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KA-INVESTOR
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3:40
From: KA-INVESTOR
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 The mobile services wars in Kenya is getting hotter by the day, with Celtel introducing a ‘free’ call service and an internet service, while Safaricom are taking their customers by storm with their hot spot internet service ( supported by 3G technology). However what seems to be tight rivalry for the market share between the two has little to do with competition. It’s all about the entry of Telkom (Orange) and Econet who are set to roll out their services by the end of this year. Even Celtel, whose customer base reduced by 23% last year, seem to be fighting for their share in the market (albeit a confused marketing strategy) and hoping to technically eat into Safaricom’s market share. I like what is happening since only the consumers stand to gain for all these reduced prices and new-better services. I want to believe that by time Econet and Telkom will be fully in business the highest calling rate will be Ksh.5 with the internet going for Ksh.1,000 p.m. lets wait and see.
Even higher food prices:
As if the 50% rise in food prices in Kenya is not enough, a law that all food products sold in Kenya should bear an approval mark from KEBS as from October, is going to increase food prices even higher. I appreciate the noble intentions of the regulation but the timing is so wrong. For a generation that was raised on substandard goods and services – where even the education system was compromised – the KEBS fee can wait for another day.
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7:47
From: KA-INVESTOR
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Last year I picked some stocks that I expected to perform exceptionally and placed them into my ‘green list’. A year later out of the four stocks I picked only one performed dismally while the other three have performed exceptionally, surpassing the market average of 12.30%. In fact they are the best performers for the period. They performed as follows: | Stock | Start price | End Price | % Gain | Other information | | AccessKenya Group | 13.35 | 35.00 | +162.17% | The only post election effects survivor | | Equity Bank | 139.00 | 300.00 | +115.83% | Eminent split | | KCB | 24.00 | 31.50 | +31.25% | Issuing rights | | E.A.Cables | 46.00 | 41.50 | -9.78% | No known activity | 1,000 shares in each counter would have made you Ksh.185K richer, a whooping 83% gain. Who ever says last year was a bad year is a speculator. Considering the little effort it took to analyze the stocks I picked for the green list, then only a speculator could have made losses last year by buying stocks blindly. All an investor need to do is understand the counter he intend to buy in – management, business strategy and numbers (though I’ve discovered that historical numbers don’t count that much) Soon I will post "the 2008 green list" after some analysis. I feel that after the Safaricom IPO there is a small ‘breath’ in the market that may lead to a correction like the one experienced in 2007 March. But no cause for alarm, I could be wrong.
{Disclaimer - this is a personal market opinion and list of my preferred stocks. It does not indicate certainty and anybody reading this should consult their investment advisor/ broker before making any investment decision}
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6:03
From: KA-INVESTOR
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 I have no words for this guy...............................................
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7:10
From: KA-INVESTOR
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Celtel Zambia has started trading on the Lusaka Stock Exchange (LuSE) today concluding the company’s IPO. The share rose 13.3% to highs of 725 kwacha (Ksh.12.50) for the listing price of 640 kwacha (Ksh.11). The IPO was 150% oversubscribed. Allotment preference will be given to the Zambian Public and Zambian institutional investors. On offer were one billion shares, 20% of Celtel Zambia, at a price of 640 kwacha (Ksh.11) per share. Applications for the ordinary shares were for a minimum of 700 ordinary shares and thereafter in multiples of 100 ordinary shares.
Zain, Celtels parent company, is seeking to buy 3 African mobile operators after concluding a US$5 billion IPO in an unspecified European stock exchange. There are possibilities that the multinational may be targeting the South African and Egyptian markets, which are some of the richest on the continent. Zain’s Q1 2008 results indicated that their customer base reached 45.7m, while their net profit rose 10% to US$270 million. Their borderless roaming services, where customers do not pay any premium for using their phones when roaming in certain African countries in East and Central Africa is something watch.
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3:42
From: KA-INVESTOR
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Here are some horrifying facts about inflation in Zimbabwe: - This month two years ago there was alarm in Zimbabwe because the inflation rate had reached 1,000%
- In January 2008 the inflation rate was 100,000%
- This month (June 2008) it reached 1,000,000%. That's over:
- 83,000% per month.
- 2,700% a day.
- 100% an hour.
- 2% per minute
- If you get $1,000 at 2pm today and spend it at 3pm the same day, it will be worth 50% less.
- According to the third source above, a small pack of coffee cost Z$1 billion last week. A decade ago, that would buy 60 new cars.
- A loaf of bread cost Z$200 million last week; enough for 12 new cars a decade ago.
Here's a 1994 Z$50 - now worth less than the ink used for the "50"
Here's a pre-Z$5 note - worth more than US$5 at the time; closer to UK£5. Here's a Z$ 2 note. You need 100,000,000 of these to buy a loaf of bread. 
Here's a Z$ 50,000,000 notes (check the expiry date) 
The Z$ 500,000,000 "bearer cheque" is the biggest denomination at the moment and a Z$1bn note will be issued in the next few days. The Z$ 500,000,000 note is now worth about US$0.20 at the official rate and 2c or so at the black market rate. To make maters worse the note expires at the end of June 2008 (just 5 months after being issued).
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6:54
From: KA-INVESTOR
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What is it with company mergers in Kenya? The recent few mergers have been faced with very gruesome legal battles that have left the merging companies with very heavy bills to foot. In the case of the Stanbic-CFC merger where Stanbic bank lost a court case and was forced to pay Ksh.532 million in fines to their former employees and Ksh.200 million in forced security to a certain creditor who will be paid once the merger is concluded. Another merger that has run into similar trouble is the merger between Ecobank from West Africa and EABS. Ecobank is planning to take over 75% of EABS at a cost that is estimated to be worth over Ksh.1 billion. Similarly, 30% of there employees who were retrenched way back in 1996 have gone to court to block the merger from taking place before they are fully compensated. So is this a new strategy by all former employees to sue their employers once they cite a merger in the offing? It’s widely known that many employers are shrewd when it comes to making contracts that favour the company over its employees. Like in the case of EABS where an employee who had worked for over 5 years was only entitled for 17 days compensation. What a reap-off! But it seems employees are not taking these lightly and companies are paying dearly for not having their contract tight enough.
