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Satchu's Rich Wrap-Up
Monday 11th of August 2014

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Macro Thoughts

Home Thoughts

I cannot explain or articulate my excitement around receiving my daily
emails from my 8 year Old Hannah.

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Hannah in the waiting room #Readyfortakeoff @Lewa_wildlife

@TheFactsBook The scent that lingers after a nice rain is called "petrichor."

read more

I have watched a documentary about the elephants of Kilimanjaro #WorldElephantDay

And I learnt that elephants mourn their dead just like we do.

They actually caress the bones of the departed and apparently never forget.

read more

Elephants 1st September 2013 Amboseli Kenya #Handsoffourelephants #WorldElephantDay

“Language is a skin: I rub my language against the other. It is as if
I had words instead of fingers, or fingers at the tip of my words. My
language trembles with desire.”
― Roland Barthes

read more

The Falling Man Don Delillo excerpt
Law & Politics

When he appeared at the door, it was not possible, a man come out of
an ash storm, all blood and slag, reeking of burned matter, with
pinpoint glints of slivered glass in his face. He looked immense, in
the doorway, with a gaze that had no distance in it. He carried a
briefcase and stood slowly nodding. She thought he might be in shock
but didn’t know what this meant in precise terms, medical terms. He
walked past her toward the kitchen and she tried calling her doctor,
then 911, then the nearest hospital, but all she heard was the drone
of overloaded lines. She turned off the TV set, not sure why,
protecting him from the news he’d just walked out of, that’s why, and
then went into the kitchen. He was sitting at the table, and she
poured him a glass of water and told him that Justin was with his
grandmother, released early from school and also being protected from
the news, at least as it concerned his father.

“Where there are suicide bombings. Maybe you don’t want to hear this.”

“I don’t know.”

“In those places where it happens, the survivors, the people nearby
who are injured, sometimes, months later, they develop bumps, for lack
of a better term, and it turns out this is caused by small fragments,
tiny fragments of the suicide bomber’s body. The bomber is blown to
bits, literally bits and pieces, and fragments of flesh and bone come
flying outward with such force and velocity that they get wedged, they
get fixed in the body of anyone who’s in striking range. Do you
believe it? A student is sitting in a café. She survives the attack.
Then, months later, they find these little, like, pellets of flesh,
human flesh that got driven into her skin. They call this organic

He tweezered another splinter of glass out of Keith’s face.

“This is something I don’t think you have,” he said.

read more

Iraqi Prime Minister Nouri al-Maliki deployed troops and tanks on the streets of Baghdad
Law & Politics

Maliki’s show of force came after he defied efforts by lawmakers to
pressure him to drop his bid for a third term. In a speech on state
television, Maliki said he plans to sue Iraqi President Fouad Masoum
in federal court for violating the constitution, by extending the
period for choosing a candidate for prime minister.

Oil and Erbil NewYorker


Erbil is an oil-rush town where the local powers that be similarly
manipulate their ambiguous sovereignty for financial gain—their own,
and that of any pioneer wild and wily enough to invest money without
having it stolen.

Erbil is the capital of the oil-endowed Kurdish Regional Government,
in northern Iraq. There the United States built political alliances
and equipped Kurdish peshmerga militias long before the Bush
Administration’s invasion of Iraq, in 2003. Since 2003, it has been
the most stable place in an unstable country. But last week,
well-armed guerrillas loyal to the Islamic State in Iraq and al-Sham,
or ISIS, threatened Erbil’s outskirts, forcing Obama’s momentous
choice. (The President also ordered air operations to deliver
humanitarian aid to tens of thousands of Yazidis and other non-Muslim
minorities stranded on remote Mount Sinjar. A secure Kurdistan could
provide sanctuary for those survivors.)

“The Kurdish region is functional in the way we would like to see,”
Obama explained during a fascinating interview with Thomas Friedman
published on Friday. “It is tolerant of other sects and other
religions in a way that we would like to see elsewhere. So we do think
it is important to make sure that that space is protected.”

Obama’s advisers explained to reporters that Erbil holds an American
consulate, and that “thousands” of Americans live there. The city has
to be defended, they continued, lest ISIS overrun it and threaten
American lives. Fair enough, but why are thousands of Americans in
Erbil these days? It is not to take in clean mountain air.

ExxonMobil and Chevron are among the many oil and gas firms large and
small drilling in Kurdistan under contracts that compensate the
companies for their political risk-taking with unusually favorable
terms. (Chevron said last week that it is pulling some expatriates out
of Kurdistan; ExxonMobil declined to comment.) With those oil giants
have come the usual contractors, the oilfield service companies, the
accountants, the construction firms, the trucking firms, and, at the
bottom of the economic chain, diverse entrepreneurs digging for a

Obama’s defense of Erbil is effectively the defense of an undeclared
Kurdish oil state whose sources of geopolitical appeal—as a long-term,
non-Russian supplier of oil and gas to Europe, for example—are best
not spoken of in polite or naïve company, as Al Swearengen would well
understand. Life, Swearengen once pointed out, is often made up of
“one vile task after another.” So is American policy in Iraq.

