Thursday, September 28, 2006

financial daily

some time back, wilfred Kiboro of nation anounced that they were going to launch a business or finance daily. they said that they had researched and found ready market for the same. i am yet to see it. does it take that long to launch a daily? even adverts for the jobs were placed and am sure interviews conducted. going by the depth of the articles i read on finance, am sure the writers will do with some help from bloggers and a few chatists from sites like i have even read in another blog about worries of plagiarism of a blog!

When Money matters was being advertised, i thought it would be more of the common man's approach to money matters. i thought they would help the mwananchi find new ways of making the extra buck and re-investing it. shock its all about corporates and 'leaders' of the industry. its probably just a copy of business weekly from KTN. I am looking forward to a time when the media will have something close to the showdown but this time discusing ways of making money, investing, savings etc. i think it would be much better. in fact i suppose that if we were equally enthusiastic about our finance and business the way we have been about our politics i suppose we would have been a superpower by now. can you imagine if all those screaming headlines of the standard newspapers, all those analysis of nation etc were mainly business/finance based where we would be.

or what if they had a program where a commoner from the street is picked and given an interview on how he makes it in kenya. dont you think we would have business ideas explosion?

tip of the day - i just found out that speculation is not entirely bad as long as you are willing to lose all the money. sort of as long as you are a gambler.

Wednesday, September 27, 2006

Kengen results

Kengen has releases great news. after just over six months trading as a listed company. however i still have wories over its 2billion shares thing. it just means that the firm has to many shares and the value is not good if you ask me. anyway by the trend of the NSE am sure we will see an upsurge in price. what worries me is that more and more of these stocks are going to fund managers and that is leaving the retailers gaping.

selling spree is there anyone else out there who feels ish ish about the way the govt is selling its parastals. i know we have always wanted to do that but at this rate arent we overdoing it? its like an expariate leaving the country selling everything and anything. sample this after kengen, even more kengen on sale, Mumias , telcom, railways, EAPC, safaricom, kenya-re. all in one year. is someone else worried or am i just being paranoid?

Market correction pessimists have been looking forward to it and optimists have feared it all along. but the greatest signs of market correction are being seen and felt. however if you ask me , i just think investors are taking in profits in readiness for the final leg of the year expected to peak in December.this is therefore the best time to buy.

tip of the day i have learnt the priciple of give and take also applies in investments at the NSE. instead of refusing to participate because of the apperent coruption of the brokers, weigh your loses and agree to share with them the extra 2 bob they will gain due to delaying your order.

Tuesday, September 26, 2006

Activism at NSE

there is a rising feeling that the stock brokers at the NSE are up to no good. Many investors are complaining that the brokers do not exercise their orders in time and also always advice them to buy at market price. indeed when jimna mbaruh came on NTV, a caller actually asked him how come brokers are all of a sudden living in posh places and driving guzzlers. of course that was unfortunate since we know that brokers are paid 1% of the value of what they invest. what that means is that when there is a boom like now, when you talk of the value of transactions being 600 million in a day, it means the brokers made a mind boggling 6million that day from commisions alone. now of course since they are kenyan they also make money from you and me by seling short to us. ie when you place a market order and in a day the high was say 80 and the low was 60. they can simlply buy your shares at 60 and sell them at 80 and make the 20!

any way its for that reason or fear that some kenyans have formed a welfare association called NISA the conversations have been very lively and the plans are advanced to face the brokers and the CMA which is sleeping on the job, head-on. The CMA cannot regulate since they sleep in the same bed with the perpetrators!

but before the market is well regulated, how will you make money? simply by buying from pessimists and selling to optimists!

Friday, September 22, 2006

Stock Prices and Perfomance

I have just been looking at stock prices and their P/E ratios. all i can say is that they are shocking to say the least. Looking at HFCK for instance the P/E is a masive 119! the issued shares are 115 million and the price is 61. honestly i cannot tell why the share keeps on rising. am told there are good prospects after they re-organised their managment and books but still one is left wondering how they will manage the commercial banks foray into their territory. Apperently the best run firms like BAT, EABL, BBK, Total and KQ do not have their prices going up. yet they have the best P/E ratios. in fact in a rare encounter with a leading CEO , i heard the man say that BAT in his view was the most efficiently run firm in Kenya. how is that for peer respect. yet BAT is no where among the firms that excite the market!

something is definitely wrong. EAC has P/E of almost 60 only after the price depreciated to 63 the other day. when it was 100; you can do the math.

Wednesday, September 13, 2006

Online trading and more

Monday 11 September was a day of good news in Kenya. The NSE took a leap into the new age by adopting the online trading system. Away with the erratic shouting of the open outcry system that has served us for more than 15 years. With the new system, the prices will be more transparent and the volumes higher. Basically meaning that the transactions will be faster. I just hope that soon I will be able to track the price changes from the comfort of my desk. Problem is most stock brokers and investment banks are themselves still very far behind. Their websites are not interactive and are only informational. The information in most cases is sometimes as old as 2004! Even the NSE website is a shame. The one of CMA is unspeakable and so on. However we must toast this great achievement of the NSE.

