Mea culpa: more stockbrokers

I have always been an advocate for more stockbrokers in the country especially to serve in the rural areas.

But, as narrated in real lean times, there is a serious shortage of investors, not brokers.

This is because most Kenyan shareholders are buy and hold investors not active traders or speculators. This is seen where companies with huge numbers of shareholders have relatively small numbers of CDS accounts (many of which are ghost companies created to increase IPO allocations).

So for those stockbrokers such as Discount Securities and CFC who have built nationwide branches, the volumes of investors and trades at these offices are relatively low – as a trip to the Mombasa and Nairobi offices of these brokers showed quick services, sparse halls and low activity. Such places only become strained before and after IPO’s but otherwise return to a slow pace.

So who should bridge the gap – productively and profitably? Stock agents, and stockbrokers through partnerships (such as CFC through Postal Corporation), Suntra (through Postbank) and Ngenye Kariuki (through K-Rep bank) to handle the everyday activities, but not by stockbrokers opening up nationwide branches.

Next time you see crowds around the block will be the Safaricom IPO in December.

Other Thursday briefs’

NSE:

  • Speaking of Safaricom, there was a story in the Wall Street Journal focusing on if the $500 million IPO will be accessible to foreign investors. A co-listing in London is possible using GDR’s
  • Best wishes to NSE Chairman Jimnah Mbaru who will be contesting the Starehe parliamentary seat and stockbroker Ngenye Kariuki in Kiharu.

Banking:

  • The government will sell 2/3 of the 90% shareholding in the Development Bank of Kenya.
  • K-rep to raise 500 million through a bond
  • Islamic banking spreads as both K-Rep (Halat) and National Bank (Al Mumin) add Shariah-compliant banking products

Real estate:

  • Is the property boom over? Apartments are going vacant while office spaces are full, and what impact will that have on banks holding mortgages and real estate investment portfolios? Hat tip Kamau
  • Tororo cement of Uganda will construct a cement factory in Kitengela
  • The Ministry of housing to construct 526 houses for civil servants in Ngara phase II

Awards & events:

  • East Africa’s most respected company crowned this weekend in Tanzania
  • Bank awards by Thinkbusiness.co.ke to be awarded on 5th December
  • Strathmore University hosts a microfinance seminar starting November 23
  • An ICT outsourcing expo is being held at the safari park hotel from November 27.

Opportunities:

  • Equity Bank: business growth & development managers, credit managers, archives & record managers. Details online. D/L is 30/11
  • Ernst & young: managing director E&Y advisory services ltd (EYAS) details online. D/L is 7/12
  • ICPAK: business & professional development officer. Apply to icpak@icpak.com by 30/11
  • KTN TV onscreen positions, full & part-time. Apply to screen@eastandard.net by 23/11
  • KTDA; General manager trading, head of strategy & planning, Network administrator, treasury & trade finance officer, marketing executive. Apply to recruitment@ktdateas.com by 26/11

Thanksgiving Portfolio

Earlier: Thanksgiving 2006 portfolio

The Stable
Diamond Trust
Express
ICDCI
KCB
Scangroup
Sameer
Stanbic (UG)
Total
* Uchumi (suspended)

What’s changed?
In: ICDCI
Out: None
Increase: Diamond Trust (rights), Scangroup
Lightened: KCB
Dividends expected: no interims
Unexpected gains/losses:
New listings not taken on: Kenya Re
Best performer: Stanbic (Ug)
Worst Performer: Total (though the dividend is assured)

Looking forward to: none really. I sat out of the Kenya Re IPO, and then didn’t really want it after the shares listed – maybe next year. Same with the Safaricom IPO which is getting dangerously close to the election, but which I expect to sit out again and instead give the money I have to some candidates (2 parliamentary, 1 civic) toward election expenses.

Lessons learnt: (i) you should not try and time trades e.g. company books for dividend close on Thursday, so you try and buy shares on Tuesday – just won’t work; think and trade long term (ii) attempts to buy low and sell high by setting a price based on yesterday’s high/low also won’t work; so think long term and don’t worry about intra-day prices

Performance Summary: The Motley Fool advises that investors should beat the share index to consider their returns a success. The NSE 20 share index is up 1% in the last six months while my portfolio is down 0.7% from May 2007. The actual share holdings are up about 13% but with the cash taken out from when KCB shares sold, the net position is down.

