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Satchu's Rich Wrap-Up
Thursday 24th of April 2014

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The New set of risks are Geopolitical risks

Macro Thoughts

Home Thoughts

I thoroughly enjoyed myself at the Jaguar F-Type Launch yesterday evening.

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"Article five [of the US-Japan security treaty] covers all territories under Japan's administration including [the] Senkaku islands," Mr Obama said, echoing comments published in Wednesday's Yomiuri newspaper.
Law & Politics

"We do not believe that they should be subject to change unilaterally."

"This is not a new position. This is a consistent one," he said.


Thats as incontestable as flying B-52s into the ADIZ was.

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02-DEC-2013 ::The Pivot to Asia bares its Fangs
Law & Politics

PRESIDENT Barack Obama's pivot to Asia bared its fangs last week.

China had declared an Air Defense Identification Zone in an area that
included those rocky Islands which are called the Senkakus by the
Japanese and Diaoyu by the Chinese. The US responded to the
declaration of the ADIZ by flying 2 B-52s directly into it and that
message is kind of incontestable.

Colonel Steve Warren at the Pentagon said Washington had "conducted
operations in the area of the Senkakus".

"We have continued to follow our nor- mal procedures, which include
not filing flight plans, not radioing ahead and not registering our
frequencies," he said.

''The Pentagon sent two strategic bombers (capable of nuclear strikes)
directly into an airspace which the Chi- nese have just declared an
"air defense identification zone" in which non-com- pliance with
Chinese rules would trigger "emergency defensive measures", and to
make sure to inflict the maximal amount of loss of face on China.''

@BarackObama and @AbeShinzo


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"There is no reason not to believe that the Americans are running the show," RT website quoted him as saying."
Law & Politics

"It's quite telling they chose the moment of the Vice President of the
US' visit to announce the resumption of this operation because the
launching of this operation happened immediately after (CIA head) John
Brennan's visit to Kiev," said Lavrov.

Sergei Lavrov


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The United States is in the opening phase of a war on Russia
Law & Politics

Policymakers in Washington have shifted their attention from the
Middle East to Eurasia where they hope to achieve the most ambitious
part of the imperial project; to establish forward-operating bases
along Russia's western flank, to stop further economic integration
between Asia and Europe, and to begin the long-sought goal of
dismembering the Russian Federation. These are the objectives of the
current policy. The US intends to spread its military bases across
Central Asia, seize vital resources and pipeline corridors, and
encircle China in order to control its future growth. The dust-up in
Ukraine indicates that the starting bell has already been rung and the
operation is fully-underway. As we know from past experience,
Washington will pursue its strategy relentlessly while shrugging off
public opinion, international law or the condemnation of adversaries
and allies alike. The world's only superpower does not have to listen
to anyone.

Journalist David Paul summed up the situation in an article titled
"Forget the Spin, Putin Is Holding a Losing Hand" at Huffington Post.
He said:

"Brzezinski's strategic formulation is designed to enhance American
power in the region in the long term, and whether Putin finds a way to
pull back or chooses to invade is immaterial. Either choice Putin
makes... will ultimately serve America's interests, even if a Ukrainian
civil war and an energy crisis in Europe have to be part of the price
along the way."

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US troops land in Poland for exercises BBC
Law & Politics

The 150 soldiers from the 173rd Airborne Brigade arrived in the Polish
town of Swidwin from their base in Vicenza, Italy.

Separately, the UK, Netherlands and Denmark scrambled fighter jets
after Russian military aircraft were spotted approaching their

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.3822
Dollar Index 79.80
Japan Yen 102.32
Swiss Franc 0.8828
Pound 1.6788
Aussie 0.9295
India Rupee 61.105
South Korea Won 1038.40
Brazil Real 2.2204
Egypt Pound 6.9965
South Africa Rand 10.5836

Dollar Index 3 Month Chart INO 79.80


Euro versus the Dollar 3 Month Chart 1.3822


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Facebook has 1.28 billion monthly active users, or almost half the world's Internet population, up from 1.23 billion last quarter.
International Trade

The company has more than 1 billion monthly active users on mobile,
with more than half of daily active users only connecting on mobile.

