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Satchu's Rich Wrap-Up
 
 
Friday 13th of November 2009
 
Morning
Africa
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Macro Thoughts

Gold remains headed to 1200.00.
Look again at the Long Gold short Crude.
Safaricom is in a low Beta uptrend towards 5.00.

Home Thoughts

The Little one has been off school and today she insisted on going.
She has a ever widening Circle of Friends and Kai is her Favourite.
She lives in our Compound and her Father is from Israel and working on
the roads and has a great insight into Security and the like,
actually. They are very best Friends but prone to the odd and very
serious falling out. Its very amusing to come home and hear her recite
her day.
read more


Global Crisis Makes US More Dependent on China than Ever Der Spiegel
Law & Politics
Obama agrees with Clinton completely. "The relationship between the
United States and China will shape the 21st century," he said in the
summer.
read more


Pakistan Spy Agency Bombed, 7 Dead WSJ
Law & Politics
A suicide car bomb devastated Pakistan's main spy agency building in
the northwest Friday, killing at least 7 people and striking at the
heart of the institution overseeing much of the country's anti-terror
campaign.

Conclusions

The Enemy seems to be able to strike at the very Jugular Vein, the
very Foundations of the State at will. It seems to me the definition
of Asymettric risk is the Pakistan Nuclear Arsenal.
read more


Top migration destinations More huddled masses? Economist
Misc.
MANY people would like to up sticks and move somewhere better. But
according to new Gallup polling data gathered over the last three
years, 16% of adults—or some 700m people—in over 130 countries say
they would like to start a new life abroad. The most popular
destinations specified are wealthy Western countries, though Saudi
Arabia and the United Arab Emirates are also attractive. If everyone
got their wish, America's population would swell by 165m while Canada,
Britain and France would each gain 45m new migrants. Those in African
countries are keenest to leave, whereas Asian respondents were
happiest where they were.
read more


Currency Markets at a Glance WSJ Dollar bounces
World Currencies
Dollar Index 75.56 and was below 75.00
Euro 1.4866 having crossed 1.50 earlier in the week.
Real 1.7340 The Brazilians are defending 1.70.
Aussie 0.9258 and had strong Jobs data this week.

Conclusions

Stronger Dollar.
read more


World Equity Markets at a glance
World Of Finance
Stocks retreated from 13-month highs, led by energy stocks after new
data showed surprising flush U.S. reserves amid low demand.Dow closed
93.79 points lower.
read more



Playboy Said to Be in Talks to Sell Itself to Iconix Bloomberg
Misc.
Playboy Enterprises Inc., the men’s magazine publisher, is in talks
to sell itself to Iconix Brand Group Inc., according to two people
close to the situation. Playboy’s stock jumped 42 percent.

Iconix, the owner of the Candie’s and London Fog clothing brands, has
looked at Chicago-based Playboy’s finances, said one of the people,
who declined to be identified because the talks aren’t public. The
discussions may not lead to a transaction, the person said.

Playboy’s market value had dropped to about $100 million before today
as circulation plunged at the namesake magazine Hugh Hefner started in
December 1953 with photos of Marilyn Monroe. Iconix Chairman and Chief
Executive Officer Neil Cole is looking for acquisitions to add more
brands that the New York- based company can license to retailers and
manufacturers.
read more


Polish Art, On Tour WSJ
Misc.
In London, the Warsaw sculptor Miroslaw Balka has filled the Tate
Modern's enormous Turbine Hall with an acclaimed installation.
read more


Commodity Markets at a Glance WSJ
Commodities
After extending records on dollar weakness overnight, gold prices
backed off Thursday as the greenback bounced.
read more


Live 24 Hour Gold Spot Price KITCO 1106.40 LAST
Commodities
Conclusions

Pull Backs will be shallow and the target is 1200.00 as it has been all year.
read more


Paper promises, golden hordes Buttonwood The Economist
Commodities
TWO hundred metric tonnes of gold would occupy a cube of a little more
than two metres on a side; it would fit into a small bedroom. But
India’s purchase of that volume of gold from the IMF last month has
had an outsize impact on the markets, helping push the price well
above $1,100 a troy ounce.For bullion bulls, the implication is clear:
central banks no longer trust the creditworthiness of other
governments. And if they have lost confidence, private investors
should do the same. The next step in this chain of reasoning is to
assume a stampede (or at least a quick trot) by other central banks
into holding the yellow metal. Gluskin Sheff, a Canadian
asset-management firm, suggests that if China followed India’s lead,
bullion could hit $1,400 an ounce.

