Anyone can be rich!

Kenya’s Investment mogul Ali Khan of Rich.co.ke has spent the better part of last month touring the world’s financial capitols in the US,UK and Canada. He discusses with K24 Executive Presenter Richard Kagoe some of the challenges facing Global markets as well as the Kenyan economy. Notably, he sites political bickering as one of the major dampeners of Business Confidence in the country.

Ali as always puts investing into perspective and  i have to say i have increased my on meagre earnings succesfully in the past based on some of his sound advise. He may not always read the market correctly(due to some unforeseen destabilizing factors) but his manual for getting rich is one every Kenyan Investor should get acquanted too.  His website is Rich.co.ke

In this interview these are some of the Key issues he raises.

• We should all invest when the Stock Market is depresses as that is best tiime to get value for money.
• China is USA’s new Bankers hence has become more powerful in the IMF and G20.
• Remittences are picking up again.
• Political bickering is distabalizing for the Kenyan Economy.
• World Economic power is shifting East to China and co.
• Obama follows the trend and agress to all inclusive world markets.
• He identifies some Entrepreneural Kenyans making Billions in the US. [Feature coming soon]

Watch the interview here and give your opinion on what he has to say.

Part A

Part B

Part C

Part D

Nairobi Stock Exchange

Our markets have been unpredictable for the last couple of months and many analysts have fallen over themselves trying to determine which direction it will take. Many have tried to call its bottom-line and failed miserably because apparently, our market is like a pendulum, swinging daily in different directions at the behest of various market dynamics such as supply, demand, investor sentiment, grand coalition government woes and company key fundamentals.

An analysis by Hidalgo Investments picks these companies as the top ten stocks to watch in the next quarter (and especially the next one month):

1. Kenya Airways

Low P/E – Upcoming poor results already factored in to the price. Will recover from effects of post-election violence for now and grapple with the current economic downturn which has made traveling only essential, thus cutting its passengers by 17 percent. Fuel prices are cheaper now, and hedges which they had gotten themselves into must have run out direct flights from JKIA. This will mean more connecting flights from Eastern/Central Africa. The worst of the financial crises is however over thus making KQ a good buy for the long term.

2. Centum

Low P/E – Upcoming bad results already factored in to the price. Their big loss will be a one off; will not affect next financial period, and their rebranding seems to be paying off.

Their application to buy into carbacid shares will be a definite boost since it will be an opportunity to unlock millions in investment options held by the company. Their holdings will appreciate starting April (except RVR), but hoping that RVR does get a strategic partner in South America, Brazil. Solid company, good management, have learnt their lesson through the rebranding issues.

3. AccessKenya

High P/E – AccessKenya has its own network of fibre optic cable, something no other ICT company, save for Safaricom through sea cables has. It also bought a stake in the undersea cable and currently has the largest satellite download. They could look at leasing out some of their bandwidth in the future, something which competitors Kenya Data Networks (KDN) until recently had a monopoly on. Key difference in their internet offering with Safaricom is that theirs is guaranteed speed, while Safaricom’s go by how many users are logged on and targets the mass market. AccessKenya targets mainly high net worth individuals and corporate. I think the high P/E is more reflective of the growth potential on this company. From a price perspective, the stock is also quite stable technically on pricing.

4. 4. Sasini

Low P/E – Low price; can rise 50 percent without breaking a sweat; diversification into the hospitality business with its brand name, ‘Savannah”. The re-strategy of its core business to factor with the global crisis thus keeping it ahead of its peers in the same industry. Tea output has suffered in Kenya, so it will be interesting to figure out if its farms have suffered the same. On the plus side, the Shilling has lost value against the dollar and tea prices globally are high (on account of reduced supply); it is also not clear if its diversification initiatives have borne any fruit thus far – that is, Savannah’s contribution to the bottom line. Speculative buy for me based on low price.

5. Equity

Low P/E – They are opening 500ac’s/day in Uganda. The best bank in terms growth and client acquisition; regional expansion working for them; incredible marketing strategies to stay ahead of the rest; impressive results and prudent management. The three year lock in period for majority foreign shareholders did elapse. The split is their best ever strategy to make the share more affordable to the local retailer and increase its supply at the market. World Bank and IMF support.

The aforementioned are companies that deserve a second and third look when investing and the short notes below each company represent the issues of sentiment, fundamental and fact about each company that one needs to consider. As an analyst, I stand to be corrected especially in a market like ours.

Steve Wafula C.E.O of Soko Directory

I begin my series of my investment and finance contributions by quoting the Oracle himself. Here is a video from one of the greatest investors of our time. Mr Warren Buffet.

Enjoy.

John Karanja

The Co-operative Bank IPO is here with us. From Thursday October 30, the bank is inviting you to make an offer on the 701 million shares it’s offering to the public in order to raise Kshs6.7 billion. Unlike the Safaricom issue, it is not a privatisation where the main shareholder has chosen to get out. Cooperative Bank is seeking to raise money to invest in expansion.

