Investing: Bears on the run at the NSE, take cover

The Nairobi Securities Exchange has been on a bear trend in the past week. In fact, since the beginning of the year, the NSE 20-Share Index has lost a collective 5.5% to about 4,800 points from 5,117.43 points in January.

According to the head of Investax Capital Ndindi Nyoro, the current bear position at the market has two sides to it.

“On one hand, we have stocks such as Equity Bank, which are not exciting investors despite news that would otherwise propel their share price upwards such as the buy-out of a bank in DR Congo,” he says.  “On the other, we have an opportunity for value medium to long-term investors to take position as the bargained shares persist.”

SAFARICOM: Safaricom has been gyrating between Ksh17 to a low of Ksh15 per share. On Friday, though, the counter pulled itself from the woodworks, rallying to Ksh16.15 apiece.  According to Kevin Tuitoek, a research analyst at Genghis Capital, Safaricom has witnessed increased foreign participation. “A price increment was expected after the record Ksh32 billion profit. However, this has been countered by exit of foreign investors and muted demand from locals,” he notes, adding that the dip could have been as a result of investors waiting to see how far the counter could fall.
“This drop is temporary. The counter is intact in value and remains a good investment. It provided vantage points for investors and it will prop up towards the highs of Sh17.”
Mr Tuitoek is nonetheless quick to note that the rise will also be determined by the performance of the overall market.

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FLAME TREE: This stock has been a prominent in both the gainers and losers pack in the past weeks. According to Mr Tuitoek, the stock is still in the price discovery position. “The rise and fall has largely depended on investor sentiments regarding its position after the acquisition of four food and snack brands from Chirac,” he says. On Friday, for instance, the counter opened at Ksh8.70 per share from Thursday’s closing price of Ksh8.15 and rose to a high of Ksh8.90 per share. “The uptake of the stock, though, could be positive based on the success of its diversification and expansion,” notes Mr Tuitoek.

KENYA AIRWAYS: Two weeks ago, Kenya Airways received a Ksh4.2 billion loan from the Treasury to help it ease its financial woes. However, according to Mr Nyoro, the bailout is a case of too little too late. “The company is struggling with debts spanning close to a billion dollars, turning the Ksh4.2 billion loan into a drop in the ocean on one hand and increasing its debt burden on the other,” he says. “It’s not a share worth taking a position.”

Currently, the national carrier is expecting to make a loss of not less than 25% of its previous year ended March 2014, in which it posted a net loss of Ksh7.8 billion and loss per share of Ksh6.35. Its results are due for release not later than next month. The counter is trading at around Ksh7.15. Over the past one year, the national carrier has traded at a low of Ksh6.40 per share and a high of Ksh12.60. (Daily Nation)

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