This column has argued that the current system is unsustainable.
Debtor countries like America and Britain have huge fiscal deficits,
but retain at the same time the ability to depreciate their currencies
and offer near-zero interest rates on their short-term debt. This does
not look like a good deal for creditors.

Developed-country governments have attempted to control bond yields
through quantitative easing and to support stockmarkets through
ultra-low interest rates. But they cannot support their currencies as
well without risking problems in the bond and equity markets. Gold’s
surge may indicate that investors fear the next stage of the crisis
will occur in the foreign-exchange markets.

Conclusions

The Developed World has read from the same Play Book for as long as I
can recall. It is the Greenspan script of a Massive Flood of Free
Liquidity or near enough. The Pillar of this Strategy previously was
the Ubiquity of the Dollar. The Dollar was the Financial Architecture.
Look back at the Mexico TesoBono crisis of 1994 and You see a very
different World.

This time around, We are in a very different Landscape. Current
allocation into the Dollar [of new Money] is 33% versus a reserves
Profile of over 60%. The Question this time around is Can we return to
what was before. I do not think so. We are watching the World move
from a Monolithic Dollar dominated World to a Multi Polar one.
The Stop Loss drive into the Dollar last year might be repeated but
its violence will diminish over time. This is a Game Changer.

Gold is also signalling we have overdosed the Patient. We have doused
the markets and the Banks with Free Money. Gold is proving an
attractive insurance against the risk of a very disorderly exit.

China only has a 2% reserves Allocation in Gold. I would have thought
its a racing certainty that percentage is not going lower.

Aly-Khan Satchu
www.rich.co.ke
Twitter alykhansatchu
read more


Live Crude Oil chart 76.88 Last1 month low
Minerals, Oil & Energy
Petroleum supplies increased by 1.76 million barrels in the past week,
according to fresh data from the Energy Information Administration.
Analysts polled by Platts expected a buildup of 1 million
barrels.Crude-oil futures sank 3% Thursday, retreating as government
data showed weak demand and higher imports pushed up U.S. inventories
and as a stronger dollar weighed on dollar-denominated oil prices. On
the New York Mercantile Exchange, crude for December delivery fell
$2.34 to end at $76.94 a barrel.

Conclusions

I think it should be at $40.00. I still like the Long Gold short Crude Trade.
read more


Soft Commodities at a Glance INO
Commodities
Lumber +3.3% and the Big Mover.
read more




Regional diplomacy and Zimbabwe When patience finally runs out Economist
Law & Politics
AT LAST the Southern African Development Community (SADC), an
influential club of 15 countries that has overseen the regional
diplomacy intended to solve Zimbabwe’s troubles, is showing signs that
it may be prepared to squeeze President Robert Mugabe a bit harder. As
the supposed guarantor of a power-sharing pact between Mr Mugabe and
Morgan Tsvangirai, the former opposition leader, SADC has—after months
of dithering—ordered all “outstanding issues” to be settled by
December 5th. As a result, Mr Tsvangirai has agreed to end a
three-week boycott of the unity government by members of his Movement
for Democratic Change (MDC).Ever since the coalition government was
set up in February, Mr Mugabe has flouted most of the pact’s main
provisions with impunity. In some respects, matters have been getting
worse. The persecution and arrest of political opponents, trade
unionists and student leaders have increased. So has violence against
the dwindling band of white farmers who refuse to be chased off their
property. Broadcasting and the daily press, still firmly in the hands
of Mr Mugabe’s Zanu-PF, smear Mr Tsvangirai and the MDC incessantly,
while independent newspapers have yet to be allowed to start printing
again.

