Investors Diary

Dear Investor,
Welcome to sample a collection of my thoughts, research, financial advice, gut feeling and other works that i love to share with you from time to time.

If you are a stock market investor or otherwise and would like to invest in the Kenyan stock mart, the Nairobi Stock Exchange, you can always get free and helpful financial and investment advice on this site.

Further leave you comments and lets make the world of investment fun to operate.

More latters as we strive the world of investing fun , more fun and alot of fun.

Tuesday, January 30, 2007

Govt Upbeat on NSE Performance

Written By:Emmanuel Toili
Posted: Mon, Jan 29, 2007

The government is upbeat on Nairobi Stock Exchange performance.
Finance Minister Amos Kimunya says, the NSE 20 share index has surpassed the NSE share index gaining some 6000 points.
Speaking at the commencement of trading of Mumias Sugar Company shares at the NSE, Kimunya said the government raised over 4.6 billion shillings in the just concluded offer of over 91 million shares.
The government intends to raise 18 billion shillings this fiscal to cover the budget deficit. Government shareholding at the company has reduced to 20 per cent from 38 per cent.
Mumias will commence its proposed 1 to 5 share split. NSE chairman, Jimnah Mbaru said the split will enable the sugar company to attract more liquidity from investors.
He said banks issuing out syndicated loans were hampering the development of the bond market and urged the Capital Markets Authority to act.

KCC to be privatized? Try an IPO

KCC set for privatization.
Written By:Toili , Posted: Thu, Jan 25, 2007

The New Kenya Cooperative Creameries is set for privatization.
Managing Director Francis Mwangi says the institution has initiated discussions with the relevant government organs to bring the process to fruition.
In an interview with KBC, Mwangi said the milk processor is now firmly on the profit path. The New Kenya Cooperative Creameries limited was revamped in 2003.
This followed a near collapse of the giant milk-processing firm and renamed it New KCC.
Mwangi said the revival of the institution has been exemplary with 11 factories and cooling plants now operational.
He said New KCC is now set for privatization after the company realized increased profit.
The turn-around of the institution's profitability has impacted favorably on dairy farmers who for a long time earned very little money from their supplies.
The company late last year signed a 500 million shillings credit line with Equity bank for use in providing financial support to dairy farmers.
Mwangi said the company has embarked on an aggressive marketing strategy in order to increase its bottom line and further push up the profit.
He also singled out efforts to increase milk exports as a key strategy for the company's growth.
The company is however grappling with modernization of its plants in order to increase efficiency and reduce wastage.
For More Read

Microsoft Launches Vista Operating System

Microsoft launches Vista to consumers
Written By:Muthoni Kariuki/agencies , Posted: Tue, Jan 30, 2007

Microsoft has launched its latest version of Windows, called Vista, with more than 100m computers predicted to be using it worldwide within 12 months.
Microsoft founder Bill Gates called the launch a "big day" that would bring a new digital workstyle and lifestyle.
The new operating system (OS) boasts an improved interface and security tools.
But not all PCs will be able to run Vista - Microsoft recommends machines have at least 512Mb of RAM, a 800Mhz processor and 15Gb of hard disk space.
Microsoft has pledged to continue support for XP users until 2011.

For more read

Kenya: Great Expectation in Stanbic, CFC Merger

The East African Standard (Nairobi)

