20th June 2019
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Satchu's Rich Wrap-Up
 
 
Tuesday 26th of February 2019
 
Morning
Africa

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

http://www.rich.co.ke

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@UKLabour says it will back call for second Brexit referendum @Reuters
Africa


“If Parliament rejects our plan, then Labour will deliver on the
promise we made at our annual conference and support a public vote,”
Labour’s Brexit spokesman Keir Starmer said.
Parliament is not expected to back Labour’s Brexit plan and it remains
unclear whether there is a majority in parliament in favour of holding
a second referendum.
“We’re in a very volatile situation. We are in the middle of a
political crisis and a constitutional crisis... It’s difficult to say
at any one point what feelings are going to be two or three weeks down
the line,” a Labour spokesman told reporters.
“There’s no turning back for Jeremy now,” Kyle said.

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THE FISHY MYSTERY OF LAKE MALAWI @SmithsonianMag
Africa


1 first learned about cichlids when I was a boy, shopping to fill an
aquarium. I’d wanted a saltwater tank, because its inhabitants tend to
be so much more colorful, but my parents nixed that idea as too
demanding. I was getting ready to resign myself to boring guppies,
plastic plants and a catfish sucking algae on the glass when the man
at the aquarium shop showed me the cichlids. They came from a
freshwater lake, he said, but they were as colorful as the residents
of any coral reef. I paid a few dollars for a pair of electric yellow
Labidochromis caeruleus, and so began my fascination with an animal
that would have amazed Darwin if only he’d known about it.

Cichlids are found all over the world, mainly in Africa and Latin
America, but they’re especially abundant in Lake Malawi, where they’ve
diverged into at least 850 species. That’s more species of fish than
can be found in all of the freshwater bodies of Europe combined.

For instance, within a mixed population of mbuna, the females—even the
ones that are drab, with only a few brown or black markings—seek out
males with extremely specific color patterns. Females of Labeotropheus
trewavasae seek out blue males with red dorsal fins, rarely mixing
with males of Labeotropheus fuelleborni, which look similar except
their dorsal fins are also blue.

It’s not uncommon for an animal to have some degree of choosiness when
it selects a mate. Darwin called this phenomenon sexual selection, and
it’s familiar to anyone who has watched a nature documentary where
birds perform elaborate courtship dances. But the reasons behind
sexual selection are not always clear. Survival of the fittest should
guide species toward practical traits like strength or ability to find
food. How could an ornate train help a peacock exploit its niche?

Darwin believed some animals simply had a “taste for the beautiful,”
an attraction to purely aesthetic traits that confer no fitness or
advantage. The idea that female birds simply enjoy colorful feathers
and elaborate dances did not catch on—the Yale ornithologist Richard
Prum has said his colleagues treat it like a “crazy aunt in the
evolutionary attic.” Still, there’s no question that female peacocks
like fans of colorful feathers and female birds of paradise like
elaborate courtship dances.

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India Fighter Jets Destroy Terrorist Camp in Pakistan, ANI Says @bpolitics
Law & Politics


Indian fighter jets destroyed a major terrorist camp in Pakistan, the
ANI news agency said, as tensions between the nuclear-armed rivals
rose following an attack in Kashmir earlier this month.
Quoting unnamed sources in the Indian Air Force, ANI said a dozen
Mirage 2000 Indian fighter jets dropped 1000 kilogram bombs on terror
camps across the Line of Control, the de-facto border between the two
countries in disputed Kashmir.
"The last time the Indian Air Force crossed the line of control
intentionally and publicly to conduct air strikes was 1971," Narang
said, referring to the Indo-Pak war.

We're getting reports that this may be a mass-casualty event. This
seems to have been a surgical strike on a terrorist camp deep in
Pakistan. Those camps have reportedly been destroyed
@StratSentinelhttps://twitter.com/StratSentinel/status/1100231116496273411

Conclusions


This is a Hair Trigger situation

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30-APR-2018 :: So my Question remains, what security guarantees can Trump provide to Kim? that convince him to denuclearise
Law & Politics


The Question remains as follows. Kim Jong-Un can hardly forget what
happened to Saddam Hussein and Muammar Gaddafi, both of whom met their
Ends after being de-fanged. So my Question remains, what security
guarantees can Trump provide to Kim? that convince him to
denuclearise. Offering up bullet-proof security guarantees is the
equivalent of threading the needle.

