Weekly Update

Week ended 3rd February, 2012 Issue 04/12

MISTAKES TO AVOID WHILE INVESTING IN FINANCIAL MARKETS

Quote of the Week: There are no mistakes, no coincidences. All events are blessings given to us to learn from Elisabth Kubler Ross. Where financial markets are concerned, investing can appear to be a complex maze filled with numbers that need to be crunched, theories that need to be practiced and even rules that need to be upheld. In reality, however, the financial market operates just like any other market, where goods and services are bought and sold, and the forces of demand and supply (among other factors) determine the availability and costs of the items being traded. Investing in financial markets must however be approached in a more systematic and organized manner. Assets such as stocks (shares), unit trust funds, debt instruments such as treasury bills and bonds, among others, can be a great means of building wealth, but only when used correctly. Being a successful investor does not come by sheer luck, or by sheer genius, and the line between succeeding and failing is a very thin one. Successful investing involves making choices that meet your unique needs today and your financial goals for the future. Your personal circumstances will affect your decisions every step of the way. Whether you are saving for a home, retirement, or your child's education, you want a plan that will help your money grow. Mastering basic investing principles can form a fundamental guide to undertaking investments, and enable one to design a unique approach which works for them. For instance, it is important to know yourself first before venturing into any kind of investment. To better understand oneself, an investor must consider their personal risk tolerance, investment knowledge, investment objectives, and investment time horizons, among other factors. We all have different investing goals and different time frames for achieving them. Some are short-term, like saving for education, while others are long-term, like retirement. In addition, every investor has a different comfort level when it comes to investment risk. While risk sounds like something to avoid, there can be an upside - greater risk may offer the opportunity for greater rewards over the long term. Finding a balance between risk and reward that you are comfortable with - and that's appropriate for your investment time frame - is an important first step to successful investing. It is a common mistake for investors to ignore this important step, and too often many end up being led by the rush to invest with expectations of high short term returns. Certainly, the earlier one starts, the better off one would be. However, investing without prior knowledge of these factors tends to do more harm than good. Another common mistake that many investors make is investing without a solid plan. An investor must align his investments with his time horizons. The type of investments one chooses will depend on whether he is saving for long-term or short-term goals. Long term goals include objectives that are 5 or more years away, such as retirement; short term goals include those objectives that are less than 5 years away, for which you'll need a significant amount of money, such as school fees, or planned expenses, among many others. The general rule is to consider long-term, growth-oriented investments for long-term goals, while considering more conservative and easily accessible investments for short-term goals. A written plan and its guidelines will help you adhere to a sound long-term policy, even when current market conditions are unsettling. For the more experienced investors, especially in the stock market, having a good plan and sticking to it is not nearly as exciting as trying to time the market, but it will likely be more profitable in the long term. Bottom line: The most successful investors were not made in one day. Learning the ins and outs of the financial world - and your personality as an investor - takes time and patience, not to mention trial and error. Successful investing is a journey - not a one-time event - and you'll need to prepare yourself as if you were going on a long trip. One must begin by defining his destination, and then plan the investment journey accordingly. What is your destination? How long will it take you to get there? What resources will you need? These are questions you must first ask yourself; and the plan that you come up with will depend on your investment goals. In addition to having a plan, an investor must always be willing to learn, and accept the reality of making mistakes from time to time. Indeed, the financial market is hard to predict but one thing is certain: it will always be volatile. Learning to be a successful investor is a gradual process and the investment journey is typically a long one. At times, the market will prove you wrong acknowledge it and learn from your mistakes; When you succeed, celebrate. However, never lose sight of your goals, as these will form the main justification that will keep you going no matter how turbulent the market gets.
You can send your comments or questions to info@zimele.net, or visit our offices at Ecobank towers, 7th floor, MuindiMbingu street for more information on personal financial planning. You can also follow us on our facebook pageZimele Asset Management ( Kenya)

The information on which this report is based upon has been obtained from sources that Zimele Asset Management Company Limited (Zimele) believes to be reliable but has not been independently verified. No representation, warranty or undertaking (express or implied) is given and no responsibility whatsoever or liability is accepted by Zimele as to the accuracy and completeness of the information contained herein. All expressions of opinion are subject to change after release of the report at any time without notice. This publication may not be distributed to the public, media or quoted or used by the public media without prior and express written consent of Zimele.