Mr Tsvangirai sounds chuffed. He is particularly pleased that SADC has
appointed South Africa’s president, Jacob Zuma, formally to
“facilitate” Zimbabwe’s power-sharing in place of his predecessor,
Thabo Mbeki, whom the MDC loathed for what it considered his gross
bias in Mr Mugabe’s favour

Comments

Morgan Tsvangirai has indeed played a very deft and intelligent hand
in a very difficult set of circumstances. He has certainly
outperformed my expectations. I might be wrong but I feel he
established a genuine personal rapport with President Mugabe and he
did say words to that effect and I think the Catalyst for that was the
unfortunate passing away of his Wife.

I sense the problem is not with the Emperor [Mugabe] but with the
Court. I would have thought Mugabe would be overweight the opportunity
to depart gracefully, a neat exit, if you will. I surmise It is the
Die Hard ZANUPF Recalcitrants [whom Tsvangirai cannot give an escape
route and who probably fear the hot breath of the ICC somewhere down
the road] who are obstructing and seeking to sink the Coalition and
are playing some very hard ball, which is probably all that they know.

I also feel that maybe Zuma and SADC if they have the will, can tip
the balance in favour of Tsvangirai. That seems to be what he is
betting on.

Aly-Khan Satchu
www.rich.co.ke
Twitter alykhansatchu
read more


Live Dollar Rand ForexPros 7.4839
World Currencies
Conclusions

Ebrahim Patel must be watching Brazil and Taiwan real close for clues
as to how to staunch the rally and reverse it.
read more


FTSE/JSE AFRICA ALL SHR Bloomberg Visual
World Of Finance
Value26,687.98
Change25.440
% Change0.095

Conclusions

Remains on target for 30,000.00.
read more


South African Banks Downgraded by Moody’s, Business Report Says Bloomberg
World Of Finance
South Africa’s five biggest banks had their financial strength ratings
downgraded by Moody’s Investors Service, Business Report said, citing
Mardig Haladjian, Moody’s general manager of financial institutions.

The downgrading of Absa Group Ltd., FirstRand Ltd., Investec Ltd.,
Nedbank Ltd. and Standard Bank Group Ltd. reflected a “slowdown in
business growth and more challenging funding conditions,” Moody’s
said, according to the Johannesburg-based daily paper.

South African banks have been resilient to the global crisis “but
weakening macroeconomic conditions, including an estimated gross
domestic product contraction in 2009 of 2 percent, is exerting
additional pressure on the banking sector’s financial fundamentals,”
Haladjian said, the newspaper reported.
read more


NIGERIA STCK EXC ALL SHR Bloomberg Visual
Africa
Value21,204.58
Change0.070
% Change0.000

Conclusions

Key Long term support is just below 20,000.00 and we need to base out
above that.
read more


Hope for Zanzibar Taking the spice out of politics The Economist
Law & Politics
With messy Kenya and chaotic Congo across the border, and lawless
Somalia just up the coast to the north, Tanzania is now viewed in the
West as a regional haven of calm in a turbulent neighbourhood.But
there has been a big blot on Tanzania’s record over the years:
Zanzibar. The last three elections on the offshore islands that
comprise the territory—Pemba and Zanzibar itself—have been
increasingly violent and disputed. The opposition Civic United Front
(CUF) claims that the elections of 1995, 2000 and 2005 were all stolen
by the local branch of Tanzania’s ruling Party of the Revolution,
better known by its Swahili initials, CCM.

Anxiety about next year’s elections on the islands has been rising.
Angry and frustrated CUF militants may react even more fiercely if
their party loses yet again. But two factors are pushing the sides
towards reconciliation: the prospect of oil and the spectre of
Islamist terrorism.

