SIB gold trading unit outperforms the Nairobi bourse

Rising gold prices and investments in US stock exchanges through Kenya’s first money manager at Standard Investment Bank (SIB) beat returns from the Nairobi bourse last year.

In a brief to investors, SIB said its forex and commodities trading platform made a return of 24 percent in its first full year of operations.

The investment bank linked the return to higher gains made from gold trading and investments in the S&P 500 — the index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.

At 24 percent, the return managed to outperform the Nairobi Securities Exchange (NSE) All -Share Index (NASI), which tracks the market value of shares of all listed firms. It gained 18.5 percent to close the year at 166.41 points.

“We benefited from the diversified asset classes at our disposal, but moves in the gold and American stock markets were the stand out performers,” said the notice from Mr Nahashon Mungai, head of global markets at SIB.

The Capital Markets Authority granted SIB the first money manager licence, which allows the firm to invest offshore in forex and commodities on behalf clients in its product dubbed Mansa X.

The firm says it invests on behalf of clients in over 300 assets classes. The S&P 500 made a return of 30.4 percent last year while gold yield was up 23 percent.

The investment bank trades stock indices, currencies and commodities for clients who require a minimum of Sh250,000 to tap the global market.

Local investors wishing to participate in the precious metals market have had to either trade in the commodity in its physical form (bullion) or through unregulated offshore dealers.

Under precision metal trading, investors’ money will go into buying securities that own an underlying commodity such as gold. The investors do not own the commodity directly, but instead hold shares in the security whose value goes up or down in tandem with the value of the underlying asset.

Lack of liquidity had dimmed trading of the gold-backed assets, which was launched in March 2017, at the NSE.

SIB is racing its revenue streams that include share and bond trading commissions.