Bodyguards run alongside the car of North Korean leader Kim Jong
Un as he leaves Dong Dang railway station after arriving in Vietnam 📷
Nhac Nguyen

https://twitter.com/AFP/status/1100258417204178945

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30-APR-2018 :: "A new history starts now. An age of peace, from the starting point of history."
Law & Politics


The Events that took place on Friday at the truce village of Panmunjom
and during the Inter-Korean Summit were breathtaking for the Hollywood
Optics. The Opening Shot of Kim Jong Un surrounded by a Phalanx of
North Korean Officials [later replayed as Chairman Kim sat in his
Presidential Vehicle surrounded by his Ninja bodyguards] was almost as
good as the opening Sequence in PT Anderson's Boogie Nights [Steadicam
operator Andy Shuttleworth]. This was Cinema of the highest level
which is no surprise when You consider that Kim Jong-Il the Father was
obsessed with Cinema and amassed arguably the world’s largest personal
film collection: over 20,000 bootlegged 35mm screening copies. Kim
Jong-Il also had a penchant for Hennessy Paradis cognac and for two
years in the mid-1990s, he was the world's largest buyer of Hennessy
Paradis cognac, importing up to $800,000 of the stuff a year.  Kim
Jong-Il began his career as the head of the state’s propaganda and
agitation department and its clear that Kim Jong-Un's sister Kim Yo
Jong who holds the same role and evidently handles all the optics, is
a chip off the old Block. Friday was tip-top Geopolitical Optics. Mike
Pompeo, the newly minted US Secretary of State [His predecessor was
fired via Twitter] had visited Pyongyang the previous week and
pronounced; that the young North Korean leader was "a smart guy who's
doing his homework"

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12-FEB-2018 :: he is the buffer state between China and more than 30,000 US soldiers parked on their doorstep in South Korea.
Law & Politics


“Water is fluid, soft, and yielding. But water will wear away rock,
which is rigid and cannot yield. As a rule, whatever is fluid, soft,
and yielding will overcome whatever is rigid and hard. This is another
paradox: What is soft is strong,” Lao Tzu

South Korea is set to be peeled off and going by his puppy dog smiles
President Moonriver will be in PyongYang before you can pronounce Kim
Yo Jong correctly. Russia always had their back. China was never
interested in bringing him to heel. After all, he is the buffer state
between China and more than 30,000 US soldiers parked on their
doorstep in South Korea.

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18 SEP 17 :: "A screaming comes across the sky" North Korea. @TheStarKenya
Law & Politics


Gravity’s Rainbow is a 1973 novel by Thomas Pynchon which is about the
design, production and dispatch of V-2 rockets by the German military.
In particular, it features the quest undertaken by several characters
to uncover the secret of a mysterious device named the “Schwarzgerät”
(black device), slated to be installed in a rocket with the serial
number “00000”. As the world watches PyongYang, I cannot help
wondering if Kim Jong-Un has read Pynchon which speaks of “A screaming
comes across the sky” and North Korea.

“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.’’

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29-11-2010 FAR away in distant lands lies the Hermit Kingdom They all have had tiny little hands like the Elves in the Elves and the Shoemaker.
Law & Politics


They all have had tiny little hands like the Elves in the Elves and
the Shoemaker. And this country has nuclear weapons and on its border
with its neighbour South Korea sit 25,000 American soldiers.

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World Court Says U.K. Should Return Control of Indian Ocean Islands @markets
Law & Politics


The International Court of Justice said the U.K. should hand back to
Mauritius control of an Indian Ocean archipelago where a key U.S.
naval base is located.
“The U.K.’s continued administration of the Chagos archipelago “is an
unlawful act of a continuing character,” court President Abdulqawi
Ahmed Yusuf said in The Hague.
“Accordingly the U.K. is under an obligation to bring an end to its
administration of the Chagos archipelago as rapidly as possible,”
Yusuf said.
The United Nations in 2017 sought an advisory opinion from the ICJ,
its principal judicial organ, on the legal status of the archipelago.
Chagos is part of the British Indian Ocean Territory, which has been
administered by the U.K. since 1965, when it paid the then
self-governing colony of Mauritius 3 million pounds ($3.9 million) for
control of the islands.
Between 1967 and 1973, hundreds of inhabitants were removed to make
way for the Diego Garcia U.S. military base, which has been used to
launch bomber jets for wars in Iraq and Afghanistan.

