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Friday 16th of January 2015
 
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Macro Thoughts

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12-JAN-2015 The Year of G2 as Europe Off Balance
Africa


Home Thoughts

“I dream that I have found us both again,
With spring so many strangers' lives away,
And we, so free,
Out walking by the sea,
With someone else's paper words to say....

They took us at the gates of green return,
Too lost by then to stop, and ask them why-
Do children meet again?
Does any trace remain,
Along the superhighways of July?”
― Thomas Pynchon, Gravity's Rainbow

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@alykhansatchu Dec 29 Ali the Navigator Wasini Island Kenya
Africa


“It's been a prevalent notion. Fallen sparks. Fragments of vessels
broken at the Creation. And someday, somehow, before the end, a
gathering back to home. A messenger from the Kingdom, arriving at the
last moment. But I tell you there is no such message, no such home --
only the millions of last moments . . . nothing more. Our history is
an aggregate of last moments.”
― Thomas Pynchon, Gravity's Rainbow

read more


The Global Risks report 2015 WEF
Law & Politics


The Global Risks Landscape, a map of the most likely and impactful
global risks, puts forward that, 25 years after the fall of the Berlin
Wall, “interstate conflict” is once again a foremost concern (see
Table 1). However, 2015 differs markedly from the past, with rising
technological risks, notably cyber attacks, and new economic
realities, which remind us that geopolitical tensions present
themselves in a very different world from before. Information flows
instantly around the globe and emerging technologies have boosted the
influence of new players and new types of warfare. At the same time,
past warnings of potential environmental catastrophes have begun to be
borne out, yet insufficient progress has been made – as reflected in
the high concerns about failure of climate-change adaptation and
looming water crises in this year’s report.

These multiple cross-cutting challenges can threaten social stability,
perceived to be the issue most interconnected with other risks in
2015, and additionally aggravated by the legacy of the global economic
crisis in the form of strained public finances and persistent
unemployment. The central theme of profound social instability
highlights an important paradox that has been smouldering since the
crisis but surfaces prominently in this year’s report. Global risks
transcend borders and spheres of influence and require stakeholders to
work together, yet these risks also threaten to undermine the trust
and collaboration needed to adapt to the challenges of the new global
context.

The world is, however, insufficiently prepared for an increasingly
complex risk environment. For the first time, the report provides
insights on this at the regional level: social instability features
among the three global risks that Europe, Latin America and the
Caribbean, and the Middle East and North Africa are least prepared
for. Other societal risks, ranging from the failure of urban planning
in South Asia to water crises in the Middle East and North Africa, are
also prominent. And capacity to tackle persistent unemployment – an
important risk connected with social instability – is a major concern
in Europe and sub- Saharan Africa.

Interplay between geopolitics and economics: The interconnections
between geopolitics and economics are intensifying because states are
making greater use of economic tools, from regional integration and
trade treaties to protectionist policies and cross-border investments,
to establish relative geopolitical power. This threatens to undermine
the logic of global economic cooperation and potentially the entire
international rule-based system.

read more







@josephwillits A Lebanese response to new #CharieHebdo cover, with some assistance from @miakhalifa #Lebanon #JeSuisCharlie
Law & Politics


@JohnKerry Kerry says may meet Iran's Zarif @JZarif again this week

http://www.reuters.com/article/2015/01/15/us-iran-nuclear-kerry-idUSKBN0KO13S20150115

Conclusions


People whose opinion I trust tell me that this is very close now.

28-OCT-2013 @BarackObama and @HassanRouhani The Two Husseins

http://www.rich.co.ke/media/docs/038NSX2810.pdf

THE recent rapprochement between President Barack Obama and Iran’s
Hassan Rouhani has certainly snapped a losing sequence in US-Iran
relations that goes all the way back to the Iranian revolution in 1979
when Ayatollah Khomeini overthrew Mohammad Reza Pahlavi, the Shah of
Iran. The Shah was the second and last monarch of the House of Pahlavi
and otherwise known as the peacock throne. Hussein [Barack Hussein
Obama] and Hassan [Rouhani] share the same name as did Prophet
Muhammed’s revered grandsons. Those who pursue the study of
anthroponymy [personal names] especially in the Islamic World probably
view this as very fortuitious.

