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Satchu's Rich Wrap-Up
Wednesday 23rd of April 2014

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Macro Thoughts

Home Thoughts

“It is not true that people stop pursuing dreams because they grow
old, they grow old because they stop pursuing dreams.” ― Gabriel Garcí
a Márquez

“All human beings have three lives: public, private, and secret.” ―
Gabriel Garcí a Márquez, Gabriel García Márquez: a Life

“The adolescents of my generation, greedy for life, forgot in body and
soul about their hopes for the future until reality taught them that
tomorrow was not what they had dreamed, and they discovered
nostalgia.” ― Gabriel Garcí a Márquez

“Age has no reality except in the physical world. The essence of a
human being is resistant to the passage of time. Our inner lives are
eternal, which is to say that our spirits remain as youthful and
vigorous as when we were in full bloom. Think of love as a state of
grace, not the means to anything, but the alpha and omega. An end in
― Gabriel Garcí a Márquez, Love in the Time of Cholera

read more

President @Barackobama goes first to Japan, arriving tomorrow in Tokyo, then travels to South Korea, Malaysia and the Philippines before returning to Washington April 29.
Law & Politics

 “A narrative has built after Syria, when the United States drew a red
line and then ignored it; Crimea; the defense budget cuts,
particularly in Japan, but elsewhere in the region” that the U.S. no
longer is focused on Asia and lacks a “go-to guy” for the region, said


I do not buy into this @BarackObama is weak theory. I think he is
remarkably subtle and actually a very aggressive exponent of c21st
instruments of warcraft.

President @BarackObama


read more

Sino-U.S. trade last year topped $562 billion, a 38 percent jump from five years earlier
Law & Politics

“There doesn’t need to be tension and conflict,” said Ben Rhodes,
deputy national security adviser. “An emerging power like China does
not inherently have to come into conflict with an established power
like the United States.”

As China has prospered, it has lavished resources on the military in a
manner exceeded only by the U.S., which will spend $572 billion on
defense this year. In March, China said it plans to increase the PLA’s
budget by 12.2 percent this year to 808.2 billion yuan, about $130

“China’s military modernization has moved more quickly than most
experts had predicted,” says Ratner, now a senior fellow at the Center
for a New American Security.

read more

Obama reassures Japan, other allies on China ahead of visit Reuters
Law & Politics

U.S. President Barack Obama has said Washington welcomes China's rise
but that engagement with Beijing would not come at the expense of its
Asian allies - as Chinese state media greeted his imminent arrival in
the region with a broadside accusing the United States of wanting to
"cage" the emerging superpower.

Obama's remarks, aimed at reassuring Japan and other allies, set
against a robust commentary from China's state news agency Xinhua that
also called the United States "myopic", demonstrate the delicate
balancing act Obama faces on a week-long Asia tour.

The four-nation trip that starts in Tokyo later on Wednesday comes at
a time of rising tension in the region, and as the United States urges
Japan's unpredictable neighbor North Korea not to conduct another
nuclear test.

Obama, who will be making the first full state visit to Japan by a
U.S. President since 1996, must assuage worries by Tokyo and other
allies that his commitment to their defense in the face of an
increasingly assertive China is weak, without hurting vital U.S. ties
with Asia's biggest economy.

Noting Beijing and Washington could work together on issues such as
North Korea's nuclear program, Obama told the Yomiuri newspaper, in
written remarks: "In other words, we welcome the continuing rise of a
China that is stable, prosperous and peaceful and plays a responsible
role in global affairs."

He added: "And our engagement with China does not and will not come at
the expense of Japan or any other ally."

Such assurances are likely to be high on the agenda when Obama meets
Japanese Prime Minister Shinzo Abe at a symbolic summit on Thursday.

Japan, whose ties with rival China have chilled over the past two
years, has been beset by anxiety over the degree to which reality
matches rhetoric in Obama's promised "pivot" of U.S. military and
diplomatic assets to Asia.

China, for its part, fears the U.S. is pursuing a policy of
containment through its network of Asian allies, several of whom have
long-standing territorial disputes with Beijing in the East and South
China Seas.

Wednesday's Xinhua commentary criticized U.S. policy in the region as
"a carefully calculated scheme to cage the rapidly developing Asian

"The United States should reappraise its anachronistic hegemonic
alliance system and stop pampering its chums like Japan and the
Philippines that have been igniting regional tensions with provocative
moves," it said.

Obama and Abe are expected to send a message of solidarity after
strains following Abe's December visit to Tokyo's Yasukuni Shrine,
seen by critics as a symbol of Japan's past militarism.

Obama also assured Japan that tiny isles in the East China Sea at the
heart of a territorial row with China are covered by a bilateral
security treaty that obligates America to come to Japan's defense.
That is long-stated U.S. policy, but the confirmation by the president
is likely to be welcome in Japan.

"The policy of the United States is clear - the Senkaku islands are
administered by Japan and therefore fall within the scope of ... the
U.S.-Japan Treaty of Mutual Cooperation and Security," Obama said,
using the Japanese name for the islands that are known as the Diaoyu
in China, which also claims them.

"And we oppose any unilateral attempts to undermine Japan's
administration of these islands," he said.

Japanese and Chinese naval vessels and coastguard ships have played
cat-and-mouse around the disputed islets since Japan's government
bought the then-privately owned territory in 2012.

A joint statement to be issued at the summit will state the two allies
will not tolerate any attempt to change the status quo by force - a
phrase that implicitly targets China - but likely not mention the
islands or China by name, Japanese media have reported.

Obama also reaffirmed Washington's commitment to the security of South
Korea, and said it would stand firm in its insistence that a nuclear
North Korea was unacceptable.

