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Satchu's Rich Wrap-Up
 
 
Friday 24th of May 2019
 
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Macro Thoughts

This is a 1994 Tesobono 1998 Russia Principal notes moment for EM and
the Frontier cc @afalli @hervegogo

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Desire is like that, once it takes over you, there is no looking back. as once an arrow leave the bow-it is bound to hit the Target! @kamlesm
Africa


thus one shud always have some target in life, then marching ahead
with concentration without loosing control over mind-(desire).
Chausath Yogini

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"I don't want realism. I want magic! Yes, yes, magic! I try to give that to people." - Tennessee Williams, A Streetcar Named Desire
Africa


“I don't want realism. I want magic! Yes, yes, magic! I try to give
that to people. I misrepresent things to them. I don't tell the truth,
I tell what ought to be the truth. And it that's sinful, then let me
be damned for it!” ― Tennessee Williams, A Streetcar Named Desire

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Babur is said to have replied thus: "I am the most valuable thing that Humayun possesses; than me he has no better thing; I shall make myself a sacrifice for him. May God the Creator accept it."
Africa


He walked three times around Humayun’s bed, praying: “O God! If a life
may be exchanged for a life, I who am Babur, I give my life and my
being for a Humayun.” A few minutes later, he cried: “We have borne it
away, we have borne it away.”

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In a sign of the growing friction with Tehran, the Pentagon is asking the White House to send several thousand more troops and additional forces to the Middle East to boost U.S. defenses against Iranian threats @latimes
Law & Politics


The Pentagon has asked the White House to send several thousand more
troops, Patriot anti-missile batteries and warplanes to the Middle
East to boost U.S. defenses against Iranian threats, senior U.S.
officials said Thursday, in a sign of the growing friction with
Tehran.
If approved, the reinforcements would represent another course
correction by President Trump, who has given mixed signals to Iran,
most recently appealing to Tehran’s supreme leader to open direct
negotiations with him only days after he threatened punishing
retaliation if Iran attacked U.S. targets.
The proposed escalation includes an Air Force fighter squadron,
several additional warships and special reconnaissance aircraft to
help keep tabs on Iranian forces. The White House announced on May 6
that it was sending the Abraham Lincoln carrier strike force and four
B-52 bombers to the region, citing growing threats from Iran.

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@theresa_may is set to resign as the Conservative leader today, clearing the way for a new prime minister by the end of July @thetimes
Law & Politics


Theresa May is set to resign as the Conservative leader today,
clearing the way for a new prime minister by the end of July.
She is expected to bring her premiership of nearly three years to a
close after a meeting with Sir Graham Brady, chairman of the 1922
Committee of Tory backbenchers.
Mrs May will remain in No 10 during a leadership election lasting
about six weeks, and may even try to pass part of her Brexit deal. The
contest is likely to start on June 10 after the state visit by
President Trump.

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An incredibly amusing and erudite Foreign Minister @BorisJohnson Esq.
Law & Politics


द्वैत अद्वैत वेदांत निरंकारी निर्गुण शैव वैष्णव शाक्य तांत्रिक
अघोरी लालित्य माधुर्य लिंगायत वल्लाभाचार्य sampraday Samkhya & Mimamsa
all lived-co-inhabited in India having debate-dialogue-fights for
centuries-that's may be SYNCRETIC? मण्डन मिश्र debated with
आदिशंकर-शाश्त्रार्थ

https://twitter.com/kamlesm/status/1112363195706953730

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Julian Assange isn't a journalist, He has never been a journalist and will never be one. He published stolen material on behalf of the Kremlin to influence an election, that isn't journalism @OzKaterji
Law & Politics


Julian Assange isn't a journalist, he's a hacker on the run from rape
charges. He has never been a journalist and will never be one. He
published stolen material on behalf of the Kremlin to influence an
election, that isn't journalism.

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05-DEC-2016:: "We have a deviate, Tomahawk."
Africa


From feeding the hot-house conspiracy frenzy on line (‘’a constant
state of destabilised perception’’), timely and judicious doses of
Wikileaks leaks which drained Hillary’s bona fides and her turn-out
and motivated Trump’s, what we have witnessed is something remarkable
and noteworthy.