Hussein and Hassan are going to cut through a great deal of
interference. In this situation, there are powerful vested interests
fully invested in the status quo.

read more


艾未未 Ai Weiwei ‏@aiww RT @alykhansatchu: @Aiww What's in a Name? @Hirshorn 802 days ago
Law & Politics


A name is the first and final marker of individual rights, one fixed
part of the ever-changing human world. A name is the most basic
characteristic of our human rights: No matter how poor or how rich,
all living people have a name, and it is endowed with good wishes, the
expectant blessings of kindness and virtue.

read more



@zbig was the Architect of the Russian Defeat in Afghanistan
Law & Politics


The three grand imperatives of imperial geostrategy are to prevent
collusion and maintain security dependence among the vassals, to keep
tributaries pliant and protected, and to keep the barbarians from
coming together Zbigniew Brzezinski

read more




Franc’s Surge Ranks Among Largest Ever in Foreign Exchange
International Trade


The Swiss franc’s 41 percent surge after the central bank unexpectedly
lifted its cap against the euro is one of the biggest moves among
major currencies since the collapse of the Bretton Woods system in
1971.

Unlike previous foreign-exchange upheavals, today’s action occurred to
one of the most-traded currencies that is considered a haven in
tumultuous times, and few saw the move coming.

“It’s normal for ruble to do this kind of thing, but we’re talking
about Swiss franc,” Axel Merk, president and founder of Palo Alto,
California-based Merk Investments, who has 20 years of experience in
the currency market. “That’s quite extraordinary and unheard of.”

A history of some of the biggest moves in the now $5.3 trillion a day market:

** Mexico Tequila Crisis, December 1994: U.S. interest-rate increases
helped spark a peso devaluation and fueled capital flight across Latin
America. The peso lost 53 percent in three months. The recession the
following year, when the economy contracted 6.2 percent, was among the
worst since the 1930s.

** Thai baht, July 1997: The currency fell 48 percent over the second
half of the year after the central bank devalued its the baht in an
attempt to revive its slumping economy, marking one of the biggest
shifts in Asian currency policy since the country last devalued its
currency in 1984.

** Japanese yen, October 1998: During the Asian Financial Crisis, the
Japanese currency rallied as much as 7.2 percent in a day as hedge
funds rushed to unwind carry trades by repaying the yen that they
borrowed to invest in higher-yielding currencies such as the Thai baht
and Russia’s ruble. The yen surged 16 percent that week.

** Turkish lira, 2001: A spat between then-President Ahmet Necdet
Sezer and Prime Minister Bulent Ecevit led to an exodus of foreign
capital, pushed up government debt and throwing more than 20 banks
into bankruptcy. The currency lost 54 percent in value that year and
inflation jumped to 69 percent by December.

** Argentine peso, June 2002: Argentina started struggling to finance
its debt in 1999 as the one-to-one peg to a rising dollar squeezed
exporters and Brazil, the country’s largest trading partner, devalued
the real. Interim President Adolfo Rodriguez Saa announced to default
on $95 billion debts in December 2001. Within weeks, the central bank
abandoned the peg, allowing the peso to fall 74 percent by June 2002.