Seoul is the second stop on Obama's four-nation swing, which also
includes Malaysia and the Philippines.

U.S.-Japan relations were strained after Abe in December visited the
Yasukuni Shrine, where wartime leaders convicted as war criminals by
an Allied tribunal are honored along with war dead. The visit prompted
a U.S. statement of "disappointment".

And while he sent a ritual offering to Yasukuni on Monday, Abe did not
join the nearly 150 lawmakers who visited in person to commemorate its
spring festival.

"Abe, by declining to visit Yasukuni for the spring festival, sent the
message that he has heard the U.S., that the message has been
received," a former Western diplomat said. "To that degree, the
situation is different from some months back."

The two leaders will also need to show progress towards a two-way
trade pact seen as vital to a broader U.S.-led Trans-Pacific
Partnership (TPP) deal.

The deal is both a pillar of Obama's Asia rebalancing and critical to
Abe's strategy to revive the Japan's economy.

But significant gaps remain over Japan's desire to keep tariffs on
politically sensitive farm products such as beef.

U.S. Trade Representative Michael Froman had arrived in Japan earlier
than expected and was likely to meet Japanese Economy Minister Akira
Amari, Japanese media reported on Wednesday.


read more

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

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 normal 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.’’

Predicting that the US will continue to send flights through the area,
Francois Godement, senior policy fellow at the European Council on
Foreign relations, said, “What they are doing is dropping their
business card.”

I see the pivot to Asia as the encirclement of China, then the
shrinking of its operating theatre and then lighting the tinderbox
that is the periphery.

The US probably feels it holds a decisive hard power advantage at this
moment and given that the trajectory is one of gradual erosion of that
decisive advantage leads me to the view that this pivot to Asia has a
logic and momentum of its own. Therefore, I see the US being
increasingly determined to press its advantage

‘’distant blockade’’ operations

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Search for MH370 reveals a military vulnerability for China
Law & Politics

 When Chinese naval supply vessel Qiandaohu entered Australia's Albany
Port this month to replenish Chinese warships helping search for a
missing Malaysian airliner, it highlighted a strategic headache for
Beijing - its lack of offshore bases and friendly ports to call on.

China's deployment for the search - 18 warships, smaller coastguard
vessels, a civilian cargo ship and an Antarctic icebreaker - has
stretched the supply lines and logistics of its rapidly expanding
navy, Chinese analysts and regional military attaches say.

The United States, by contrast, has built up an extensive network of
full bases - Japan, Guam and Diego Garcia - buttressed by formal
security alliances and access and repair agreements with friendly
countries, including strategic ports in Singapore and Malaysia.

While China is building up its fortified holdings on islands and reefs
in the disputed South China Sea, its most significant southernmost
base remains on Hainan Island, still some 3,000 nautical miles away
from where Chinese warships have been searching for missing Malaysia
airlines flight MH370.

The United States, by contrast, has built up an extensive network of
full bases - Japan, Guam and Diego Garcia - buttressed by formal
security alliances and access and repair agreements with friendly
countries, including strategic ports in Singapore and Malaysia.

While China is building up its fortified holdings on islands and reefs
in the disputed South China Sea, its most significant southernmost
base remains on Hainan Island, still some 3,000 nautical miles away
from where Chinese warships have been searching for missing Malaysia
airlines flight MH370.

read more

The slap in Obama's face should be smart enough to jerk Washington out of illusion and back to reality. Xinhua
Law & Politics

Washington has good reason to pivot. Asia has grown into the
powerhouse of the world economy; it is home to important U.S. allies
and brimful of significant U.S. interests. Any country disregarding or
even discounting the role of Asia would do so to its own peril.

But that is not all there is to it. Beneath the pragmatic exterior
lies the China factor. Despite Washington's repeated denial, its
rebalancing strategy smacks of a carefully calculated scheme to cage
the rapidly developing Asian giant by rallying U.S. allies and
reinforcing U.S. presence.

While the outer layer of Washington's logic indicates an adaptable and
far-sighted global colossus, the inner layer betrays a sclerotic and
myopic superpower trapped by recent history in a confrontational
mindset and blinded by outmoded realism to China's peaceful

Such a double character is dangerous and unsustainable. With the Asian
landscape having altered dramatically, the United States needs to
shake off its historical and philosophical shackles and update its
Asia policy in line with the new realities, both for its own benefit
and for that of the region and globe at large.

"No nation should threaten its neighbors by amassing troops along the
border. We call on Russia to pull these forces," Biden told a joint
news conference after meeting Yatseniuk.


"We have been clear that more provocative behavior by Russia will lead
to more costs and to greater isolation," the vice president said.
"We've heard a lot from Russian officials in the past few days. But
now it's time for Russia to stop talking and start acting."

Biden added: "We will not allow this to become an open ended process.
Time is short in which to make progress."


I do not believe the US can pivot to Asia and to China simultaneously
and therefore I do not see Ukraine as the defining Geopolitical
Target. I think China is.

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“He never smiles, he never says thank you, and I’ve never seen him say, ‘I’m sorry,’ ” a longtime associate of Maliki’s told me.
Law & Politics

The resurgence of Iraq’s Shiites is the greatest legacy of the
American invasion, which overthrew Sunni rule and replaced it with a
government led by Shiites—the first since the eighteenth century.

Prime Minister Nuri al-Maliki is seeking a third term. Photograph
by Moises Saman.


The New set of risks are Geopolitical risks


“The new set of risks are geopolitical risks. Most of the attention is
to the question of what’s happening in the Ukraine, and the
relationship between Russia and the US But we’ve also pointed to the
geopolitical risks in the Middle East, what’s happening in Syria, and
geopolitical risks in terms of the relationship between China and
Japan. So there are geopolitical risks that are a bit more on the
radar screen than in past years, and given the fragility of recovery,
they’re more salient than they might otherwise be.’’ said the IMF’s
David Lipton last week.