January 30, 2007Posted to the web January 30, 2007

South African muscle is truly beginning to be felt in Africa's banking circles as a race for territory in corporate and retail banking comes to a head.
It looks like the contest will now be down to Absa/Barclays, the Stanbic/Standard Bank network and Standard Chartered Bank.
Absa has confirmed it has begun arm's-length discussions to buy Barclays' African units - the long awaited phase two of their deal with the UK giant.
South Africa's Standard Bank Group trades under the name Stanbic Bank in Botswana, the Democratic Republic of Congo, Ghana, Kenya, Malawi, Nigeria, Tanzania, Uganda, Zambia and Zimbabwe.
Its rival Standard Bank is now sounding out Kenya's sixth-largest bank, CFC, with a merger plan. Standard Bank (which operates as Stanbic in some countries) is just fresh from listing part of its Ugandan operation. It has a head-start over Absa in its race, so news of the CFC-Stanbic merger talks has captured the imagination of investors in an unprecedented way.
It kicked off in controversial fashion with a little snafu at the Nairobi Stock Exchange. In a cautionary announcement to shareholders appearing in the press on Thursday last week, CFC Bank announced that the company, and certain of its major shareholders, has entered into merger negotiations with Stanbic Bank Kenya. CFC Bank shares rose 181 per cent in the wake of the news to trade at an average of Sh368 up from Sh131 recorded at close of business on Wednesday.
Abnormal rise
Investors rushed for the shares, pushing the price to a record high of Sh900. The bank's shareholders had struck gold! But the party did not last long.
Reports now emerging from the Nairobi Stock Exchange (NSE) indicate that the transaction that pushed the share prices to Sh900 has now been cancelled. NSE chairman, Mr Jimnah Mbaru, was quoted as saying that the Sh900 transaction was 'abnormal' and a 'mistake.' He now claims that some one must have exploited a 'loophole' that exists in the stock market rules to push the share prices by a whopping 587 per cent.
"There was a mistake, but once this was noted and rectified trading resumed at normal prices," said Mbaru.
The NSE chairman did not stop there; he is now calling for a review of the stock market rules to limit the level to which a share price can rise after a major corporate announcement.
"About 20 to 30 per cent is reasonable but above that is unreasonable," said the NSE boss.
Currently, the rule is that a share price cannot be allowed to rise by above 10 per cent of its previously recorded price on a normal trading day. This rule is, however, lifted whenever there is a major corporate announcement (as was the case with CFC) or during a stock's first day of trading.
Amidst all this drama, CFC Bank shareholders must be have been left wondering what would have been. The CFC Bank counter was quiet in Friday's trading, with no transaction recorded. Again, it is a plausible argument that the investors are holding dearly onto their priced possession anxiously waiting to make the move when time is right. This, after all, is what trading in stocks is all about!
Stanbic wants 50 per cent
The financial value of the deal, according to the statement issued on Thursday, is currently being negotiated and will be pegged on, among other things, the price of CFC Bank shares on the Nairobi Stock Exchange (NSE) over a 30-day trading period up to, and including January 18 this year. With 156 million shares and an average price of Sh117 in the week ending Friday, January 19 this year, the bank's market capitalization is about Sh18.25 billion.
The Standard Bank Group of South Africa, the Stanbic Bank Kenya parent company is reportedly negotiating for a controlling shareholding (above 50 per cent). The final deal, theoretically, cannot therefore be anything less than Sh9 billion. A source has confided to the FS that it will be anything between Sh10 billion and Sh11 billion.
If successful, the merger will result in what experts are referring to as a 'reverse take-over', where the smaller entity takes over control of the larger entity. Stanbic Kenya had assets worth approximately Sh23.2 billion as at September 30 last year (provisional statements).
A statement by CFC Bank puts CFC Bank shareholders' funds at approximately Sh4 billion ($62.8 million) and total assets at approximately Sh39 billion ($557.6 million) as at 30 September 2006.
CFC Bank recorded a pre-tax profit of Sh865 million in 2005, while Stanbic Kenya recorded a profit of Sh439 million in the same financial year.
Standard Bank Group is a big fish with a global stature.
The group has a representation spanning over 18 African countries and 21 countries outside the African continent, including the key financial centres of Europe, the United States and Asia. It is listed at the JSE and has 746 branches operating in South Africa and 241 in the rest of Africa.
Shareholder Information from the Nairobi Stock Exchange as at September last year gives a list of CFC Bank shareholders who are hiding behind the veil of incorporation.
Gambit Holdings, with over 71 million shares (45.6 per cent) is listed as the largest shareholder, followed by African Liaison with 43 million shares (27 per cent) and Sovereign Trust Ltd with 19 million shares (12 per cent).
Institutional shareholders own a cumulative total of 144 million shares (92 per cent) of the bank, and are all listed as local investors. CFC Bank is associated with current and former powerful political figures.
Mr Charles Njonjo, a former Constitutional Affairs Minister, is the current chairman, while Mr Joshua Kulei, a close aide to former President Daniel Moi, once sat on the CFC Bank board.
The top local individual shareholder, who is listed in his name, is Mr Kamau Mike Maina, with 1.5 million shares (0.79 per cent). A quick arithmetic puts him at Sh552 million shillings rich, Sh355 million shillings richer than he was before the share's meteoric price rise.
Share prices are however known to fluctuate and therefore this figure is only recognised as a 'potential' worth, until it is realized through a sale of the shares.
Mr Charles Njonjo, the Bank's Board chairman has 234,000 shares listed in his name, though his actual shareholding in the firm is suspected to be substantially higher.
The late Mr Prahlad 'PK' Jani, the bank's founder, is also believed to have a substantial shareholding in the Bank.
Implications of the proposed transaction are bound to have far reaching effects. It is still not clear if CFC will change its name. The capital markets authority is also expected to rule whether if the bank will be de-listed from the stock exchange upon acquisition by the South African Bank.
Successful conclusion of the transaction is, however, subject to approval from the Ministry of Finance, Central bank of Kenya, the Capital Markets Authority and the Monopolies Commissioner.
Meanwhile, all the interested parties wait with bated breath.