2007 Government Funds BeneficiariesI’ve been looking around for someone who got the youth or women’s fund or someone who know someone who benefited from these funds. It seems I’m not alone on this quest, Enterprise Kenya are also looking for these funds beneficiaries. If you applied for the youth fund or the women development fund how much did you get? Please send your answer to enterprisekenya@ktnkenya.com and also drop me a mail at kainvestor@gmail.com
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8:44
From: KA-INVESTOR
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The cookie has finally crumbled with the Safaricom IPO being oversubscribed by 532%. Over Ksh.226 billion (Ksh.160.6 billion from local investors and Ksh.76 billion from international investors) was put in applications for the Ksh.50 billion IPO. The allocations were made out has follows: | Type of investor | Amount Allocated | | Local/Retail investors | 21% | | QII’s & Safaricom dealers | 31% | | Safaricom Employees | 84% | | Foreign investors | 15% | Retail investors are now left holding on to a mere 21% of their application (in most cases 420 shares). Sorry for the investors who took loans to finance their applications and for those who opened multiple accounts to ‘maximize’ on their allocations. It is time for them to learn the bitter lessons of the better option IPO. 21% is 21% no matter how many accounts you applied with, the only difference is if you had applied with one account, you would not be chasing around for several refund cheques. Not all those who took loans to finance their application will feel the pain of paying back almost all the money with interest, while their merger allocations are held by the bank as collateral. Borrowing a leaf from Ssembonge its clear that the more an investor borrowed and invested the less the burden and the higher the yield. | loan
amount | cost of
loan | No. of
shares
allocated | Cost of
shares
allocated | Break Even price | Profit at
Ksh. 20 | %
Yield | | | | | | | | | | 10,000.00 | 2,885.60 | 420.00 | 4,985.60 | 11.87 | 3,414.40 | 34.14% | | 20,000.00 | 3,441.20 | 840.00 | 7,641.20 | 9.10 | 9,158.80 | 45.79% | | 50,000.00 | 5,108.00 | 2,100.00 | 15,608.00 | 7.43 | 26,392.00 | 52.78% | | 100,000.00 | 7,886.00 | 4,200.00 | 28,886.00 | 6.88 | 55,114.00 | 55.11% | | 200,000.00 | 13,442.00 | 8,400.00 | 55,442.00 | 6.60 | 112,558.00 | 56.28% | | 500,000.00 | 30,110.00 | 21,000.00 | 135,110.00 | 6.43 | 284,890.00 | 56.98% | | 1,000,000.00 | 57,890.00 | 42,000.00 | 267,890.00 | 6.38 | 572,110.00 | 57.21% | | 2,500,000.00 | 141,230.00 | 105,000.00 | 666,230.00 | 6.35 | 1,433,770.00 | 57.35% | | 5,000,000.00 | 280,130.00 | 210,000.00 | 1,330,130.00 | 6.33 | 2,869,870.00 | 57.40% | | 10,000,000.00 | 557,930.00 | 420,000.00 | 2,657,930.00 | 6.33 | 5,742,070.00 | 57.42% | Form the table its clear that after some point – at about ksh.1,000,000 loans, the incremental value of the yield from loan becomes negligible. This simply confirms that some investors (animals) are more equal than others. Large investors will keep on gaining from the stock market as small investors’ loose out in almost every deal they make. It’s also clear that any price less than Ksh.6.33 will not be good for any one. IPO Politics To some extend the ODM and Africog caveat emptor on the IPO was right. Looking at what has happened to many poor Kenyans who ignored the warnings and went forth to borrow from banks, at hefty interests to be able to participate in the Safaricom IPO; one is only left feeling sorry for them. Contrary to the government promises that Kenyans would be given priority in the event of a massive oversubscription, the same government has ignored them and praised how the IPO has attracted foreign investors (both institutional and retail) at such times is when I wish we had a grand opposition to make noise. Such government excesses will not go unabated with a strong opposition in Kenya.
