Bits and Pieces

Cheque Truncation
Just read a good piece by bankelele on cheque truncation that is set to significantly revolutionize the banking industry, ensure security of cheques, minimimze fraud and increase liquidity.. check it HERE...

Yipeeeeee!!

Am back again after a year in the cold from the blogosphere... Halooooo peeeeeeeepz!!

Thank You Mr. Speaker

The much awaited speaker's ruling on who should be the leader of government business in parliament was delivered with the wit, skill and utmost consideration to the weight it had.

Country First
Given the kind of bickering that had been blatantly exhibited by both sides of the political divide this was an acid test to the speaker and behooved him to use the sword like the proverbial Solomon or provide astute leadership and the latter proved to be his second name. He surely put the country first in full cognizance of the precarious precipice we fell into after the disputed elections.

Two Principals
The evident refusal by the two principals to consult in full flare and glare of the public is a sad indictment on the future of the Grand Coalition Government after the enactment of the National Accord and Reconciliation Act and subsequent entrenchment in the Constitution. This display of grandstanding is uncalle for, and unneccessary in we are truly concerned aboup steering the country to economic growth.

Investors and Investments
It is clear that with the current stalemate and political uncertainty foreign investors seeking to venture and bring the much needed foreign direct investment will surely shy away.

Stock Market
The financial markets all over the world respond to any slight fundamental news and uncertain political environment in our country does not help. Our leadership show know best at this time when our stock markets is still wading the murky waters of world financial meltdown occassioned by the subprime mortgage crisis. Its time they put their acts together!

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.

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.

MPESA
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.

Zap
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.

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.

Stockbrokers
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.

Facts
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.

Reforms
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!

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
Accesskenya
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.

Despite Raging Bear Run at NSE, All is not Lost

As the stock market reels under the global financial crisis, contrasting with the bull run realized in early 2007, and lack of investor confidence, a group of investors are feeling most of the heat with their stocks plunging below issue prices. Never mind the fact that some of the victim companies surpass their industry average performance and experts forecasting a bright outlook.January analysts report card gives NSE an empty return.

New IPOs
As most analysts expect more Initial Public Offers of most companies this year, Investment advisers, brokers and investors alike might be taking a back seat before venturing to take up the Offers for sale coming their way.Kenya Pipeline is set to be made public(read an analysis by Bankelele) In fact the Government offered papers are now more secure and give better returns on Investments and this might have informed the issuance of the Infrastructure Bond by the Government mid this week.
Kenya has budgeted over Sh51 billion in infrastructure bonds comprising Sh33 billion and Sh18 billion through a debut international sovereign bond and long term domestic bonds respectively to finance rehabilitation and expansion of the road network.At the onset Treasury has issued a Sh18.5 billion infrastructure bond.Potential investors expected to take up this issue include commercial banks, insurance firms, pension funds and private firms.

Market Performance
Overall, all investors at the Nairobi Stock Exchange have lost considerably if the market performance gauge —the NSE 20-Share Index— and market capitalisation are anything to go by.The index has been oscillating around the 3100 and 3500 mark and the psychological 3000 mark might surpassed what with the low investor confidence, considerable erosion of the investments in most counters and low trade turnovers. The bear run might persist butr not for long as it is a cycle like in any other market of the world.

20 Share Index and NASI
In close to 3 years, the index has slid from a high of 6161 points recorded in February 2007,opening levels of 5016 points for 2008 and peak of 5445.66, on June 9, and the NASI has declined by 41.13 per cent from a peak of 116.243 to 68.52 in the same period.

Global Financial Crisis
The global financial crisis has exacerbated the situation as foreign investors, who were expected to cushion the stock against any panic sale, have joined the retail investors in offloading the stock to consolidate their investments and probably explore other possible investments in other emerging market that promise to retunr good earnings on investments.