** Russian Ruble, December 2014: The currency plummeted 34 percent in
three weeks through mid-December as plunging oil prices and
international sanctions pushed Russia toward a recession. The central
bank has spent $95 billion of foreign reserves over the past year to
shore up the ruble and boosted interest rate five times. While the
efforts helped quell volatility, the ruble remains within 5 percent of
the record low set on Dec. 16.

read more



25-AUG-2014 In fact, my view is the new normal is a very arrhythmic world.
International Trade


When I plugged ‘’arrhythmia’’ into my computer, it threw up this;

‘’For years he’d been studying the phenomenon of chaos, of which an
arrhythmic heartbeat was a perfect example’’

Conclusions

The Swissie Move yesterday is surely an an arrhythmic one.

read more


SNB Unexpectedly Gives Up Cap on Franc, Lowers Deposit Rate
International Trade


The Swiss National Bank (SNBN) scrapped its minimum exchange rate
today, abandoning a key tool in its policy kit designed to shield the
economy from the euro area’s sovereign debt crisis.

In a surprise move, the central bank ended its three-year-old cap of
1.20 franc per euro and cut the interest rate on sight deposits over a
certain limit. Just a month ago, when the SNB introduced negative
rates, the bank indicated the cap was here to stay, saying it would
defend it with “utmost determination.”

The franc jumped to a record against the euro and rose to its highest
in more than three years against the dollar following today’s
announcement. Swiss stocks plunged.

The decision came just one week before European Central Bank policy
makers meet to discuss the purchase of government bonds, a move that
may add to pressure on the franc against the euro. The central bank
has already spent billions defending the cap after introducing it in
September 2011.

“The SNB doesn’t see any future any more for their floor with the
strong U.S. dollar and the QE ahead at the ECB,” said Alessandro Bee,
strategist at Bank J Safra Sarasin AG in Zurich.

The SNB also cut its interest rate to minus 0.75 percent.

Thomas J Jordan Chairman Swiss National Bank #NZZCMF 865 days ago

http://www.twitpic.com/aqnbrq

Dollar Swiss 3 day Chart INO [Just Extraordinary]

http://quotes.ino.com/charting/index.html?s=FOREX_USDCHF&t=&a=&w=&v=i

The franc jumped by almost 30 percent in a chaotic few minutes that
saw it break past parity against the euro to trade as high as 0.8052
francs per euro as it cast off the 1.20 per euro cap it has had in
place since late 2011

http://www.reuters.com/article/2015/01/15/us-markets-global-idUSKBN0KM01O20150115

"This is extremely violent and totally unexpected, the central bank
didn't prepare the market for it," said Alexandre Baradez, chief
market analyst at IG in France.

"It's sparking panic across all asset classes. It suddenly revives the
risk of central bank policy mistakes, right when central bank action
is what's keeping equity markets going."

 “The SNB concluded that enforcing and maintaining the minimum
exchange rate for the Swiss franc against the euro is no longer
justified,” the central bank said in a statement today. SNB President
Thomas Jordan will hold a briefing at 1:15 p.m. in Zurich today.

The franc appreciated as much as 41 percent to 85.17 centimes per euro
following the announcement. That is the strongest level on record,
according to data compiled by Bloomberg. At 11:43 a.m. in Zurich, the
franc gave up some of those gains to trade at 1.04135 per euro.
Against the dollar it was up 14 percent at 89.06 centimes.
Switzerland’s benchmark SMI index declined as much as 8.7 percent in
Zurich.

“Market reaction has been seismic,” said George Buckley, economist at
Deutsche Bank. “A 20 percent appreciation in the currency is clearly
is going to have more sizable implications for growth and inflation
than a 50 basis point cut in interest rates.”

To complement the lower deposit rate, the SNB also moved the target
range for the three-month Libor to between minus 1.25 percent and
minus 0.25 percent, from the current range of between minus 0.75
percent and 0.25 percent.

Since introducing its minimum exchange rate of 1.20 per euro in
September 2011, the SNB’s foreign-currency holdings have soared. They
stood at 495.1 billion francs ($556 billion) in December. The SNB’s
holdings have exposed it to big fluctuations in profit, on which local
governments rely to fund their budgets. Some economists have also
wondered how the SNB plans to get rid of its holdings in the future.