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09-JUL-2018 :: Tariff wars, who blinks first?
Law & Politics


«Die Amerikaner sitzen im Handelsdisput am längeren Hebel» Jörg Wuttke

http://bit.ly/2JVxheq

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.1192
Dollar Index 97.719
Japan Yen 109.67
Swiss Franc 1.0027
Pound 1.2694
Aussie 0.6905
India Rupee 69.6785
South Korea Won 1188.11
Brazil Real 4.0420
Egypt Pound 16.8645
South Africa Rand 14.4396

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The following commodities falling by > 3 standard deviation PTA, Rubber, Zinc, copper, Coking Coal in 3 std deviations. @sunchartist
Commodities


The margin calls on retail China oil futures meant they fell much more
than Brent or WTI
It will be an interesting few weeks ahead of us.

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Emerging and Frontier markets are shivering as they start to factor in the China - Emerging and Frontier Markets [Add Germany to that mix] Feedback loop Phenomenon
Emerging Markets


If China sneezes a whole lot of Countries are going to get a very
serious bout of influenza.
Interestingly, In our case, we are relatively immune to this
phenomenon because China is not a Big Taker [Avocado hopes aside] of
our Exports

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@MoodysInvSvc's downgrades Zambia's ratings to Caa2. This reflects increasing external and liquidity pressures, which raise the probability of default over the near term.
Africa


.@MoodysInvSvc's downgrades Zambia's ratings to Caa2. This reflects
increasing external and liquidity pressures, which, by impairing the
government's ability to service its debt over the medium term, raise
the probability of default over the near term.

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Vedanta-Konkola liquidation case adjourned to June 4-lawyer @ReutersAfrica
Africa


Vedanta is fighting the government’s attempt to seize KCM, which is
one of the biggest employers in Zambia, Africa’s second largest copper
producer.
The case involving KCM has stirred up concerns in the mining industry
about rising resource nationalism in Africa, where Tanzania and
Democratic Republic of Congo have been seeking a greater share of
mining revenues.
Friday’s court action followed an order earlier in the week to name a
Zambian law firm as a liquidator of KCM.
Lawyer for the liquidator Jonas Zimba told reporters on Friday the
case had been adjourned because Vedanta had not served documents.
Vedanta’s lawyer, Michael Mundashi, declined to comment.
The Zambian government has said it is not seizing private assets or
breaking any laws.
It has cited breaches of KCM’s licence to operate, the company’s
financial situation and said it was talking to three prospective
investors, although it has declined to name them.
Vedanta is the majority shareholder of KCM, while the Zambian state
arm ZCCM-IH holds around 20 percent.
Vedanta is seeking to ensure it is part of the KCM liquidation
proceedings, which until now had not involved the main shareholder.
In a statement late on Thursday, Vedanta said it would fully defend
its legal rights and has “serious concerns about the intentions of the
applicants and the procedures that were followed by ZCCM-IH as a
representative of the government to obtain a provisional liquidation
order”.
Vedanda listed a series of concerns including that the petition for
winding up KCM dealt with a “broad range of issues relating to KCM not
at all related to the solvency of the business”.
The company also said a number of expatriate employees and contractors
had been prevented from leaving the country.

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Zambia hikes rates & notes FX reserves down to $1.4bn from $1.57bn at end 2018. @gregorylbsmith
Africa


External debt service costs up 90% this year (& stay high in 2020-21)
& will continue to drain the buffer. Worry is this gov’t does not act
& tries to make it through to 2021 elections.

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@IMFNews Congo Meet as President Tshisekedi Seeks Reconciliation @markets @WTBClowes
Africa


