Investors usually ask about a possible trend in the market that could assist them identify market low points at which to put in their funds in the market, and market highs where they can then exit with maximum gains. While the market doesn’t always follow expected market trends, identifying the main factors behind significant price movements could give a certain indication of possible market trends.
Result Release
Anticipation of company interim and final releases usually has an impact on company prices. In cases where a company is expected to release strong results, the prices usually commence a gradual appreciation a while before the results are released. Once the results are released into the market, the price movement will depend on the results and any corporate action declared. The price movement may turn around if the released results are weaker than expected, or maintain the upward trend if results are stronger than expected. In some cases however, the price has factored in the expected performance by the time of the release such that the price does not gain significantly after the release regardless of any dividend or bonus declaration.
A majority of listed companies including all banks and most industrial counters close their years in December. Other companies full under March, June or September. Results usually received in the market 2 to 3 months after the interim or final period closure.
Other information Released in the market
Other information received on the bourse and not relating to the company performance may have a significant impact on the price movement. Government decisions that may have an impact on company performance such as the debt equity swap on KPLC or the budget cash boost announcement on NBK both saw the share prices gain by leaps. Last years Government decision to go for concrete roads resulted cement share price boost while the decision on the recent KPLC / Kengen tariff wrangle had a buoying effect on KPLC share price.
Information on market expansion like the one Kenya Airways has rode on over the last 4 years, product diversification, mergers, acquisitions and significant management changes may all have an impact on share price movement. There is no document that could keep an investors equipped with or anticipate such information. Investors just need to keep abreast with general business news.
There are points where the market is completely dry of information in the absence of any releases or news. At such points, prices may remain unmoved unless there is a third factor playing on the market.
Market Liquidity
Investors have a choice of channels through which they can invest their funds the main equity competitors being the bank, government bills and bonds and corporate bonds. At points where the gains on these other channels are just too low, investors opt to take their funds to the stock exchange which promises a better return. This results in increased liquidity in the market, and a heightened demand for shares. With this comes an unbridled share price appreciation as investors continue piling up funds on to the market. This appreciation may continue for as long as the liquidity environment remains, and may only be interrupted by a gains realization improvement on the bills and bonds, the onset of an IPO or a significant political adjustment.
The bourse poses a potential for gains at all times since, there is always either a company releasing their result, or other information being received in the market or just an enabling environment. Investor thus need to analyze the market at every point of entry in order to identify the most potential stocks based on the factors in play at that particular point.
MARKET REVIEW
The bull seems to have reduced its pace over the week to Friday 22nd September. Loosing counters were slightly more than the gaining ones, and the appreciations were much smaller than those captured over the previous weeks. Most of the counters that had enjoyed strong gains succumbed to profit taking and closed the week lower.
National Bank captured the largest decline having lost 17% over the week to close at Kshs. 55.50. E.A Cables hit a low of Kshs 61 over the wekk but then picked up to close the week at Kshs. 67.50, 12.34% below last week’s Kshs. 77 close. Equity shed 10% to close at Kshs. 118 while ICDC edged down 9.5% to close at Kshs. 239. Jubilee maintained its appreciation to a Kshs. 188 week close, 12% above the previous week’s close.
Result Release
Anticipation of company interim and final releases usually has an impact on company prices. In cases where a company is expected to release strong results, the prices usually commence a gradual appreciation a while before the results are released. Once the results are released into the market, the price movement will depend on the results and any corporate action declared. The price movement may turn around if the released results are weaker than expected, or maintain the upward trend if results are stronger than expected. In some cases however, the price has factored in the expected performance by the time of the release such that the price does not gain significantly after the release regardless of any dividend or bonus declaration.
A majority of listed companies including all banks and most industrial counters close their years in December. Other companies full under March, June or September. Results usually received in the market 2 to 3 months after the interim or final period closure.
Other information Released in the market
Other information received on the bourse and not relating to the company performance may have a significant impact on the price movement. Government decisions that may have an impact on company performance such as the debt equity swap on KPLC or the budget cash boost announcement on NBK both saw the share prices gain by leaps. Last years Government decision to go for concrete roads resulted cement share price boost while the decision on the recent KPLC / Kengen tariff wrangle had a buoying effect on KPLC share price.
Information on market expansion like the one Kenya Airways has rode on over the last 4 years, product diversification, mergers, acquisitions and significant management changes may all have an impact on share price movement. There is no document that could keep an investors equipped with or anticipate such information. Investors just need to keep abreast with general business news.
There are points where the market is completely dry of information in the absence of any releases or news. At such points, prices may remain unmoved unless there is a third factor playing on the market.
Market Liquidity
Investors have a choice of channels through which they can invest their funds the main equity competitors being the bank, government bills and bonds and corporate bonds. At points where the gains on these other channels are just too low, investors opt to take their funds to the stock exchange which promises a better return. This results in increased liquidity in the market, and a heightened demand for shares. With this comes an unbridled share price appreciation as investors continue piling up funds on to the market. This appreciation may continue for as long as the liquidity environment remains, and may only be interrupted by a gains realization improvement on the bills and bonds, the onset of an IPO or a significant political adjustment.
The bourse poses a potential for gains at all times since, there is always either a company releasing their result, or other information being received in the market or just an enabling environment. Investor thus need to analyze the market at every point of entry in order to identify the most potential stocks based on the factors in play at that particular point.
MARKET REVIEW
The bull seems to have reduced its pace over the week to Friday 22nd September. Loosing counters were slightly more than the gaining ones, and the appreciations were much smaller than those captured over the previous weeks. Most of the counters that had enjoyed strong gains succumbed to profit taking and closed the week lower.
National Bank captured the largest decline having lost 17% over the week to close at Kshs. 55.50. E.A Cables hit a low of Kshs 61 over the wekk but then picked up to close the week at Kshs. 67.50, 12.34% below last week’s Kshs. 77 close. Equity shed 10% to close at Kshs. 118 while ICDC edged down 9.5% to close at Kshs. 239. Jubilee maintained its appreciation to a Kshs. 188 week close, 12% above the previous week’s close.
2 comments:
Great post in a great blog!
Thanks Ryan, positive comment much appreciated
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