NSE weekly catch up- out of step

NSE has in the main been tracking western markets this year. With the odd variation here and there. And this week's 61pt is one of them. I suspect a portion of this is driven by the 25% post-spilt Equity drop. My own estimate was that the inflexion point for Equity spilt shares would be Ksh10, but Friday buy and sell volumes were not that different. So it appears that for now, principals are not reducing stakes.

Results:
ScanGroup-now with a stake owned by WPP one of the world's largest ad firms announced 29% PAT uptick on 2007 driven (translating to 20% in EPS), by 21% growth in turnover. DPS is 0.75, a little lower than prior yr. ScanGroup has a huge market share in Kenya (53%) and a third in TZ and Ug. And these markets are growing. Forecast for 2009 is 10% yoy growth. Btw, I predict ScanGroup will be fully/majority owned by WPP within next few years.
EA Cables was first off the block with quartely numbers. PAT was down 19% on turnover falling by 3%. One of the reasons given for this is a bit ambigous to say the least. Apparently LME prices fell. LME is ofcourse London Metal Exchange. So why would falling copper and aluminium prices be a bad rather than a good thing for a company that uses these are raw materials? I don't recall mention of any hedging in the annual results.

Macroeconomy: World Bank projects 2-3% growth for 2009 while Africa Development Bank projects 5.5%.

Other markets: A nice study in contrasts with USE by Bankelele.

NSE weekly catch up: Equity, EA Cables release FY

Another low week (2,848 close), but I think Equity has brought a little cheer back into the bourse and will spar some little upward momentum for a few weeks. BBK announces on Tuesday and EABL announces interim numbers on Friday and KCB possibly the Friday after. On the negative side of the account, the Nyaga saga has really exposed us to what many of us feared was going on and from now onwards, no conspiracy will sound too outlandish. Some very practical steps for safeguarding your NSE pocket. No more calling broker dealers to place your orders, it was always there but its become a convenient way for dealers to eat your funds. Like JM's comment too.

EA Cables announced full year PAT of Ksh462m, 12% higher than prior year. Its a good result given the challenges rote by high copper and aluminium prices, high utility (elecritricity and fuel) costs and and a very competitive market in a generally lacklustre economic year. Its strategy to spread into the rest of EA actually held it in good stead. For 2009, with much lower commodity prices, I'd expect to 20%+ year on year growth. DPS will be Ksh1, 10% higher than prior year.

Equity's FY is analysed here. It bears repeating. Non-shareholders might be happy at a chance to get the stock at very low prices, but for us existing shareholders, it leaves us cold because it adds risk that wasn't really necessary. The history of spilts at the NSE is almost exclusively a bearish one.

Unga saw 33% turnover growth apparently wiped out by fx and will miss FY by 25%. Very strange especially as one would assume scarcity in maize would equate to better gross margins.

Other Markets:

Gold is fast approaching $1,000 as investors survey other instruments' waastelands. FTSE is in a bit of a lull at the moment. I think many were hoping for greater detail around the Obama plan which as yet seems as muddled as Hank Poulson's botch-up last year. Lloyds TSB is now caught in the short-sellers' sights following HBOS' update.

Results season: Things to look out for

Most of the full year results will be released within this month and next. With this in mind, I'll be looking at for following in addition to the usual yoy growth in PBT, cash flow, debt.

Banks:

• Growth in other income: As long as CBK is determined to keep interest rates low and interest margins remain under pressure, banks need to diversify their income. Equity, KCB, StanChart and to some extent, NIC should see a very good year given entry into custody business by Equity and fx volatility for the other 3.
• Loan loss provision-most banks grew loans hugely in 2007 compared to 2006. Then the economy ground to a halt in 2008 and has since not really resurrected. My expectation is that loan loss provision which in ordinary times accounts for an average of 1% of the listed banks total loans will account for around 3% of the additional loans that were given in 2007 vs 2006.
• Risk management- given CBK's intentions on Basel 2and the world we are in now, this one will be of particular interest to me. Banks need to be clear about the risks they face and the contingency plans in place.
• About time HFCK showed some positive momentum.

Of the other financials, PanAfric will have benefitted from its associate's strong showing in Q3.

Industrials:

Impact of higher oil, electricity prices and a weaker Ksh/$ rate, makes it harder to call this sector. ARM is of particular interest especially keen to know if its gaining cement market share against the two. EA Cable's 2nd half should much be improved given copper prices have gone through the floor.

