The Star (Nairobi)

7 January 2013

Kenya: On the Road to Scaling Great Heights

My Christmas holiday ritual is to jump into a car and take the family down to the Coast. The Nairobi-Mombasa road arrows 'into immensities and is 'impossible-to- believe.' It retains a near mystical hold on my imagination and connects me to my childhood and beyond.

Dad used to once own an Alfa Romeo [of which there were only three then in the country] and my pilgrimage along that road started then, when we used to come from Mombasa. Now, of course, we set off from Nairobi but the road still has its hold. The landmarks still reach out to me.

This time we were swarmed by doves near Emali which was breathtaking. There is still the eerie and deserted very Oscar Niemeyer building which might have been a petrol station with a restaurant.

We stopped at Makindu which is like being teleported to Amritsar and on New Years day was packed to the rafters. We always stop at Mackinnon road where there is a shrine which houses the tomb of Seyyid Baghali, a Punjabi foreman at the time of the building of the railway who was renowned for his strength.

And this time we took ourselves to Vipingo and Watamu. In Vipingo,I was introduced to a pristine beach which is accessed via a ladder as if you were descending from the real world into another.

Jim Rogers who is a trader of some repute and co-founded the Quantum Fund with George Soros at one point took a sabbatical and took off on a motor bike round the world and wrote a book called Investment Biker.

Now I am not proposing that you bike the Nairobi- Mombasa road, not at all. However, as I looked through the performance tables for 2012 and by the way the Nairobi all share ranked eighth worldwide out of 104 indices that I track and has started 2013 with a bang and confounding expectations the first quarter would be more of a whimper as investors watch the general elections loom large.

Returning to the premier league of stock indices in 2012, the top ten reads, Venezuela, Istanbul, Egypt, Phillipines, Estonia, Thailand, Karachi, eighth you know about, Nigeria and tenth Laos.

I do not see one developed market index in that ranking. The returns in 2012 have come from off the well trodden path and I expect this to continue. Edwin Lefevre says in his seminal Book Reminiscences of a Stock Market Operator; 'The Tape is Your Telescope.'

The Nairobi all share has rallied +2.57221% over the first three sessions in 2013 admittedly whilst most folks were still on their holidays.

EABL, BAT, ARM and City Trust all hit all time highs. Kenya Commercial Bank missed an all time high by a whisker Friday and will post one this week.

Safaricom closed at a 28 month high. A market is considered in a bull trend when it rallies over 20 per cent.

The Nairobi all share has been in a bull market since the May 7, 2012 and has been resolutely bullish since then.

Foreign investors have been on the buy side since the start of 2012 and local investors on the sell side.

And every local investor I meet no longer says; 'I will buy the pull back. It always falls before the elec- tion.' They are now asking rather forlornly 'Its going to correct isn't it?' I believe we are in a one off adjustment in favour of Africa.

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