Thursday, September 04, 2008

Stolen Crown

What happened to the shares of Crown Berger last Friday was an anomaly that gives a bad impression of the NSE. The company announced an increase in pre-tax profits on Thursday only for their shares to nose dive from Kshs. 38 to Kshs. 8 on Friday, before settling at 19.75, about 48% lower – on a volume of just 10,000 shares.

Still as the running thread of NSE insiders shows, such one day spike trades have usually on the upper side (Equity, Citi Trust, CFC, to name a few), and don’t merit much complaint, except from skeptics. But if I was a shareholder of Crown (used to be one two years ago), I’d be very upset that 50% of my portfolio in an otherwise sound company has been wiped out in one day. What Crown is going through is no different than any manufacturing company as this time of high oil prices; they have even had mostly good press - expanding regionally, attained Super brand status recently etc.

There’s a supposed 10% rule on price moves following market information, which is selectively applied. This unusual trade was sloppy or sinister, should never have been allowed.

22 comments:

Girl In the Meadow said...

Banks, at times share appreciates in the apprehension of the results so when the results are not as good as they were expected, it results to a share dip. Where there is a major announcement the cap of 10% is always lifted on all cases.

Mashatall said...

Banks,
Is it me or did the NSE get bearish once the capital base of investment banks and stockbrokers was raised, and the NSE insiders have been busy shorting stocks so that they can raise the neccessary funds? They are the only ones who can short stocks thru nominee accounts and i bet that is what happened to crown berger's price, i cant understand how we are supposed to make any money in this market where we can only profit if we go long, we cannot even margin trade while the brokers have a field day shorting our stocks! let them level the playing field so that Hedge funds can also come up as alternative investments.

MainaT said...

Banks-All I can say is thank God that is someone else who has been around long enough to recognise another City Trust/EA Cables/A Baumann type of price change.
The numbers were flat so there was no reason at all for the price change.
And the new trade system isn't to blame. Its pure manipulation.

Luckily, I think its shareholders are savvy so they've not reacted and won't until the price gets back to late 30s.

Jim Dandy said...

Totally unrelated but financial in nature.

Other than Equity Bank, which other bank in Kenya offers mortgages to Kenyans living abroad? Through the internet, I have initiated an enquiry with Equity Bank's oversees contacts in the US….. but honestly, their websites look a little bit shady to trust in dealing with a Ksh 12M loan. They come across as those jamaas who file taxes every April then close shop until the next season.

I think Equity Bank must vet their registered foreign contacts. I bet you these 'financial institutions' are not registered under any laws. I'm just looking for something legitimate.

I've checked KCB online but nada. Please help if you can. Thanks and great blog.

MainaT said...

Try HFCK

Miztaguugs said...

Banks,learnt that on the day a company announces results,the 10% rule is lifted,and its an 'open day'.
so prices can fluctuate outside this range in the ATS.

t'was a zero sum,someone was careless and someone was smart.

doubt CMA would like to set a precedent after the mishap,coz a trade took place...

Maishinski said...

Hmmm... I seem to recall MJ telling journalists that Mobile Banking is not an important part of their business...

Then a couple of days or so later, a new deal with PesaPoint is unveiled...BAMM! I bet Zain never saw it coming...

Can't wait to see Zain's counterattack...

Maishinski said...

@Jim Dandy

1. housing.co.ke

2. Google "Savings and Loan kenya" it's the KCB mortgage arm. They have some info online + application forms.

As US is so far away, you might consider giving power of attonrney to someone you really trust so they can transact for you locally. Then all you have to do is deal with your contact - who then deals wit the bank on your behalf.

Sometimes its not an option... Sooner or later you may be required as part of the mortgage contract to appoint someone to deal with the bank on your behalf.

Good luck. I am toying with the idea of a motgage too (construction). Just need to figure out the project management riddle - how to get an honest project manager who will ensure cement and other construction materials are not "channelled" from the site resulting in substandard end product, while I remain off site (abroad).

Property prices are so inflated in Kenya with get-rich-quick developers asking for 100% profit margins.

In 2002, you could build a decent quality house at a cost of Ksh 12,000/= per square meter.

