Comments on: Of Banks, $50 Billion Pyramid Schemes & The Kenyan Economy. http://johnkaranja.com/2008/12/15/of-banks-50-billion-pyramid-schemes-the-kenyan-economy/ Simply Bee :-) Fri, 13 Apr 2012 19:17:00 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: John Karanja http://johnkaranja.com/2008/12/15/of-banks-50-billion-pyramid-schemes-the-kenyan-economy/comment-page-1/#comment-4 John Karanja Tue, 16 Dec 2008 08:50:07 +0000 http://johnkaranja.com/?p=84#comment-4 The finance markets are driven by trust and greed. From the case of Murdoff he was chairman of NASDAQ(trust) and the consistency of his fun to continuously return positive demands though highly unusual drove investors to invest with him on the premise that he was doing insider trade(GREED). In Kenya we have a more or less similar scenario but what saves us is the lack of sophistication and scant information. Look for instance at some of the new or proposed IPOs hoards flock to them leveraged to the hilt. On the other hand well connected people take this opportunity to offload their protfolios at tidy profits. The latest in this barrage is Transcentury, there is an email circulating on an impending IPO for next year and now is the time to get in through a private offering. It seems very enticing until one looks at some basic information for example they are basing their offer price on 1.2X June 30 valuation truth be told the most share values have dropped by more than 50% since then. The writing is on the wall but I beg to differ with Mr Mbaru because some of the indicators he points out are as a result of local conditions such as January clashes and not a direct result of international financial crisis. On the other hand Mr Mabru is a top ten shareholder in Transcentury so he might have a clue as to what is about to happen. Kenya being a cash based economy might actually be shielded from much of the devastation wiping out the west. Economies run on sentiments and major players like Mbaru have a social responsibility to maintain positive outlook. One way of doing this is to increase their holdings in the stock market. Being in the boards of large companies they may also want to commit themselves to long term capital expenditure. Since also they have connections in politics they may seek to comfront social issues before we have another January 2008. Thomas Kiarie. The finance markets are driven by trust and greed. From the case of Murdoff he was chairman of NASDAQ(trust) and the consistency of his fun to continuously return positive demands though highly unusual drove investors to invest with him on the premise that he was doing insider trade(GREED).
In Kenya we have a more or less similar scenario but what saves us is the lack of sophistication and scant information. Look for instance at some of the new or proposed IPOs hoards flock to them leveraged to the hilt. On the other hand well connected people take this opportunity to offload their protfolios at tidy profits. The latest in this barrage is Transcentury, there is an email circulating on an impending IPO for next year and now is the time to get in through a private offering. It seems very enticing until one looks at some basic information for example they are basing their offer price on 1.2X June 30 valuation truth be told the most share values have dropped by more than 50% since then.
The writing is on the wall but I beg to differ with Mr Mbaru because some of the indicators he points out are as a result of local conditions such as January clashes and not a direct result of international financial crisis. On the other hand Mr Mabru is a top ten shareholder in Transcentury so he might have a clue as to what is about to happen. Kenya being a cash based economy might actually be shielded from much of the devastation wiping out the west.
Economies run on sentiments and major players like Mbaru have a social responsibility to maintain positive outlook. One way of doing this is to increase their holdings in the stock market. Being in the boards of large companies they may also want to commit themselves to long term capital expenditure. Since also they have connections in politics they may seek to comfront social issues before we have another January 2008.

Thomas Kiarie.

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