If you are an investor in Equity bank shares, start planning an exit strategy

Source: Soko Analyst

If you are an investor in Equity bank shares, plan an exit strategy

If there was a time when investing at the market was something at its optimal best, the time has been the last 3 weeks, when foreign investors have been taking up key positions on very lucrative bargains on key shares that will definitely give them optimal returns in the next coming weeks.

The unfortunate twist to this despite the fact that they have lifted the 20 share index of the NSE is that local investors have bailed out or sold their options to them. Banking stocks have been of keen interest to the foreign investors given the set of fundamentals that these stocks have been exhibiting and the fact that all of them just released their last quarter’s financial results.

As banks have very different operating structures than regular industrial companies, it stands to reason that investors have a different set of fundamental factors to consider, when evaluating banks. This is not meant as an exhaustive or complete list of the financial details an investor needs to consider, when contemplating a bank investment.

These are technical aspects of evaluating a banking stock and in my analysis, I always try to omit these facts because the Kenyan NSE does not operate on key fundamentals but rather human emotion of the investors at the behest of current affairs in the industry.

Equity as of today saw a  demand  of 2,673,500  shares against a supply  of 1,508,600 resulting to a best bid of 23.50 and best as of 26.50 to close at 24.50 per share with zero per cent change on the price compared to the previous day with a turnover of 149,098,496 and 105 deals as of 1513 hours today. The increased demand was from foreign investors and this will continue for the rest of the week as they look for the perfect pendulum moment to settle and ensure a balanced trade on the stock.

This is because of the just released results and the fact the CEO has been in the news for the last two months for all the right reasons, giving the brand an emotional endearment to its investors. Especially after the CEO was named the business person of the year, coming on the heels of a serious social responsibility venture that the bank has embarked on in terms of raising an army of young trained entrepreneurs and a changed and better exposed new board room members and a new CEO.

These factors have seen the stock become very valuable in the eyes of the foreign investors however, every good thing reaches its plateau curve and equity has reached its curve. It’s time to sell and relocate the funds to other stocks. Equity won’t surpass the 31 KES per share mark given the fact that the results released have shown a decline in profits for the first time in a long time. Banks like KCB have come and overtaken it in this department. Not to mention that it’s been found to be the most expensive bank to get a loan especially for its target client.

Also working negatively on the share is the perceived rumor that the bank has the support of the government in its operations and that’s why it’s done well and that any change in an administration that won’t seat well with its ideology might just impact its performance in a serious negative way.

In addition, it’s the one bank that has stalled on innovative ways to keep attracting the target market through mobile innovation.

Our analyses for further action on this is that if you have shares here, then plan an exit in the next one month, if you interested in getting in, then get in now with the aspect of large volumes to benefit from the action of marginal trade. In the next month, the stock will hit plateau horizon and be there for the next 6 months until after elections are done.

               

Safaricom takes on banks with micro-loans product

Safaricom’s foray into the financial services market is expected to deepen on Tuesday morning with the launch of a mobile banking service that allows users of its revolutionary M-Pesa platform to save and borrow money using their phones.

Safaricom partners with CBK to offer loans. #M-Shwari

Also read: Safaricom biggest loser as CCK cuts termination rate 

The service, which mainly targets micro-savers and borrowers, requires users to open a mobile bank account, M-Shwari , into which they can deposit as low as Sh1 in savings and borrow up to Sh100,000 payable with a one-off interest rate of 7.5 per cent.

All loans are payable within a month of disbursement.

People familiar with the product told the Business Daily that deposits in M-Shwari accounts will earn a graduated interest up to a maximum of five per cent per annum.

Safaricom is offering the service in collaboration with Commercial Bank of Africa (CBA), which has been the primary banker for M-Pesa, Safaricom’s mobile money platform.

Users of the mobile banking service will remotely open the M-Shwari account by simply clicking on their phones. This will spare them the pain of filling application forms as happens with traditional banking.

“It is simple. There are no ledger fees, no limits on the frequency of withdrawals, no minimum operating balance and no charges on deposits for M-Pesa to M-Shwari account,” said Bob Collymore, the Safaricom chief executive officer.

Safaricom is positioning M-Shwari as a groundbreaking financial service that promotes a culture of saving among ordinary Kenyans and allows those with no collateral to access loans through their mobile phones.

