Global markets and instruments

Looking beyond the borders can provide opportunities for Kenyan investors

By Robert Ochieng’

A stock exchange is a marketplace for the buying and selling of shares, bonds and securities. Stock exchanges can serve as a measure for the health of the national economy, and can also be a key indicator of world economic strength. Most exceptional brands and companies in Kenya are listed in foreign stock markets, which is a larger strategy to keep money flowing.

Each and every Tuesday, Pizza Inn outlets in Nairobi have a Terrific Tuesday promotions for “buy one pizza and get one free”. The brand is owned by Innscor Kenya which is a subsidiary of Innscor Africa listed at the Zimbabwe Stock Exchange. Its rival, Domino Pizza, is listed at the New York Stock Exchange (NYSE).

A majority of football fans watch Dstv, which is owned by Multichoice Kenya whose parent company Multichoice Africa is listed at the Johanesburg Stock Exchange (JSE) – JSE is the biggest stock market in Africa. The largest stock market in the world is NYSE.

The second largest stock market in the world is Nasdaq, also found in the USA. Nasdaq was initially and acronym for the National Association of Securities Dealers Automated Quotations. Founded in 1971 by the National Association of Securities Dealers (NASD), it is now the Financial Industry Regulatory Authority (FINRA). The NYSE and Nasdaq constitute about one third of market capitalization of all of the world stock markets.

Nairobi Securities Exchange (NSE) is the fifth largest in Africa after stock markets in South Africa, Egypt, Morroco and Nigeria. And, it is the largest stock market in East Africa followed by the Dar es Salaam Exchange, Uganda Securities Exchange and Rwanda Stock Exchange in that order.

Eliud Kipchoge became the first human to run under two hours on shoes designed by Nike. Nike is listed in the NYSE in the US – and one of its biggest competitors is called Under Armour, a company which also designs and manufactures footwear, sports, and casual apparel.

It also takes little imagination to realize that the bulk of today’s readers access news via social media platforms such as Twitter, Instagram, Facebook and WhatsApp. This leads us to look at Facebook.

Facebook is listed in the Nasdaq stock market in the US – it is also interesting to note that many technology or non-financial companies in the US are listed at the Nasdaq. Facebook relies on digital adverts for its business yet it is not the biggest online advertising company. Top online advertisement company is Google.

Google and Facebook run multisided business models with users who are doing searches or using their platforms on one side and companies looking to sell to these users on the other side. Businesses then pay to have their products advertised on these platforms and increase their chances of pushing up sales. Google’s parent, Alphabet, is also listed in the Nasdaq.

Buzz around the iPhone

There is a saying that the rich keep getting richer, so let’s look at some of the brands associated with moneyed people. One such brand is Apple. An ordinary person may not understand the buzz around the iPhone but Apple customers continue to buy more and more iPhones and the company’s revenues continue to grow and make no mistake, Apple stock has more than doubled in the past one year.

The richest investor in the world, Warrant Buffet has also invested in Apple shares. There are tales of people visiting B Club and spending over Sh30,000 on a bottle of Hennessy, a brand owned by LVMH, a French company specializing in luxury clothing, jewellery, perfumes and cosmetics among other luxury brands. It is listed in the Euronext Paris exchange.

LMVH has the biggest market capitalization in France and the entire Eurozone. Market capitalization is the total monetary value of shares in a company or the stock market. A good example is Safaricom which boasts the biggest market capitalization of about Sh1.2trn in the NSE.

If many people in Kenya use Google as a search engine then let us ask ourselves if that is the case globally. Well, that is not the case in Russia and South Korea. In Russia, Google equivalent is known as Yandex and it is listed in the Nasdaq. Yandex also doubles as Uber equivalent in Russia. Its stock has tripled since 2016. Google equivalent in South Korea is known as Naver. It is listed in the Korea Stock Exchange.

In China you can do What M-PESA, WhatsApp and banking apps in one app known as WeChat. WeChat is owned by a firm called Tencent. It is listed in the Hong Kong Stock Exchange. The parent company of Dstv called Naspers (Owns Multichoice Africa) from South Africa has 31% stake valued at about $100bn in Tencent. They spotted the opportunity in 2001 and invested $32mn for a 46.5% stake in Tencent.

This just shows how looking beyond the borders can present us with investment opportunities, and indeed over 2mn  Kenyans live in the diaspora. Bottomline is; investors can take advantage of growth opportunities outside Kenya while in Kenya by investing in offshore stocks. 

Writer is CEO and founder of Abojani, a company that provides training and consultancy services on personal finance and investments