Trade in Mumias Shares Open at NSE

Mumias Sugar Company’s 91.9 million new shares began trading yesterday at the Nairobi Stock Exchange.
The company’s shares moved at between Sh45 and Sh50 on a volume of 787,000 shares at the NSE.
The Government sale of 91,999,220 shares at Sh49.50 a share was the second sale since an initial public offer (IPO) in 2001.
The Government now holds only 20 per cent of the company’s shareholding.
It collected Sh4.5 billion from the offer, which is part of Sh18 billion it expects to raise in this financial year through divestiture.
Mumias produces approximately half of the domestic sugar output.
The management is putting in place strategies to introduce new products such as ethanol, expanding cogeneration and acquisition for government-owned sugar millers.
Twin spectrum
Chairman John Bosse said the world faces twin spectrum for a cleaner environment and fluctuating oil prices.
Cogeneration and ethanol, he said, are alternative sources of energy that would continue to grow.

Consider splitting, NSE urges Mumias

The Nairobi Stock Exchange (NSE) asked the management of Mumias Sugar Company’s to consider splitting its shares, moments after the sugar-miller’s 92 million shares started trading at the bourse.
NSE chairman Mr Jimnah Mbaru said a share split will make the firm’s shares affordable and more attractive to retail investors such as farmers.
Mbaru said that despite being one of the blue-chip companies in the market, the price of the company— which opened on Monday at Sh49 per share — had moved beyond what retail investors could afford.
If effected, the split would follow the footsteps of ICDCI, Barclays Bank, East African Breweries, Sasini Tea & Coffee, and EA Cables.
"We think that a split in Mumias shares will make it more affordable. The company could consider to institute a 1 to 5 share split to stimulate further trading in the shares and thereby make it easier for farmers to acquire such shares," he said.
Mr Amish Gupta, a member of the DSC Consortium that was the lead sponsoring stockbrokers’ group urged the Capital Markets Authority (CMA) to allow the use of ‘global refunds’ to authorised selling agents for onward credit to their investors.
Gupta argued that the role of the receiving bank and receiving agent in other offers should be directly regulated through appropriate regulations and licensing procedures.
The sale of the 18.04 per cent stake of the Government’s stake in Mumias was the fourth initial public offer in the last ten months at the NSE. It follows the Kenya Electricity Generating Company (KenGen), Scangroup, Eveready Batteries IPOs and the Diamond Trust bank’s rights issue.
In total, the Government has raised Sh12.403 billion during the period from the IPOs and a further Sh70 billion from the 18 government-sponsored Treasury Bonds (T-Bills) which were listed on the NSE Fixed Income Market Segment (FISMS) during the course of 2006.
"The capital markets therefore enabled the Government to meet two key policy planks for growing the economy-stimulating a savings and investments culture through the sale of equity holdings in state corporations of Kenya, expanding Kenya’s private sector and funding the budget deficit," Mbaru said.
Finance minister Mr Amos Kimunya rung the bell to officially launch the trading of the new Mumias shares. The share dealt 787,050 shares at between Sh45 and Sh50 Monday.
Mbaru said that based on past experiences, the financial markets had shown that there was room for new products. Specifically the NSE is ready to take up the forthcoming Kenya Re-insurance Corporation (Kenya Re), Safaricom Limited, Telkom Kenya and a further sale of the estimated 19 per cent of KenGen shares.
Mbaru suggested that CMA should introduce the need for under-writing of shares as a way of deepening the market. "We believe that if the CMA were to facilitate transaction advisors to use underwriting, it would enable more private sector issuers to come to the market," he said.
He urged the CMA to approve underwriting from 20 per cent of an issue. As the market develops and builds capacity, CMA should progressively increase the amount of an issue that can be underwritten up to 100 per cent of the issue.

