13th February 2016
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Friday 12th of February 2016
 
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Macro Thoughts

read more


“What central bankers are doing now feels like a Jedi trick,” said Albert Edwards, global strategist for Société Générale in London.
Africa


“Everyone is in a currency war and inflation expectations are collapsing.”

What if the bazooka is shooting blanks?

Since the financial crisis, it has been gospel for many investors that
some combination of actions by central banks — bond buying, bold
promises or flirtations with negative interest rates — would be enough
to keep the global economy out of recession.

But investors’ distress over the latest volley by a major central
bank, the surprise decision on Thursday by the Swedish central bank to
lower its short-term rate to minus 0.50 percent from minus 0.35
percent, has heightened fears that brazen actions by central bankers
are now making things worse, not better.

read more






“We’re opening a window on the universe...This was a scientific moonshot and we did it. We landed on the Moon,” said David Reitze
Africa


“We’re opening a window on the universe, the window of gravitational
wave astronomy. It’s the first time the Universe has spoken to us in
gravitational waves. This was a scientific moonshot and we did it. We
landed on the Moon,” said David Reitze

Gravitational ripples in the fabric of spacetime, first predicted by
Albert Einstein 100 years ago, have now been detected by scientists
who believe the discovery opens new vistas into the “dark” side of the
Universe.

Physicists around the world confirmed they had detected unambiguous
signals of gravitational waves emanating from the collision of two
massive black holes 1.3 billion light years away in deep space.

As the two black holes spiralled together in a violent collision that
was over in 20 thousandths of a second, immense amounts of matter -
equivalent to the mass of three suns - were instantly converted into
energy.

This sent shock waves travelling through space for 1.3 billion years
until they were picked up by gravitational-wave instruments on Earth
on 14 September last year.

read more


Gravitational Waves Exist: The Inside Story of How Scientists Finally Found Them New Yorker
Africa


Just over a billion years ago, many millions of galaxies from here, a
pair of black holes collided. They had been circling each other for
aeons, in a sort of mating dance, gathering pace with each orbit,
hurtling closer and closer. By the time they were a few hundred miles
apart, they were whipping around at nearly the speed of light,
releasing great shudders of gravitational energy. Space and time
became distorted, like water at a rolling boil. In the fraction of a
second that it took for the black holes to finally merge, they
radiated a hundred times more energy than all the stars in the
universe combined. They formed a new black hole, sixty-two times as
heavy as our sun and almost as wide across as the state of Maine. As
it smoothed itself out, assuming the shape of a slightly flattened
sphere, a few last quivers of energy escaped. Then space and time
became silent again.

The waves rippled outward in every direction, weakening as they went.
On Earth, dinosaurs arose, evolved, and went extinct. The waves kept
going. About fifty thousand years ago, they entered our own Milky Way
galaxy, just as Homo sapiens were beginning to replace our Neanderthal
cousins as the planet’s dominant species of ape. A hundred years ago,
Albert Einstein, one of the more advanced members of the species,
predicted the waves’ existence, inspiring decades of speculation and
fruitless searching.

“Heard melodies are sweet, but those unheard, are sweeter” ― John
Keats, Ode on a Grecian Urn

“I almost wish we were butterflies and liv'd but three summer days -
three such days with you I could fill with more delight than fifty
common years could ever contain.” ― John Keats

“A thing of beauty is a joy forever.” ― John Keats

“My imagination is a monastery, and I am its monk” ― John Keats

read more



Major powers agree to plan for 'cessation of hostilities' in Syria
Law & Politics


Russian Foreign Minister Sergei Lavrov told the news conference that
Russia would not stop air attacks in Syria, saying the cessation of
hostilities did not apply to Islamic State and al Nusrah, which is
affiliated with al Qaeda. Islamic State militants control large parts
of Syria and Iraq

"Our airspace forces will continue working against these
organizations," he said.

Conclusions

a ''cessation of hostilities'' is not a ceasefire, evidently.

read more



Saudis Goad Obama to Invade Syria
Law & Politics


Saudi Arabia’s desire to intervene (under the cover of fighting
Islamic State terrorists but really aimed at ousting Syrian President
Bashar al-Assad) has been welcomed by Washington but dismissed by the
Iranian Revolutionary Guards commander and some Western analysts as a
ruse.

Iranian Maj. Gen. Ali Jafari told reporters in Tehran, “They claim
they will send troops, but I don’t think they will dare do so. They
have a classic army and history tells us such armies stand no chance
in fighting irregular resistance forces.”

But I don’t believe it is a bluff or a ruse and here’s why: It appears
instead to be a challenge by the Saudis to get President Barack Obama
to commit U.S. ground troops to lead the invasion. The Saudis made it
clear they would only intervene as part of a U.S.-led operation.