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.1355
Dollar Index 96.40
Japan Yen 110.822
Swiss Franc 1.0003
Pound 1.3137
Aussie 0.7158
India Rupee 71.015
South Korea Won 1118.63
Brazil Real 3.7525
Egypt Pound 17.546
South Africa Rand 13.8542

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25-FEB-2019 :: Currency Puzzles
World Currencies


The Currency Markets remain the most liquid market of all in the World
and something equivalent to the Challenger Deep in the Mariana Trench
which is the deepest known point in the Earth's oceans. The Foreign
Exchange market trades in excess of $5.1 trillion a day. Within the 24
hour cycle, the market exhibits Liquidity peaks and troughs and we
have witnessed spectacular and exponential moves typically in the
early hours when most of the World is in the Land of Nod and liquidity
is at its lowest. You might recall a night when Sterling tanked ten
big figures, a night when the Rand flash-crashed and even this year we
saw the Aussie get creamed. Wizards and Gremlins stalk the night. Once
upon a time, the FX market was a ''voice-over'' market, today its
entirely screen-based and algorithimic and High Frequency Trading is a
big component and both are heavily reliant on complex mathematical
formulas and high-speed computer programs. HFT strategies utilize
computers that make elaborate decisions to initiate orders based on
information that is received electronically, before human traders are
capable of processing the information they observe. Algorithmic
trading and HFT have resulted in a dramatic change of the market
microstructure, particularly in the way liquidity is provided. The
attraction of the FX market is that it allows all Participants to
deploy outsize leverage. Basically, You can deploy up to 200x
Leverage. There is no other market that allows this level of leverage.
The US Dollar [notwithstanding endless chatter over its imminent
demise] remains the dominant currency representing around 60% of the
market. Of course The [Petro] Dollar underpins US Power and this is an
observable fact. The US has frequently deployed coercive financial
warfare strategies and it works a Treat and in fact President Trump
has lobbed the odd Tweet to good effect but more than that You can see
how coercive financial warfare has ground the likes of Venezuela and
Iran into the dust. Thats the background.

The Market View pivoted big time on the Dollar at the end of last year
and priced out further interest rate increases and has now priced in a
rate cut. Typically, a reduction in interest rate expectations would
soften a currency. However, the market has now absorbed the view that
it will be a synchronised global slowdown and that the US will likely
outperform. I stand by my view that the Dollar will appreciate about
10% in 2019.

The currency markets in Africa, however, have been idiosyncratic and
endlessly fascinating. The Ghana Cedi slumped to an all time low last
week, has weakened 8.6% Year to Date and is the worse performing
currency in the World.

Tito Mboweni the South African Finance Minister delivered a currency
Yehudi Menuhin level master-class last week. He delivered his Budget
Speech last week and began by presenting the aloe ferox which he says
is resilient, sturdy and drought resistant. He then started with all
the bad news, the proposed and expensive rescue of Eskom and this sent
the Rand into an almighty Tail-Spin and an orgy of Rand selling. At
one point the Rand was -2.00% on the day. Then he rowed back and he
had all the Rand Shorts where he wanted them. The Rand ended the day
marginally positive. Mr. Mboweni's Budget Speech and the finesse with
which he skewed his delivery [negative first and then gradually more
positive] set the Trap. He exhibited a feel for the markets which was
seriously noteworthy.

Zimbabwe finally overhauled its dysfunctional,''whack'' and even
Voodoo FX regime.  Zimbabwe’s government dropped its insistence that a
quasi-currency known as bond notes are at par with the dollar as it
overhauled foreign-exchange trading and effectively devalued the
securities. While the government has previously insisted that bond
notes and RTGS dollars are worth the same as U.S. dollars, the units
currently trade at between 3.66 and 3.8 to the dollar respectively on
the black market [Bloomberg]

“The introduction of a Zim dollar will be just in name, but the RTGS$
is essentially the Zim dollar.”

