Buying and selling shares is among the biggest financial investments globally. Millions of investors do it daily with most countries having a stock market. In Kenya, buying and selling of shares are done through the Nairobi Securities Exchange (NSE).

A share represents part of a company’s ownership. Buying shares of company “A” gives you some level of ownership in that company. You should always keep in mind that the key motive for buying and selling shares is to get dividends and sell them at a profit.

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Becoming a successful shares trader in Kenya requires some key basic understanding of the market and how it operates. (A key point to note is that a successful shares investor is the one that generates some profit in the market).

Risks of Buying and Selling Shares in Kenya

Shares trading has its risks and rewards. The risks arise because you are committing your money in anticipation the future of the company will get better resulting in share price gain.

However, this is not always the case. Sometimes the company doesn’t perform well resulting in to decrease in share price and in extreme cases, the liquidation of the company.

It is advisable not to invest in the shares market if you don’t understand it. Instead, you should use the services of various established investment firms. Although it comes at a fee, it is still better than doing it without market knowledge.

The good thing about buying and selling shares is that anyone can learn over time. Profiting from buying and selling shares requires patience and experience. Trading in shares requires continuous investment in knowledge and experience. Below are some of the key things you need to know before you can start to buy and sell shares in Kenya.

A CDS (Central Depository Settlement) Account

A Central Depository Settlement Account (CDS) account is a mandatory requirement before you can start trading in shares. It is offered by Central Depository and Settlement Corporation, (CDSC). The only body that is authorized to offer these services by the Capital Markets Authority (CMA).

A CDS account facilitates settlements when you are buying and selling shares. It acts as the store for your shares after buying them. This is among the first things you need to understand in the process of learning how to buy and sell shares in Kenya.

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How Do You Get a CDS account?

The process of opening a CDS account is almost similar to that of opening a normal bank account. Some of the organizations offering the CDS accounts are;

Below are some of the requirements for opening an account.

  1. National Identity Card/ Registration Certificate
  2. Passport photos
  3. KRA Pin
  4. A Kenyan bank account number
  5. Must be above 18 years
  6. Filling of the CDS 1 form

The process of opening a CDS account with the central bank is free. However, other commercial entities such as stockbrokers may attract some fees depending on the entity.

Hence, it is necessary to conduct some research before settling on the right provider depending on your needs.

After getting the CDS account, you are required to fund it to become eligible to buy and sell shares. To begin with, you can only buy a minimum of 100 shares as per the market regulations.

This is what determines the amount of capital by analyzing the share price. As an example, if the share price of Company B is 1000 shillings, you need 100*1000=100,000 shillings as the minimum capital.

Nairobi Securities Exchange (NSE)

NSE in the market where the companies whose shares are tradable are listed. The market opens From Monday to Friday between 9 am and 3 pm. These are the timelines when you can buy and sell shares. Through the NSE, you can access market data that is critical in making trading decisions.

Some of the information you can get on the NSE include;

  • Number of the Companies listed
  • Real-time share prices
  • Historical share prices
  • Market Statistics

This information is useful when making investment market decisions. As an example, understanding a company’s historical performance is key in predicting its future.

It would be unwise to buy shares of a company that has been deteriorating in the last few years as the trend could continue resulting in losses.

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Choosing a Stock Broker

As highlighted earlier, stockbrokers are the middlemen that facilitate buying and selling shares in Kenya. They provide the platforms and data that are key in trading.

Brokers are also required to offer timely and useful information to their clients that are key in helping them make investment decisions. You can also get a CDS to account from the broker. Settling on a good broker is key in learning how to buy and sell shares in Kenya.

A good stockbroker is the one that;

  • Offers competitive fees in commissions and account maintenance
  • Have well developed and modern trading systems
  • Is regulated by the Capital Markets Authority
  • Offer their customers market training and trading support.

Determining the Shares to Buy

Determining the shares to buy requires adequate market research on the business and prospects of a company. Buying shares means getting ownership of the company. Because you want to benefit from future price gains of the share price, you should evaluate the viability of the companies undertaking into the future.

Below are some of the factors that are critical to consider;

Nature of business

Every company has its core business they focus on. In the Nairobi Securities Exchange, various companies operate and operate in different business segments.

These include sectors such as Agriculture, Banking, Telecommunications, and Manufacturing. Hence, it is key to have a specific type of industry or industry that you are focusing on.

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The leadership of a company plays a key role in its success. Hence, you should have a basic understanding of the company leaders based on their historical careers.

You can get this information easily on the internet or the company’s websites. Some of the factors to consider when evaluating the leadership is;

  • Experience in the Industry
  • Academic qualifications
  • Reputations

An example of a company to avoid is if the leader has been involved in past scandals. The better the leadership, the higher the chances of success translating to better returns.

Past Performance

Past performance is a key guide to understanding the company’s potential. Companies that have been profitable consistently in the past are likely to maintain the trend.

This type of company normally experiences huge share price growth. Hence, one of the key reasons why you should target them for better and less risky returns. Remember a rise in share price enables you to sell them at a profit.

It is also a requirement for the listed companies to publish their statements periodically making it easier for investors to access financial information.

This normally happens in print media such as newspapers and also on the company websites. Some of the important parameters to review when checking financial performance include;

  • Profitability
  • Asset base
  • Sales numbers
  • Liabilities

Although past performance doesn’t give a 100% future prediction, they play a key role in making an investment decision. In the stock market, you only need a higher chance of success you become profitable.

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Benefits of Buying Shares in Kenya

As an investor, your goal when buying shares is to get a return in the future. The length of the future matters per individual. Some get in for short-term gains while others invest for the long term.  Below are some of the benefits you receive as a shareholder.

  • Dividends

Dividends are regular payments made to a shareholder periodically. They are mostly paid half annually and Annually. Dividends represent a share of the profits given by the company to its shareholders.

The more shares you have, the more dividends you get. However, it is not mandatory for a company to pay dividends.

Most companies pay dividends if they are profitable. Hence, the reason why it is necessary to research before buying shares.

  • Share Price gain

Shares continuously appreciate and depreciate. Good performing companies have a higher chance of their shares appreciating. This enables you to sell them higher than the buying price and book a profit in the process.

Just like dividends, bad performing companies could also experience share price depreciation resulting in losses for the shareholders.

  • Debt collateral

You can use your shares as collateral to access credit in financial institutions. This is an added advantage in case you don’t have any other securities to secure your loans. Normally, the share value is discounted due to its volatile nature.


Buying and selling shares is not a complex process. The steps are straightforward and self-guiding. It also doesn’t require a huge amount of capital like most businesses to start. You can buy shares with as little as 5,000 shillings.

Hence, as long as you have the interest on how to buy and sell shares in Kenya and have done adequate due diligence, buying and selling shares in Kenya could be a profitable venture.

The Kenyan stock market is developing with the list of publicly listed companies expanding. This will create more options for the investors increasing their chances of profitability.

You should however remember that buying and selling shares is a risky investment. Hence, only invest the money that you are willing to lose.

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