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Macro Thoughts

Watching Developments.

Home Thoughts

This Missive comes to you from The Internet Cafe at Sun N Sand in
Kikambala and now from the Internet Cafe at Nyali Cinemax. I came
through a very familiar Landscape last night from the Airport, over
the Causeway, Nyali Bridge and the Mtwapa Bridge and found myself
spending my first night here all these years later. I have yet to have
my swim but I will.

The International Monetary Fund raised its forecast for global growth
this year, reflecting a stronger-than-expected first half, while
warning that financial- market turmoil has increased the risks to the
recovery.The world economy will expand 4.6 percent in 2010, the
biggest gain since 2007, compared with an April projection of 4.2
percent, the Washington-based fund said in revisions yesterday to its
World Economic Outlook. Growth next year is projected to be 4.3
percent, unchanged from the April forecast.

Canada and the U.S. are leading advanced economies out of the worst
recession since World War II, trailed by euro-area countries that need
additional measures to boost confidence in their banks, the fund said.
Faster expansions in Brazil, China and India are helping to protect
the global recovery as a sovereign-debt crisis weighs on Europe, the
IMF said.

Conclusions

“The overarching policy challenge is to restore financial- market
confidence without choking the recovery,” the IMF report said. “The
new forecasts hinge on implementation of policies to rebuild
confidence and stability, particularly in the euro area.”

Euro 1.2648
Pound 1.5140
Dollar Index 83.93
Aussie 0.8733
Rand 7.5616
Korean Won 1208.30

The 16-nation currency was up at $1.2662 from $1.2648 late Wednesday
in New York, according to EBS. Earlier in the day, it rallied as far
as $1.2688, a level last seen in early May. The euro also rose to
¥111.63 from ¥110.93 while the dollar rose to ¥88.14 from ¥87.70.

Conclusions

I continue to like the Pound best on the basis that Osborne has taken
the Country ahead of the Curve from being resolutely behind it.

The next ‘It’ bag may be a shoe.

As some customers struggle to justify spending thousands of dollars on
Hermes Kelly or Chanel 2.55 bags, shoes like Jimmy Choo gladiator
sandals are set to become a faster-growing luxury, according to
estimates by Euromonitor International Plc.

Having trailed bags in the five years before and during the recession,
sales of luxury shoes will rise 20 percent in the four years through
2013, compared with 16 percent growth in handbag revenue, according to
a study by the research company.

Demand for $1,000-plus bags may not match pre-recession levels as
consumers now hang on to their clutches and totes for more than one
season, said Fflur Roberts, Euromonitor’s luxury goods research
manager. While also curbing spending on shoes, shoppers may purchase
more designer footwear than bags because it’s “more forgivable” to pay
$500 for a pair of Manolo Blahnik blue satin heels, Roberts said in a
phone interview.

Conclusions

There You go its not all Matters Financial and Geopolitical.

I  loved Willy Vanderperre’s somber group portrait of models in
Riccardo Tisci’s fall couture collection for Givenchy. Instead of a
show, Mr. Tisci presented 10 looks on forms, as well as Mr.
Vanderperre’s portrait (front and back views) in a gilded set of rooms
in the Place Vendôme. Frida Kahlo inspired the religious and
anatomical details in the long dresses and embroidered cat suits, done
in a palette of porcelain, blush-pink and gold, with exposed zippers
and long silk fringe, like human hair.

A  curious three-day burst of activity last month jolted the coffee
market back to life, forcing traders and analysts to confront the
possibility that the buzz may not wear off quickly.Prices jumped 16%
during three days of futures trading in mid-June, helping catapult
coffee to its highest level in 12 years and pushing it out of its
moribund trading range of the previous six months.

I am bullish Coffee and Sugar and in fact, the Breakfast Commodity Class.

Oil ended a 6 day Down Streak.

The International Monetary Fund raised its 2010 growth forecast for
sub-Saharan Africa as global trade rebounded.The region’s economy will
expand 5 percent, compared with an April forecast of 4.7 percent, the
Washington-based lender said in its World Economic Outlook update on
its website today. The forecast for 2011 was left unchanged at 5.9
percent.

“Overall, macroeconomic developments during much of the spring
confirmed expectations of a modest but steady recovery in most
advanced economies and strong growth in many emerging and developing
economies,” the IMF said. “Nevertheless, recent turbulence in
financial markets, reflecting a drop in confidence about fiscal
sustainability, policy responses, and future growth prospects, has
cast a cloud over the outlook.”

On June 9, the World Bank said it expects sub-Saharan Africa’s economy
to expand 4.5 percent this year, and 5.1 percent next year.