Hillary Clinton: 'Failure' to Help Syrian Rebels Led to the Rise of
ISIS The Atlantic


“The failure to help build up a credible fighting force of the people
who were the originators of the protests against Assad—there were
Islamists, there were secularists, there was everything in the
middle—the failure to do that left a big vacuum, which the jihadists
have now filled,” Clinton said.

Of course, Clinton had many kind words for the “incredibly
intelligent” and “thoughtful” Obama, and she expressed sympathy and
understanding for the devilishly complicated challenges he faces. But
she also suggested that she finds his approach to foreign policy
overly cautious, and she made the case that America needs a leader who
believes that the country, despite its various missteps, is an
indispensable force for good. At one point, I mentioned the slogan
President Obama recently coined to describe his foreign-policy
doctrine: “Don’t do stupid shit” (an expression often rendered as
“Don’t do stupid stuff” in less-than-private encounters).

This is what Clinton said about Obama’s slogan: “Great nations need
organizing principles, and ‘Don’t do stupid stuff’ is not an
organizing principle.”

She softened the blow by noting that Obama was “trying to communicate
to the American people that he’s not going to do something crazy,” but
she repeatedly suggested that the U.S. sometimes appears to be
withdrawing from the world stage.

“One issue is that we don’t even tell our own story very well these days.”

“One of the reasons why I worry about what’s happening in the Middle
East right now is because of the breakout capacity of jihadist groups
that can affect Europe, can affect the United States,” she said.
“Jihadist groups are governing territory. They will never stay there,
though. They are driven to expand. Their raison d’etre is to be
against the West, against the Crusaders, against the
fill-in-the-blank—and we all fit into one of these categories. How do
we try to contain that? I’m thinking a lot about containment,
deterrence, and defeat.”

“I think Israel did what it had to do to respond to the rockets,” she
told me. “Israel has a right to defend itself. The steps Hamas has
taken to embed rockets and command-and-control facilities and tunnel
entrances in civilian areas, this makes a response by Israel

Hillary Clinton and Barack Obama on the campaign trail, in 2008
(Jim Young/Reuters)


read more

Just why it took so long – in a Middle East laced with barbed wire frontiers, walls and checkpoints — for Muslim military forces to resort to tunnels, remains unclear.
Law & Politics

There is, of course, nothing new in what Israeli prime minister
Benjamin Netanyahu – with his usual facility for cliché – calls
“tunnels of terror”. Tunnels have always provoked fear. The Romans
were petrified of the tunnels constructed by the Jews in the great
revolts in Judea and Samaria.

Just why it took so long – in a Middle East laced with barbed wire
frontiers, walls and checkpoints — for Muslim military forces to
resort to tunnels, remains unclear.  Al-Qa'ida’s cave tunnels at Tora
Bora stretched up to 15 miles through the mountains outside Jalalabad,
and the success of Osama bin Laden’s fighters in eluding their Russian
– and later US – enemies, may have been an inspiration for those who
followed them in Syria, even in Gaza.  The Islamic faith may have
played a role; as bin Laden himself was well aware, the Prophet
Mohamed received his message from God in a cave.  Light and darkness
are constantly invoked in the Quran.

One Palestinian official in Beirut, who remembers the weapons and
makeshift rockets stored under the city during the 1982 Israeli siege,
believes that the introduction of pilotless drone aircraft — used by
the Americans in Afghanistan and Iraq, and by the Israelis over Gaza –
drove fighters underground.  “Conventional armies like daylight,
guerillas prefer darkness,” he says.  “When drones could see at night,
we had to go beneath the earth.”

In Homs, the Syrians also used drones and, within the past two years,
the Iranian-supported Lebanese Hizballah, which have been fighting
alongside Assad’s forces in Syria, have launched their own drone
flights over Israel, taking pictures of Israel’s own underground
communications centre outside Haifa.  Hizballah’s machines were made
in Iran, which has itself seized US drone aircraft which crashed – or
were shot down – over Iranian territory.

The more powerful that eye in the sky, it seems, the more tunnels will
be dug.  If, in the mantra of US forces, guerrilla war is
asymmetrical, it is becoming ever more three dimensional.

read more

29 Killed In <b>Iran Plane Crash</b> - CBS News
Law & Politics

Planes have been falling out of the Sky like Flies this year.

U.S. intelligence analysts are weighing the possibility that the
shoot-down of #MH17 was a botched attempt by extremists in the
Ukrainian government to assassinate Russian President Vladimir Putin
whose aircraft was returning from South America the same day


All hail Ukraine as the new Somalia; a fitting Frankenstein created by
the exceptionalist Empire of Chaos.


