CAPITAL MARKETS AUTHORITY
INTRODUCTION
The Capital Markets Authority (CMA) is an independent government regulating agency responsible for overseeing or supervising, licensing and monitoring the activities of market intermediaries, including the stock exchange market and the central depository and settlement system and all the other persons licensed under the Capital Markets Act of Kenya. The capital market is part of the financial market that provides funds for long-term development. This is a market that brings together investors of capital and borrowers (companies that sell securities to the public) of capital.
Formation of the Capital Markets Authority of Kenya
In the 1980s the Government of Kenya realized the need to design and implement policy reforms to foster sustainable economic development for an efficient and stable financial system. In particular, it set out to enhance the role of the private sector in the economy to reduce the demands of public enterprises on the exchequer, rationalize the operations of the public enterprise sector to broaden the base of ownership and enhance capital market development. It had become apparent that the commercial banks could not support and sustain a desirable economic development because they could not offer the necessary long-term credit. In 1984, a study on the Development of Money and Capital Markets in Kenya was jointly undertaken by the Central Bank of Kenya and the International Finance Corporation with the objectives of making recommendations on measures that would ensure active development and strengthening of the financial sector. This became a blu...
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...e growth in the country’s economy.
10. Also the capital markets allow ownership of assets and productive projects by small earners and upcoming investors to enable them to also benefit from the country’s growing economy and this will lead to distribution of the wealth in Kenya.
CONCLUSION
The lack of a progressive and vibrant capital market can cause underutilization of financial resources. The developed capital market also offers access to the foreign capital for domestic industry. Thus capital market definitely plays a productive role in the over all development of an economy.
REFERENCES.
1. http://www.nse.co.ke/regulatory-framework/category/27-capital-markets-authority-cma.html
2. Capital Markets and Securities FAQs by Nilene R. Evans, David M. Lynn, Anna T. Pinedo and James R. Tanenbaum (Kindle Edition - Nov. 19, 2013) - Kindle eBook
3. Fin 3010 course text.
The September Duke University/CFO Business Outlook survey indicates that three-quarters of the CFOs surveyed expect M&A activity to slow. Of particular interest is the suddenness of this change in expectations. In the prior quarter’s survey, the majority of surveyed CFOs expected M&A to “stay strong through the remainder of 2007.”
The situation became even more complex when the British colonial administration introduced a currency-based income tax system. For centuries, the Kenyan economy had largely rested on the exchange of livestock and other goods. With this in mind, it should come as little su...
When discussing the cost of equity capital, or the rate of return required by investors for their share expenses, there are three main models widely used for analyzation. These models are the dividend growth model, which operates on the variable of growth and future trends, the capital asset pricing model (CAPM), which operates on the premise that higher returns are a result of higher risk, and the arbitrage pricing theory (APT), which has a more flexible set of criteria than CAPM and takes advantage of mispriced securities
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We analyzed the market for two weeks to determine when the equity market would turn from a bearish to bullish market. Without a change in the market and a declining bond price, we decided to invest in equities according to our investment strategy, which brought us into the second phase of our portfolio. Therefore, at the beginning of February we bought shares in Sirius, Microsoft, Neon, Washington Mutual, and Nike. As assumed, the equity market continued to plummet decreasing the value of all our stocks except for our Gold Corporation stock.
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.
