The erosion of value at the Nairobi Securities Exchange presents a significant opportunity for investors to re-enter and spread their portfolios in different market segments.
According to market experts, the volatility seen at the bourse in 2023 presents a unique opportunity for both retail and institutional investors looking to take advantage of discounted share prices in the market before the projected bull run.
“Looking broadly down, Kenya is the cheapest it has ever been on the data we have, which goes back 15 years, it is three standard deviations away from its average, which is extreme so that’s almost like a black swan type of event, and when you compare the key to its peers and not just African peers Kenya performed extremely badly, there is a lot of value, there’s a lot of value in Kenya,” said Muathi Kilonzo the Head of Equities Kenya, EFG Hermes.
But where should investors look with most counters performing nearly the same?
According to market analysts, 2024 presents opportunities for investment in the agricultural space, with financial counters expected to improve and rebound.
Safaricom’s entry into the Ethiopian market is also projected to attract decent earnings for the telco giant.
“I’m looking at pockets of opportunity in the banking sector, especially the Equity Group, we are also bullish On NCBA group and I&M because of their strong value proposition on the agricultural front we are very optimistic on Kapchorwa and Williamson Tea because of their earnings are growing strong, in triple digits,” says Ronny Chokaa Senior Research Analyst – Aib-Axys.
“In the insurance front, we like CIC as well as Jubilee, we like the exposure to long-term insurance and Jubilee has leadership in the medical front which we think will tailwind profitability, on the construction side we are bullish on Bamburi.”
Speaking on Safaricoms’ potential Mr Muathi Kilonzo the head of Equities Kenya at EFG Hermes, noted; “ Safaricom is interesting because they are demystifying Ethiopia, they are taking investors to Ethiopia in February. They are also doing an update call this January, so I think there are a lot of efforts that the management is making to open people’s eyes to what is one of the greatest global prices. If you look globally there are very few telco markets where you have over 100 million people still using 2G.”
The Nairobi bourse experienced significant volatility in 2023, with the market capitalization fluctuating, from a high Ksh.64.8 billion in March on the back of the Diageo Tender Offer to lows of Ksh.6.6 billion turnover as of December 2023.
Jimmy Mbogoh, “List of Kenyan Companies, Stocks to Invest in This Year,” Citizen Digital (Citizen Digital, January 24, 2024), https://www.citizen.digital/business/list-of-kenyan-companies-stocks-to-invest-in-this-year-n335417.