Tendai Biti is predicting a 6-8 range whilst the Government is looking
for it to appreciate to 2.5 which is best characterised as
''Hail-Mary'' economics. This is the right move but I would definitely
be short at 2.5, if it ever gets there which is entirely unlikely.

The Sudanese Pound has been in FreeFall and its consequences are
self-evident with Omar Al-Bashir imposing a State of Emergency.
Nigeria maintains a two tier FX Regime a little like King Canute. Its
entirely unlikely that Nigeria can accelerate out of the GDP slow lane
with the current FX regime.

The Stand-Outs in Africa from a currency perspective are Egypt and
Kenya. Egypt's Al-Sisi devalued big and early and the consequences of
that bold economic pivot is there for all to see, Egypt GDP is likely
to have a 5 handle in 2019 and the economy overtook South Africa. And
in Kenya, The Shilling has appreciated by +1.6% in 2019 and is testing
the key 100.00 level.

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China Tightens Grip on East African Port @WSJ
Africa


A Chinese port operator is tightening its grip on a strategic
container terminal in East Africa, resetting operations and
infrastructure at a site crucial to Beijing’s push to control seagoing
trade lanes between Asia and Europe.
China Merchants Port Holdings is asserting control of operations at
Djibouti’s Doraleh Container Terminal, maritime officials say, while
state-owned China Civil Engineering Construction Corp. and China State
Construction Engineering Corp. have built a multipurpose cargo
facility next door to handle cars, livestock, steel and other goods.
“At the multipurpose port it’s the same cranes, the same silos for
grain, fertilizers and other commodities, it’s very Chinese,” said
Apolinario Bautista, executive officer of a dry-bulk ship that docked
in Djibouti in late January.
The Djiboutian government has repeatedly said it alone controls the
Doraleh terminal and has told the U.S. it has no plans to cede control
of its maritime assets to Chinese state port operators. But some U.S.
officials have expressed concern that it could be a matter of time
before that happens.
The changes under way in Djibouti, a small nation strategically
positioned on the Horn of Africa at a crossroads of Asia-Europe trade,
come as legal challenges to China’s advance at the port move forward.
DP World, one of the world’s top port operators, last year sued rival
China Merchants over the cancellation of a long-term concession
contract that DP World had to exclusively run a container terminal in
Djibouti. Hong Kong’s High Court is scheduled to hear the case in
mid-October.
Beijing sees Djibouti as part of its multitrillion-dollar Belt and
Road Initiative that encompasses seaports in a range of nations,
including Pakistan, Sri Lanka, Greece and Belgium.
These gateways afford Chinese vessels priority handling and lower
docking fees, giving China’s carriers and their shipping customers an
advantage in the contest to deliver as much cargo as possible in the
shortest time to European markets.
Djibouti stands at the entrance to the Red Sea, which about 12% of all
seaborne trade traverses on scores of ships using the Suez Canal.
There are no other ports along the East Africa coastline with the
infrastructure to handle, store and trade cargo between ships.
It also is a gateway for East African markets with the potential for
greater volume of imports and exports.
The Horn of Africa location makes the country and the port
strategically important for nations looking to exert influence across
the region.
The U.S. has a military installation near the port that it uses to
monitor sea traffic tied to the Middle East; the facility is also key
to its efforts to curtail al-Shabaab, an East African terrorist group
aligned with al Qaeda.
China also has a military base in Djibouti, its first in a foreign
country. China is Djibouti’s top financier—holding about half of the
country’s public debt, according to bankers’ calculations based on
International Monetary Fund numbers.
Dubai-based DP World in 2004 was granted a 25-year concession to run
the Doraleh Container Terminal. But that agreement was tossed out when
Djibouti’s government nationalized the container terminal early last
year and brought in Chinese businesses in return for investment and
state financing.
In conjunction with the concession, DP World had owned 33% of the port
venture, with the government holding the rest. After nationalization,
the government offered a quarter of its stake to China Merchants. DP
World has said it is seeking compensation for its holding.
State-run China Merchants is active across the world in port
construction, container logistics and terminal management. The company
and Cosco Shipping Ports are important tools in Beijing’s Belt and
Road Initiative.
An arbitration court in London ruled in August that DP World is the
legal owner of the terminal concession but can’t take punitive action,
so the port operator took the case to Hong Kong’s High Court.
“We believe the Hong Kong Port has jurisdiction over China Merchants,”
a senior DP World official said. “We were illegally removed from
operations in Djibouti and we are asking either a return to the
previous status or to be paid damages.”
The court is scheduled to discuss the DP World lawsuit on Oct. 15.
Lawyers said the court could grant DP World damages, but it is
unlikely that the concession would be returned. The lawyers said China
Merchants has been slow to respond to the case since it was first
filed to the Hong Kong court in August.
Marine Gen. Thomas Waldhauser, the top U.S. military officer for
Africa, told a congressional hearing last year that the U.S. military
could face significant consequences if China took the port in
Djibouti.
“We are baffled by the U.S. inaction,” the DP World official said.
“All supplies for their base come through the port, and if it falls in
Chinese hands, there could be significant problems.”
“It’s like a baby sister to mainland China ports that expand to bring
in more ships,” said Panagiotis Hatzikostas, a chief mechanic on a
container vessel that unloaded cargo destined for neighboring Ethiopia
this month.
“But if you want to send cargo to East Africa, you call at Djibouti.
It became a gateway from the start, with no real competition. That
gives it a lot of potential.”

