Tuesday, November 30, 2004

Happenings at the nairobi Stock Exchange

(1) East Africa Breweries effected a 5 for 1 share split yesterday to make it’s stock more affordable. It closed yesterday at 114 shillings/share down from 530 the previous day. It is the second company in the to do a stock split this year – Kenya Oil Corporation (KENOL) did the 1st ever with a 10 for 1 split earlier this year – and it’s share price has already climbed back to 60 which is the highest price 9equivqlent of 600 shillings – before the split).

(2) In a related matter the Financial Post (a new weekly paper in Nairobi) has an article, which says that 14 companies plan to be listed on the NSE once their over the counter (OTC) market is operational. Companies will only have to display two years of profits unlike the NSE where you have to show five years – or they also don’t have to show good profit industry, only the potential to turn round! Companies lined up include Kenya Cooperative Creameries and Cooperative Bank, Tim Sale, Hutchins Biemer and Orion - an agro chemical company.

This OTC market will target the cooperative movement. Just the fact that a company cannot meet listing requirement for the NSE, make these much riskier investment vehicles – especially for the cooperative sector which is riddled with mismanaged giant societies. I think small investors can participate in the NSE-proper as the KQ AGM showed. It’s stock trades for 19 shillings, and there are several other companies that trade for below 50 shillings.

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