Market Wrap By @SokoAnalyst

*Lazy Post*
Lately I've become lazy on this blogging thing, so to coverup I would let Steve Biko (@SokoAnalyst on twitter) of Hidalgo do the talking in this interview with CNBC Africa:-

NSE: In Your Face!

Ok, we get it! Somehow the numbers at the NSE have improved and every one is rushing to tell us how things are getting better. Good for them and for those who beat the herd mentality and averaged down on their equities during the down-turn. NSE has a report on how they are the best in Africa for Q1 2010. The market index rose 24.89% during the period, crossing both the 4,000 NSE-20 index and the Ksh.1 trillion mark in capitalization.

Dyer & Blair and Apex Africa stock brokers have published their impressive Q1 results. Compared to their full year results things are really looking up. D&B Q1 pre-tax profit rose 166% to Ksh.35 million, compared to a Ksh.53 million loss in the same period last year. Commissions’ increase 202% to Ksh.54 million; total income increased by 114% to Ksh.103 million (including Ksh.35 mln from unrealized revaluation gain on equity investment); while total expenses dropped 30% to Ksh.64 million mainly due to a 43.9% (to Ksh.12 mln) reduction in operations and admin costs.

Apex operating profit was already 130% up for the first three months of the year to stand at ksh.35 million compared to only ksh.15 million for the full year 2009. Their Q1 published statement was more of a ‘gloat statement’ looking at its sheer size with no much information to go with.

@AlykhanSatchu of rich.co.ke expects Kenya’s GDP to grow by at least 5% this year. Quite optimistic, but could happen. Everything is going well: farmers experiencing a bumper harvests, easing inflation rate and interest rates, reduced political tension (for now) and a seemingly return of foreign investors to our markets (though some pundit tells me that’s not the case). Striking oil now would be a nice addition. At least we won’t worry about shifting balance of trade with our good neighbors the Ugandans.

As much as I share in our brokers and NSE excitement, at least these good tidings have reversed my paper loses; I think it’s too early to scream eureka! Not yet. It would be wise to wait and see developments in Q2 and what the reviewed constitution referendum will unearth in our political scene.

Most of the listed firms, with an exception of banks, have posted improved results too. Some activities expected at the NSE this year include a rights issue from KCB, separate listing of the CFC/Stanbic insurance arm and relisting of Uchumi supermarket. An IPO would be in order, but not without some improvement of brokers corporate governance.

KQ – Quick Hits

Kenya Airways has been on a rally for over six months driven by what they say is foreign investor demand. It has been the darling of my small portfolio at the NSE, posting an over 100% rise in price to stand at the current Ksh.60. I’ve been keeping tabs on it, just incase I’m caught off side with another workers strike. Their service however, is still in bad taste to many. Competition on its African routes is getting stiffer as Ethiopian Airways ups its game but lucky the hedged fuel contracts ghost is fading as oil prices Increase. Any way, I’m still watching patiently, with a finger on the ‘sell button’.

True Love (Didn’t) Last

*for lack of a better title*

At some point a year or so back I was engaged in rigorous process of coming up with a budget that would have seen a hard-copy magazine published and distributed all over the world. After several days of dicing and slicing I came to a simple conclusion that it couldn’t happen. Unless it was purely for humanitarian purpose, sponsored by a very deep pocketed donor, it wasn’t going to be viable.

The recent folding of Media24/EAM magazines in Kenya is just a good example of how hard it is to make head way in this magazines industry. However, I still find the blatant blaming of their collapse on an ‘imported model’ half baked.

Generally, SA firms find it hard to adapt to the Kenyan market. What with peculiarly behaving customers as Michael Joseph once put it. That was before he became a darling of the masses we know today. A long list of firms that have gone the Media24 way include Supreme furniture, retail chain Cash and Carry, cinema company Nu Metro, fast foods giant Nandos and beverage giant SAB Miller (who’s planning a Ksh.1.2 billion ‘EABL-hostile’ come back soon). An in-depth research on why this trend is so would be quite interesting.

There are several other magazines, published by Kenyan media outlets that have gone down the same path – (Business Post?). At the end of the day it is all about content and understanding your target client, both of which True Love, Drum and Twende lacked. Most Kenyans would only buy a magazine for its good-unique content, not just anything they can get freely on Google search. And our appetite for magazines, or any reading for that sake, is at a historic low.

Despite dwindling trends in the developing world, Kenyan newspapers seem to be fairing well (for the time being). They too have been feeling the heat as internet penetration in the country increases with the landing of faster (not cheap yet) fibre optic. Loss of advertisement revenue to other media sources has also had them think hard, with a shift towards providing online content by most of them albeit slow and uncoordinated for some.