NIC IPO

Is the National Insurance Corporation's long awaited IPO finally on! watch this space

SHOULD I BUY STOCKS IN UGANDA NOW?

The Uganda Stock Market is 11 years old this year with six primary listings of: Uganda Clays Limited, British American Tobacco, Bank of Baroda, Development Finance Corporation Uganda, New Vision Limited and Stanbic Bank Limited.
Currently the market is shrouded in the after effects of the: NSSF debacle, the Global crisis and Safaricom’s IPO aftermath.

On a lighter note the half year results so far released are defying the effect of the global crisis on the health of Ugandan listed companies with Stanbic Bank and DFCU each posting over 35% growth in half year profitability and over 405 in sales revenue.
The USE is due for Computerisation with the Securities Central depository system taking shape this means transactions will be automated making much faster and there will be no need for physical share certificates as there will be a centralized record of all shareholders and their respective shareholding.

Likely cycle (2009-2013)
We could witness share prices gaining a little in 2010 at the back of accumulated impressive results hence excellent Price Earning ratios (current share price compared to its earning power eg Stanbic is trading at 160 today and each share earns 15/= therefore PE= 10.6) in the ranges between 10-18.
However as the 2011 Elections draw closer these share price gains will be offset by the caution and uncertainty this brings along.
Regardless of the Elections outcome, my bet would be that the Uganda Stock Market shall have great year in 2013 as the election baggage fades away.


Share price movements: September 2007- September 2009.
Company
Stock Current price 24 months 24 months
Symbol 09/09/2009 High Low

UCL 70 250 65

BATU 370 1,465 370

BOBU 380 1,160 375

DFCU 500 980 390

NVL 770 2,645 770

SBU 160 250 120

SAFCOM 3.65 Kshs 8.15 Kshs 2.5 Kshs
Key:
UCL- Uganda Clays Limited
BATU- British American Tobacco Uganda
BOBU-Bank of Baroda Uganda
DFCU- Development Finance Corporation of Uganda
NVL- New Vision Limited
SBU- Stanbic Bank Limited
SAFCOM- Safaricom Kenya


Is it a great time to buy?
At the moment the Stock market belongs exclusively to those investors willing and able to invest over a longer period of time not less than Four years reason being:
2011 Presidential elections
In my opinion the Nairobi Stock Market was mainly brought to its knees more by the Kibaki-Odinga power struggle than anything else.
Back home: with a potential formidable opposition like was the case in Kenya, I hate to write this but by ignoring the likelihood of a ‘Kenyan Election’ replica does not mean it will not happen here; clearly the battle lines are drawn so to speak (Read bafuruki, splitting kingdoms). If this happens the Stock market will be knocked off its rails like happened in Kenya.



Uganda Stock Market is going through its toughest darkest time thus far with its estranged Market Maker, NSSF, not buying a single Share since mid 2008 thereby starving her of the much needed demand in a market where price movements are determined by market forces of demand and supply.
No doubt the BUYERS PARADISE is on now.
As captured in a Malcom X quote;
“It is only after the deepest darkness that the greatest light can come”
Do investors have the nerve and foresight to take advantage of this Paradise?