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100% ownership of listed companies in NSE by foreigners
Rank: Member Joined: 1/16/2014 Posts: 114
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www.nation.co.ke/lifesty...58/-/5gbqqb/-/index.html If this law goes through then we might see some companies being 99.99% owned by foreigners and since they have had an upper hand in selecting stocks compared to the Locals then only crap stocks will be left to the wanjikus. Also as the article noted the global financial crises and market melt downs will be mirrored back in NSE. All in all hata Hague sisi ni wanoma, let law be changed and am sure kenyans will prevail. fear makes people live a miserable life.
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Rank: Member Joined: 10/8/2010 Posts: 446 Location: london
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stockshunter wrote:www.nation.co.ke/lifestyle/smartcompany/Kenya-risks-global-financial-shocks-in-new-markets-plan/-/1226/2201258/-/5gbqqb/-/index.html If this law goes through then we might see some companies being 99.99% owned by foreigners and since they have had an upper hand in selecting stocks compared to the Locals then only crap stocks will be left to the wanjikus. Also as the article noted the global financial crises and market melt downs will be mirrored back in NSE. All in all hata Hague sisi ni wanoma, let law be changed and am sure kenyans will prevail. To avoid future resentments, I think companies should be 50 to 60 per cent locally owned. That way, some profit will be left in the country to sustain the economy. can you imagine if KBL was locally owned? All that profit being pumped back to the economy
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Rank: Chief Joined: 1/3/2007 Posts: 18,124 Location: Nairobi
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Kwani? If you want an ownership stake then do NOT sell. You sell to foreigners then complain that they own 60 or 70 or 100% of the firm? When @stockhunter says "foreigners have an upper hand in selecting stocks" ... why not be sensible about selecting stocks? Why not learn how to value them? There are very good analysts at Kestrel, SIB, etc who can provide insights. There are many local investors including Paul Ndungu, BC Patel (Carabcid), James Mwangi (Equity & Britam), Chris Kirubi (Centum), etc who have large stakes which they acquired over the years. They have the smarts to do so. Paul Ndungu - despite recent setbacks - has been acquiring shares in many listed firms over the years including CMC. Chris Kirubi bought ICDCIC (now Centum) shares over many years at a huge discount to NAV. BC Patel has stakes in Carbacid bought over the years on the NSE, Pan Africa Insurance (started by his family), Limuru Tea (purchased from the market), etc James Mwangi - You know his story. Hats off to him. He is a brilliant strategist! There are many I have not even listed who bought into firms over the years. Some grew their firms from tiny ventures into behemoths including Pradeep Paurana of ARM and Bharat Thakrar of Scangroup. Do we want to be discriminated against when we want to go into Uganda, Rwanda & Tanzania? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 1/27/2012 Posts: 851 Location: Nairobi
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VituVingiSana wrote:Kwani? If you want an ownership stake then do NOT sell. You sell to foreigners then complain that they own 60 or 70 or 100% of the firm?
When @stockhunter says "foreigners have an upper hand in selecting stocks" ... why not be sensible about selecting stocks? Why not learn how to value them? There are very good analysts at Kestrel, SIB, etc who can provide insights. There are many local investors including Paul Ndungu, BC Patel (Carabcid), James Mwangi (Equity & Britam), Chris Kirubi (Centum), etc who have large stakes which they acquired over the years. They have the smarts to do so.
Paul Ndungu - despite recent setbacks - has been acquiring shares in many listed firms over the years including CMC.
Chris Kirubi bought ICDCIC (now Centum) shares over many years at a huge discount to NAV.
BC Patel has stakes in Carbacid bought over the years on the NSE, Pan Africa Insurance (started by his family), Limuru Tea (purchased from the market), etc
James Mwangi - You know his story. Hats off to him. He is a brilliant strategist!
There are many I have not even listed who bought into firms over the years. Some grew their firms from tiny ventures into behemoths including Pradeep Paurana of ARM and Bharat Thakrar of Scangroup.
Do we want to be discriminated against when we want to go into Uganda, Rwanda & Tanzania? Tell him. What happened at Yu? What has the locals done with their stake? @stockshunter, Stop whining and making excuses for lazy locals. If they can't learn the trade, what business do they have trading stocks? Let them go plant watermelons or look for gov't tenders. Upusi,kulialia bure.
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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I get where both sides are coming from. And I think there has to be some kind of protection mainly because foreigners have money, the kind of money locals, even the Kirubi types can only dream of. The problem with most foreign investors including myself and others who've invested in BOK, Brarilwa etc is we feel nothing for those companies and are only in for bonuses, appreciation and dividends but doe not participate in their growth.
