Friday, June 13, 2008

Safaricom @ NSE Day 5

Friday afternoon
Deals 4,415 with a turnover of Kshs. 1.87 billion [$29.7 million]
Avg price 7.47
Closing 7.45
High 7.65
Low 7.00
Last 7.65
Volume 250.9 million shares

Commentary: Bullish break out. Heavy Buy side demand. 8-10 range next week. Foreign Selling top 555,000,000/= [They must be near flat]
Courtesy of Rich.Co.Ke [NSE data vendor]

Refund drama
- The Central Bank directive that requires refund cheques to be banked in applicants bank accounts (not endorsed to brokers or third parties) will require many applicants to open bank accounts, just to receive their money.

It is a boost to banks, since the initial Safaricom prospectus document contained the option of applicants receiving refunds of less than 5,000 shillings ($80) to get their cash via M-pesa. However no one meets that amount as even the lowest application investor of Kshs. 10,000 is getting at least Kshs. 7,500, but which is still an amount Safaricom (instant value to mobile phone) is better able to handle and process than a bank cheque that clears after a week.

- Equity Bank applicants’ refunds are already in their accounts where they have been used to offset the IPO loans. Other banks should also state their policies on IPO loans where investors have only utilized 22% towards shares, while paying interest rates on the full 100% loan

Refunds to Bonds
Try your luck at Bonds if NSE Equities are too volatile: The second tranche of the 7 year Barclays Bank bond is available to investors up to July 9th, minimum application amount is 100,000 shillings ($1,585) at fixed or floating rates and can be traded at the NSE thereafter. (details at barclaysbond@barclays.com)

15 comments:

Maishinski said...

I don't care how long I have to wait - am not selling below 60/=

This Safcom thing is a "KQ" bull waiting to take off when you least expect it.

QIIs, especially investment banks, are manipulating demand so they can short the market - while accumulating their volumes (hence they kill 2 birds with one stone).

Don't fall for that old trick... It's a waiting game - and am not gonna be the first to blink.

:-)

fimbo said...

@ Maishinski
But are you buying?

bankelele said...

Maishinski: The retail mass wont be able to buy till next week, when our refund cheques clear. I think thsi week has been foreign booking a lot of 40% gains at 7 shillings

fimbo: i'm buying

Anonymous said...

Hang on! I've read this directive twice over, and Im not entirely sure I understand what it means.

I'm a Kenyan, living in the UK (so got the appaling 21%). I DO NOT currently have a Kenyan bank account, and sent the application funds directly to the broker (D&B) electronically.

Qtn: Does this directive mean that I will have to open a bank account in Kenya in order to receive my refund?
Qtn 2: I have a Ugandan friend who did exactly the same thing (lives in UK too). Will he have to open a bank account in Kenya too??

Tnx

Robe said...

Hey Bankelele
Nice blog you got here, been reading it for a while and this is my first post on here

To answer the questions asked by many pple on the CBK directive

its my understanding that CBK is trying to curtail the process whereby pple endorse their checks to someone else( a third party) since this opens up a big avenue for stealing of checks from the mail etc, and endorsing them to a third party.
It also seems that there have been pple offering to advance loans to individuals expecting refund checks, and then they would take the refund checks
To answer kenyan in UK.
you dont need to open a bank account in kenya. the money can be wired back to your account or can stay with your stock broker and await further instructions from you.
hope this clarifies the situation

Anonymous said...

Who buys bonds with a fixed rate of return of approx 7% p.y. when inflation is 32%

Maishinski said...

@fimbo... Yeah. Bought like crazy! My bank balance is gonna be zero for a while.

@banks - I got my refund on 10th June via EFT. I honestly don't believe in cheques (too old fashioned). Plus - the online application was flawless - hopefully hope other IPOs will be fully automated to cut down costs and save time.

@ Anon in UK... My guess is taht the directive doesnt affect you or your friend. Most likely D&B applied for you via a Nominee account - or they lumped up all amounts in one cheque - meaning that the refund comes direct to the D&B account first - then redistributed to clients. Of course this approach is open to abuse by the broker.

Until we have proper laws I believe it's much better to have direct dealings with receiving banks (i.e. don't send cash to brokers during IPOs).

Anonymous said...

Thanks guys.
I guess I will have to wait till D&B get their act together and get round to sorting our refunds out.
Anyone know of a D&B client whose online account has been updated?

I think it's time I considered using anothe broker; any suggestions?

Anon in UK

pesa tu said...

Great marketing coup for Equity Bank.

Anonymous said...

Hey Anon from UK, I would suggest you try NIC Capital.

They don't have many customers so you can expect more personalized service compared to the likes of D&B, Suntra and CFC who have thousands of clients to deal with. You also get the chance to build a relationship with the senior staff - so they know you personally (i.e. you're not just another CDS number on legs).

