Riding the Bull

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.