For those investors who would like to know the interwoven world of short selling, here is a transcript of one very renowned shortseller, Manuel Asensio.
The Nairobi Securities Exchange will soon launch the derivatives market, from which you can go both long and short. Few people venture in the dark world of short selling, but you could use it as a hedge. Here is an example;
Say you are very bullish on Safaricom stock but the economic environment just is not well structured to sustain the current momentum, you know if the FED buckles and raises rates the Kenya shilling will go south. To structure this trade as to make better returns in absolute dollar terms, you buy Safaricom stocks at the NSE,then go South, to South Africa JSE to the futures exchange and short the shilling against the dollar. If this was late 2015 this trade would have made you good money as the shilling dropped to 107 and Safaricom stock just recently touched its highest price yet.
Most African currencies and corporate are heavily exposed to devaluation due to huge dollar debts and deficits, so keep you eyes on the price. There only two rule to investing, rule number one never lose money, rule number two, don’t forget rule number one.