“It may show that the SNB doesn’t want to widen its balance sheet any
more,” said Maxime Botteron, economist at Credit Suisse Group AG in
Zurich.

read more




“This was a 180-degree about turn by the SNB. People feel hurt and betrayed.”
International Trade


“The interbank market for francs was illiquid for hours after the
event and no traders with an open franc position were able to close it
for a significant period of time, at any broker,” Johnson said.

read more


Currency Markets at a Glance WSJ
World Currencies


Euro 1.1632
Dollar Index 92.25
Japan Yen 116.34
Swiss Franc 0.8688
Pound 1.5182
Aussie 0.8233
India Rupee 62.095
South Korea Won 1077.05
Brazil Real 2.6426
Egypt Pound 7.1500
South Africa Rand 11.5462

read more







12-JAN-2015 The oil warfare specialist, US President Barack Obama, has successfully wrestled crude price to below $50 a barrel, and with that effected a chokehold on Vladimir Putin’s Russia.
Commodities


Oil has slumped more than 50 percent since June, pinching exports from
countries including Venezuela, Nigeria and Russia. Copper has
plummeted about 11 percent since December, hurting the metal’s biggest
producers such as Peru and Chile. The dollar has rallied 7 percent in
the past three months through yesterday, while the ruble plunged 37
percent and the Colombian peso tumbled 14 percent against the U.S.
currency.

read more




Nyusi Sworn in as Mozambique’s President as Opposition Protests
Africa


Filipe Nyusi was sworn in as Mozambique’s new president today,
pledging to prioritize peace as a precondition of economic
development.

Nyusi, a former defense minister, won the post in Oct. 15 elections
that saw the Front for the Liberation of Mozambique, or Frelimo,
retain its parliamentary majority. While the election results were
confirmed by the country’s Constitutional Council on Dec. 29, they are
still being disputed by the Mozambique National Resistance, or Renamo,
which finished second.

Nyusi, who was inaugurated at a ceremony in central Maputo, succeeds
Armando Guebuza, who stepped down after serving the maximum two
five-year terms in office.

read more




Sun Rise #Maputo Polana Hotel @SerenaHotels #Mozambique 954 days ago
Africa


South Africa All Share Bloomberg -2.46% 2015

http://www.bloomberg.com/quote/JALSH:IND

48,524.25 +466.79 +0.97%

Dollar versus Rand 6 Month Chart INO 11.5481

http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt Pound versus The Dollar 3 Month Chart INO 7.1506

http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Egypt EGX30 Bloomberg +7.09% 2015

http://www.bloomberg.com/quote/CASE:IND

9,555.99 +11.91 +0.12%

24-NOV-2014 Nigeria In The Eye Of The Storm

http://www.rich.co.ke/media/docs/038NSX2411.pdf

My target for the Naira is 200.

I can hear the echo of folks asking 'What went wrong?'

It was only earlier this year that Nigeria's economy was calculated to
have surpassed South Africa's as the largest on the continent after
Nigeria's GDP was rebased to $488 billion for 2013 compared to the
World Bank's 2012 GDP figures of $384.3 billion for South Africa.

The big game changer for Nigeria has been the free fall in the price
of crude oil.

Nigeria All Share Bloomberg -16.87% 2015 [24 month lows]

http://www.bloomberg.com/quote/NGSEINDX:IND

28,811.39 +70.78 +0.25%

read more




Equity Group Holdings limited Public Announcement Cautionary Statement
Kenyan Economy


Proposed Purhase by NORFININVEST shares held by HELIOS EB Investors 1
LTD in Equity Group Holdings limited

Helios EB Investors LP has on 12th January 2015 entered into a sale
agreement with Norinvest AS which upon its completion will result in
Norfininvest holding 452,581,275 shares or 12.223% of the issued share
capital of Equity Group.

read more



Eveready East Africa reports Full Year 2014 Loss after Tax [248.013m] Earnings here
Kenyan Economy


Par Value:                  1/-
Closing Price:           3.80
Total Shares Issued:          210000000.00
Market Capitalization:        798,000,000
EPS:             -0.85
PE:                 4.471

Kenyan battery manufacturer.

