Questions you should ask before investing in Kenyan stocks

Investing in every part of the globe has its opportunities and risks. In various parts of Africa there are strengths and liabilities that must be understood by any investor aiming at eventual success. 

This article addresses some of the most important questions that must asked in relation to specific conditions relating to how to buy shares in Kenya

What kind of preliminary research needs to be done?

Research before investing is your most useful tool. In the case of Kenya, it is useful to keep an eye on socio-economic and political conditions, as well as micro-trends in the various types of industry portfolios. 

The same applies to the wider region, since regional macro-economic influences can strongly influence local markets.

What kinds of securities should I choose?

The Nairobi Securities Exchange offers a broad spectrum of stocks, including bonds, derivatives, and real estate investment trusts. 

It is difficult when starting out to make sound decisions among these options, and the best way to proceed is to study the data at a variety of sources, and especially to draw on the insight of experienced traders.

Which stocks are currently the most highly recommended

Recommendations from experienced analysts usually include the following 10 entities as among the most reliable and profitable:

  • KenGen
  • Jubilee Holdings Plc
  • Unilever Kenya
  • Kenya Commercial Bank Group Pcl
  • Limuru Tea
  • Safaricom Plc
  • Centum
  • Co-operative Bank
  • Bambuti Cement Plc
  • Diamond Trust Bank

In spite of such recommendations, it is always wise to take advice from a number of different sources, and especially to keep up to date by consulting a specialist stockbroker.

How do I choose a stockbroker for Kenya?

In making your selection, place emphasis on the range of services, flexibility, and specialist local and regional knowledge of the broker. 

Strike a balance between the amount of fees you are willing to pay for brokerage services and the in-depth insight, both short- and long-term, that an experienced service provider can give you.

Acquire a good understanding through thorough study of local market trends so that you are able to discuss stocks across the spectrum of industries rather than relying only on brokerage advice.

How do I open a trading account?

There are many reliable sources providing information for opening a trading account for the Kenyan markets. Read these carefully and ensure that all the criteria are met. 

They key step is to go through all the steps that will permit you to open an account with the Central Depository System (CDS), which ensures payment of all settlements.

How to buy shares in Kenya

  • Once you have undertaken the necessary research, find an experienced and accredited stockbroker or brokerage service.
  • Take advice on how to open your own CDS account, and complete the necessary steps.
  • In consultation and with due diligence, decide on the kind of portfolio you wish to establish, and what your range of investment limits are.
  • Ensure that your funds are properly administered and take precautions against scam operators.
  • Start with a portfolio that balances risk and security, and wait for these investments to prove themselves worthy before moving on to more risky but more profitable ventures.

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