From Lipton’s comments, we can appreciate that there are multiple
theatres and spillover risks that remain. The cause and effect on the
markets remains real high. The Russian Micex trades on 4.5x earnings,
for example, which is about one third of the valuation imputed to
emerging markets. The Syrian pound has collapsed. The impact on
Chinese and Japanese markets of a serious collision between the two
would be brutal and violent. Getting caught up in crossfire of
geopolitical uncertainty not only decimates lives but decimates your
wealth. Interestingly, gold which tends to be a proxy for geopolitical
risks whilst +8.00% in 2014, in fact, trades much softer than you
would have expected given the levels of geopolitical uncertainty.

The Arab Spring which was ignited by Mohamed Bouazizi’s self-
immolation in 2011 also speaks to a different type of geopolitical
risk, that being internal but nevertheless just as risky. Whilst most
states have an overwhelming monopoly on the instruments of violence,
what we know is that there are moments when the state’s monopoly
counts for naught, just ask Ben-Ali, who fled to Saudi Arabia with his

As the inestimable Ryszard Kapuscinski said in his book “Shah of Shahs”

‘’All books about all revolutions begin with a chapter that describes
the decay of tottering authority or the misery and sufferings of the
people. They should begin with a psychologi- cal chapter, one that
shows how a harassed, terrified man suddenly breaks his terror, stops
being afraid. This unusual process, sometimes accomplished in an
instant like a shock or a lustration, demands illuminating. Man gets
rid of fear and feels free. Without that there would be no revolution.
It is authority that provokes revolution....This occurs when a feeling
of impunity takes root among the elite: We are allowed anything, we
can do anything. This is a delusion, but it rests on a certain
rational foundation. For a while it does indeed look as if they can do
whatever they want. Scandal after scandal and illegality after
illegality go unpunished. The people remain silent...They are afraid
and do not yet feel their own strength. At the same time, they keep a
detailed account of the wrongs, which at one particular moment are to
be added up. The choice of that moment is the greatest riddle of

There is a school of thought that the kingdom of Saudi Arabia is
sitting on the cusp of such a moment that a system developed in the
early 20th century is simply not optimised to handle the 21st century.

Coming to Africa, we have to accept that geopolitical risks have
ratcheted higher. At a macro level, the US and China are in my view in
a conflictual relation on our continent. As we drill further down to
the micro level, we can see from South Sudan [where I cannot see how
either side can win this decisively] to places like CAR, a significant
deterioration. 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.

Oman Fights Saudi Bid for Gulf Hegemony With Iran Pipeline Plan


Oman’s plan to build a $1 billion natural-gas pipeline from Iran is
the latest sign that Saudi Arabia is failing to bind its smaller Gulf
neighbors into a tighter bloc united in hostility to the Islamic

The accord was signed during Iranian President Hassan Rouhani’s visit
to Oman last month, and marks the first such deal between Iran and a
Gulf Cooperation Council state in more than a decade. Oman is in good
standing with the U.S. too: a $2.1 billion purchase of air-defense
systems from Raytheon Inc. was announced during a visit by Secretary
of State John Kerry last year. Oman, led by 73-year-old Sultan Qaboos
Bin Said Al-Said, hosted secret talks between the U.S. and Iran in the
run-up to November’s Geneva agreement, Foreign Minister Yusuf Bin
Alawi Bin Abdullah told al-Hayat newspaper this week.

Saudi Arabia’s oil reserves and population exceed the combined total
of the Gulf Cooperation Council’s other five members, yet it has
struggled to impose policy on its smaller neighbors. Some are
uncomfortable with Saudi opposition to changes in the region including
the U.S.-Iranian thaw and the rise of political Islam.

“Oman isn’t enthusiastic about integration and cooperation, and I
don’t think it ever will be,” Abdulkhaleq Abdullah, an Emirati
academic and author of “The Gulf Regional System,” said in a phone
interview. “The Sultan has always maintained a sense of mysteriousness
about Oman, and they think of themselves as somewhat different from
the rest of the GCC.”

Oman faces Iran across the Strait of Hormuz, the world’s most
important trade route for crude shipments.

A nation of 4 million with an $82 billion economy, it has opted out of
the race among neighbors to build the tallest building, most luxurious
resort or biggest mall. The capital, Muscat, is relatively free of
skyscrapers and the shops in its souks, unlike in most Gulf cities,
are run by locals. Oman’s leader, Qaboos, was born in 1940 and there’s
no heir apparent, since he has no brothers or children.

Oman isn’t the only GCC country that hasn’t adopted Saudi Arabia’s
foreign policy. Qatar has refused to toe the Saudi line on another
regional issue, supporting political Islamists including the Muslim
Brotherhood in Egypt after the 2011 revolts. Last month, Saudi Arabia,
the U.A.E. and Bahrain recalled their ambassadors from Doha, accusing
Qatar of undermining regional security.

“Oman plays it a little more carefully than Qatar has done,” Schep
said by telephone.

Qaboos “has set himself on a safe course, becoming America’s broker in
the region, warming things up with Iran, and saying unequivocally that
it wants nothing to do with Saudi Arabia’s sponsored Gulf union,” said
Christopher Davidson, author of “After the Sheikhs: The Coming
Collapse of the Gulf Monarchies.” “He’s the smartest guy in the


Sultan Qaboos is an extraordinary Interlocutor and has navigated a
very clever path.

