This study examines how investors of varying levels of wealth, experience in and proximity to Kenya’s emerging stock exchange take advantage of short term profit opportunities in a politically manipulated market characterized by significant early gains in IPO share prices. Analysis of individual-level data for all Kenyan IPO investors shows that first-time investors are often the most likely to sell shares in the first month of trading, while lower income investors quickly learn to imitate the speculative behaviors of institutional investors. Contrary to expectations, investors located in rural areas are often more likely to speculate than urban investors. Based on these results I argue that state policies in Kenya condition the investing public to adopt short-term orientations toward share ownership.
Date posted: April 30, 2010
; Last revised: August 4, 2010
Yenkey, Christopher B., The Social Structure of Speculation: Investor Attributes and Short Term Share
Ownership in Kenya’s Emerging Stock Market (August 2, 2010). Available at SSRN: http://ssrn.com/abstract=1597326