Another major advantage (to me) is that they dont try to con/mislead you to give them your money - like the other brokers (I guess the parent bank's discipline is rubbing off). Refunds were chap chap (by 9th/10th June) - straight to your bank account, no hullabaloo.

The downside: The junior staff are still new and learning the ropes - so you'll see one or two incompetent blunders here and there e.g. a young lady making you wait as she talks to her boyfriend on phone; or not knowing how to put a GTC Limit Order in the system or how to print a statement. I think (hope) this is temporary - and the senior guys always seem to be on hand to save the day!

Another more serious downside is that they just don't seem to have up-to-the-minute market info (e.g. Demand vs Supply statistics for a particular stock).

...and once in a while you will hear someone whine about the internet connection not working - especially if they want to get rid of you (i.e. when you're as pesky and demanding as I am). Dont fall for it. The internet eventually works if you seem to get really pissed off...

They are quite new in the game and they ought to catch up pretty quick. I think the risk level is lower compared to investment banks because they are a subsidiary of a relatively well established full-fledged banking institution.

If you can live with a few forehead slapping moments and wanna try them, the number is on www.Nic-bank.com. Speak to Chris - he's one of the senior guys. Tell him one of his most pesky IPO clients from the abroad recommended NIC Capital to you.

Alternatively you can try the high-networth brokers like Kestrel - but they are snotty as hell and wont talk to you unlesss you got big bucks to invest (0.5M and above - I think).

Maishinski said...

NSE MAFIA:
==========
Is it right for a broker to intentionally omit your EFT details in the aplication form - so that any refunds go back to the broker?

Check this out from todays leading article in BD:

[start quote]
Investors’ difficulties have been deepened by the fact that the brokers did not include details provided in application forms to enable the receiving banks to electronically transfer the refunds to their bank accounts.

“Due to the sheer numbers involved, we did not forward ETF details. We were only transmitting investor identifications (CDSC accounts), the amount applied for and the sum tendered,” said a manager with one of the brokerage firms.
[end quote]

Arent the commissions enough? What the hell is wrong with these brokers? Treating kenyans like morons who dont know what to do with their own money. Seriously!

Ssembonge said...

Everytime I read an article about Kenya stock brokers I get annoyed. They treat retail investors like dirt.

The very thought of dealing with these goons is one reason that I am in no hurry to return home.

Kenya needs to change, fast.

Nikki said...

You have a great blog, well-written and informative. I am one of the many unemployed Kenyan 'youths' that dreams of investing in the stock market one day. I notice that most of your blog's patrons are educated, employed and somewhat older (than me at least) Kenyans. I hope you don't mind that my question has nothing to do with Safaricom but I would like to ask if you could kindly write an article for the 'youths' who are looking for work in Kenya. BrighterMonday says that it has 300 vacancies and most of these are geared towards those on higher rungs of the unemployment ladder. Only Jesus could feed 5000 men with 5 loaves of bread and 2 fish. Any guidance would be most welcome. Thanks and keep up the good work.

bankelele said...

Anon – UK: I’ve checked on behalf of foreign applicant and they have to get in touch with the broker and see what can be done. The cheque could be mailed to you, or once the dust dies down, I expect brokers will be able to act on your instructions e.g. buy more Safaricom or other shares etc.

Robe: I think the issue is the amount of money. Many regular shareholders don’t have bank accounts and lament at AGM’s about the high cost of clearing dividend or IPO cheques. E.g. if you have 200 Eveready shares (which almost 100,000 people do), you get a 60 shilling dividend cheque this year, which may cost more than that to clear at some banks [the amount is so small that even KRA can’t deduct their 5% dividend tax on it]. So people prefer to cash the cheque at the brokers or banks window, get cash instantly (not after a week of clearing), even at a small fee of maybe 100 shillings

Pesa tu: Equity a winner in Safcom IPO. They work with volumes and got the largest stack of applicants, and with their I-bank license coming up, wow!

Maishinski: Even worse, for them to hold your money in their pool and not allocate you any share in the IPO.
- I suspect that the problem with EFT’s is that the information is often wrong as account holders often don’t know their number of correct branch codes.

Ssembonge: sector is improving as everyone is watching out now for rogues.

Nikki: Thank you will try and write on youth opportunities. But don’t know how objective I can be since even those of us with jobs could tip over any day into the same pool.

Maishinski said...

@ Ssembonge, There is some light at the end of the tunnel... The Online IPO application process provided some level of protection against dirty tricks by Brokers.

A combination of legal deterrents and Automation will help. Many successful eBanking concepts can be borrowed e.g.:

- if you could monitor your stock broker account from home in REAL TIME - then no one would dare touch your funds/shares without your consent.

- Rather than use regular mails, the CDSC/NSE should provide a "secure mail" platform that is linked to your account - such that instructions are not really relayed by email (plus there is a history of instructions for your reference).

- SMS alerts can be triggered whenever a buy/sell order is executed to catch any thief in the act!

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