Share Prices – Exchange Rates Nexus: Evidence from Kenya

Kenya adopted a floating exchange rate regime in 1993. In the years that followed the exchange rates are market driven. Undoubtedly, the changes in exchange rates do have a diverse effect across the economic spectrum in any country. The sectoral and economy wide effects of exchange rates may ultimately be reflected in the share prices. The objective of this research was to study share price and exchange rate nexus. The context of the study is Kenya for the period November 1993- April 2011. The findings have implications for investors, investment managers, regulators, listed companies, financial institutions and other market players. The economic theory points to the relationship between stock price and exchange rates but does not properly define the direction of the relationship. The research used the procedure proposed by Toda and Yamamoto to determine the share price and exchange rates nexus. The outcome of the research suggests that there is bi-directional causal relationship between share price and exchange rates. Besides, the sign of causality is negative and causality exists in both directions. Keywords: Share prices, Exchange rates, Modified WALD tes

A COMPARATIVE STUDY OF THE RETURNS OF QUOTED SIN AND NON SIN STOCKS AT THE NAIROBI SECURITIES EXCHANGE

Sin stocks are of increased interest since more and more investors and fund managers avoid them whileintegrating social screening with their investment decisions. As a reflection of social norms, sociallyresponsible investing has become a niche of its own in determining investors’ portfolio decisions in the pastdecade. The study adopted an explanatory research design with the population consisting of all firms listen inthe NSE. The sample of the study involved the 20 firm that make up the NSE index. Secondary data usedsecondary data sources in gathering data for analysis which was done using the Statistical Package forSocial Sciences (SPSS version 20) to generate the descriptive statistics and also to generate inferentialresults. T-Tests used to check whether the mean returns of Sin stock differ from the mean returns of non sinstocks. Regression analysis done showed that the type of firm that is either sinstock or non sinstock have apositive and significant relationship with return. T-test statistics indicate that capital gains for sinstocks werehigher than that of non sinstocks. Dividends of nonsinstocks, were slightly lower than that of sinstocks. Fromthe given results, it is evident to conclude that sinstocks have a higher capital gain, return and dividends thanin nonsinstocks

Effects of Unit Trust Products Mix on Turnover of Asset Management Companies in Kenya

Purpose: The focus of this study was to establish the effect of unit trust products mix on turnover of Asset Management Companies in Kenya. Methodology: The study was modeled as a mixed methods research design which incorporated both qualitative and quantitative methods of research. Primary and secondary data was collected and thereafter analyzed through a multiple linear regression model. Data from 10 of the 21 registered mutual funds managers as at April 2017 was used for the study. Findings: The study revealed that holding proportions of Equity funds, Money market funds, Balanced funds and bond funds constant revenues of asset managers would be at 7.306, a unit increase in equity funds would lead to an increase in revenues of asset managers by a factor of 1.86, a unit increase in money market would lead to an increase in revenue of asset managers by a factor of 0.861, a unit increase in balanced funds would lead to increase in revenue of asset managers by a factor of 0.672, further a unit increase in size of bond fund would lead to an increase in the revenues of asset managers by a factor of 0.369. Therefore, the industry is generally experiencing unbalanced investment volumes and, hence, income level in the unit trust products. Implications: This study implies that different unit trust products had different degrees of contributions to the total income attributed to unit trusts. Also, unit trust products had a positive impact on the incomes by asset management companies but losses in some unit trust products had negative effects on incomes of the companies as well. This necessitates for the intervention of authorities such as the Capital Markets Authority and make policies that encourage the even distribution of investments in unit trusts and a fairer competitive environment for the mutual fund managers. Value: This study will aid the fund managers in improving their skills to make viable decisions by taking into consideration different unit trust products and their optimal performance in the Kenyan market. Secondly, the asset management companies should comprehend how best to add value to unit trust products with the intent of boosting and diversifying their incomes. Unit holders should also be able to understand how best to link asset management performance through their reported incomes over specific periods. The investors should also have a better glimpse on the overall health of the asset management industry by observing trends and key performance indicators (KPIs) that denote the overall health of the capital markets in Kenya. This study should be of benefit to the Kenyan government through its bodies; National Security Exchange (NSE) and Capital Markets Authority (CMA). The relevant bodies should be in a better position to avail informed policies and counsel to the relevant asset management companies and authorities hence aid the market efficiency and industrial growth.