The problem of NSE continues with shares prices heading South most of last week. The question on the lips of most commentators is how much worse can it possibly get. Increasingly last week, all too many seem to be pointing finger at the shear number of Safaricom shares plus some hidden hands which might be manipulating specifically the Safaricom share prices.Take a look at the following:
Geoffrey Irungu wrote in Busines Daily ?As Safaricom?s share price decline drags down the total board at the Nairobi Stock Exchange, and the fortunes of hundreds of thousands of Kenyan investors? he continued to note ? Since its debut at the bourse, Safaricom has declined by a third, faster than the market average of a quarter, ?implying there is more to the share?s slide than the prevailing bear at the market.?
Ng?ang?a Mbugua wrote in Daily Nation ?Share prices are low, so why are we not buying?? He noted that when the prices fall in NSE, the investors run away but sprint back when the prices begin to go up. The result is that many small-scale investors end up buying overpriced stocks and often lose out when the prices decline ?to correct themselves? as experts say. Yet they could make more money by buying when the stocks are cheap.
Washington Gikunju writing on Business Daily took a dig at the fact that the banks might be the first victims of deepening prices of the Safaricom shares ?Many financial services sector observers fret that the banks doled out too much money after lowering the requirements to the bare minimum. All that was required for collateral by most banks was evidence that the borrower was an account holder with the lending institution.?
If you are an investor in NSE take it easy and breath deeply. You have just survived the worst bear run seen in Kenya market history. I know the gut feelings of most investors at this time is to dump their shares and get out of the market. Well i will tell you not, because you might justify the theory that most people tend to give up when they are just three feet from gold.
Before the listing of Safaricom shares Prof. Anyang Nyong?o warned that the Safaricom shares were overpriced. Being an electioneering period his warning was taken as political brinkmanship. Actually it was the most politicized IPO ever with former finance minister Mr. Amos Kimunya once told Mr. Raila Odinga then ODM presidential candidate that Nairobi Stock Exchange is not a fish market. So with Safaricom shares it might be a case of proper adjustment.
The good news is that by all possible angle you look at it we have reached the bottom of this bear run and sooner than later the stock market prices will start rallying upwards. The factors which have been driving cost of living are cooling off. The oil prices are falling in the international market and we expect them do so in Kenya. The rate of inflation is going down and the liquidity problem which gripped Kenya in recent months seems to have been solved.