@GlobalPost  Myanmar


Abu Abdurahman al-Trinidadi


"Please O believers, come, who can make it, come. Come to Sham [Syria]
as soon as possible," says an "mujahid" who claims to be American in
the 30-minute video released last weekend, identified by his nom de
guerre Abu Abdurahman al-Trinidadi.

Cradling an automatic weapon in one hand and a young boy in his other
arm and standing on a street alongside other fighters with weapons who
are also surrounded by kids, the Caribbean-accented al-Trinidadi
added, "Look at all the little children -- they’re having fun."

read more

Currency Markets at a Glance WSJ
World Currencies

Euro 1.3400
Dollar Index 81.40
Japan Yen 102.14 The yen fell 0.1 percent to 102.14 per dollar as of
1:13 p.m. in Tokyo after reaching 101.51 on Aug. 8, the strongest
since July 24
Swiss Franc 0.9061
Pound 1.6778
Aussie 0.9283
India Rupee 61.10
South Korea Won 1031.15
Brazil Real 2.2841
Egypt Pound 7.1561
South Africa Rand 10.6450

A gauge of currency price swings rose to a two-month high last week.
JPMorgan Chase & Co.’s Global FX Volatility Index was at 6.22 percent
after reaching 6.33 percent on Aug. 7, the most since June 4 and up
from an all-time low on a closing basis of 5.29 percent on July 3.

Dollar Index 3 Month Chart INO 81.40


The Bloomberg Dollar Spot Index, which tracks the greenback against 10
developed-market peers, was little changed at 1,021.59, holding four
straight weeks of gains.

Euro versus the Dollar 3 Month Chart 1.3400


German 10-year yields dropped as much as four basis points to a
record-low 1.023 percent before trading at 1.05, down one basis point.


German two-year rates fell to as low as minus 0.005 percent, the least
since May 2013.

read more

Commodity Markets at a Glance WSJ

Gold 1 Year Chart INO 1307.25


Crude Oil 1 Year Chart INO 97.86


WTI for September delivery was up 38 cents at $98.03 a barrel in
electronic trading on the New York Mercantile Exchange. The volume of
all futures traded was 36 percent above the 100-day average. The U.S.
benchmark crude traded at a discount of $7.13 to Brent, compared with
$7.37 on Aug. 8.

read more

“From a business standpoint, this is the time,” says General Electric ’s Chief Executive Jeff Immelt.

“The growth is real. Challenges remain but they can be solved through
innovation. To play, you have to show up.”

As such, the economic results that have exceeded global averages since
the Great Recession show no sign of letting up there, which is why GE
is betting big on the region’s future, and why other multinationals
will soon follow.

read more

Banco Espírito Santo: The Angolan Story Forbes

As if being brought to its knees by a corrupt family-owned
conglomerate wasn’t enough, Portugal’s beleaguered Banco Espírito
Santo (BES) is now facing further losses due to the failure of its
Angolan subsidiary.

BES owns 55% of Angola‘s second-largest bank, BES Angola (BESA). In
recent years, BESA has become critically dependent on BES for funding
because of its extraordinarily high loan/deposit ratio and
deteriorating loan book. When the ESG empire collapsed, BES had not
only an equity stake, but a loan exposure to BESA of around EUR3bn.

On the face of it, Portuguese investment in Angola makes sense. Angola
is oil and mineral rich, and has experienced fast economic growth in
recent years, though its economy has slowed recently due to falling
oil prices. As the former colonial power, Portugal has strong
historical and cultural ties to Angola.

But the Angolan regime is among the most corrupt on earth and its
people among the poorest. Over 40% of the Angolan population live on
less than $2 a day and the majority have little access to running
water, sanitation or electricity. But the Angolan president is one of
the richest men in Africa and his eldest daughter, Isabel, is the
richest woman in Africa according to Forbes. There have been numerous
allegations that the dos Santos family have systematically enriched
themselves and their cronies at the expense of the Angolan people, but
so far there are no signs of political instability and the regime
appears well entrenched. Doing business in Angola is virtually
impossible without the direct involvement of politicians in the
Angolan ruling party, the MPLA. Businesses are either “partners of the
state” or they don’t operate.

BESA is undoubtedly a “partner of the state”, though not because it
has invested productively in the Angolan economy. No, it is because it
has done its duty by the Angolan powers-that-be. According to the
investigative journalist Rafael Marques de Morais at makaangola.org,
much of BESA’s loan book is made up of loans to Angolan political
interests, many of them directly connected with the dos Santos family.