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7:16
From: KA-INVESTOR
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Profits after tax declined by 5.6%, from Ksh.4.098 billion to Ksh.3.869 billion (this is the third consecutive year that their profits have dipped) Reasons for the drop: - post-election crisis - weaker U.S. dollar - loss of its KQ 507 - net margin dropped 6.4% compared to 7.0% last year operating costs went up by 5.4% the average seat occupancy drop to 70.4% from 73.6% last year. The company reduced its operating capacity (laid off some workers) to save on costs Cash and short-term investments increased marginally from Ksh.12.18 billion to Ksh.12.24 billion Maintained a 25 days credit term with its suppliers Number of passenger increase by 6% to 2.8 million Suspended flights to Paris will be reintroduced on June 10 Europe carryings dropped by 8%, Middle East routes to Mumbai and Dubai dropped by 8, while the Far East to Bangkok, Hong Kong and Guangzhou recorded growth of 7%. West and Central Africa had 24% increase, East Africa 16%, Southern Africa 13% and Northern Africa 10%. Three more plane will be delivered in the course of the year – Embraer 170 (a regional jet) and three Boeing 737-800’s (one to replace KQ 507 whose report is yet to be released ) KQ CEO, Naikuni expressed optimism that the company will be exempted from Value Added Tax (VAT) when the budget is read in mid-June. Apparently this has been the reason behind their increasing their fares. Industry Outlook: The general outlook of the industry is not good with the credit crisis in developed countries (which has affected tourism) and the ever sky rocketing fuel prices in the international market. Dividend KQ board announced a dividend payout of Ksh1.745 per share, to be approved at the AGM on 26th September. A total dividend payment of ksh.808 million Abdulrazaq Adan Ali has been appointed to replace Dr. Gerrishon Ikiara. Click here for the full KQ Results for the year ended March 31st March y 2008
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9:44
From: KA-INVESTOR
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As widely expected Safaricom’s 2007 full-year pre tax profit rose 16% to Ksh19.9 billion with their subscribers’ numbers increased by 68% to 10.2 million. I had expected Safaricom to register a higher profit than that – probably ksh.21 billion. Here are some of the impressive numbers: - Net income grew by 15%, from ksh.12 billion to Ksh. 13.9 billion - Sales jumped by 29.8%, from Ksh.47.4 to ksh.61.4 - Safaricom market share – grew from 73% to 84% (despite Celtel spirited compe) - The company plans to expand their m-pesa client base by 92% by the end of the year, from their current 2.6 million registered clients to 5 million. - Ksh. 3 billion worth of transfers was made in March 2008 alone! - Safaricom seeks to stamp their national foot print with more expansion to the rural areas (to grow by 10% in the next 10 months) – have they not already made the national foot print? - Capital expenditure expected to remain high in the next few years owing to GSM roll out. (not good) Regarding the stiff competition they are facing, Michael Joseph came shot of telling Celtel “it’s on, B*#!”, but said they are more than ready for the competition. So expect some very crazy rates soon.
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4:08
From: KA-INVESTOR
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I had earlier this year blogged about mobile wars and the stiff competition that major players are facing with the entry of France Telcom (by acquiring 51%Telkom Kenya) and Econnet into the market. Initially Safaricom pretended to snub being dragged into meaningless price wars with Celtel (soon to become ‘Zain’), but it seems this was just a bluff. Today as Celtel announced yet another great 3 bob tariff option for their subscriber, the industry leaders have also announced a 10 bob tariff. Clearly, the wars are not yet over, not now. Even the former loss making Telkom Kenya is not being left behind. After a ksh.26 billion buyout by France Telcom, the former government parastatal has gone forth to sign a Ksh.8.9 billion deal with Ericsson to roll out their intended GSM network as from September this year. Econet is planning to roll out its long awaited network in July The stage for a bruising battle for control of the local mobile phone market is now set and the main target is the safaricom’s near monopoly 9.2 million subscribers (although some of them are absentee subscribers). Other battle frontiers are the cash transfer business, internet service provision and even the intra network call charges. To add petrol to the fire the government is seeking to trim down the current 26% airtime tax to less than 10% in the 2008/09 Budget. This will see the mobile phone charges dropping to as low as Ksh.2 per minute. Life can’t get sweeter than this, can it?
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2:18
From: KA-INVESTOR
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 Celtel International, a leading mobile telephone service provider across Africa could be in a major re-branding strategy before the end of this year. The move could see the company drop the Celtel brand and adopt a completely new identity - Zain. The new name is used by celtel’s parent company MTC Group in other nations except the African market. MTC group says the re-branding is meant to re-invent the regional brand into a global brand. Experts described the new logo as too dark and moody. The re-branding process has reportedly begun in Kuwait and is expected to spread to other MTC-branded operations in the Middle East then Africa. Brandscape has more discussions on Celtel re-branding and other branding issues.
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10:02
From: KA-INVESTOR
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Finally, Safaricom IPO has been oversubscribed and we are set for the minute allocations we are used to. Despite the instability witnessed in the country at the beginning of the year, the IPO was surprisingly oversubscribed by 382% - raising Ksh.119 billion. To some extend I feel duped. I was basing my investment decision on the fact that many people will not buy into it because of the post election chaos. So what could have happened if these IPO had come last year when everybody was itching for it? What about if BoT had allowed Tanzanians to participate in the IPO? Probably we would have seen a 500% oversubscription.
With Ksh.50 billion safely in the net, the IPO has surpassed its goals; namely: maximizing revenues for the Treasury, increasing international investor interest in the NSE and deepening the market. Safaricom IPO is now the Largest Sub-Saharan IPO ever completed (previously SANLAM and Telkom S. A from South Africa were the largest). In Africa as a whole it’s now the third largest IPO after those of Maroc Telecom and Telecom Egypt. Safaricom will most probably announce their ever impressive year end results this May. The company had Ksh.16 billion profits before tax for the 9 month ended December 2007 (almost equal to ksh.17 billion full years profit in 2007), up from Ksh.12 billion last year – 2008 full year pre-tax profit may hit ksh.22 billion. So will the dividend only accrue to the old shareholders (GoK, Vodafone & Mobitelea) or will the new shareholders also be included? I would advocate for the latter to sooth the bitter retail investors – like me - that feel they have been taken for a ride.
What options do retail investors have now? Looking at the small number of shares we will be allocated we don’t have many options: Option 1
Stay put – the bog boys and the QII will – and then when short term speculators will be selling @Ksh.10, top up your account with as many shares as you can using your refund. Then enjoy the ride to supernormal gains. Option 2
Swallow your anger (asira za chura na ng’ombe) and reinvest your refund in the shares once they start trading on June 9th and wait for an opportune time (probably before Telkom K and Celtel K catch up) and price to cash out. Option 3
Wait for your CDS account to be credited and sell the shares as soon as they hit Ksh.10. then chase around for your refund and invest in the next big thing (Coop bank IPO, KCB & HFCK right issues, NMG share split or Equity bank, which is definitely headed for a split).
