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.

Thursday, February 26, 2009

Bad Politics to Blame for our Woes

Since independence, Kenya has enjoyed relative calm and many of its 42 tribes co-existed well. This happened against a backdrop of bickering, infighting and politically instigated uprisings accross the continent. Indeed, Kenya has been an island of peace in the sea of political turmoil.

The advent of multiparty democracy in Kenya saw the widening of the democratic space and with it came the increase freedom of expression. The media that had been strangled and gagged for a long time rejuvenated and reemerged with a renewed gusto to delve into issues bedevilling the country in a suscint, blunt and unwavery way.

As the media industry in Kenya grew by leaps and bounds, many became more informed on the goings-on in the political, social, and the business arena. The populace had now become greatly abreast with the issues affecting their lifes many bordering on bad governance, inherent grand corruption and blatant looting of public resource. This unending tirade of grand corruption has its epicenter in the ills of the Kenyatta administration that grabbed massive junks of public land alongside haemorrhaging of public assets and resources.

The unveiling of the Moi administration was seen as a ray of hope and light at the end of the tunnel on issues reform. Many were optimistic and expectant of radical shift in the paradigms that begat our leadership. Sadly however, hardly had the administration sat in office than another sweeping indictment of the administration was revealed. The cases of mega corruption had now been given a thrust and its tentacles now spread far and wide as public officers, cognizant of the public servants code of ethics, defiantly diverted public resources to private use.

The corruption that had eaten into every facet of the Moi administration was epitomized in the Goldenberg scandal that saw the country loose Billions in imports compensation.
Fast forward to 2002 and the political climate was so charged after exit of the hallowed baba Moi. Many including those in his inner circle didnot take kindly his open support of project Uhuru, then an amarteur in politicalspeak. This latter saw a wave of rebellion in government leading to the formation of the Rainbow Coalition and eventually NARC that resounding took power away from the party of the Cockerel-KANU with its project that was no match to the machinery of 'yote yawezekana'.

The unveiling of the Kibaki administration lend credence to the hope of fighting corruption as hundreds of thousands thronged the Uhuru Park to celebrate the resounding victory against the metaphoric Mugumo tree.

Theafter, and in a sudden change of events, the administration was dogged by the Anglo Leasing scam that encaptioned payments to fictitious companies through promissory notes. Sadly therefore, the administration had become an embodiment of corruption that tainted its leadership and the ghost still haunts some of them until today.

The administration oblivious of the resolve of its populace, and the resilience of their will went into the ballot again in 2007 for a second term though some of its members had ditched camp during the referendum to form the Orange Democratic Movement, ODM, that became such a force to reckon with upto the ballot.
Hordes of Kenyans turned up in large numbers to cast their vote though the tribal equation was now more evident than before.

The results became such a close game to call and each party was expectant of a resounding victory. As the results were announced Kibaki had 'won' and this did not augur well with the other camp that marshalled its troops for countrywide mass action that latter blurgeoned into full blow violence now famously know as the Post Election Violence. Several months latter over a thousand had died, several injured and hundreds of thousands displaced and became the Internally Displaced Persons.

Indeed, quite sadly and unprecedented, politics had wrecked havoc in our country and the effects are still being felt.
As the country reels from this unfortunate events, businesses have sufferred immensely as the economy was dealt a major blow. Further our risk assessment internationally was alterred and Foreign Direct Investment significantly reduced.

The stock market is at its lowest ebb and sadly it is a victim, a pawn in this roller coster called politics.

Sunday, February 15, 2009

Zain to Launch Zap ending MPESA Monopoly

After spoiling for fight with the regulator, including the Central Bank of Kenya, Zain is now set to launch its money transfer service dubbed Zap. The launch is set to end MPESA's monopoly in the mobile telephony money transfer and enhance convergence in service delivery to customers.

When Safaricom launched its debut mobile money transfer service a few years ago, many didnot imagine that its growth would be phenomenal. After tailoring its services to banking the unbanked rural population as well as facilitating secure and real time money transfer the business has grown by leaps and bounds and the customer base now stands at over 5Million with substantial daily remittances going through the system.

After the unsuccessful launch of the Money transfer service, Sokotele, the company went back to the drawing board resulting in the launch of Zap in partnership with Standard Chartered bank and a host of other partners across the east african region.

Banks Jittery
It is indeed evident that the successfull roll out of MPESA money transfer service did send jitters across the banking sector players. Pundits will therefore be waiting to see how this new product that has more services converged including e-banking will be received by banks. As competition hots up, the major beneficiary shall be the customer as more services will be brought closer and closer at relatively lower costs.

Other players
As Zain is rearing to go with the launch of Zap, other players in the mobile telephony industry including Orange and Econet will be keenly watching and hopefully launch other innovative products fashion in the form of MPESA and ZAP.