The International Monetary Fund arrived for its first talks with the
Democratic Republic of Congo since 2015 as President Felix Tshisekedi
seeks to repair relations with the Washington-based institution and
fulfill a pledge to fight corruption.
Tshisekedi, who replaced Joseph Kabila after elections in December,
last month told delegates while on a visit to Washington that he’d
come “to untangle the dictatorial system which was in place.”
He told another meeting that Congo’s endemic corruption had
“discouraged serious investors.”
“We urge them to do a thorough audit at every level and not to be
lenient,” Gilbert Mundela, an adviser to Tshisekedi, said in interview
Thursday in the capital, Kinsasha.
Non-government organizations want the IMF to undertake “an independent
audit into the management of public companies,” according to a letter
addressed to Managing Director Christine Lagarde. They also called for
unpublished mining contracts to be made public.
The fund halted a $532 million three-year loan program for Congo seven
years ago after the government failed to publish details of a 2011
mining deal.
“Opacity in the management of public companies has only increased”
since the program ended, according to the letter.
The local organizations singled out state-owned mining company
Gecamines, saying its transactions with international investors “are
done in darkness.”
Advocacy groups such as the Atlanta-based Carter Center and
London-based Global Witness say Gecamines failed to account for
hundreds of millions of dollars paid to it by partners in copper and
cobalt deals. Gecamines rejects the claims.
The 32 organizations are also “worried” about royalties paid to
Israeli businessman Dan Gertler from two copper-cobalt mines
controlled by Glencore Plc. The contracts enabling Gertler to acquire
the royalty streams are unpublished, according to the letter.
Gertler has been under U.S. sanctions since December 2017 for
allegedly using his friendship with Kabila to strike “opaque and
corrupt mining and oil deals.” Gertler has denied any wrongdoing.
A multi billion-dollar minerals-for-infrastructure deal between Congo
and China in 2007 also requires scrutiny, according to the
organizations.
Chinese companies build roads and hospitals that are financed by
Chinese banks and reimbursed through copper exports from a mining
venture called Sicomines.
The value of loans disbursed and “their destination remains difficult
to trace,” according to the letter.
The IMF will assess economic developments and discuss policies with
officials of the mineral-rich central African nation under a so-called
Article IV consultation.
Tshisekedi hasn’t said if he intends to request financial assistance.

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Zimbabwe's Currency Fix Is Failing: It Has Too Few Dollars @markets
Africa


Zimbabwe’s attempt to close a wide gap between its official and
black-market exchange rates appears to be failing.
The southern African nation effectively devalued its currency, known
as RTGS$, in February when it ended a peg to the U.S. dollar and
allowed it to trade on an interbank market. That was to try to end
dire shortages of fuel, medicine and other imported goods.
It hasn’t worked out as planned: the black-market rate remains much
weaker than the official one amid a lack of dollar supplies from the
central bank and foreign investors, who mostly continue to shun the
country.
The central bank carried out a second big devaluation on Wednesday of
almost 25%, which has taken the official price of the RTGS$ to around
4.76 against the greenback.
The parallel rate is 33% weaker at 7.1, according to
marketwatch.co.zw, a website run by financial analysts.
The gap between Zimbabwe's official and parallel exchange rates isn't closing
Government officials announced last weekend that they’d obtained a
$500 million loan that would be used to boost liquidity in the
interbank market.
The relief from that was short-lived, with the parallel rate giving up
its initial gains.
The central bank said on May 20 that fuel importers will no longer be
able to buy dollars at a one-to-one exchange rate and that they’d have
to use the interbank market.

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25-FEB-2019 :: Currency Puzzles Zimbabwe finally overhauled its dysfunctional,"whack" and even Voodoo FX regime
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.

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Zim state propaganda is on overdrive mode as it tries to lay the ground for inevitable protesrs against what many see as ruinous governance, theft and endemic corruption. @PiersPigou
Africa


Zim state propaganda is on overdrive mode as it tries to lay the
ground for inevitable protesrs against what  many see as ruinous
governance, theft and endemic corruption.  Will the SADC region buy
into this deceit?

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South Africa Is Collateral Damage in U.S.-China Trade War @economics
Africa


