Wednesday, December 13, 2006

Foreign investors

Dont you just love the way kenyans have taken to the securities market and are looking for any small or big opportunity? last monday i was at standard stocks and discovered they have oppened a dedicated hall to handle IPO traffic. i found many people applying for MSC but a number were also applying for the stanbic IPO in Uganda. stanbic UG is said to be the largest bank in UG and offers services to all government bodies and NGOs. its also the only bank in rural UG. sounds like KCB of kenya but without compe from BBK and stanchart. its not clear how robust the investor public is in UG. but at 2.85 /= kenyan money and by Kenyan standards, this IPO is very 'cheap'. MSC is going for 49.50 and some pple are grumbling that its too high. some rumor mongers have it that the price will drop to 30 in januray. i never know hoe kenyans can tell such things but they do.

if UG does not watch, then stanbic will be over subed by kenyans alone. they will probably have to watch out and limit the thirsty kenyans. this will happen after project fame has seen only kenyans take home the grand merc as well as positions 1 to 4. however on the project fame i dont know how that is good for business. i also dont know how that helps our relationship with TZ. those guys are already paranoid.

if kenyans override that stanbic thing then UG may hav to got the TZ route and follow the adage, that if the brain fails try the fist! however the 'behavior' is very refreshing

odegle tip of the day -- before investing, make sure you set up clear goals , objectives and policies. these can guide you in what you are doing. investing should not be a by the way and the way you treat 10 bob should be the same way you treat 10 million bob.

Sunday, December 10, 2006

oiling the wheels of consumerism

i spent much of last week with the leaders of the cooperative movement. the seminar had been organised by their bank to chart the way forward. it was necessary since they said that commercial banks were eating into their market and threatening the very survival of the coop movement. the bank is fully owned by the coops and is probably the only bank where directorship is not determined by the number of shares owned but rather by the number of individaul votes one can muster. the coop movement has really helped develop this ocuntry and currently many countries are sending delegations to kenya to learn the business and implement it in their counries. i know at least two Kenyans who are 'consultants' in SA on the coop movement.

the coop business model is based on a simple principle, save and borrow. this encourages pple to save and also borrow from the commmon pool. its a very good model which created both a saving culture as well as financial discipline. pple invested and broke away from poverty on sacco's . we also know that in the 80's and part of 90's it was invariably missused as was everything else by the rulling elite and by the greatest monster of all - tribalism.

right now , the sacco's survival is threatened by availability of very cheap credit offered by banks who have suddenly found themselves with too much money and impopsible targets to meet. just 4 years ago, commercial banks kicked out poor savers by increasing their minimum balances to extreme levels. they proceded to close some branches in remmote areas. thats when pple turned to sacco societies to process their loans, payments etc. at that time, the sacco fosa was born. this was a rudimentary banking service offered by these societies. now those same commercial banks are knocking at the doors of the same custormers they threw out and offering them upwards of 2000,000 bob unsecured loan for as long a period as 5 years! on top of that they can give you credit card valued at 1 1/2 times your salary plus interest free overdraft. what this is translating to is massive and unbriddled consumerism. the saccos are also trying to keep their ground and trying to match the banks by loosening their lending requirements. this is a very dangerous precedent. pple are getting indebted to their necks and we may soon see a repeat of what happened in america when they had a personal debt crisis. americas market was more sophiscated and they were able to solve that problem by moving the laibility from the card companies. in kenya it may be a diff ball game. sacco savings currently account for almost 30% of total savings in kenya , if they collapse due to consumerism being oiled by banks then we may see a very huge dent in the available savings per capita in kenya. its funny that this is happening at a time when other countries are looking to kenya for lessons on the sacco model.

i have never heard this but this time, the shareholders of KPLC waited in vain for split and had to ask for it themselves! thats definitely new.

the slow down is on in earnest, but mostly due to MSC offer. pple are liquidating to buy MSC

odegle tip of the day
-- its important to build a good asset base first before spening. it helps to try and make the assets outweigh liabilities for personal financial security. remember an asset must be able to give future benefits. stocks are some of the best forms of investment especially if you are young.

Wednesday, December 06, 2006

Celebrity stunts

Last friday i went back to blue corner restaurant and decided to forgive them for their yorghurt (read milkshake) however the main reason was that they advertised a certain unique musician who does his music just the way i like it. Tony nyadundo. i did not have much to do in the early evening however i also wanted to give him time to settle down and play a few songs so i went at about 8:30, but he hadnt arrived and so i decided to do some window shoping and also buy an umbrella while at it. i got back at 9 and the man hadnt arrived, so i ordered a drink and told myself that if i clreared it before he came i would give up and go home to stare at the TV. the place was packed like i have never seen before. i wasnt even sure it would be this way. people were literally drinking on their feet. I met a number of my work mates who had snubbed a well advertised and oiled mugithi night for this. however towards 9:30, the mans equipment started arriving. shortly Tony himself arrived to quite a warm and enviable welcome from the crowd of mostly young , kenyan professionals. in the follwoing short minutes he showed why he is king and a real celeb by the way people even danced as he tested the equipment.

the excitement was real. this guy's music has been enjoying fair time in discos and other social joints and so most pple were just thrilled to see the real man in person.
However the testing took more time than i expected and after fidgeting with the equpment for a while he announced that the sound system was too bad for him to sing. i thought he was joking, after he went ahead and did one song to which pple danced where they were standing, the dance floor was packed to the brim. Tony however sotpped abruptly and announced in 'kiswahili' that sauti ndiyo inasindilia mimi kuimbilia nyinyi he then casually replaced the mike and walked away!

come monday and fate was not finished with me yet, eveready OFS returned a whooping 800 X over supscription! against my wise judgement. to say the truth, i dont understand how that was posible. does it mean people actually beliv in that comapny that much in spite of their books? however i still hold that price appreciation will depend on whether the enthusiasm will hold after the allocations are done and refunds are made. if this is not handled properly then there may be fatigur and apathy during the coming IPOs coz pple will be tired of low allotments and refunds all the time.

Mumias also finaly calmed the rumours and hit the market at 49.50 and 200 minimum. kenya being a price sensitive society, we already started hearing grumblings about teh price and there are fears that it would be undersubscried like the first IPO based on this offer price. however if fundmanagers decide to take positions like they have done before , the IPO would be fine. however what i can say is stop the joke about speculating with eveready and go for value in MSC

on another front, BBK has listned to my gramblings and upped their personal loans to 2,000,000 . let the games begin and may the best man --- sorry may the best bank win! however there are a number of conditions on the BBK loan and caution is advised.

and that was after KQ, stamped its authority by winning for a second time , the most respected firm of the year. i covet that award since its your peers who recognize you. there is no better respect than bein respected by your peers, equals , competitors. i would like to be naikuni for a day! how come safaricom didnt win? does it mean eas africans do not admire profitability? does that even explain why the stock market snubbed such good news

odegle tip of the day --- Cash driven investors- these are people who invest at the NSE because they have money. Maybe they just got their bonus or commissions or they won a charity sweepstakes etc. they will buy shares just because they have money to spend. These same investors will sell their shareholdings just because they urgently need the money. At the NSE this mostly happens in January when retail investors are selling to get school fees. Also in January people are generally broke following the free will expenditure of December holidays. Other investors make lots of money from cash driven investors