If you do not take long positions in a stock that is you only speculate, then this thread is not for you.

For long term investors especially in sub saharan African markets, has it ever crossed your mind that your choices of most of your stocks are skewed towards the Finance sector ?

The reasons are obvious :=

They are the most profitable sectors
They are the most liquid sectors.

But be awasre that your greatest risk is in this sector because :-
Your exposure to risk is far more than other sector namely :-
1 High risk Of non performing loans
2 Wrong disclosure of balance sheet entries, auditors are only exposed to what the banks want them to see

3 The spiral effect on other banks because of interbank setlement which if consistently defaulted by a few distressed banks can affect the books of other banks.

The insurance firms are not spared either as they invest heavily on bank stocks.

What ever the returns my take is that you should not expose your porfolio more than 40% of your holdings on finance sector as a leverage.

The industrials seem to be more stable and consistent during turbulence, but their returns may not be as salutable as banking counters.

If majority of your counters is in banking or finance stocks my candid advise is that you need to rethink and re-balance your porfolio.
The banking sector is an ill wind that has already blown in US, Europe. In Africa, Nigeria investors learnt the hard lesson, for those whose portfolio were over exposed to banking stocks, it can happen to any other market.

I know of some investors that do not invest in Banking stocks at all due to obvious reasons above.
Even in Banking you have to split your portfolio between the agressive banks and the value banks.

Your aggressive bank I can pin point are:-
(i) KCB
(ii) Equity
(iii)COOP
(iv) HFC
(V)NIC
(Vi) DTB etc

For the consevative banks I can pin point

(i) Stan Chart
(ii) Barclays

During bullish run aggressive banks take the lead, but during bear run, the conservative banks are more reliable.
I suggest out of your 40% allocation to finance sector, give 40% of it to agressive bankS, 50% to conservatives and 10% to the insurence compnies. With this you will have 60$ of your portfolio spread ON the industrial and other sectors.
Simply put it is not very balanced or not so ideal to be too exposed to financial sector no matter how attractive it is as on the longer term you may tend to loose more.

So check your portfolio and see how exposed you are to the finacial sector ?. Is it not worthwhile to re-balance your portfolio ? The decision is yours.

Happy investing

I could be wrong but I think I&M, KCB, Equity & COOP are also present beyond Kenya