Kenya Airways' (KQ) share price has doubled from Sh3.83 to Sh7.60 in the eight days following its return to trading on the Nairobi Securities Exchange (NSE) on January 6, 2024.
This has led to increase in shareholder wealth by Sh21.4 billion, making it the 11th largest listed firm by market capitalization at Sh43.18 billion.
The airline's return to trading comes after a four-and-a-half-year suspension that began in July 2020, with the Capital Markets Authority (CMA) declining KQ's request for further extension into 2025, citing dissipated risks and the need to protect investor interests.
It was absurd to suspend KQ from trading on the basis of a mere proposal to restructure it.
That just required a customary cautionary announcement. It was up to the shareholders to decide what to do with that information.
Stocks like Uchumi Supermarkets continue to trade yet the business is all but dead. KQ was suspended despite remaining in operation.
KQ's minority shareholders were diluted without being given an opportunity to defend their stake. (πΈπ*)
The trading resumption follows KQ's return to profitability in the first half of 2024, reporting a net profit of Sh513 million, largely due to the government's takeover of its Sh88 billion US Exim Bank debt, which was restructured into a shilling-denominated facility.
National Treasury remains the largest shareholder with a 48.9 percent stake worth Sh21.1 billion, followed by ten local banks holding 38.09 percent worth Sh16.4 billion, while investors have traded 3.4 million shares worth Sh17.63 million since the return to trading.
Meanwhile, According to an IMF report, Kenyan firms are increasingly turning to cryptocurrencies, particularly stablecoins like USDT, for foreign supplier payments during periods of dollar shortages and shilling depreciation.
The finding comes from a market survey conducted by a technical working group comprising officials from the Capital Markets Authority (CMA) and Central Bank of Kenya (CBK), which revealed more extensive use of digital assets than previously thought, despite the CBK's prohibition on banks doing business with crypto entities.
The survey found that Kenya ranks 21st out of 155 countries in global crypto adoption, with over 730,000 users, predominantly under 40 years old, investing in Bitcoin, Ethereum, and USDT.
The sector's significance is highlighted by the Kenya Revenue Authority's collection of Sh10 billion in taxes from crypto users last year, with the market reportedly transacting about Sh42.4 trillion between 2021 and 2022, representing nearly 20% of GDP.
While individuals typically invest less than Sh100,000, both corporate and individual users primarily employ digital assets as a hedge against shilling depreciation and for international settlements.
Stablecoins are tied to a reserve asset like the US dollar or gold to sustain value. In areas or places where traditional currencies are unstable, stablecoins strive to provide a more trustworthy medium of exchange than volatile cryptocurrencies like Bitcoin and Ethereum.
Tether, a stablecoin, is tied to the US dollar, so 1 USDT is worth 1 USD. Stablecoins are tempting for daily transactions, international payments, and currency depreciation hedges due to their stability.
While innovative, their emergence requires strict regulatory control to ensure financial stability.
Kenya's draft National Policy on Virtual Assets and Virtual Asset Service Providers, available for public comment until January 24, 2025, indicates a practical transition towards adopting digital innovation while tackling essential issues related to consumer protection and financial stability.
This regulatory development may establish Kenya as a model for other African countries addressing the intricate convergence of traditional finance and digital assets.