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Monday 31st of December 2018 |
Morning Africa |
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If you are tracking the NSE Do it via RICHLIVE and use Mozilla Firefox as your Browser. 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 http://www.rich.co.ke |
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31-DEC-2018 :: Annus horribilis [Cash is King] Part 2. @TheStarKenya Africa |
Vinod Khosla who bagged a billion or two Dollars at Sun Microsystems [When I arrived on the Trading Floor at Credit Suisse First Boston in the early 1990s every computer was a Sun Microsystems Computer] said
''The Future is not seen in the rear view Mirror.''
In my last article, we looked in the rear view Mirror, we remembered The Queen who said in 1992
''1992 is not a year on which I shall look back with undiluted pleasure. In the words of one of my more sympathetic correspondents, it has turned out to be an annus horribilis''
Subsequent to that article, The US markets swooned and served up the worse Christmas since 1931 [I think]. President Trump was holed up in the White House [except for a short visit to Iraq]
“He’s trapped,” Murphy told the Washington Post . “He’s playing poker holding two threes and suddenly putting all of his chips in. It’s pure emotion, the mark of a panicking amateur.”
Nancy Pelosi mocked Trump’s ultimatum “Now he’s down to, I think, a beaded curtain or something, I’m not sure where he is.”
The thing is a New Year beckons and what I recall is that January is the month for Bargain-hunting. So lets try and peer into the Future
What is a ''Known Known'' is that Trump-related political volatility is surely a Buy into 2019. Prediction markets have Impeachment before the end of the first term at 50%. Markets down-shifted interest rate expectations in the US in the run up to the end of the year. The US Fiscal story is popping over the radar. The US Dollar whilst seeing its share of global FX reserves fall to 61.9% an almost 5 year Low, is still the Elephant in the room. A strong Dollar is the equivalent of administering a Caning when it comes to Emerging and Frontier markets. The direction of the Dollar is therefore pivotal. I am increasingly in a minority but I expect the Dollar to strengthen about 10% through 2019. Folks are keenly looking for chinks in the US Economy. If the US Economy slows, I can guarantee you the Rest of the World will slow further.
After quaffing Malbec wine with their Argentine Sirloin steaks in what was a widely anticipated ''Truce'' Dinner, the markets will be watching developments very carefully. The Trajectory of the Tariff War is another pivotal Curve to keep an eye on in 2019. China has been delaying some data releases and high frequency satellite level data confirms a sharp slow-down in the Chinese Economy which has yet to be seen in official data points.
The Financial Times is reporting that Juncker is telling the UK to ‘get act together’ on Brexit. The UK remains a political conundrum. The recalcitrant Jeremy Corbyn refuses to pivot on Brexit and surge into 10 Downing Street on a ''Youthquake'' wave. Prime Minister Theresa May who came to Africa and danced in 2018 is still there like Geoffrey Boycott and that of itself is an achievement. The Pound has not priced in a hard Brexit nor has the Euro.
Europe remains off balance. The French have always been prone to take to the Streets but President Macron clearly has to deal with things with plenty of finesse, now. President Putin is snapping at the edges and his European Portfolio continues to grow.
The new Certainty seems to be Uncertainty.
Commodity Markets are also a natural cleavage. Crude Oil slumped coincident with the Khashoggi incident and has been in Free-Fall. Crude Oil is a big Pivot for 2019. The esoteric Carbon Credit markets were the best performing commodity in 2018 adding more than 200%.
Emerging and Frontier markets endured a torrid 2018 well with some exceptions, Jamaica interestingly was a Stand Out. African Eurobond Yields [$81b issuance in the last 4 years] soared to 4 year highs. Credit Cards are maxed out just as the interest rates are being dialled higher is what is called a ''double whammy''. President Kenyatta made a comparison between Japan [Debt-to-GDP] and Kenya's but the crucial point is this, Japan pays 0% for borrowings out to 10 Years. I like 30 year maturity African Eurobond Paper not necessarily at todays closing levels. Double Digit Yields will be difficult to resist after sifting through the credit risk. You might consider putting together a Portfolio and leveraging it 50%. 30 Years is a long enough Off-Ramp to get our Ducks in a row.
