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Satchu's Rich Wrap-Up
 
 
Tuesday 03rd of September 2019
 
Morning
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02-SEP-2019 :: Bow Tie toting Akinwumi A. Adesina who said The US-China trade war and uncertainty over Brexit pose risks to Africa's economic prospects that are "increasing by the day"
Africa


Last week I closed by quoting the President of the AfDB, the mercurial
and Bow Tie toting Akinwumi A. Adesina who said The US-China trade war
and uncertainty over Brexit pose risks to Africa’s economic prospects
that are “increasing by the day”
“You have Brexit, you also have the recent challenges between Pakistan
and India that have flared off there, plus you have the trade war
between the United States and China. All these things can combine to
slow global growth, with implications for African countries.”
“I think the trade war has significantly impacted economic growth
prospects in China and therefore import demand from China has fallen
significantly and so demand for products and raw materials from Africa
will only fall even further,” he said.
“It will also have another effect with regard to China’s own
outward-bound investments on the continent,” he added. The US China
Trade War continues to intensify notwithstanding the Fact that Aides
have now admitted Trump Made Up “High Level Phone Calls” With China To
Boost Markets. Such a negotiating strategy is of the ‘’Cry Wolf’’ type
and its shelf life infinitesimally short. It is the increasing
intensity of the Trade War which has triggered the Surge into Safe
Havens. Unprecedented Doses of Financial Repression have created
‘’scarcity’’ in the G7 Sovereign Space, further fuelling the interest
Rate Rally. Central Bankers apparently stand ready to increase the
dosage. Central Bankers are seeking to re-imagine the Economic Cycle
and magic it away. Its not going to happen, it never does.
Andrew Mellon believed that eco- nomic recessions, such as those that
had occurred in 1873 and 1907, were a necessary part of the business
cycle because they purged the economy.
In his memoirs, Hoover wrote that Mellon advised him to “liquidate
labor, liquidate stocks, liquidate the farmers, liquidate real estate.
Purge the rottenness out of the system. High costs of living and high
living will come down... enterprising people will pick up the wrecks
from less competent people.”
The overarching macro issue forAfrica remains the Trade War and it
will remain a source of downside pressure via the China EM Frontier
Feedback Loop Phenomenon. This Phenomenon was positive for the last
two decades but has now undergone a Trend rever- sal. The Fall-out is
being experienced as far away as Germany Inc. The ZAR is the purest
proxy for this Phenomenon. African Countries heavily dependent on
China being the main Taker are also at the bleeding edge of this
Phenomenon. This Pressure Point will not ease soon but will continue
to intensify.
As to Brexit, The Queen approved the government’s request to prorogue
parliament. The Financial Times editorial Board pronounced “Boris
Johnson has detonated a bomb under the constitutional apparatus of the
United Kingdom.” - It is clear to me that Pri- me Minister Johnson is
the Triangulator and therefore the United Kingdom is now like the
Pound at risk of a precipitous, downside, even asymmetric move before
the recovery.
China whilst fending off Trump and a flare-Up on its Periphery will
mark the 70th anniversary of People’s Republic on Oct. 1. The DF-41
intercontinental ballistic missile will be a centrepiece of that
parade. China’s miraculous economy is slowing down.
‘’If you had said 2 years ago that the status of global geopolitics
and financial markets depended on the world’s supply of pigs you would
have been laughed out of the room. But you would have been right’’
@SantiagoAu- Fund. Pork inflation in China amid the trade war:”I’ve
never seen anything like this,” said Xiao Tong,a vendor who has been
selling pork for nearly 20 years in Beijing. “Every day the price
rises more.”
China has exerted the Power of Pull over vast swathes of the World
from Germany to Angola, from the Mekong Delta to Asia and that Power
of Pull is now ebbing. Now where does that leave Africa?
Well firstly, it places an enormous premium on nimble Policy Making
and a heavy discount on Policy Making that cannot read the signs or as
Lao Tzu put it “Men are born soft and supple; dead they are stiff and
hard. Plants are born tender and pliant; dead, they are brittle and
dry. Thus whoever is stiff and inflexible is a disciple of death.
Whoever is soft and yielding is a disciple of life. The hard and stiff
will be broken. The soft and supple will prevail.”
Let me tell you by the way who was very nimble, Abiy was. Prime
Minister Abiy has already reprofiled his debt to China.
Of course, the Continent is absolutely non-linear something which we
are seeking to address with the AfCTA and what is key in that is the
free circulation of our most valuable capital
of all our Human Capital. [As a result, population explosion in Africa
has been supercharged compared with earlier adopters of modernity in
Europe. If large numbers of people are a good thing, then this is a
case of last-mover advantage FT] However, the AfCTA whilst surely a
Silver Bullet is some ways off and we have to deal with the NOW. The
NOW looks different depending on where you look at it from. Africa
Confidential is reporting that the G7 had planned to arrange a $2.3bn
bailout for Zimbabwe, which would settle its arrears with the World
Bank, African Development Bank and the European Investment Bank. They
would then immediately release $1bn in a fresh loan (AC Vol 60 No 11,
Austerity first). The quid pro quo, insiders say, was for the
Mnangagwa government to show good will on opening Zimbabwe’s
democratic space. The bailout was not discussed at Biarritz, we hear,
probably because of Harare’s failure to follow through on this.
Remember Lao Tzu. That was the Opportunity. They have blown it. They
also blew $1.3b ahead of the election in 2018, money they did not
have. South Africa with is smack bang in the middle of Fire when it
comes the China EM Frontier Markets Loop Phenomenon, saw its stock
market witness its worst August since 1998.

