Some folks have pooped on the party but the drop in prices is uneven. Some counters e.g. NBK & KQ have fallen further (see earlier blog entry) but their underlying fundamentals are very different. Logic has little to with it but market psychology drives the market. Any other thoughts?
I believe share prices on the NSE (no market makers, generally illiquid & no shorting allowed) to be sticky i.e. share prices tend to rise faster than they fall since the Sellers are holding out for a better price while prices rise while they are unwilling to sell immediately prices drop.
Therefore, impatient Buyers who can't wait support the price while it gradually drops. The patient/disciplined Buyers will wait until either the Sellers get desperate or the price hits their target Buy price.
IMHO, in Kenya, the retail investors chases shares when prices are rising but the market bottoms are anchored by the institutions moving in...
I think the current mood is moderately bearish & unless spectacular results are announced soon, there will be little to spur the NSE. The current political situation does not help. The market will wander aimlessly but it is INDIVIDUAL shares that need watching!
Do your own research! My opinions are just that, my opinions! I believe successful investing means that one has to be ready to hold for the long-term (at least 3 years) but take advantage of short-term pricing mismatches! Further, monitor your investments i.e. make sure the reasons why you purchased the stock still exist. Don't expect eye-popping prices unless you find a firm that others have missed! Inspired by Ryan S-H...
- KPLC - The 2005-6 Final results are due anytime now since their year-end is June 30 2006. I expect good results BUT the issue of KenGen's "reprieve" will remain as a cloud over KPLC's results. Tough call but certainly buy on price weakness.
- KQ - 1H 2006-7 results expected Oct/Nov 2006. One of the lowest P/Es (12x 2005-6 results) thus rated a BUY by NSE standards. Only 164,000 shares traded thus the current price (124/-) will have to give i.e. it will drop to the 120/- level or rise above the 130/- level by 27 September 2006.
- Sasini - Year ends 30 Sep 2006. I expect the current price (41/-) to fall slowly since Coffee's 2nd marketing window's benefits will not accrue till 2006-7. The "Sasini" branding move will negatively affect Sasini's profits in 2005-6 but expect growth in the next few years from this line of products. The earnings are extremely volatile earnings. Wait for the share price to drop. Then check the following; the rain forecast for 2006-7, Kenyan tea prices, India & Sri Lanka's estimated production & finally the trade/political situation with Pakistan & Egypt. If all looks good, go through the process again!
- BAT - 7% dividend. Steady growth. The downside is limited even with the "tobacco regulations" since smoking remains a growing habit BUT haphazard implementation of these regulations (as Ngilu demonstrated) can affect BAT in the short-term. BUY for steady not explosive growth.
- NBK - Unless the government "bails" out NBK by issuing a bond to "absorb" the bad debts, there is no justifiable reason for the current price! SELL.
The NSE is inefficient even with the ATS system since clients can't see current prices thus it prevents "quick" decisions. The major beneficiaries are the brokers who trade in their own accounts since they can sense the market's direction while the rest of the shmucks are generally late to the party!