MARKET SUMMARY
NSE Top Five Stocks
BOC Kenya Sameer Africa Scan Group Standard Group Jubilee Holdings 3-Feb 118.00 4.20 41.75 27.00 155.00 30-Jan 100.00 3.85 39.00 25.25 145.00 Change 18.00% 9.09% 7.05% 6.93% 6.90%

NSE Weekly Statistics

Kshs. B
Market Cap. Equity Turnover Bonds Turnover 3-Feb 881.090 0.039 1.277 30-Jan 879.457 0.120 0.710 Change 0.2% -67.6% 79.8%

NSE Bottom Five Stocks

3-Feb REA Vipingo Access Kenya Group Car & General Kenya Airways KenGen 16.05 4.55 23.25 18.95 7.55 30-Jan 17.45 4.90 25.00 19.85 7.90 Change -8.02% -7.14% -7.00% -4.53% -4.43%

Local &Regional Stock Indices

3-Feb NSE 20 Index NASI Index AIG Index USE ALSI (Ug) DSEI (Tz) JSEI (SA) 3,196.70 69.04 426.62 818.00 1,298.97 34,386.97 30-Jan 3,224.89 68.91 426.50 807.00 1,298.24 33,629.77 Change -0.9% 0.2% 0.0% 1.4% 0.1% 2.3%

International Stock Indices

2-Feb Fin. Times 100 Dow Jones Nikkei Average RTS Index BSE SENSEX SSE Composite Bovespa Index London, UK New York, USA Tokyo, Japan Moscow, Russia Mumbai, India Shanghai, China Sao Paulo, Brazil 5,796.10 12,705.41 8,876.82 1,602.99 17,431.85 2,312.56 64,593.00

Key Highlights The Central Bank of Kenya (CBK) reported that Kenyans working abroad increased the amount of remittances by 39% last year to kshs.79 billion (US$891 million), helping to cushion their friends and relatives from the rapid rise in the cost of living. According to the CBK, the bulk of remittances come from North America and the UK, which account for 49.4% and 29% of total remittances, respectively. The recent decline in prices of fuel has slowed the rate of inflation for the second consecutive month, easing pressure on Kenyan consumers and setting the stage for a drop in interest rates. Data released by the Kenya National Bureau of Statistics (KNBS) showed that the rate of inflation fell to 18.31% in January from 18.93% in December. The United Arab Emirates (UAE) has reclaimed its position as the largest exporter of goods to Kenya, relegating China to third spot. The value of UAE exports to Kenya rose to Sh.177.8 billion or 23.3% of Kenyas total imports in the first 11 months to November compared to Chinas Sh.132.9 billion or 17.4% of imports, according to the Kenya National Bureau of Statistics (KNBS). The imports from the UAE are primarily comprised of crude oil and petroleum products. China was Kenyas largest source of imports in 2010 after Beijing deepened its presence in East Africa with mega infrastructure development projects.

Change
2.2% 0.4% 1.0% 3.6% 3.4% 1.2% 2.9%

Economic Data
Indicator
Economic Growth Overall Inflation Rate Average Bank Deposit Rate Average Bank Lending Rate Average Bank Savings Rate 91-Day Treasury Bill 182-Day Treasury Bill

Rate
3.6% 18.31% 6.99% 20.04% 1.59% 20.503% 20.723%

Period
3Q 2011 Jan 2012 Dec-11 Dec-11 Dec-11 6-Feb-12 6-Feb-12

Zimele Highlights
Zimele Funds
3-Feb Balanced Fund Pension Plan 3.56 11.95 30-Jan 3.63 12.21 Change -1.9% -2.1%

M-PESA Service
You can now send money to your account in the Zimele Money Market Fund (also known as the Zimele Savings Plan) and Zimele Pension Plan using M-PESA. Please send an email to info@zimele.net for more information.

Weekly Market Update

EcobankTowers, 7th Floor; P. O. Box 76528-00508 Yaya, Nairobi. Tel: 254-20-2246273 Telefax: 254-2-216507 E-mail: info@zimele.net, Website: www.zimele.co.ke