In my next article, I will look into my Conviction Trades for 2019.
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Halcyon Days Africa |
From Latin Alcyone, daughter of Aeolus and wife of Ceyx. When her husband died in a shipwreck, Alcyone threw herself into the sea whereupon the gods transformed them both into halcyon birds (kingfishers). When Alcyone made her nest on the beach, waves threatened to destroy it. Aeolus restrained his winds and kept them calm during seven days in each year, so she could lay her eggs. These became known as the “halcyon days,” when storms do not occur. Today, the term is used to denote a past period that is being remembered for being happy and/or successful.
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Alfred, Lord Tennyson, "The Death of the Old Year" Africa |
Full knee-deep lies the winter snow, And the winter winds are wearily sighing: Toll ye the church bell sad and slow, And tread softly and speak low, For the old year lies a-dying. Old year you must not die; You came to us so readily, You lived with us so steadily, Old year you shall not die.
He lieth still: he doth not move: He will not see the dawn of day. He hath no other life above. He gave me a friend and a true truelove And the New-year will take 'em away. Old year you must not go; So long you have been with us, Such joy as you have seen with us, Old year, you shall not go.
He froth'd his bumpers to the brim; A jollier year we shall not see. But tho' his eyes are waxing dim, And tho' his foes speak ill of him, He was a friend to me. Old year, you shall not die; We did so laugh and cry with you, I've half a mind to die with you, Old year, if you must die.
He was full of joke and jest, But all his merry quips are o'er. To see him die across the waste His son and heir doth ride post-haste, But he'll be dead before. Every one for his own. The night is starry and cold, my friend, And the New-year blithe and bold, my friend, Comes up to take his own.
How hard he breathes! over the snow I heard just now the crowing cock. The shadows flicker to and fro: The cricket chirps: the light burns low: 'Tis nearly twelve o'clock. Shake hands, before you die. Old year, we'll dearly rue for you: What is it we can do for you? Speak out before you die.
His face is growing sharp and thin. Alack! our friend is gone, Close up his eyes: tie up his chin: Step from the corpse, and let him in That standeth there alone, And waiteth at the door. There's a new foot on the floor, my friend, And a new face at the door, my friend, A new face at the door.
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NEW @GEC_CRG -BERCI-IPSOS POLL: AN ANXIOUS ELECTORATE DEMANDS CHANGE H/T @jasonkstearns Law & Politics |
The full report can be found here. The major conclusions are:
If elections are free and fair, an opposition candidate would be almost certain to win the presidency. According to our survey, Martin Fayulu is clearly the favorite, with 47% (BERCI: 45%, Ipsos/GeoPoll: 49%) of the intended vote, ahead of 24% for Felix Tshisekedi (BERCI: 28%, Ipsos/GeoPoll: 20% ); and 19% (BERCI: 20%, Ipsos/GeoPoll: 18%) for Emmanuel Shadary. Fayulu achieved a clear majority in most of the 26 provinces, with the exception of Ituri, Sankuru and Maniema, which favored Shadary, and South Kivu, Kasai Central, Kasai, Kasai Oriental and of Upper Lomami, where a majority supported Tshisekedi. This is a remarkable rise in popularity for a politician who was little known outside of Kinshasa a year ago. potential for violence is extremely high. A few days before the CENI postponement, 48% of respondents (BERCI: 65%, Ipsos/GeoPoll: 30%) said they would “most certainly and/or probably” protest against rigged elections. An alarming percentage of respondents (BERCI: 63%, Ipsos/GeoPoll: 43%) indicated that they would not accept the results if Shadary won, and 53% (BERCI: 63%, Ipsos/GeoPoll: 43%) do not trust courts to fairly resolve electoral disputes. This survey, like previous ones, reveals a politically aware and motivated electorate. 98% of respondents (identical for BERCI and Ipsos/GeoPoll) registered to vote in the next elections and among these, 91% (BERCI: 90%, Ipsos/GeoPoll: 92%) and 98% (BERCI: 97% Ipsos/GeoPoll: 98%) intend to vote in the legislative and presidential elections.