Some quarters are saying that the NSE is heated. I don’t agree. I suppose that I would say the market is heated or the counters overpriced only if I see that the firms have no room for expansion. At the moment it would not be accurate to say that the firms have reached their peak. Take KPLC for instance, the opportunities are so huge. You would expect that they would take advantage of the increased capitalization, to offer their services to more people at a lower cost. Prudent managers would have taken advantage and consolidated their position in the country and the region. Same applies to EAC and even Bamburi. Am surprised that the robust trading in the NSE is not reflecting on the activity of these firms. For example EAC still has very docile adverts in the paper. No new exciting jobs from this firm and no new exciting products. For a firm which is a near monopoly in the region, this is not very good. I thought they would be aiming at the Siemens of this world. The only firm showing real activity is Equity bank whose hype is almost equivalent to its real activity.

Does any firm that goes down eventually go up? No. there is no law of gravity in stock market apart from the one that states that money flows for the smart to the dumb! Ok there is another law that states that money flows for the rush to the patient. Actually the only fact that can stand the test of time is that if you buy an undervalued stock and wait patiently, then you will definitely make money. The best strategy however is the contrarian strategy. Contrarians always pick stocks prudently and mostly buy when people are selling and sell when they are buying. They thus always are avoiding the crowd. Of course they don’t do it for its own sake. They actually buy the firm not the stock when it’s under priced and let go of it when it’s prime. That way they make some really tidy sum. like Graham said; The intelligent investor is a realist who sells to optimists and buys from pessimists.

When picking stocks one needs to be very sober and look at the fundamentals, make sure you understand the business they are doing, make sure you know the directors and management. Find out whether they have a future etc. it sometimes helps to go visiting the firm just to get a feeling of what is going on. I was appalled when people kept on buying Uchumi shares when they knew very well that the management was not very well structured and the firm was actually indebted to the neck. I even know shareholders of Uchumi who could not even shop at Uchumi . Where were they going to get profits for their investments!

Friday, September 08, 2006

Mumias Sugar announces results

Mumias proved itself as one of the top Kenyan firms run by Kenyans by producing a mind boggling 2bn shillings returns. This was a 20% increase in earnings over the same time last year. Now that makes me really proud! The brighter side is even that the firm has even greater potential given that both the domestic and international markets are starved. Now there a stock to invest in! With clear prospects for growth and further divestiture by the government, up is the only way. The pact that Mumias has with Japan means they will literally be making money while asleep. However because of the huge number of shareholders (I guess) the directors will propose only 1 shilling per share as dividend.

Tuesday, September 05, 2006

Real Time Stock Prices

Some enterprising Kenyans have launched a website that gives realtime stock prices as they happen in the NSE. (you got to believe it!)

These guys update the site every 15 minutes from the time the market opens at 10 till it closes. I find it very exciting . you can check it here . additionaly you can get stock quotes of your favorite stock by simply sending stocks to 5553. the idea is brilliant. this is the best and most up to date site at the moment.

EAC finally settles at 77 on the first day of trading. meaning that the stock is now worth 770 shillings. it went up to 85 at some point. meaning some people sold theirs at 850 shillings. of course the split will mask the real price gains and shield the company from scrutiny.

i have heard people suggesting that kengen will be affected by the ministerial decision on the KPLC tarrif. I dont think so, Kengen is basicaly a monopoly which has just been privatised. with proper management, the sky is the limit! in fact once all those shares that went to individuals have been mopped up by institutional investors, the sprint will begin. This is because institutional investors are long term. hence shortage.

Newspaper reports show that banks are battling with where to place their excess liquidity. none of them is bold enough to increase their lending periods or lower their rates for personal loans since credit bureaux are underdeveloped in Kenya. clever bankers can simply assist in creation of the same and take the plunge. short term loans will not be profitably to them in the long run. If the economy goes on as it is happening now,and i suspect it will, interest rates will continue to come down.

the final investment leg of the year 2006 is here. the last quarter for growth which will peak at about december has started. those who want quick 3 months gains can invest now. the run normally colapses in January when parents sell stocks to pay fees. fund managers are also less optimistic at that time , and the market is generaly watching and waiting

Monday, September 04, 2006

Scangroup hits the market and more

Scangroup has hit the market but a bit more docile than the way Kengen did. sceptics who lost out on the Kengen euphoria still hold that even though scangroup is moving up slow but steady the prospects are not favorable for long term. pray, a company which made only 89 million, what would there be to gain? secondly its rumored that their main client is Coca Cola. move that out and you have paper in your hands. however these guys sell the most expensive of all assets, human capital or better human intelligence. but that which gives them their edge is what is their archiles heel. since if they lose their best talent to whichever firm, they lose out on the company. i need someone to explain to me then how the comapny has managed to stay in operation and indeed profitability for so long. the results were of course very disappointing!

EAC new shares start tomorrow in the NSE. trading at 67 . what will happen ? i speculate that this share will rally to 100 very quickly in the short term. long term prospects are dim and that is why i suspect that the powerful club will pick another underdog eg express and repeat the history. those looking for quick gains can rush to get it. but will it be available?

Kengen it appears that fund managers have managed to mop up the excess kengen shares in the market and shortage has begun hence the price is slowly moving upwards. i speculate that the power generator is looking for its cousin KPLC which is trading at 202 today. again the small guys will lose out just like in the case of KQ and Mumias!

is Merali a shrewed business man or just a jumpy specultor? he cant settle down and most of the firms associated with him are doing quite badly. again, does it make sence to invest in such a wide variety of things like he has done? the man is virtually everywhere!