In 2003, Capital Market Authority (CMA) was established under the Capital Market Law (CML) to act as regulatory supervisor for the capital market. Capital Market Authority regulate and supervise different critical issues such as market conduct, merger and acquisitions, corporate governance, and issuance of financial tools such as mutual funds, IPOs and Sukuks “Islamic bonds”. Thus, the establishment of CMA defined a new stage of financial liberalization in the country. CMA established the legal and regulatory platform to open up the Saudi capital market, support the privatization effort and increase public participation in the market while promoting efficiency and transparency. Furthermore, in March 2007, Tadawul exchange was re-incorporated as joint stock Company with a capital of USD 320 million to increase autonomy for the exchange. After the formation of CMA, the Saudi capital market continuously evolving in term of breadth, depth and complexity. In March 2010, the number of listed companies increased to 139 from 76 back in 2001 as local companies started to look at capital markets to fund their future financing needs. Due to the increasing in investors participation, Tadawul’s total market capitalization at a compound annual growth rate “CAGR” of 34.8% to SAR 1.9 trillion which about USD 507 billion between 2003-2007. Due to the financial crisis in 2008-2009 the market capitalization for Tadawul declined to SAR 1.2 trillion, which about USD 320 billion. Between the years of 2003-2007, the stock market activity grew in a fast pace without interruption in term of value, volume, and market cap along with rising in the number of transactions. The total trading volume of shares on Tadawul Stock Exchange increased at a CAGR of 11.4% between 2003-2009. The
Kenya relies on many different jobs in order to keep their economy afloat. “Kenya’s economy suffers from a high population growth rate and rampant corruption” (Content). Kenya’s GDP reflects the ups and downs the country’s economy has been through, since the gaining of its independence. At the beginning of the country’s independence their GDP was roughly 6%, but it has continued to decrease from there. The drop in the GDP has come from different variables such as high growth rates, corruption and violence. The country has been able to redeem itself with having a GDP of more than 5% as of 2011. Kenya’s currency is called shillings. One US dollar is equivalent to $102.24 in shillings. The GDP per capita is around $77705.82. Inflation has been a problem Kenya has been facing for years. Its continuance to rise has caused it to know be 12%; but, measures have been taken by the government to decrease its inflation value
The bank failure in Jamaica illustrates how negative mindsets and behaviors can devastate the financial system and disrupt economic growth. The primary role of any bank is to safeguard its customer’s money, offer interest rate on deposits, lend money to creditworthy individuals, and make sound investment decisions to maximize shareholder value. Because of rapid economic growth between the late 1980s and early 1990s in Jamaica, the Central National Bank (CNB) and Worker’s Savings and Loans Bank (WSLB) loosened their monetary policies, provided preferential interest rates and extended credit beyond what was reasonable to members of its own board of directors, managing directors, and officers of the bank. These actions posed significant risks to the bank and its future.
Capital markets are markets "where people, companies, and governments with more funds than they need (because they save some of their income) transfer those funds to people, companies, or governments who have a shortage of funds (because they spend more than their income)" (Woepking, ¶3). The two major capital markets are stock and bond markets. Capital markets promote economic efficiency by moving funds from those who do not have an immediate need for it to those who do. Individuals or companies will put money at risk if the return on the intended investment is greater than the return of holding risk-free assets. An example of this would be those that invest in real estate or purchase stocks and bonds. Those that invest want the stock, bond, or real estate to grow in value or appreciate. An example of this concept would be if an individual or company invested an amount saved over the course of a year. While investing may be riskier, these individuals hope that the investment will yield a greater return than leaving the money in a savings account drawing nominal interest. In this example the companies that issue the stocks or bonds have spending needs that exceed their income so the company will finance their spending needs by issuing securities in the capital markets. This is a method of direct finance because the "companies borrowed directly by issuing securities to investors in the capital markets" (Woepking, ¶5).
...crease unemployment. Investors are an important factor to consider because without investment the economy will decline. To sum up, investment solves vital economic problems and is a nourishing factor to the economy. Investors desire to invest in a capitalist economy because they make their own decisions not like communist economy and they set their own prices and they are not restricted to minimum wages.
I am currently majoring in Finance Management. Most of the time people think of finance as just managing money. However, finance is needed for so much more! The finance industry deals with starting businesses, developing new products, expanding markets, as well as everyday things like saving for retirement, purchasing a home, and even insurance. The stock market, asset allocation, portfolio analysis, and electronic commerce are all key aspects in finance. In this paper, I will explain how these features play a vital role in the industry, along with the issues that come with these factors.