The world's largest social-networking site reported first-quarter
profit and revenue yesterday that blew past analysts' estimates.
Mobile accounted for 59 percent of advertising revenue, up from almost
nothing at the time of Facebook's initial public offering in May 2012.

The stock jumped as much as 6 percent in extended trading, adding to a
rally that's seen Facebook's market value more than double in the past

IPhone sales were 43.7 million, topping analysts' estimates of 37.7
million, the company said in a statement today.


Apple said it will also increase its repurchase authorization to $90
billion from $60 billion and announced a seven-for-one stock split. In
addition, the company boosted its dividend. Apple said it plans to
take on debt to pay for the added stock buyback and dividend plans.

Shares rose as much as 8.5 percent in extended trading. The stock,
which closed today at $524.75, is down 6.5 percent for the year and 25
percent from an all-time high in 2012.

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Sri Lankans use a raft to transport motorcycles across a lake at Biyagama, outside Colombo via @AFP
Frontier Markets

I attended the @IMFNews Regional Economic Outlook for Sub-Saharan Africa Launch

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China urges renewed peace effort in South Sudan after massacre

"We strongly condemn this and urge all sides in South Sudan, including
the opposition and the authorities, to keep pushing political dialogue
to resolve the relevant issues and achieve reconciliation, peace and
development at the earliest date," foreign ministry spokesman Qin Gang
told a daily briefing.

China has played an unusually active diplomatic role in South Sudan
and is the biggest investor in its oil industry.

Bentiu is capital of South Sudan's oil-producing Unity state. Oil
firms in South Sudan, a country roughly the size of France, include
China National Petroleum Corp, India's ONGC Videsh and Malaysia's

"China has energy interests in South Sudan, so we hope even more that
this country can maintain peace and stability," Qin added.

"We also ask that the South Sudanese authorities provide protection to
China's reasonable rights in South Sudan and the safety of Chinese
nationals," he said.

South Africa All Share Bloomberg +6.66% 2014


Dollar versus Rand 3 Month Chart INO 10.5829


Egypt Pound versus The Dollar 3 Month Chart INO 6.9966


Egypt EGX30 Bloomberg +23.56% 2014 [Africa's best in 2014]


8,294.88 25.86 0.31%

Nigeria All Share Bloomberg -2.75% 2014


Ghana Stock Exchange Composite Index Bloomberg +6.88% 2014


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In Luanda's Jumbo supermarket, a half-liter tub of imported vanilla ice-cream used to cost $25, testament to the Angolan capital's rank as one of the world's most expensive cities.

With new import tariffs imposed last month, that price has jumped to
$31, enough to make even wealthy locals and expatriates pause and
putting it even further beyond the reach of millions of poor Angolans
struggling to feed their families.

The government of President Jose Eduardo dos Santos, who has ruled
since 1979, imposed higher import tariffs last month on hundreds of
items, from garlic to cars. The stated aim is to try to diversify the
heavily oil-dependent economy and nurture farming and industry,
sectors which have remained weak.

Some staples - flour, beans, rice, palm oil, sugar, powdered milk and
soap - will be exempt from the tariffs.

But not other vegetables and fruit, imported from Europe or neighbors
such as Namibia, which will carry a new top rate of 50 percent duty.
The government believes these can be produced at home and the tariff
barrier is designed to encourage this.

The average national salary in 2010, the latest year for which
official data is available, was around $260 per month. In the finance
sector the average was 10 times higher and in the oil business over 20
times higher, or around $5400.

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Uganda's economy is forecast to expand 6.8 percent in the next fiscal year as the government boosts investment in road, energy and farming projects to spur growth, according to the Finance Ministry.

Gross domestic product is projected to rise 6 percent in the year
through June, "slightly lower" than previously projected, according to
a pre-budget statement released today. Drought in parts of the country
that has cut food and livestock production and conflict in the
neighboring trade partner of South Sudan have hurt Uganda's economy,
according to the Kampala-based Finance Ministry.

"The focus of fiscal policy remains on sustaining efforts towards
infrastructure development, especially roads and energy, and boosting
agricultural production and productivity, which are vital to unlock
the growth potential of the economy," according to the statement.