Strong Fundamentals
The above notwithstanding, the Kenyan financial market is still growing stronger by the day and though the effects of contagion might be felt, it is not all that bleak a future after all.
A company like Safaricom that entered the market with alot of expectations amongst the investing public remains fundamentally strong,though its shares have slid below the Sh5 offer price since they debuted at the NSE on June 9 this year, and oscillating around sh 3 by the end of January 2009.

Most Profitable Company
Safaricom is currently ranking as the most profitable listed company in Eastern Africa, whose only undoing has been the huge supply of the 40 billion listed shares into a market that previously had a mere 15 billion shares which brings in a case of poor structuring by the investment advisors for the IPO or the greed to raise so much money from the public that would stop at nothing to acquire the company.

Profitability
Safaricom saw its pre-tax profit rise to Sh8.9 billion for the six months ending September 30 last year, up from Sh8.7 billion recorded over similar period in 2007, is strong since it controls about 80 per cent of the market and is operating in a growing industry—Information and Communication Technology.

Regional Comparison
Compared to its regional counterparts, the NSE has registered the biggest loss so far since the beginning of the year.

Grand Corruption and Grand Rogue Brockers on the Loose

The BD has a detailed story of the simmering wars between them and the Capital Markets Authority over regulatory measures taken to stamp more authority in order to ensure that investors confidence at the market is restored.The licensing war has seen the exit of CMAs Chairman.

Undervaluation
You may recall that currently there has been jitters in the market over the supposed undervaluation of various counters as well as the reluctance of various foreign investors to remit their cash for investments in the emerging market.

There is more than meets they eye in this saga. For a long time CMA has been a toothless bulldog in hibernation.

With various cases of grand corruption including the Triton saga confidence in our emerging market might be waning by the day and more still needs to be done for investments opportunities to attract rallied prices and increased attention in 2009.

Triton Saga
The case of Triton and Kenya Commercial Bank loan has led to price scare for the counter at the stock market as the mystery of missing millions deepens by the day.
The Kenya Commercial Bank has sued Triton Petroleum Company, under receivership, for Sh2 billion guaranteed through various debentures to import crude and refined oil to the Kenyan market.

7 Billion
The lump sum is part of Sh7 billion the oil dealer owes other banks among them Eastern and Southern African Trade and Development Bank and a chain of oil companies.

Convergence
Bankers could soon be allowed to provide a diverse range of financial products including insurance services, if draft amendment proposals to the Banking Act prepared by Central Bank (CBK) are approved by the Attorney General.more

Emerging Stock Market Trends in 2009 (Part I)

As we move forward a look at the African stock markets amidst the contagion of the Sub prime Morgage crisis that emanated in the US might not be that rossy after all. The Capital Markets Authority did make a case for highly capitalized financial institutions and risk based supervision approach amongst other recommendations in view of the crisis.Business confidence did slide as most companies review their investment plans and strategies in 2009.

Global Financial Crisis
The year 2008 in global financial markets has been one of the most volatile since the 1930s.The last serious bear market originated in Asia in 1997, but this 2008 crisis originated in the US.

Currencies
During 2008,emerging market currencies weakened against the US dollar as a result of
the rush to the US dollar and US Treasury instruments.Investors sought “safe havens”
and US Treasuries were considered the safest haven.

ILower Interest Rates
Recognising the severity of the credit crunch,in October major developed and
emerging central banks lowered interest rates in an unprecedented globally coordinated monetary policy effort.This was followed by the implementation of fiscal stimulus measures and loosening monetary policies from governments and central banks in developed as well as emerging markets. Thus far, more than US$1 trillion has been pledged by governments around the world to rejuvenate their domestic economiesincluding China, the US, Germany, the UK, Taiwan, Spain, Japan, South Korea,Russia, France, Australia, Hong Kong, Singapore and Malaysia.

Fastest Growing Economies
It is expected that the BRIC (Brazil, Russia, India and China) economies to continue to be akey driver of global economic growth.They are among the fastest growing economies in the world. The four markets together account for more than 40% of the world population. Domestic demand growth also remains robust. Moreover, Brazil and Russia are resource-rich countries and although there has been a recent fall in commodity prices, the longer trend for commodity prices is to increase and these countries will benefit from global demand for oil, steel, aluminum, pulp and other commodities.China continues to take great strides towards becoming a major global player.

