Saturday, January 12, 2008

NEW YEAR ,NEW PROBLEMS

Let's hope the year ends better than it started. I have been away for the holidays and work. My condolences to all of you who have lost friends, family, colleagues and property in the current political crisis.

Let’s hope we deal with the root causes of the crisis which are poverty, inequality and rabble rousing politicians who are the matchstick that lit our flame. South America, South Africa and Nigeria have the same problems as Kenya. However, the problems manifest themselves through kidnapping, armed insurgency and drug trafficking in South America. In Nigeria the crime and constant coups in the past. In South Africa via violent crime and xenophobia.

Aside from that I think this will be great year for the market. Why?

1. Inflation

It will be high in the current year. Generally inflation tends to erode the value of money. For instance, bread is now Ksh 35/loaf from Ksh 23 a year ago. You still get the same loaf (500gm) but you must spend more money i.e. Ksh 12 to get the same 500gm.


2. Real Estate slump

I don’t think the high end of the market will go anywhere soon. The current chaos will make wealthy Kenyans think of buying second, third or even fourth homes overseas. I see UK (If u can get around the tax implications for non-resident property owners), UAE, Tanzania and even Australia get some of this Kenyans.


3. Uncertainty creates opportunities

Opportunities are present in the current environment for the clever investor. There is only one rider 'YOU NEED CASH TO SEIZE THE OPPORTUNITIES'

Therefore, you must be in cash (but u will get whacked by inflation) or near cash situations.

That leaves only one place to place your money-Stocks.

9 comments:

MainaT said...

Agree therre are seriuos underlying issues. Youth unemployment and underemployment is I think my main concern and the one Kibz must tackle this term.

I think you and me are the only two bloggers who think this will be a great yr for the NSE. Once Safcom is out of the way, I think there will be some seriously good buying opportunities especially for those who are investing for the medium term.

bankelele said...

I'd reommend starting an NGO, focusing on conflict, displaced persons, constitutional reform - those guys will be making money for the next 3 years

Ssembonge said...

Tourism and agriculture are the main stay of the Kenyan economy. If these two are disrupted and there is continued political tension, we will revert back to the 90's.

The earlier a political solution is achieved, the better. The only winners will be the purveyors of corruption.

pesa tu said...

@Mainat: Ditto, on the market.I hope Parliament will work as one entity to solve unemployment/undremployment

pesa tu said...

@Bankelele: I guess AIDS NGOs are now old fashioned
@SSembonge: Even if we get a solution tomorrow morning those two sectors will still suffer.-Lower overall growth for Kenya

coldtusker said...

Bread:

Bread in Kenya is 400gm... the "price" was kept steady but the weight reduced!

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pesa tu said...

@CT: Woooiiiii1 inflation +theft a double whammy for i and other bread lovers

pesa tu said...

@Omar Cruz: This ain't the classifieds.