Nairobi securities exchange:is it a reliable form of investment?

Abstract

The big question remains" Is Nairobi securities exchange a reliable form of investment? ................ " Following the market confidence, that was generated in the first three year of independence due to stable economic development and the Kengen initial public offer which did some acceleration in the recent years, the stock market operated several highly oversubscribe issues. Some people investing in NSE have become super rich while others stagnate in abject poverty. The disparity between the gainers and losers in the market is disquieting and thus the question. This research was inquest to establish whether the Nairobi stock market is an efficient capital market and find out to what extent is it efficient. Further, analysis was carried out to determine the survival of newly listed counter to continually register impressive which in turn accelerates the prices of respective securities. This research was paramount and it will help investors in future to cautious evaluate the investment option to avoid pit falls that were encountered by their predecessors. Data was collected from Nairobi Stock exchange for the year 2009 from i.e. from Jan 2009 to December 31st. Data collected was subjected to Wald walfowiz test, serial correlation test and survival analysis. Survival analysis was important since most of listings done in the recent past have failed to record impressive returns soon after listing thus frustrating the investors. It was noted that the Nairobi stock exchange is not an efficient capital market, thus, an investor can earn consistently returns above average. This can be achieved by carrying out technical