Investigative reporter Seymour Hersh contends Obama backed away
because British intelligence informed him it was the rebels and not
the Syrian government that carried out the chemical attack.

read more


Saudi policy has become more aggressive and proactive over the past year as it has come under the control of the deputy Crown Prince and Defence Minister, Prince Mohammed bin Salman
Law & Politics


If Saudi Arabia becomes involved in any more ambitious venture in
Syria it is likely to be in association with Turkey; but Turkey’s
policy towards sending its army across the border is ambivalent
because to do so would be highly risky.

President Recep Tayyip Erdogan is appalled by the prospect that the
war in Syria may conclude with Mr Assad still in power and the de
facto Syrian Kurdish state of Rojava controlling half of the 550-mile
long Syrian-Turkish border. Turkey particularly wants to prevent the
Syrian Kurdish militia force, the People’s Protection Units (YPG),
advancing west of the Euphrates and linking up with the Kurdish
enclave of Afrin. This would cut the supply lines of Isis and the
non-Isis opposition from Turkey to Aleppo.

read more


U.K. government suspects that bookseller Lee Bo was “involuntarily removed” from Hong Kong to mainland China, in what it called a threat to the city’s autonomy.
Law & Politics


“The full facts of the case remain unclear, but our current
information indicates that Mr. Lee was involuntarily removed to the
mainland without any due process under” Hong Kong law, U.K. Foreign
Secretary Philip Hammond wrote in a biannual report on the former
British colony submitted to Parliament in London.

read more



Currency Markets at a Glance WSJ
World Currencies


Euro 1.1308
Dollar Index 95.72
Japan Yen 112.15
Swiss Franc 0.9735
Pound 1.4466
Aussie 0.7093
India Rupee 68.415
South Korea Won 1211.34
Brazil Real 3.9899
Egypt Pound 7.8277
South Africa Rand 15.9050

read more


The Yen touched 110.99, its strongest level since Oct. 31, 2014.
World Currencies


The yen jumped against all of its 16 major counterparts, rising the
most against the currencies of Mexico, Brazil and Norway. It added 0.8
percent to 112.42 per dollar, after touching 110.99, its strongest
level since Oct. 31, 2014.

Given the yen is now close to a level reached before the Bank of Japan
unexpectedly expanded stimulus in October 2014, traders are debating
whether the central bank will step in to curb its strength. The BOJ
hasn’t intervened in currency markets since 2011.

read more






Commodity Markets at a Glance WSJ
Commodities


Gold Spot prices jumped 4.2 percent to $1,247.27 an ounce, while gold
futures jumped as much as 5.8 percent during the session, to $1,263.90
an ounce, the highest level since February 2015.

It was the steepest intraday gain since 2009.

read more


#Gold roars to One-Year high, Near Bull-Market Territory on deepening banking crisis
Commodities


Oil rose briefly after settling at $26.21, its lowest closing level in
almost 12 years.

read more


Crude Oil 1 Month Chart INO 27.42
Commodities


Emerging Markets

Frontier Markets

read more




U.S. says political crisis building in Democratic Republic of Congo
Africa


Tom Perriello, U.S. Special Envoy to Africa's Great Lakes Region, said
if Kabila sought a third term in November elections, even though the
constitution bars such a move, it could undermine political and
economic gains of the past decade.

Kabila has stopped short of saying he will step down in November at
the end of his second elected mandate, prompting concerns he wants
another term.

"A political crisis is building as the DRC prepares, or rather fails
to prepare, for upcoming historic elections scheduled for this
November," Perriello told a congressional hearing. "If the DRC chooses
the path of Burundi, the scale of human suffering could dwarf what we
have seen next door."

More than 240,000 people have fled political violence in Burundi,
sparked by President Pierre Nkurunziza's decision last year to run for
a third term. It has raised concerns of a bloody ethnic conflict in a
region where memories of Rwanda's 1994 genocide are still fresh.

Perriello said it appeared increasingly possible that Kabila was
seeking reelection, pointing at delays by his administration to
prepare for the elections.

"A confrontation between President Kabila and those demanding timely
and credible elections in the country is not inevitable, but it is
becoming increasingly probable," he said.

read more


Congo opposition calls for general strike to make Kabila stand down
Africa

Opposition leaders in Democratic Republic of Congo called for a
general strike next Tuesday to press President Joseph Kabila to step
down when his mandate expires at the end of the year.

