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Satchu's Rich Wrap-Up
Tuesday 17th of February 2015

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0930-1500 KENYA TIME
Normal Board - The Whole shebang
Prompt Board Next day settlement
Expert Board All you need re an Individual stock.

The Latest Daily PodCast can be found here on the Front Page of the site

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@alykhansatchu Always a pleasure speaking with the informed @bonneytunya of @cnbcafrica on Monday

EABL sheds billions in debt as financial position improves. East
African Breweries Ltd (EABL) cut its short-term borrowings and bank
overdraft by 4 billion shillings in the six months to December 2014,
as it kept an eye on rising financing costs. Asset manager Stanlib
Kenya has set aside a Sh3 billion war chest for acquiring property
that will be converted into a Real Estate Investment Trust (REIT) for
listing at the stock market. Joining CNBC Africa's Bonney Tunya is Aly
Khan Satchu, CEO at Rich Management to discuss the impact of these
moves in the Kenyan market.

Macro Thoughts

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@nanexllc Feb 15 Beautiful art from a rogue Goldman Sachs algo. Details here

Home Thoughts

I picked up the Little one this morning and stood her on the bed and
said one day Darling You will be as tall as me!

She is such a delight.

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“The Russians are wary of becoming over leveraged to China and so they are very keen to try to diversify their portfolio and improve ties with a multitude of Asian powers,” said Andrew Kuchins
Law & Politics

“The Russians are wary of becoming over leveraged to China and so they
are very keen to try to diversify their portfolio and improve ties
with a multitude of Asian powers,” said Andrew Kuchins, director of
the Russia and Eurasia Program at the Center for Strategic and
International Studies in Washington. “The Ukraine crisis has prompted
them to try to accelerate their Asian pivot.”
While Russia can’t ignore China -- it was Russia’s biggest trading
partner in 2013, the two hold regular military drills and China is
buying Russian gas -- the government in Moscow is renewing efforts to
find other nations in Asia to act as a hedge. In recent months it has
reached out to middle powers like India, Japan, South Korea, Indonesia
and Pakistan.

Putin’s accelerated Asian focus is a mix of military engagement and
efforts to promote trade, the latter starting from a low base. Russia
is only the 14th-largest trading partner of the 10-member Association
of Southeast Asian Nations, with two-way trade worth $19.9 billion in
2013, up 10 percent on the prior year, according to Asean. Russia
ranked as China’s ninth-most important commercial relationship in

“Russia’s priority is relations with China, however it doesn’t want to
put all of its eggs in that basket,” said James Brown, who specializes
in ties between Russia and Japan at Temple University in Tokyo. “That
is why it is also pursuing relations with India, Vietnam - two
countries with difficult relations with China -- and Japan can fit
into that box as well.”


On the Ground Putin played hard ball but the Oil War Specialist
exacted a very big Price.

United Arab Emirates warplanes operating out of Jordan have attacked
targets inside ISIS-held territory in Syria. Though details are still
scant, they reportedly targeted oil refineries.


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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1361
Dollar Index 94.32
Japan Yen 118.47 The dollar edged up 0.1 percent to 118.520 yen,
crawling away from a 10-day low of 118.110 struck overnight.
Swiss Franc 0.9324
Pound 1.5373
Aussie 0.7801
India Rupee 62.257
South Korea Won 1101.12
Brazil Real 2.8299
Egypt Pound 7.6221
South Africa Rand 11.6420

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Dollar Index 3 Month Chart INO 94.32 [might well surge tomorrow on a hawkish Yellen]
World Currencies

My View remains steadfast and of the supreme conviction type regarding
the Dollar

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29-SEP-2014 A Small Window for Sharks as Dollar Rises
World Currencies

The point I am making is that the dollar has just started going. There
will be blood in the water. There is a small window if we want to be
the sharks.

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12-JAN-2015 The Dollar Index is headed a lot higher – buy the dollar.
World Currencies

The US economy is the ‘come-back kid’ of 2015. The Federal Reserve has
stopped printing dollars and I think the Fed is just one headline
economic print from raising interest rates. A rate hike, even as small
as 0.25 per cent, will be the catalyst for a renewed surge in the
dollar. The Dollar Index is headed a lot higher – buy the dollar.

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09-FEB-2015 King Dollar
World Currencies

ON Friday, the United States released its typically market-moving
non-farm payroll numbers. After interrogating the released data, I
realised that the US posted the largest three-month payroll gain going
back to 1997.