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.@realDonaldTrump Didn't Kill the Global Trade System. He Split It in Two. @WSJ Law & Politics |
When Donald Trump entered the White House on a platform of defiant nationalism nearly two years ago, many feared he would dismantle the global trading system the U.S. and its allies had built over the past 70 years. He hasn’t. Instead, he is presiding over its realignment into two distinct systems. One, between the U.S. and its traditional, democratic trading partners, looks a lot like the system that has prevailed since the 1980s: free trade with a smattering of quotas and tariffs like those Ronald Reagan once deployed. The second reflects an emerging rivalry between the U.S. and China carrying echoes of the Cold War. On trade, investment and technology, the U.S. is moving to undo some of the integration that followed China’s accession to the World Trade Organization in 2001. There are two big questions hanging over this realignment. The first is deciding how far the U.S. is prepared to decouple from China. The U.S. has given China until March 1 to avoid higher tariffs by addressing complaints it discriminates against foreign companies and steals their technology. Mr. Trump is counting on a deal that avoids a trade war. But many in his administration and Congress don’t trust China to make the necessary concessions and would likely advocate a sharper break. The second question is whether the U.S. can persuade allies to join a united front to contain China. Other countries don’t relish the choice. Their economic ties to China are far greater than they ever were to the Soviet Union during the Cold War. Mr. Trump’s actions so far affect only 12% of U.S. imports, according to Chad Bown of the Peterson Institute for International Economics. In 1984, 21% of imports were covered by similar restraints, many imposed by Mr. Reagan, such as on cars, steel, motorcycles and clothing. “War between the U.S. and China is more likely than recognized at the moment.” “Many companies are…pursuing a ‘China plus one’ strategy, in which current China production remains largely in place but the marginal dollar of new investment goes into countries with lower labor costs,” Dan Wang, an analyst at research firm Gavekal Dragonomics, recently wrote to clients. “The assumption behind some of the cold war, containment, decoupling rhetoric you hear rests on a fallacy—that such a strategy is deliverable in the 21st century given the integrated nature of the global economy and the role of China,” said Kevin Rudd, a former Australian prime minister who now heads the Asia Society Policy Institute think tank.
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He came away with a reputation as a blunt, effective negotiator, and a nickname to match: "missile man." @TheAtlantic Law & Politics |
Japanese negotiators slapped him with the moniker, according to The Wall Street Journal, after he folded one of their proposals into a paper airplane and threw it back at them. According to Dan DiMicco, the former CEO of Nucor Corporation and a trade adviser to President Trump, steel jobs were the first casualties of a quiet war China has been waging on the American worker. “We’ve been in a trade war for 25 years. We haven’t engaged; it’s been waged on us. They’ve done it by sleight of hand, by lying, by using short-term greed to undermine long-term success. And Trump knows all of that, and he’s put Bob in charge,” DiMicco told me. At his confirmation hearings in 2017, Lighthizer bantered with a senator about his ability to push the U.S.-China conflict to the top of the political agenda: "I will bet you, you and I will sit down in your office between now and the time I leave, and you will say, ‘Bob, you were right; he really is going to change the paradigm on China. I believe he is going to change the paradigm on China.’ If you look at our problems, China is right up there.” “In my judgment, we have the finest U.S. trade representative we have had in our history,” Navarro told an audience at a recent speech. Navarro also denounced “Wall Street bankers and globalist elites” who have been trying to head off conflict with China, aiming a shot at individuals like Gary Cohn, the former head of Trump’s Council of Economic Advisers. at the moment, Lighthizer is still riding a nafta high within the administration. The still-unratified U.S.-Mexico-Canada Agreement would produce largely cosmetic changes to the underlying economic relationship among the three countries. (“I would describe it as a face lift and a boob job,” Susan Aaronson, a professor at George Washington University, told me) But the deal has two particular provisions that stand out. One threatens automotive manufacturers with higher costs if they don’t return manufacturing jobs to the United States. The other makes it difficult for the negotiating partners to strike new trade deals with China. By implication, the overarching strategy of American trade policy is to start bringing back the manufacturing jobs that have migrated from the U.S. to China since the latter joined the WTO—whether businesses like it or not. A November update to the 301 report features two alleged Chinese intelligence officers who discuss targeting American aerospace technology by planting a Trojan horse in a French company’s network. “I’ll bring the horse … to you tonight,” one officer reportedly says. “Can you take the Frenchmen out to dinner tonight? I’ll pretend I bump [sic] into you at the restaurant to say hello. This way we don’t need to meet in Shanghai.” when donald trump met with Xi Jinping in Argentina in December, the two presidents tried to reduce the tensions. Lighthizer will lead the U.S. side in 90 days of talks that were widely described as a kind of truce. But he has cautioned that he will quickly return to arms when the clock runs out on March 1 if China doesn’t restructure its economic relationship with the U.S. and stop stealing American technology. “We will protect that technology and get additional market access from China,” he said on a recent Face the Nation. “If that can be done, the president wants us to do it. If not, we'll have tariffs.”
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Aboard the giant sand-sucking ships that China uses to reshape the world @techreview Law & Politics |
In China as elsewhere, dredging is used to build protective barriers against the rising seas, as the Ellis Island is doing, and to create valuable new real estate. But for China’s president, Xi Jinping, it is also an important geopolitical tool. Today, more than ever, dredges have the power to create land where there was none, altering the shapes of coastlines and the contours of countries. No nation has cultivated this power more zealously than China. In 2013, Rabobank, a Dutch firm, declared that China’s dredging industry had become the biggest in the world, and it has only grown since then. Chinese firms bring in as much revenue from domestic dredging as is accrued in all of Europe and the Middle East combined. Since 1985, according to Deltares, a Dutch research group, humans have added 5,237 square miles (13,564 sq km) of artificial land to the world’s coasts. China is a major—and growing—contributor to that total. In 2017, CCCC Dredging launched the Tian Kun Hao, Asia’s biggest cutter suction dredger, which was built entirely in China. It is about the same size as the Ellis Island, or about a quarter the size of the Belgian behemoths, and can suck nearly 8,000 cubic yards of sand and other material per hour from depths up to 100 feet. CCCC Dredging has begun taking on projects overseas, and it now operates in dozens of countries. It has a particular focus on places targeted for Chinese-led port development as part of Xi’s Belt and Road Initiative. The South China Sea is one of the world’s busiest shipping routes. What’s more, billions of barrels of oil and trillions of cubic feet of natural gas lie under the seafloor. So it’s no surprise that every country in the region—China, Taiwan, Vietnam, Brunei, Malaysia, and the Philippines—lays claim to parts of the Spratly Islands, a scattering of rocks and reefs in the middle of the sea, 500 miles due east of Vietnam and 200 miles southwest of the Philippines. China controls seven naturally occurring Spratly outcroppings (one of which it seized from Vietnam in a 1988 clash that left dozens of soldiers dead). It is using its industrial might to create new facts in the water. Starting in late 2013, the Chinese government set dozens of CCCC Dredging’s ships to work. Within 18 months, these ships added nearly 3,000 acres (1,200 hectares) of new land to the Spratlys, enough to fit three copies of New York’s Central Park with room to spare. Almost as soon as the sand was dry, China began turning the new islands into military bases. It installed antimissile weaponry, runways capable of handling military aircraft, structures apparently designed to house long-range surface‑to‑air missile launchers, and port facilities for warships. China has also built new territory in another tiny collection of South China Sea islands called the Paracels, where it has similarly installed airstrips and missile batteries. This expansion of Chinese power into the Pacific has alarmed the US as well as China’s neighbors. To show it does not recognize the new islands as Chinese territory, the United States has made a point of flying B-52 bombers over them and sending warships to pass close by. For its part, China has landed long-range bombers on its new runways, as a show of force. Tensions spiked in late September 2018, when the Lanzhou, a Chinese destroyer, cut across the bow of the USS Decatur, an American destroyer. The Decatur’s captain slammed the ship’s engines into reverse, averting a collision by only 45 yards—a quarter of the length of his ship. The incident took place just a few miles away from some of the new artificial islands. It may be too late for other nations to do much about China’s artificial-land grab. Admiral Philip S. Davidson, head of the US Indo-Pacific Command, told Congress in April (shortly before assuming his command) that “China is now capable of controlling the South China Sea in all scenarios short of war with the United States.” Most plant and animal life on the seven Spratly reefs was destroyed by the mountains of sand dumped atop the coral. John McManus, a University of Miami marine biologist, called it “the most rapid rate of permanent loss of coral reef area in human history.” Island building, as China has shown, is one of the most important projects there is. Today, geopolitical power goes not only to those who control territory but to those who can manufacture it.