Iranian President Hassan Rouhani, left, and Oman's leader Sultan
Qaboos Bin Said


Oman in east Africa Gingerly coming back @Economist


LAST September a conspicuous group of visitors mingled with tourists
in Zanzibar. A small horde of Omani diplomats, ministers and academics
came for a three-day symposium, ostensibly on the history of Islam in
east Africa. Most of the visitors, many from Sultan Qaboos University,
focused on the strength of Omani influences in Zanzibari culture and
civic institutions.

In years past, this might have been an uncomfortable subject for
Omanis and Zanzibaris. Although Oman played a major role in the
development of east African Islam, its citizens also acted as
colonists and slavers. This led to ethnic violence in 1964 and decades
of mutual silence, even after other Gulf countries began exploring
African trade deals and investments,

That seems to be changing now. In November, the sultanate donated
$1.8m to America’s National Museum of African Art to promote Oman’s
ties to the region. In December the sultanate provided Tanzania with
over $100,000 in equipment and training for the preservation of
historical data, including that on the period of Omani rule.

According to Nathaniel Mathews, a PhD student at Northwestern
University in Illinois studying migration between Oman and the Swahili
coast, this shift represents a change in Omani attitudes. Omani
newspapers have recently started making more blatant and proud
references to the country's imperial past, not least since returnees
from Swahili families are rising in political and cultural circles.
But it is also a recognition of the sultanate’s cultural diversity and
historical ties with the African coast as a source of strength and
possible future benefit.

Tanzanians too are eyeing opportunities. Omani investors have promised
to inject $100m into Tanzania’s pitiful national airline, hoping to
revive direct flights to Muscat, the Omani capital. The Oman Oil
Company has established its first regional representative office in
Tanzania, as Oman Energy Limited.

Gulf countries have found investments in Africa tricky. East Africa is
an especially hard market to crack and Oman still has a long way to

read more

Tony Blair to say battle against Islamic extremism is paramount
Law & Politics

Tony Blair will warn the west it needs to take sides in the Middle
East and move the battle against Islamist extremism to the top of the
political agenda.

In a speech to Bloomberg in London on Wednesday, the former Labour
prime minister will say: "The important point for western opinion is
that this is a struggle with two sides. So when we look at the Middle
East and beyond it to Pakistan or Iran and elsewhere, it isn't just a
vast unfathomable mess with no end in sight and no one worthy of our
support. It is in fact a struggle in which our own strategic interests
are intimately involved; where there are indeed people we should
support and who, ironically, are probably in the majority if only that
majority were mobilised, organised and helped.

"But what is absolutely necessary is that we first liberate ourselves
from our own attitude. We have to take sides. We have to stop treating
each country on the basis of whatever seems to make for the easiest
life for us at any one time. We have to have an approach to the region
that is coherent and sees it as a whole. And above all, we have to
commit. We have to engage".

Blair will warn: "The threat of this radical Islam is not abating. It
is growing. It is spreading across the world. It is destabilising
communities and even nations. It is undermining the possibility of
peaceful co-existence in an era of globalisation. And in the face of
this threat we seem curiously reluctant to acknowledge it and
powerless to counter it effectively".

In a clear reference to Saudi Arabia, he will say: "It is absurd to
spend billions of dollars on security arrangements and on defence to
protect ourselves against the consequences of an ideology that is
being advocated in the formal and informal school systems and in civic
institutions of the very countries with whom we have intimate security
and defence relationships."

He claims some of these countries want to break out of this ideology,
but need the west to make it a core part of the international dialogue
in order to force the necessary change within their own societies.

Blair will be unrepentant about his apparent rejection of democracy in
Egypt, saying the "Muslim Brotherhood government was not simply a bad
government. It was systematically taking over the traditions and
institutions of the country."

He will claim the revolt of 30 June 2013 led by the army was "not an
ordinary protest. It was the absolutely necessary rescue of a nation.
We should support the new government and help."

He will add that this does not mean strong criticism of the death
sentence on 500 Egyptians, but does require showing "some sensitivity
to the fact that over 400 police officers have suffered violent deaths
and several hundred soldiers been killed".

Across the Middle East, he will say, there is one essential struggle
between pluralistic societies and open economies, where the attitudes
and patterns of globalisation are embraced; and those who want to
impose an ideology born out of a belief that there is one proper
religion and one proper view of it, and that this view should
exclusively determine the nature of society and the political economy.

read more

Currency Markets at a Glance WSJ
World Currencies

Euro 1.3818 drifting up from a near two-week low of $1.3785
Dollar Index 79.84
Japan Yen 102.56
Swiss Franc 0.8836
Pound 1.6832 touched $1.6842 on April 17, the highest since November 2009
Aussie 0.9285 The trimmed mean gauge of Australian consumer prices was
2.6 percent in the first quarter from a year earlier, less than the
median estimate of economists in a Bloomberg News survey for a 2.9
percent increase, the statistics bureau said today.
India Rupee 61.03 India’s rupee weakened beyond 61 per dollar for the
first time in a month
South Korea Won 1039.55
Brazil Real 2.2398
Egypt Pound 6.9897
South Africa Rand 10.5471

HSBC Holdings Plc and Markit Economics said their Chinese
manufacturing gauge rose to 48.3 this month from 48 in March, which
was the lowest since July.

Dollar Index 3 Month Chart INO 79.84 [need to see a push through
80.16 then 80.50 to get constructive]


Sterling 1 Year Chart INO 1.6831 [more than 4 year highs looking
for a move to 1.7350]


So how does an investor play this recovery. I think you need to be net
long sterling. 12-AUG-2013


Euro versus the Dollar 3 Month Chart 1.3818 [resilient]


read more

Commodity Markets at a Glance WSJ

Gold 3 month Chart INO 1284.95 [looking for a sharp break lower]


Crude Oil 3 Month Chart INO 101.60 [worst session in 2014 yesterday]


WTI for June delivery was at $101.52 a barrel, down 23 cents, in
electronic trading on the New York Mercantile Exchange at 1:53 p.m.
Sydney time. The May contract expired yesterday after falling $2.24 to
$102.13, the lowest since April 7.