3rd Anniversary: Idea Exchange

It’s almost the third anniversary of this blog (started in November 2004) and it’s time to reflect on the 800 or so posts that appear here. It’s been great channeling everyday stories and knowledge and new, finding obscure pieces in the Kenya Gazette or the classifieds and building something worthwhile to write about. Also, some posts have been obscure, trivial, and forgotten a day after.

Now there’s a support group of other financial bloggers (see the blog roll to the right) to spread the financial word as well as the Business Daily which has been a great resource for me over the last year – and I truly enjoy it though I question its long term viability.

Dear readers: Idea exchange
This is also a chance to improve going forwards and readers are invited to offer their suggestions;

– Why do you read this? What do you hate?
– What topics would you liked to see covered more? Or less? As long as there are shillings involved, it’s worth blogging about.
– Do you like the design? Go back to black?
– More posts or less?
– What features, enhancements, tools, can be added to enhance the information and participation at this blog? Digg etc?
– What blogs would you like to introduce here? Preferably financial, social, or economic with an African or development focus
– Would you like to advertise or collaborate on an idea? Remember this has been an one man shop with full time social, family, and work activities
– Any other ideas? Comment her or drop a line via the contact page

Financial Friday

Earlier results showed that tax collection is not profitable, but neither is dealing with the strong shilling.

The Central Bank of Kenya year ended June 2007 shows the bank recorded a 386 million shillings loss down from a 4.5 billion profit in 2006. This was largely due to a forex loss of lost 9.8 billion shillings as the shilling remained strong against the US dollar, Euro and Sterling pound.

How much currency is circulating in Kenya? 90 billion shillings ($1.34 billion), in currency up from 76 billion in June 2006.

Bank in law
You don’t start a marriage by locking out the in-laws, but that’s what’s happening with CFC Stanbic as CFC stockbrokers have suspended trades in Stanbic Uganda shares to clear up a backlog of orders.

Shares vs. Holiday vs. Election expenses
The much anticipated Safaricom IPO edges into danger zone as the IPO could be pushed back to start on December 10th, not the 3rd.

Hedge funds to Africa
There was the Equity – Helios deal announced this week.

Another prime opportunity would be for a hedge fund to invest in Transcentury

PSD blog puts the new investment interest in Africa in a historical perspective with China and other Asian countries recognizing an opportunity to stake out the long term

Hedge Funds a year ago

Equity goes Giga

The story of the day and probably going to be the deal of the year (trumping CFC/Stanbic merger – which while being 6X larger, is not really foreign direct investment – FDI into Kenya) is that Equity Bank is selling a 25% stake to Helios Investors – (official). The deal to sell 90.5m new at shares 122 shares ($1.80) will bring in about 11 billion ($160 million) in new capital to the Bank.

When last months’ post discussed local banks needing
to raise capital a deal of this size was not in the picture. With the new capital Equity will be able to do business up to 150 billion shillings (about
where Barclays is today) – but that growth cannot be organic, so you can look to Equity to buy up a half dozen smaller banks.

Other shareholders must approve the deal in which their stake will be reduced. Fortunately for top managers they will retain their stake while falling under the 5% CBK limit for managers.

Others

– Diamond Trust opens a Branch in Malindi: Way to go after those Italian
accounts
– NIC Bank to buy a stockbrokerage firm.
– Safaricom data costs up: Bamba net a USB modem service was introduced in August 2007 at a cost 6,000 shillings to connect and 2,000 ($28) per month for unlimited net usage up to 700MB then 10 per MB thereafter. Now a new one costs 12,500 and 12.6 per MB after 8,000 shillings worth of free internet.

Opportunities

Joint Voluntary Agency – Financial Comptroller Position: The Joint Voluntary Agency (JVA) operates a US refugee resettlement program in
eastern and southern Africa through a Cooperative Agreement with the Department. It is seeking a Financial Comptroller position (chief accounting officer for JVA Kenya)
Requirements: Professional Certification in Accounting such as CPA, ACCA or equivalent, Bachelor’s degree in commerce or business administration with
specialization in accounting, Four or more years work experience in the NGO sector at management level with supervisory duties, among others. Interested and qualified applicants should submit a cover letter and a résumé by November 20, 2007 to the
Human Resources Manager – hr@jvakenya.org
advertise your job postings here- but preferably only for companies that enable online or e-mail applications

Also
– Capital Markets Authority: Chief executive, Manager legal affairs, National Bank of Kenya – deputy managing director. apply through Hawkins
associates by 27/11
– Nairobi Stock Exchange; head of legal & compliance. apply through Deloitte