This research report was prepared by the Research Department of Old Mutual Securities Limited. Old Mutual Securities Limited is a securities trading company licensed by the Capital Markets Authority (Kenya) for the purpose of facilitating trade on the Nairobi Securities Exchange.

Here are our views on the news making headlines today for Kenya:
Stockbrokers now take tax case to the Court of Appeal. Treasury secretary Henry Rotich announced last month that he and the taxman had resolved to pass the remittance burden to investors, and that the necessary legislation to make the shift official was currently being worked on. Despite the shift, stockbrokers still want the tax scrapped, as they fear it will ward off potential investors from the Nairobi Securities Exchange.

Our View: Prior to re-introduction of the CGT, Kenya’s securities market experienced strong resurgence and this placed the Kenya’s market among its African peers in terms of growth due to improved earnings reported by listed companies and this led to sustained demand for their securities, especially on the large and medium size counters. In January 2015 the bourse recorded KES 9.7 billion equity market turnover, which was a 66% drop from December 2014 value and is mainly attributed to the introduction of Capital Gains Tax in the market. We however saw a reversal of this trend in February 2015 where the bourse recorded KES 16 billion equity market turnover, a 65% increase from January 2015 valueafter treasury Shifted the responsibility of accounting for the capital gains tax to investors through an amendment of the relevant law which meant the taxman will have to wait until the next financial year beginning July to bring the new tax measure into force...

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