Kenyans have been advised to take advantage of the falling share prices of stocks and other securities at the Nairobi Securities Exchange to invest for long term returns.
In the latest Investor Pulse by ICEA Lion, experts are recommending a buy on high dividend paying stocks at NSE especially in the banking, communication and insurance sectors.
George Kamau, senior portfolio manager at ICEA Lion Asset Management said the market is trading at an all-time low valuation of 10 times price-to-earnings ratio, making it an ideal time for investors to buy shares at discounted rates.
"As we face the prospect of a stubborn bear market, investors with a long term investment horizon have attractive entry points being made available under the prevailing environment," Kamau said, adding that fundamentals of numerous listed companies remain solid.
The market capitalisation dropped from Sh2.4 trillion in the first three months of the year to Sh1.9 trillion shedding Sh500 billion as volatilities in global market persist.
Global slowdown, ongoing geopolitical tensions in Europe and the upcoming Kenyan election have been blamed for the 20 per cent drop.
Telecommunications sector saw a 27 per cent drop in value from Sh1.38 trillion to approximately Sh1 trillion over the quarter.
Safaricom's share, which hit a high of Sh42 mid-last year dropped to a low of Sh24 during the quarter under review, having shed almost half the value.
This means, if an investor buys a million shares at the current price and Safaricom shares go back to original prices of Sh42, the investor will go home with at least Sh18 million profit.
Banking counters saw a 28 per cent drop in turnover registering Sh7.7 billion worth of trades during the quarter compared to Sh10.7 billion in Q1.
For investors with a near term investment horizon, experts at ICEA Lion recommended investment in treasury bills and short term treasury bonds, as well as high dividend paying stocks.
According to experts, bonds and Treasury bills have been attracting high yields of up to 13.8 per cent from an average of 12 per cent last year.
This as the exchequer is set to greatly leverage the local domestic debt market to meet the budget deficit for the upcoming fiscal year.
Net domestic borrowing for the new 2022-2023 financial year is estimated at Sh570.2 billion.
The local debt appetite by the Kenyan government was last month increased after it shunned $1 billion (Sh118 billion) Eurobond it had planned to float before the end of the financial year ended June 30. It cited the high yield rate due to the strong dollar.