Like all Angolan banks, BESA has lent excessively in recent years: its
loan portfolio doubled in size between 2010 and 2012, leaving it with
a loan/deposit ratio of about 200%. The quality of the loan portfolio
has been deteriorating rapidly, raising concerns about its solvency
and liquidity. The Angolan state news channel reported in December
2013 that the shareholders had agreed to recapitalize the bank to the
tune of $500m. At around the same time the Angolan sovereign
guaranteed up to $5.7bn of loans on BESA’s books, though the official
news channel makes no mention of this. The Portuguese newspaper
Expresso recently revealed documents purporting to show that the
guarantee was extended at the personal insistence of the Angolan
president, Jose Eduardo dos Santos, after a meeting with Ricardo
Espírito Santo Salgado, then CEO of BES. I wonder if this was the same
meeting at which Salgado told the President about the bank
recapitalization? Maybe the guarantee was the quid pro quo for the
bank recapitalization.

Anyway, whether or not there was any connection between Salgado’s
offer and the Angolan president’s guarantee, the fact remains that at
the time of ESG’s failure, BES’s exposure to BESA – both equity and
funding – was in effect backstopped by the Angolan sovereign. Then the
Bank of Portugal stepped in. On Friday August 1st it split BES into
“good” and “bad” banks, temporarily nationalizing the “good” bank and
leaving equity and subordinated debt holders to take the losses in the
“bad” bank. The Angolan portion of BES’s investments remained in the
“bad” bank.

This did not go down well in Angola. On Monday August 4th, the Angolan
central bank (BNA) placed BESA into administration and revoked the
sovereign guarantee. BES’s “bad bank” took an immediate loss of around
EUR3bn as its equity stake in BESA was wiped and the inter-bank loan
impaired. Of course the official reason for BNA’s seizure of BESA was
a deteriorating loan portfolio. But BNA had known about that for quite
a while. Why wait till August 4th to act?

One reason might be the relationship between the two sovereigns. The
Angolan government extended a guarantee to BESA which was not
explicitly reciprocated by the Portuguese government. But the Angolan
government might still have expected that its guarantee would mean
that BESA would ultimately be backed by Portuguese taxpayers. By
refusing support to BES’s investments in BESA, the Portuguese
government was therefore reneging on its side of the deal.
Diplomatically, this could be seen as equivalent to recalling an
ambassador. Retaliation would be inevitable.

But there is another explanation too, which I think is closer to the
truth. This guarantee was not revoked at all. It was called.

According to the Angolan news network, BNA is to inject $5bn into
BESA. But it’s not clear what the purpose of this money is, and the
National Bank of Angola’s website is not enlightening. Is the central
bank going to lend to BESA or recapitalize it? The BNA does say that
public funds will not be called on “for now”, so I would guess this is
emergency liquidity support rather than recapitalization. Either way,
the sovereign guarantee is now no longer needed. The central bank is
providing the funding to support the loans.

The central bank will keep BESA afloat for up to year while “advisers”
(unnamed) review and restructure its loan books. The Bank of Portugal,
dealing with a similar situation in BES, acted much faster: it split
the bank into “good” and “bad” portions over a weekend. Though it had
to act fast to prevent disorderly collapse of BES, since the ECB had
pulled the plug on Eurosystem funding for BES. The BNA, being a
currency issuing central bank, can choose to take longer. But the
outcome should really be the same. Good loans will form the core of
the restructured bank: bad ones will eventually be written off or
sold. But why would the public sector have to recapitalize the bank,
and what would happen to the existing shareholders?

Ideally, the existing shareholders would be completely wiped, leaving
the public sector to provide new capital as a prelude for selling the
bank back into the private sector. But it doesn’t work like that in
Angola. It’s unlikely that anyone would allow the existing Angolan
shareholders to be wiped. In important ways, they ARE the public

Angola is a one-party state run along quasi-Communist lines. The state
owns everything, or rather – since this is state cronyism, really –
the dominant individuals in the state apparatus do, one way or
another. So virtually everything in Angola is owned directly or
indirectly by the Presidential clique – the dos Santos family, the
vice-President Manuel Vicente, the Head of Military Intelligence
General Manuel Helder Vieira Dias Junior (who goes by the nickname
Kopelipa) and General Leopoldino Fragoso do Nascimento, usually known
as Dino. BESA is no exception.

This chart indicates the extent and complexity of Isabel dos Santos’s
business interests (from www. cabinda.net):

Others at Forbes have done considerable investigation into Isabel dos
Santos’s business interests, so I shall not go into further detail
here. Suffice it to say that she has direct or indirect stakes in many
of Angola’s banks, and significant links to Angola’s controversial
diamond industry. She also has numerous other Angolan investments,
including a stake in its state-owned oil company Sonangol – the
company that acquired Escom from BES’s parent Rioforte in 2011 but
never fully paid for it: the unpaid amount is on BES’s books (and now
in the “bad bank”).