Monday, January 29, 2007

Housing Finance rights Issue

The stock market has started again on the upward trend though there is still some mixed reactions in a couple of counters. Nonetheless investors are now bracing themselves for the upcoming release of financial information of most companies come February and March which might be followed by good tidings in form of dividends, share splits, bonus issue and many more.
Today it has been revealed that Housing Finance plans to offer a Rights Issue to finance its impending expansions. The Mortgage finance company, Housing Finance, intends to give a Rights Issue to raise funds for its planned expansion programme.
The company chairman, Mr Kungu Gatabaki, said the proposed expansion would strategically position HF in the wake of growing competition from other players in the financial sector.

Wednesday, January 24, 2007

Week's Business Highlights

-CFC group in Merger talks with Stanbic Bank from South Africa.
-Forensic Audit to be done before Kenya Re IPO is finialized.
-Safaricom IPO likely within 6 moths.
-Kenol buys KLSS Rwanda.
-Stanbic Uganda IPO oversubscribed by 200pc.

NSE 20 share Index to be reviewed

Recently the activity at the Nairobi Stock Exchange has raised querries on the effectiveness of the NSE index in clearly and accurately capturing the market activity without overhyping the same.

The Index which in the last few months has surpassed the 6000 marked to scale new highs thanks to the new Initial Public Offerings (IPOs) is to be reviewed and analysts are bracing for a better and a a more reflective index.

For more information read the excerpt below from the Standard :

NSE plan for new Index

Excerpts from

The experts eventually hired to study the Nairobi Stock Exchange index have been asked to consider new ways to track market activity.

As a result, the NSE could get new indicators to track performance on its three market segments. All of these will be tried out using computer models and historical information to show how they would behave under different economic conditions before they are introduced on the bourse.

Tuesday, January 23, 2007

Investing at Home while away from Home

I am looking for kenyans abroad who have the intention and ability to invest in the now vibrant Kenyan stock market. anyone out there????

Stock market has become the latest fad in Kenya and many rural folks young and old, men and women and rushing to cash in on this new craze.

The expected listing of new companies in the Nairobi Stock Exchange (NSE) including Kenya Re and Safaricom is expected to add an impetus to the vibrancy and ensure better returns for investors.

Anyone who is abroad and wants to channel foreign direct investments into kenya to drop me a line and lets see how far we can go this year. For financial advice, company analysis, portfolio management and many more we can always talk.


Wednesday, January 17, 2007

Stock Market

Over the past few months the Kenyan stock market has been a beehive of activity and investment hungry investors rush to commit their funds into one or the other of the Initial Public Offers (IPOs). First came Kengen, followed by Scangroup, then Eveready and finally the just concluded Mumias share offer.

Statitistics from the various stockbroking houses and the Nairobi Stock Exchange reveal that Kenyan investors have reawakened to the reality of investing in shares and stocks. However, it is noteworthy that alot of investors just follow the hype and rush to queue for any Initial Public offers without proper analysis and review of the company fundamentals.

Although, through sheer luck or otherwise some have made money from these involvments, it goes without saying that many investors across the country who know little if any about the stock market have burnt their fingers and at times lost substantial amounts of their savings.

This therefore is a clarion call for the various stakeholders at the Kenyan Capital Markets to rise to the occassion and institute various programs geared towards enlightening investors on the nitty gritty of the stock market so as to enable them make informed investment decisions. Investor education therefore is paramount and must be carried out relentlessly and expeditiously.As we go into this new year, investors who made money during the year 2006 are beaming with joy whereas those who may have had a bad year are sulking in desperation. Nevertheless, the year 2007 comes with alot of activity for the Kenyan economy.

This is an electioneering year and investors need to beware of the various investment options they may undertake as the political environment is bound to be quite volatile and the stock market will not be an exception.Regardless, of what happens however in 2007, one thing is clear, investors are hungry for more avenues to invest, more IPOs and better return investment options. This is a challenge that must be overcome if the vision 2030 is to be a reality as the stock market is a conduit for development. Do you believe?