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How to tell NSE has bottomed out
Rank: Chief Joined: 5/31/2011 Posts: 5,121
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hisah wrote:mwekez@ji wrote:hisah wrote:hisah wrote:the deal wrote:Its very easy to get carried away in a bull run...lets see what happens when the market clocks above 5000...valuations are currently above historic levels on most bluechip companies...we need strong earnings....super dividends...to keep the market excited....if nothing of that sort happens then a correction will come...I'm more worried about the current twin deficits (current & fiscal)...the effect of this deficits is that Treasury will have to borrow excessively resulting in yields in the fixed income market rising and its happening...3 month T-Bill yield 10.3% while inflation at 4.1%...once T-Bills creep to 15-20% consider this bull run slaughtered....guys will move money from stocks to bonds...banks will pass the cost of funds into the economy....I think thats the red flag for now. True. If Tbills spike to 15% and above the rally will meet a brick wall... @deal saw the market complacency too... Yields on the 91, 182 & 364 day papers have recently been on decline. This Wed, CBK will also auction 5 & 15 year papers. If the rates don't spike you should reverse your insipid market call @mwekezaji - for tbills to clock 15% plus there must be a nasty market event.
I reposted @deal's comment due to his similar view about 5000pts plus on the NSE coming too fast ahead of fundies. Some counters have prices that call for super results to justify their lofty premiums... The period of rerating the election premium is now done. Next move must come from fundies valuations before ICC gives another political premium boost. @hisah, 5,000+ is being revisited after about 5 years. Companies fundies have significantly grown in the 5 years and the forward looks good to justify 5,000+. I also hold the view that stock market has not factored in de-risking of kenya post the election. The market has not responded to the good supreme court verdict and peaceful inauguration of a new president. The money market and forex market have responded, but not stock market. .... 5,000+ should be the new normal
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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mwekez@ji wrote:hisah wrote:hisah wrote:the deal wrote:Its very easy to get carried away in a bull run...lets see what happens when the market clocks above 5000...valuations are currently above historic levels on most bluechip companies...we need strong earnings....super dividends...to keep the market excited....if nothing of that sort happens then a correction will come...I'm more worried about the current twin deficits (current & fiscal)...the effect of this deficits is that Treasury will have to borrow excessively resulting in yields in the fixed income market rising and its happening...3 month T-Bill yield 10.3% while inflation at 4.1%...once T-Bills creep to 15-20% consider this bull run slaughtered....guys will move money from stocks to bonds...banks will pass the cost of funds into the economy....I think thats the red flag for now. True. If Tbills spike to 15% and above the rally will meet a brick wall... @deal saw the market complacency too... Yields on the 91, 182 & 364 day papers have recently been on decline. This Wed, CBK will also auction 5 & 15 year papers. If the rates don't spike you should reverse your insipid market call Clearly English is a 2nd Language so lemme explain my call above...the call was made some weeks ago btwn 1. The first part talks about a correction from the 5,000 mark...its happening....YES or NO? 2. The 2nd part talks about the bull run ending...note there is a difference between a market top & a market correction/pull back. If T-Bills continue to decline then the market will find support....if they spike I can tell you it will be OVER!!! NSE bluechips are overvalued at current prices...new catalysts are needed to keep the current bull run alive thats why I talked of strong earnings...low lending rates etc
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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the deal wrote:mwekez@ji wrote:hisah wrote:hisah wrote:the deal wrote:Its very easy to get carried away in a bull run...lets see what happens when the market clocks above 5000...valuations are currently above historic levels on most bluechip companies...we need strong earnings....super dividends...to keep the market excited....if nothing of that sort happens then a correction will come...I'm more worried about the current twin deficits (current & fiscal)...the effect of this deficits is that Treasury will have to borrow excessively resulting in yields in the fixed income market rising and its happening...3 month T-Bill yield 10.3% while inflation at 4.1%...once T-Bills creep to 15-20% consider this bull run slaughtered....guys will move money from stocks to bonds...banks will pass the cost of funds into the economy....I think thats the red flag for now. True. If Tbills spike to 15% and above the rally will meet a brick wall... @deal saw the market complacency too... Yields on the 91, 182 & 364 day papers have recently been on decline. This Wed, CBK will also auction 5 & 15 year papers. If the rates don't spike you should reverse your insipid market call Clearly English is a 2nd Language so lemme explain my call above...the call was made a some weeks ago btwn 1. The first part talks about a correction from the 5,000 mark...its happening....YES or NO? 2. The 2nd part talks about the bull run ending...note there is a difference between a market utop & a market correction/pull back. If T-Bills continue to decline then the market will find support....if they spike I can tell you it will be OVER!!! NSE bluechips are overvalued at current priced...catalysts are needed to keep bull run alive thats why I talked of strong earnings...low lending rates etc Qs to you: 1. Do you believe the market correction is orderly and we are still in the bull trend 2. Do you really think tbill rates will go to 15-20% yet the government has engaged high growth gear? 3. Do you trust that most of the blue chips will record historic performance this year therefore presenting good outlook