But at least Isabel appears to operate alone (or perhaps as a front
for her father). The other three hunt as a pack. Rafael Marques de
Morais describes them as the “triumvirate” that rules Angolan politics
– and whoever rules Angolan politics, rules Angola. According to

Key sectors such as petroleum, telecommunications, banking, media and
diamonds form part of the business empire built by these figures. The
firms involved include Movicel, Biocom, Banco Espírito Santo Angola,
Nazaki Oil & Gás, Media Nova, World Wide Capital and Lumanhe.

US readers might also be interested to learn that via Nazaki, all
three own shares in Cobalt International Energy Inc., the oil
exploration company currently facing enforcement action by SEC for
corruption in its Angolan operations.

So how exactly does the Presidential clique own BESA? Well, it’s not
exactly clear – not much in Angola is, really – but I’ve pieced it
together as best I can.

In December 2009, BES sold a 24% stake in BESA to Angola’s Portmill
Investimentos e Telecomunicações. Portmill was originally owned by the
triumvirate, but in June 2009 they sold their stakes to
Lieutenant-Colonel Leonardo Lidinikeni, officer of the President’s
security detail and a direct subordinate of Kopelipa. How Lidinikeni
raised the money to buy this stake is a matter of conjecture: Marques
suggests that BESA may have extended a loan, either directly to him or
to the triumvirate. If it did, then his ownership is fraudulent. But
even if his ownership is legitimately financed from other sources, it
is hard to believe that the triumvirate has not retained effective
control by some means, most likely undisclosed debt obligations.
Nominal ownership may rest with Lidinikeni, but beneficial ownership
almost certainly rests with the triumvirate.

A further 19% of BESA is owned by Geni Group, which is allegedly
part-owned by the President’s daughter Isabel dos Santos. She denies
owning shares in Geni, but that doesn’t necessarily mean she isn’t in
control of it: Isabel dos Santos is known to use family members and
close associates to disguise her personal involvement in some of her
business enterprises. Again, it was BES that sold the stake, though
this was back in 2004.

So 43% of BESA may be either owned or controlled by the Presidental
clique. Wiping out a Portuguese bank’s shareholding in BESA is one
thing. But wiping out the shareholdings of the Presidential clique is
quite another.

I have no doubt that the Governor of BNA is doing his best to act with
probity, but he has to operate within the Angolan political system, in
which corruption is deeply entrenched. His priority is to preserve
financial stability and limit the damage to the Angolan economy that a
disorderly failure of BESA would cause. Rooting out corruption is at
best a secondary consideration.

The Presidential clique’s interests in BESA will most likely be
protected. And their loans will, too. Does anyone really think that
the “advisers” appointed to sort out BESA’s balance sheet will be
allowed to rip apart the incestuous network of political loans and
investments that hold together not only the Angolan banking system but
all of its major industries? Hardly. The loans will survive, and so
will their owners. And the Angolan people, shockingly poor though they
are, will pay.

But there is an interesting twist to this tale. According to Rafael
Marques de Morais, the sale of part of BES’s stake to Portmill in 2011
was dodgy even by Angolan standards. Ever since then, the bank has in
effect been laundering money looted from the Angolan state by its
military. Ricardo Espírito Santo Salgado was the man responsible for
selling BES’s stake to Portmill. He is now under investigation by the
Portuguese police for suspected money laundering and tax evasion
centering on a Swiss asset manager, Akoya, of which the former CEO of
BESA, Alvaro Sobrinho, is a board member. Sobrinho himself, while
still CEO of BESA, was the subject of an inconclusive money laundering
investigation in 2011. No such investigation is ever likely to take
place on the Angolan side of course: but perhaps one man in this web
of deceit and corruption might eventually be brought to justice.

read more

This chart indicates the extent and complexity of Isabel dos Santos’s business interests (from www. cabinda.net):

South Africa All Share Bloomberg +9.54% 2014


50,669.95 -4.66 -0.01%

Dollar versus Rand 6 Month Chart INO 10.6449


Egypt Pound versus The Dollar 3 Month Chart INO 7.1561


Egypt EGX30 Bloomberg +34.429% 2014


9,117.12 -35.83 -0.39%

Nigeria All Share Bloomberg +3.0704% 2014


42,598.48 -13.87 -0.03%

Ghana Stock Exchange Composite Index Bloomberg +5.641% 2014


2,266.48 -9.27 -0.41%

Gertler’s Oil Company Says Congo Project Has 3 Billion Barrels


A South Sudanese model applies make-up during the festival of
fashion & arts for peace, in Juba. Photograph: Andreea Campeanu/


read more

The essential nature of our subjective experience of photography is defined by an irreducible singularity Roland Barthes
Kenyan Economy

