Where is the new NSE website?

Nothing done on NSE website

Last December, Mr Hoseah Njuguna wrote to The Standard about the woes of the Nairobi Stock Exchange website. The bourse’s chief executive Mr Chris Mwebesa explained that the website would be updated. That was on December 14. Nearly two months later, no new website is in place. The issues Njuguna cited have not been addressed. On Wednesday — February 7 — the NSE website still showed trading figures for February 2. The home page has poor graphics and picture resolution and information is outdated. Financial statements have not been updated since 2004. Concerned investor, US The above is a letter published in The Standard dated 9 Feb 2007. It harks back to an earlier letter... click on this link for more information... Let's see what happens now... but do not hold your breath! In addition, we do not want just a pretty face but increased functionality with additional information that can help us including real-time prices! Websites like www.eight.co.ke do a better job of informing us than the NSE... After all we pay a hefty fee per trade! For those who are unaware... the NSE also charges firms to list so they double-dip... they charge investors & their firms!

India to power ahead with 9% growth while Kenya manages a mere 6%

Kenyan (govt) politicians keep on crowing about 2005's 5.8% growth like this was going to pull us out of the current economic doldrums! Estimates for 2006 are 5.7%.

India expects a 2006 growth rate of 9.2%... which means the additional growth in the Indian economy could be greater is larger than Kenya's entire economy! BTW, this is on top of India's 8% growth over the past 3 years!

India's estimated 2006 GDP (PPP) is just shy of $4 Trillion... so a 9% growth = $360 Billion!

The compounding factor year after year is what separates the men from the boys... The difference of 3% between the two growth rates means India's economy ccould grow at a rate that is 50% higher i.e. 9% vs 6%.

If India continues at this pace & Kenya lags, then compounding kicks in thus the gap between 2 economies will grow even faster!

Indian firms, & by proxy India, is the 3rd largest investor in UK. Tata Steel's recent purchase of Corus (UK) made headlines the world over as they beat off a challenge from Brazil.
Kenya's Magadi Soda is part of the Tata Group through Tata's purchase of Brunner Mond (UK) which gave Tata control of Magadi Soda.

Magadi Soda was recently in the news after Exim Bank rejected their application to finance locomotives & rail stock. Nevertheless, Magadi Soda did secure financing since it had the support of GE & Tata.

Kenya needs to wake up from its reverie... Stop comparisons with regional poorhouses & our benchmarks should be Powerhouses like India & China.

Kenyans can't use the "Western Oppression" excuse this time round when India & China start making our life difficult! As an example, Kenya has lost most of its USA textile market to China, Pakistan & India in the past 2 years. We had many years under AGOA to build up our competitiveness but squandered it to inane populist politics & economic blunders! Kenya should have built up its infrastructure:

• Reliable & cost-effective electricity supply
• Transport efficiencies incl Railroads, Shipping & Raods
  

What can we do to ensure we don't get steam-rolled by these fast developing countries while all we can manage is a mere 6% growth amidst increasing insecurity & poverty?

What options for HFCK?

HFCK announced they intend to do a Rights Issue but the details will be released later on as to the:

• Number of shares
• Price
• Timing

IMHO, I do not think HFCK will survive in its current form. The market for mortgage financing is under pressure from better funded competitors including:

• Savings & Loan (KCB)
• BBK
• SCBK
• I&M

Therefore my take is that the following will happen during the Rights:

• CDC/Actis will take up their Rights
• Transcentury (or some other group) will buy Rights from the Market
• GOK will sell its Rights. A politically connected group like TCG will use D&B to effect this trade at the right time under everyones noses.

After the Rights Issue is over, then the following scenarios will take place by Dec 2008:

• S&L bids for a takeover of HFCK for cash &/or KCB stock
• TCG buys a controlling interest through purchases on the NSE & the Rights Shares.
• An alternate group follows the strategy above
• A smaller bank e.g. Equity or Stanbic offers cash &/or stock

Whoever buys HFCK buys a strong customer base for mortgages. In addition, HFCK has branches all over the country & can ramp up production with a strong(er) parent.

Nevertheless, all said & done... HFCK is in play!

HFCK's MD announces a potential Rights Issue

So HFCK's MD announces a Rights Issue to shore up its finances that has taken a severe beating in the recent past....

I see interesting possibilities here!

Continued on Investing In Africa

Kenya Needs Better Lobbyists

I came across this in Gathara's World. Whereas I disagree that it the USA to blame but rather an idiot called enzi who is extremely short-sighted!

The EA Standard also has the story...

Please link to the story and put your comments... do not insult enzi coz they will not post your comment but make your arguments against enzi's pig-headedness!

BTW, you can insult enzi on my blog... LOL...

Politicians the world over are STUPID, STUPID & worse!

VIA Uganda is down but not out!

Its tough for airlines out there... Just as Flamingo folded - reabsorbed into KQ - since it could not sell enough tickets thru the web, VIA Uganda has (temporarily) closed up shop!

I highlighted the fact that most airline startups in East Africa have collapsed. The low internet penetration in Kenya & Uganda as well as fraud & low credit card use makes web bookings difficult for customers/passengers.

The 'collapse' of VIA leaves KQ as the dominant - if not, only carrier - between NBO-EBB. KQ's strengths are:

• Extensive network. It is estimated that 80% of NBO-EBB flights are connecting not point-to-point flights.
• Extensive but expensive distribution system including Travel Agents, Web & Sales Offices.
• Financial strength
  

Kenya has its Fly 54o which has lucked out since fuel prices have fallen as well as increased tourism on the NBO-MBA route. They have also added KSM but they will face increased competition from KQ's new Embraer Jets coming in mid-2007.