Zanzibar already enjoys a large degree of political autonomy from the
mainland within the union of Tanzania (born of Tanganyika and Zanzibar
coming together in 1964, soon after independence). It has its own
parliament, president and anthem. The opposition CUF does not demand
secession but wants the islanders to run their own economy. Zanzibar,
they complain, always gets a worse deal in terms of aid and investment
from abroad. The CUF people say that, despite the popularity of
Zanzibar’s ritzy hotels, 70% of the islanders live on no more than $1
a day.

Conclusions

Zanzibar is an extraordinary Place with a deep Civilisation and a
wonderful mix of Arab and Swahili Culture. Many of its most Famous
Sons are far away and the Author Abdulrazah Gurnah [Read Paradise if
you want to get to the very heart of Zanzibari culture] have been
exiled or forced away. The Tanzanian State has been aggressive in
asserting its Unitary Status and at times brutally so.

Kikwete has tapped into tremendous International Good Will and can
catapault himself to another Level entirely by taking a progressive
approach to the Island. Give them some space, make a fairer
distribution of the Spolis and it might well once more regain its
Place that it owned 100 Years Ago.

Its a unique opportunity for President Kikwete to reset the clock and
win himself Plaudits doing it and put it on the Path of Prosperity. In
some ways Dubai has become [before the Debacle] what Zanzibar could
be.

Aly-Khan Satchu
www.rich.co.ke
Twitter alykhansatchu

Zanzibar Old Town Google Image Search
http://bit.ly/1Plu8Y
read more


Nairobi NSE 20 Share Index Bloomberg Visual
N.S.E General
Value3,131.47

Conclusions

Resistance is 3381 and we are headed there.I do sense some of the
Political Risk is Abating and I talked of it here
read more



Kenya's Co-op bank Q3 pretax profit up 10 pct Reuters
N.S.E Equities - Finance & Investment
Kenya's Co-operative Bank said on Friday third-quarter pretax profits
rose by 10 percent to 2.85 billion Kenya shillings.The bank, Kenya's
fourth largest by assets, posted a pretax profit of 2.59 billion
shillings in the same July-September period a year ago.In an unaudited
statement published in newspapers, the bank said its total assets
increased by 26 percent to 98.78 billion shillings.Customer deposits
jumped by 18 percent to 76.63 billion shillings, while the bank's
holdings of Kenyan government securities increased by 57 percent to
14.24 billion.Net interest income rose to 4.9 billion shillings from
3.87 billion shillings in the similar period a year before, the bank
said.

The bank listed on the Nairobi Stock Exchange last December. It was
founded in 1965 as a bank for cooperative societies -- which have a
two-thirds stake in the bank.

Conclusions

The run rate has slowed from the 6 month marker.
read more


COOP Bank share price data and 3rd Quarter results from www.rich.co.ke
N.S.E Equities - Finance & Investment
Par Value: 1.00
Closing Price: 8.75
Total Shares Issued: 3,492,369,920
Market Capitalization: 30,558M
EPS: 0.80
PE: 11.81
read more


Nigeria’s Guaranty Trust Plans $1.3 Billion Bond Sale Next Week Bloomberg
World Of Finance
Nigeria’s Guaranty Trust Bank Plc plans to start selling a 200 billion
naira ($1.3 billion) bond next week to boost its capital available for
loans, according to its asset management arm, and lead arranger of the
sale.

The Lagos-based bank aims to raise as much as 100 billion naira when
it begins auctioning the first tranche of the five year securities on
Nov. 19, David Alao, a member of the team arranging the sale at GTB
Asset Management, said by telephone. The securities will be offered at
an “indicative coupon” of between 12 and 13 percent payable
semi-annually, with the auction scheduled to end on Nov. 26, Alao
said.

“GTB is issuing the bond to help fund infrastructure projects,” said
Alao. “Nigeria is behind on its infrastructure needs and we require
quite a bit of capital to finance such projects.”
read more


Uchumi of Kenya Postpones Closing Date of Bond Sale by Two Weeks
N.S.E Equities - Commercial & Services
Uchumi Supermarket Ltd., Kenya’s second-largest retailer, postponed
the closing date of its bond sale by two weeks to Nov. 30 after
shareholders requested an extension of the deadline, the company said
in a statement published in the Nairobi-based Standard Newspaper
today.

