No more share hype
I keep getting asked for stock picks and I must admit that I don’t understand the NSE. For the rest of the year, I will make a few tweaks, but otherwise maintain my portfolio, with only participation in new IPO’s like Kenya Re and Sarova, but otherwise leave the rest, of what I believe is a quality porfolio, to ride away intact till 2007 and discuss less on shares here.
I have no intention of selling some shares which have done very well. This comes after having sold some shares when they doubled (Kenya Airways at 24/=), tripled (Mumias at 36), or better EA Cables (at 150/=) only to be left with egg on my face when those shares continued to appreciate.
Its a dangerous, frenzied stockmarket were in - one which newspapers, and every man-on-the street is celebrating making a killing at the NSE. It reminds me of financial news media in the US in the mid-90’s who turned shares into an activity we couldn’t live without with online trading and TV’s in the gym and airports showing CNBC and everyone wanted to get the next hot web stock and even put their retirement money (pensions) into stocks.
There’s are three myths about the NSE that are driving some of this hype (i) that only good companies make it to the stock exchange i.e. any stock that clears the CMA hurdles and is listed on the NSE is certified as fail safe (ii) that all share prices go up (iii) that i’ll buy a cheap share and sell when, not if, it goes up.
Death of a stockbroker Part II
Nothing has changed since Part I and everyone in town knows something is wrong but no one will say why things have gone wrong there and no one (CMA) will take action. Maybe no one has formally complained, but Kenyans are not people who complain to authorities (not much action expected) and so they vote with their feet and wallets. Everyone is fleeing the stockbroker from staff to clients and those remaining are plagued by missing funds, shares not bought, wrong shares bought, incorrect balances, 30-day wait for cheques while other brokers give next day cheques for shares sold, among other unanswered queries.
Untaxed lawyers
Once, the the electronic tax register (ETR) furore passes, the next target in the Kenya Revenue Authority's war on tax avoiders will be lawyers. It is estimated that only 30% of lawyers pay their full taxes while the rest use various shields like declaring clients money and reporting losses to understate their income and tax bills.
Where’s the bonus?
Newly split EA Cables share have continued to ignite the stock market. But where are the Express bonus shares which we were promised a month ago? Nothing in CDS accounts yet.
Uchumi update
There was a story on the business news on TV this week that Uchumi had fallen short in its quest to raise 300 million shillings from shareholders. As such, the debenture loan programme will now be opened to other (non-Uchumi shareholders) investors.
Meanwhile in more fallout, Trade Minister Mukhisa Kituyi has given corporate boot to two of his nemesis the Uchumi debacle – businessman Chris Kirubi and former ICDC boss Joe Munene.
Alternate route to USA
American airline, Delta, will use new long-range 777 to fly a new African route from Atlanta to Johannesburg. This is sure to revive the debate on if Kenya Airways, which has similar 777, will attempt the same (Nairobi-Atlanta or Nairobi-Miami) though MD Naikuni has said an American route does not have enough business.
Housekeeping
- Experimenting with the new beta blogger upgrade which now has some features like tags (e.g. categorize posts as bank rankings, Safaricom, politics) and comment feeds. One cool new feature is the ability to control who reads your blog and which I wish people like Au Lait and Kenyan Musings could activate and resume blogging in semi-privacy.
- Also sponsor has upgraded the stock roundup and is now specific to the Nairobi Stock Exchange. (see right)
- No disrespect to anyone but I will do away with anonymous comments in future.
25 comments:
Hi Bankelele!!!
I enjoy reading your blog, though not frequently enough.
Just wanted to know of the current status regarding the sale of the Kariokor/Madaraka houses. I will try and find more info from my sources, but if you hear or read anthing....keep us posted.
Otherwise, keep well.
Bankelele:
How many times have I told you and coldtusker that you were making dangerous predictions about stock prices on the NSE? (often times, using "analysis" that I could not figure out)
However, I am stunned to hear you admit that you do not know much about the NSE. Why would you do that on a blog that has built it's reputation on writing reviews about company stocks?
Also, have you considered moving to a blogging outfit like wordpress? it's free and you don't get the .blogspot at the end of your domain name. I'm thinking about doing it, but I just have to play around with the software features first before I make my move.
So kirubi is out but judy kibaki is in on the EPC... Is judy related to emilio?
Does judy have any experience/qualifications to be on the EPC?
I also found that removing Suresh Shah from KNTC odd since he did a great job (1978-1999) at Uchumi & smart businessman who cuts to the chase!
ciiku - Well, you seem proud that the first daughter is on the EPC... pray, tell me, what qualification she has (apart being daddy's favourite)?
jk cud b qualified but can someone elaborate?
Banks, I guess that by you saying that you don't know much about NSE you're simply laying a defence just in case one of your readers invests in the market based on your advice and then the damn thing does a crash and burn.
Kituyi-my take is that the chaps is just doing some political realignment. What a shame!!!
