This archive report was first published on 6 June 2020.
As the world grapples with the Covid-19 pandemic, investors are left wondering what to do with their cash. According to Warren Buffett, the key to making money is to invest when everyone is afraid to buy and sell off when everyone is greedy. With markets in a bloodbath and economies on the verge of recession, it may seem like a daunting task. However, financial market experts have identified several assets that are poised to perform well in the current market.
One such asset is stocks, particularly those in the technology sector. Christine Kihara, a financial markets analyst at Abojani Investments, recommends Safaricom as a top pick. "Safaricom is the finest jewel in the market," she says. "It goes hand in hand with technology, whose consumption is at its peak." Michael David, a financial and investment coach at MoneySense, also recommends Kenya Power as a stock with a high value-to-price ratio.
Government bonds are another option for investors looking for sustainable income. According to David, government bonds are risk-free and offer a source of sustainable income. "For example, if you have Sh5 million and invest it in government bonds at a coupon rate of 13 per cent, you will be getting monthly income of Sh54,000 without taxes," he says.
Distress properties are also an attractive option for investors. Reuben Kimani, the chief executive officer at real estate firm Username, notes that there are prime distress properties available at unrealistically low prices. "Everyone, from individuals to companies, has been pushed to the corner," he says. "Consequently, we have some property firms selling land and plots at unrealistically low prices in a bid to get cash and survive."
Agribusiness and fast-moving consumer goods (FMCGs) are also expected to perform well in the current market. Eric Munywoki, a director at Goodson Capital, notes that these sectors have a shorter cash conversion cycle. "Even in the presence of a pandemic and low liquidity in the population, agricultural products and FCMGs will remain in demand," he says.
Finally, digital innovations are an attractive option for investors. With the rise of remote work, platforms like Zoom are becoming increasingly popular. According to Munywoki, businesses that provide technological solutions like internet provision and voice will continue to do well. "Businesses that provide technological solutions like internet provision and voice such as Safaricom will continue to do well," he says.