The Shilling is at 74.65 and has edged a little lower. Central Bank bought $8m.
read more



 
 
N.S.E Today
The Bourse has turned Bullish and the outsize Trading confirms its depth and muscularity. Today Equity [22.85m shares] and KENOL [4.3261% of the issued shares] dominated Trading. However, many shares have bubbled higher. The Official Closing Data is delayed but we have closed a good deal higher. Shares worth 694.072m were traded and there is a Powerful Under the Radar Appetite for Kenya Paper.


N.S.E Equities - Agricultural
Sasini Tea rose a further 3.27% to close at 7.90 and traded a session high of 8.25 +7.84% and traded 153,500 shares.Sasini has rallied near enough 33% in 5 weeks and trades on a Trailing PE of 2. Kapchorua Tea traded 5,000 shares all at 88.00 +10.00% and was the biggest gainer on the day. Williamson Tea bucked the trend and traded 25,300 shares all at 86.00 -1.71%. Do Go here and check their Valuations http://www.rich.co.ke/rcdata/nsestocks.php Tea Shares are completely out of whack. On a PE basis India Tea Shares trade on a PE of 20.00. Here they are trading between 2-5. The most expensive Tea share is trading at a 75% discount to India, which is as absurd as it gets and we could witness a very sharp rerating. Rea Vipingo traded 1,600 shares all at 11.50 -2.13%. Kakuzi did not trade.


N.S.E Equities - Commercial & Services
SAFARICOM shares volume 2,185,300 total turnover 8,928,130 avg price 4.09 CLOSING price 4.05 Unchanged high price 4.15 low price 4.05 last price 4.10 Conclusions Safaricom traded an intraday high 4.15 and closed again at a 6 month high. It is extending higher. Demand at the Finish line was 13m+ shares, there was less than a million shares for sale. I have an equilibrium price of 5.00. Safaricom traded 4th overall. Kenya Airways rose 3.8466% to close at 27.00 and was trading at 27.75 +6.73% into the Finish Line. Investors are looking through the noise and it has rebounded just under 30% in 5 weeks. Kenya Airways traded 47,200 shares and and that was all that was available. Kenya Airways share price Graphs and latest results www.rich.co.ke http://www.rich.co.ke/rcdata/company.php?i=OA%3D%3D CMC Holdings traded 3rd and closed 1.933% lower at 10.15 and traded 901,300 shares worth 9.152m. Access Kenya firmed 1.19% to close at 21.25 and traded session highs of 22.00 +4.76%. 86,400 shares were traded and Demand was 3x that figure. Nation was unchanged at 124.00 and traded 33,300 shares. Standard did not trade. ScanGroup was unchanged at 24.75 and traded 5,100 shares. TPSerena traded 2,000 shares all at 40.00 -1.23%. CARGEN did not trade.


