Wednesday, February 28, 2007

NSE: The Bears Haven

Yesterday could have been termed as Black Tuesday. The Chinese stock market went spiraling on rumors of some crackdown on illegal deals...whats so amazing was that majority of stock holders are locals; for those who don't know, the Chinese don't like foreigners owning major shares; so what they do is split the shares into Classes A, B , C...> So with all these categorizations and bureaucracies, a foreigner owns Class B shares and still its hard(the last time i tried to get a piece of the Chinese market i had to go through some company on LA.) Anyway about $10 billion vanished at the end of trading; which had a ripple effect on world markets and DOW plummeted by 416 points.

And Al Greenspan came to my mind with his recent comment that we are heading for a recession. I can sigh a relief because i don't own no US based stocks at the moment and they have never been my favorite...i don't see why Uncle Sam has to eat off my sweat considering there are millions on welfare who can work hard and yet they sit on their asses and do crap...yet there is a monthly check coming in...or those black 'mama's with 4 kids from 4 different baby daddy's who can work but just wait for those checks and have more fun with shopping at Tiffany's and drinking Hennessy and Jose something as one Poko Hunter calls it. Its so ridiculous that Uncle Sam has the guts to ask me to pay taxes on $400 i made on a stock deal and on top he had already taxed 32% .Bottomline; When they elect me as Governor, welfare will be based on what you can do to help ;"Work and get Paid"....> I can see the those white voters clapping for me...> "Join the Road Gang and you will get higher welfare and we dont have to hire more state workers" .Anyway that a story for another day.

Back to my dear NSE...its been an amazing 2 years at the NSE with outrageous stock prices and an index of 6000 considering that it was almost 3000 some time ago....> Yes outrageous stock prices which have hoodwinked so many common 'mwananchi'. They are even doing reviews in the UK Guardian. I would say that there have been some good information coming in from my favorite bloggers; Riba Capital, Bankele, and Cold Tusker. You people have done a great job and i would say that you do good research and after my so called study of the market i will once in a while make a reference to your postings...Good Work.

Kenyans seems seem to have fallen hook and crook with the NSE...> people made their money intially on Kengen which was oversubscribed to Eveready which was a bad idea(Merali is a speculator and i wouldn't buy shares in his companies). The ordinary Kenyan in the stock market has this idea that the stock market is on some Viagra and will keep on rising and rising..but what they forget is that the effects wear off after some time...was it 3 hours?
Anyway with the bullish run, everyone from 'mama mboga' to Wanjiru plunged most of their savings into the market with initial success but right now it seems people are losing or not making any gains.....> and they should know its time to get out...tell you mother, father, brother, sister e.t.c to watch out....for those who remember Asterix & Obelix, Chief Vitalstatistix says," The Sky may fall on our heads tommorow," but "Tommorrow never comes". But it might be for the NSE.

Still on the NSE, i would say that i very disappointed with th CMA and couple of brokers who have really misbehaved. Thanks i took off from Francis Thuo a long time ago....> no more brokers for me....i prefer having my siblings and parents deal with my accounts...and no worries of what will happen with these rogue traders...its ridiculous that East Africa Cables would quadruple their prices...same for CFC Bank jumping to Kshs.900 which actually not the first time...when CFC was floated on the NSE, it was issued at Kshs.5 and 3 months later its was at Kshs.600 and that was around 1995.. Then i think it dropped back to the Kshs.30's in some few months time.
Anyway i think there is too much 'roguish' activities going on in the market and this CDS crap is not worth does a trader sell client stocks without authorization? No wonder it looks good on paper. Another issue thats bothering me is all these split issues we are having...did someone not tell them that its called diluting the value of the stock...i would rather have 3 buyers at Kshs.560 that have 100 buyers at Kshs.35. The more shares out there, the less the earnings .

NSE predictions for 2007.

The NSE stock index will be plummet to 4000 or an upper 3800's. Looking at the listed, companies listed the Return On Capital , Earnings Yield and P/E are not favorable in the long end. With the coming political season ipredict a break in the prices.
I can see Kengen at Kshs.15 and even a new share issue won't jumpstart the price....i can see Eveready at Kshs.7.50; Mumias at Kshs20.00....> Can u smell the bears coming in....> The dividends that are being issued remind me of the NSE in the 90's ...still remember those checks ICDC would send my dad...> 15cts per share which would cost you more on bank charges that the amount paid.

IPO Opinion.

Say HELL NO!!! to Kenya RE, Wananchi and all this stupid upstarts who just see listing as a means to make $$$$$$$$ forgetting that the money raised is to expand operations. I am even going to avoid Safaricom for now until am sure how the new CCK rules will affect their business model...and did they not just announce that there will be a hit in profit earnings?
Remember Newtons theory where anything that goes up can come down; diversify your risks and 2007 will be a good idea.

Personal Opinion.
I have always been a bear and trust me i will snatch these stocks once they dip and i don't care waiting for another 2-3 years to even out...have done that before and will be doing it once more. For those interested in predicting the Kenyan markets check, Betonstocks. You can make predictions on how a certain stock will perform.
Take your Money to Zimele, Old Mutual, Stanbic e.t.c these are unit trusts with the exception of Zimele which is more of an investment group/fund and they don't need lots of $$$ to start...minimum is Kshs.5000 without administrative fees(these suck) and returns have been good on the 2 products they are currently offering; Money Market and Balanced Portfolio...they stopped the Offshore fund.
The unit trusts are expensive and we are talking about a minimum of Kshs.500,000 ....> ChaseBank has some investment schemes that start with Kshs.100,000 but will update you once i get the information. Happy investing and keep the eyes wide open.