India's oil imports from Iran more than doubled in March from a year
ago to about 387,000 barrels per day (bpd).


Iranian shipments in the first quarter of this year rose about 43
percent from the same period in 2013, according to tanker arrival data
obtained from trade sources and compiled by Thomson Reuters Oil

The CHART OF THE DAY shows that an index comprising futures in New
York for arabica coffee and orange juice climbed yesterday to a
25-month high of 378.1, jumping 51 percent in 2014.


World's fastest lift climbs 95 floors in 43 seconds at speeds of up to 45mph


The Burj Khalifa Dubai


read more

NEWS ANALYSIS: Young nation hovers on brink of collapse amid raging warfare

WHEN not plotting military strategy to seize South Sudan’s crucial oil
fields, sacked vice-president turned rebel chief Riek Machar spends
time reading the economic and political history "Why Nations Fail".

"Propping up the government in Juba and polishing its legitimacy with
a dose of political dialogue and a dash of power sharing will not end
the conflict," the International Crisis Group (ICG) wrote in a recent

"The war risks tearing the country further apart and is pulling in
regional states," the ICG said, pointing to a plan by regional nations
to send in military forces in addition to UN peacekeepers.

Uganda has sent in troops and fighter jets to back the government,
while Information Minister Michael Makuei has accused "forces from
Sudan" of backing Mr Machar, although he stopped short of actively
accusing Khartoum of interfering.

Back at the camp, Mr Machar predicts, gloomily, that "this will be a
regional conflict".

He says he is "looking for funding", but rejects accusations that he
is seeking support from neighbouring Sudan, old friends who backed him
during the 1983-2005 war.

Rival gunmen from Sudan’s war-torn Darfur are accused of fighting on
both sides in South Sudan.

"Worse is yet to come," Jonathan Veitch, the UNICEF chief in South
Sudan said last week, warning if the war is not stopped, there will be
"child malnutrition on a scale never before experienced here".

read more

“We’re not taking 51 percent of anyone’s money,” Patrick Chinamasa told reporters in the capital, Harare, yesterday. “There’s no one-size-fits-all.”

Zimbabwe will decide how much of foreign companies local blacks should
own “sector by sector,” he said, and the government is “quite
comfortable” with the injection of foreign capital in the banking
industry because it “will increase the volume of credit to the
productive sector.” Chinamasa said Zimbabwe’s indigenization minister,
Francis Nhema, will put proposals to the country’s cabinet “soon.”

Zimbabwe’s parliament passed the 51 percent ownership law in 2008, and
three years later the government began enforcing it, compelling
foreign and white-owned companies with assets of more than $500,000 to
shift majority ownership to black Zimbabweans. Miners were in the
front line, and companies such as Impala Platinum Holdings Ltd (IMP),
Anglo Platinum Ltd. and Aquarius Platinum Ltd. (AQP) have already
complied with the law.

The easing of the indigenization requirements comes as Zimbabwe’s
economy shows signs of deflation caused by a fall in consumer spending
since elections last year.

In His First Year, China's Xi Puts Unprecedented Focus on Africa


A little over a year ago, Xi Jinping embarked on his first foreign
trip as China’s president, making stops in Russia and Africa. Over the
past 13 months, his administration has focused unprecedented attention
on strengthening economic and political ties in Africa, according to a
new policy briefing by Brookings Institution scholar Yun Sun.

While China’s People’s Liberation Army has long maintained what Sun
calls a “tacit operating principle of ‘no troops on foreign soil,’”
last spring Beijing sent 170 combat troops from the PLA Special Force
to accompany the United Nations peacekeeping mission in Mali. In the
past, only Chinese engineers and medical personnel had ever been
dispatched to foreign soils under a UN mandate.

“China’s choosing Africa to dispatch combat troops for the first time
does suggest Beijing’s rising interests,” writes Sun, as well
“enhanced commitment and [a] direct role in maintaining [the] peace
and security of Africa.” China has also “dispatched a total of 16
fleets and escorted more than 5,300 ships and vessels” around the Gulf
of Aden, in effect taking responsibility for maintaining the security
of key shipping lanes.

China’s Foreign Minister Wang Yi flew to Addis Ababa in January to
join Ethiopian-led efforts to mediate between rebel forces and
government officials from South Sudan. In the past, Beijing had
officially frowned on “open intervention in … [foreign] conflicts
through direct mediation,” writes Sun. But with China now importing
significant oil from South Sudan—almost 14 million barrels in the
first 10 months of 2013—a shift in China’s rhetoric and strategy is

China is also deepening direct economic ties. Over the past year,
Beijing has granted $10 billion in direct loans to African
governments. And the focus of Chinese investments is evolving. “One
striking feature of these loans lies in China’s new priority in
financing infrastructure, agricultural, and manufacturing industries
in Africa,” writes Sun, “a strategy that shifts away from its
traditional heavy investment in Africa’s extractive industries.”

In addition to Chinese government-directed investments and security
campaigns in Africa, more than 1 million Chinese immigrants are now in
Africa, ranging from short-term construction workers to entrepreneurs
aiming to settle there long term. These new arrivals come both to seek
opportunity and to escape oppression in their homelands, a dynamic
explored in moving detail in an upcoming book, by veteran foreign
correspondent Howard French, called China’s Second Continent.

