Research tools for Kenyan Investors

                         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

+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

         Kenya Business Review

+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

Rich.co.ke  vs. My stocks portal

+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.

Nairobi Securities Exchange and Capital Markets Authority

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.

YOUTH UNEMPLOYMENT

By Rakeli Gichuki

Unemployment is a big concern in any society. This is because; employment is one of the tools for wealth creation at both the individual and national level. The rate of unemployment in Kenya is estimated to be 40% of the labour force with youth taking 67% of the total.[1] Most of the unemployed youth in Kenya have been through the formal education system but do not have any vocational or professional skills.[2]  Graduates from primary and secondary school make for 82% of the unemployed and university students make up for 1.4% of the unemployed. The youth who make up 75% of the total population are the mostly affected by unemployment.

This article features youth unemployment in Pumwani. Pumwani is an administrative area in Nairobi, which houses the largest public maternity hospital in Kenya. It has an estimated population of about 29,616 people. Unemployment is quite dominant in Pumwani, which houses a myriad of youth who are unemployed either due to lack of willingness to get formal or informal employment, due to lack of formal education or lack of employment opportunities. However, there are a number of young people whose unwillingness to seek any form of employment causes them to venture of into the world of self employment. These particular individuals become an inspiration to many other who still hang on the ideal of getting employment as opposed to creating jobs for themselves and their peers.

Jared Okoth is one of the young people in Pumwani who together with his peers has created employment for themselves and many other youths in Pumwani. He is 30years of age, engaged to one beautiful Roselyne Opondo and loves watching movies as a hobby. He and his peers are in the poultry business, which is their source of livelihood.

 They started the poultry business over two years ago and their focus is broilers, which are chicken reared mainly for consumption. They get 100 one-day-old chicks from Kenchick industrial area at the rate of Kshs. 50/- each, a deal, which comes with two free chicks. Kenchick provides support in terms of free training for their clientele that includes basic skills on building the poultry house, information on the best chicken feeds and medication.

The group has to buy chicken feeds for Kshs. 3,800/- per 70 kg, which will last the chicks for one week. The chicks are reared for 6 months after which they are ready for market and are sold for a price of between 450 to 500 shillings. Jared sells his chicken in Barma market, City market and to private households. His main marketing strategy is by word of mouth making it mandatory the group to not short-change their customers. Initially the group was making a profit of 2000 shillings after the rearing cycle but presently they make a profit of about Kshs. 8,000.

Nevertheless, the group faces a number of challenges, first is the feeds are too expensive thus reducing their profit margin. Secondly, the chicken may be under-weight after the rearing cycle meaning that they fetch less, since they are sold according to their weight.

In bids to expand their business, the group tried to access the youth enterprise fund. The youth enterprise fund is an initiative by the Kenyan government that was established to counter youth unemployment. The government set aside 1 billion Kenya shillings in the financial year of 2006/07 and consequent years through the fund in order to provide loans to youth owned enterprises. However, Jared and the group found it difficult to access the government loan due to first, the fact the fund only gives 50,000 shillings as a loan. This to Jared was not enough for them to effectively expand their business. In addition the above, the authorities disbursing the funds, ask for a bribe of 5% of the total loan in order to process the money for the youth groups.

Despite the foregoing challenges, Jared and his peers are still very optimistic about their future. For Jared, he sees himself as a large business and land owner in the future, with three bright kids. He hopes to give his wife and kids a life, better than the one he had.

His message to other young people is,

“I believe young people should not focus too much on getting formal employment. If you look at our country, the opportunities for formal employment are quite limited. If we bank too much on formal employment we will all turn out to be thieves just to survive, and for me that is not a choice.”

If you would like to buy chicken from Jared and his group, kindly reach him on 0736 680 438.

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[1] The Youth Employment Marshall Plan 2009, Ministry of Youth Affairs and Sports

[2] The Youth Employment Marshall Plan 2009, Ministry of Youth Affairs and Sports