The NSE has the feel of someone trying to touch the floor of a 4m deep swimming pool. While shares are still showing strong fundamnetals for 2008, longer-term investors are now turning their focusing to 2009 and beyond. And it doesn't too pretty if one looks at the economy:
- The weight of the budget deficit is now starting to tell and I expect rates to go up slowly if only because CBK is being cautious with t-bill issuance.
- Higher rates mean higher repayments mean higher loan default rate.
- Inflation is not going to come down below 20% before Q1 and only if concerted eforts are made to tackle it. Means reduced investor wallet.
- Diaspora
- Oil companies are showing usual sticky pattern in reducing fuel prices which keeps manufacturers and others expensing higher
And ofcourse western markets haven't hit bottom yet. They'll do this when we get quicker action on assets. 2ndly, GM and other US motor companies are now on the cliff edge. Honda is feeling the effects.
Bottomline: I still expect the NSE to touch October bottoms before we close 2008.
PS: From last week, Safcom announced worse than expected results for H1 with previously unexpected hits from loan (gave an fx gain but it could be an fx loss another day). Total finally got some bucks from KRA which helped double H1 profits while Marshalls' went the other way.
2 comments:
Fuel prices have dropped for several reasons (some also experienced in more developed economies):
- High gov't taxes. GoK in typical fashion backtracked on lowering taxes. The bastards.
- Inefficiencies at the port.
- KPRL & KPA & KPC are inefficient. Their charges keep on rising.
- The sudden depreciation of the KES. It has dropped over 23% in less than 1 year.
Difference with us and the west is the leaders are working day and night trying to get their economies out of the office.
Ours are sleeping day and night.
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