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Tuesday 05th of August 2014
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Morning Africa |
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0930-1500 KENYA TIME
Normal Board - The Whole shebang
Prompt Board Next day settlement
Expert Board All you need re an Individual stock.
The Latest Daily PodCast can be found here on the Front Page of the site
http://www.rich.co.ke |
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Currency Markets at a Glance WSJ World Currencies |
Euro 1.3404
Dollar Index 81.39
Japan Yen 102.58
Swiss Franc 0.9082
Pound 1.6884
Aussie 0.9339 The currency has rallied 4.7 percent this year.
India Rupee 60.73
South Korea Won 1029.64 Korean exports jumped 5.7 percent last month
from a year earlier, a government report showed on Aug. 1.
Brazil Real 2.2588
Egypt Pound 7.1511
South Africa Rand 10.6310
Dollar Index 3 Month Chart INO 81.39 [stalled near term]
http://quotes.ino.com/charting/index.html?s=NYBOT_DX&v=d3&t=c&a=50&w=1
Euro versus the Dollar 3 Month Chart 1.3404
http://quotes.ino.com/charting/index.html?s=FOREX_EURUSD&v=d3&t=c&a=50&w=1
A pedestrian passes an ATM outside a Banco Espirito Santo SA
branch in Lisbon. Portugal.
http://www.bloomberg.com/news/2014-08-04/portugal-rescue-avoids-cyprus-style-pain-in-test-of-bank-rules.html
Bank of Portugal unveiled a 4.9 billion-euro ($6.6 billion) bailout
over the weekend that will leave shareholders and junior bondholders
with losses, while sparing senior creditors and unsecured depositors.
Banco Espirito Santo, once the country's largest lender by market
value, will be split in two, with depositors and healthy assets
joining the newly formed Novo Bank while bad loans and junior
creditors stay with the old bank until it can be shut down.
"To regulators in Frankfurt and Brussels, this must have seemed the
safest way to isolate any residual and tail risks" related to the
bank's Angolan unit and loans to other parts of the Espirito Santo
group, Citigroup Inc. analysts including Stefan Nedialkov wrote in an
e-mailed report from London today. "The EU's tough approach in the
case of the BES resolution is likely to be the law of the land."
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Africa goes to visit @BarackObama in Washington #AfricaSummit #USAfrica #USAfricaSummit Africa |
The White House has invited 50 African heads of state to Washington
next week for the first summit between the US and Africa. As many as
200 prominent US chief executives will be on
the sidelines of the Washington summit, including the bosses of
Walmart and General Electric and comments as long ago as last July
from Ben Rhodes, @rhodes44 [Deputy National Security Advisor for
Strategic Communications & Speechwriting] confirm that the US
Corporate Sector is looking to hard charge into Africa;
''Frankly, we have heard a high demand signal from the US private
sector What we hear from our businesses is that they want to get in
the game in Africa.''
President Obama spent less than a day in Africa during the entire
First term and is evidently playing Catch Up. Being the First
African-American President of the US at a time when the US was seeking
to emerge from a brutal recession, it would have played very poorly
back home if the President was seen to be cavorting on the African
Continent, at that time. Therefore, during his first term, President
Obama was in a Political Trap not of his own making with respect to
Africa.
I appreciate that Africa is in a much better place in this new more
multi lateral World. This new multilateral world is much more
advantageous for Africa. It has injected some competition into the
Demand Side of our Equation. But we need to be cognisant of the Hard
Power Disequilibrium because its intact and set to stay intact for
quite a while. With respect to ourselves, I sincerely wish we reset
our relations. The Rhetoric has veiled the following reality.
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GE To Invest $2 Billion in Africa by 2018 Africa |
GE convenes African Heads of State, government representatives, &
business leaders at U.S.-Africa Leaders Summit
GE commits to facility development, skills training, and
sustainability initiatives across Africa over next four years
GE revenues exceed $5.2 billion across 30 African countries in 2013 --
Africa has emerged as the most promising growth region for GE
GE has won more than $8.3 billion in orders across Africa in last 12 months
GE (NYSE: GE) announced today that it will invest $2 billion in
facility development, skills training, and sustainability initiatives
across Africa by 2018.