IPO & OFS Allocations - Safaricom

There were interesting comments to my earlier post where I argued Kenyan should be favoured over foreigners (including East Africans).

IPO - Initial Public Offering - The funds raised adds to the equity of the Issuing Firm
OFS - Offer For Sale - The funds raised is paid to the Sellers e.g. Eveready & Mumias (2006)

ScanGroup was a combination of the above.

Let me clairfy WHY I chose the position I took:

• Stanbic - Kenyans (among other non-Ugandans) were discriminated against i.e. they received a far smaller share of the OFS allocation. There is nothing wrong with the allocation since the Uganda government was selling its shares (10%) at a discount to "market value" thus it should favour its own citizens. It is their money after all!
• Therefore, the Kenya Govt, should, in the same spirit, give Kenyans preferential treatment in IPOs or OFS where the Kenyan Govt is selling its shares or an IPO at a discount to Market Value.
• Tanga Cement - Non-Tanzanians were locked out from the IPO/OFS. Valid, yes, but unfair to other East Africans in the spirit of EAC.
• Therefore, the Kenya Govt, should, in the same spirit, give Kenyans preferential treatment. Shares will only be allocated to foreigners if there is an underscription from Kenyans.
• Allocation Criteria should be spelt out as I argued in the earlier post by create various classes for the applicants:
Class A - Employees - as is they are always favoured especially in a new listing

Class B - Kenyan Citizens - Since they "own" the government which owns the share so the ultimate owners (the citizens) should get priority

Class C - Kenyan Residents - Similar argument to B except they are not citizens thus not as vested as citizens

Class D - Ugandans & others who allow Kenyans to apply for IPOs, incl USA, UK, etc - Since they are part of EAC & have allowed Kenyans in their IPO/OFS (Stanbic)

Class E - Everyone else (those who restrict Kenyans in IPOs, etc) - Includes the Tanzanians who locked out foreigners including Kenyans.

No, I am not picking on Tanzanians but they need to understand that ALL E.Africans need to cooperate for the greater good. Good progress has been made but nationalistic & populist politics still plays a nasty role. Kenyans can't give all the time while receiving little in exchange. Let's be treated as equals & with respect.

Tanzania for political reasons harassed Kenyan editors & journalists (Nation Media Group) for no good reason & on flimsy excuses! A successful partnership is Precision Air & KQ. KQ owns 49% of PAir while providing the financial & managerial backup needed. PAir has since become the largest Tanzanian airline & flies to the Mid-East while continously expanding its regional footprint.

Kenyans have discovered Uganda & Rwanda to be more hospitable. Increasingly, Kenyans are investing in these countries e.g. Uchumi, Bidco & Jubilee.

Uganda provided better benefits/conditions for Bidco than Kenya there Bidco opened a new factory & plantations in Uganda.

Private Firms (with no or little government stake) e.g. Eveready can do what they want in terms of allocation after all the Kenyan citizen's 'stake' is limited.

Safaricom OFS should favour Kenyans over foreigners!

I am disappointed at the gross unfairness of the Stanbic allocations. Kenyans were locked out while Ugandans were heavily favoured.

I propose that in the upcoming IPOs, Kenyans get preferred allocations before any Ugandans are considered. Tanzanians should be barred from Kenyan IPOs.

Why do I take such a stand?

IPOs & new OFS tend to attract lots of Kenyan investors e.g. KenGen, Eveready, etc... so Kenyans should benefit BEFORE foreigners. I am not being xenophobic but the Ugandans did not play fair with Kenyans with Stanbic while the Tanzanians locked out Kenyans from Tanga Cement's IPO.

IPOs esp govt divestiture is at a discount to NAV or market value. Why give away 'free' money to non-Kenyans?
Ug & Tz investors can buy on the secondary market.


Safaricom is coming up... I say CMA needs to address this NOW so that Kenyans benefit first!

NSE woes continue! Again! Again!

As of 8 PM I had not received the NSE pricelist for 15 Jan 2007.
Does anyone have it?

The NSE website (mwebesa, we are waiting for a "new" website per your earlier letter) is still as dark & uninformative as before. I tried to download the latest pricelist but no luck!

Apparently, there was a problem with either the CDS or ATS earlier in the morning & trading did not take off until much later during the day.

I hope the NSE & the brokers can make 2007 their year to deliver solid gains in service - sorely lacking at the moment!

2007... Another Year... More Stuff...

As mentioned earlier, I have not been blogging due to time, internet & technology constraints!

I am trying to expand to "Africa" but I am constrained primarily to Kenya. In this regard, I try to post on Investing In Africa.

Investing in Africa has newsletter that provides an analysis on listed African firms from all parts of Sub-Saharan Africa. Even though it is a paid service, it is an excellent resource for those who want to look outside Kenya for investments.

NSE Index- It has risen over the 6000 mark but unless I have the guts on its composition & how it is calculated, I would not place much faith on the Index...

NSE website - Same old pathtic site. All talk, no action!

KPLC - It has shot out of the gate in 2007 in heavy anticipation of a bonus.
CMC - Another bloomer while investors wait for a bonus.

The PE & PEG are getting out of whack (IMHO) but there are a few stocks that seem price laggards even with decent performance.

BOC - Its rather idiotic to have BOC on ice/suspended from trading for over 6 months! It has performed rather well in spite of the drought in early 2005 & the price for BOC is expected to rise when trading resumes.

Carbacid - Its rather idiotic to have Carbacid on ice/suspended from trading for over 6 months! It has performed rather well but until the CMA &/or the tribunal decides on its fate regarding its acquisition by BOC, the shareholders are stuck if they want to sell. The good news is that since it is well managed the firm's shareholders do benefit from larger profits & dividends while trading is suspended.