That was plain another era in 1997 and I looked up the music from that
year to better anchor that period in my mind. I discovered that Toni
Braxton’s ‘Unbreak my heart’, Biggy’s ‘Hypnotise’ and Elton John’s
‘Candle in the wind’ – in remembrance of the late Princess of Wales,
Diana Frances – were the big hits that year.

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Euro versus the Dollar 3 Month Chart 1.1361 [prevailing $1.1270-1.1534 range]
World Currencies

"The market has witnessed this before - it remembers the brinkmanship
during the Greek debt negotiations of 2011. There are only nine
trading days left until the Feb. 28 deadline but some see that as
enough time. Thus we are not seeing the euro sold in panic," said
Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.

"On the other hand tail risk is definitely rising. This is limiting
bargain-hunting of the euro by short-term players and the currency
will remain under selling pressure."

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The European Union on Monday unveiled a $270 million aid package to support Zimbabwe's agriculture and health sectors, marking the resumption of direct funding after more than 10 years.

"We have made an important step in our cooperation with Zimbabwe," EU
ambassador Philippe Van Damme said at the signing ceremony for the aid

"We look forward to work in all the strategic and important areas
covered by this national ... programme, with the aim to foster the
political and economic reforms Zimbabwe is undertaking," said the EU

Zimbabwe's Finance Minister Patrick Chinamasa welcomed the EU aid, but
asked for the "unconditional lifting of sanctions against our head of
state and first lady".

The EU early this month said that Mugabe may nevertheless be
authorised to travel to Europe under specific circumstances in his
capacity as current chairman of the African Union.

Last year, the EU issued a special invitation for Mugabe to attend an
EU-Africa summit in Brussels, but he turned it down in disgust when
his wife was denied a visa to travel with him.

"Zimbabwe Incorporated has a chief executive officer and as long as
the chief executive remains under sanctions our relations asvtheremain
poisoned and unproductive," said Chinamasa.

Chinamasa used the opportunity to appeal for direct foreign investment
from EU countries.

"Zimbabwe is open for business," said Chinamasa. "I would therefore
want to extend my invitation to European investors to come and invest
in Zimbabwe."

President Joseph Kabila denounced the move by the U.N. during a
meeting with Western ambassadors in the capital of Kinshasa, noting
that his country was "not under the supervision of the U.N.," said
government spokesman Lambert Mende.


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Gaddafi's Body in a Freezer - What's the Message? 24th October 2011

The raw feed of the capture and then death of the Libyan dictator
Muammar Gaddafi and his son Mo’tassim Gaddafi raise plenty of
questions. The bodies are currently lying side by side, bloodied and
half-naked on a filthy mattress in a meat locker, in Misrata.

John Donne wrote: “... Therefore, send not to know for whom the bell
tolls, It tolls for thee…”

I am left thinking, this dead Gaddafi business is one powerful
message. And today Marshall McLuhan’s prediction in The Gutenberg
Galaxy (1962) that ‘The new electronic interdependence recreates the
world in the image of a global village’ has come to pass. The image of
a bloodied Gaddafi, then of a dead Gaddafi in a meat locker have
flashed around the world via the mobile, YouTube and Twitter.

Who is in charge of the messaging? Through the fog of real time and
raw footage, I note a very powerful message. The essence of that
message being;

‘Don’t Fxxk with us! Be- cause you will end up dead and a trophy
souvenir in a fridge.’ That same person is probably repeating
Muammar’s comment, “I tell the coward crusaders: I live in a place
where you can’t get me. I live in the hearts of millions.”

And asking ‘Really? Are You? Or are you now very dead and in a meat locker?’

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Nigeria's central bank intervened to defend the beleaguered naira on Monday by selling dollars below its official band for the second time, a sign the bank could weaken the currency to save its dwindling foreign reserves.

The naira crashed through a psychologically important level of 200 to
the dollar last week
in a rout triggered by weak oil prices and
escalating tension over the postponement of a presidential election
Africa's biggest economy, prompting the central bank to step up

The bank sold dollars in a special auction on Monday at 198 naira to
the U.S. currency, similar levels to Friday's sale, and once again
banned banks from reselling dollars bought at the currency auction to
other banks.

"The special FX auctions are not sustainable in the current setting
... until and unless oil prices rise significantly, there is little
the authorities can do to prevent the naira from weakening," Angus
Downie, head of research at Ecobank.

Both the Monday and Friday trades by the bank were outside a target
band of 160-176 to the dollar it set in November when it devalued the
currency by 8 percent to save its foreign reserves.

The devaluation failed to ease pressure on the naira in an economy
reliant on oil for more than 90 percent of its dollar inflows.