Macro Thoughts

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05-AUG-2019 :: Last week the Pound traded below $1.2100 and is now in danger of taking out its post-referendum low $1.1860
Africa


Last week the Pound traded be- low $1.2100 and is now in danger of
taking out its post-referendum low [$1.1860 but there is considerable
debate about this number because it happened in the middle of the
night when Gremlins and Goblins stalk the FX markets]

read more


As I watched the Pound fall like a stone, I could not help wondering if this Sterling moment is precisely like it was in 1992, a no brainer.
Africa


‘’Impossible is nothing’’ and ‘’can-do’’ political posture but the
bottom line is can he swing it? if he can swing it then he has to face
down the “whispering death” [Michael Holding who was thus nicknamed
because He was exactly that when he opened the bowling for the West
Indies] that will be the foreign exchange markets. London’s Capital
Economics conducted an exercise for the dollar-sterling exchange rate,
and found that for every 10-percen- tage-point increase in the chance
of “no deal” equates to the pound losing 3.5 cents on the dollar.

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13-AUG-2019 :: The Feedback Loop Phenomenon
Africa


The Point is this the Yuan is now the catalyst and China has signalled
it will be a shock abso ber. Xi Jinping was also signalling he had
control of the console. The direction of travel for the Chinese
currency is therefore lower.
The Yen and the Swiss franc considered safe havens in trou- bled times
have been in demand and Sterling was described as ‘’drinking at the
last chance sa- loon’’ and closed on Friday with its nose just in
front of 1.2000.

Home Thoughts


Good Afternoon or is it the morning from Aga Khan Hospital Coronary
Care Unit. Fortunately, my Daughter Layla was with me yesterday
morning and took some decisive action. And My cousin Fazal, who when
the chips are down always comes through. I have had a Stent inserted
and am expecting to have another one. Having smoked since I was 14 and
having puffed my first cigarette in Parliament Square -  I have to
admit I am 24 hours into a smoke free life having thought about
getting out of my bed in the early hours and finding a kiosk. And then
I thought of my Nishet, my Aysha, my Layla and my Hannah. I have
always disliked hospitals and at times my reaction borders on the
hysterical. The White Noise, the beeping, the time we had to switch
off Mum's life support machine. I could not even handle the machine
that puts you in a capsule for thirty minutes. But the Girls all
calmed me down and here I am Good Morning World

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19-AUG-2019 :: The Frontier from Xinjiang to Kashmir, from Gaza to Crimea from Hong Kong to Taiwan are c21st flash points.
Law & Politics


Of course, there are many other Frontiers, the Mediterranean Sea, the
Sahara desert, Islands because of the EEZ’s they control

read more


Currency Markets at a Glance WSJ
World Currencies


Euro 1.0939
Dollar Index 99.286
Japan Yen 106.06
Swiss Franc 0.9913
Pound 1.1982
Aussie 0.6722
India Rupee 72.255
South Korea Won 1215.6
Brazil Real 4.1836
Egypt Pound 16,.5755
South Africa Rand 15.1988

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I wrote last week about the China Emerging and Frontier markets loop Phenomenon which has been super positive for more than 2 decades and is now in a Major Trend Change and has turned negative.
Emerging Markets


I would be adding to short positions in the Australia Dollar [a Global
Trade Proxy and Global Trade is slowing] and the South African Rand.
The Periphery will get smashed as we are seeing it unfold in Lusaka.

read more







Botswana to hold national and local elections on Oct. 23 @ReutersAfrica
Africa


GABORONE (Reuters) - Botswana President Mokgweetsi Masisi has set Oct.
23 as the date for parliamentary and local elections, the Independent
Electoral Commission (IEC) said on Monday.
President of Botswana Mokgweetsi Eric Keabetswe Masisi addresses the
73rd session of the United Nations General Assembly at U.N.
headquarters in New York, U.S., September 27, 2018. REUTERS/Carlo
Allegri
The poll will elect 57 national assembly and 490 local government
representatives, IEC spokesman Osupile Maroba said in a statement.
The leader of the political party that wins most seats in parliament
will become president of the country.
Masisi’s Botswana Democratic Party (BDP) has been in power since
independence from Britain in 1966, but has seen its support erode
gradually, and in 2014 lost the popular vote for the first time.

read more


Kenya in 2019, up 5.3% YTD, trailing Egypt, which is up 12.4%. Worst performing is Zambia at -15.6%. @MihrThakar
Africa


Highest PE is enjoyed by Ghana at 15.7X (v. Kenya 11.3X).

Kenya div. yield is 5.2% v. Ghana 0.5%!

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The government has approved the intended acquisition of British security printer De La Rue's Kenya business by American firm HID Corporation Ltd.
Kenyan Economy


In a gazette notice, Competition Authority of Kenya Director-General
Wang’ombe Kariuki said the government “has authorised the proposed
transaction as set out herein on condition that existing contracts the
target (De La Rue Kenya Ltd) has with the government are honoured”.

One such agreement with the government is the £85 million (Sh11
billion) three-year contract with the Central Bank of Kenya to print
its new series of banknotes.

read more


Kenya Shilling versus The Dollar Live ForexPros 103.65
Kenyan Economy


Nairobi All Share Bloomberg +4.68% 2019

http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -13.72% 2019

http://j.mp/ajuMHJ

Every Listed Share can be interrogated here

http://www.rich.co.ke/rcdata/nsestocks.php

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