Chasing Stock Splits

Sorry to keep boring some of you by blogging about stocks and equities of companies, however I do believe that this asset class has the potential of improving the fortunes of many individuals in developing countries who invest prudently in established companies (think of individuals who made riches and drastically improved their financial situations by being first movers in the Chinese and Indian equities market.)

Back in the days of my Grandfather and great Grandfather Banks were little known phenomena. Even today with banks/financial institutions rushing to developing countries with speed, the culture of saving and depositing money into these institutions to build wealth has yet to really gather pace. Uganda has one of the lowest deposit rates for banks in East Africa and Sub-Saharan Africa alike. In the days of old people accumulated wealth by obtaining and holding onto vast swathes of land or prime plots of land, and this trend has carried on even till this day. One thing people know or should know however is that Real Estate is not something that you can sell and trade with the snap of a finger and takes time to be converted to money.
The Ugandan Stock Exchange recently celebrated its 10th anniversary and people are becoming savvier to the money which can be made through stocks. Remember the Safaricom IPO of a few months back? It was one of the most highly anticipated IPO’s to date and even though it was quite disappointing (I didn’t participate) it showed peoples newfound interest and appetite for risk in investing in stocks.

Recently Uganda Clays Limited conducted its 2nd stock split in the last couple of years to increase liquidity of its shares. In the end the company decided that a split of 100:1 would take effect. My measly 150 shares have grown now to 15,000 shares and even though they have been revalued at 170 Ugandan shillings per share the 60 shilling increase since the beginning of the week have netted me roughly 300.00 GBP in two days time. Not bad work shall I say for not even being in the country, watching via internet and being produced from a developing country (I love this game!)

Now seeing how easy it was to make a few dollars/pounds the last time and also realizing it would be nice to diversify a bit I’ve been looking for the next stock to invest in which is talking of splitting stocks. I earmarked Bank of Baroda Uganda a few weeks back. Bank of Baroda is actually an Indian bank who came to Uganda years ago and was the first financial institution to list on the exchange. Just like Uganda Clays Bank of Baroda has been dogged by the fact of liquidity and shares are quite hard to find as people are reluctant to let them go (especially now since a stock split is set for next week.)

I have been received a small lot of shares (nothing drastic) and am hoping on securing my 2nd round before the split occurs which is set to be 10:1. One of the frustrating factors is that the exchange only trades stocks on Monday, Tuesday and Thursday and to make matters worse trading on happens a few hours a day. Trades occur on a first come first serve basis and whichever broker gets in the cue first, is the first broker allowed to purchase. This can become quite a headache.

Tomorrow’s an important day and I hope that I can receive my allotment before the split occurs next week. I’ll keep everyone updated as to how it goes. I’m sure that I’ll find some time during the day to make the call to my broker via my 5 pound calling card to see what the situation is..