South Africa may be almost 12,000 kilometers (7,456 miles) from
Beijing and even further away from Washington D.C., but the mass
producer of fruit and wine is still affected by the U.S.-China trade
war.
The country is “a small, open economy which grows by selling into the
global demand,” central bank Governor Lesetja Kganyago told reporters
in Pretoria on Thursday. That’s no different to other emerging
economies, which will also be held back, he said.
Flaring U.S.-China tensions over trade came to a head this month when
talks between the two superpowers fell apart. U.S. President Donald
Trump has since raised tariffs on Chinese goods and put restrictions
on telecommunications giant Huawei Technologies Co., with a solution
to the impasse seemingly far off.
That may hurt the probability of South Africa’s economy coming out of
the doldrums -- an eventuality that local companies such as Liberty
Holdings Ltd. are banking on to stimulate revenue growth.
The dispute between the U.S. and China will also worsen negative
sentiment around equity prices, which the insurer needs to boost the
value of its assets, Chief Executive Officer David Munro said in an
interview at Bloomberg’s offices in Johannesburg.
“We are battling a little bit of headwind with the U.S.-China trade
war,” the CEO said. “The extent to which equity markets rally
increases our assets under management and assets that we administer in
pension funds. The whole business is geared toward equity market
performance.”
Ultimately, “there are no winners,” Kganyago said as the South African
Reserve Bank held the key interest rate at 6.75% while cutting the
full-year economic growth forecast.
“Trade wars are silly, you want to control your market, but you still
want access to other markets so it’s illogical,” he said.

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@OldMutualSA Ltd. suspended Chief Executive Officer Peter Moyo over what its directors called a "material breakdown in trust and confidence"
Africa


The insurer’s board, chaired by former Finance Minister Trevor Manuel,
made the announcement hours before the 174-year-old company’s annual
meeting with shareholders in Johannesburg without disclosing anything
about alleged misbehavior. Chief Operating Officer Iain Williamson
will serve as acting CEO.
The “breakdown” concerned a conflict of interest related to Moyo’s
personal business, according to people who received information from
the insurer. Old Mutual declined to comment immediately on any
conflict of interest.
''The question is, what does this mean for Moyo’s future and if he
were to leave would that mean a change in strategy,” said Bradley
Preston, chief investment officer at Mergence Investment Managers,
which owns Old Mutual shares.
The 56-year-old Moyo has worked in the top tier of South Africa Plc
for more than a decade and has led the insurer for a year following
the breakup of the group and the sell down of a stake in Nedba

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Egypt Pound versus The Dollar 3 Month Chart INO 16.862
Africa


Egypt EGX30 Bloomberg  +5.68% 2019

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

Nigerian Stock Exchange Main-Board Index has wiped out almost all
of its 2019 losses -- thanks to the recent arrival of a new giant
listing, @MTNza.  The All Share Index is +0.15% YTD @BBoason
@RichEconomics

https://twitter.com/RichEconomics/status/1131787041623171072

Nigeria All Share Bloomberg +0.15% 2019

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

Ghana Stock Exchange Composite Index Bloomberg -1.6% 2019

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

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Report: Treasury hid deficit in false figures @dailynation
Kenyan Economy


The National Treasury is hiding Kenya’s true budget deficit by using
wrong figures, the Parliamentary Budget Office (PBO) has said.
The Budget Office, which is funded by the taxpayer to provide
professional services to Members of Parliament, says Treasury is
masking the true deficit by using a set of numbers that ignores
adjustments.
The office also accused Treasury of overshooting the budget ceiling
given by Parliament and approved through its own Budget Policy
Statement (BPS), which is prepared months in advance. The PBO says the
2019/2020 budget is higher than the approved ceiling by Sh78 billion.
“The higher expenditure levels have been accommodated through upward
adjustments in the revenue projections from the BPS level by
approximately Sh35 billion,” the PBO report to Parliament notes.
The report, "Unpacking the Estimates of Revenue and Expenditure for
2019/20 and the Medium Term", is prepared for legislators to guide
them in deliberations over the next budget cycle that starts on July
1.

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.@SafaricomPLC @Vodacom plan $13 mln purchase of M-Pesa rights from @VodafoneUK @ReutersAfrica
Kenyan Economy