South Africa All Share Bloomberg +6.67% 2014 and at a record


Dollar versus Rand 3 Month Chart INO 10.548


Egypt Pound versus The Dollar 3 Month Chart INO 6.9857


Egypt EGX30 Bloomberg +23.17% 2014 [Africa's best in 2014]


8,269.02 +165.35 +2.04%

read more

U.S. to deliver Apache helicopters to Egypt, relaxing hold on aid

The United States said on Tuesday it will deliver 10 Apache attack
helicopters to Egypt, relaxing a partial suspension of aid imposed
after Egypt's military ousted President Mohamed Mursi last year and
cracked down violently on protesters.

U.S. Defense Secretary Chuck Hagel informed his Egyptian counterpart
of the decision, which will help Egypt's counter-terrorism operations
in the Sinai Peninsula, the Pentagon said.

"We believe these new helicopters will help the Egyptian government
counter extremists who threaten U.S., Egyptian, and Israeli security,"
Pentagon spokesman Rear Admiral John Kirby said in a statement,
recounting Hagel's conversation with Egyptian Defense Minister Colonel
Sedki Sobhi.

Secretary of State John Kerry had paved the way by certifying to
Congress that Egypt met key criteria for Washington to resume some

Those criteria included Egypt "upholding its obligations under the
Egypt-Israel Peace Treaty," the State Department said.

But Kerry noted in a call with his counterpart that he was not yet
able to certify that Egypt was taking steps to support a democratic

Still, the move to free up the delivery of the Apaches underscores the
importance that Washington places on ties with Egypt, which for
decades has been among the largest recipients of U.S. military and
economic aid because of its 1979 peace treaty with U.S. ally Israel.


El-Sisi's alignment with Israel in the Sinai has finally started
paying some dividends in Washington.

read more

Nigeria All Share Bloomberg -2.22% 2014 [+4.805% over the last 4 weeks]

Ghana Stock Exchange Composite Index Bloomberg +6.31% 2014 [its a
negative return when you factor in Cedi depreciation]


The Fundo Soberano de Angola, the $5 billion sovereign wealth fund of
Africa’s second-largest oil producer, is starting investments in
hotels and commercial infrastructure in sub-Saharan Africa.


The fund, based in Luanda, may invest in 50 sub-Saharan African hotels
over three years, including in its home country, Chairman Jose
Filomeno dos Santos said in an interview in Hong Kong yesterday. In
addition to the hotel fund, it is also setting up an infrastructure
fund that will participate in projects including ports, airports and
power plants, added the 36-year-old eldest son of the nation’s
President Jose Eduardo dos Santos.

The two-year-old sovereign wealth fund is tapping into the shortage of
business hotels and infrastructure in the continent rich in natural
resources to boost returns from its global fixed-income and cash
holdings. It plans to allocate half of its initial $5 billion to
alternative investments including hospitality, infrastructure,
agriculture and mining in the first two years, dos Santos said.

“We believe there’s a lot of investment interest in Africa,” said the
U.K.-educated former banker. “It has a lot of mineral potential,
almost a commodity hub. We believe this interest will remain there for
the coming years.”

The hotel fund will focus on three- to five-star hotels in sub-Saharan
African capitals and other commercial centers, targeting business
travelers rather than tourists for their “stable” and “predictable”
returns, he said.

Africa’s Tech Edge


It’s a painfully First World problem: Splitting dinner with friends,
we do the dance of the seven credit cards. No one, it seems, carries
cash anymore, so we blunder through the inconvenience that comes with
our dependence on plastic. Just as often, I encounter a street vendor
or taxi driver who can’t handle my proffered card and am left shaking
out my pockets and purse.

When I returned to the United States after living in Nairobi on and
off for two years, these antiquated payment ordeals were especially
frustrating. As I never tire of explaining to friends, in Kenya I
could pay for nearly everything with a few taps on my cellphone.

In a pleasing inversion of development logic, Africa has leapfrogged
way ahead of the wealthy world. Though about half of Americans now
have smartphones—driving major changes in the way we learn, work, and
socialize—mobile innovation has only grazed the realm of finance. A
2012 report on global financial habits found that the most
technologically advanced economies have actually been among the
slowest to catch on to mobile money. Across sub-Saharan Africa, 16
percent of adults said they used mobile money. In all other regions,
including Europe and the Americas, by contrast, that figure was less
than 5 percent.

Dayo Olopade is the author of The Bright Continent: Breaking Rules and
Making Change in Modern Africa.

IFC Begins Marketing Rwandan Bond as Africa Debt Plan Expands


The International Finance Corp. started marketing local-currency bonds
in Rwanda, which is marking 20 years since a genocide that killed at
least 800,000 people, as it expands an African debt program.

The debt will be sold in Rwandan francs and listed on the nation’s
bourse, Standard Bank Group Ltd., which is arranging the sale with CfC
Stanbic Bank and Bank of Kigali Ltd., said in an e-mailed statement

“The timing and size of the bond will be at the issuer’s discretion,”
Johannesburg-based Standard Bank said. The sale is “subject to market
conditions,” the company said.

The World Bank debuted its Pan-Africa Domestic Medium-Term Note
Programme with the sale of 150 million Zambian kwacha ($24 million) of
Zambezi notes in September last year in an offer that was 4.8 times
oversubscribed. Africa may become the IFC’s biggest portfolio by 2016,
Chief Risk Officer Saadia Khairi said in an interview in Frankfurt in
November. The lender has been in talks with the governments of
Botswana, Kenya, Namibia, South Africa, and Uganda about
local-currency issuances.