When will our politicians realise that Africa has changed? Aid is
dead. Trade is the future.
http://www.independent.co.uk/voices/comment/when-will-our-politicians-realise-that-africa-has-changed-aid-is-dead-trade-is-the-future-9645205.html
Ministers love to talk of the global race but, with its blinkered aid
fetish and self-harming visa policies, Britain is falling behind the
pack when it comes to Africa. We will suffer for it. Now that even the
United States is waking up to what is happening in this remarkable,
vast and diverse continent, is it too much to hope that our political
leaders might do the same?
Angola guarantee for BES Angolan unit to be revoked in overhaul - cenbank
http://af.reuters.com/article/investingNews/idAFKBN0G411R20140804
Reuters -
Angola's central bank on Monday announced "extraordinary overhaul
measures" for the local unit of Portugal's Banco Espirito Santo,
saying a sovereign guarantee of most of its loans would be revoked in
the initial phase of this process.
Provisional administrators had been named to carry out the overhaul,
National Bank of Angola said in a statement, citing the "deteriorated
state" of the credit portfolio of Banco Espirito Santo Angola (BESA).
The bank's assets would be assessed and could be sold-off or
restructured, it said
South Africa All Share Bloomberg +10.772% 2014
http://www.bloomberg.com/quote/JALSH:IND
51,239.56 +321.78 +0.63%
07-APR-2014 Snapshots from South Africa and Its role in Africa's Economy
http://www.rich.co.ke/media/docs/038NSX0705.pdf
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Dollar versus Rand 6 Month Chart INO 10.6315 Africa |
Egypt Pound versus The Dollar 3 Month Chart INO 7.1541
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1
Egypt EGX30 Bloomberg +31.495% 2014 [Fresh 2014 and more than 60 month highs]
http://www.bloomberg.com/quote/CASE:IND
8,918.00
If the equity markets had a vote in Egypt, army chief general Abdel
Fattah al-Sisi would actually get one of those impossible- to-believe
votes of 99.8% 20-JAN-2014
http://www.rich.co.ke/media/docs/038NSX2001.pdf
Nigeria All Share Bloomberg +1.142% 2014
http://www.bloomberg.com/quote/NGSEINDX:IND
41,801.58 -132.85 -0.32%
Nigeria: Gruesome footage implicates military in war crimes @YouTube @Amnesty
https://www.youtube.com/watch?v=GA7SIbvEO64
Ghana Stock Exchange Composite Index Bloomberg +6.526% 2014
http://www.bloomberg.com/quote/GGSECI:IND
2,285.90 -15.15 -0.66%
Ghana is seeking to restore policy credibility by asking the
International Monetary Fund to help rescue its currency, Finance
Minister Seth Terkper said.
http://www.bloomberg.com/news/2014-08-05/ghana-seeks-to-restore-policy-credibility-by-asking-for-imf-help.html
The government's plan to narrow the fiscal gap last year was too
ambitious because of a shortfall in revenue, he said in an interview
yesterday in Washington, where he is attending the U.S.-Africa Leaders
Summit. The IMF program will include support for balance of payments,
he said.
"We believe strongly that we are putting the right mechanisms into
place," he said. "It is about the certainty of policy that comes with
an IMF endorsement."
Conclusions
The IMF is a Force Multiplier and this is what was in fact required.
'Africa oil and gas industry will continue to grow', PwC review reveals
http://www.oilreviewafrica.com/exploration/exploration/africa-oil-and-gas-industry-will-continue-to-grow-pwc-review-says
The oil and gas industry has become one of the biggest sectors for
merger and acquisition activities in Africa. On average, transactions
worth US$1bn occurred every 17 days in the oil and gas industry during
2013, with more activity expected as new licence rounds are opened up
and regulatory uncertainty is removed.
Chris Bredenhann, PwC Africa Oil & Gas advisory leader, said, "Large
gas finds in Mozambique and Tanzania have caused the world to take
note of East Africa as an emerging player in the global industry."
Africa has proven natural gas reserves of 14.2 trillion cu m with 90
per cent of the continent's annual natural gas production of 184bn cu
m coming from Nigeria, Libya, Algeria and Egypt.
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Kenya to Cut Local Borrowing by Half as Samurai Bond Considered Kenyan Economy |
Kenya will reduce domestic borrowing by almost 50 percent as the
government considers broadening its foreign-debt portfolio with bonds
denominated in yen and Shariah-compliant securities, President Uhuru
Kenyatta said.