The central bank has reiterated it would not devalue the currency but
would stabilise the naira and has burned through $1.1 billion over the
past nine days to prop up the currency.

Before Monday's intervention, data showed foreign reserves at $33.04
billion, down 4 percent from a month ago.

The naira Non-Deliverable Forwards - currency derivatives traded
offshore - pointed to the local currency being priced at 268-275 to
the greenback in a year's time.

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Nigerian dollar bond yield spreads - the premium investors demand to hold its debt over U.S. Treasuries - have blown out by more than a third since the start of the year, hitting record highs of 578 basis points (bps) earlier this month.

That's a steep premium over African peers such as Gabon or Kenya that
trade at around 450 bps .

Nigeria's 10 year dollar bond maturing in 2023 now yields 7.5 percent,
up 100 bps since the start of the year. Compare that to a 6.2 percent
yield for Kenya's 10-year dollar bond, maturing in 2024 even though
S&P rates Kenya at B+, one notch below Nigeria.

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here are 10 astonishing facts about the US-Africa trade

1. Five years ago, waterborne cargo imports by the US from Nigeria
were worth more than those from South Korea, Russia, the UK or Canada.
In 2010, Nigeria was the United States’ seventh biggest source of
imports by value, at $30.4-billion, the majority of it being crude oil
whose value was boosted by high global oil prices.
But the expansion of American extraction of oil from its domestic
shale deposits has reduced American demand, hitting Nigeria hard. In
2013, the value of Nigerian waterborne cargo to the US had fallen by
nearly two-thirds to just $11.6 billion, pushing down the country to
#22 on the list of US import destinations. By October 2014, Nigerian
crude oil exports to the US had fallen to zero barrels.

Ghana Stock Exchange Composite Index Bloomberg -4.79% 2015


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16-FEB-2015 African Markets in 2015

Edwin Lefevre [whom I admire and who wrote the seminal Reminiscences
of a Stock Market Operator in 1923] said:

‘“You can spot, for instance, where the buying is only a trifle better
than the selling. A battle goes on in the stock market and the tape is
your telescope. You can depend upon it seven out of ten cases’’

That is how I first came to take an interest in the message of the
tape. The fluctuations were from the first associated in my mind with
upward or downward movements. Of course there is always a reason for
fluctuations, but the tape does not concern itself with the why and
wherefore. It doesn’t go into explanations. I didn’t ask the tape why
when I was 14 and I don’t ask it to-day at 40.
The reason for what a certain stock does to-day may not be known for
two or three days, or weeks, or months. But what the dickens does that
matter? Your business with the tape is now not tomorrow. The reason
can wait. But you must act instantly or be left. Time and again I see
this happen.

Now lets take a look at the African tape and lets start with Nigeria
because after all it is now [after last years rebasing] the elephant
in the Sub Saharan Africa room.

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TPS @serenahotels share price data here [unchanged on year]
Kenyan Economy

Par Value:                  1/-
Closing Price:           37.00
Total Shares Issued:          182174108.00
Market Capitalization:        6,740,441,996
EPS:             3.45
PE:                 10.725

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31-DEC-2014 Tourism sector will need a calm 2015 to register a rebound
Kenyan Economy

The ‘tourist economy’ which is es- timated at more than $1billion a
year (which I am experiencing as I write this at the Swahili Beach
Hotel in the South Coast - listening to the Indian Ocean breeze and
anticipating my boat trip tomorrow to see the dol- phins) is going to
remain a drag on 2015 Gross Domestic Product. There is no silver

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Falling oil price adds spurt to Kenyan grassroots February 15, 2015 5:36 pm Katrina Manson in Nairobi
Kenyan Economy

Kenyan farmer Anne Lidonde will plant more spinach than usual this
year — and it is all thanks to the collapse in global oil prices.

The middle-aged mother of two is one of the more obscure beneficiaries
of a falling oil price which the International Monetary Fund predicts
will depress growth rates for sub-Saharan Africa to 4.9 per cent. This
is almost 1 per cent lower than previous forecasts, with key economies
such as Nigeria relying on oil sales for revenues.

Kenya, like all bar one of its neighbours in east Africa, is dependent
on oil imports rather than exports. The big fall in crude oil prices
has resulted in savings not only in petroleum products, where prices
have fallen less precipitously than crude, but also for products that
rely on fuel inputs. Oil accounts for most inflationary pressures
across the region, according to the African Development Bank, so the
oil crash has resulted in lower prices for food and household goods.

