October showed signs of the beginning of the end of the prevailing bullish market at the NSE. This saw heavy selling as investors took in gains for their investments. However, this may be viewed as normal trend, where markets slump between October and January but recover from February as companies begin to announce full-year results and dividends. Shares at NSE had mixed performance as a result of various material announcements. This included British American Investments {Britam}, Equity Bank, KenGen, Kenya Power, Kenya Orchards, Olympia Capital Holdings ltd.
Among the shares that rose significantly was Kenya Power going up by over 25%, a trend attributed to the company being awarded the Sh10 billion tender to supply lighting for Nairobi County and release of yearly financials where the company grew its profits by 55% to about Sh7 billion. This radiated good performance ahead for investors holding the stock and also its consistency in price. KenGen was also on the receiving end following government launch of 5,000 megawatt project to supply electricity and an industrial park in Olkaria. This led to a rally for the stock from about Sh10.90 to Sh12.40 before settling at Sh12.00.
Other counters that rose were Kenya Orchards and Olympia Holdings. Kenya Orchards had information in the media that it is venturing into food seasoning; a move that the market felt supported its line of operations and would diversify it effectively. This has led to increased demand for this share, rising to over Sh120 from about Sh13–15. Olympia Holdings released the information that it had appointed a CEO, Matu Wamae, gave about Sh30 million to fund its investee companies and released its performance for six months. This as a result led to growth of its stock value to about Sh8.2 per share from the usual Sh2.5-3.00 per share.
Investors seem to be moving from just investing based on fundamentals to market information. This explains why some stocks as Britam experienced more than 20% drop from loss of a deal notwithstanding the fact that it wasn’t a loss per but just that it doesn’t have direct control. British Asset Managers {one of Britam’s subsidiary} lost a Sh20 billion real estate financing deal to Acorn Limited {a company owned 25% by Britam} to Former employees’ outfit, Cytonn Ltd. This led the share to shed about Sh10 per share to settle at Sh25.50.
Equity Bank was also on the losing end with information that the legislature had halted introduction of the thin SIM technology prior to investigation, which may span over periods. Nonetheless, other stocks have either stagnated or are now being affected by bear the market such as KCB, Pan African Insurance Limited, Housing Finance and Centum Investments Ltd, which have all lost over 5% from September 2014.
While November does promise anything different, investors would be safer investing through evaluation of stock fundamentals over sentiments. Undervalued companies present a better profit margin during an eminent price rally over waiting for announcements which may not always pay off.
Keep in mind Rumi’s words “when you go through a hard period, when everything seems to oppose you … When you feel you cannot even bear one more minute, NEVER GIVE UP! Because it is the time and place that the course will divert!”
