A general comment. The NSE may fall a bit more, but I don't think the trend will last another month. Unless Co-op comes in and inflation stays flat at 27.6% or goes higher. Its therefore time to start looking at what are the good shares in the market:
- KCB-Its annualised P/E for 2008 is around 15. The bank will start benefiting from its regional growth from 2009 and beyond. The only spoiler (which will impact the sector anyway), would be if the economy turned negative because of inflation thus increasing non performing loans.
- AK- Fibre optic cable will be with us in 2009 in one shape or form. AK is an established player in the market already and in the first lane to take advantage of the faster, cheaper internet network. If it can't, somebody will buy a stake in a similar vein to ScanGroup.
- Equity- The share has been good to me and remains my favourite despite the taking a turn since that announcement. Its annualised P/E still looks high but the bank has 3 more years of 60%+ growth to come all at a lower tax point and it would be churlish to ignore the opportunity.
- DTB- Has some of the KCB ingredients (strong and aggressive regional franchise) though not the same balance sheet or branch network. Its slowly standing out in the mid-tier because its able to source funds in different ways from say NIC which doesn't have the branch network or the international connections.
- TPS- Having logged out, I might be tempted to get back in should the price go below ksh58 (which would be its lowest for this year). Great hotel business and a bellweather company for its industry.
- EABL/NMG- These two are back ups in case the NSE confounds my expectations and continues to go downhill beyond 4,000.
- Industrial- Not touching especially those with a high energy cost component (whether fuel or electricity). Electricity price rises will burn margins.
5 comments:
Emerging markets are being driven down by the US slowdown. I would like to think that the US recovery would preceed emerging markets.
I'm with you on KCB, DTB and TPSE. Can't vouch for AK and Equity.
commendable of you to consider buying at this time. I have exited all manufacturing/industrials but that may still nto be enough for the year. The fuel/ electricity hikes combo is a dangerous spiral that has people cutting back on DSTV, beer, newspapers etc. so even service industry stocks may get caught up
They say markets go up and down.This is a down phase.Interesting picks u got
Ssem-we'll see how the dice rolls.
Banks-Some will weather the strain, the only question is when to enter.
Pesa-I detect sarcasm :-)
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