Under the Banking Act, there are limits to the amount of money a bank can collect from the public in terms of deposits. Indeed capital-to-deposits ratios restrict the level of deposits, which a bank can collect from the public. The Co-operative Bank of Kenya is at a point in its growth curve where it cannot engage in any meaningful expansion and growth without a massive capital injection.

The more that bank has in terms of share capital the more it’s able to do business with ease as it can lend more. This translates to a better P&L (profit and loss) and hence good returns to its shareholders.

However, even as we discuss the merits of the IPO there is widespread fear that this initial sale might not achieve its goal, at least at this period in time. Who will subscribe to the offer is the big question especially with skittish Kenyans who form the bulk of retail investors.

Co-op Bank IPO is tied to Safaricom’s in the sense many investors have learnt a few lessons albeit not positive. The success of this IPO will hinge on how fast Safaricom investors are willing to forget the bad experience. Many retail investors, and who make IPOs lively, have not forgotten that barely six months into trading Safaricom share has shed 30% of its listing value.

In addition, analysts are predicting a bumpy ride for the mobile phone shareholders, as more investors are willing to offload the stock at any price. This has been witnessed day in and out as supply exceeds demand even as the price goes below the listing price.

Investors have not forgotten the problem with the refunds. Some lost theirs through the confusion while many complained of the process having taken too long. Who can forget the queues snaking in Nairobi streets and the shoving and jostling as investors made their applications?

But what pains most investors is the expected profits which didn’t materialise. Billed as the largest IPO south of the Sahara, there was false optimism that the share would hit a high of Kshs15 and make a new breed of millionaires, just like the KenGen IPO did in mid 2006.

It is not only the retail investors who had misplaced their ambitions. Financial institutions led by banks came on board to finance its customers and are reaping big. And with the share below the listing price, there is widespread panic from all corners as banks try to readjust their non-performing loans in line with the new reality.

Going into the festivities, there is some feeling on the ground that investors might choose to forgo the IPO in readiness for December holidays and January school fees commitments. This argument does not hold water. Despite the high rate of inflation Kenyans are still engaging in their favourite past times i.e. drinking and partying. Money then is not issue. What should be on discussion is how much investors will afford to put in.

Safaricom’s shortcomings are a positive for Cooperative Bank. As of today, no bank, even Equity, has indicated any plans to finance the IPO. We are then going to see only serious investors as opposed to Safaricom where financial institutions went out of their way to dole cash to investors.  And serious investors are what is needed to streamline the Nairobi Stock Exchange.

Many retailers who got in did so for the simple reason that money was available. We can relate this to the speculative attitude adopted by retail investors since KenGen days.

Perminus Wainaina is the CEO of Concept Advisory Services, an investment adviser and stocks agent for African Alliance. He can be reached at perminus@conceptadvisoryservices.co.ke

The problem of NSE continues with shares prices heading South most of last week. The question on the lips of most commentators is how much worse can it possibly get. Increasingly last week, all too many seem to be pointing finger at the shear number of Safaricom shares plus some hidden hands which might be manipulating specifically the Safaricom share prices.Take a look at the following:

Geoffrey Irungu wrote in Busines Daily “As Safaricom’s share price decline drags down the total board at the Nairobi Stock Exchange, and the fortunes of hundreds of thousands of Kenyan investors” he continued to note ” Since its debut at the bourse, Safaricom has declined by a third, faster than the market average of a quarter, —implying there is more to the share’s slide than the prevailing bear at the market.”

Ng’ang’a Mbugua wrote in Daily Nation “Share prices are low, so why are we not buying?” He noted that when the  prices fall in NSE, the investors run away but sprint back when the prices begin to go up. The result is that many small-scale investors end up buying overpriced stocks and often lose out when the prices decline “to correct themselves” as experts say. Yet they could make more money by buying when the stocks are cheap.

Washington Gikunju writing on Business Daily took a dig at the fact that the banks might be the first victims of deepening prices of the Safaricom shares “Many financial services sector observers fret that the banks doled out too much money after lowering the requirements to the bare minimum. All that was required for collateral by most banks was evidence that the borrower was an account holder with the lending institution.”

If you are an investor in NSE take it easy and breath deeply. You have just survived the worst bear run seen in Kenya market history. I know the gut feelings of most investors at this time is to dump their shares and get out of the market. Well i will tell you not, because you might justify the theory that most people tend to give up when they are just three feet from gold.

Before the listing of Safaricom shares Prof. Anyang Nyong’o warned that the Safaricom shares were overpriced. Being an electioneering period his warning was taken as political brinkmanship. Actually it was the most politicized IPO ever with former finance minister Mr. Amos Kimunya once told Mr. Raila Odinga then ODM presidential candidate that Nairobi Stock Exchange is not a fish market. So with Safaricom shares it might be a case of proper adjustment.

The good news is that by all possible angle you look at it we have reached the bottom of this bear run and sooner than later the stock market prices will start rallying upwards. The factors which have been driving cost of living are cooling off. The oil prices are falling in the international market and we expect them do so in Kenya. The rate of inflation is going down and the liquidity problem which gripped Kenya in recent months seems to have been solved.

Author: Kennedy Kachwanya

Website: http://www.whive.com/blog.php?user=kachwanya