Tuesday, April 17, 2007

Net blamed for stock speculation

The internet (be it forums or blogs) is being blamed for rumours that drove up the price of Sameer Africa shares to 40 shillings before it again dropped to half it's take off price.

But Sameer never confirmed, denied or commented on the rumors until now.

But would you buy shares because a stranger wrote something to a blog, or chat room? And it seems far fetched that the readers of Kenyan blogs and chat rooms have enough weight & financial muscle to drive up a share price so drastically. I'm inclined to place blame with others, perhaps brokers, who simply used the 'internet' as an extra forum to play around with the share price of Sameer Africa (and who probably cashed out at 40 shillings).

4 comments:

E-Nyce said...

Depends on which blog the readers are reading. There cannot be even 10% of adult Kenyan population who use the Internet consistently (say, at least once per day), and less than 10% of that even know about blogs.

If buzz was generated about the sameer position, then it had to be on some highly focused forums, with peeps knowledgeable about trading and other financial matters. And those people, my friends, are the ones who would most definitely influence the market. Incestuous community, if you ask me.

beninmwangi said...

It would be difficult for me to believe that net related events led to this incident too. I hope that the bloggers of Kenya don't become the favored scapegoats of the nation's influential.

You know, now that I think about it, even in the States only about 1 in 5 or maybe 1 in 6 knows what I am talking about when I mention the word blog...So even here it would be difficult to imagine blogs being responsible for shifting supply or demand curves of public companies and their stock.

E-Nyce said...

@beninmwangi:

Apples and Oranges...

US equities investors/brokers/analysts are highly diverse, have access to multiple streams of information about companies, their managment and finances, etc., and real-time mechanisms to counter any rumors or runs on the market. Even a cabal of bloggers could not manipulate the market beyond one day. And they would be discredited, tar-and-feathered, crushed the day after that.

Now... compare that with Kenya's environment.

The most informed Kenyan investors (part of the less than 10%, of the less than 10%) are using Internet info-sources to make their decisions, and those sources - blogs like this one, e.g. - are insular, few in number, and highly influential beyond the scale of their actual contributions.

This isn't a roast of bloggers, Kenyan or otherwise, it's an issue of a closed enivronment that can be easily manipulated by a small group of people. For good or for ill.

DeadAndAlive said...

Don't ask where i got this but word is that Merali buys in the bulk, prices rise due to the demand. People start selling more and the he's there to buy. Non share holders start buying, then he dumps it all. Explains the sudden changes in all counters he is in (sameer, eveready...)

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