In February, Rwanda received record demand at the first sale of debt
in francs since 2011 and the country said it would offer more debt in
May, August and November. Rwanda is the only East African nation to
have issued a Eurobond, raising $400 million in 2013. The debt has
returned 7.4 percent in 2014, the second-best best in Africa,
according to Bank of America Merrill Lynch indexes.

read more

Rwandan president says he is not ready to rule out third term

Rwandan President Paul Kagame said on Tuesday it was too early to say
whether he will seek a third term as head of the east African state,
adding "whatever will happen, we'll have an explanation."

Articles in pro-government newspapers in recent years have raised the
prospect of him staying on after his mandate expires in 2017, a move
that would anger his critics and require a change to the constitution.

"I have been asked when or whether I am going to leave office right
from the time when I started. It is as if I am here just to leave. I'm
here to do business on behalf of Rwandans," Kagame told students and
faculty after a speech at Tufts University near Boston.

"I don't know what else I can give you on that, but let's wait and see
what happens as we go. Whatever will happen, we'll have an

He was responding to a student's question about how he imagined his
political role in Rwanda after his term ends.


He will stand for a 3rd Term, thats a racing certainty.

read more

Born Free USA Exposes the Bloody Ivory Trade

From Sudan, government-allied militias complicit in the Darfur
genocide fund their operations by poaching elephants hundreds of miles
outside North Sudan's borders.
In the Democratic Republic of the Congo, state security forces
patronize the very rebels they are supposed to fight, providing them
with weapons and support in exchange for ivory.
Zimbabwean political elites, including those under international
sanction, are seizing wildlife spaces that either are, or are likely
to soon be, used as covers for poaching operations.
In East Africa, al-Shabaab and Somali criminal networks are profiting
off of Kenyan elephants killed by poachers using weapons leaked from
local security forces.
Mozambican organized crime has militarized and consolidated to the
extent that it is willing to battle the South African army and
well-trained ranger forces for rhino horn.
In Gabon and the Republic of Congo, ill-regulated forest exploitation
is bringing East Asian migrant laborers, and East Asian organized
crime, into contact with Central Africa's last elephants.
In Tanzania, political elites have aided the industrial-scale
depletion of East Africa's largest elephant population.

Roberts explains, "Our findings shine a bright light on Zimbabwe,
Mozambique, Tanzania, Sudan, and Kenya, where poachers move across
borders with near impunity, slaughter elephants with complete
disregard, and use the ivory to fund violent operations across the
continent.  Global leaders cannot stand by while the human tragedy and
poaching crisis continue."

The scourge of elephant poaching has reached crisis — historically
shocking — levels, with an estimated 35,000 to 50,000 elephants
poached per year.

Elephants 1st September 2013 Amboseli Kenya #Handsoffourelephants


read more

@UKenyatta I arrived this evening in Qatar for a three-day State visit.
Kenyan Economy

Given the schism in the Sunni complex especially around the perceived
existentialist threat presented by the Muslim Brotherhood and in
particular Qatar's support for the MB, This is an interesting visit.

read more

Uhuru strikes deal for Mombasa gas-fired power plant
Kenyan Economy

“I encourage Qatari entities in the energy sector to participate in
the Kenyan energy sector where substantial returns and mutual benefits
can be expected,” said President Kenyatta in Doha during a meeting
with Qatari Energy and Industry minister Mohamed Saleh Al Sada.

“Co-operation with Qatar in the energy sector will not only benefit
Kenya but also our neighbours by opening the region to diverse

Kenya hopes of yuan clearing house rise with premier’s visit


Kenya’s bid to host a clearing house for China’s yuan currency is
expected to gain fresh impetus as Chinese Premier Li Keqiang visits
Nairobi next month.

For Kenya, hosting the clearing house would be important in sending a
political message on its deepening ties with the East and in its bid
to turn Nairobi into one of Africa’s key financial hubs. Tanzania and
South Africa are said to be also interested in hosting the facility.

“We only developed a proposal... the modalities on how it can be done
depend on the Chinese government,” Njuguna Ndung’u, the Central Bank
Governor, told The EastAfrican.

Singapore was last year picked as the first regional financial centre
outside China to have a yuan clearing centre with several other
cities, including London, Frankfurt and Luxembourg pursuing the
opportunity to host offshore yuan clearing banks.

If Kenya’s wish is granted, it will be the first Yuan clearing house
in Africa and a big win for the country.

“The real gain for Kenya, or any other African host, would be the
symbolism of being the continent’s business gateway to China, and
essentially Asia,” said South African brokerage firm Imara Capital in
a research note.

Foreign investors’ stake in Britam stood at 4.32 per cent in February
compared to 41.51 per cent in July last year, with the equity of local
institutions rising to 62.68 per cent from 28.49 per cent in the same


BRITAM EA share price data here


Par Value:
Closing Price:           18.10
Total Shares Issued:          1891460000.00
Market Capitalization:        34,235,426,000
EPS:             1.4
PE:                 12.929

Most buyers in the market for a 777-300ER—list price: $320.2
million—or a $212 million 787 Dreamliner pay Boeing cash they have
borrowed elsewhere, typically from a bank or a commercial bond issue
to support the acquisition.


Kenyan farmers Insure my cows A new kind of insurance may protect
herders against drought


Mr Mude has developed an insurance model that uses satellite images to
assess the impact of drought on the vegetation that camels, cows and
goats need to survive. The data allow for the severity of the drought
to be factored into the size of the premium. If dry weather causes
grazing to drop by at least 15%, judging by historical records, the
insurer will pay out. This model “insures the grass, not the animal”,
says Mr Mude. Mr Bashir’s father was paid, along with dozens of
others, after his area was judged to have suffered a 23% drought. He
got a cheque worth 8% of the total insured value of his beloved herd
of 50 cows.