Commercial and Services:

With the exception of TPS (will have a horrible yr given its start), the rest should as minimum not see lower than 10% growth compared to 2007. CMC and Car & General have already come through very strongly and it shouldn't be different for the others. AK is of particular interest as it needs to show momentum ahead of the fibre optic arrival in Q2-it will also be interesting to see how its residential business is doing.

Forward looking statements:

NSE shares rarely do this, but it would be good if counters gave a view on 2009.

NSE weekly catch up: Results season kicks off

If you were looking to buy to take advantage of capital growth induced by the results season which kicked off yesterday until end of March, then you may well have missed the bus on some shares:

Equity was up 22% from Monday and there was this intriguing foreigner sale which no Media house or broker seems to have commented on...
AK was up 12% and has a lot of momentum for the rest of the year in my opinion
EA Cables was up 11% and is another (together with Centum-up 10%) which I see having a solid year shareprice-wise
Unga with results already out and its 1 for 5 bonus issue closure day behind it (30/12), will probably slide slowly (down 7% since Monday).

AIM corner:
Any prospective shareholders of Limuru Tea? I forgot to mention that the Tea firm (which now belongs to Brooke Bond given Unilever had a 54% holding), is doing a 1 for 1 bonus share issue. For which the books closed on the 18th of Dec :-(
However, City Trust (minority shareholder of fast rising I&M bank), is also doing a 1 for 10 bonus share issue and this is still open.

AOB: Nice of Reuters to highlight what a miserable yr 2008 was for us NSE investors. Not sure though where BDA got its 3.3% rise for Equity in 2008 (opening price was Ksh150, closing was Ksh176).

Macro view: I still read press reports that peeps are not getting the cheaper Ugali, so who is? Hopefully, we'll get a decent finance minister this year though that will have to wait for the old man to wake up.

2008 Investing Highlights

This was me end of June, this is me today:

Kenya
Sold: In the money (NMG, TPS, ARM, NIC) & Out of the money (BBK, EA Cables)

Reduced: KCB

Switched to: Equity, Cash

Hold: Equity, AK, miniscule KCB (2,500 shares) & Safcom & Cash

TZ
Bought: Dar es salaam Community Bank

Zambia
Bought: Pamodzi Hotel

Theme has been to move from diversification of risk to concentration of gains. Has it worked? Yes and would have been even more fruitful if I had kept to one of my golden rules of never adding more shares unless the price of the said stock is lower than my average cost so far. I got punished for buying AK at Ksh33.50 thus driving my average for it to early 20s and Equity at Ksh301 and Ksh250 thus driving average to mid 120s.

Overall for the year: average i.e. below 30% gain. Had to rush out of BRIC nations just to stay in the money and NSE has been so-so but thankfully my offloads were all in July/Aug time.

Other investment decisions:
Good ones: Missed out on SIB’s private placement. Having opened a trading account and just about to send the funds to buy some shares at Ksh120, I once more request ed a copy of its accounts. Still not received even today. In the meantime, I now hear that the initial placement failed and subsequently the shares were retailing at ksh30!
Tough ones: After sweating to set up the investment club, I decided to move on because of strategic differences. So why I my still blogging as KCIG? Investment club changed its name.
Bad ones: Hesitated when was Equity was Ksh116…

Investing resource: Thanks Aly Khan for the live prices streaming. Some of my last minute price adjustments relied on the live feed.

Key learnings: Self-discipline, early bird mentality and thereafter liquidity and investors confidence are the key ingredients that turn good company/market fundamentals into investor bounty.

Acting GM confirmed as CEO at EA Cables

George Mwangi has been confirmed as the CEO to replace (the irreplacable?) Mugo Kibati. One thing at least he has some experience of EA Cables and of the seat having been in acting capacity for a while. I wondered why the share has been gaining in recent days... Copper prices have improved of late, so I expect better Q4 than earlier quarters where EA Cables was rescued by it regional reach.

NSE Update- technical hitch gives way to bounce

The NSE was a one way bet, until the "technical hitch" on Thursday. Even the papers had the quotation marks around the technical hitch. Equity for example had 1 share in demand for every 8 suppplied on Wednesday. On Thursday after the " ", the ratio was the almost the same but opposite. For Equity, this sounds okay given it had just announced very good results, but AK, KCB, EABL and others didn't announce their results on Thursday. 2ndly yesterday was a surprise, because although Equity announced its results on Thursday morning, the 10% rule was lifted yesterday. In any case, my take is the two days rise was aimed at Co-op IPO and investors (as opposed to speculators/traders), should eiether step in slowly or wait for a full week of solid volume rises.

