Stocks to Watch in 2016

The year 2015 was marred with tough economic challenges at the Nairobi Stock Exchange. The 20 share index at the Nairobi Security Exchange fell by 21 percent from 5,112 points in December 2014 to 4,040 points in the month of December 2015.

The all share index reduced from 177 points in February 2015 to 145 points in December 2015 being a reduction by 19 percent and a total reduction of 6 percent year-on-year as compared to the year 2014.

In general, during the year 2015 at Nairobi Security Exchange, investors lost a total of about 250 billion shillings in paper value of their total investment value as 48 out of the 65 actively trading counters. The banking sector was the most hit especially as a result of the weakening shilling against the dollar as well as due to the tight and strict monetary policy. This was also the period that witnessed the exit from the financial scene of Dubai Bank and Imperial Bank. There is a total of 11 registered Banks at the Nairobi Security Exchange and all of them registered a reduction in share price with an averaged cumulative share loss of 26 percent. At the same time, mortgage lender housing finance recorded the highest loss of more than 50 percent, 51 percent, of its share value.

The only sector that showed some tremendous gains on the Nairobi Security Exchange was the agricultural sector. Sasini posted a 52 percent increase, Kakuzi posted 76 percent increase, Kapchorua posted 45 percent increase, and Williamson posted 54 percent increase while Limuru posted 40 percent increase. All these were tea companies. The only firm in the agricultural sector that registered a drop was Eaggads, which is a coffee firm and this was attributed to the numerous rankles at the Tatu City Project.

As the year 2016 starts, both the investors as well as stockbrokers are looking forward to a fruitful year especially with the Kenyan shilling gaining stability against the dollar as well as the reduction of the interest rates which had flown through the roof the better part of last year.

Stockbrokers and investors are likely to go for the shares that suffered during last year especially in the banking sector, the insurance sector as well as in the construction sector. Home Africa, in the construction sector has already featured in the top gainers list with a 20.9 percent week-on-week gain for the consequent second week.

Article by Juma Fred.