Tuesday, January 26, 2010

Investment destinations in Kenya

  1. Real estate: Growing population; growing urban population; fewer alpha investment opportunities (past debacles at the NSE will take a while to be forgotten) , mean real estate is now far more liquid than it was even 2 years ago. Whether buy and hold merchant; buy and live to sell later; rental (residential/farming lease/commercial) are available avenues.
  2. Agri-business : farming will grow to big business for the discerning. How so? Population growth at 2.5% per year coupled with urbanisation mean that one demand for food is higher overall, but the ones who can farm are moving to towns in search of bright lights. Couple this with uneven weather and you have a situation made for earnings growth in focused farming of any type of crop.
  3. Bonds : at 12.5%, a bond whether or government released is now a valuable portion of a unit trust/portfolio manager.
  4. NSE stocks: Rains have stopped which if they keep means they didn't reach the end of Feb. Worrying for farmers (who have become the best practitioners of rational expectations in the past, many would plant with a day of heavy rainfall-now many wait a week and then if it rains for 3 and stops, the crop can get destroyed... and the wider economy. But the index is 10% of 4,000 and it won't take much for it to get there
  5. Venture/incubation : there are lot good to great commercial ideas out there. Which just need to meet with capital. And a good deal of patience. And here is the thing. In places like my home province of Central, young men who can't financing are being drawn to Mungiki where they can get some help either to commandeer finance from local raia or even get that capital.

7 comments:

Maishinski said...

I still doubt real estate... there could be a bubble there.

Agri business is on my watchlist as it has huge untapped potential.

12%pa returns offered by bonds is to little for me. But thats because I am a risk taker.

NSE is my kind of playground. Rains will continue because the clouds are stil there. However it may be too late to plant new seeds hence better to nurture existing crops and harvest at the right moment.

ICT has some promise. Though that seems tied to fibre link costs.

As for the Mungiki aspirants... Easy-come Easy-go. Lasting wealth comes from sweat and hard work. Seek God's blessings in your endeavors.

If someone can dream up a big idea they have the capacity to think of creative ways to fund it. If the owner can show ability to legitimately raise even 20% capital, it becomes easier to motivate "angel investors" (they know ther person is a dependable go-getter who wont let them down).

Empower Kenya said...

@Maishinski
There is no bubble in real estate. Kenya is even attracting some big ballers from India (check out my blog for the story)

NSE is def on the rebound...mainly driven by foreigners and fund managers.

ICT will continue to grow and the market is nowhere close to being saturated.

I am very optimistic in 2010

MainaT said...

Maishinski-no bubble in real estate apart from maybe the high class areas.
I'm not as gungho on NSE as i once was. 2012 is still the big elephant in the room.
Empowerkenya-ICT urgently requires new leadership.

cypress said...

No such thing as a real estate bubble in Kenya because most transactions are done in cash for lack of credit facilities. I do agree with you that prices are superficially high, which means, that the poor are being priced out.
Anyone waiting for a “bubble bust” to get a piece of prime Kenya will only find themselves priced out as well.

Maishinski said...

MainaT if 2012 is the elephant then Real estate is the grass.

Fact is NSE is more liquid than real estate. Nothing stops you from making a "tactical exit" in Q3 2011 if things looks fishy. The warning signs will always be there.

In any case, the Kenya police are doing a good job at improving the security situation. A lot of their work nowadays is grounded on undercover intelligence, hence pre-emptive.

Not praising them yet (still a lot of room for improvement) - but am simply recognizing good work when I see it.

:-)

Maishinski said...
This comment has been removed by the author.
Maishinski said...

..and the cash buyers.. where are they getting the cash?

There are rumours you know... anyway, demand supported by money laundering is artificial.

What happens when anti-laundering bill is enforced?

:-)