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06-AUG-2018 :: The Indian Ocean Economy and a Port Race
Africa


Today from Massawa, Eritrea [admittedly on the Red Sea] to Djibouti,
from Berbera to Mogadishu, from Lamu to Mombasa to Tanga to Bagamoyo
to Dar Es Salaam, through Beira and Maputo all the way to Durban and
all points in between we are witnessing a Port race of sorts as
everyone seeks to get a piece of the Indian Ocean Port action. China
[The BRI initiative], the Gulf Countries [who now appear to see the
Horn of Africa as their hinter- land], Japan and India [to a lesser
degree] are all jostling for optimal ‘’geo-economic’’ positioning.

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02-JUL-2018 :: Ethiopia Rising. @TheStarKenya
Africa


On the same day he said, “we are in debt, we have to pay back but we
can’t. And secondarily, we aren’t able to finish projects we have
started” and announced his economic Pivot.
Of course, the downside risk of all this infrastructure is plain to
see and Sri Lanka and the tale of its Hambantota Port is now a
cautionary Tale.
FX reserves were at less than a month’s worth of imports and something
needed to be done. Expectations are high.
The Prime Minister needs to execute real quick on the economic front
but if he levels the playing Field,
a whole Troop of folks will be looking to pile in. That Troop will
include the Ethiopian Diaspora,
Foreign Investors and I am sure our very own Safaricom who must have
already presented the Prime minister with a copy of the MIT research
on M-Pesa which confirmed access to mobile-money services increased
daily per capita consumption levels of two percent of Kenyan
households, lifting them out of extreme poverty.

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Central bank has been selling dollars to banks at a rate of one U.S. dollar to 2.5 RTGS, a level which bankers have criticized as too low but which @MthuliNcube said was appropriate for now, calling it an "initial trigger point". @ReutersAfrica
Africa


He declined to disclose where Zimbabwe got credit lines to launch the
RTGS currency, or the size of those credit lines.
“Actually we can’t tell you how deep our pockets are or how shallow
they are. If markets believe you have too much money they can bet by
saying we are going to make money out of these guys,” he said.
But the new RTGS currency has been dogged by criticism that the level
of 2.5 RTGS per U.S. dollar is too strong for the Zimbabwean unit.
A dealer at a bank which operates on Zimbabwe’s interbank market said
launching the RTGS at 3 to the dollar or higher would have been better
to encourage U.S. dollar sellers.
“There are a lot of (dollar) buyers ... but no sellers because the
rate is not high enough,” the dealer said. “The interbank system will
ultimately become redundant if the Reserve Bank doesn’t allow the
currency to freely trade.”
On Monday, one U.S. dollar was being sold on the black market for four
electronic dollars — those locked in individuals’ accounts for months
due to the chronic cash shortages — compared to 4.2 on Friday,
currency traders said.
“The big players are holding onto their money, that is what is holding
rates at the moment,” one currency trader at Harare’s Eastgate
shopping center said.