Results announced in the last week:
KCB- up 69% yoy driven by strong F&C and strong jaw effect between costs and income. Flat vs. Q2.
DTK-up but can't locate its results
KQ-down 63% yoy, but a commendable perfomance in respect of growing revenue in the first half despite everything. It must get its customer service and hedging right to recover. Really needs a new CEO.
ARM-up 15% yoy on similar turnover growth. Cash flow a bit stronger after loan.
Equity- up 277% yoy for the 9 months driven by Safcom IPO and Ksh0.2m higher than my forecasted fall from Q2.
HFCK-up 36%, Equity has a 20% stake and is in my view, unlikely to take a bigger chunk of HFCK for the time being.

Elsewhere, EA Cables appointed James Mworia, a young guy from TC as its new CEO (apparently).

NMG share spilt confirmed

Spilt shares start trading on 11th of August with books closing this Friday. Moderate share growth and a fat dividend makes NMG a share to hold for the longterm. Don't all rush in now.

Total announced a doubling of profits for the first 6 months, with turnover growing by 30% (petrol-pump prices I'd say given its probably able to sell old stock at seriously good margins); but the key driver was much slower growth in costs.

EA Cables was pretty flat despite a good first quarter. Me thinks exit time may be very near. The Kenyan business which is still the major business driver is simply not performing as well as I thought it would be given the construction work still on-going. Still, I can hang onto the shares until mid 2009 to see if fibre-optic will have the impact I have included in my forecasts.

So who is going to replace Mugo Kibati @ EA Cables?

By all accounts, Mugo Kibati is an exceptional chap. According to this rather sugary profile by Generation Kenya, he has been a first in many arenas. And this explains my worries about who can fill his boots @ EA Cables. The company has many challenges not least increased competition to supply KPLC and the rest of Kenyan construction market. Its expanding extensively and that requires a committed and seriuos CEO.

Recent price fall in the counter reflects the nervousness about this situation.

NSE Stock Portfolio: 6 months into 2008

Generally, I haven't traded much this yr, not because of lacking opportunities, more because of a busy schedule elsewhere and an evolving strategy. From buying and holding for the whole presidential cycle, I am now more inclined to buy, and hold as long as the stocks are meeting the short-term mini-goals i.e. FY profits etc.

Bought:

1. During the January clashes: Equity@125, TPS@58 and Barclays@65
2. Nation Media Group@326 just before it announced its results
3. A few Safaricom during the IPO

Switched: after its Q1 results, sold-off my whole Barclays portfolio and switched into Equity@250 and Access Kenya@33.50

Overall Portfolio: Also includes ARM, KCB, NIC and EA Cables.
Overall trading from H1 2008: Very good returns....

Running the ruler over:

• Nation Bank of Kenya
• Safaricom while waiting to see if it'll get cheaper than ksh7.40.

PS: The above is my own personal stock-trading account. For KCIG, we outperformed the NSE for H1 2008

Monday Shorts

Mugo Kibati's impending departure from EA Cables doesn't sound right. The MIT engineer was airlifted from NY to come and turnaround the then underperforming cable company in 2004. Apart from the profitability growth, he has managed to make EA CAbles a competitor in TZ and further on. The company has just completed a factory that will strategically position it for the incoming fibre optic. So his departure now seems odd and might be due to:

1. The cashflow rumours being true, and thus he is taking the flak or running off before the proverbial hits the fan


2. He sees bad times ahead.

I expect price to drop steadily until a statement is issued on the way forward.

Company's only ever spilt businesses into distinct subsidiaries as opposed to strategic business units if they are planning to sell. Is this ARM's (thanks Bankelele) intention? Note that ARM is primarily a manufacturer of chemicals.

Britak's retention of its highly-rated CEO for its investment arm was a shot in the arm for its plan to do an IPO-which I hope is very soon.

Excellently researched piece on NMG (a share that can only grow further).

EA Cables, Safaricom & KCB

Just how oversubscribed was Safaricom? Based on various hints from brokers, probably in the region of 200%. But that is for the retailer section and what I’m wary of is whether there was enough interest from foreign investors. Reading the prospectus, it seems that these were supposed to have gone through Morgan Stanley, yet many local brokers are saying they’ve received applications? Secondly, the book building price range was (according to the D&B summary anyway) supposed to have been announced by 9th of April and then FII would apply for their allocation. The only way I can see this being fully subscribed is if retail section is oversubscribed by more than 200% thus some shares are taken from the FII section.

