Stock and real estate markets still hold promising yields this year, a report by financial services firm Sanlam Kenya says.
In the ‘East Africa Investment Theme for 2019’ report, the firm stated that assessments for informed financial decisions on the sectors would spike yields, supported by the economy’s stability.
“Though the real estate market is flat and overall equity market looks dull, there seem to be pockets of opportunities in selected sectors, a few stocks offer good value,” it said.
“Comprehensive feasibility studies are recommended to ensure investors make fully informed and rational decisions,” the report said.
The Kenya Bankers Association third quarter 2018 housing price index revealed prices were stable with signs of softening in sectors such as high-end residential properties.
The report showed a 1.35 per cent increase in house prices between Q2 and Q3. Similarly, investor interest shifted towards private equities, considering limited opportunity in public traded equities.
In their Q3 Statistical Bulletin, the Capital Markets Authority reported a Sh364.9 billion loss to investors of most listed firms in the period ended September. The turnover had declined by 32 per cent compared to the period ended June. Preferred sectors were fintech, education, consumer products and services, and energy.
Forty-seven private equity deals were announced in 2018, from 27 the previous year. Kenya led with 24 transactions in the East Africa region, up from 18 in 2017.
Last year, PE investments concentrated in the financial sector as evidenced by increased activity by local and global investors, including Kuramo Capital, AfricInvest and Goldman Sachs. Tunisia-based AfricInvest completed a transaction to buy a 14.3 per cent stake in Britam for Sh5.7 billion in May.
Dubai-based Badoer Investment firm bought a 15.6 per cent stake in Sumac Microfinance Bank for Sh100 million, increasing their portfolio in Kenya. Sanlam expressed optimism about the momentum of private equity to pick up backed by economies’ resilience.
According to the East Africa Venture Capital Association, private equity activity in the region increased in 2018 after a tough 2017. The disclosed value for deals recorded almost doubled to Sh84.89 billion ($834.3 million), compared with Sh45.46 billion ($446.78 million) last year.