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25-FEB-2019 :: This is the right move but I would definitely be short at 2.5, if it ever gets there which is entirely unlikely.
Africa


Zimbabwe finally overhauled its dysfunctional,''whack'' and even
Voodoo FX regime.  Zimbabwe’s government dropped its insistence that a
quasi-currency known as bond notes are at par with the dollar as it
overhauled foreign-exchange trading and effectively devalued the
securities. While the government has previously insisted that bond
notes and RTGS dollars are worth the same as U.S. dollars, the units
currently trade at between 3.66 and 3.8 to the dollar respectively on
the black market [Bloomberg]
“The introduction of a Zim dollar will be just in name, but the RTGS$
is essentially the Zim dollar.”
Tendai Biti is predicting a 6-8 range whilst the Government is looking
for it to appreciate to 2.5 which is best characterised as
''Hail-Mary'' economics. This is the right move but I would definitely
be short at 2.5, if it ever gets there which is entirely unlikely.

read more



25-FEB-2019 :: .@tito_mboweni the South African Finance Minister delivered a currency Yehudi Menuhin level master-class last week
Africa


Tito Mboweni the South African Finance Minister delivered a currency
Yehudi Menuhin level master-class last week. He delivered his Budget
Speech last week and began by presenting the aloe ferox which he says
is resilient, sturdy and drought resistant. He then started with all
the bad news, the proposed and expensive rescue of Eskom and this sent
the Rand into an almighty Tail-Spin and an orgy of Rand selling. At
one point the Rand was -2.00% on the day. Then he rowed back and he
had all the Rand Shorts where he wanted them. The Rand ended the day
marginally positive. Mr. Mboweni's Budget Speech and the finesse with
which he skewed his delivery [negative first and then gradually more
positive] set the Trap. He exhibited a feel for the markets which was
seriously noteworthy.

read more


Dollar versus Rand Chart INO 13.857
Africa


25-FEB-2019 ::  Egypt's Al-Sisi devalued big and early and the
consequences of that bold economic pivot is there for all to see,
Egypt GDP is likely to have a 5 handle in 2019 and the economy
overtook South Africa

http://bit.ly/2SlYw2d

Egypt Pound versus The Dollar 3 Month Chart INO 17.545

http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Egypt EGX30 Bloomberg

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

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18-FEB-2019 :: #NigeriaDecides
Africa