FY Earnings through September 2014 versus FY through September 2013

FY Turnover 1.216580b versus 1.428278b
Plant Closure Cost [246.342m]
FY Profit Before Taxation [248.013m] versus 60.113m
FY Tax Charge 70.424m versus [15.021m]
FY Profit after Tax [177.589m] versus 45.092m
FY EPS [0.85] versus 0.21

Company Commentary


A Deliberate decision made to reposition our Business in Tanzania that
resulted in a decline in revenue from that market.
Extraordinary one off costs relating to the plant closure amounting to 246m
Looking to unveil plans for real estate development in Nakuru

Conclusions


More of a Real Estate Play than a Battery Play now.

read more



Dec 26 @alykhansatchu: Fort Jesus Mombasa
Kenyan Economy


I spoke yesterday at the @KAM_Kenya Sundowner Event

And I thank @KAM_Kenya for the Invite and I tweeted this Infographic
about Kenya Industry that Phyllis posted in her presentation.

read more



Kenya Shilling versus The Dollar Live ForexPros 91.352
Kenyan Economy


Nairobi All Share Bloomberg +1.58% 2015 [1.2355% below a record
closing High from 9th Dec 2014]

http://www.BLOOMBERG.COM/quote/NSEASI:IND

165.47 0.61 0.37%

read more






Ex-Matiba hotel left to rot away after Barclays auction
Kenyan Economy


The pristine grounds of the hotel, auctioned in 2013 to Simba Lodges
by Barclays Bank of Kenya to recover bad debts owed by Alliance Group
of Hotels owned by the former Cabinet minister, are being taken over
by a jungle, of creeping vines and bushes.

“There are no plans to do anything,” said Vipul Patel, a director of
Simba. “Tourism at the coast is in bad shape. Many hotels are closed
and several have been put up for sale.”

Conclusions

read more


31-DEC-2014 We live in a 24-hour world. I have yet to see the plan which bends the perception curve.
Kenyan Economy


We have not reached a ‘firesale’ moment at the Coast but directionally
its heading towards a denouement and for those of us who have a longer
term and institutional memory in these respects, we know what that
‘firesale’ can look like.

read more




 
 
N.S.E Today


The Nairobi All Share rallied 0.8098% to close at 166.81 and within
0.43% of a record closing high reached Dec 9th Last Year.
The All Share has posted a real muscular week rallying +2.918% cover 5 sessions.
The Nairobi NSE20 ticked 2.11 points better to close at 5203.72 a
fresh 10 week high.
Equity Turnover clocked 636.718m as Buyers paid up for stock.
The market might have squeezed higher in part because local Sellers
became more circumspect in January because of the CGT and essentially
throttled back the Offer Side.
There were 2 Winners for every loser at the Exchange today.



N.S.E Equities - Agricultural


Limuru Tea was high ticked 9.60% to close at 845.00 on just 100 shares
traded. Limuru Tea Estate is prime real estate on the outskirts of
Nairobi and as such the share price discount to the Net Asset Value is
seriously egregious.



N.S.E Equities - Commercial & Services


Safaricom rallied 1.71% to close at 14.85 and traded 5.718m shares
worth 84.907m. Safaricom is +5.693% in 2015 and 1% below a record
closing High which it will slice through this month.

Uchumi rallied 8.33% to close at 11.70 which is a 4 and a half month
Closing High. Uchumi traded 77,900 shares. Sentiment has mended
towards Uchumi since the successfully conducted right issue and Uchumi
has been rallying sharply and +16.4179% so far in January.

TPS Serena [which remains at the sharp end of a still troubled Tourism
Sector] rebounded 6.12% to close at 39.00 and traded 1,000 shares.

Kenya Airways firmed a further 1.06% to close at 9.55 and just shy of
a 5 month high. Kenya Airways has rallied +9.77% so far this month.



