Capital Markets Authority Moves to Stall Speculative Activity on Uchumi

Capital Markets Authority has moved to stem the heightened speculative activity witnessed over the past two weeks on Uchumi Supermarket counter at the Nairobi Securities Exchange(NSE).

The regulator first slapped Ernest& Young Accounting firm with a hefty KSh 10 million fine for misleading the public on the retailer’s 2014 last Rights Issue. When this enforcement action failed to deter speculators on Uchumi, CMA has taken further action.

Capital Markets Authority has launched a fresh inquiry into Uchumi’s governance structures after an investor Francis Njoroge Wanjiku filed a complaint about the Uchumi Board conduct, disclosures and compliance level with set regulations

While Uchumi is staring at possible liquidation, this has not stopped bullish trading at the counter, as strategic investors ride through the storm and make gains.

Capital Markets Authority surveillance on Uchumi

Capital Markets Authority had earlier this year cautioned on speculative trading of Uchumi shares, citing a pump up dump scenario. While they threatened to stop trading of Uchumi shares, they did not carry out the threat. So with speculators coming back in bigger volumes and better organised, CMA has been busy shutting the door on them. Meanwhile strategic investors have also joined the hungry pack and are busy trading the rumours.

Market analysts also point at lack of supply or sellers, for the upward rise in Uchumi shares and the volatility being witnessed.

According to its financial statements for the year ended 30^th June 2024, the retailer successfully leased its Langata property to China Square, who occupy the main hall.

This lease not only affirmed the property’s long-term strategic value but also injected significant and stable rental income into the business.

In the report, Uchumi Supermarkets CEO Lawrence Ngao said resolution of its dispute with Kenya Defence Forces over land in Kasarani, will have implications of the retailer’s asset base and recovery

The firm said leasing of the Langata property, growth in operating income, prudent cost management, and responsible asset utilization have laid a stronger foundation for the future.

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