“Everything is down: petrol charges are down, unga[maize flour] is
down, fertiliser is down. I’m ploughing the savings back into the
farm,” said Ms Lidonde as she boarded a minibus taxi that slashed
fares by 20 per cent this month.

Inflation across Kenya fell to 5.53 per cent in January, down from
6.02 per cent the month before, according to the latest figures from
the Kenya National Bureau of Statistics. This means most food prices
are still rising — especially in the drought-affected scarce season
that lasts until the April rains — but the cost of some staples is

Average petrol prices fell 8.9 per cent in a single month, and maize
flour by 2.9 per cent — the largest monthly drop for any foodstuff,
and hugely significant for the millions of Kenyans who rely on ugali,
a cooked maize-flour dough, as their staple.

The impact is likely to be most felt in some of the region’s smallest,
landlocked economies more than 1,000km from the coast, such as Burundi
and Rwanda.

“Forty per cent of the cost of our imports and exports is down to
transport, so we stand to benefit more than any other country in our
region,” says John Rwangombwa, governor of Rwanda’s central bank.

“Pump prices have already reduced by 22 per cent year to year. We
expect it to have a positive impact on our growth figures.”

The drop is likely to provide a boost at the macro level for others,
too. Kenya and Tanzania, which both spend about $4bn a year on oil
imports — equivalent to 8.2 per cent of gross domestic product in
Tanzania — are likely to save more than $1bn each on their import

“Lower oil prices will be good for [east Africa’s] current accounts,
many of which are dire, at over 10 per cent,” says David Cowan, Africa
economist at Citi. The World Bank says it is still calculating the
likely impact of the oil price on the region’s current account
deficits and growth prospects, but expects “substantial” savings.

Geoffrey Mwau, economic secretary at Kenya’s finance ministry, raised
a note of caution, saying: “Despite the oil price drop, the shilling
is still not that strong, so we don’t see a lot of benefits in terms
of imports. That’s because the dollar is strong for a variety of
reasons.” The price collapse has also delayed plans by cash-strapped
oil explorers for Kenya and Uganda to become crude exporters and grow
state revenues, despite finds running to 2.3bn barrels.

Mr Cowan pointed out that the full extent of the price drop was
unlikely to be passed on to consumers. “The last few years have been
pretty difficult profit-wise. Quite a lot [of importers, manufacturers
and traders] may seek to rebuild profit by keeping up their margins.”

The region’s biggest supermarket Nakumatt, with 40 stores across four
east African countries, has yet to reduce its prices, for example.

“Most manufacturers will confirm that, yes, the cost of oil has gone
down, but most of the other input costs have almost doubled. Labour
costs are very high at the moment,” said Nakumatt’s Alfred Ng’ang’a.
He thinks prices may fall in the coming months once the benefit of the
lower crude price has fully fed through to traders.

It could prove a worthwhile move: several businesses have found that
far from reducing revenues, dropping prices boosts customer numbers
and overall takings. At a central bus station where passengers cram
into 250 minibus taxis that shuttle back and forth across Nairobi
every day, operations manager Leonard Ndungu says takings are up 5 per
cent, even though he has cut fares by 20 per cent.

Likewise, at a petrol station in Nairobi’s busy business district, one
manager said sales were up 3,000 litres a day — equivalent to 20 per
cent — and that longer traffic jams indicated more vehicle owners
could now afford to fuel their cars.

The individual benefit to the overall economy from people such as Ms
Lidonde may be minute — her farm runs only to five acres — but
financial experts say it is precisely the most vulnerable in Kenya’s
unequal economy who stand to gain and, relatively, spend the most.

“I think [the oil price drop] is going to be a massive stimulus at
grassroots,” said Aly-Khan Satchu, a Kenya-based investment analyst
who thinks increased consumption due to oil price savings is likely to
boost overall GDP. “The economy outperforms when the average Joe,
who’s earning not very much, has more in his pocket.”

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26-JAN-2015 As an importer of petroleum, the sharply reduced price will provide a significant stimulus to our economy. It is very ‘grassroots’ because everyone buys fuel.
Kenyan Economy

Kenya Shilling versus The Dollar Live ForexPros 91.55


Nairobi All Share Bloomberg +5.87% in 2015 [has closed at a Record
High last 6 Trading Sessions]


172.45 +0.51 +0.30%

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N.S.E Today

The Nairobi All Share has been on a red hot winning streak and has
closed at a record high on 7 consecutive sessions through today.
The intensely destabilised markets in Nigeria [with Naira 12 month
forwards pricing the Naira at 268.00-275.00 versus the Dollar. The
Naira has already tanked big time and over 200.00 for the first time
last week] has meant funds which were destined for Lagos have re
routed to Johannesburg [The All Share is at a record high], Egypt [up
more than 7% this year] and here in Nairobi where the All Share is at
a record.
The FT's Katrina Manson wrote about the effects of the Lower Oil Price
and the positive spill-over stimulus effect.
The All Share rallied 0.26% to close at 172.90.
The All Share has surged +6.145% in 2015.
The Nairobi NSE20 crossed 5,400 for the first time since the 22nd
September 2014.
This a bull market plain and simple.