EA Cables has spectacularly surprised by announcing 59% rise in PBT (43% PAT) despite the almost two months of disrupted business. It’s secret? Regional growth that is reducing country-specific risk and also aimed at tapping into economic growth in our neighbour nations.

Seems the rumours about possible oil in Uganda are now confirmed. Tullow's shares (one of the few shares I hold in the UK) has started racing after it announced that that it may have a billion-barrels of oil in Ug. Better get some more Ug shares as well…

After Equity, KCB is now rumoured to be in play for a foreign investor to come in possibly UK’s largest bank HSBC. Very curious. HSBC only has a small offshore piece in SA (via its acquisition of the old Midland bank). However, it’s also involved in an Africa fund joint venture with some Prince Hamed or the other. In any case, what a vote of confidence it would be for KCB, and Kenya generally!

Rumour share-trading

One of the hallmarks of a bear/bull market these days is that rumours become an important component of your stock trading. You have to understand when a rumour is driving the market; which way is it driving the market; what is the rumour; who is the source of the rumour; and more importantly why the rumour?
In Kenya, rumours fall into three types: rumours that will lead to increased number of shares; rumours about merger activity and bankrupt/corruption-type rumours:

• Increased number of shares via bonus issue: usually done before results announcement, tends to get very giddy response and only happens when the stock is doing exceptionally profitability-wise. These are the rarest because they don’t happen often and tend to be credible. Secondly, they also have a very short-window i.e. will usually happen just before the results are announced. This is the best bull to ride, but requires a lot of analysis of the motives from the stock’s point of view.
• Increased number of shares via stock spilt: very popular rumour and will usually affect a share with a price above Ksh200. KPLC is probably in a class of its own on this one.
• Increased number of shares via rights: also popular, but as investors become more savvy, they’re waiting for firm details (especially on pricing), and thus lacks the bull-ride it had in 2006 or early 2007
• Merger activity: usually focused on banking and cement sectors. Last year was about NBK and later on about Equity. Rarely get any reaction unless it’s tangible.
• Bankruptcy/liquidity/corruption sagas: usually coincide with a bearish market and may occasionally have political undertones. Equity has been the main victim (of both of them) even after Hellios entry. After benefitting from the 1-2&3 above, EA Cables also became victim early this year of a politically-driven rumour about its inability to meet loan repayments and pending bankruptcy proceedings.

Outside of Kenya, rumours tend to be intelligently targeted but don’t defer too much from above apart from those on profitability. Barclays, HBOS and Lehman Brothers have all been recent victims of the liquidity/bankruptcy-type rumours some very targeted by short-sellers. During the bull market era aka leverage era, Barclays used to be linked to every bank merger and Lehman to UBS’ investment banking ones.

Bottom-line though, the old line of buy on fundamentals sell on rumours, no longer suffices.

In other news, the best one line on credit crunch comes from a certain Omaha stock trader by the name Warren Buffet “You only learn who has been swimming naked when the tide goes out”.
Finally, my commiserations in advance of tonight’s Champions League game to Arsenal fans. Good wine takes a long-time to mature. Your time will come, but not tonight.

Investment Strategy- Go Regional

One of my earliest posts was about an investment strategy for a 5 year investor at the NSE. This post updates those themes with one extra caveat, regional expansion.
If Kibz, RO and other politicians can change the habits of a lifetime, Kenya will be an African economic powerhouse by 2011. The upside of this is that the NSE will outdo its 2002-6 performance, as foreigners start chasing the frontier markets in earnest. The downside is that firms are now getting competitive and in every industry, listed companies will feel the heat.
If your chosen firm doesn't have any plans for East Africa to start with, then it'll struggle
to grow beyond being able to handle compe in Kenya. The 2nd important reason is to reduce the Kenyan political risk on your chosen stock which will be there in 2012 (if there are no elections in 2010 which I hope). You need stocks that can effortlessly grow come funny politics or not.
Both TZ and Ug are growing are at roughly similar rate of around 5% per year.
Ug is probably the easiest market to access grew at an estimated of 7% for and has opportunities in construction; banking; large infrastructure projects and the clincher, possible oil wealth.
TZ remains largely untapped and possibly hostile to Kenya but the EAC economic zone will overcome the latter.
Further on we have Rwanda and Burundi. Rwanda is working furiously hard to become an investment haven despite the smallsize of its  market and language barriers, is seen as having huge growth potential. If Kabila can breakaway from his father’s habits, there is not enough space to write about Congo's potential especially in commodities. Ethiopia with the 2nd largest population in Africa and an economy averaging 9% presents opportunities in agriculture; huge hydroelectricity potential; potash deposits and of course historic tourist sites.
In terms of stocks already expanding regionally, EA Cables; NMG; EABL; KCB ; Kenol; TPS and DTB are at the forefront of this trend.