Uganda faced disruptions in foreign aid flows in 2012 and last year
over a corruption scandal and more cuts to external assistance this
year after President Yoweri Museveni signed a law that strengthens
punishments against homosexuality.

Spending, discounting debt payments, in 2014-15 is forecast to
increase 10 percent to 14.3 trillion shillings ($5.7 billion), while
the fiscal deficit excluding grants is expected to narrow to 5.5
percent of gross domestic product next year from 9.1 percent of GDP.

Revenue will grow to 10.1 trillion shillings from 8.8 trillion
shillings in 2013-14. Donors are expected to fund 18 percent of next
year's budget, according to the statement.

Expenditure on energy will rise by 2 percent to 1.7 trillion shillings
in 2014-15. The funding will partly go toward construction of the
600-megawatt Karuma and 183-megawatt Isimba hydroelectric plants, as
well as the proposed 600-megawatt Ayago hydropower project, all on the
Nile River, according to the Finance Ministry.

Uganda, Africa's biggest robusta coffee exporter with a $20 billion
economy, is classified by the World Bank as one of the world's poorest

Kidnap scourge persists in Mozambique


THE arrest of a businessman with links to the ruling Frelimo party in
Mozambique, in connection with a series of kidnappings, has shocked
Maputo and refocused attention on a scourge that had seemed to be

The arrest of Moniz Carsane, a young Hindu businessman with a jet-set
lifestyle, marks the first time someone with such prominent links to
the circles of power has been implicated in connection with the
kidnaps-for-ransom that have earned Mozambique a reputation as the
Colombia of southern Africa.

According to local reporters, Mr Carsane (also known as Manish
Cantilal) had trouble finding a lawyer when he was arrested on April
12, because many of Maputo's top attorneys shied away from the case.
The reason was not hard to fathom.

Not only did Mr Carsane attend a ruling party congress as a Frelimo
representative in 2012, but a prominent Frelimo mayor was at his
wedding, a few weeks before his arrest, at Maputo's swish Polana
Hotel. Authorities are trying to link him to four kidnappings: two
dating back to 2011 and two early this year.

Former Senegalese President Abdoulaye Wade's plane was denied
permission to land in the country, where he was due to visit after a
two-year absence, according to his party.


The plane was stuck in Morocco because authorities in Dakar refused to
authorize its landing, said Omar Sarr, a coordinator for Wade's former
ruling group, the Senegalese Democratic Party. He was addressing
hundreds of supporters gathered at the party's headquarters in
Senegal's capital late yesterday, as heavily armed security forces
stood guard.

Wade ran Senegal for 12 years before leaving the country after his
defeat in a 2012 presidential election by President Macky Sall. Since
then, Wade's son Karim has been the subject of a corruption
investigation which sparked objections by ex-president's party.

Sall's office said in an e-mailed statement late yesterday that
authorization for a flight from Morocco had been granted, only to be
revoked because "important flight parameters were changed" including
the plane's registration and passenger manifests. It said that a new
application was made yesterday and received a "positive opinion."

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Car bomb kills four in Kenyan capital @Reuters
Kenyan Economy

Police officers had earlier stopped the saloon car at traffic lights
and were taking the occupants for questioning when the bomb exploded,
the ministry said.

"At least 4 people dead after a saloon exploded at Pangani police
station. Two of them are police officers," the ministry said.

Pangani is located next to Nairobi's Eastleigh district, an area
populated by Somalis and targeted in past bomb and grenade attacks.

A second controlled detonation was carried out by bomb disposal
officers shortly after the initial blast, a Reuters witness said.


Asymmetric risks remain real potent.

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The recent bombings in Abuja and last years attack on Westgate confirm the potency of asymmetric risks. 22-APR-2014
Kenyan Economy

This comment by the leader of Nigeria's Boko Haram Islamists Abubakar
Shekau caught my attention;

"We are in your city," he said, ad- dressing Nigeria's President
Goodluck Jonathan.

That comment could have been made by the Al-Shebaab.

