How to Change your Stockbroker

Republished from January 2006.

Change your stockbroker – a.k.a. central depository agent (CDA) – by taking these steps to transfer a shares (CDS) account to a new broker.

1. Complete and sign CDS 4A and 4B and submit both to current and new CDA (all stockbrokers have these forms).
2. Sign account opening forms with new CDA.
3. Keep signed copy of security transfer forms for own records.

It can take one day for the new arrangement to be effective – if processed before 12 PM. Shareholders can also contact the NSE’s business development department (info@nse.co.ke) or send complaints (compliance@nse.co.ke).

Also this week
– The Scangroup IPO will close on Friday, July 28.
– The Weekly Citizen reports that Charterhouse Bank will re-open on July 28.
– For the recently unemployed, here are Steve Pavlina’s 10 reasons NOT to get a job!

Share Regrets

I have been actively buying shares as long as I have been blogging (2004) and have made some investment decisions that have turned out to be both good and bad. Here’s a recap of the major lemons:

Total Bonkers Broker!
I deposited a cheque with my broker to open an account while I picked the stocks I wanted for my portfolio – and then settled on Kenya Airways (KQ) which I felt was undervalued at 11 shillings (11/=) per share given it’s growth and earnings. But, when I got my first statement from the broker, in addition to my KQ shares, two-thirds of my money had been used to buy me shares in Total (Oil) at 37/=. I called the broker and was told that Total was a good company and shares were likely to appreciate

This would not happen to me today, but at the time, I was new at the broker. I was timid, and didn’t want to rock the boat – I had no sense of my rights and expectations as a shareholder. I felt that if I had asked for the shares to be un-sold, the broker would have handed me back my cash and closed my account, since I was not ready to follow his advice in the mysterious arena of share investments.

So I sat with my Total shares, and since I didn’t want to have a negative cash position in my account I sold some KQ shares at 12/= to bring my account back to zero.

Outcome: I kept my Total shares for almost a year, got a 2.50 shilling dividend, and sold them at the same price of 37/= – and they are still at 37/= today, while KQ is at 113/=

Broker vs. Investor Smarts!
I attended one Serena AGM (as a proxy) where the company announced that there would seen be restructuring to combine their holdings in Uganda, Tanzania and Kenya. Other companies that have had rights issues had seen their share prices appreciate if investors looked positively at the moves (e.g. KCB). I had just sold my Total shares and thought this was a good buy as Serena was around 50/= per share then.

At the AGM lunch I met a classmate of mine who worked at one investment bank and I shared my thoughts with her ”should I buy Serena?” “nah, looks good, but buy Breweries” “Tourism is hot, the company is going to be bigger in a few months” “nah, breweries just had a stock split (now at 90/=, buy now as it will soon go back up to 300)”.

Outcome: I took her advice, placed an order for EABL which was rapidly rising from 90 to 110, 115, then 130 when my broker finally bought the shares. Again I kept them for a year, got a 3/= dividend and sold them at the same price of 130/=. Meanwhile Serena’s shares rose after the AGM from 50, 70, to 80 when they announced the rights issue and closed their register. After they re-listed, the new company shares are now at 115/=.

Uchumi
I had read the prospectus at the time of the rights issue, and all the research, about Uchumi. I did not believe in the company then, did not participate, but only bought the shares afterwards when the prices started going up.

Outcome: I was greedy and bought into a company I knew had no fundamentals because I would have sold at a higher price. Now I’m stuck, and on Friday, we shareholders will be asked to invest another 300 million shillings into the company.

Ultimate Sin
Looking at Ory’s shareholding is an excellent indication of the time value of share investments and the need to start early. At one time Breweries shares were going for 50 shillings, B.A.T 45, Barclays 90 and Portland cement was 15! Some shares may look expensive, but where will they be in ten years?

A few years ago I was on holiday from the States, and home for a typical Kenyan student summer trip – sun, sand, fun, tusker, nyama choma etc. I had also lined up a possible interview with a leading stockbroker in Nairobi to feel out future employment prospects. I was working at the time, and one of my good friends there (also Kenyan) suggested that now would be a good time to buy some shares in Kenya because it was so hard to save money in the US. He gave me $1,000 to give the stockbroker and I also set aside $500 to add to the pile.

I came to Nairobi and interviewed with the stockbroker – it was more a chat really, that went nowhere. He didn’t give much information, was not encouraging, was non-committal on a job offer, and was maybe preoccupied with his impending political foray. So I never brought up the issue of buying shares and after I left his office, all the money was wasted on sun, sand, fun, tusker, nyama choma etc.

Big mistake. Big. Huge!

I then went back to the States and had to work harder, to repay my friend.