Mobile money enthusiasts declared the service another revolutionary product with the potential of taking the ongoing convergence between telecoms and banking sectors higher but critics warned of the dangers that lie in the high interest rates and the one-month loan term.

The M-Shwari service is designed to act as a rudimentary credit facility for those who have been locked out of the loans market for lack of collateral and credit history.

“M-Shwari will attract a one-time facilitation fee (read interest rate) of 7.5 per cent of the borrowed amount,” Safaricom said in a statement.

Though the 7.5 per cent interest looks competitive compared to interest charged on commercial bank loans, that advantage is severely eroded by the one-month lending period that will mostly require borrowers to pay a lump sum amount to settle the debt compared to smaller monthly instalments paid by those who borrow from commercial bank.

For instance, a loan of Sh100,000 from the mobile bank account would attract a Sh7,500 interest charge, which means that the borrower pays back Sh107,500 within 30 days, including the principal.

A similar bank loan attracting interest at the current average rate of 20 per cent, would be repaid at the rate of between Sh9,150 and Sh9,200 per month for a year on reducing balance.

This would translate to an interest burden of Sh11,161 spread over 12 months – compared to Safaricom’s Sh7,500 interest payable in a month.

Safaricom is relying on the spending patterns of its customers, traceable from their airtime top-ups and M-Pesa transactions to determine the creditworthiness of subscribers.

Credit evaluation experts see this as giving the telecoms firm an edge over banks, especially with regard to target market that is mainly made up of informal sector operators who have been unable to secure loans for lack of cashflow statements, payslips and collateral.

To qualify for an M-Shwari loan, one needs to be an M-Pesa subscriber for at least six months, deposit some savings in their M-Shwari account and be a regular user of other Safaricom services such as voice, data and M-Pesa.

And to open an M-Shwari account, consumers will go to the Safaricom menu in their phones, select “M-Pesa”, go to “My Account”, “Update Menu”, enter “M-Pesa PIN” and wait to receive the updated M-Pesa menu.

Commercial Bank of Africa is hoping to hook a large segment of Safaricom’s 19 million subscriber base to M-Shwari as well as the telecom firm’s network of 47,000 distribution agents to deliver the service.

It is estimated that more than Sh300 billion of money in circulation in Kenya is outside the formal banking system and M-Shwari is designed to bring some of that money into the formal banking channels by targeting the 12 million Kenyans identified by the Central Bank of Kenya and the Kenya Bureau of Statistics as unbanked.

Safaricom launched a similar service with Equity Bank in May 2010 but the initiative collapsed a few months later amid reports of disagreements over fees and revenue sharing.

It also comes just six months after Airtel launched its credit-over-the-mobile service offer, targeting commercial banks’ core lending business at the lower end of the market. Airtel’s loans are capped at Sh10,000 and are issued in partnership with Faulu Kenya, a micro-financier.

The partnership between Safaricom and CBA comes after last week’s release of Central Bank of Kenya data showing that Kenyans transferred Sh1.117 trillion through their mobile phones, helped by the interface between banks and cash transfer services of telephone firms.

The value of all economic activities in Kenya — or the Gross Domestic Product — was Sh3.7 trillion last year.

CBK said the increase in mobile money transfers was being fuelled by the high number of consumers moving money into and from their bank accounts using mobile phones.

Kenya’s six biggest banks have established mobile banking platforms that allow consumers to access their accounts through their phones.

Kenya’s mobile phone operators first rattled the banks with money transfer services five years ago, forcing the lenders to form partnerships with the telecom operators for a share of the fees charged on the multi-billion-shilling domestic transfers.

The direct entry of Safaricom into the lending market is expected to lift its earnings from M-Pesa, which was introduced as a money transfer tool but has evolved into a utility bills payment and credit service.

Daily M-Pesa transactions stand at two million and are valued at Sh2 billion. M-Pesa users now stand at 15.2 million, having grown from 52,452 at its launch in April 2007.

Revenues from the service rose 32 per cent to Sh10.4 billion in the first half of the year ended September 30, making it a critical growth area compared to the voice business, which has been hit by a vicious price war.