 To experience time as a singular and unrepeatable event.
 “Every photograph is a certification of presence”
 “I want a history of looking” (12), or the irreducibility of the
emotional experience of looking at photographs.
 the Spectrum: the experience of being- photographed
 the Spectator: the desire and emotion aroused by the act of looking
at specific photographs

read more

Obama Summit' has set Kenya-US Relationship, The Star.
Kenyan Economy

Two photographs caught my attention last week. The first was the
photograph of President Kenyatta being received very graciously by
President Obama and The First Lady at the White House and the second
was of the President be- coming an honorary Texan, wearing a cowboy
hat and clutching some rather fancy cowboy boots. On a tangential
note, what is remarkable is the 'New Now', where so much content is
upstreamed in real time and distributed, curated and ampli-fied before
mainstream media can filter. Its revolutionary and informs us why
Israel has all of a sudden lost control of the narrative. The crowd is
now the narrator and its happening in real time. Essentially the news
is being set ground up whereas once it was being set up from the top

 Roland Barthes is well worth reading on photography and wrote:

"One of the marks of our world is perhaps this reversal: we live
according to a generalised image- repertoire. Consider the United
States, where everything is trans- formed into images: only images
exist and are produced and are consumed..."

The point I am making is that the two photographs to which I refer are
the signal in the noise and my it has been noisy! It had been so
discordant. We live in a multi-polar world, where our national
interest is served by being globally fluent, by having as many
potential part-ners with whom we can transact. The resetting of our
relationship with the United States that was signalled in the two
photographs to which I referred was necessary and long overdue.

President Kenyatta said, ''I want to reassure you concerning a rumour
going round the interna-tional public sphere that Kenya and my
government have turned away from the West in favour of the East."

"Every time Kenya and the US have collaborated on any project, the
world has witnessed spectacu-lar success," he said.

I for one am pleased that we have reset our relations with the US. The
US remains a key counter- terrorism partner and in this regard we need
all the assistance we can get. Inward remittances from North America
are no less than half a billion dollars a year and seriously material.
As I previously mentioned the US bought $1.32 billion out of $2
billion of our Eurobonds. And most interestingly, I think President
Barack Obama the Commander-in- Chief has heard the demand signal
emanating from the US corporate sector and the Africa Summit might
well mark an inflexion point and the starting gun for a US [eco-nomic]
surge across the continent. It is self evidently in our national
in-terest to surf this predicted surge.

The Nairobi Securities Exchange rallied through Wednesday setting a
fresh all time high before profit taking set in. The NSE20 crossed the
5,000 level for the first time since January 29 last week. The
President spoke of issuing a Samurai Bond [denominated in Yen] and
further reducing the call on the local bond mar-ket to about Sh100
billion. There is a lot of money that had gotten cosy parking it- self
in the local bond market. This money will have to find a new home.

Mortgage Interest rates continue to trend lower. Single digit
inter-est rates are no longer a Hail Mary prediction.

It's never going to be a linear thing but those two photographs inform
us that at least things might be a little less bumpy.

read more

EABL releases FY Earnings 2014 FY PAT +5.157% here
Kenyan Economy

Par Value:                  2/-
Closing Price:           297.00
Total Shares Issued:          790774976.00
Market Capitalization:        234,860,167,872
EPS:             8.83
PE:                 33.635

Full Year Net Revenue 61.292176b versus 59.061875b [restated] +3.776%

Full Year Profit After Tax 6.858608b versus 6.522200b +5.157%
Full Year Earnings Per share 8.22 versus 8.55 -3.85%
Full Year diluted Earnings Per Share 8.21 versus 8.54 -3.85%
Final Dividend 4.00 shillings a share +1.50 Interim Dividend

Company Commentary

Kenya [64% of NSV] 1% decline in NSV
Uganda [18% of NSV] Net Sales Growth +13%
Tanzania [11% of NSV] Net Sales Growth -1.00%
Export Markets [7% of NSV] +50% Net Sales Growth
One of staff reorganisation costs of 1.2b
Tusker Lager +17%
Guinness +20%
We already knew Senator Volumes have cratered
Net Capex of 6.8b

read more

#Mindspeak with Charles Ireland CEO EABL RICH TV
Kenyan Economy

The brewer revealed that it is sitting on 13,000 tonnes of sorghum,
the main raw material used in production of the Senator Keg @BD_Africa


The growth, however, took a nosedive after the Treasury introduced a
50 per cent excise duty on the previously tax-free beer, which more
than doubled the cost of the drink. The government had targeted to
collect Sh6.2 billion from introduction of tax on Senator Keg. Soon
after the increase, over a quarter of the 12,000 outlets that used to
sell Senator were closed due to low sales.

EABL reacted by introducing new, low-cost spirit brands to plug this
gap, spent Sh1.6 billion on laying off staff and also reduced the
brewery schedule to five days from seven.

read more

Bamburi Cement reports H1 PAT 2014 -28.06% Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           175.00
Total Shares Issued:          362959275.00
Market Capitalization:        63,517,873,125
EPS:             9.55
PE:                 18.325

The largest cement manufacturing company in the region.