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9:45
From: KA-INVESTOR
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 Starting at 18:00 GMT on May 10, 2008, locations in Cairo, Kigali, London, Los Angeles, Mumbai, and Rio de Janeiro will be linked for a live program of powerful films, live music, and visionary speakers. The entire program will be broadcast – in seven languages – to millions of people worldwide through the internet, television, and mobile phones.
The 24 short films to be featured have been selected from an international competition that generated more than 2,500 submissions from over one hundred countries. The films were chosen based on their ability to inspire, transform, and allow us see the world through another person's eyes. Details on the Pangea Day films can be viewed here. The program will also include a number of exceptional speakers and musical performers. Queen Noor of Jordan, CNN's Christiane Amanpour, musician/activist Bob Geldof, and Iranian rock phenom Hypernova are among those taking part. About Pangea Day: Inspired by the 2006 TED Prize wish of documentary filmmaker Jehane Noujaim, Pangea Day endeavors to bring the world together and promote understanding and tolerance through film. Pangea Day is a celebration of what unites us, rather than what divides us. Movies can't change the world. But the people who watch them can. After May 10, Pangea Day organizers will facilitate community-building activities around the world by connecting inspired viewers with organizations doing groundbreaking work. For more information, please visit For more information see; http://www.pangeaday.org/
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9:15
From: KA-INVESTOR
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 (This post is in memory of all the 114 passengers who perished in the crash) It’s exactly one year since KQ flight 507 went down in Duala – Cameroon. Up to now, no official report has been released on the real cause of the crash. Kenya Airways is now seeking the help of the Kenya government and the US Administration, manufacturers of the Boeing, to compel the Cameroonian authorities to release the one year old report. The Boeing 737-800 series was only 6 months old and so the issue of a technical hitch could not arise. Two weeks ago, another 737-800 series belonging to KQ overshot the runway at the Entebbe International Airport in Uganda, and once again the incident was blamed on bad weather. On Friday last week, a Kenya Airways flight from Kisumu to Nairobi aborted after what the airline said was a small technical hitch (what hitch?) Although KQ CEO, Titus Naikuni, came out defending his company’s record and said that such hitches are expected taking into account the volume of flights KQ covers, it leaves a lot to beg. The frequency of the recent incidences does not look normal at all. Could this be a case of mismanagement? It’s clearly understood that workers at this flight company are quite overworked and may be under performing not due to laziness, but fatigue. What KQ needs is a complete overhaul and not a re-branding, hiking fares or cancellation of partnerships. The whole management team needs to be replaced with a new one with more stringent performance contracts. Without this the inefficient rot in there will never be dealt with and more disappointing things will happen. We cannot afford to lose more lives just because we want to serve vested interests. Our African Pride is bigger than that. The company is faced with very tough industry times (increased fuel prices, stringent terrorism laws and stiff competition from international Airlines) and cannot afford to goof around. I think making the KQ private owned or fully owned by the public will make it more efficient and accountable to its customers. Things like 48 hours delays of flights will be a thing of the past.
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9:31
From: KA-INVESTOR
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Safaricom has partner with DSTV to provide Mobile TV to their subscribers. Mobile TV is a technology that allows people to view regular live television content on their mobile phones or other mobile devices that they get through traditional cable or pay TV subscriptions at home. 
Research indicate that mobile phones will remain the central multi-purpose device for the foreseeable future, outnumbering any other mobile devices like digital media players and pocket PCs. 84% of mobile phone users in countries where Mobile TV has been launched are interested in using Mobile TV Service provided it is commonly available and affordable. Close to 60% of these will prefer watching the same content that they get on TV at home. News, sports, music videos and Game shows are the four dominant types of content that the surveyed users will prefer watching on mobile TV. Personally I would go for it, if the subscription costs are affordable. The possibilities are tremendous. Getting up-to-date news on the go, watching a live soccer matches when you are in the rural or even following your favorite series anywhere you are. It’s just amazing, I bet the service will be quite popular. The big question however is the pricing, which in turns depends on how much it will cost the mobile services provider. Safaricom plans to price it at Ksh.1,000 as from 1st July, but it will be free before June 30. This will be a boon for high end mobile handsets as most of the users will upgrade their handsets specifically to get mobile TV on their handsets. The recommended phone type by Safaricom cost at least Ksh.25,000 per set. The success however, will be dependent on content offered and price charged for the service Would you go for mobile TV if the prices are kept in the range of Ksh.1,000 per month?
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5:37
From: KA-INVESTOR
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Now that the window of application for the Safaricom IPO has finally closed, everybody is waiting to cash-in in one of the ‘biggest bets’ of the year. Most of the optimists that queued up for hours just to get a piece of this giant offer are now crossing their fingers that the share price will double or triple {to ksh.10, 15 ….or even 20} once the share hit the trading floor on May 9 th. On the other hand, pessimists or mere IPO-refund-adverse investors who by-passed the IPO hope that many retail investors will off-load in the 1st week so that the share price won’t appreciate that much {hover around Ksh.6 or 7} and they can buy as many shares as possible for the long term. In my view the possibility of this is quite minimal, but I’m ready to get more shares in case it happens. With an oversubscription being more than likely to be the case {even with Tanzanians out}, I hope it will be over 200% so that we claw back more shares from the foreign lot. Anything less than this will mean having your monies tied up in refund cheques. With over 2 million shareholders in their register, Safaricom is in for more headaches during their AGM’s. And I don’t understand how foreign shareholders will be handled when it comes to this. 
The waiting has been long and I’m glad that at last this is behind us. For over two years, the debate on Safaricom the company and Safaricom the IPO, its Mobitelea connections and many other things have been making rounds in the blogs. Some heated discussions have taken place, but after all is said and done the Mobitelea culprits are still untouchables. So forgetting about them is the only feasible option.
