Thursday, June 08, 2006

Uchumi investigation: IS NSE UP TO TASK

The NSE is being severely tested following the news ofUchumi collapse last week. Trading for the past threedays (2, 5,6th June) has been subdued and almost allcounters have taken huge knocks on the share price. Itappears like investors have lost some amount ofconfidence in the market even after the NSE chairmanJimnah Mbaru spoke to reasssure them. This wasexpected.Uchumi was not any other listed company. Forstarters, it was a household name with the brandhaving penetrated the minds of most kenyans. Inaddition, it was no secret that Uchumi usually stockedlocally manufactured products therefore giving thelocal manufacturing sector an outlet. However, themost worrying factor is that its only eight months agowhen Uchumi issued a sucessful rights issue thatraised Kshs. 1.3 b, promising to return to the blackin two years. To come back eight months down the lineto tell the same audience that the company is indeedisolvent, was a major shock. who was paid with the1.3b. Were the directors intentionally withholdingcrucial information from investors while marketing therights?The NSE has rightly started a probe into the affairsof uchumi. Everyone is watching with keen eyes howthis will be handled.
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