Business Costs
Against a backdrop of these new products, many players in the mobile telephony and the telecommunication sector have been petitioning the government for reduction in the cost of doing business in Kenya. These issues revolve around poor infrastructure and moreso the road network, increased cases of insecurity and unreliable energy supplies leading to significant costs incurred by these companies. The immediate resolution of the above will go a long way toward spurring investments in Kenya as an East African hub for business and an emerging market in Africa.

Wednesday, February 11, 2009

Kenya Capital Markets under the Microscope

The Kenyan capital markets is now under focus against a backdrop of shrinking investor confidence and continually droping market index in defiance of any fundamentals. Other stockbroking firms including Suntra Investment Bank are struggling over pending lawsuits due to illegal selling of investors shares.
CFC Financials had also been sued over illegal short selling of a client's shares and the landmark ruling requiring them to pay back Millions is set to change the financial landscape and send shivers down the spines of other struggling stockbrokers who may have been doing the same scheme in full glare of the CDSC and the CMA.

Radical Surgery
The current NSE meltdown has brought to the fore the urgent need for radical surgery of the Capital Markets Authority and the NSE as well as stringent regulations on stockbrokers and investment banks inorder to bring back the much needed market rescusitation.

Since the collapse of Francis Thuo, Discount and placing of Nyaga under statutory management many had been wary of venturing into the market worst hit being foreign investors. Infact foreign investors and Kenyans in Diaspora have been flooding the market with orders to sell stock as they seek safe havens to hedge against risk associated with global financial crisis.

The sharp drop in the NSE 20-Share Index from over 6000 to 2927 by Monday after an unprecedented rise of 279% by December 2007. Market capitalisation has dropped from 1.3 Trillion in June 2008 to slighty over 700 Billion this week.

Though the capital markets is said to have been pursuing reforms in the capital markets, radical surgery of stockbrokers, investment banks, Nairobi Stock Exchange and Capital Markets Authority is urgently needed and the time is NOW!

Tuesday, February 3, 2009

NSE;Stocks to Watch in 2009

(The views expressed herein individual evaluations and should not be taken to mean a strong buy advisory but an indication of the likely movers and shakers of 2009)

As the year progresses several investors at the NSE are lost for words as their hard earned investments go down the drain however this is my take for 2009;

Likely Movers
The enactment of the (in)famous media bill has opened a window of opportunity for investments by this company and indications are that Accesskenya is likely to launch a portal fashioned in the way of ebay to compete with others like mamamikes and find. This new window of orpotunity is likely to enhance the synergetic component and thrust the company to a higher level of profitability.
AccessKenya has been one of few star stocks at the NSE since its listing in mid last year, and for the better part of 2008.The information technology company had its share price pegged at Sh32 until May 2008, a valuation that was way above its IPO price of Sh10.Many will be watching as it flexes its muscle.

East African Breweries (EABL)
Day in day out the company continues to churn out large quantities of the famous 'imbibed froth'-beer that continues to attract new customers by the day. Despite the addition of sin tax by the Kenya Revenue Authority continually leading to substantial increase in the prices of this commodity, users continue to throng entertainment places to down the same and this will not stop any day soon.This only serves to enrich the company Earnings Before Interest and Tax (EBIT) and eventually net profitability that will affect share prices at the bourse.

Financial results released in September 2008 indicated that the giant brewer returned a pre-tax profit of Sh12.3 billion compared to Sh10.6 billion in 2007 and things are bound to get better.
EABL has maintained one of the highest dividend payout ratios among the NSE listed firms.The company will be doling out to investors an estimated total of Sh6.4 billion in dividends this year equivalent to a payout of Sh8.05 per share- representing a 10 per cent growth over last year.EABL is also turning to fully service the beverage market with the introduction of non- alcoholic drink.

CFC Stanbic
CFC-Stanbic Bank has set off to revamp its retail banking section over the next three years. This will see the bank, which is mainly considered to provide banking and financial services large corporate institutions, parastatals, non-governmental organizations, diplomatic missions and multi-nationals, open up a number of new retail branches across Kenya. In the last six month the bank has opened four new branches and its planning to open five more by the end of this year, bringing its outlets to 30 with over 40,000 clientele.
The expansion plan after the takeover/merger is likely to be well though out and planned to bring greater returns making it a good stock.

Equity Bank
The company has realize such enviable feats in recent times that the players in the banking sector are yearning for.Being Kenya’s largest retail bank, Equity, has posted an impressive growth that put its ahead of most companies in the banking league.Their expansion programme is growing and expectations are that its performance come the next quarter will still be sterling and hence a darling for most stock pickers.

Centum Investments

Centum investments has announced a 5 years strategic plans (2009-20013) that will help it raise additional capital and take advantage of the investment opportunities created by the global financial crisis. Though the amount and financial option was not detailed, the firm seeks to increase its foothold in sub-Sahara Africa has private foreign investors divest from the region. centum’s asset value has grown from Ksh.3 billion in 2004 to Ksh.8.4 billion at the end of last year with equity portfolio accounting for approximately Ksh.7.9 billion.
As the next quarter results draw closer many are watching for any surprised herein that might significantly transform its share price after the departure of its CEO earlier.