Capital
Capital availability is the key question for emerging markets in 2009.Those who have it should do well.As for those who don't - it may be better not to ask.

This year is not going to be easy for the developing world. Lower commodity prices and slumping Western economies will damage growth. But with the United States, Western Europe and Japan all in recession and unlikely to emerge quickly, whatever growth there is in the world - not much - will be concentrated in emerging markets.

Emerging Market stocks
Given the steep market decline, investors have begun to shift their focus to the
increasingly attractive valuations in emerging markets.
NSE Chairman alluded that assets at the NSE are highly unbdervalued due to the persistent bearish trends that have failed to attract investors amidst current inflation and increase in the cost of living. Most investors at the NSE are retail.Uncertainty in the global financial markets is also suspected to be fuelling the investors’ jitters, with the deepening recession putting into doubt the chances of a quick recovery of stock markets.

2009 Outlook
While it is believed that the longer-term outlook for emerging markets remains positive due to the relatively strong fundamental characteristics and faster growth rate than theirdeveloped counterparts, 2009 is expected to be challenging. We can expect more volatility in view of slowing growth and recession concerns in major world economies,volatile exchange rates and commodity prices, and a global credit crunch.
Investors should brace for lower returns in the first quarter of the year 2009.

Africap Offloads 15M Equity Shares after 5 Years

5 year period
The expiry of the 5 year lock in period where initial shareholders of the company (This was placed on ther principle shareholders of the company when the bank wenbt public in 2006).The principle shareholders were not to sell their shares until after August 2008 when the period would expire for Equity. The expiry of this period saw the opening of a window of opportunity for Africap to offload its shares though three months latter in December.

Shares
The firm sold the shares for Sh2.5 billion, reaping one of the highest returns from equity investment in Kenya over a five-year period. AfriCap was one of the seven large shareholders, who the Capital Markets Authority (CMA) had barred from selling Equity Bank shares before August, 2008.

Equity Shareholders
-Private Equity firm Helios EB held 24.23% of the bank’s shares by end of March 2008
-British American Investments-10.73%
-Dr. Mwangi-5.3%.
-Mr Nelson Njoroge 6%
-John Mwangi 4.58%
-Africap 4.02%
-Equity Bank’s Employee Share Ownership Plan (ESOPs)held 4.02 per cent.
-The rest of the shareholders in the bank had less than 2.93 per cent shares.

Benefits
Over the years Equity has split it shares, issued dividends and bonuses and continued to post strong profit margins alongside receiving major local as well as global awards in microfinance as well as innovative banking.

Expansion
In Kenya the Company continues to expand its customer base, branch network and ATM machines to serve a wider clientele Recently the company enterred into stock dealerships with the listing of Safaricom IPO alongside its insurance products and real estate development loans available to its clients. The company also acquired 24.9% of Housing Finance successfully enterring into the housing and property development market.
Equity Bank closed 2008 as the only stock at the NSE to post positive returns oscillating between Ksh 155 and 176 by end of December 2008.

Financial supermarket
Equity is endeavoring to become a financial supermarket of sorts with its diverse poducts lines and synergetic engagements but more still needs to be done to harnsaess these opportunities for the betterment of its services.

Parting shot!
Apart from long ATM queues amidst continually broken down ATM machines, hectic banking hall escapades, Overworked staff, and seemingly swelling cleintele base that may not be sufficiently served by the bank, Equity still rocks and its shares are set to go places in 2009!

Media Bill and all the Fuss

The media Bill that had generated alot of controversy and near-personal-attacks and counter accussations has cooled down thanks to a directive by the president to the Minister of Information and Communication and the Attorney General to review the contentious clauses of the Bill and prepare a paper for Cabinet and probably parliament for review and amendment.