Persuading seasoned Somali herders who have been husbanding their
animals the same way for centuries to pay insurance premiums has not
been easy. Mr Bashir has bent the ear of local imams and sheikhs and
brought in Islamic scholars. Meanwhile donors, including Britain and
Australia, whose aid agencies fund ILRI, have stumped up more money to
get the word out around Wajir. The only problem, Mr Bashir concedes,
is that, with all his herder clients currently grazing in one area,
everyone must be paid at the same time when the rains fail.

Kenya Shilling versus The Dollar Live ForexPros 87.098 [The Shilling
is at 3 and a 1/2 month lows]


Nairobi All Share Bloomberg +8.466% 2014 at a Record High


Nairobi ^NSE20 Bloomberg -0.4544% 2014


Every Listed Share can be interrogated here


read more

N.S.E Today

The Nairobi All Share closed 0.24 points higher at a Fresh Record High
of 148.46.
The Nairobi All Share has rallied 3.269% in April and the Index is
+8.64% in 2014.
African Equity Markets have enjoyed a broad based rally in April with
Nigeria rallying +4.805% and South Africa at an All time High.
Egypt is the best performing Index in 2014 and +23.17%.
Volumes ticked higher today and just shy of 1b kenya shillings to
total 967.722m.
Big Banks, Insurers and the likes of EABL led the All Share higher.
The Nairobi NSE20 edged marginally higher.

N.S.E Equities - Commercial & Services

Safaricom eased 1.515% off a record closing High of 13.20 to close at
13.00 and traded 14.446m shares worth 187.846m. Safaricom is +19.815%
in 2014 and will set Fresh All Time Highs ahead of the FY Earnings
Release. I expect a shallow correction which was in fact overdue.

Kenya Airways improved 1.19% to close at 12.80. Kenya Airways'
Commercial Director steered FY Earnings Expectations higher and
towards a FY Profit and this is yet to be reflected in the Price.

N.S.E Equities - Finance & Investment

Equity Bank rallied 5.147% to close at 35.75 and traded its highest
volume session of 2014 with 10.513m shares worth 376.523m changing
hands. Equity Bank is now +13.008% in 2014 and has rallied 10.85% over
the last 3 sessions and on very muscular volume. Equity Bank released
better than expected Q1 2014 Earnings and that Release in conjunction
with some apparently bold moves in the Mobile Phone/Mobile Money Space
has been the Positive Catalyst for the 10.85% 3 session rally.
Kenya Commercial Bank rallied a further 1.57% to close at 48.50 and
was trading at 49.25 +3.14% at the closing Bell. Kenya Commercial Bank
traded 2.438m shares. Kenya Commercial Bank is now within striking
distance and 3% of an All Time Closing High reached in Q4 2013.
COOP Bank firmed 1.176% to set an all time Closing High [for the
second consecutive session] of 21.50. COOP Bank traded 1.153m shares
worth 25.068m. COOP Bank is now +21.12% in 2014.
Diamond Trust bank rebounded 3.181% to close at 227.00 and took back
87.5% of yesterdays retreat. Diamond Trust Bank traded 155,900 shares
worth 35.500m. Diamond Trust is +18.22% in 2014 and has headroom. The
Rights Issue is real light sized and therefore Supply via the Rights
Issue is not a factor or an impediment.
Barclays Bank firmed 0.611% to close at 16.45 and was trading at 16.60
+1.53% at the Finish line. Barclays Bank traded 820,700 shares.

Housing Finance eased 4.05% to close at 35.50 and traded 355,100
shares after releasing Q1 2014 which evidently underwhelmed.

Pan Africa Insurance rallied 3.03% to close at 136.00 and is now
+51.111% in 2014. Sanlam have already announced they are looking to
uplift their shareholding and this was the latest Trigger for the
recent run higher.
CIC Insurance closed 1.12% firmer at 8.95 and was trading at 9.50
+7.34% session highs at the closing Bell. CIC Insurance is +50.42%
this year and a Leader in what has been a broad based Insurance Rally
which began in Q4 2013.

N.S.E Equities - Industrial & Allied

EABL firmed 0.71% to close at 284.00 and was trading at session Highs
of 288.00 +2.13% at the Finish Line. EABL traded 108,400 shares with 4
Buyers for every 1 Seller at the Finish Line which is supportive for
the Price. EABL is headed to unchanged for the Year and -2.06% in
2014. EABL has rallied 9.65% and violently since the 7th of April.
Weak Longs have been flushed out a while ago.

KenolKobil traded 6.288m shares worth 56.616m [and this was its 2nd
highest volume session in 2014] and retreated 3.74% to close at 9.00.
KenolKobil reported a FY Profit after Tax in 2013 of 558.149m versus a
FY Loss of [6.284575b] in 2012.
Total Kenya ticked 1.01% easier to close at 24.50 on light trading of
56,700 shares. Buyers outpace Sellers in a Ratio of 2 versus 1 at this
closing Level, in point of fact.

Kenya Power ticked 0.34% higher to close at 14.95 and traded 1.151m
shares worth 17.23m. KPLC is +5.65% in 2014.
KenGen, by contrast, eased 0.42% to close at 11.75 and is -13.28% in
2014. The Investor Relations Messaging signalling has lacked clarity
and has crimped the share Price. Buyers are simply sidelined and
awaiting the supersized rights Issue and that Liquidity Event.

Eveready firmed a further 2.816% to close at 3.65 and was trading at
3.90 +9.86% and its Daily Limit at the finish Line. Eveready has
rallied +10.606% over 2 sessions and is now +35.185% in 2014.

Kenya Orchards rallied 7.14% to close close at 6.00 on just 100
shares. Kenya Orchards has rallied 100% in 2014.

Home Afrika eased 2.88% to close at 5.05 but subsequently issued a
Restatement of Full Year 2013 Earnings, after the market closed.

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

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