NSE update

NSE has gained 10% on its opening position on Monday as investors see the light at the end of the tunnel on the political front. Given;

1. its the results season and bumper dividends, bonus issues and even rights issues are expected to be announced
2. other longer-types of investments are on-hold because of the ethnic cleansingthe NSE should bounce back to its 5,500 level IF a mutually agreeable position is found next week.

EA Cable announced 41% rise in its PBT, against a background of rising copper prices and increased finance costs due to its loan for its new plant in Industrail Area. At current share price, there is an instant 10% gain to be made over the next month not to mention a DPS of 90 cents. Fibre optics will be here next yr, so its also worth it for medium and long-term investors.

Unga announced yet another earnings warning, no surprise given the RV upheavals.

Sassini is begging the CMA not to fine it for being late with its annual results. Kwani? Its as if it didn't know that year end had arrived...

The NSE & the Kofi mediation

As a general rule, I find an over-concentration on politics not only  soul destroying but also reminds me of that primary school saying that empty dembes make the most noise. Thus with our great nation dominated and adversely impacted by siasa mbaya, the adverse effects are being felt on our economy.

With 44% of our population classed as being below the poverty line (i.e. earning less than a dollar a day), the urgency of getting our economy growing constistently for like 10 + yrs, means that if a complete overhaul of the constitution is what it'll take to avoid the 5yr need to slaughter the "outsider" communities, lets get it done pronto. I was speaking to a friend who is in the insurance industry back home. On a normal month, he'd expect to write between ksh1-2m of new business. In Dec, he actually had one or two contracts of around that amount ready to sign in Jan. As it is, he hasn't written anything in January. Which is ironic given the prevailing situation where many businesses in Eldoret and other towns west of it are finding that the only way of redeeming their investments is to go for the Ksh1bn thatKibz announced. Reason? Many didn't insure their businesses. Tell me,when you have a business perhaps transacting ksh1m per month or more, shouldn'thave insurance especially where you have stock?

The bourse continues to sway back and forth and is now reflecting the fears and uncertainties about the direction Kenya's economy will take should are solution not be found. What remains on my stockwatch: AK, EABL/BBK ( for defensive purposes), EA Cables (who is its competitor for the fibre optic market?) and as always Equity should it breach KSh120.

As an aside, changes in the NSE matters to different people in different ways (an oxymoron I know). As an investor, when you want to know the value of your portfolio, you don't pay attention to the index movements, but to what you hold. Hence, I tend to follow the market cap number more closely than the index itself. For stockbrokers, market turnover matters most because that is what dictates their commission. For pension funds and unit trusts, it's the index. For hedge funds it's the volatility of the index. To gauge market sentiment, have a look at the volumes being traded (although its better to look at bid vs. ask). Long-term prospects are another matter.

Anyway, in my etravels, I picked up three articles worth a read. By the way, I think it's true what they say, if you repeat a lie enough times,it become a truth. Sample  George Bush and weapons of mass distraction in Iraq; the myths about who dominates who in Kenya. In all this I forgot that out of Kenya's 44 yrs of independence, m-o-1 ruled 24 of them...

1. David Anderson article on kenya's siasa mbaya
2. That article about RV's warlord
   
3. Senegal president's take on Sino-Africa relationship.

TPS: One of the stocks of 2008?

Did you know that TPS' shareprice has outperformed NMG over the last three years? Of the Aga Khan shares, only Jubilee has done better.  So why do I think it will be a stock to watch for 2008:

1. It should start seeing the benefits of its regional approach with tremendous improvements in its Zanzibar, Ug and lately Rwanda businesses
2. Tourism in Kenya is up 36% on year-to-date compared to last year. And projected to explode in the next 5 years (1m to 5m tourists-read Fintrade's article on the same)
3. The Serena offering in Kenya is increasingly targetting the growing middle class in Kenya with weekend excursions; 2/3 day fairly-well priced offers to go see game at Maasai Mara et al
4. A lot of administration has now been streamlined-its possible to now reserve your stay online. This has led to cost cuts.
5. TPS are projecting to double PBT for the year (based on their first half performance) and probably the same for 2008.
6. TPS is of course the only hospitality/tourism stock at the NSE. Despite a 1 for 5 bonus issue in June, the share price is today back to its pre-bonus issue price.
   
