Investors will soon be able to shield themselves against forex market volatility following an announcement by Nairobi Securities Exchange that it will launch currency futures this year.
NSE's product development manager Terry Adembesa said yesterday that plans are at an advanced stage to launch currency and index futures before the end of June.
"We already have approvals from the regulator," Adembesa told a financial analysts forum in Nairobi.
If the plan succeeds as per schedule, Kenya will be the second country to launch a derivatives market after South Africa. Last October, the Johannesburg Stock Exchange launched futures contracts for the Kenya shilling, Zambian kwacha and Nigeria's Naira.
The NSE has spent about $750,000 (Sh68.6 million) to prepare systems and the market for derivatives trading locally.
"The launch of the derivatives market will mean investors will be able to hedge out risks prevalent with the underlying security," added Adembesa.
Speaking at the Certified Financial Analysts Society for East Africa forum, the director of Africa-focused advisory firm Barani Capital Chris Grune said Kenya has seen a bit slow in areas of financial innvovation.
Institutional investors, he said, are very eager for the new products in the pipeline which include the derivatives and Real Estate Investment Trusts.
Chief investment officer at Genesis Kenya Investment Management Limited Fahima Zein she was "cautiously optimistic" of the performance of the securities markets across EA, after a series of profit warnings recently.
Twelve listed companies among them TP Serena and Crowne Paints have so far issued profit warnings to their investors which means that their earnings are likely to fall by more than 25 per cent in comparison to previous period under review.
