Nairobi-traded equities trail in the global league table. Over the past year alone, the stock market is down more than 13% in US dollar terms. Some names are tempted to buy ravaged assets. Yet the opportunity cost may be too great to act on those instincts, at least for public-market investors. The Nairobi exchange was hammered by the collapse in the oil price; Middle East-sourced liquidity was quick to evaporate. That problem was compounded by a presidential decision to cap local interest rates, limiting banks’ ability to price risk appropriately. GDP could reach 5.5% this year, but top-line data shrouds downward economic revisions. One bright spot in Kenya is deal flow from its impressive startup scene. An at-hand example is BRCK, a company that produces a hardened Wi-Fi box to overcome network reliability issues. The long gestation period for growth firms may deliver lively exit opportunities. Their products are relevant across emerging markets. ■
Our Vantage Point: The near-term outlook in Kenyan assets is sufficiently clouded that Africa-minded investors should focus on venture deals. Alongside Nigeria and South Africa, Kenya offers deep startup potential.
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