Conclusions

I believe their is significant Momentum and self propulsion.

Growth in the South African mobile advertising market shot up by an
impressive 65% in the 2nd quarter of 2010 according to BuzzCity, the
global mobile media company, who released their latest results today.
South Africa’s growth in ad banners served is the fourth highest,
behind Kenya who recorded a massive 243% growth, Vietnam at 273%, and
Ghana with a staggering 654% growth rate, although this is “off an
admittedly very low base.”

South African business confidence rose to the highest level in nine
months in June as the soccer World Cup boosted sentiment in Africa’s
biggest economy, according to the Chamber of Commerce and Industry.

The Business Confidence Index climbed to 84.8, the highest since
September 2009, from 82 in May, the Johannesburg-based chamber said in
an e-mailed statement today. The index is compiled from 13 economic
indicators including retail sales, inflation, the benchmark stock
index and the currency.

“The World Cup has obviously had a positive effect on sentiment both
domestically and internationally,” Richard Downing, an economist at
the chamber, said in a telephone interview. “The main benefit is that
the positive spirit and momentum created by the tournament can be
carried forward to realize long-term economic improvement.”

Conclusions

I was making this Point here

Is the World Cup Africa's Tipping Point The Star
http://bit.ly/94jnfx

And here

World Cup Benefits more than Money The Star
http://bit.ly/cWOBYm

And here

South Africa spent a bundle on stadiums, but World Cup will pay off
Christian Science
http://bit.ly/atbEkq

CAPE TOWN — Jessica Hilltout, a nomadic, Belgian-born photographer,
loaded sacks of deflated soccer balls onto the roof of a battered
yellow Volkswagen Beetle last year and began a seven-month road trip
across Africa to document the continent’s love of the game. She found
it in villages where children played with joyous abandon on dusty
patches of ground, sandy beaches and lush fields, far from the
stadiums where Africa’s first World Cup would be held.

Grassroots Soccer Slide Show NYT
http://nyti.ms/aLEopS

“What is absolutely striking is how much change there has been between
the BRICs and Africa,” Mr Jacko Maree, the CEO of South Africa’s
Standard Bank, told Reuters in an interview. “We like to think that
the whole story has only just begun.”

President Kibaki’s hand in the ongoing shift is being seen in the fact
that he has not visited or hosted any major European leader since
coming to power eight years ago but has made several trips to China
and India.

“While Sino-Africa trade has grown particularly rapidly, Brazil’s has
remained relatively flat at around 18 per cent of Africa’s total trade
with the BRICs in the past two decades,” Simon Freemantle and Jeremy
Stevens of Standard Bank said in a recent analysis of the BRICs
activities in Africa.

Conclusions

I am with Maree.The Speed of Developments has been just breathtaking.

The Hass Property Index that sought to analyse sector trends covering
the period up to the end of the first half of the year indicates
residential houses have appreciated by as much as 120 per cent in
Kenya since 2005 while they have depreciated by as much as 20 per cent
in the US and stagnated in the UK.

According to the report, an investor from the UK would have made the
highest capital gains of about 120 per cent while an investor from the
US would have seen their investment increase by as much as 95 per cent
had they invested in Kenya in the last quarter of 2005 and held the
investment to date.

Conclusions

The Tape is your Telescope but getting an accurate Tape is actually
problematic. This Story has been replayed from Kinshasa to Juba to
Lilongwe to Nairobi. Land Prices have shown a much higher Trajectory.

And I feel it will maintain this Trajectory for some time.

The Closing Data is delayed but I am confident the Market turned higher today.

The NSE traded 278.314m upto 14.54.

Rea Vipingo rallied 4.06875% to close at 17.90 and traded 11,000 shares.

Sasini Tea closed at 14.05 and traded 19,000 shares.
Kakuzi was unchanged at 75.00.

SAFARICOM

total turnover      61,304,364
avg price     5.80 CLOSING PRICE 5.80 +0.87%
high price     5.85
low price     5.70
last price     5.80
shares volume     10,572,000

Conclusions

We are exactly mid Range between 5.50-6.10. I think Fair Value is 6.42
according to my Model and Buyers have now returned a little more
forcefully at these levels. The Down Side is probably a maximum of 10
cents which makes it interesting and Low Beta from the long side.

Kenya Airways firmed 0.5425% to close at 46.25 and traded a
46.00-47.00 range and 224,900 shares worth 10.448m. Buyers are pushing
back here after a 20% correction pull back post the Full Year
Results..

TPS Serena was unchanged at 57.50 and traded 74,400 shares.