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3:51
From: KA-INVESTOR
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Confused investors: there seems to be too much information flowing around (Brokers advert and bank loans) and many investors are left confused on what is right and what isn’t. The fact is, where money is involved the truth is usually the first casualty. Many applicants have been misadvised into taking loans without proper analysis (IPO euphoria), opening multiple accounts to ‘maximize’ on allocations and some are even wondering who’s telling the truth after read caveat emptor on the IPO from ODM and Africog. As Concept will put it, there is too much information noise to understand who is saying it right.
‘ Undugu’ keeps Tanzanians out: The Bank of Tanzania (BoT) barred Tanzanians against participating in the Safaricom IPO. The main reason being that Safaricom had not made any commitment to cross-listing at the DSE (I believe this could have been done later on). But it’s evident that brokers there are not taking it in good faith. They have questioned the legality of the directive by BoT. And even after the CMA chairman, Jimnah, tried to lure the BoT to rescind on its decision, Kenyan brokers are saying the Tanzanian snub will not dent the IPO hopes. But the rejection by BoT is a clear blow to the regions integration.
1.65 million applications … and counting: data available at Nation media indicate that over 1.65 million applications have been made for the Safaricom IPO, with 50,000 being online application. Taking into account the enormous amount of applications to be made, I preferred the manual application for my shares over the online one. With the inefficiencies our brokers have I’m skeptical that the online applications will be handled well. But let’s wait and see. One of the leading banks has also issued over ksh15 billion in loans to applicants (could this be Equity bank…and is it the reason behind the recent rally in its share price to Ksh.185?)
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6:40
From: KA-INVESTOR
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Another week has opened for the Safaricom IPO with more investors rushing to apply for the shares. I hope the number of applications will increase this week as most investors have read the prospectus and sourced for enough funds. Last week was a little bit slow, with most applications coming from non-Kenyans. There are several conflicting analysis on the expected peak for the shares once they hit the trading floor on May 9th. But my prediction is the price will settle some where between Ksh.10 and Ksh.15. Applicants who have been going for loans being hawked by banks for the IPO have learned the tricks of the banks to reap them off. Apart from the interest being charged on the loans, loan applicants have to incur several hidden charges before the loan is awarded. Some of the banks claiming to finance 100% of the IPO application are forcing applicants to open new CDS accounts with them, hence cashing in on the transaction charges too. In Uganda, investors are wary of the Safaricom IPO citing the political uncertainness of Kenya. For a country like Uganda that is quite used to violence than Kenya, it’s really ironical. Most Ugandans are in favour of alternative investments on the Uganda Securities Exchange such as the Uganda Clays rights issue that ended just before Easter and the upcoming New Vision rights issue. In other developments:
- Gold production at Lolgorien, Kenya, by Goldplat Plc. (a UK firm that specialize in producing precious metals like gold, silver and platinum group metals, on the African continent) may commence in the second half of 2008.
-The Uganda Securities Exchange (USE) is planning to immobilize their listed companies share certificates so as to increase on the bourse liquidity. Similarly several firms are set to have rights issues and stock splits to increase on the share supply at the USE.
- ZTE Corporation, China's largest listed telecommunications manufacturer and wireless solutions provider, has signed a deal with the Kenya government to construct an optical network covering the western part of Kenya.
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5:16
From: KA-INVESTOR
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 {an article I wrote for the African Executive early last year...might be turning out to be true!} As some stock exchanges, Kenya and South Africa, around Africa are taking a bear turn an unlikely bourse is on a bull run and going even stronger. The Zimbabwe Stocks Exchange {ZSE} has ballooned to phenomenal levels as a result of the bullish patterns dominating the stock market this year. Most of the counters in ZSE have recorded enormous gains with the mainstream industrial index growing by over 600% Despite the big economic crisis that has been facing Zimbabwe; the ZSE has managed to post very impressive performance two years in a row, 2005 and 2006, beating the high inflation rate that plagues the country according to The Africa Stock Exchanges Association (ASEA). Thanks to the on going stocks rally, the ZSE market is now worth a staggering Z$405 trillion in market capitalization, after rising a steep 275 percent in just three days this week. While market capitalization (value of a company calculated by multiplying the number of shares in issue by the current stock price) does not reflect the actual performance of a company, it provides a useful guide to movements in the share price of a listed company. The huge increase in the market capitalization of the 75 listed companies in ZSE suggests, obviously, that the amount of trade is so high. This begs the question; why does the ZSE perform so well when everything is apparently in turmoil? Ideologically, a country’s stock market performance should reflect the performance of the economy. But in the case of Zimbabwe, this does not apply. Institutional investors and individuals from South Africa and Britain are simply eyeing the stock market in the belief that
 The remaining three constituencies (out of the 210 that exist) will be determined by by-elections following the deaths of three candidates prior to the March 29th elections: Pelandaba/Mpopoma, Gwanda South, and Redcliff
prices will soar if and when Mr. Mugabe steps down and investors regain confidence in the country. This has therefore led to a mad rush for the listed stocks, making the market to have an exceptional bull run in a slump economy. Further more, negative interest rates and inflation have caused a stampede for assets, which have driven share prices to record highs, even in real terms. To these investors – both legitimate and crooks – the early bird catches the worm, and in this case there are too many birds that came in early. The ZSE boom simply reflects profits that have been made on paper while, on the ground, several businesses have gone bankrupt. This pseudo profits, for the foreign investors, could yet vanish into thin air because of currency controls that make it difficult to take money out of the country. The stocks rally may also be because there are very few investment options that can provide real returns in Zimbabwe. Most of the other investment options like mining and land ownership lost their value after most of the European investors moved out due to the turbulent political climate in the country. Hard-line policies by the Zimbabwe government created an inherent risk that most investors were left with the stocks market as the only viable investment. Investors know where good returns are, and the ZSE is one of them. This is why it’s performing above all markets in Africa. The ZSE’s future in the short run indicates a continued upside. Equities are the only other best form of investment in a hyperinflationary environment such as the one existing in Zimbabwe. At the moment, there is no reason for an immediate stop in the Bull Run. But as the demand for stocks continue to sore, the market capitalization will eventually reduce. Stocks which are absurdly overvalued will lose more than proportionately when normalcy returns and the market may even be faced with an eminent crash. The viability of the decision to invest in the future of Mugabe’s tenure in power is simply a wrong investment factor. It is not a good sign for the ZSE, especially for a country whose economy is indicating otherwise. It’s only a matter of time before the stocks market follows the downward trend that the Zimbabwe economy has taken, and when that happens there will be no redeeming of losses.