CK-What is all this about a fire at his house and then another elsewhere? Is someone trying to play dirty??
Death of a broker II just prompts to suggest yet again that perhaps the like minded chaps about town should just open a stock broking firm and we get on with it. Of course it won't be smoooth sailing (at first) but who cares. We've go to face 'em!!
ciiku:
bankelele said he was "tarmacking" the other day. if he knew where the jobs were, presumably, he'd have one lined up for himself (this is not a knock on bankelele, but finding jobs in kenya is tough)
What link gets me to the NSE info?
Mocha: Thanks. Madaraka case still with the courts and the NHC are trying to get an okay to resume the sale process
Kenyanentrepreneur: Define dangerous predictions please? I generally don't do analysis or price predictions. I buy and hold shares for the long term in companies I do and I do read up on investment bank and other research reports. This blog makes no pretensions or guaratees and that is what I am trying to communicate to you.
- Am happy with blogger for now, but am looking at wordpress as a future option
Coldtusker: Minsiter's have much leeway/discretion in the process and once names are published in the Kenya Gazette they are law
- NSE roundup is on the site (blue table) - small, but highlights teh main movers of the day with links to corporate news
Ciiku: Thanks, I always advise that you have some solid leads before considering a move back home. Use holiday time to network and feel out prospects
Ig-know-rant: I know as much as anyone layman, but I kep gettign requests for what shares to buy.
IAG Blog: Thanks for the clarification. But would itbe possible for an ER to do a direct flight to the south east US?
@Banks:
I'm also surprised you say that you aren't a stock advisor, yet most are of the opinion that you are the guru. I figure we all learn from mistakes (especially those made by others - e.g. you) so keep us posted on how your stock deals go, I won't blame you if we both lose...
As for blocking anonymous comments, isn't that tantamount to restricting freedom of speech???
@ cold tusker: Did a google search on judy kibz, turns out she's the director of Lucy International (courtesy of www.africapoint.com/women - she was addressing some conference). So maybe don't be hating on her board membership to EPC, she might have some skills and connections(which you don't have)!
I have simply agreed with myself to devide the NSE into two categories; those who want to make quick money--the kenyan way- and those who know what they are doing! see more on my blog. what i mean here is that at the moment the speculators and gamblers are more than the real traders. the situation will ease and predictions will be more likely. but still all you have to do is choose one. either play with the crowd for quick gains or stick to the long term. in my blog i specify what i feel is good long term and what is meant for the speculators. but at the end of the day what matters is you own situation and financial goals
What i have come to regard as advice purported by above comments is no more than opinion and news dispensed from elsewhere on stocks and NSE.
To use such information for financial gain is a choice as much as to burn your fingers. Whether Banks keeps off or not is a no win situation to consumers. However there are conventional facts that an expert and a layperson can use and arrive at a common position, defining the difference b/n opinion and advice.
Come accross any info and at the bottom even an expert puts a disclaimer. We consumers must cross-reference and depend on conventional facts anybody with the tools or knowhow can derive.
Cross check the credibity from the title of adviser e.g attorney, CPA or Registered Financial Advisor. These are legally obligated to uphold fiduciary-interest of customer first. Shy off from agents, representative or brokers.
I have benefitted from leads & tips on stocks, 'prediction'? Yes a must to position after affirming the contents with a higher chance of occurence. Risk averse avoid prediction.
bankelele:
This is what you said: "I keep getting asked for stock picks and I must admit that I don’t understand the NSE"
If you don't understand the NSE, why then, are you buying stocks on the NSE?
When I say 'dangerous predictions' - I'm talking about analysis that is based largely on rumours & info from AGM meetings given by CEO's who are trying to keep the stock price high (for obvious reasons) - you need to read books on Enron & other public companies that collapsed.
Coldtusker mentioned something interesting about the NSE. They are no charts, you can't short picks...I mean, what kind of "research" are you doing?
Odele: Couldn't get to your blog... Link???
Kagz: Kweli... I was wondering where you disappeared to!
All I can say is I missed ya!
I hope you bought ScanGroup after all the discussions we had! It hit the 25/- level leo.
Kudri: As an FYI, I started blogging thanx to Bankelele & Thinker... Welcome...
Ta!
kudrineth:
I'm not bitter. coldtusker and I have dispirited discussions, which are both interesting and informative. We don't always agree, but that's ok.
Kagz:
You just keep on lighting those bush fires...i'm staying away from you!
Any analysis as KE admits whether from rumours or 'others' facts' arms you with self derived facts right or wrong to arrive at a decision. Coys world over hold certain parameters constant and some variable to forecast the future in terms of business trend and beam them before their 'externals' to make sense of them. Experts factor periodically these assumptions as benchmark aganist actual performance to determine future stock prices -'read prediction'
NSE listed coys rarely forecast & hold briefings essential to 'externals' to gauge their performance and who are forced to seek alternatives-rumours... as an expert/layperson how can you adapt,interpret stocks movement and make merry or be swept by the deluge?- simply 'facts'
Touch base with NSE and piece the bits,factor economic trends e.g the future effects of civil servants contribution to retirement benefits vis-a-vis RBA rules on investment & market liquidity with an eye on earlier emergence of retirement funds peeping at sum total of investors historical behaviours. The list is long & confusing but take courage.
