Nobody can really predict what might happen in the future perfectly and more so in the stock market. In most cases the so called financial experts get it horribly wrong when they start going in this direction. I can remember before the Safaricom IPO last year most people were made to believe that investing on Safaricom is the best opportunity ever, and anybody who dared said otherwise was considered enemy of the poeple. It did not take long before people realized that the reality on the NSE is so different from their expectations. And now as the clock start ticking in the year of our Lord 2009 most investors in NSE would want to know what the future holds.
There is some optimism in the air as we move on. The anticipated fall in food prices, fall in the cost of electricity, expected landing of fiber optic by mid 2009, Obama feel good factor, the expected fall of fuel pump prices, are all good indicators. For fuel prices the political events around the world would dictate the direction and the current events in the Middle East and tension between India and Pakistan are not helping the matter any little bit. Well for NSE the local factors matter and that is why i think 2009 is going to be a better year for the pocket.
There is no doubt that banking sector will post a greater growth in year 2009. It is now clear that everyone in the sector wants to be poor man’s bank, a business model perfected by the Equity bank. So we will see more of the desks set out on the pavement infront of most buildings in Nairobi as they continue to try to appeal for the minds and souls of Kenyans. The cut throat competition among the big players in the sector will not necessary reduce their profit margins. The fact is banking services are yet to reach every corner of the Kenyan society and therefore there is still a big field to harvest from. On top of that the thirst for bank loans is expected to increase ten folds this year. Due to the credit crunch most banks might be reluctant to give loans left right an center but there is no doubt that the introduction of insecure loans by the banks have registered positive effects on their books. The dangers of this are yet to dawn on most people seeking the loans but that is a story for another day.
Overview of the stocks prices in this sector at the end of the year revealed interesting facts. The best bets ware trading as low as they can be. For those who believe that you should buy when it is low and sell when it is high, it would not be bad to try your hands on Equity Bank….Ksh.176, Barcleys.. ….Ksh.50.50, Kenya Commercial Bank..23.50, National Bank..KSh.43.50, Standard Bank…Ksh.160
The completion of fiber optic by June as promised by the government would definitely spur unprecedented growth on this sector. To start with AccessKenya Group would be highly placed to take advantage of this. Since it was listed in the NSE AccessKenya stock prices remained stable for sometime but were later on affected by the downward trend just as any other counter in the market. It closed the year trading at KSh.20.75.
No matter what they say, Safaricom is feeling the heat from the competitors. I once said that it might take like four years before the new entrants in this sector make their presence felt but i now think that it might come sooner than that. If you thought that competition on the banking sector is going to be nasty in the year 2009, then brace yourself for a bloody one here. Well the Safaricom shares closed the year trading at Ksh.3.60. If anything the NSE is desparate for the Safaricom share prices to go up. Majority of people ran away from the market because of the Safaricom and nothing will inspire upward trend in the market more than the good news of Safaricom share price rally.
Other stocks to watch in the year 2009 are EABL, CMC Holdings, Standard Group and Nation Media.
Although The morale of Kenyan investors in the NSE is as low it could be in years. The number of issues which have contributed to this are many . The good news is, this was not isolated case from what was hapening on the other parts of the world. There was ovewhelming evedence that this was a worldwide thing. The performance of majority of stocks across the globe was pathetic last year. For the next six months things might not change much, but many commentators believe that the second half of the year would be wonderful for business
A friend of mine once told me that when i go to the market i should FOCUS ON FACTS, NOT ON FEELINGS. So for the year 2009 don’t let insecurity lead to incorrect assumptions about NSE. Try examine the situation and wait for tangible facts before determining to run, buy, or sell. Happy New and good luck