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28-AUG-2017 :: China Rising Law & Politics |
Apart from a few half-hearted and timid FONOPs [freedom of navigation operations], China has established control over the South China Sea. It has created artificial Islands and then militarised those artificial islands across the South China Sea. It is a mind-boggling geopolitical advance any which way you care to cut it.
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Dollar Share of Currency Reserves Slips to Near Five-Year Low @economics World Currencies |
The dollar’s share of known official currency reserves around the world slumped to an almost five-year low, the International Monetary Fund said. The U.S. currency accounted for 61.9 percent of global foreign-exchange reserves in this third quarter, down from 62.4 percent the prior quarter and the lowest level since the fourth quarter of 2013, according to IMF data released Friday on its website. The euro’s share of allocated reserves rose to 20.5 percent, the highest since late-2014, from 20.3 percent in the second quarter. The yen’s share gained to 5 percent, the highest in 16 years.
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26-NOV-2018 :: Armageddon Cryptogeddon and BITCOIN. World Currencies |
We have yet to hit peak melt-down. The reason being so many Folks espouse the HODL philosophy.
GameKyuubi posted "I AM HODLING," a drunk, semi-coherent, typo-laden rant about his poor trading skills and determination to simply hold his bitcoin from that point on. "I type d that tyitle twice because I knew it was wrong the first time. Still wrong. w/e," he wrote in reference to the now-famous misspelling of "holding." "WHY AM I HOLDING? I'LL TELL YOU WHY," he continued. "It's because I'm a bad trader and I KNOW I'M A BAD TRADER. Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro."
He concluded that the best course was to hold, since "You only sell in a bear market if you are a good day trader or an illusioned noob. The people inbetween hold. In a zero-sum game such as this, traders can only take your money if you sell." He then confessed he'd had some whiskey and briefly mused about the spelling of whisk(e)y. [HODL Definition | Investopedia]
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27-NOV-2017 :: Bitcoin "Wow! What a Ride!" @TheStarKenya World Currencies |
“But it is a curve each of them feels, unmistakably.It is the parabola. They must have guessed, once or twice -guessed and refused to believe- that everything, always, collectively, had been moving toward that purified shape latent in the sky, that shape of no surprise, no second chance, no return.’’
Let me leave you with Hunter S. Thompson, “Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming “Wow! What a Ride!”