Outcome What a wasted opportunity – I may have become a student millionaire.

Death of a stockbroker

Amid other revivals

No stockbroker is collapsing!

Part II
The whole stock broking industry is due for a shake-up. Arguably CFC is the only stockbroker with the capacity to serve a myriad of customer stock broking requirements.

Now, one other leading Kenyan Bank has applied for a stock broking license, which is expected to be granted later this year. And if one of the big Kenyan banks (Barclays, KCB, Stanchart) decides to enter the market, this could herald the death of the traditional stockbroker.

Banks are always looking to grow their fee income and the sums are here. Imagine if every time a customer withdrew or deposited funds from his/her account, the bank earned a commission of 1.5% of that amount. That’s what a stock broking license means as brokers get paid their commission when investors buy or sell shares regardless of their investors gain or loss.

Revival

EA Safari Air: The airline will launch twice daily flights to Mombasa starting on August 1 at a price of 8,900 shillings plus tax. No response from Kenya Airways who have had a virtual monopoly on that route.

Equity Bank: The listing of 90.5 million shares of Equity Bank at the stock exchange has now been approved. listing on August 7

KBS: A few Kenya Bus vehicles are back on the road this morning. The buses are refurbished, painted over, with new seats, and look much cleaner and better maintained than when the company shut down earlier this month.

Kenya Re Another IPO expected, probably in 2007 will be that of the Kenya Reinsurance Company (Kenya Re) from www.stock-detective.co.ke.

Scangroup: IPO opens today, with 69 million shares up for grabs.

Uchumi: One month after I made, what I thought was, my last Uchumi purchase, I was back to buy some Afya apple juice. Afya is one of the brands of Kevian Kenya owned by Kimani Rugendo, a dynamic Kenyan entrepreneur and businessman, and who as a supplier, has led the Uchumi supplier’s movement that successfully lobbied the government to revive the chain.

The stores have reopened with the same euphoria and fanfare that followed the rights issue last year. The question is can this be sustained and will customers be shopping, and suppliers be stocking, at Uchumi 3 or 6 months from now?

Also, the Minister of Trade announced that an Uchumi shareholders meeting will be held this Friday at KICC.

July 14 Jobs

Most appeared in the Friday July 14 Daily Nation

Regional representative for East Central & Horn of Africa at the Academy for Educational Development. Apply to regionaloffice@aed.org by August 4.

Chief accountant at AirKenya Express. Apply to the CEO 30537-00100 by July 28.

East African Cables
– Electrical engineer
– Regional sales manager
Apply to hr@eacables.com by July 28.

Flashcom
– marketing manager
– corporate sales manager
– human resource leaders
Apply to the administration manager 9423-00100 by 21 July.

The company is also seeking exclusive distributors who can apply to retail@flashcom.co.ke by July 21.

GJLOS
– information, education and communication specialist
– program officer
– human resource development specialist
Apply through the project director at KPMG by July 28.

Kenya Banker’s Savings and Credit Society
– general manager
– assistant manager human capital development and management
– assistant manager credit
– internal auditor
– accountant
Apply to efex@consultant.com by 25 July.

Nzoia Sugar
– Field assistants
– Management trainees (sales & marketing)
Apply to Box 285 Bungoma by August 5.

Qatar Air
– reservations supervisor
– reservations agent
Details of these Nairobi jobs at www.qatarairways.com.

Program manager East Africa at the Save the Child Fund Finland. Apply through Hawkins Associates, Nairobi.

Marketing & promotions manager at the Tea Board of Kenya. Apply by August 2 to 20064-00200 Nairobi.

IT analyst at the World Bank, Juba, S. Sudan. Apply to wbitrim@worldbank.org by July 31.

Tiomin: A raw deal?

This interesting article/interview recaps some of the questions that have dogged the controversial Tiomin project in Kwale and which I am sure have been covered during the 10 years that that it has taken the project to start.

Such as:
– What is the true value of the Tiomin resource? $1,3-billion, or $11-billion? Given the current debate of whether mining & oil should disclose all their payments some of the figures which are bandied about need to be reviewed.
– Why was the approval of the Toronto stock exchange required for a Canadian-Chinese finance deal based in Kenya? Where’s the NSE & CMA?
– Was it really cheaper to construct a value adding processing plant in Canada than in Kenya? And that is after shipping the raw product to Canada?
– Why was an environmental-impact assessment (EIA) by a South African consultancy firm used and a Kenyan one ignored? And isn’t our NEMA the ultimate arbiter on environmental issues?

The article notes that most opposition to the project was because Tiomin was accused of being sketchy on the finer details of the project.

I hope when we find Oil, (and it’s only a matter of time, si Uganda has already found theirs?!), the benefits will accrue within Kenya.