Safaricom CEO on his part (Supports the Law) envisages a situation where companies will issue annual reports, prospectuses and other documents online alongside official email communication. More still companies like Kengen and Safaricom with hordes of shareholders many have a reprieve by sending electronic mails to their clients including dividends by MPESA.

More analysis on the meda Bill by Bankelele...

Merry Christmas

Now that the year 2008 is about to end in a few days, it is now christmass time and the festivities are here with lots of merry making and celebrating in evey corner (unless you done celebrate one). Its time to look back at the year that was and ponder what we did achieve and what we missed.

Well as you celebrate this christmass may you 'jienjoy' as someone would say and take care. See you in the new year 2009 ready, roaring and rearing to go with new resolutions.

We Live to Blog and Blog to Live

Indeed over the years many bloggers have emerged focusing on topical issues and i must say they make the world of blogging fun to partkae.

I am Proud
I must say, in Kenya there have been many bloggers that have emerged to share their thoughts, experiences, views, opinions, nairumours(as Bankelele would call it), research works and probably business ideas or still just connect with other like minde thinkers. I have indeed been proud to be part of this great team and moreso likeminded publishers focusing on the financial markets-money market, capital markets and foreign stock market trends.
I am proud of you all!!!

Our Voices
As bloggers, we’re all different, and a blog can only be what we as the individuals or groups behind the blog want it to be.Thanks to some of my colleages in this field who have inspired me from time to time, i have continually read and followed their posts on various issues and i must say a Million thanks to them and in expanding the tagged thread i wish to give some thumbs up to Bankelele who has tagged me, Kenya Capital Investment Group for providing a Kenyan view from the international arena, Kainvestor for his analytical viewsSa, savvy Kenyan,pesa tu and Riba Capital who have gone quite, concept, Emerging Africa Capital, and many other bloggers who are part of these great team.

Why i blog
I blog to share my thoughts,experiences and views on topical issues and more importantly about the financial markets.
I blog to part have my voice heard on various topical issues albeit in the smallesst of ways.
I blog because each new day comes with new challenges and as we try to make the world of investing fun to operate, it behooves us to shares what we've got-information.

What i Blog
I blog about Kenya as an emerging financial market in Africa that is dreaming to realize Vision 2030 to thrust itself to the next level of developed economies. I blog about finance and the financial markets alogside all the financial infrastructure-the money market and the capital markets. I blog about business and investments in Kenya, Africa and the world, I blog about portolio management and stocks-shares, bonds, treasury bills,financial innovations, derivatives and such instruments.

This christmas may you live to blog even more...

Metropolis Welcome but Realization Daunting

The launch of the much publicized Nairobi Metropolitan that is set to create a rather expansive city with coverage spanning 15 urban centers is welcome as presented in paper but the cost to realize this dream city is a daunting task for all the stakeholders if the vision of transforming Nairobi into one of the regions business hub is to be a reality.
All these grand plans to transform the city of Nairobi into a major regional business and tourism hub known as the new Nairobi Metro 2030 Strategy, was launched in Nairobi Yesterday amidst current tough economic times for the lower cadre of society.


Ksh 33 Trillion?
When the plan was launched yesterday the announcement that this will cost Ksh 33Trillion way beyond our GDP and calls for major Foreign Direct Investment. However with Kenya being viewed currently as an emergent volatile zone with uprisings and tribal infighting every five years things might not be easy to attain this mark but nonetheless dream we must!

Dream
The Vision envisaged building the best-managed metropolis in Africa, providing high quality life as anchored in seven key result areas including infrastructure, security, opportunities for investors amongst others.The metropolis is expected to deliver a unique image and identity through effective place branding, building a competitive and deploying world-class infrastructure shall be realized.

Dream big, Dream for the Small
As the Kenyan government endeavors to lay the strategy towards this Vision 2030 there is dire need to reconsider thoroughly the issued affecting the majority of the populace including food, fuel, security, youth employment and many more as these will impact on the Vision 2030 and action is needed albeit NOW!