The state may cut the amount of debt it sells to local lenders by
about 90 billion shillings ($1.02 billion), Kenyatta said in an
interview in the capital, Nairobi, on Aug. 2. The government is
increasing offshore borrowing after investors demanded five times the
$2 billion it raised in debut Eurobond sales in June.
"Our objective is to reduce our initial intended borrowing, which is
about 190 billion shillings, and see if we can reduce our exposure in
the domestic market to about 100 billion," Kenyatta said. "Those are
the kind of levels generally we are looking at this financial year."
Falling borrowing costs prompted Kenya to tap global debt markets and
rely less on local funding, joining nations from South Africa to
Senegal selling Eurobonds. East Africa's largest economy is facing
violence by suspected Islamist militants that's prompted a slide in
tourism, the biggest foreign-exchange earner after tea. Visits fell 18
percent last year following attacks including a deadly September raid
by the al-Qaeda-linked al-Shabaab group on a Nairobi mall.
Kenyatta couldn't confirm the "exact level" of the reduction in
domestic borrowing or how much the nation would raise from
international markets. Kenyan Treasury Secretary Henry Rotich said in
a July 25 interview that a decision on the type of bond and the amount
to be issued will be made in "weeks."
Sub-Saharan African nations have sold $6.39 billion in sovereign debt
this year, compared with $9.7 billion in all of 2013, according to
Standard Bank Group Ltd., the continent's biggest lender. Corporate
and government issuance may beat last year's record of $16.6 billion,
Megan McDonald, the lender's head of debt primary markets, said July
31 in Johannesburg.
Senegal sold $500 million of 10-year debt on July 23, a week after
offering sub-Saharan Africa's biggest sukuk, worth 100 billion CFA
francs ($204 million). South Africa and Nigeria are considering
Islamic bonds.
Kenya's use of domestic funding sources to finance government
operations crowds out private industry from taking up more credit and
has caused interest rates to climb to "unacceptable" levels, Kenyatta
said. The Central Bank of Kenya's official lending rate is 8.5
percent, while average commercial-bank costs are 16.4 percent,
according to data on the regulator's website.
The World Bank lowered its outlook for Kenyan growth to 4.7 percent
this year and 2015 from as much as 5.2 percent as delayed rains curb
agriculture production and worsening insecurity scares off tourists.
Kenyatta said the economy may still grow at 10 percent by 2017 on
expanded infrastructure and institutional reforms that ease doing
business.
Fitch Ratings affirmed the country's creditworthiness at B+, the
fourth-highest non-investment grade, with a stable outlook on July 25.
The yield on Eurobonds (BEMS) due June 2024 dropped 64 basis points,
or 0.64 percentage point, since they were issued to 6.24 percent by
11:53 a.m. in Nairobi. Average African yields rose 10 basis points
over the period to 5.2 percent, according to JPMorgan Chase & Co.
indexes.
The presidency said the Treasury plans to borrow 100 billion Kenyan
shillings in the 2014/2015 financial year, down from about 190 billion
shillings it borrowed last year.
http://www.reuters.com/article/2014/08/04/kenya-borrowings-idUSL6N0QA4MA20140804
Conclusions
Lower rates are set to juice the Economy and the Stock Market.
we should see a good rally in interest rates and the economy can get
juiced a little on lower interest rates 20-JAN-2014
http://www.rich.co.ke/media/docs/038NSX2001.pdf
And of course, there is our big Wembley stadium moment with the
eurobond, which is now imminent. I incline to the view that the Kenya
government should slot the Eurobond market the full $2bn. This
eurobond issue will release the pressure cooker that is the domestic
bond and interest rate markets--we should see a good rally in interest
rates. Hopefully, the banks will go for some volume and not just
spread and the economy can get juiced a little on lower interest
rates.
The Euro Bond Gets off to a Flier, The Star 14-JUL-2014
http://www.rich.co.ke/media/docs/043NSX1407.pdf
Returning to the Eurobond price action, this will surely be a catalyst
for wrestling local interest rates lower. The spread between GOK USD
borrowing rates and GOK local currency rates is like an elastic band
that is now stretched too far and will snap back by way of local Kenya
shilling interest rates easing. The
net liquidity add of $1.4 billion net is yet to transmit through the
system and this will guide rates lower.
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