2008 is finally around the corner and we are in the New Year 2009. 2008 was quite a busy year, but as time goes by it will only be a fading memory. I took the liberty of writing a final annual summary for the business year 2008 and some things I expect in 2009.
The NSE
The NSE was full of surprises in 2008. First there was the biggest ever Safaricom IPO that went sour, ushering in the bear run and brought back some sanity to our over-valued securities market. The Cooperative bank IPO that followed was only 81% subscribed a sure investor confidence reality check. Unilever got de-listed, Uchumi did not get re-listed, and some two rights issues from KBC and Housing finance graced the NSE during the year.
Broke Brokers
Yet again another market player, Nyaga stockbrokers, went under and several other were put on the warning radar. Discount Securities was put under statutory management following some internal squabbles and one of the biggest securities agent Tsavo was also in some trouble of its own. The depressed market was not doing any good to the brokers as commission revenues diminished.
Strange Deeds
2008 was full of strange things in the Kenyan business cycles. the resignation of Centum’s CEO, Peter Mwangi, and a month later NSE Boss, Chris Mwebesa, a few months after reappointment. The former ended up replacing the latter on the NSE seat, making it seem like it was all choreographed by the big boys. Mwebesa later went back to his former job at CFCfs, leaving a begging question if he was pushed out?
Then there were several share manipulation allegations that rocked the market, particularly the Crown Berger and East Africa Portland Cement cases. Despite CMA’s efforts insider trading is still very rife in our bourse. In good light though, the Uchumi insider trading case was opened where former KCB CEO, Terry Davidson, was charged.
Facing the Bear
Finally, after the perpetual bull ride that had characterized the NSE for the last few years, the bourse was hit by a full blown bear run. Investors are still counting their paper losses, while the searching for the elusive bottom. Every time the indexes hit a ‘decisive point’ analysts are in haste to say that the market will not fall bellow that (NSE 20 – 4000, 3500 or 3000), but every time it just keep on dropping. The market index has dropped 43% from a high of about 5,445 in December 2007 to as low as 3,106 in December 2008.
Investor’s Goodies
In light of the changing investors’ sentiment, investment firms and also the government have come up with better investment packages that target the low earners. Old Mutual launched the Toboa investment scheme that allows investors to invest as low as Ksh.7,500 per months in their different unit trust combinations. Similarly the government lowered the minimum investment in Treasury Bills, to attract small investors and also help the blotted government to raise the much required funds.
Acts of God
The year saw some major changes both in Kenya and the world scene. Kenya opened the year on a bad note with the post election violence rocking every sector of the economy (some firms are yet to recover?) most importantly the political terrain. The Global financial crisis could not have come at a worse time, with the oil and food prices sky-rocketing everything went to the dogs. Obama’s win was a lifting moment from all these misery.
Expected in 2009
I’m not very optimistic about this New Year. However I expect the following to occur during the year:
- A few more IPO’s from Nakumatt, K-rep and some de-listings or suspensions on the NSE (Eveready? Marshall E.A.)
- the NSE will either plateau at between 3,500 and 4,000 or drop even further with most of it pegged on the listed financial firms
- the global financial crisis may get worse in the first half of the year before getting any better
- new regulations by CMA will reign some sanity to the market and in the process some brokers may fold