Safaricom value dips below Sh1trn after US rate hikes

WEDNESDAY OCTOBER 05 2022


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[SIZE=6]Safaricom value dips below Sh1trn after US rate hikes[/SIZE]
WEDNESDAY OCTOBER 05 2022
https://www.businessdailyafrica.com/resource/image/3923942/landscape_ratio3x2/400/267/fe94296b7d586bee90542fcee1b6be1/EA/scom.jpg
Pedestrians walk past a Safaricom shop in Nairobi. PHOTO | AFP

By ELIZABETH KIVUVA
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The value of Safaricom at the Nairobi bourse has dipped below the Sh1 trillion mark on foreign investors’ flight in the wake of rate hikes in the US.
The telco was yesterday valued at Sh979.60 billion after its share price dipped to Sh24.45 from a high of Sh38.15 at the start of the year, translating to a paper loss of Sh548.9 billion over the period.
The plunge in the firm’s share price hit the valuation of Nairobi Securities Exchange (NSE), with market capitalisation falling below the Sh2 trillion mark that is similar to market performance when Kenya was battling Covid-19 restrictions like the nationwide curfew, which delivered layoffs, job cuts and business closures.
Safaricom, the country’s most profitable company, accounted for 82 percent of the NSE paper loss of Sh662 billion since the start of the year, underlining its dominance that is making it difficult for investors to gauge the performance of the bourse.
The bourse is being weighed down by a reduced appetite for emerging markets after a jump in interest rates in the developed markets such as the US, which are currently battling high inflation that has forced their central banks to adjust rates upwards.
The Federal Reserve on September 21 announced a third consecutive 0.75 percentage point increase in interest rates and signalled borrowing costs would remain high for an extended period.

My question is:

How will what is expected to happen to USD affect KSH ?

Thanks in advance.

Amefanya.

Everything is interconnected. Dollar is king.

I will buy tons ikifika 16 bob or lower. Until then wacha nikae kando.

I don’t see it reaching that zone unless the company is collapsing. A company to lose 60% value is no joke.

Facebook is down 70%. 2009-2011 dec nakumbuka stocks zilishuka kama crazy. We might be experiencing a similar event.

Isn’t 24 the dip to buy at? Ama it’s still overvalued?

Facebook’s importance as a social media is declining. This coupled with privacy concerns, scams, spam, misinformation campaigns, regulatory problems, disdain for Zuckerberg and user fatigue are guaranteed to kill Facebook slowly but surely.

Expecting another announcement of a 75bps hike next month. Anyone expecting any kind of pivot from the fed is living far from reality. Damn…so much money to be made this year albeit I’d advice anyone with a dollar account that had funds transferred to it after March to make a switch right after the mid- term elections(you never heard this from me)

There is no standard “good” valuation. It all depends on what value YOU decide is cheap enough to buy. I chase dividends and I think Safcom is a mature company with limited growth potential. That’s why I wouldn’t pay a cent over Ksh 16. At that level the dividend yield approaches 10% so I get paid in cash as I wait. At 24 the dividend yield is not juicy enough for me.

What are you talking about? Please elaborate.

Now are you comparing FB and Safaricom? Do you remember what happened in the US in 2009? I don’t see a similar event in Kenya, that is a position borrowers are over leveraged.That was very unique to the US due to lax laws. You would find someone like @Kahuni Maisha making $30k a year able to borrow $300k ( mortgage).

Nikisema stocks zilishuka from 2009-2011 namaanisha local stocks huku Kenya. The bloodbath was everywhere. I was in my late teens and new to the NSE.

@G_Mwaura, @Azor Ahai , @Simiyu22 ni upuzi mtawacha !!!
Mini nauliza story ya USD vs KSH, nyinyi mnaanza story hazieleweki.

Style up !!!

Foolish. Anything below 25 is good value for Safcom. When foreign investors come back it will bounce back to 40+. Safcom is a bullet proof business

Your story is about Safaricom? Or are you attributing Safaricoms loss in value to Kshs drop?

Let me simply it this way;

  1. Some big players(read banks) from Japan to China to London to Frankfurt…you name it have been planning on shorting the fuck out of dollar for the past month or so and it’s about to happen, all that is happening right now is building up the positions and the whole world will follow suit including the common investors. Big multinationals have already started giving instructions to their banks to start trimming their net dollar reserves so I’d place the period range to sometime late next month when you’ll start seeing capital flows into the emerging markets. A pivot point in simple terms is where the intervention of the fed in the economy by aggressively raising interest rates so as to cool down inflation gets to a point where it doesn’t make more sense since it will trigger a long term recession hence they have to double back on their hiking and when you see this happening then the dollar will tank massively. There’s some important data that we look at and starting from tomorrow onwards up until next month, we’ll get a clear picture of when these events that I talk about will start happening albeit most economists already have started seeing the signs from their modeling.

Hint; Safaricom will be a big beneficiary and from sometime late next month you’ll start to witness a bull run on its shares. Ahoi’s assumption of the share price getting to Ksh 16 is abit flawed and to the extreme. The charts have already started forming a strong double bottom and I’d place the best buying price at between ksh21-23. You won’t get a better discounted price than that.

  1. The Ksh is also about to see a bull run too from the incoming demand and as the capital flight happens within the US markets. So if you have a dollar account then by the next of next month you should do something about it because we are going to see a strong/more stable shilling for the next multi month periods.

:eek::eek:
Boss I think you are overstating assumptions here. You sound like a Forex trader trapped in short positions. Many assumed dollar would fall due to inflation, instead the opposite happened. US economy is just too solid.

I’m a senior economist and my employer is one of if not arguably the biggest bank in the Netherlands so I have information that a common person would only dream of. We work based on models that have stood the test of time and I don’t believe that we are wrong on the future of the dollar. You’d be surprised at the kind of short positioning we are seeing build up from the big players.