Everyone hates the stock market at this point in time and people are running away in fear. Kenya’s is the worst performing stock market in the world, so goes the new headlines in leading news outlets.
However, what the media does not tell you is that shares on the market are going for prices less than their worth. Therefore, this is the best time for you to invest in the stock market.
The Kenyan market may remain depressed the whole of these year based on election jitters but the upside potential remains immense given that most of these companies have their underlying fundamentals in place.
Very valuable stocks are going at a bargain not because all the companies are in trouble but because of the general bearish market outlook especially on account of the expected depressed margins of commercial banks earnings due to a cut interest rates enforced by the government.
Look for stocks that have delivered consistently good long-term performance but whose prices are discounted not by their own problems but because of the prevailing market conditions.
The other key factor is the expected uncertainty posed by the oncoming elections which has led to an outflow of capital to safety.
The elections jitters are also driving the weakening of the shilling even as the strong dollar also makes investors to seek higher yields elsewhere.
Investors normally dump currencies whose interest rates are weakening in favour of countries whose rates are expected to rise. This is called yield chasing caused by interest rates differential.
Kenyan investment clubs prefer to sell shares in bear markets to put their money in real estate leaving most of the counters discounted.
However, the bear market is likely to be sustained till the elections on jitters of perceived poll chaos fizzle out. Before the past elections the market tends to be depressed and the economy does not deliver good performance which means Kenya undergoes an economic down turn during every election which opens an entry point for those seeking bargains in the market.