Both Boko Haram and Al-Shebaab represent a risk that David Lipton did
not touch on, that being asymmetric risks. The recent bombings in
Abuja and last years attack on Westgate confirm the potency of
asymmetric risks. African markets have taken these risks in their
stride. They might stumble if these asymmetric risks ratchet higher.

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Kenyan police Photograph: Tony Karumba/AFP/Getty Images
Kenyan Economy

@KenolKobil of Kenya's Managing Director Plans to Eliminate Debt


KenolKobil Ltd., a Kenyan fuel retailer with operations in nine other
African countries, plans to be debt-free by the end of the year and is
consolidating its business, Managing Director David Ohana said.

"We are busy paying our loans to the banks," Ohana, AGE?, who took the
position in July, said in an interview on April 22 in the capital,
Nairobi. "In the past we borrowed monies for expanding our business.
But we are now changing our strategy a bit. We want to reduce our
loans completely by 2014 so that the company can stabilize."

Commercial lending rates in Kenya averaged 17.1 percent last month,
according to the country's central bank. The East African nation's
government wants these levels cut to less than 10 percent within the
next year, Vice President William Ruto said on April 7. The Treasury
is preparing recommendations on how to reduce lending rates to boost
investment after consulting with the banks, Treasury Secretary Henry
Rotich said in March.

"It's a concern for the overall economy when interest rates" charged
by banks are "anywhere between 13 and 18 percent," Ohana said. "It
makes borrowing money expensive and the margins in retailing oil are
not that high. This impacts negatively on the business."

The company, which is Kenya's biggest fuel retailer by market value,
owes 800 million shillings ($9 million) to lenders including Standard
Bank Ltd., Africa's biggest, he said.

While KenolKobil, which is based in Nairobi, isn't looking for a
strategic partner, local and international investors have shown
interest, Ohana said.

In March 2013, the company terminated buyout talks with Puma Energy
BV, a Geneva-based downstream and storage unit of Trafigura Beheer BV,
which had planned to buy a controlling stake in the pan-African

"The main focus for now is sustainability of earnings because we
suffered some volatility in profit earnings in 2011 and 2012," Ohana
said. "We want to focus on stabilizing the business first. We possess
a great set of assets."

KenolKobil reported a profit of 558.4 million shillings in 2013 from a
loss of 6.28 billion shillings in 2012 after foreign-exchange losses
that erased net income.

The stock declined 3.7 percent to 9 shillings by the close in Nairobi
yesterday. It has lost 11 percent this year, making it the worst
performer on the 25-member FTSE/NSE Kenya 25 index after Uchumi
Supermarkets Ltd. and Kenya Electricity Generating Co.

Kenya, which has attracted explorers including France's Total SA and
Tullow Oil Plc, is headed to become the first oil exporter in East
Africa when it starts shipments as early as 2016.

@Kenolkobil share price data and FY 2013 Earnings here


Par Value:                  0.50/-
Closing Price:           9.00
Total Shares Issued:          1471761200.00
Market Capitalization:        13,245,850,800
EPS:             0.38
PE:                 23.684

Major energy supplier in the Region.

Full Year Earnings through 31st December 2013 versus FY through December 2012

FY Net Sales 109.687453b versus 192.527486b -43.027%
FY Cost of Sales [104.660874b] versus [188.239327b] -44.4001%
FY Gross Profit 5.026579b versus 4.288159b +17.2199%
FY Other Income 1.402931b versus 483.364m +190.243%
FY Distribution Costs [761.412m] versus [995.560m]
FY Administrative Expenses [3.369232b] versus [5.859819b] -42.502%
FY Net Foreign Exchange Losses [105.347m] versus [4.605632b] -97.712%
FY Interest Expense [1.671759b] versus [2.351185b] -28.897%
FY Profit Before Tax 563.918m versus [8.964664b]
FY Profit After Tax 558.149m versus [6.284575b]
FY Earnings Per Share 0.38 versus [4.26]
FY Dividend 10 cents a share

Kenya Shilling versus The Dollar Live ForexPros 86.887


Nairobi All Share Bloomberg +8.642% 2014 Record High


Nairobi ^NSE20 Bloomberg -0.452% 2014


Every Listed Share can be interrogated here


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by Aly Khan Satchu (www.rich.co.ke)
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April 2014

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