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7:00
From: KA-INVESTOR
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 Subscribers in the coming Safaricom IPO will now be able to make their applications on-line. This is expected to reduce the work load and queues at the brokers’ offices. But already the site is inaccessible only two days after being launched. Then again with the ‘computer problems’ KNEC has been having over last year KCSE results, I’m really worried with what kind of short comings we should expect from this on-line application system. I hope it works out well. The IPO is widely expected to be oversubscribed by over 200% with cold tusker even giving a detailed projection of how this could happen. The IPO is expected to atrract over a million applications from all over the world. As much as retail investors would have wished for the Delivery Versus Payment (DVP) Method to be applied on all subscribers, this will not be possible and they have been left out to run around after their refunds for the next few weeks after the IPO. Luckily, incase of an oversubscription the shares will be allocated pro-rata and if the oversubscription is over 200% some of the share allocated to foreign investors will be ploughed back to the local investors. My caution goes to anyone hoping to buy into the IPO using a bank loan, which most banks are more than willing to give out. CCsf had a very appealing Safaricom IPO leverage product last year, but I’m unsure if they still have it on offer this time.
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6:34
From: KA-INVESTOR
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Safari Park hotel in conjuction with KBC have this Easter special offer with the proceeds going towards helping the IDP. If you believe in helping our brothers and sisters in the camps, please get yourself their for a fun filled family day. Talk of killing two birds with one stone. 
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7:07
From: KA-INVESTOR
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BD indicated in their paper today that investor are selling off their stocks in preparation for the Safaricom IPO at the end of this months or first week of April. Already some stockbrokers (read Dyer & Blair) are recruiting more staff in preparation for the heavy work load. The IPO is most likely to be priced at ksh.5 per share with a minimum application 1,000 shares, to attract more retail investors and build the badly damaged confidence in the market. Get yourself ready!
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3:05
From: KA-INVESTOR
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Brokers have chosen a very wrong time to screw up. And they are doing it big time! Lucky for them, there are several banks (Equity, KCB, Chase, HFCK, Family, NIC, Old Mutual et. al.) out there hawking for a place on the NSE and are more than ready to snatch up their trading licenses and compensate their disgruntled investors no matter how much that will cost. I believe this has made the perpetrators of these hideous crimes against investors to continue with unabated impunity, knowing the tradition of not being charged in court will be upheld. Coming to think of it, it seems there is more than enough demand for a position on the stocks market. WHY not then allow more brokers to be registered or easily license some banks to trade for their clients? The idea of holding the bourse hostage to a few old boys clubs is not working and its time they let free markets set the course or else NSE is doomed. Mumias transport/farmers crisis Mumias Sugar Company is advertising for track transporters for their canes, after falling out with their current transports over payments. The sugar manufacturer is facing another crisis from its out-grower farmers who are threatening to join the striking transporters if the payment per tonnage is not increased soon. 2008 Young Global Leaders The World Economic Forum has announced its list of 2008 Young Global Leaders. Last year Binyavanga Wainaina was nominated but declined the award. You've got to read his letter. Widget Obsession I don’t know if it’s only me, or all bloggers love widgets? I’m not so much into high-tech stuff, but widgets have got me obsessed and I try all the widgets I can get. I like how White African, Afromusing and mental have their IT thing going, although some of those terms they use leave my head spinning. I recently stumbled on FEEDJIT and neoworx.net which have very great live statistics and pimp-my-blog stuff that you can try, although neoworx is not free.
