BY PATRICK WAMEYO
On 27 April, the curtain fell on one of Kenya’s biggest rights issue that was marked with subdued interest from retail investors. You are now either holding more shares of Kenya Airways, if you took up the rights, or have diluted your shareholding, if you opted out.
Evident during the entire month of the shares offer was the conspicuous absence of retail investors. The usual players in stock investing appear to have been set up for the next price growth momentum that will attract them back to make a loss.
While some pundits have explained this unusual situation as resulting from the prevailing economic difficulties that have eroded the public’s purchasing power, I am persuaded otherwise. I believe that fear played a bigger role in eroding the usually buoyant mood — fear of loss resulting from the experience of the previous initial public offerings (IPO) post-issue flops.
I am convinced that over 90 per cent of the two million plus investors at the Nairobi Stock Exchange are first-time investors guided by “me too” moods more than economic research. And since there were no crowds to follow, there were only informed investors taking positions, lying in wait for the moment to make a kill.
In our last article, “You are what you think and feel”, we recalled that at home and in school, our failures were pointed out to us by well-meaning parents and teachers in a way that made us feel that something was wrong with us rather than the fact that something could have been wrong with our behaviour. The resulting self-doubt is detrimental. Deal with it.
Take a look at the events at the Nairobi Stock Exchange since the KenGen IPO. The economic environment for that IPO, the stock valuation and the pricing was so right that virtually everybody who put some money in the share made some profit. People who had sold their cows to buy shares made money and convinced themselves that their decisions were right, whether they were well informed or not.
Many good tidings followed, ending with the ill-timed Safaricom and British American IPOs. It is amazing how fear can impede learning.
On 27 April, the curtain fell on one of Kenya’s biggest rights issue that was marked with subdued interest from retail investors. You are now either holding more shares of Kenya Airways, if you took up the rights, or have diluted your shareholding, if you opted out.
Evident during the entire month of the shares offer was the conspicuous absence of retail investors. The usual players in stock investing appear to have been set up for the next price growth momentum that will attract them back to make a loss.
While some pundits have explained this unusual situation as resulting from the prevailing economic difficulties that have eroded the public’s purchasing power, I am persuaded otherwise. I believe that fear played a bigger role in eroding the usually buoyant mood — fear of loss resulting from the experience of the previous initial public offerings (IPO) post-issue flops.
I am convinced that over 90 per cent of the two million plus investors at the Nairobi Stock Exchange are first-time investors guided by “me too” moods more than economic research. And since there were no crowds to follow, there were only informed investors taking positions, lying in wait for the moment to make a kill.
In our last article, “You are what you think and feel”, we recalled that at home and in school, our failures were pointed out to us by well-meaning parents and teachers in a way that made us feel that something was wrong with us rather than the fact that something could have been wrong with our behaviour. The resulting self-doubt is detrimental. Deal with it.
Take a look at the events at the Nairobi Stock Exchange since the KenGen IPO. The economic environment for that IPO, the stock valuation and the pricing was so right that virtually everybody who put some money in the share made some profit. People who had sold their cows to buy shares made money and convinced themselves that their decisions were right, whether they were well informed or not.
Many good tidings followed, ending with the ill-timed Safaricom and British American IPOs. It is amazing how fear can impede learning.
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