Top indices at the Nairobi bourse have dropped to a 20- year low on investor flight due to currency devaluation coupled with CBK's move to hike the base lending rate and the upcoming election.
The Nairobi 20 index has decreased 234 points or 12.31 per cent since the beginning of 2022, according to trading on a contract for difference (CFD) that tracks this benchmark index from Kenya.
The downward trend has seen US Wall Street’s S&P 500 and Nasdaq stock indices record their worst week since January.
The same is witnessed in the UK as well where £40 billion (Sh 4.89 trillion) has been wiped off its biggest listed companies as a sell-off across global markets intensified.
The Financial Times Stock Exchange (FTSE) 100 crashed 1.8 per cent, extending its losses after yesterday’s red-hot inflation figures fueled fears the UK could be tipped into recession.
The FTSE 250 dropped 1.3 per cent, taking combined market losses to £40 billion (Sh 4.89 trillion).
It comes after the benchmark S&P 500 plunged four per cent overnight – its biggest drop since June 2020 – after soaring costs dented profits at retail giant Target and sparked fears of a slowdown in consumer spending.
The tech-heavy Nasdaq tumbled five percent, with investors also rattled by comments from top Federal Reserve officials hinting at aggressive interest rate rises.
The jitters spread into Asia, as benchmarks in China, Hong Kong and Japan all lost ground.
According to International Monetary Fund, it is getting harder for central banks to bring down inflation without causing recessions, due to mounting pressures on energy and food prices from Russia's war in Ukraine.
While the current situation has seen investors lose billions in paper wealth, a bear run presents a chance to reexamine investments.
The Star did a spot check on NSE counters to give you an insight on some of the company shares you can buy, sell or hold.
Some of the factors that informed buy decisions for counters listed include an excellent track record in terms of profitability and growth and strong competitive advantages.
We also looked at stocks with strong balance sheets, relatively low levels of institutional ownership, and reasonable valuations concerning earnings, sales, and book value per share.
STOCKS TO BUY
Safaricom Plc commands a huge percentage of trading at the NSE, commanding above 50 per cent of market capitalization.
It is one of the most active counters on the Nairobi bourse due to the huge role the firm plays in the country's telecommunication and mobile money market.
Last year, on a day like this, investors who bought the firm's shares at Sh5 during the Initial Public Offer (IPO) in 2008 had gained eight times after it hit Sh41.75.
The rise was after a Safaricom-led consortium —which includes its South African parent firm Vodacom— won an $850 million (Sh91.7 billion) auction for an operating license in Ethiopia.
Even so, Yesterday, the share closed at Sh26.50 having shed 37 per cent in value in just 12 months.
Financial analyst Alykhan Satchu attributes the retreat to the macro environment where we have witnessed significant deterioration which has translated into a $4 trillion dollar retreat in the MSCI inc emerging market Index.
The firm has vowed to start activities in Ethiopia this financial year, a move likely to trigger interest by investors.
It is also a key driver in the country's economy hence marked recovery after currency volatilities will see the share price rebound.
For this reason, the Star recommends a buy on the share.
Kakuzi PLC is an agricultural production and processing firm based in Kenya and listed on the Nairobi Stock Exchange. It has been paying dividends since 2008, which makes it suitable for any portfolio.
This company offers double-digit returns in the long run and almost zero tax to pay on your dividends received every year.
You can probably buy a share in Kakuzi PLC and hold onto it for months, years, or even decades because of its consistency in increasing dividends every year since 2008.
Yesterday, the share was among the top gainers, recording a 9.8 per cent gain over its previous closing price of Sh386 to trade at Sh424.
Bamburi Cement which operates as a subsidiary of LafargeHolcim is one of the largest building materials producers globally.
Just like Kakuzi, the firm has been paying dividends for more than seven years now, and it has a dividend yield of over 10 per cent.
A buy is recommended on its share because it’s good at increasing revenue and distributes profits to shareholders every year.
KCB Group PLC is the second leading lender in the country in terms of asset value after Equity Bank Holdings.
The lender has been paying dividends for over 20 years now, and it has a dividend yield of about 9.5 per cent. It also pays out more than 50 per cent of its profits to shareholders every year.
The share price has slightly dropped at NSE to close trading at Sh38 from Sh39, presenting a buying opportunity. Those going for this share should, however, think future.
Buy and forget about it because you can be sure that your money will multiply. After all, dividends are paid out twice a year.
Most banking shares are ripe for a buy considering the huge profits they are reporting quarterly.
Risky lenders like HF Group which is operating below CBK's threshold must be approached with caution or are good to sell.
Other stocks to sell and count losses includes Uchumi, Mumias Sugar and Eveready. They have been either on a downwards trend or stagnated for the past decade.
Investors can hold on to stocks like KenGen, Kenya Power, Jubilee Holdings, CIC Insurance, Williamson Tea, Crown Paints and Stanlib Fahari as they are expected to continue with the gaining streak.