M-Pesa’s contribution to Safaricom’s total revenue rose to 18.6 per cent from 17.1 per cent, with Safaricom’s parent company, Vodafone, set to take the service global by signing more partnerships in multiple markets.

www.businessdailyafrica.com

CBK launches new campaign to ease coin shortage

You can take your coins to Your nearest bank for notes

Central Bank of Kenya has launched a coin usage campaign dubbed “Chomoa coins” to help it fight the current coin shortage which has been attributed to poor circulation.

The regulator holds that there are enough coins in the economy with the shortage being a result of persons, especially those in the middle and upper income bracket, keeping them out of circulation by holding them in their homes, cars and work places due to the low value they attach to them.

“Most of you have witnessed situations where token items such as sweets or matchboxes are offered in place of coin-change. This is a practice that we would like to see stopped,” said the governor Prof Njuguna Ndung’u.

He said there are 1.31 billion pieces of coins in various denominations in circulation with an estimated value of Sh5.1 billion. This, he said, was adequate for the economy indicating that the shortage would not be addressed by adding new coins but by ensuring there was an efficient mechanism for re-circulating existing ones within the economy.

The public has thus been urged to use coins in their shopping, changing them with supermarkets for note values or operating children accounts where they can deposit with the banks.

On the other hand banks have been discouraged from charging a fee on those who are depositing coins as is currently the case as this also becomes a barrier.

“We are asking Kenyans to collect their coins. Deposit them in a bank or use them to make a purchase, no matter how many or how few,” said Habil Olaka, CEO of Kenya Bankers Association.

The coin shortage has seen some traders hike the cost of their goods and services to the nearest five shillings in order to avoid the hustle of searching for coin change.

CBK had conducted a similar campaign in July last year which the governor said had been successful in bringing the coins into circulation.

“The campaign was successful bringing large amounts of coins into circulation but in the early part of this year the momentum seemed to have waned and reports of perceived coin shortages resurfaced again,” said Prof. Ndung’u.

He said that they were looking for a sustainable solution so as to avoid having to conduct campaigns each year.

http://www.businessdailyafrica.com

Why does the UN Want to Take Over the Internet?

On the 3rd, Internet sanctions may
be validated by The ITU.

On the 3^rd of December, 2012 The International Telecommunication Union (ITU), branch of the UN, will be meeting to discuss an outdated communications treaty. This meeting that will take place behind closed doors could threaten our very freedom and our ability to connect with others throughout the rest of the world. Our Internet should be open and inclusive not threatened with censorship that could stifle innovation!

“Contrary to some of the sensationalist claims in the press,” ITU Secretary-General Dr. Hamadoun I. Touré shot back in a speech last week at Columbia University, “WCIT is definitively not about taking control of the Internet or restricting people’s freedom of expression or freedom of speech.”

Despite Dr. Touré’s reassurances, however, claims that the WCIT is being hijacked are hardly sensational–nor are they being raised by “the press.”  Rather, a remarkably broad coalition of governments in both developed and developing nations, advocacy groups on the left and the right, and leading international Internet engineering groups have all been sounding the alarm.

Making the best use of You Tube

Take your marketing a notch higher 

You Tube is the currently second biggest search engine owned by Google which is the first biggest search engine in the world. Pound for pound there is no comparison between the two but make no mistake You Tube remains as the most powerful tool for promoting your business, charity or non-profit organization as well as getting your message to the right people.

From personal experience, I understand how good You Tube is especially for practically researching on anything. On YouTube, there are good films out there that can help you get your head round so many things both big things and little things.

To quote a personal example recently, I wanted to update my blog on HTML. I took the first step with the little knowledge I had, went round and round trying to fix flash on the header in vain impossible.

After a several minutes of exhausting activity I was definitely getting nowhere and that’s when my colleagues suggested that I use Google it. I pooh-poohed the idea and got even hotter and more disturbed until when I eventually gave up and asked her to try Google on my behalf.

Within seconds she found a clip on You Tube which demonstrated how to get that flashing header on the blog using HTML. So the message here is, whenever in doubt try You Tube.

Well for the moment at least it is pretty easy with the right kind of tagging. Today I look forward to doing a short video on how to use social media as a marketing tool, an You Tube is my channel of transmission.

The result is that his film has rocketed up the pages and is now taking pride of place just below the paid for positions. It is not like SEO - a mystical process akin to shovelling fog into the back of a lorry, it does not take months to see the benefits. The progress only took minutes and it really is not that difficult. So if you want to get ahead of the game on You Tube while you still can - give me a call.