Access Kenya was unchanged at 21.25 and traded 162,700 shares. Demand
Supply has inverted with Supply 2x Demand which might cap the recent
Rally.

Nation was unchanged at 141.00 [The Bonus share Issue got the
Regulatory Nod] and traded 3,500 shares which was about all that was
for sale.
Standard traded 300 shares at 38.50 +1.32%.

Scangroup was unchanged at 38.75 and traded 32,200 shares.

CMC Holdings was unchanged at 12.85 and traded 49,300 shares.
CarGen traded a 1,000 shares all at 48.00.

Half Year Results are keenly awaited and will govern the next move,
which I expect to be higher once the 1st Quarter Trajectory is
confirmed.

KCB was the most active Counter at the Bourse. KCB closed unchanged at
18.15 and traded a 18.00-19.00 range and 3.730m shares worth 67.746m.
I am increasingly of the View that the Price is within a whisker of
its lows for the Year and actually moved preemptively ahead of the
Rights Shares Supply. Moreover, that the Rights Issue represents good
timing ahead of a Game Changer Type Acceleration across the KCB
Franchise.

COOP Bank was the 2nd most actively traded Counter. COOP shaved off 5
cents to close at 14.95 and traded a 14.55-15.00 range and 4.241m
shares worth 63.579m. COOP Bank has rallied 49.95% post its Full Year
Earnings Release earlier this Year. This is a Period of Congestion
post that sharp run up.

Equity Bank eased 1.09% to close at 22.75 and traded 258,600 shares
and has an overhang of about 1m shares now.
Barclays Bank has a 10-1 Demand versus Supply Disequilibrium which is
plain egregious. Barclays Bank was unchanged at 64.00 and traded a
66.00 +3.13% session high and 44,100 shares. Supply is thin below
66.00.
Stanchart firmed 0.44% to close at 229.00 and traded a 231.00 session
high and 12,200 shares.

Centum was unchanged at 22.00 and traded a 22.00-22.50 range and
141,000 shares. The Re Engineering deserves a prce of 25.00 which is
where we are headed.

CFC StanBic rose 1.3% to close at 78.00 and was stuck at 80.00 +3.9%
into the session Finale. CFC StanBic traded 23,900 shares. CFC has
rallied 95% since it released its Full Year 2009 Earnings earlier this
Year.
DTB was unchanged at 89.50 and traded just 1,000 shares.
HFCK rose 1.22% to close at 20.75 and traded 27,700 shares. Buy Side
Demand was for 10x the Amount traded.
NBK rose 1.28% to close at 39.50 and traded 12,000 shares.
NIC eased 0.63% to close at 39.50 and traded 9,700 shares.

Kenya Re was unchanged at 11.90 and traded 70,500 shares.
Jubilee firmed 0.62% to close at 162.00 and traded 1,500 shares. It
has been low ticked down to here and Demand is beginning to tip its
Hand and these lower levels.
PanAfric did not trade.

Olympia Capital closed higher at 7.50.

KenolKobil rallied 4% to close at 10.40 which equates to 104.00 pre
Split and was its 2010 High. KenolKobil traded an 11.00 +10.00%
session high and 659,900 shares with Demand outweighing Supply by a
wide margin.
Total rose 0.86% to close at 29.25 and traded 24,800 shares.

Athi River Mining was unchanged at 141.00 and was bid a 142.00 +0.71%
into the close. ARM traded 87,100 shares worth 12.353m. ARM is at an
all time closing High and the charts remain resolutely bullish.
Bamburi Cement traded 600 shares at an unchanged 200.00.
Portland did not trade.

KenGen firmed 0.29% to close at 17.00 and traded a 17.00-17.10 range
and 381,700 shares. KenGen is well supported here and the News Flow
will continue to support.
KPLC traded 2,600 shares at 199.00 unchanged.
Cables was unchanged at 20.25 and traded 133,400 shares.

Mumias Sugar was unchanged at 12.70 and traded 542,800 shares.

EABL was unchanged at 179.00 and traded 13,300 shares. Thinning
Volumes confirm Supply exhaustion at these price points and probably
an imminent move higher.

BAT traded 100 shares at 220.00 +1.85% which were the only shares for
sale through the entire session.
BOC Kenya traded 500 shares at 135.00 unchanged.
Carbacid traded 400 shares at 149.00 +2.76%.
Crown Berger traded unchanged at 32.50.
Eveready was unchanged at 4.05 and traded 31,200 shares.
Sameer was unchanged at 8.55 and traded 102,000 shares.
Unga closed at 12.10 and traded 71,400 shares.