BBI will solve it :)
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Rank: Chief Joined: 1/3/2007 Posts: 18,124 Location: Nairobi
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2012 wrote:I get where both sides are coming from. And I think there has to be some kind of protection mainly because foreigners have money, the kind of money locals, even the Kirubi types can only dream of. The problem with most foreign investors including myself and others who've invested in BOK, Brarilwa etc is we feel nothing for those companies and are only in for bonuses, appreciation and dividends but doe not participate in their growth. The problem when you have 'feelings' for an investment is when you stop thinking clearly. I used to have 'feelings' for KQ since it was a Kenyan success story. Perhaps it still is. As an investment it was a disaster. For those who bought Rights Shares in KQ, it has continued to be a disaster. The same money into Bank of Kigali or Bralirwa has doubled in value. Nevertheless, if we choose NOT to buy into KQ [as I did] but complain later about increased foreign ownership, then it is my fault. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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VituVingiSana wrote:2012 wrote:I get where both sides are coming from. And I think there has to be some kind of protection mainly because foreigners have money, the kind of money locals, even the Kirubi types can only dream of. The problem with most foreign investors including myself and others who've invested in BOK, Brarilwa etc is we feel nothing for those companies and are only in for bonuses, appreciation and dividends but doe not participate in their growth. The problem when you have 'feelings' for an investment is when you stop thinking clearly. I used to have 'feelings' for KQ since it was a Kenyan success story. Perhaps it still is. As an investment it was a disaster. For those who bought Rights Shares in KQ, it has continued to be a disaster. The same money into Bank of Kigali or Bralirwa has doubled in value. Nevertheless, if we choose NOT to buy into KQ [as I did] but complain later about increased foreign ownership, then it is my fault. VVS, in our kind of market, you need feelings to grow a local brand. If we sold off 100% of EABL I can bet you Keroche brands will take over Tusker's territory knowing Kenyans and patriotism to brands. Look at Equity, KCB and Safaricom. Safaricom enjoys loyalty from the market because it is perceived to be more Kenyan that Airtel. I honestly would call this loyalty; goodwill because Airtel is better than SCOM in most aspects.
BBI will solve it :)
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Rank: Member Joined: 1/15/2010 Posts: 625
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There are many lessons to learn from the Asian financial crisis. Unfettered foreign investments in the stock market can lead to financial disaster. This kind of policy only serves to attract hot money ie. money looking for short term gains in the stock market. It's not the kind of foreign investment that we traditionally think of for building infrastructure and other long term investments.
The risk of foreign domination in the stock market is directly tied to currency risks.
If stock markets are dominated by hot money, financial catastrophes tend to be exaggerated. In the event the stock market starts going down quickly, foreign investors start selling off to avert losses and they have to convert their money to USD or Euros. The result is a rapidly weakening currency especially when there are no currency controls. Rapidly declining currency likely results in hyper inflation especially in an import dominated economy resulting in high costs of basic commodities. The end result could be riots in the streets as citizens are unable to afford basic commodities.
Read more about the Asian Financial Crisis and a great book "Globalization and Its Discontents" by Joseph Stiglitz.
Kenya needs to be smart about the kind of money it wants to attract. We want foreign investors to come in and really invest in the kind of long term projects that we need but we don't want to be the playground for short term traders.
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Rank: Chief Joined: 1/3/2007 Posts: 18,124 Location: Nairobi
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mv_ufanisi wrote:There are many lessons to learn from the Asian financial crisis. Unfettered foreign investments in the stock market can lead to financial disaster. This kind of policy only serves to attract hot money ie. money looking for short term gains in the stock market. It's not the kind of foreign investment that we traditionally think of for building infrastructure and other long term investments.
The risk of foreign domination in the stock market is directly tied to currency risks.
If stock markets are dominated by hot money, financial catastrophes tend to be exaggerated. In the event the stock market starts going down quickly, foreign investors start selling off to avert losses and they have to convert their money to USD or Euros. The result is a rapidly weakening currency especially when there are no currency controls. Rapidly declining currency likely results in hyper inflation especially in an import dominated economy resulting in high costs of basic commodities. The end result could be riots in the streets as citizens are unable to afford basic commodities.
Read more about the Asian Financial Crisis and a great book "Globalization and Its Discontents" by Joseph Stiglitz.
Kenya needs to be smart about the kind of money it wants to attract. We want foreign investors to come in and really invest in the kind of long term projects that we need but we don't want to be the playground for short term traders. So what's the problem? When the 'hot money' comes in, why not sell the shares at high(er) prices then wait. When the crash comes, go out & buy the same shares at lowe(er) prices. So sell high, buy low... Let the foreigner chasing yield get hurt while you, the local, who knows the market can take advantage! When the Japanese were driving up prices of real estate in the US [due to lower returns in Japan] many sold them these properties. When the market crashed, these properties were repurchased at a fraction of the prior sale price. As for the currency depreciating due to 'hot money' leaving... well, it would have been weaker in the first place if not for the hot money! Ask yourself whether the KES is being kept strong because of (hot money) inflows... If yes, then sell out & go into USD/Euro. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 1/16/2014 Posts: 114
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mkeiy wrote:VituVingiSana wrote:Kwani? If you want an ownership stake then do NOT sell. You sell to foreigners then complain that they own 60 or 70 or 100% of the firm?
When @stockhunter says "foreigners have an upper hand in selecting stocks" ... why not be sensible about selecting stocks? Why not learn how to value them? There are very good analysts at Kestrel, SIB, etc who can provide insights. There are many local investors including Paul Ndungu, BC Patel (Carabcid), James Mwangi (Equity & Britam), Chris Kirubi (Centum), etc who have large stakes which they acquired over the years. They have the smarts to do so.
Paul Ndungu - despite recent setbacks - has been acquiring shares in many listed firms over the years including CMC.
Chris Kirubi bought ICDCIC (now Centum) shares over many years at a huge discount to NAV.
BC Patel has stakes in Carbacid bought over the years on the NSE, Pan Africa Insurance (started by his family), Limuru Tea (purchased from the market), etc
James Mwangi - You know his story. Hats off to him. He is a brilliant strategist!
There are many I have not even listed who bought into firms over the years. Some grew their firms from tiny ventures into behemoths including Pradeep Paurana of ARM and Bharat Thakrar of Scangroup.
Do we want to be discriminated against when we want to go into Uganda, Rwanda & Tanzania? Tell him. What happened at Yu? What has the locals done with their stake? @stockshunter, Stop whining and making excuses for lazy locals. If they can't learn the trade, what business do they have trading stocks? Let them go plant watermelons or look for gov't tenders. Upusi,kulialia bure. fear makes people live a miserable life.
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