Keep off the 'evils of the mind' masking analytical findings with solace in rumours and wishful thinking. Again NSE is not for faint hearted if you do not intend to go the whole hog seek a second voice.
mushenzi: nothing against anonymous comments, but many were very interesting but I tended not to respond to them - Hoping to draw them in for more interaction
Ig-know-rant: Guidlines are there on the CMA site. One major bank is getting a licence soon
mwasjd: Coldtusker, Riba, Gathinga do that better than me. As for anonymous comments, am trying to draw them out
falconsgladiator: Stock picks never been my thing. We can disucss company events, external factors, new IPO's etc, but I can't/won't predict prices, buy/sell/hold etc.
Odegle Nyang: long term is me. notice specultors focus is limited to IPO's and "affordable" shares
Alibaba$tocks: Thank you
kenyanentrepreneur: I like buying stokc on the NSE and I have made some good money from it. I am comforable with the risks there and the returns have been comensurate. I am mot able to invest in real estate, the NYSE, NASDAQ, JSE or any other exchange - so NSE is it for many of us in Kenya. I also enjoy attending AGM meeting and corporate events, but I disagree with your statement that Kenyan CEO's try to keep their stock price high - in fact they have little impact on this besides ensuring their companies own performance and profits.
Kagz: Thanks for the support. Welcome back and when/where's the new blog? Will work on some real estate features. The Thursday Standard has some nice features each week, but they are never online (shame really). As for Safaricom, IPO will come after Telkom's so look out for Telkom IPO first.
Kudrinketh: Thanks. We're hoping Safaricom could be our google
Alibaba$tocks: African Allicance, CFC, Kestrel and many other stockbrokers and fund managers do publish comprehensive research, forecasts, and recomendations on NSE companies, but strictly for their clients.
Kudrinketh: discussion/comments are very enlightining. Pole about big brother!
Hi Banks, interesting you did this blog.I have covered something similar on my blog this week.
I have been in the mkt. since 1998 and i have to confess i dont undersatnd it nowadays.
@kagz - Yep, I am welcoming Kudri to blogging... he has been a regular on Banks blog.
Some support the "tribal" view... Can't stand that. I want results even if CEO is not Kenyan. I am a HUGE supporter of KLM & Guinness management of KQ & EABL. Note both CEO's are Kenyans chosen for ABILITY not tribe!
@Kudri - Pole about big bro... now get back to work!
@KE - I hope you mean spirited not dispirited!
@Alibaba - Yep, we do the best we can since we are not insiders e.g. Cement sales (not necessarily profits) expected to increase coz I see construction everywhere!
Opinions are just that! I try & help out BUT does it benefit me if I tell all?
I want people to do their OWN research not wait on it from bloggers or others!
@kagz - Financing is a full-time job in Kenya. You need to have cash (no 100% financing see KE's take on ARMS) of at least 40% before the banks will lend. Further, the interest rates are horrendous & their is no certainty with the City Council thus a project which would take 1 year in the USA can take 3 years!
IP - How can you benefit from the recent happenings?
Any suggestions?
banks, interesting about the 'death of a stockbroker pt2'. maybe i have a clue, have mentioned something similar on one of my posts. good to be cautious anyway. as for your stocks roundups, i feel this been your space, you owe noone any apologies or guarantees. the disclaimer all the same warns any would be investors that you are not compiling another gospel. do keep blogging all the same on stocks.
bankelele:
You said:
"I disagree with your statement that Kenyan CEO's try to keep their stock price high - in fact they have little impact on this besides ensuring their companies own performance and profits".
Again, I am stunned that you would say this! Do you understand how public companies work?? The shareholders (the people who own stock) are the owners of the company. The CEO is answerable to them. The CEO may think he's doing a wonderful job, but if the stock price starts tanking, believe me...the CEO will not last. The Ceo's compensation package and job security is tied to the performance of the stock price.
Don't the majority of Kenyans understand this? or are they just inclined to believe a man who wears a nice suit & tie?
The NSE is going through an 'irrationally exuberant' phase at the moment and thus it honest for someone to say he does not understand what really makes this market tick. There are too many stocks with prices that are not justified at all. Do I hear a bubble bursting????
This a great blog written by someone who chooses to express himself. You dont have to agree with him, but guess what? It has broought out the best and sometimes the worst in the rest of us.
I think the best way to benefit from this active site is to air opinions and comments and then do your homework. I would rather stick with someone who knows he is not infallible and does his home work and learns from his mistakes...rather than someone who can claim to be an expert on the NSE, of all unstable places.
Keep up the good work Banks.
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