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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mwekez@ji wrote:the deal wrote:mwekez@ji wrote:hisah wrote:hisah wrote:the deal wrote:Its very easy to get carried away in a bull run...lets see what happens when the market clocks above 5000...valuations are currently above historic levels on most bluechip companies...we need strong earnings....super dividends...to keep the market excited....if nothing of that sort happens then a correction will come...I'm more worried about the current twin deficits (current & fiscal)...the effect of this deficits is that Treasury will have to borrow excessively resulting in yields in the fixed income market rising and its happening...3 month T-Bill yield 10.3% while inflation at 4.1%...once T-Bills creep to 15-20% consider this bull run slaughtered....guys will move money from stocks to bonds...banks will pass the cost of funds into the economy....I think thats the red flag for now. True. If Tbills spike to 15% and above the rally will meet a brick wall... @deal saw the market complacency too... Yields on the 91, 182 & 364 day papers have recently been on decline. This Wed, CBK will also auction 5 & 15 year papers. If the rates don't spike you should reverse your insipid market call Clearly English is a 2nd Language so lemme explain my call above...the call was made a some weeks ago btwn 1. The first part talks about a correction from the 5,000 mark...its happening....YES or NO? 2. The 2nd part talks about the bull run ending...note there is a difference between a market utop & a market correction/pull back. If T-Bills continue to decline then the market will find support....if they spike I can tell you it will be OVER!!! NSE bluechips are overvalued at current priced...catalysts are needed to keep bull run alive thats why I talked of strong earnings...low lending rates etc Qs to you: 1. Do you believe the market correction is orderly and we are still in the bull trend 2. Do you really think tbill rates will go to 15-20% yet the government has engaged high growth gear? 3. Do you trust that most of the blue chips will record historic performance this year therefore presenting good outlook 1. We are still trading in a bullish channel so the bull is still alive for now 2. T-Bills spiking depends on fiscal deficit...I assume UK will go on a spending spree to achieve his desired growth rate... the question is how will he finance it? local/international borrowing? Local borrowing means high yields on T-Bills...high local interest rates...the current scenario where inflation is below 4% while lending rates are at 17% clearly explains my sentiments above. So for UK to achieve his desired growth rates...he needs to drive local interest rates lower....put MONEY/LIQUIDITY into the hands of Kenyans..but there is one baby called the KES....remember what happened to the KES when interest rates hit rock bottom? UK was the Fin Min...to cut the story short KE econ cant grow at 10% in its current state...it overheats! So structural reforms are needed. 3. NSE bluechips means SCOM (operates in a mature market...can't expand)....EABL (huge Diageo loan)...BAT (strong KES)...maybe Banks! Bottomline: NSE bluechips are overvalued compared to their peers i.e compare MTN vs Scom on PE & DY basis etc
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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the deal wrote:
1. We are still trading in a bullish channel so the bull is still alive for now
2. T-Bills spiking depends on fiscal deficit...I assume UK will go on a spending spree to achieve his desired growth rate... the question is how will he finance it? local/international borrowing? Local borrowing means high yields on T-Bills...high local interest rates...the current scenario where inflation is below 4% while lending rates are at 17% clearly explains my sentiments above. So for UK to achieve his desired growth rates...he needs to drive local interest rates lower....put MONEY/LIQUIDITY into the hands of Kenyans..but there is one baby called the KES....remember what happened to the KES when interest rates hit rock bottom? UK was the Fin Min...to cut the story short KE econ cant grow at 10% in its current state...it overheats! So structural reforms are needed.
3. NSE bluechips means SCOM (operates in a mature market...can't expand)....EABL (huge Diageo loan)...BAT (strong KES)...maybe Banks! Bottomline: NSE bluechips are overvalued compared to their peers i.e compare MTN vs Scom on PE & DY basis etc
1 & 2, agreed. 3,  SCOM has alot of room to grow in data and mpesa bank. the innovation of this counter will also keep surprising. Plus, they have no limitation in venturing regional markets. EABL last year engaged growth mode. This has been touted as the reason of the share bullishness. however, i aint touching it. BAT is not my cup of tea. Banks, these have alot of growth in store for them both locally and regionally. this is clearly a space to watch. Am well positioned here. There are a couple of other bluechips in the market but since you havent talked about them, i also will not.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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Some are saying that UK is going on a spending spree to take the economy to 10% growth... This may be true but there is no rule book that says he must borrow! I have said time and again that a lean government can save at least 100billion in wage bills p.a! This money can be channeled to fulfil all those Jubilee promises without affecting the debt market adversely! As for the stock market... Although we are going through a correction it is unwise to sell anything you own because I have a feeling that this will be the cheapest stocks will ever be for at least a generation! (read China growth rates vs market P/E ratio) Mark 12:29
Deuteronomy 4:16
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Well noted. Life is short. Live passionately.
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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the current market environment is the true test of an investors mettle. no more easy picking or rallies from euphoria. happy hunting indeed The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Chief Joined: 1/3/2007 Posts: 18,095 Location: Nairobi
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mlennyma wrote:Many bought ak expecting small gains but big gains surfaced,they alighted but the price resisted to drop significantly,now wait for 13-15 range after doors close. The firm is for sale. Not if but when. It went public at 10 so it is unlikely to be sold for less than that price. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Rank: Member Joined: 5/8/2008 Posts: 77
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Rank: Elder Joined: 3/19/2013 Posts: 2,552
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We have a great opportunity in East Africa.We just need more skills,improve on infrastructure and cooperate instead of compete.
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Rank: Elder Joined: 3/19/2013 Posts: 2,552
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mwekez@ji wrote:Q deleted. got z ans Are they listing or?
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Rank: Elder Joined: 3/19/2013 Posts: 2,552
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Aguytrying wrote:the current market environment is the true test of an investors mettle. no more easy picking or rallies from euphoria.
happy hunting indeed I agree.I've been waiting for this.
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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symbols wrote:mwekez@ji wrote:Q deleted. got z ans Are they listing or? they have a listed bond
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Rank: Elder Joined: 3/19/2013 Posts: 2,552
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I like when there is more demand than supply.I like the opportunity we have right now. Thanx for the bond information.Chandaria,interesting.
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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hisah, we closed at 4839.49... GOD BLESS YOUR LIFE
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