N.S.E Equities - Finance & Investment


Kenya Commercial Bank rallied 1.69% to close at 59.00 and closed the
Session trading at 60.00 +3.45% which also happens to be an all time
closing High level from September last year. Kenya Commercial traded
2.084m shares worth 123.948m and Buyers outpaced Sellers by a margin
of 3 versus 1 at the Finish Line. Kenya Commercial Bank is +3.508% in
2015 and all set to sail into new record highs as early as next week.

Equity Group released the following Cautionary Announcement pre-market Opening

http://www.rich.co.ke/media/docs/Equity%20Group%20Holdings%20Ltd%20Public%20Announcement%20Cautionary%20Notice.pdf

Helios EB Investors LP has on 12th January 2015 entered into a sale
agreement with Norinvest AS which upon its completion will result in
Norfininvest holding 452,581,275 shares or 12.223% of the issued share
capital of Equity Group.

Helios this week raised the largest Africa dedicated PE Fund and
clocked in excess of $1b but evidently are looking to bag some outsize
gains from their Equity Bank investment. Equity bank was the most
actively traded share at the Securities Exchange today and firmed
0.98% to close at 51.50 and traded 4.839m shares worth 249.285m.
Equity Bank is +3.00% in 2015.

Housing Finance put in a strong showing and closed 3.91% better at
46.50 and traded 68,600 shares.

Kenya Re was well traded and closed 1.126% better at 17.95 with 1.019m
shares worth 18.339m changing  hands. Kenya Re has rallied +5.27% in
2015.
CIC Insurance rallied 2.59% to close at 9.90 on good volume of 510,300
shares. CIC Insurance is +3.125% in 2015.



N.S.E Equities - Industrial & Allied


Mumias Sugar Company surged a further 8.47% to close at 3.20 and
traded 2.749m shares with Buyers on board during the session for 5x
the volume traded. Mumias Sugar has rallied a parabolic +68.42% in
2015 and the Precipitator of this Bull Move were supportive comments
made by the Cabinet Secretary Henry Rotich. We have gone up in a
straight line since those comments.

EABL firmed 0.33% to close at 305.00 and traded shares as high as
310.00 +1.97% at the Finish. Buyers outpaced Sellers by a Factor of 6
to 1 at the Finish and EABL traded 105,300 shares worth 32.126m. EABL
has outsize Buy Side Interest [some of it under the radar] at 300+ and
therefore, on a risk-adjusted basis, this looks an Optimal Entry Level
for a run up to 400.00 in 2015.

Kenya Power KPLC eased 0.98% to close at 15.15 and traded 201,000
shares. KPLC has been on a roller coaster ride in 2015 rallied +12.15%
out of the blocks at the start of the year through 8th Jan before
correcting 5.607% 8th Jan through today.

Eveready reported a Full Year Loss after Tax of [177.589m] versus a
profit of 45.092m the previous Year. The Loss was nearly exactly
equivalent to the one-off extraordinary Plant Closure Cost of
[246.342m]. Eveready is parlaying the closure of its Nakuru Factory
into a Real Estate Play. Eveready closed unchanged but traded shares
as high as 4.00 +5.26% at the closing Bell. Eveready has a market
capitalisation of 798m shillings and the Nakuru Real Estate Gambit
will surely unlock value in excess of that hence the resilient price
performance. Eveready traded 17,800 shares and There were Buyers for
25x that volume at the Finish line.

ARM eased 0.62% to close at 80.50 and traded 405,000 shares worth
32.732m. ARM's CEO Pradeep Paunrana who is also the Chairman of
@KAM_Kenya was unabashedly bullish about prospects for the Economy
yesterday at a @KAM_Kenya Sundowner Function I spoke at.
East African Portland Cement was high ticked 7.0796% to close at 60.50
and on just 100 shares



by Aly Khan Satchu (www.rich.co.ke)
 
 
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January 2015
 
 
 
 
 
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