it was once written on kenyan papers that raila odinga has an intelligence network that leaves kenya's formal intelligence service envious. how he manages to finance and create such a network is beyond this post. he has all plots being hatched figured out; be it the standard raid, mercenaries out to finish opposition, a stage-managed attack at security minister home or meetings held specifically to plot how he will be assassinated. one thing in kenya is that raila is a top contender for the presidency and at times i think he wants that seat just too badly. he cannot afford to miss a thing that’s happening around kenya. that i understand. he leaves many with admiration of his energy, charisma and his attention seeking tactics.

he has also had the nse bubble figured out as well. according to his theology, the current boom being experienced at the nairobi stock exchange is largely due to drug money being sanitized through the exchange. there is no bit of economic prosperity and the economy has grown at a paltry three per cent if any growth has occurred at all. raila's claims at face value look ridiculous. well, there is nothing to stop a drug dealer from using the exchange to cleanse his money and it’s hard to say that kenya has no drug money given the fact that only the other day, kenya destroyed a billion worth of netted cocaine haul. but attributing the nse bubble to dug money is to say the least, misleading.

well, a nation newspaper columnist once commented that whenever raila opens his mouth to talk about economics, his economic professor, prof. anyang nyong'o feels like going under the table. what with his trashing of gdp and ndp reported growth rate? instead he recommended for a measure of gnu. gross national happiness! imagine him as president, such radicalness. maybe kenya needs such now; railanomics!

other than the growth in the kenyan economy, which is a fact, there are numerous other factors that have led to the nse boom. the other leading factors include government goodwill in privatisation of parastatals and automation of the trading process (cds & ats) that increased trades executed per day as well as reduced turnaround times. the banks have been more than willing to finance share buying at affordable rates. the local mwananchi is more aware of the investment opportunities available at the nse than he/she was five years ago. the pension rule that was introduced three years ago that one cannot access their employer retirement contribution until they are 55, have left pension funds with more than enough funds to invest.

good tax collection by the kenya revenue authority have reduced the government's domestic borrowing, making treasury bills and bonds unattractive to corporate investors. the base interest rate has been caged to a single-digit figure making banks to release their funds to other higher rate borrowers fuelling enterprise growth. the ipo craze both for public and private companies has also fuelled the nse bonfire. the business community is at peace with more predictable policies and the political stability has been near-guaranteed. that in my opinion has fuelled the nse boom.

other interesting factors are that the average kenyan investor at the nse is more gullible, less risk averse-or pure risk blindness and quite speculative. we hedge our hopes on the ever skyrocketing prices hoping to make a kill from a more gullible investor. the broker cartel has colluded to keep manipulating the market and this has acquired a life of its own. insider trading is the order of the day. ever wondered why some suspect deals like the massive offloading of uchumi shares a day before closure has never been acted upon? or a city trust deal investigation that saw the share price take a hike form kshs 120 to kshs 407 in a matter of hours?

the above paragraph has led to another category of doomsday prophets who advocate that in a few days to come the nse bubble will burst on the face of its ardent believers. market professionals call it a sure prediction of market correction that will leave many wounded when the bull and the bear touch base. i call them prophets of doom because they say the end of the nse triple-your-cash is just before the end of the month bearing in mind that this school of thought got class-full beginning of this month. i respect their opinion but i feel the crash is not coming that soon. eveready will still be oversubscribed regardless of what the prospectus says or the battery market prospects. mumias maybe a quiet one but not the kenya-re ipo or the 20 per cent safaricom offload in 2007.

i see a situation where even the election volatility and political tension in 2007 will not scratch the over-zealous nse investors. going by 2002 elections, there are enough of us gullible investors who are ready to pump funds at the nse by near-end 2007 - we speculate the prices to be low, courtesy of election uncertainty and cash-in once the new government stabilizes in 2008. if there is a hundred thousand of us, what will make nse crash? not to be taken seriously, i could be in my own class of doomsday cult. however it is said that the best test for a prophet is time. time will tell. in the same light i am also slowly building up my scanad shares, advertising will be key in an election year.

what i wonder is whether there will be a time when market fundamentals and financial analysis will matter at the nse. currently it is largely a speculative market. maybe the best strategy is to have two classes of portfolio, a sound market fundamental one and a speculative portfolio balanced based on the risk one is willing to take. maybe price speculation is a part of market fundamentals?