7. Interestingly, TPS are offering all their shareholders a 12.5% discount for any bookings this year.

In other stock news, Equity announced its Q3 numbers (with 98% yoy growth, although slightly down on Q2). As did EA Cable (they had a 24% increase yoy, but are getting stung by aluminium prices). Its good to see the effort they are putting into diversifying their revenue from Kenya -its  a good political hedge. It also a bit of a shock to see Kenya Orchard (they produce some very yummy strawberry jam)  announce their results. They do need a decent accountant however.

Interims announced this week

In order of performance vs. expectation:
TPS: PAT doubled in H1'07 compared to last year as the group consolidated its lead in the Kenyan and TZ markets. TPS has also acquired hotels in Rwanda and Burundi and is using this to sell "Destination East Africa" tour packages. Barring anymore adverse travel notices and with improved road network, TPS Serena being the only tourism related stock on the NSE allied to AKD ownership should be a must-have. Despite a bonus issue, share price is nearly back to pre-bonus levels. Has exceeded expectations.
EACables: A 45% growth in after tax earnings is good going given the continued rise in base metals. EA Cables has just completed its new factory. This will enable it be in a position to provide fibre optic cables to the new market. Its also looking at entrenching its top position in East Africa while expanding to South Sudan and Central Africa. Watch this space.
NBK: Leapfrogged Equity to announce its results first. No major surprises in terms of rise in PBT of 34%. Closer scrutiny of P&L and BS did reveal several puzzles. PBT rise was primarily due to lower loan loss provision (because of fewer loans?) and Fees and Comms. Interest income fell by 20% due to lower rates compared to last yr. The bank has a very small loan book. The real puzzle was that after repayment of 20bn npl by GoK its 33bn NPL has fallen to 5bn? The new initiative announcements are also fairly dull. If a bank is going into mortgages or rural areas similar to 5 others, it has be able to say this is what will distinguish us from say Equity in the rural area or Stanbic in mortgages. There is also the risk of over-paying to snatch customers from existing banks or getting lousy customers in the case of mortgages.

Equity takes HFCK? More detail...EA Cables (TZ)

A bit more detail on the Equity/HFCK link-up now including Britak, Equity's largest shareholder. As an aside, Britak is planning an IPO in the next 18-24 months.

While this blogger has a very positive view of this deal, those fearing its impact on Equity bottomline ought to be aware that as Equity will only hold 25% of HFCK, HFCK's results will be accounted for as an associate in Equity's books. Equity will however have a controlling stake thus will be able to steer HFCK strategy and be in a position for a later takeover or equity exit

EA Cables seems to be working its magic in TZ, where its subsidiary is experiencing a turnaround in perfomance.

NSE: A preview of H2 07

July to Dec will likely be dominated by the slated IPOs namely Kenya Re, Safaricom and far-fetchedly, (NBK, Telkom) and the General Election. Analysing these and their likely impacts:

Kenya Re: As Kenya Re is using an AccessKenya type of IPO mode, this will lock out some of the speculative retail investors and will also reduce the upside expected. Its unlikely that Kenya Re will have a strong downward impact on the NSE. But bear in mind that with previous oversubscriptions, overextended refund periods, the retail sector are becoming increasing choosy about IPOs. Verdict: minimal downside impact on NSE index.

Safaricom: GoK will be under immense political and public pressure to do this IPO as a free-for-all i.e. similar to KenGen. If it does, the NSE may well see counters falling by 5-10% as liquidity dries up. But, will GoK allow the wider market to fall at the expense of putting smiles on the same folks? Yes/maybe. Bottomline: expect some impact on NSE counters

General Elections: Impact has been -ve in past elections with some correlation being seen when there has been uncertainty as to the new head of state. This time will be no different except that it should be clear within July/Aug how bad the impact will be on NSE. At the moment, the political consensus is that IF the ODM house gets itself in order and unites behind its candidate, there might be a real political contest in which case expect some downside on the NSE.


Other highlights will be the interim results of various shares, especially Equity (can it double Q2 profits to justify current multiples being reflected in its share price?), EA Cables, NBK (will they get any uplift from the npl pay-off as alleged by some?) and KQ (any impact of accident?) and will Mumias give its long-suffering shareholders some +ve news by releasing improved FY 06 results. Also, in the frame will be M&A in form of CFC Stanbic who its clear they have done their homework in terms mitigating against BOC/Carbacid-type of hold-ups. As well as Equity/HFCK?