Monday, June 15, 2009

NSE touches 3,000 next stop is 3,500

NSE is up 30% from the March lows and now has in-built momentum to at least go up another 20% by September or year end depending on when GoK starts selling t-bills.

Fundamentally, the picture is still the same, with firms and especially manufacturers looking at a grim 2009 in which they'll struggle to match 2008 perfomance. Most banks are looking at 40% tops yoy growth with significant loan loss provisioning to be done. BBK especially I suspect has either hidden talent for creedit scoring customers while hawking loans on the streets or this will be a grim yr.

Telecom sector (basically Safcom and AK), will almost certainly recover previous share pricepeaks (at least in the case of AK), on the back of expectations about how fibre optic will help revenue growth. Don't forget however that internet providing will rapidly become volume business.

The main driver for the NSE rise is that risk apetite is back. Many investors who got burned from around October have probably been able to pick up some liquidity and are now back in the market. I also expect to see focused attention from Western funds back into the NSE thus the rising boats effect on every share.

Which are the good buys? CT has a fairly good list. I'd add TPS, NMG and DTB from Aga Khan stable. And if you are feeling aggressive, pick up Centum given its portfolio will recover in line with the NSE.

7 comments:

Ssembonge said...

Compared to RE the NSE is under-valued. Investors will soon forget the downturn but I'm not sure of the timeframe of their return.

kainvestor said...

the upturn is particularly slower than it dropped. wonder if local investors still trust brokers with their investments.

Village Analyst said...

Its an opportunity squandered for the much needed changes @ the NSE. They'l now be harder to do if the "don fix it if aint broke" maxim is anything to go by.

Maishinski said...

Daimm. I was hoping for even lower prices...

:-)

Ssembonge said...

From what I'm reading the up-turn is on very disappointing volume. This means that the move cannot be sustained or the highs may not hold. I have a feeling that the shilling will determine the direction of the NSE.

MainaT said...

Ssem-without significant uptown in the wider economy I'd say 3-3,500 would be an ok level. Having been able to follow the live trade boards, but looking at normal order book on rich.co.ke and excluding ramping, it seems there is some appetite. Local kenyans will push the NSE to 3,5 for sure.
Maishinski-always obey WB's only useful rule, by when others are afraid.

MainaT said...

Kainvestor-such for alpha overcomes alot of things.
Village Analyst-I used to be naive...