Last week President Cyril Ramaphosa closed a speech quoting Ben Okri
We dream of a new politics
That will renew the world
Under their weary suspicious gaze. There’s always a new way,
A better way that’s not been tried before.
This week Nigerians [84m people are registered to vote] were intending
to go to the Polls in the country’s sixth general election since
military rule ended in 1999. In fact, The Nigerian vote is ''the
largest democratic event in African history'' [@TheEconomist]. The
Elections were postponed at 2.40am on election day. The Nigerian
electoral commission pronounced that the general elections were
postponed by a week. Charlie Robertson tweeted
“#Nigeriadecides but not yet. Postponement is typical. 2011 elections
were pushed back twice, the 2nd time when the parliamentary vote had
already begun ... In 2015 they were delayed by 6 weeks (roughly a week
ahead of time)”
Like Ben Okri's preferred literary genre of “magic realism” Nigerian
Politics has spun some surreal narratives of its own. Who can forget
the legendary Pleasure- Seeker General Sani Abacha, President Umaru
Yar'Adua who allegedly was kept alive [or not] for a number of days in
an ambulance in the State House grounds, even the austere President
Buhari went missing for a few months.
“The significance of the Nigerian elections for Africa is tremendous,”
said Professor Nic Cheeseman [Bloomberg]
“A flawed election and the political instability that this could
generate would not only undermine confidence in the feasibility of
democracy in one of Africa’s most important states, but also slow
economic growth in West Africa and the wider region.”
‘In a system where candidates jump between political parties as if
they were changing buses, personality & money trump policy discussion’
tweeted David Pilling
It’s a Nollywood Level drama but permit me to give you some context.
GDP growth has lagged Population growth, GDP grew by 1.93 percent last
year, up from 0.82 percent in 2017 and grew 2.4 percent in the fourth
quarter. Nigeria was the second biggest economy in Africa in 2018,
using the market exchange rate of NGN362/$ or the biggest economy
using the fixed rate [@RencapMan]. Unemployment has risen from 8.2% to
23.1% under President Buhari's watch which would be a plain untenable
position for any incumbent Politician seeking re-election in most
parts of the World. The President is a victim of low oil prices which
provide 70% of government revenue. ''Baba Go Slow'' has to be
contrasted with President Al-Sisi's Egypt. Al-Sisi [and I for one
disagree with him on many things particularly with his
''incarceration'' strategy] made bold moves when it came to the
Economy. Egypt devalued its currency early, took a brutal punch in the
solar plexus but is now reaping the dividend from its bolder economic
policy, Nigeria is still muddling along with its ''Voodoo'' level FX
economics. Since President Buhari came to power in May 2015, Nigeria's
stock market has fallen more than any other in the world, dropping 50%
in dollar terms. There is a Message in that performance. The Stock
Market has perked up over the last few sessions, however.
Atiku Abubakar, the main challenger to Mr Buhari, is also in his 70s.
It is an extraordinary Outcome that as the Continent becomes younger,
Our Leaders in many cases are getting older. This Elastic Band [the
difference between the average of leadership and the average of its
Citizens] is now stretched to breaking point and will snap.
Abubakar has struck a Bill Clinton circa 1992 when he kept chanting
"It's the economy, stupid"
Atiku Abubakar's mantra is “Let’s Get Nigerians Working Again”. Citing
Margaret Thatcher, he says he wants to privatise state-owned firms,
which frankly is the optimal economic policy if it’s done fairly and
increases ownership in the Nigerian economy. I saw The Thatcher
Revolution up close and personal and it worked. From Ethiopia to
Nigeria to many other parts of Africa, Governments are running out of
headroom and they absolutely need to embrace Thatcherism. It is a
Silver Bullet.
We have seen a number of elections in Africa. Overturning Incumbents
is a thankless task but not too long ago we saw a number of Upsets in
West Africa. However, recently we witnessed a Nollywood level Plot
Twist in the DR Congo and its clear the Will of the People was not
expressed in the result.
Mr. Mbeki said “They are aware that the rest of the world is busy with
bigger issues, In Africa, things are most likely to get worse before
they get better.”

read more








"This is technically a one-and-half year bond because it is a re-opening. If you compare that to a one-year instrument, it is a very attractive one for anyone going for short-term instrument," said Mr @g_odundo @dailynation
Kenyan Economy


Last week’s 364-day Treasury bill that closed last week accepted bids
at weighted average of 9.49 percent. That of two-year bond was 10.7
percent. Both returns are potentially below that of M-Akiba when
eventually subjected to tax.

read more


M-Akiba bond via @NSE_PLC @KeTreasury @M_AKIBA2017 @RichEconomics
Kenyan Economy


✅Amount: KES 250m
✅Tenor: 3-year (1.5 years to maturity)
✅Coupon: 10% p.a. (half-yearly)
✅Tax exempt
✅Redemption 07/09/2020
✅Min investment: KES 3,000
✅Mode: Mobile money & @IPSL_Kenya

read more



Rate capping cuts asking price of small lenders @BD_Africa
Kenyan Economy


“Valuations have dropped off a cliff post the interest rate cap
legislation in 2016, in line with the plunging return on equity
multiples,” says SIB in latest analysis.
“Future acquisitions may occur at significant discounts to book unless
value can be demonstrated.”
Some of the recent transactions have been that of Giro Commercial
Bank, which was absorbed by I&M Bank  in 2016 at price to book (PB)
ratio of 2.2, while Habib Bank Kenya was taken in by Diamond Bank
Kenya  2017 at 0.85x PB.
SIB says whereas consolidation is almost inevitable in the sector,
many smaller banks lack the relevant efficiencies for long-term
profitability. This has made it difficult for bigger players to turn
them around upon acquisition.
“We remain suspicious of some transactions that have occurred in this
space as purchasers seem to struggle immensely to turn around the
operations, although market conditions have worsened for the small
lenders after the interest rate cap,” said SIB.
Small banks, categorised as tier III lenders, have also borne the
biggest brunt of non-performing loans (NPLs), further eroding their
value.
SIB data shows that as at end of 2017, the average NPL ratio for tier
III lenders was 18 per cent, being 5.7 per cent higher than industry’s
average.