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Then, around end of 2016, Saudi Arabia offered a lifeline: The kingdom would pay as much as $10,000 if Hager joined its forces fighting 1,200 miles away in Yemen. @nytimes Commodities |
Hager, 14 at the time, could not find Yemen on a map, and his mother was appalled. “Families know that the only way their lives will change is if their sons join the war and bring them back money,” Hager said in an interview last week in the capital, Khartoum, a few days after his 16th birthday. At any time for nearly four years as many as 14,000 Sudanese militiamen have been fighting in Yemen in tandem with the local militia aligned with the Saudis, according to several Sudanese fighters who have returned and Sudanese lawmakers who are attempting to track it. Hundreds, at least, have died there. To keep a safe distance from the battle lines, their Saudi or Emirati overseers commanded the Sudanese fighters almost exclusively by remote control, directing them to attack or retreat through radio headsets and GPS systems provided to the Sudanese officers in charge of each unit, the fighters all said. “The Saudis told us what to do through the telephones and devices,” said Mohamed Suleiman al-Fadil, a 28-year-old member of the Bani Hussein tribe who returned from Yemen at the end of last year. “They never fought with us.” “The Saudis would give us a phone call and then pull back,” agreed Ahmed, 25, a member of the Awlad Zeid tribe who fought near Hudaydah this year and who did not want his full name published for fear of government retaliation. “They treat the Sudanese like their firewood.” “People are desperate. They are fighting in Yemen because they know that in Sudan they don’t have a future,” said Hafiz Ismail Mohamed, a former banker, economic consultant and critic of the government. “We are exporting soldiers to fight like they are a commodity we are exchanging for foreign currency.” “Without us, the Houthis would take all of Saudi Arabia, including Mecca,” Mr. Fadil said. All said they fought only for money. They were paid in Saudi riyals, the equivalent of about $480 a month for a 14-year-old novice to about $530 a month for an experienced Janjaweed officer. They received an additional $185 to $285 for any month they saw combat — every month for some. Their payments were deposited directly into the Faisal Islamic Bank of Sudan, partly owned by Saudis. At the end of a six-month rotation, each fighter also received a one-time payment of at least 700,000 Sudanese pounds — roughly $10,000 at the current official exchange rate. By comparison, a Sudanese doctor working overtime at multiple jobs might earn the equivalent of $500 a month, said Mr. Mohamed, the economic consultant. Abdul Rahman’s wife and three children received the equivalent of $35,000 in Sudanese pounds, although banking restrictions have hindered access to it
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China in your land @Reuters @Breakingviews @edwardcropley Africa |
China and the United States’ global Cold War has an increasingly important theatre: Africa. On different metrics Uncle Sam and the Middle Kingdom can claim to be the continent’s biggest player. In 2019, China will pull ahead. The United States has $57 billion of FDI stock, United Nations data shows, narrowly ahead of Britain and France. But China had cumulative investment worth $40 billion in 2016, against just $16 billion in 2011. In trade terms it has been Africa’s main partner for a decade. Its sum of exports and imports in 2017 was $170 billion, over three times America’s. Washington has noticed. In mid-2018, as Donald Trump launched his trade war, the U.S. president recognised China’s threat by doubling development finance to $60 billion – a far cry from Trump’s previous dismissal of unspecified African countries as “shitholes”. But it’s not certain to work. After heavy Chinese borrowing by Angola, Ethiopia and Zambia, African governments are wary of mega-projects financed by “debt-trap diplomacy”, be they American- or Chinese-enabled. China has already offered to match the U.S. commitment. It may find cash easier to deploy given Washington’s checks and balances and corruption concerns. Chinese and U.S. military bases sitting next to each in Djibouti are one potential flashpoint, but in 2019 the hostilities will mainly play out in two sectors. One is infrastructure, where China will try to squeeze America out of local deals. A live example is U.S. backing for construction giant Bechtel’s bid to build a $3 billion expressway across Kenya – which, appropriately enough, shadows a shiny new Chinese railway. After two years of slow progress, Kenyan media are questioning the scheme’s necessity. Beijing could trump the deal, possibly via offering equity rather than just cheap debt. The second sphere is mining. The People’s Republic covets minerals such as copper and cobalt, central to its ambitions to control next-generation technologies like electric vehicles. Listed firms Glencore and First Quantum have hit political problems in Congo and Zambia respectively. Chinese state-backed mining firms could try to muscle in. There’s even scope to challenge the dollar’s commercial dominance. Only 0.1 percent of Africa’s external payments are in renminbi, according to SWIFT. But China-Africa interbank relationships leapt from 20 in 2008 to 186 in 2017 and many central banks hold renminbi reserves, making Chinese currency transactions easier. By the end of 2019, Beijing’s pre-eminence may no longer be in question.
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