The decision represents a retreat from earlier plans for a mass
pro-democracy march after the powerful Catholic church pulled its
support last month, saying the event had been co-opted by political
interests.

read more



Tea Time Over as `Bulldozer' President Targets Tanzanian Waste
Africa


Since his inauguration three months ago, Magufuli, 56, has canceled
Independence Day celebrations and barred civil servants from sending
Christmas cards as part of a campaign pledge to tackle graft and curb
waste of public resources. The money-saving measures generated a meme
on Twitter that asked #WhatWouldMagufuliDo?

Tanzania, Africa’s third-biggest gold producer, ranks in the bottom
half of Berlin-based Transparency International’s Corruption
Perceptions Index, below other African nations such as Ivory Coast and
Mozambique. Per capita income in the nation of 49 million people is
$955, well below the sub-Saharan African average of $1,638, World Bank
data shows.

On his first day at work, the president conducted an impromptu tour of
the Finance Ministry’s offices, where he demanded to know the
whereabouts of officials whose desks were unoccupied. While Magufuli
is soft-spoken, he earned a reputation as a hard-driving boss and was
nicknamed “tingatinga,” Swahili for bulldozer, in his previous
position as the country’s minister of works.
“Who sits here? What is his name?” Magufuli asked officials at the
ministry in Swahili, footage aired on the Tanzania Broadcasting Corp.,
the state-owned broadcaster. “You’re the boss here, where are the
others? They’ve gone to drink tea?”

Magufuli’s efficiency drive has also focused on tax collection.
Takings exceeded 1.4 trillion shillings ($643 million) in December,
beating the government’s target by 12 percent, according to Finance
Minister Philip Mpango. In November, the president suspended the head
of the Tanzania Revenue Authority and ordered a probe into hundreds of
shipping containers with goods worth 80 billion shillings that went
missing at Dar es Salaam’s port. About two dozen port employees were
fired or suspended.

read more





08-FEB-2016 A 10 per cent fall in a currency in a single hour [the rand flash crash] confirms the complete loss of any credibility that President Zuma might have had
Africa


South Africa which is the second biggest economy in SSA will also
contract or be at zero per cent GDP this year. Here again, the David
Van Rooyen interlude at the Finance ministry was a step too far. A 10
per cent fall in a currency in a single hour [the rand flash crash]
confirms the complete loss of any credibility that President Zuma
might have had. Barclays PLC is desperately seeking the Africa exit
button and the reasons are around SA volatility.

read more



“Zuma is no longer a president that deserves the respect from anyone,” the party’s leader, Julius Malema, yelled
Africa


“He has stolen from us, he has corrupted the economy of South Africa,
he has made this country a joke and after that, he has laughed at us.”

Members of the Economic Freedom Fighters party leave parliament
during Jacob Zuma’s state of the nation address. Photograph: Schalk
van Zuydam/AFP/Getty

http://www.theguardian.com/world/2016/feb/11/south-african-opposition-eff-walks-out-jacob-zumas-state-address

14-DEC-2015 The markets are not interested in Zuma’s explanations,
they are seeing a South African president who has gone rogue.

http://www.rich.co.ke/media/docs/038NSX1412.pdf

South Africa All Share Bloomberg -6.47% 2016 [2 week closing low]

http://www.bloomberg.com/quote/JALSH:IND

47,411.57 -861.67 -1.78%

Dollar versus Rand 6 Month Chart INO 15.8359 [RESELL]

http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt EGX30 Bloomberg -17.02% 2016 [-4.11% yesterday]

http://www.bloomberg.com/quote/CASE:IND

5,813.72 -248.93 -4.11%

read more


Nigeria to seek China loan, shelves Eurobond sale for now: sources
Africa


Nigeria had wanted to raise $1 billion from Eurobond investors but has
dropped plans to sound them out at a non-deal "road show" which the
finance ministry had tentatively planned for March, financial sources
say.

"They will wait a bit with a road show as they wouldn't be able to get
a good deal," said one source familiar with the finance ministry
plans.

Reflecting the higher risks as Nigeria struggles with sharply reduced
oil revenue, the average yield spread on its sovereign dollar bonds –
the premium investors demand to hold them over U.S. Treasuries – has
climbed to 713 basis points.

That is a rise of 100 basis points since the start of last month and
more than double levels a year ago, according to the EMBI Global
emerging debt index. Nigeria's 2023 bond issued in 2013 with a coupon
of 6.37 percent is now yielding almost 9 percent. [XS094470722=TE]

To excite buyers, Nigeria would have to devalue or float the naira.
Investors believe its overvaluation is delaying economic recovery
especially as other oil exporters from Russia and Angola to Colombia
have devalued their currencies significantly in the past 12 to 18
months.

The Nigerian currency hit a new low this week on the black market
where a dollar fetched 318 naira, compared with the official rate of
197.