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8:35
From: KA-INVESTOR
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Written by James Shikwati in the Business DailyI joined Kenyans in celebrating our new found power of the ballot in December 30 2002; the surging crowds exhibited decades of energy that had been held hostage by the Moi regime. We put faith in individuals and were disappointed in 2007. In 2006, hundreds of Kenyans queued outside stock brokerage houses to partake of shares in the country’s biggest Initial Public Offering. Bottled investment thirst by Kenyans was exhibited with little time invested in evaluating the existing capital markets institutions. Again, investors are getting disappointed by the day. The Capital Markets Authority (CMA), the sector regulator, has joined the political elites in giving Kenyans a blank cheque. Reports that individuals at the Nairobi Stock Exchange (NSE) had sought to hush up the weak financial position of the Nyaga Stock Brokers, and that the NSE went ahead to advance Sh100 million only for the CMA to later declare the broker was under receivership must be condemned. The collapse of Francis Thuo and Partners was yet to clear the doubts on the suspicion that Kenya’s stock market is a preserve of 18 brokers who seem keen to stifle competition at all costs. According to the Kenyan Capital Markets Eligibility requirements, for a company to be listed at the NSE, it must, among other factors, have net assets immediately before public offer of not less than Sh20 million. The minimum authorised, issued and fully paid capital should be Sh20 million. These, of course, are regulations that were put in place to ensure that the bourse meets international standards while securing the investments of individual shareholders. The requirements seem to be silent on medium sized or small businesses. Studies show that the majority of Kenyan entrepreneurs are locked up in the micro and small enterprises partly due to the inability to mobilise financial capital. Can the policy makers reform the law to permit parallel stock markets that target such groups? It will be easier for the public to invest in such groups as long as they meet the other non-monetary requirements. Stock brokers could engage in over the counter trading, mobilise stocks for medium-sized businesses and assist entrepreneurs to clear cash-flow headache. Kenya should develop three levels of stock markets; the existing stock market, for big companies, medium level market, and low level market complete with graduation eligibility to the next level. The same can be said for the rest of Africa to allow majority to trade in stocks in whichever country. There are many positive side effects of such a venture. For instance, land grabbing, hurried buildings that do not meet architectural standards will reduce because many people will find other ways to invest their money. Businesses will be assured of capital and the resultant investment diversification will promote efficiency, competitiveness and sustainability of businesses. It is very clear, therefore, that to get ordinary Kenyans graduating into engaging in big business, the law must be reformed to fit into their pocket, that is, parallel stock markets must be allowed to thrive to enable all to enjoy the benefits of the stock market. By so doing, the ordinary citizens will also get economically empowered to enjoy the benefits of privatisation and to put in check the argument that privatisation will only benefit the politically connected. The CMA must save Kenyans from being held hostage by one investment club. We have seen the weakness of this approach in political leadership; we should be the last in the business sector to mirror politics in the financial markets. Let us liberalize the stock market and get capital for local entrepreneurs.
James Shikwati is director, Inter Region Economic Network and was recently named one of the 245 2008 young Global leaders by the World Economic Forum
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7:28
From: KA-INVESTOR
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 After acquiring the 'troubled' Solid Securities Ltd through NIC Capital, NIC Bank will soon be re-branding Solid to something like NIC stockbrokers or NIC Capital Securities Ltd. NIC Capital bought a 57% stake worth almost Ksh.231 million according to a valuation done late last year. I hope they will turn around the troubled brokerage firm to save us from yet another collapse. NIC profits for the FY07 broke the one billion mark.
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7:20
From: KA-INVESTOR
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 Resolution health, a health insurance firm, may be coming to the NSE in a few years time. At the moment they are considering a private placement to increase the number of shareholder and value of the company in preparation for listing in the NSE in a few years time. The insurance firm seeks to raise Ksh.600 million through this private placement. In their financial results for 2007, the company recorded a 63% increase in profit to Ksh.114 million. Their turnover increased to Ksh.591 million a 66% growth over the 2006 figures. The company projects a Ksh.910 million turnover at the end of this year and Ksh.300 million in net income. The insurer also expects to increase their member by over 175% from the current 19,600 to 54, 000 by year end. Resolution now join K-rep and Nakumatt who may be having their IPO's next year.
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5:19
From: KA-INVESTOR
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Equity Bank 2007 pretax profit jumped 118% to Ksh.2.4 billion, boosted by higher asset growth which was mainly supported by the increase in funding i.e
- capital injection of Ksh.11 billion (Helios EB)
- additional long-term debt of Ksh.4 billion
- growth in customer deposits of Ksh.15 billion (Ksh.31.5 billion from Ksh.16.3 billion 2006)
Other impresive figure inclide - Total operating income grew 73% in to Ksh.5.8 billion
- Total expenses rose 52% to Ksh.3.5. because of opening 28 additional branches, bringing the network to 98
- Interest income increased by 83% to Ksh.2.8 billion.
- Earnings per share rose to Ksh.6.96 from Ksh.2.77 in 2006.
- A total dividend payment of Ksh.543 million has been proposed compared to ksh.181 million last year.
- Market capitalization grew by 331% to Ksh.54.3 billion in from Ksh.12.6 billion
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0:26
From: KA-INVESTOR
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One of the fundamental pillars of a well-built securities exchange is a strong and efficient regulatory organ. This helps build investor confidence, ensure security of investment and punish market players that do not abide by regulations that promote a free market environment.
Kenya’s Nairobi Stocks Exchange (NSE) has witnessed a surge of rogue stockbrokers. The most recent example is the Nyaga Stock Brokers (which was marred in allegations of unauthorized trading in client’s shares) and Francis Thuo Stocks brokerage firm that went down in similar circumstances a year ago. Despite having a CMA that claims to be functional, the perpetrators of these criminal activities have neither been charged in a court of law nor investigated. Instead, affected clients were quickly compensated and the matter swept below the carpet in both cases.
Clearly, there are fishy activities in the capital market that beg investigation. When Francis Thuo Stock Brokers were suspended in 2007, several complaints were raised to the CMA about Nyaga Stock Brokers, but nothing was done. When the story finally appeared in the local dailies early this month, the NSE feigned surprise and moved quickly to create a Ksh.100 million fund to help affected clients. This happened amidst investigations on the stockbrokers’ conduct.
Nyaga Stocks Brokers should have been suspended immediately, since their operating capital has not only been in the negative but they have been using gains made from illegal trade in clients’ shares to prop up their operating capital. The preferential treatment accorded to this criminal firm is an abuse of a free and efficient market. A market that has a turnover of over Ksh.100 billion per year should be well regulated by a strong, independent and decisive capital markets regulator to avoid manipulations and subsidizing of failure being witnessing at the NSE.
The capital markets regulator can easily be equated to the Central bank in terms of mandate and duty. While the Central Bank of Kenya (CBK) is trying to ensure that the activities of commercial banks and the monetary policy are under constant check, the CMA is trying as much as it can to maintain the status quo, in this case rogue broker are left to rule the market with their ever-present power plays and manipulations.