6 months through June 2014 versus 6 months through June 2013

H1 Turnover 17.290b versus 15.841b +9.00%
H1 Operating profit 2.209b versus 3.051b -27.597%
H1 Investment Income 206m versus 267m
H1 Profit Before Tax 2.325b versus 3.270b -28.89%
H1 Profit After Tax 1.658b versus 2.305b -28.06%
H1 Earnings Per share 4.38 versus 6.00 -27.00%
Net increase in cash and cash equivalents 1.505b versus [1.246b]
Cash at End of Year 10.381b versus 7.523b
6 shillings a share Interim Dividend

Company Commentary

Group turnover for the period under review grew by 9% as a result of
stronger first half sales in both the domestic markets and inland
Africa exports markets.
Margins in Uganda remained lower than in the first half of 2013.
Higher costs 25% increase in power prices in Kenya
Use of more imported clinker and introduction of a mining levy in
Kenya led to a 29% reduction in operating Profit and Pre Tax Profit


The Turnover increase was a bright spot but there has been significant
margin erosion.
Paying out 136.9% of the EPS as an Interim Dividend as a 60 year
celebratory present to Shareholders is an interesting move.
I think the Macro Backdrop for Cement is constructive.

read more

M-Pesa tops the fastest growing global cash transfer companies @BD_Africa
Kenyan Economy

The coverage note says M-Pesa should now be treated as a money
transfer or payments processing service rather than just another
mobile phone application. Analysts at UBS say that when the growth in
revenues and profits generated from M-Pesa are compared with those
from other services like Visa and MasterCard, the Safaricom unit’s
performance emerges on top.

“However, given M-Pesa’s far faster Earnings Before Interest, Tax,
Depreciation and Amortisation (EBITDA) growth than the majority of the
global payments/transaction processing peers (29 per cent year-on-year
Vs peers at an average of 10 per cent), we believe a multiple
(comparison) at least in-line with these peers is justifiable,” says
the coverage note.

The report says the average growth rate for Visa and MasterCard
revenues over the last three years is 11 per cent each while EBITDA
stands at 11 and 10 per cent respectively. UBS says that over the same
three-year period, M-Pesa’s revenues have on average grown by 20 per
cent while EBITDA has grown by 29 per cent.

The global average for all the 12 payments and transaction processors
covered in the report stood at eight and 10 per cent respectively.

read more

.@Safaricomltd share price data here
Kenyan Economy

Par Value:                  0.05/-
Closing Price:           12.80
Total Shares Issued:          40044601000.00
Market Capitalization:        512,570,892,800
EPS:             0.57
PE:                 22.456

FY Revenue 144.67b versus 124.29b +16.4%

FY Voice Revenue 86.3b versus 77.33b +11.6%
FY Messaging Revenue 13.62b versus 10.15b +34.19%
FY Mobile Data Revenue 9.31b versus 6.62b +40.63%
FY Fixed Service Revenue 2.57b versus 2.11b +21.8%
FY M-Pesa Revenue 26.56b versus 21.84b +21.61%
FY Direct Costs [51.96b] versus [[47.17b] +10.15%
FY EBITDA 60.94b versus 49.24b
FY PAT 23.02b versus 17.54b +31.24%
FY EPS 0.57 versus 0.44 +29.55%
FY Dividend 0.47 versus 0.31 +51.61%
Dividend Yield 3.65%
Free Cash Flow 22.69b versus 14.51b

read more

CFC Bank reports H1 2014 PAT +52.435% Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           127.00
Total Shares Issued:          395321638.00
Market Capitalization:        50,205,848,026
EPS:             12.97
PE:                 9.792

The Kenyan Banc assurance model includes CFC Bank, CFC Financial
Services and Heritage Assurance.

First Half Earnings through 30th June 2014 versus through 30th June 2013

First Half Loans and Advances 97.486381b versus 79.052031b
First Half Net Interest income 4.302200b versus 3.619652b
First Half Non-Interest Revenue 4.9725205b versus 4.467059b
First Half total Income 9.277405b versus 8.086711b
First Half income after credit impairment charges 9.003647b versus 7.689457b
First Half Total Operating Expenses [4.677951b] versus [4.453495b]
First Half Profit before Tax 4.325696b versus 3.235962b +33.675%
First Half Profit After Tax 3.356701b versus 2.202041b +52.435%
First Half Earnings per share 8.49 versus 5.57 +52.42%
First Half Dividend 0.95 versus 0.63 +50.79%


strong results following on strong FY 2013 Earnings. Momentum has
carried through.
Its a cheap share on a single digit trailing PE