And going back to the pop-up, why were there no instructions for getting it back in the bag

Limited Boundaries? Not as per the Slum Fest.

Technology is definitely on business tool you need to embrace

By now, I suppose you are aware that the 6^th Slam Fest took place sometime last week. Woe unto you if you had no idea of what this is because by now, whoever attended the tech Festival is by now putting into play the sentiments aired by the attendants. There was a lot to learn and ape from fellow business people and other tech exhibitors. In my opinion, awesome would not be enough a compliment for that. Super awesome, that is it.

The theme of the fest was 'the power of infinite possibilities - leveraging the ICT space' and I presume you considered this a serious only geek faces event. However, this was not the case as it was more of an entertainment event. All class and no play makes Jack a dull boy you know, this is exactly what made the event a unique experience.

This time, not only for you, but we got an all new dimension to the way we at KB do things. Since we have always worked towards ensuring quality service delivery,, from this event we built an all new dimension on the way we do things even in our office.

Considering the uniqueness of the festival, we decided to get a new and unique way to improve our products for you. Take two “You sure do not have to wear that tough face to deliver a point”

From the interactions with the exhibitors, it is evident that people are working round the clock in seeing to it that solutions arise from the advantages of the internet. People are working round the clock inventing and building ideas based on existing problems.

You now side with me that the slam fest was not just the usual events we attend and slam you with content, but a partnership and event that definitely bring a change in the way you will be receiving information.

Not only for my new way of reporting, but even the activities in the three blogs that I run as well as participation in brainstorming sessions have definitely changed. Talking to different attendants after the festival, most business managers emphasized on the new measures they would take whenever they hold their office meetings and brain storming sessions.

This is a change any business set up could emulate given that constant interactions among employees and the management help in building the employer – employee relationships as well as increase revenue generation since this interactions help increase the product value.

Talking on Employee-employer relationships and brainstorming, I confirm there is more in the tunnel. From the event coverage, you get the understanding of why technology is quickly taking pace, reiterating comments from known local artiste -Juliani, we understand that the internet is not only a source of fun and entertainment but  a place you can share an idea and probably get an idea as well.

Roughly 60% of Kenya’s vision 2030 focused on the internet and the online platform as a tool of propulsion for the vision to succeed. Professor Mugo Kibati echoed the departments’ vision saying that with solutions online and business people taking advantage of the online medium, it will be easy and quick to reach all the components of the Vision 2030.

Speaker by speaker, heaped praise on the Slam Fest 2012 organizers as this fest comes at a time when Kenya is ranked among the best countries in Africa when it comes to offering solutions online as well as with the best internet speeds and connectivity in Africa.

Germany Opens its Doors for Kenyan Products

Germeny-Kenya trade

Germany will soon open its market to products and raw materials from Kenyan companies and manufacturers according to Mr. Karl Wondling, Germany’s deputy director of the Federal Ministry of Economics and Technology.

Mr. Karl, during his tour at Kevian Kenya Limited in Thika revealed that Kenya and Germany will enter into a formal partnership that will facilitate further trade relations between the two countries.

He indicated that the cooperation between Germany and Kenya is set to go a notch higher especially in trade partnerships. Echoing on these sentiments, Mr. Richard Kimani Rugendo, Managing director at Kevian said that the agreement would be a win-win option for both the countries.

Mr. Karl further urged Kenyan companies to strive towards the attainment of high production standards for them to exploit the German market. He insisted that if they met their (German) standards, then their market will open up for the Kenyan forms.

Kenya last week became the third country in Sub-Saharan Africa, after Angola and Ghana to host a delegation of the German Industry and Commerce which set up an office in Nairobi. This office will be used to enhance trade relations between Kenya and Germany.

Peering into deeper trade detail, we found out that Kenya is the seventh largest export destination for German products in sub-Saharan Africa, while Germany is the third largest trading partner for Kenya in the European Union.

Last year, Kenya traded volumes worth $477 million with Germany and with the betterment of trade partnerships and relations between the two states, this is bound to increase.

The Kenyan small business owners and entrepreneurs will see this as an avenue of creating trade relations with other firm s in Germany and the European Union as a whole