I am uite sure today you can build a decent quality house at KSH 20,000/= per square meter.

Which means that most houses selling at 40,000/= per square meter are ripping you off. Meaning you can save over KSH 1 million if you build your own 3 bedroom house instead of buying.

Further more, you dont pay stamp duty for construction mortgage - which makes them cheaper (over 500,000 savings typically)!

Apartments are worse as the upper floors tend to be cheaper to build... so I would guess 16,000 per square meters.

Getting clean land is another riddle I'd like to solve!

Anyone in the building industry care to challenge my figures?

Anonymous said...

C'mon guys, you've known all along that NSE is currently a cartel operated by thieves... and CMA is a toothless dog..

Why are you surprised?

We're still waiting for the promised new Laws to reign in rogue brokers and demutualization... Until then, day trade at your own risk.

I'll stick to long term investment based on fundamentals (as opposed to day trading).

arachesostufo said...

un cordiale saluto da scorzè, Padania

nick said...

We were not expected the movement of stock market because the world economic is unstable.

simbafizzle said...

how about creating an electronic exchange or listing companies in an exchange that follows some form or rules... NSE + CMA is the Moi-era of Capital Markets.

Builder said...

jimdandy,
The Equity agents pull your credit history and notarize your docs (pay stubs and statements) then submit them to Equity for approval...Equity bank is accessing the established American credit bureaus thro' the agents . (Transunion is already building a database in kenya). So these loans are genuine, and its the easiest way to get a loan if your credit is good.
Standard chartered,housing finance and kcb are much slower for the diaspora.

propaganda said...

@ Maishinski: Surely you mean per square foot? I'm considering a flat in Nyayo Estate that's 18m square (about 162 square feet). At Sh3.85m, they are working out to Sh23,000 a square foot. Which is reasonable... for what they are.

My thinking: It makes no sense to build for Sh18,000 a square foot in Kitengela, Ruai or whatever godforsaken bush I can buy land in.

propaganda said...

Actually, that's 194 square feet, so that's Sh19,845 per square foot.

Maishinski said...

Hi propaganda,

Actually its per Square Meters.

Have a look at a 200sq ft property and you'll see how tiny that is... like a cubicle.. roughly 14ft by 14ft...

Be warned.. 23,000 per square foot looks like a major major ripoff to me!

Check out any property for sale, divide the price by the total plinth area and you will be in for a rude shock...

Maishinski said...

Even 19k per square foot is too rich for me. With that kind of budget, I be thinking of a gigantic commercial steel tower in Nairobi.

Unless you're doing a 100% 5-star, 'money is no object' job, it might be a good idea to get a second opinion from peeps working at Bamburi BIC (Mombasa Road opposite Cabanas/Imara daima) or any reputable organization before you sign a regrettable deal.

Cheers!

propaganda said...

I already live in one of the flats, so I know how big it is: It's your average three bedroom. And you say it costs Sh360,000 to build? I find that highly unlikely. Do you have credible sources for your figures?

Maishinski said...

LaFarge/Bamburi.

Visit them at the Building Information Centre on Mombasa road for FREE advice, info and contacts of reputable construction professionals.

NOTE: It's impossible to squeeze in 3 a bedroom apartment in 194 sq feet. Area would be too tiny.

:-)

Anonymous said...

I have a feeling something nasty is about to happen to one of the leading stock brokers one that recently changed to an investment bank. I have seen things happening, I happen to be their client, i have no evidence at hand yet but something very wrong is happening there. Otherwise i dont see how those less than 28 yrs employees cant turn to millionaires in a duration of 2 years. I have seen them drive Nissan Marchs to owning a fleet of cars for hire

propaganda said...

Hi. Found a developer who confirmed your figures, Maish. I'm guessing when you work in land and utilities (sewage etc) it goes up a bit, but it is somethin of a robbery... On the size of the flats, the link says property size, for the 8 flats (two to a floor), is 107.40 m², and Living Space is 18m².

Maishinski said...

Propaganda,

I think by living space they mean LIVING ROOM SPACE.

Else it's a Typo. All the other NSSF properties for sale seem to have the same "living space" size - despite different designs (maisonettes and flats).

Why not call them up / email?

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