read more

Kenya Shilling versus The Dollar Live ForexPros 88.027
Kenyan Economy

Nairobi All Share Bloomberg +13.0845% 2014


154.53 -1.30 -0.83%

Nairobi ^NSE20 Bloomberg


5,003.78 -7.73 -0.15%

Every Listed Share can be interrogated here


read more

N.S.E Today

The Nairobi All Share ticked 0.12 points lower to close at 154.41.
The All Share rallied +14.6578% since the start of the year through
6th August when it closed at 156.68 a record High.
Since the 6th August through today the All Share has retreated 1.4488%
on profit taking.
This bout of Profit taking might have completed today.
The Nairobi NSE20 which crossed the 5,000 mark for the first time
since 29th January last wednesday, closed 11.79 points better at
Turnover ramped higher to cross the 1b mark and clock 1.047b.
EABL traded 60.908% of that volume.
My View remains that Lower Interest rates is no longer a Hail Mary
Pass and that this lower rate structure will be a tide that the market
will surf.

N.S.E Equities - Commercial & Services

Safaricom eased 0.39% to close at 12.75 and traded 3.686m shares. UBS
issued a Research Note about M-Pesa [which I characterised 882 days
ago as the Jewel in the @Safaricomltd Crown] last week and the report
said the average growth rate for Visa and MasterCard revenues over the
last three years is 11 per cent each while EBITDA stands at 11 and 10
per cent respectively. UBS says that over the same three-year period,
M-Pesa's revenues have on average grown by 20 per cent while EBITDA
has grown by 29 per cent.  The point UBS is making is that M-Pesa
might not be properly baked into the share price and I agree.
Safaricom sits 3.04% beneath an all time high set in April this year.

ScanGroup rebounded 3.72% to close at 48.75 and traded 15,000 shares.
ScanGroup reported an H1 Profit Before Tax Acceleration of 151%.

Car and General was the biggest Winner at the Securities exchange and
closed 4.761% higher at 44.00 and traded 4,700 shares.

N.S.E Equities - Finance & Investment

CFC Standard Bank reported H1 2014 Earnings before the Opening Bell.
CFC Standard Bank responded 1.57% higher to close at 129.00 and traded
125,100 shares. CFC trades on a Trailing PE of 9.946 and reported a
+52.435% Acceleration in First Half Profit After Tax to 3.356701b
versus 2.202041b previously. There is a lot of headroom and the
Forward PE Discount versus its Peers is not justified. The Key
Constraint on the share price has been the Foreign Investor component
which has been limit Long for quite a while now.
Standard Chartered improved 0.65% to close at 312.00 and traded 9,800
shares. Standard Chartered trades on a Trailing PE of 10.605 and given
the acceleration seen in Q1, it looks an inexpensive share.
Kenya Commercial Bank eased 0.925% to close at 53.50 and traded 3.424m
shares worth 184.459m. Kenya Commercial Bank rallied through a
Sequence of all time highs and +24.86% since the start of the year
through the 5th of August. Subsequently, KCB corrected 9.322% 5th
August through today in what was a heavy bout of profit taking which
was frankly a little careless in the execution.
That Price correction was completed today and Kenya Commercial Bank
will rebound as early as tomorrow.
Equity Bank ticked 0.54% easier to close at 45.75 and traded 982,000
shares. Equity Bank is +47.96% in 2014.
Diamond Trust Bank firmed +1.244% to close at 244.00 and traded 7,000 shares.

N.S.E Equities - Industrial & Allied

EABL firmed 0.673% to close at 299.00 [The Weighted average Price was
299.97 and was rounded down] on heavy volume action of 2.125m shares
worth 637.711m and this was the 2nd highest volume session of 2014.
EABL released Full year Earnings on Thursday Evening. Senator which
lopped 1,000 basis points off Full Year Earnings was a very high
hurdle but EABL hurdled it. EABL reported a +3.776% acceleration in
Full Year Revenue and posted a 5.157% acceleration in Full year Profit
After Tax. Export Markets which constitute 7% of Net Sales Volume was
a standout with a 50% Year on Year Gain. Tusker Lager expanded 17%,
Guinness expanded 20% and Reserve Spirits posted a 60% increase.  I
thought Earnings beat Street Estimates by a margin and that there was
plenty of Growth for shareholders to get their arms around. EABL is
+3.103% in 2014 and I feel it has at least 10% of headroom and upside.

Bamburi Cement reported First Half Earnings Friday where whilst First
Revenue expanded 9.00% to 17.290b, First Half Profit after Tax sank
-28.06%. Interestingly, Bamburi Cement are proposing to pay out 136.9%
of its First Half Earnings per share as Dividend. Bamburi Cement
traded 700 shares at 175.00 and unchanged. The Interim Dividend is
worth 3.42% of Yield.
Athi River Cement firmed 1.26% to close at 80.50 and traded 18,300
shares. Bamburi cited imported Clinker as being responsible for margin
compression. Interestingly, ARM are bring on stream a significant
Clinker Facility in Tanga

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

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