Kenya’s Safaricom will start a joint venture with Vodacom to acquire
the intellectual property rights to the popular M-Pesa mobile
financial services platform from Britain’s Vodafone, Safaricom’s CEO
said on Thursday.
The 12 million euro ($13.4 million) deal will let both purchasers make
significant savings in royalties paid to Vodafone and expand the
service to new African markets, said Bob Collymore, Safaricom’s CEO.
“We are taking ownership of M-Pesa, the brand and the intellectual
property. Joint ownership between us and Vodacom and we then use that
as a platform into running into other markets across the continent,”
Collymore told Reuters in an interview.
Safaricom, the most profitable company in East Africa, pays 2 percent
of its annual M-Pesa revenue to Vodafone. Revenue from M-Pesa stood at
75 billion shillings ($741 million) in Safaricom’s financial year to
the end of March.
Vodacom, a South African operator which owns 35 percent of Safaricom,
pays 5 percent in an intellectual property fee to Vodafone from its
M-Pesa business, which is mainly in Tanzania.
“More important than the significant savings is about us determining
the future, the roadmap of M-Pesa because at the moment the roadmap is
determined by Vodafone,” Collymore said.
“Given that the bulk of the M-Pesa business is in Africa, between
Tanzania and Kenya, it is right for us to be determinants.”
The acquisition of the intellectual property rights by the new joint
venture will allow the partners to more easily develop local products,
Collymore said, pointing to Fuliza, an M-Pesa overdraft facility
launched in Kenya in January.
Fuliza, which is operated jointly with two local banks, has garnered
8.8 million users who have borrowed a combined 45 billion shillings,
Safaricom said earlier this month.
Apart from developing new products based on the M-Pesa platform,
Safaricom and Vodacom also want to launch into other African markets.
Collymore cited Ethiopia, where economic liberalisation plans put in
place by a new prime minister last year have left firms scrambling to
position themselves for entry.
“We are watching Ethiopia closely because as we see the liberalisation
of the markets, both the mobile payments market, the telecoms market
and the banking sector, we think there could be opportunities,” he
said.
Safaricom’s plan to form a joint venture with Vodacom and acquire the
intellectual property rights to M-Pesa still requires regulatory and
shareholder approvals in South Africa. It also requires regulatory
approval in Kenya, Collymore said.
“We are putting everything in place just subject to getting the right
approvals,” he said, adding the joint venture should be set up and the
deal with Vodafone completed this year.

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06-MAY-2019 M-Pesa the Jewel in @SafaricomPLC's Crown
Kenyan Economy


The real Earnings Outlier was Mpesa. Full Year Mpesa Revenue surged
+19.2% to reach 74.99b. In November of last year, I wrote this in the
Star ‘Mpesa revenue surged +18.2% to register 35.52b and looks like
its on the cusp of a hockey stick like breakout’. Safaricom have
tweaked the Mpesa ecosystem with good effect. They have made the Mpesa
garden richer [the average user is transacting 12 times a month] and
have increased retention and circulation in the ecosystem. This is a
very big deal. Safaricom: ‘’The growth in MPESA has been driven by an
increased number of users, higher velocity of funds within the
ecosystem, and adoption of new use cases. MPESA now accounts for 31.2%
of service revenue’’ Mpesa contributed 75% of Safaricom’s Year on Year
Growth. Bob Collymore told the Financial Times’s Tom Wilson, “If you
strip out Mpesa’s performance you will see that our underlying growth
as a telco is only about 2.4 per cent.” Mpesa is the Jewel in the
Safaricom Crown and has ‘’blitz-scaled’’ [of course, I think Mobile
Data will also become as valuable a Jewel] and Safaricom’s premium is
a direct consequence of the value being placed on this Earnings curve.
Safaricom have continued to fine-tune the Mpesa eco-system under
Lapoiyit to good effect with the latest innovation Fuli- za, “the
worlds first contextual mobile money overdraft facility’’ going great
Guns and providing further confirma- tion the Mpesa ‘’Platform
Economy’’ is a part of the genre of Platform Eco- nomies like UBER and
the like. Safaricom predicted that within three years its pioneering
digital payments business Mpesa will generate more revenue than all
other parts of the business combined [FT].

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.@Safaricomplc share price data
Kenyan Economy


Par Value:                  0.05/-
Closing Price:           26.10
Total Shares Issued:          40065428000.00
Market Capitalization:        1,045,707,670,800
EPS:             1.58
PE:                 16.519

Safaricom FY 2019 Results for the year ended 31st March 2019 vs. 31st March 2018
FY Mpesa Revenue 74.99b vs. 62.91b +19.2%
MPESA
MPESA grew 19.2% for the year. The growth in MPESA has been driven by
an increased number of users, higher velocity of funds within the
ecosystem, and adoption of new use cases. In the period, we added 2.1
million active MPESA customers. MPESA now accounts for 31.2% of
service revenue, further accelerating displacement of traditional
voice and messaging services.

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