"The policy response in Nigeria has been very slow with respect to the
currency," said Claudia Calich, head of emerging debt at M&G
Investments in London. "If you look at Angola they have allowed the
currency to devalue quite a bit so the rate of potential deterioration
in Nigeria in future might be higher."

read more




Citi says Kenyan lenders ideal takeover targets by PE Atlas Mara
Kenyan Economy


According to Citi, the Kenyan lenders have the ideal return on assets
(ROA), cost of capital and price to earnings (P/E) ratios at a time
Atlas Mara is eyeing East African acquisitions to grow its African
banking asset base from about Sh245 billion ($2.4 billion) to Sh1.8
trillion ($17.5 billion).

Atlas Mara is targeting an ROA of two per cent, while Kenyan banks
have on average an ROA of 4.5 per cent as per third quarter 2015
numbers.

read more








 
 
N.S.E Today


The International Markets remain extraordinary and stressed.
The Japanese Yen touched 110.99, its strongest level since Oct. 31, 2014.
Gold Spot prices jumped as much as 5.8 percent yesterday, to $1,263.90
an ounce, the highest level since February 2015 and the steepest
intraday gain since 2009.
Ben Bernanke was asked why people hold gold and he said "As protection
against what we call tail risks: really, really bad outcomes," he
answered
The Swedish central bank to lowered its short-term rate to minus 0.50
percent from minus 0.35
Banks Stocks [Deutsche Bank in particular] have been crushed.
The Shilling remains rock-solid at 101.80.
The Nairobi All edged 0.08 points higher to close at 140.49.
The All Share is -3.57% in 2016 and outperforming its SSA Peers,
Nigeria is -13.89%, Egypt -17.02% and South Africa -6.47%
This Trend of Nairobi outperformance has further to run through 2016.
The NSE20 retreated 34.64 points to close at 3790.54.
Equity Turnover clocked 529.666m.
There were 5 losing stocks for every Winning Stock today.
The Tone at the bourse will be set by the Full Year Earnings Season
which will swing into play imminently.
I expect Bank Earnings to outperform what are realistic or even low
market expectations.



N.S.E Equities - Agricultural


Williamson Tea was high-ticked +5.82% to close at 200.00 on light trading.



N.S.E Equities - Commercial & Services


Safaricom was the most actively traded share at the Exchange and
rebounded +0.95% to close at 15.80 and traded 10.362m shares worth
163.853m. Safaricom sits 5.38% below its 2016 closing High of 16.70
from the 3rd of this month. We will see that 2016 High taken out in
due course.



N.S.E Equities - Finance & Investment


Kenya Commercial Bank closed unchanged at 39.50 but was trading at
40.00 +1.27% at the Finish. There is some supply overhead at 40.00 but
I expect it to be extinguished next week and KCB to thrust through
40.00
Equity Group closed -1.24% easier at 39.75 and traded 1.382m shares.
Diamond Trust Bank rallied +3.14% to close at 2016 closing High of
197.00 and traded 104,000 shares. DTB is +5.34% in 2016.

NIC Bank was a big Winner at the Bourse



N.S.E Equities - Industrial & Allied


East African Cables [where Trans-century holds a majority position]
slumped -9.57% to close at 8.50 which is a Fresh 2016 Low. EA Cables
is -19.811% in 2016.

EA Cables share price data -19.811% in 2016 and at a 2016 Closing Low

http://www.rich.co.ke/rcdata/company.php?i=MzI%3D

Trans-century eased -0.87% to close at a Fresh All Time Low of 5.70.
Trans-Century has slumped -30.909% in 2016 as Investors continue to
fret about the March Bond Redemption.

Trans-Century share price data -30.909% and at an all time low

http://www.rich.co.ke/rcdata/company.php?i=MzI%3D

Bamburi Cement firmed +0.56% to close at 180.00 which is a 5 month
High. Bamburi Cement has been well traded of late and is +2.857% Year
To Date. Bamburi Cement traded 573,600 shares worth 103.245m.

EABL closed unchanged at 281.00 and traded 188.500 shares. EABL is
+2.93% in 2016 outperforming the All Share by a meaningful 600 basis
points and this outperformance has happened since the H1 Earnings were
released and the price reaction confirms the Earnings Release beat the
street estimates.



by Aly Khan Satchu (www.rich.co.ke)
 
 
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February 2016
 
 
 
 
RICH PODCASTS
08-apr-2011 ::  Rich Podcast 8th April 2011
07-apr-2011 ::  Rich Podcast 7th April 2011
06-apr-2011 ::  Rich Podcast 6th April 2011
05-apr-2011 ::  Rich Podcast 5th April 2011
04-apr-2011 ::  Rich Podcast 4th April 2011
01-apr-2011 ::  Rich Podcast 1st April 2011
 
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