read more



 
 
N.S.E Today


The Indo-Pak situation is a hair-trigger one.
"The last time the Indian Air Force crossed the line of control
intentionally and publicly to conduct air strikes was 1971," Narang
said, referring to the Indo-Pak war.
The US President is meeting with Kim Jong-Un in Vietnam tomorrow.
Chinese Stocks have entered a bull market and is +20% since the start of 2019
This Price action is a Signal that the markets are expecting a
positive solution to the Tariff War.
 The move up in Chinese stocks on Monday was well clear of 3 standard
deviations. We've only seen that about 10 times in the last decade.
[@DavidInglesTV]
Sterling has been flying higher on the calculation that UK has stared
down the barrel of a Hard Brexit and is set to capitulate and delay
the process.
Jeremy Corbyn is talking about a People's Referendum.
Trump who is a Financial and sanction warfare specialist it Oil prices
with a Tweet sending Oil Prices down about 4%
The Ethiopian Prime Minster pronounced ‘My model is capitalism’ to the
Financial Times.
Ethiopia’s prime minister plans telecoms privatisation  "To promote
competition, Ethiopia is also likely to auction off spectrum to two
additional telecoms companies, with Vodacom, Orange, MTN and others
expected to bid." [FT via Addis Standard]
The Central Bank of Zimbabwe has been selling small lots of Dollars at
2.5:1 versus the Cash Dollar. This is not a sustainable price.
Markets are awaiting the Nigeria Election result.
The Kenya Shilling has appreciated by +1.6% in 2019 and is testing the
100.00 level
Kenya has re-opened te M-Akiba bond via ✅Amount: KES 250m ✅Tenor:
3-year (1.5 years to maturity) ✅Coupon: 10% p.a. (half-yearly) ✅Tax
exempt  ✅Redemption 07/09/2020 ✅Min investment: KES 3,000
The Nairobi All Share upshifted 0.20 points to close at 155.23.
The Nairobi NSE20 Index eased -9.56 points.
Equity Turnover was lackadaisical at 203.076m



N.S.E Equities - Agricultural


Sasini Tea and Coffee was high-ticked 5.76% to close at 19.25 with
just 200 shares traded.



N.S.E Equities - Commercial & Services


Safaricom rallied +0.38% to close at 26.60 and traded 3.376m shares.
Safaricom is +19.819% in 2019 outpacing the bouyant NSE by a Factor of
2. Reading the Tea Leaves and an interview that Prime Minister gave
the Financial Times:
''My model is capitalism': #Ethiopia's prime minister plans telecoms
privatisation "To promote competition, Ethiopia is also likely to
auction off spectrum to two additional telecoms companies, with
#Vodacom, #Orange, #MTN and others expected to bid''
One could speculate that Vodacom goes for spectrum and ports M-Pesa
with it. Just a thought.



N.S.E Equities - Finance & Investment


Equity Bank firmed +0.242% to close at 41.30 and traded 1.318m shares.
Equity Bank is +18.507% in 2019.
The best performing stock at the Securities Exchange in 2019 is NIC
Bank. NIC Bank corrected -3.065% to close at 37.95 on light trading
and remains +36.51% in 2019.



N.S.E Equities - Industrial & Allied


KenGen
has bagged a Sh7.6 billion contract to drill geothermal wells
in Ethiopia in a joint bid with Chinese company Shandong Kerui Group.
[KenGen is supplying about 30 percent of the component of phase II,
which translates to about $6.2 million (Sh620 million)]
“We are delighted to announce that our diversification strategy is
finally paying dividend. This is good news for KenGen, our
shareholders and indeed for Kenya as a country,” Rebecca Miano said.
I said this on the occasion of the First Half Earnings Release:
Big Turn Around in the Cash and cash equivalents position +1,150%
PE Ratio is 5.4 which is at least a 50% discount to Fair Value
Rebecca Miano is displaying a very safe pair of hands and that too is
deserving of a further premium.
I think the undervaluation is plain egregious.
KenGen rallied +2.707% to close at 6.45 and traded 132,600 shares. My
conservative Estimate of Fair Value is 9.72.


--



by Aly Khan Satchu (www.rich.co.ke)
 
 
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February 2019
 
 
 
 
 
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