N.S.E Equities - Finance & Investment
Equity Bank was the most active Counter at the Bourse. Equity Bank traded a 14.00-14.30 range and closed 1.7833% firmer at 14.25. Equity Bank traded a chunky 22.855m shares [0.6172% of the issued shares] worth 326.733m, which was 47.08% of the total turnover at the Bourse. Equity Bank have signalled a return to growth by Year End [my Model has between +15-20%] and Investors are picking up Supply as witnessed by todays very Big Ticket. Equity Bank share price data and Graphs from www.rich.co.ke http://www.rich.co.ke/rcdata/company.php?i=MTc%3D Par Value: 0.50/- Closing Price: 14.00 Total Shares Issued: 3,702,777,088 Market Capitalization: 51,839M EPS: 1.07 PE: 13.58 COOP Bank reported results at +10% 9 months to September. COOP Bank traded an 8.65-8.95 range and closed 0.57% better at 8.80. COOP Bank traded 259,300 shares. The shares sold at the IPO stage were very well distributed going by the number of transactions that are conducted on a daily basis. COOP Bank share price and graphs from www.rich.co.ke http://www.rich.co.ke/rcdata/company.php?i=NTY%3D Par Value: 1.00 Closing Price: 8.75 Total Shares Issued: 3,492,369,920 Market Capitalization: 30,558M EPS: 0.80 PE: 11.81 KCB edged 1.23% lower and closed at 20.00. KCB traded a 20.00-20.50 and 247,100 shares. KCB trades a 9.03 Forward and yields 4.94%. Barclays Bank was unchanged at 44.00 and traded 30,700 shares. Barclays trades on a 9.6 Forward [thats at the 6 month point] and yields 4.55% Stanchart eased 0.68% and closed at 146.00 and traded 6,800 shares. Stanchart accelerated earnings at a 41% run rate through the 3rd Quarter and was the Outperformer results wise this Year. Stanchart trades on an 8.5 Forward and yield 6.80% some way higher than its Peers. Shares are well held and volumes tend to be thinnest here and hence the slow speed of the adjustment in the price. To wit Stanchart traded 3,800 shares. Centum rose 2.3933% to close at 12.85 and traded a 12.50-13.00 range and 210,900 shares. CFC StanBic traded 100 shares at 49.00 -1.01%. DTB was unchanged at 68.50 and traded 1,400 shares. HFCK rose 5 cents to close at 14.55 and traded 10,000 shares. Demand was for 174,000 shares. NBK closed 1.5% lower at 33.00 and traded 5,200 shares. NIC eased 1.72% to close at 28.50 and traded 41,800 shares. Kenya Re firmed 0.98% and closed at 10.30 and traded a 10.40 high and 23,700 shares. Demand has swelled to 10x that amount. Jubilee bounced 3.64% to close at 114.00 and traded 13,600 shares. Jubilee carries its positions at cost and hence there is tremendous Value in the Balance Sheet, in most instances. PanAfric traded 1100 shares at 46.00 and unchanged. Olympia Capital rallied 3.17% to close at 6.50 and traded 6,400 shares.


N.S.E Equities - Industrial & Allied
KENOLKOBIL was the 2nd most active Counter at the Bourse. KENOLKOBIL closed 3.52% lower at 48.00 and traded a 46.00-49.50 range and traded 6.367m shares [4.3261% of the Issued shares] worth 305.629m which was 44.12% of the Total turnover. KENOLKOBIL share price and graphs from www.rich.co.ke http://bit.ly/2DMFVE Par Value: 0.50/- Closing Price: 49.75 Total Shares Issued: 147,176,128 Market Capitalization: 7,322M Total was unchanged at 29.00 and traded 4,300 shares. The KENGEN Bond traded at 100.48 on the ATS System. The share price closed 0.435% lighter at 11.40 and traded 132,700 shares. KPLC closed 2.16% lower at 136.00 and traded 21,600 shares. KPLC is trading on a PE of less than 4.00. Cables closed at 19.30 and traded 25,700 shares. CARBACID traded an extraordinary range of 200.00-285.00 and closed at 240.00. CARBACID traded 12,000 shares. BOC Gases did not trade. Mumias Sugar improved 1.57% to close at 6.45 and traded a 6.40-6.60 range and 844,900 shares. Mumias trades on a PE of 6.00 which is lower than all other Sugar Companies I can find. BAT traded 6,900 shares all at 175.00. The Yield here is 9.71% EABL improved 0.71% to close at 142.00 and traded 2,600 shares. ARM edged lower to close at 97.50 and traded a 95.00-98.00 range and 15,400 shares. Bamburi did not trade. Portland did not either. Crown Berger did not trade. Eveready was marked down 1.96% to close at 2.50 and traded 24,700 shares. Sameer traded 40,800 shares all at 5.00 +1.01%. Unga was unchanged at 8.40 and traded 2,400 shares.


by Aly Khan Satchu (www.rich.co.ke)
 
 
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November 2009
 
 
 
 
 
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