N.S.E Equities - Agricultural

This Niche of the market continues to trade to the upside and the move
is broadening out. The Value Proposition is around the Net Asset Value
discount. All these counters trade at steep discounts to their NAV.
Kakuzi followed on yesterdays run higher to an all time closing High
and rallied by its Daily Limit [unless its the day of a material
Trading announcement [when there is no limit] daily market moves are
capped at 10% up or down] and closed 9.81% higher at a Fresh record of
291.00. Kakuzi has rallied a blistering +61.666% in 2015.
Sasini Tea and coffee rallied +6.67% to close at 14.40 and traded
77,200 shares. Sasini had 7 Buyers for every Seller and is now +12.06%
in 2015
Eaagads traded 5.7% higher to close at 41.75 on light trading.

N.S.E Equities - Commercial & Services

TPS Serena issued a Profits Warning before the market opened today.
TPS Serena cited a ''challenging business landscape in Kenya'' Travel
advisories and the Introduction of VAT all as having depressed
Destination Kenya. TPS Serena retreated 2.7% to close at 36.00 and
traded 39,000 shares. The Limited and orderly down move is signalling
that the Profits warning was probably already baked into the Price.
TPS Serena is operating in what is the softest component of the
Economy that being Tourism.

Safaricom had a Buyer Seller Imbalance of more than 4 to 1 but closed
unchanged at 14.85 and traded 3.23m shares. Safaricom is +5.69% in
2015 and all set to slice through an All time closing High of 15.00
reached last year.

Nation Media Group which has been at the Frontline of the ''Digital
Migration'' War ticked 1.13% lower to close at 262.00 and traded
shares as low as 257.00 -3.02%. Nation Media is -0.38% in 2015.
Standard Group [who are also in the trenches with Nation Media] firmed
+4.24% to close at 43.00 and traded 900 shares. Standard Group is
+23.74% this year.

N.S.E Equities - Finance & Investment

Kenya Commercial Bank closed unchanged at 59.00 and on heavy volume of
action of 7.091m shares worth 418.616m, ahead of its Full Year
Earnings Release later this month. Kenya Commercial Bank traded 61.39%
of the volume traded at the Securities Exchange today. KCB is +3.508%
in 2015 and within 1.666% and striking distance of record closing high
of 60.00 reached last year.
Standard Chartered Bank traded 0.872% to close at a Fresh 2015 high of
347.00 and was trading out the session at 350.00 +1.74% at the Finish.
Standard Chartered is +3.58% in 2015 and well placed to push on from
Equity Group closed unchanged at 53.50 and traded 643,800 shares.
Equity Group is +7.00% in 2015.
CO-OP Bank firmed 1.234% to close at 20.50 and was trading at 21.00
+3.7% at the closing Bell.

BRITAM EA firmed 1.71% to close at 29.75 and traded 1.163m shares.
BRITAM EA is unchanged in 2015.

N.S.E Equities - Industrial & Allied

EABL firmed 0.5988% to close at a Fresh 2015 High of 336.00 and was
trading session Highs of 340.00 +1.5% at the close. EABL is now
+9.0909% Year to date and the strong First Half Earnings will further
juice the rally.

Kenya Power KPLC rallied 2.1% to close at 17.00 and traded 425,500
shares. KPLC has surged +17.64% in 2015 and interestingly considerably
outperformed KenGen.
KenGen rallied +3.38% to close at 10.70 and traded 165,500 shares.
KenGen is +3.88% in 2015 and lagging KPLC by a wide margin.

Crown Paints was high ticked +3.77% to close at a Fresh record [for
the 2nd consecutive trading session] of 165.00 on just 100 shares
traded, however. Crown Paints has surged +48.64% this year.

Unga rallied 7.142% to close at 45.00. Unga has rallied +13.2% since
the start of the year.

BOC Kenya was high ticked 7.43% to close at 159.00 and traded just 200
shares. BOC Kenya has spiked +27.2% higher in 2015.

by Aly Khan Satchu (www.rich.co.ke)
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February 2015

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