By
Rakeli Gichuki and Wambui Mukundi
In previous articles on this subject matter, we demystified the myth
that gambling and trading in the stock market is the same thing. While not refuting the role of
chance in both, we alluded to the fact research and information is a key
differentiating factor. Further, we touched on the kind of relevant information
required by prospective traders. We examined external and internal factors affecting the price of securities. This piece
is an extrapolation of the previous articles and answers the question “where do
I find the relevant information needed in contemplation of a trade?’’. It looks
at the reliability of relevant information as against various existing sources
of information.
The rules on a good source of information are the same regardless of the
reason for which the information be sought. A good source of Information is one
that is in line with the principles of Authority, Accuracy, Currency, Objectivity and Presentation.
These principles work the same whether the sources are physical or online. This
discussion looks at the reliability of research tools available for stock
traders market based on the above named principles.
Ideally, when a company goes public it opens all its doors to members of
the public to gain ‘reasonable’ access to its information. Most companies have
online presence where various company documents are posted for the benefit of
shareholders and prospective investors. On the flip-side currency and relevance
of the information is often questionable.
It is also dreary to expect that a
trader will visit all listed companies either physically or online to access
the information. A preferable source is therefore one that can consolidate the
data from all listed companies and present it wholesome to save a trader the
trouble of accessing it in piecemeal.
There are various avenues where individuals can access information on
listed companies. This information may range from statistical analysis of the
performance of companies and general news relating to a certain industry or
company. Below is an analysis of various sources of information
Newspaper
sources:
+Business Daily Africa is a print and online newspaper that features news about
the east African market and commentaries. Companies usually publish their
earnings in this newspaper.
The online site also provides commentaries on industries and market
events that could affect the stock market. It also has the Nairobi stock
exchange live market ticker that gives up to date information on stock prices
+Kenyan Business Review is a website that provides a
myriad of business information for investors and people evaluating their
investment options. The information provided not specific to listed companies.
It is also not in-depth and might not be provide sufficient information to
seasoned investors. It is not the best available option for investors.
Investor
websites
+myStocks portal and Rich are the two main independent
online sources of information relating to the stock market in Kenya. Both sites
are authorized data vendors by the Nairobi Securities Exchange and therefore
score highly on authority.
Below is an analysis of the reliability of the data on
the sites.
Rich.co.ke
|
My stocks portal
|
No subscription fee
|
Some information such as the performance charts and market news is
available free of charge. However detailed analysis of historical performance
of listed companies, is accessed at a Subscription fee of Ksh. 1000 per month
|
Provides real time information and figures required for fundamental
analysis that are up to date
|
While the price last quoted share price are as real as reflected on
the NSE website, some of the figures required for fundamental analysis
provided in this websites are out-dated. For instance recent financial
reports at best only go as far as the year 2012
|
Provides information on financial results among other as downloadable from
the NSE website
|
Some of the important values are missing in the financials tab such as
income statement and cash flow statement are not populated
|
Provides a chart depicting historical prices that is less user
friendly
|
Provides a user and well presented friendly list historical prices of stocks
|
Provides history of market capitalization figure of listed companies
dating back to five months
|
Market capitalization figure is provided on month frequency and the site does not provide historical
figures on the same
|
Data presentation is done in a rather random manner that may be
frustrating to a first time user finding
|
Presentation of data is very friendly manner for ease access even if the site is packed with
|
Commentary on performance of listed company is not detailed and no
diversity of business analysts. Commentary is also lacking in as far as
availing current news on different industries
|
Provides a detailed commentary on performance of listed companies and
different industries; this is very useful as written by renowned business
analysts.
|
The
Nairobi Securities Exchange (NSE) is a company licensed by the Capital Markets
Authority (CMA) to facilitate the trading of financial products through the
provision of a trading platform for listed securities.
The Capital Markets Authority is an
independent public agency established by an Act of Parliament, Cap 485 A under
the Ministry of Finance. The CMA is a regulating body charged with the prime
responsibility of supervising, licensing and monitoring the activities of
market intermediaries, including the stock exchange and the central depository
and settlement system and all the other persons licensed under the Capital Markets
Act. It plays a critical role in the economy by facilitating mobilization and
allocation of capital resources to finance long-term productive investments.
The
NSE and the CMA, both provide vital information in discharge of their mandate
as required by their respective establishing Statutes. While the NSE will publish data such as the and live share
prices throughout the day, daily and historical
market statistics; CMA will provide data on corporate governance, Legal
and Policy Issues relating to listed
companies. Needless to say, the websites are definitely authorities in this
field. However, these sites do not go into detail to give the specific
performance of a particular company. They provide snapshot and detailed reports
of the general performance and matters of law relating to the stock market in
Kenya.
In
conclusion, it is important to note all the above sources provide general
information about stock options and are not responsible for any losses due to
reliance on the information given. Different sites are strong in some aspects
and others not. It is therefore advisable that investors and prospective
traders use the available sources as complementary sources of information to maximize the quality the information.
