An elderly person receives a flu vaccine in Asuncion, Paraguay on April 15, 2020 amid coronavirus pandemic. PHOTO | AFP It is that time of the year again, when a good number of people firm up their investment decisions and align their goals to their social and economic expectations of the next 12 months. A good majority are still not sure of how to navigate the new normal that is defined by the globally devastating Covid-19 pandemic.
The uncertainties notwithstanding, experts have predicted economic recovery this year, which offers a platform for investors to take carefully calculated risks.
For starters, all East African economies are projected to register positive growth, which raises the probability for strategically positioned and well-run businesses to return a profit.
It is projected that Rwanda will register fastest growth of all eastern African countries at 4.2 percent followed by Tanzania (4.0 percent), Ethiopia (3.1 percent), Uganda (2.5 percent), Kenya (1.4 percent), and Eritrea (0.3 percent), according to data compiled by Statista.
The positive regional outlook is important as it means investors with a cross-border focus are not limited in their choices. The traditional investment options remain equities, treasuries and fixed securities and real estate. Precious metals and offshore assets are also worth looking at for the more sophisticated investors.
Last year’s sell-off at the Nairobi Securities Exchange (NSE) means that valuations at the bourse are irresistibly attractive for long-term investors. It takes a lot of mettle, however, to put money in companies that were so hard hit by the economic shutdowns witnessed last year, lending credence to the age old adage that the stock market is not for the faint hearted.
The NSE-20 share Index plunged by 34.1 percent in 2020 while the Nairobi All Share Index (NASI) lost 8.7 percent to 152.11 points, offering investors heavily discounted multiples compared to historical averages.
Doubts about the prospects for strong business recovery means that the stock market may not record near-term noteworthy price appreciation, but value counters such as telecommunications, financials and industrials remain fundamentally sound choices.
The global rollout of vaccines could see strong recoveries for the tourism and travel industries in the second half of the industry, as restrictions on international flights are lifted. With government revenue still depressed by after-effects of the Covid-19 pandemic, treasury securities remain an attractive option for investors with lower risk appetite.
The Central Bank of Kenya’s Monetary Policy Committee is likely to maintain its benchmark rate at […]