The conventional reasons would be inflation (more cash to spend, less to invest); political uncertainty (only a factor over the last two weeks); delayed refunds (I'm not sure what the scale of this is now as it seems to have gone off the media radar and there are fewer complaints at stockskenya).
The more unconventional answer that i posit is that Kenyans don't play by the rules. As Phillip Ochieng in his Sunday column said, we've imported systems and structures that require us to obey certain norms which we've neglected to do.
- Pre-Safaricom IPO, the select few (QIIs who got d-v-p privilege) were able to hoover up shares on the cheap as retail investors sold so as to be able buy into IPO. This propped the NSE (strangely enough it rose 300 points from 29th of May and peaked on June 6th the Friday before the Monday of Safcom's listing). The d-v-p is thus an unfair system if you are retail investor.
- On Safcom itself, its clear that in 2 or so months time, institutional investors (yes the QIIs) will probably be able to pick up this stock at around Ksh7 or less from discouraged retail investors. Here, retail investors and others who have been chasing KenGen-type profits are not playing by the rules. Many couldn't tell you why shares go up or down, how good an investment they are making et al. All they are interested in is the fact that there is easy money to be made if you go in and come out quickly.
- You then have stock situations such as Equity going up rapidly in a couple of days leading to its AGM on 27th of June. Investors rushed in thinking there was going to be a bonus/spilt announcement at the AGM. Lakini, companies can only announce before going to the AGMs so that they cab be approved.. Simple things we all need to learn by doing a bit of stock research.
- Finally, rights issue. This week, there have been complaints about HFCK allocations. Rights issues like other share issuance methods should always have clearly spelt method of allocation where there is oversubscription. In Kenya, this is rarely spelt out therefore opening the door for large investors (QIIs again) to be improperly over-allocated. Not playing by the rules again...
Where are the NSE/CMA going to get Ksh900m to compensate Nyaga's clients from?