An integrated robust regulator will encourage a saving and investing culture among Kenyans. It will also create the much required confidence in both foreign and local investors at this time when Kenya is facing a lot of negative publicity from the post election violence. In the absence of a strong body, then the country should be prepared for a capital flight to other efficient and better frontier markets.
The CMA is to blame for our underdeveloped capital market. When the electronic trading system was introduced at the NSE, the CMA was quick to point out how this would help efficiently monitor the transaction and audit activities of brokers. But this never came to be. Instead it opened up a new frontier for rogue brokers to engage in illegal trading of clients’ shares without their authorization with unabated impunity.
It is sad that the number of stock brokerage players at the NSE has remained 18 since the NSE was founded in 1950. The recent entry of Renaissance capital Ltd. only replaced the ill-fated Francis Thuo. This leaves very small room for competition, creating a cartel of few players who decide on who joins the market and how the market is regulated. This has led to the formation of numerous stocks agents that charge exorbitant fees and provide very unprofessional services to their clients. The cartels create a perfect environment for market manipulation for the benefit of the cartel members.
Investment is not static. Market regulations need to be dynamic and constantly reviewed to ensure that investors are protected from imminent mal-practice from the industry players. If the country hopes to achieve the 2030 vision, then it’s obliged to have an independent robust CMA that will ensure a free and efficient capitals market.
(This is one of my recent articles on the African Executive on-line magazine.)
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8:33
From: KA-INVESTOR
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Kenya Re suspended for a day
Kenya Re was yesterday suspended from trading on the NSE for releasing their ‘bad’ 3rd quarter results through the press without submitting it for approval by the NSE first. This is expected to affect the share price today, which may tumble a notch lower partly due to the poor results reported and the bleak future of the industry arising from huge claims occasioned by the post election violence on businesses.
Companies’ results
Other companies that have released their results recently include Accesskenya, Barclays, Bamburi and KPLC. Watch out for very impressive 2007 results from Banks {think Equity, KCB…}
Growthfin financing SME
With Only 11% of the Kenyan population having access to formal banking and many microfince solutions not working for kenyans, FSDKenya (Financial Sector Deepening) through a project called GrowthFin has come up with innovative, tailor made financing solutions for SME’s. FSDKenya is an organization that works with key partners to facilitate access to finance for Kenya's Small and Medium sized Enterprises. This can easily be confused by GroFin which also give financial support services to Entreprenuers. GroFin is an international company, while Growthfin is just a product of FSDKenya, a local company.
Celtel vs. Safaricom
It seems Celtel has resorted to dishing out very good offers and mad-slinging Safaricom to win back their lost customer base. They are now calling themselves the ‘Best Option’, just to indicate who they are fighting against. But sincerely, I like their new Pamoja Tariff. I believe it’s the lowest ever since mobile phones stepped in to Kenya. It doesn’t come better than this.
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8:22
From: KA-INVESTOR
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 Apprentice Africa an African version of the popular TV series "The Apprentice" produced by Mark Burnet and hosted by U.S. multi billionaire, Donald Trump will be opening on tomorrow February 26, 2008 in Nigeria. KTN will has bought the rights to air it in Kenya, but am not sure if it will air it in ‘real-time’ as from 26th when it opens. Unlike the original version where the winner goes home with annual salary of $250,000, the African version being sponsored by Bank PHB from Nigeria will earn the winner only $200,000 (wonder why?)  Biodun Shobanjo chairman of the Troyka Group, a holding company of several large firms, with over seven thousand employees and with a turnover in excess of N20 billion ($167 million) per annum, will be the CEO (Trump) of Apprentice Africa. This is one of my favorite programs and i hope the quality will be as good as the ones from Mark Brunet. If it turns out to be just another Nigerian movie i will be so disappointed.
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0:38
From: KA-INVESTOR
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From my previous post i got this visitor's question that I would like to share with you and the answer i gave. What do you think? His Question: Dear sir, I've been a regular of your blog and I've gained some very vital knowledge while here...to make the long story short I would kindly request your advice on two good buys (share) on the NSE, and your opinions as to why. Thank you. mseewetu@gmail.comMy Answer: Hi Msee wetu, Thanks for leaving your comment on my blog. Regarding the question, I don't think it is wise to buy into shares right now since political instability in the country is quite unpredictable. However, if you so wish to make long term buy I would advice you to go for the following shares: 1. Stan chart
I expect them to give out good dividend when they announce 2007 results. This is a strong company that banks on experience and efficiency. 2. KCB (watch the rights issue)
With an extensive branch network and investment in latest technologies across the East African region, this banks growth prospects look promising. They also have a very strong marketing strategy that sets them a head of the rest. They are planning to have a rights issue soon and you can get gain a bit from the price rally occasioned by it. I suspect they will announce good dividends coupled with a bonus issue when they give out their end year results, to sweeten the rights issue (remember NIC bank) 3. KQ (very long term)I suggest this since it’s a strong counter that has received some battering of late. Their operating cost is high due to the increasing prices on the international market, there has been an increase in competition from international airlines and tourism which is their main source of revenue is badly affected by the effects of post election violence. Adding the resignations of their two directors, many people are off-loading them now to avoid further losses so you can get them at a bargain - less than Ksh.45. I would advice you to get this as a long term counter, 5 to 10 year. But eventually it will pay back well. Several companies will soon be releasing their end year results and most of them are likely to post good profits for 2007. Yo | |
The mobile services wars in Kenya is getting hotter by the day, with Celtel introducing a ‘free’ call service and an internet service, while Safaricom are taking their customers by storm with their hot spot internet service (supported by 3G technology). However what seems to be tight rivalry for the market share between the two has little to do with competition. It’s all about the entry of Telkom (Orange) and Econet who are set to roll out their services by the end of this year. 
