Nairobi — Barclays Africa Group is preparing to list its NewGold exchange-traded fund (ETF) on the Nairobi Securities Exchange after receiving regulatory approval to begin trading the securities.
“We expect the listing to take place early this year,” Michael Mgwaba, head of exchange-traded products at Barclays Africa’s Absa Capital unit, said. Kenya’s Capital Markets Authority approved the listing last week.
The fund, which has a primary listing on the JSE, already has secondary listings in Botswana, Nigeria, Mauritius, Namibia and Ghana. The Kenyan regulator approved the listing of 400,000 gold bullion debentures, each equivalent to 0.01 of an ounce of gold.
The Nairobi Securities Exchange has been preparing to introduce new products including derivatives, ETFs and asset-backed securities since at least 2013 as it seeks to boost trading volumes. The volume of shares traded on the Nairobi Securities Exchange declined to $5.81bn in 2016, compared with $8.11bn in 2014, according to data compiled by Bloomberg. At the same time, the exchange’s market capitalisation shrank to $18.7bn by the end of December, the lowest since 2012.
“NewGold ETF fits the objective of what Kenyan markets seeks to achieve, which is to boost liquidity and deepen the market,” Mgwaba said.
Investors piled almost $3bn into long-only commodity-linked ETFs in the first half of February, driven mainly by investment in precious metals, according to data compiled by Bloomberg Intelligence. The gold price has risen 9.1% this year, as political uncertainty over US President Donald Trump’s unorthodoxy, European elections and Brexit ruffle confidence and drive demand for the safe-haven investment.
“Investors in the Kenyan market are keen on diversification and eager to add more products to their portfolios,” Geoffrey Odundo, CEO of the Nairobi exchange, said in response to e-mailed questions.