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Satchu's Rich Wrap-Up
Wednesday 04th of March 2015

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Macro Thoughts

Home Thoughts

Once upon a time I would leave my Home just before 7 to get to the
Office around 7.15 or 7.20. Then I started leaving at 6.30 in order to
arrive at 7 and now I leave at 5.50 to get at my desk at a quarter
past 6 because if I left any later its a Crap-shoot with a low of 45
minutes and High of > 2 hours.

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@alykhansatchu Good Morning from the 8th Floor #ThisisNairobi at 6.26 am #Africa

And in that early half light its a little surreal because so many
People in fact walk to work and occasionally you find yourself have to
make a deep swerve to avoid someone.

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@KenyanTraffic 07:40 via @kijanamdigital @mpwani_halisi Early Wdnsday morning rush to job~Vehicles versus motorcycles versus humans

And then the most curious thing of all - You will  find yourself
behind a Fellow who will drive at 5 kph for about 10 ten minutes and
when you finally decide to overtake this 5 kph Fellow morphs into
Ayrton Senna

Whats with that?

Hannah and I spent 5 minutes looking at the Stars this morning which was fun.

Lake Elmenteita and Lamu are the places where you can practically
reach out and touch the Milky Way.

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Is the Mysterious Light on This Dwarf Planet a Sign of Life? via @business

Researchers, some of whom have worked on the $473 million Dawn mission
for more than a decade, say they’re surprised by the strange
brightness from Ceres’s otherwise highly cratered, "dark surface of
fairly primitive composition," according to Carol Raymond, deputy
principal investigator of the Dawn mission. It is probably unique in
the solar system.

“The mystery will be solved,” she says, “but it is one that really got
us on the edge of our seats.”

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The Peaks of Mount Kenya seen from the Slopes of @Fairmontmtkenya @Fairmonthotels [and a mysterious Green Light]

“And as I sat there brooding on the old, unknown world, I thought of
Gatsby’s wonder when he first picked out the green light at the end of
Daisy’s dock. He had come a long way to this blue lawn, and his dream
must have seemed so close that he could hardly fail to grasp it. He
did not know that it was already behind him, somewhere back in that
vast obscurity beyond the city, where the dark fields of the republic
rolled on under the night.

Gatsby believed in the green light, the orgastic future that year by
year recedes before us. It eluded us then, but that's no
matter—to-morrow we will run faster, stretch out our arms farther. . .
. And one fine morning——

So we beat on, boats against the current, borne back ceaselessly into
the past.”
― F. Scott Fitzgerald, The Great Gatsby

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Netanyahu warned Obama against accepting a nuclear deal with Iran that would be a "countdown to a potential nuclear nightmare" by a country that "will always be an enemy of America".
Law & Politics

“Iran’s nuclear program can be rolled back well beyond the current
proposal by insisting on a better deal and keeping up the pressure on
a very vulnerable regime, especially given the recent collapse of the
price of oil.”


An US Iran Rapprochement represents an existential Threat to Bibi
@Netanyahu not to the State of Israel.

read more

The Prime Minister received twenty-three standing ovations for his portrayal of Iran as a villainous country now “gobbling up” four other Middle Eastern countries—Iraq, Syria, Lebanon, and Yemen. New Yorker
Law & Politics

“How many more countries will Iran devour when sanctions are lifted?”
he asked. “We must all stand together to stop Iran’s march of
conquest, subjugation, and terror.”

As Netanyahu addressed Congress, Secretary of State John Kerry was
meeting with his Iranian counterpart—their eighth round of talks in
this year alone—four thousand miles away, in the Swiss resort city of
Montreux, to try to nail down a framework for an agreement within the
next three weeks. “We’re working away. Productively,” Kerry told
reporters. In Washington, the White House noted that President Obama
was not watching Netanyahu’s speech—he was participating in a video
conference with his British, French, German, and Italian counterparts
on the Ukraine crisis. He read a transcript of Netanyahu’s remarks

The schism between the White House and an Israeli government has not
been so deep since the dispute between the Reagan Administration and
Prime Minister Menachem Begin, in the nineteen-eighties, over the sale
of American AWAC intelligence aircraft to Saudi Arabia, the former
U.S. Ambassador to Israel Martin Indyk told me. “It’s tragic and sad,”
he said. Tensions are even reminiscent of President Eisenhower’s
confrontation with Israel during the 1956 invasion of Egypt during the
Suez crisis.

The chemistry between Netanyahu and Obama has never been good. It’s
not a matter of personalities. It’s a clash of realities—the two men
see the world differently.

“But when asked to finally decide,” he said, “a clear majority breaks
in favor of a deal.”

read more

Currency Markets at a Glance WSJ
World Currencies

Euro 1.1169
Dollar Index 95.41
Japan Yen 119.61
Swiss Franc 0.9605
Pound 1.5358
Aussie 0.7821
India Rupee 61.667
South Korea Won 1096.96
Brazil Real 2.9311
Egypt Pound 7.6306
South Africa Rand 11.7451

Dollar Index 3 Month Chart INO 95.41 [See what happens when the FED
hikes in june]


I was calling this move from September 2014 and I remain of the View
that There is plenty more to come

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12-JAN-2015 The euro/dollar exchange rate is headed to parity and even lower in 2015.
World Currencies

The euro/dollar exchange rate is headed to parity and even lower in 2015.

I know Goldman Sachs has a parity call for euro/dollar in 2016, but I
think the unravelling will happen in 2015 and a lot more quickly.

read more

Brent held above $60 a barrel on Wednesday supported by a hike in Saudi crude prices and strikes on oil facilities in Libya.

In a move widely seen as a vote of confidence by Saudi Arabia in
demand recovery, the OPEC kingpin raised the official selling prices
(OSPs) for its oil deliveries to Asia and the United States on

"This is a sign that prices have bottomed out because it means Saudi
is confident in raising prices without being afraid of losing market
share," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.

In the past seven weeks, Brent crude LCOc1 rose from a six-year low to
hold above $60 a barrel despite continued concerns about global

The April Brent contract was down 30 cents at $60.72 by 0302 GMT,
after rising 2.5 percent on Tuesday, while U.S. crude futures CLc1
edged up 9 cents to $50.61 a barrel.

Air strikes on oil terminals and an airport in Libya on Tuesday helped
to underpin prices.

Still, talks between major powers and Iran over its nuclear program
capped oil price gains. Any sign of a lasting agreement between Tehran
and six world powers could result in a flood of Iranian crude
returning to the market.

"We still have the big question mark over Iran. This month is the
crunch time for P5+1 talks," Nunan said.

Investors are also looking to weekly U.S. government inventories data
due later on Wednesday for more price support, after an industry
report showed a smaller-than-expected build in U.S. commercial crude
stocks last week. [API/S]

U.S. crude stocks rose 2.9 million barrels last week, data from the
American Petroleum Institute showed on Tuesday, versus analysts'
expectations for an increase of 4.2 million barrels. [EIA/S]

State-owned Saudi Arabian Oil Co. said Tuesday it will sell cargoes of
Arab Light in April at 90 cents a barrel below Asia’s regional
benchmark. That narrows the discount by $1.40 from March, the biggest
price increase since January 2012, according to data compiled by
Bloomberg. The company also raised prices it offers to refiners in the

read more

@Oilprocom Dec 24 #Saudi Oil Minister Ali Naimi


Saudi Arabia is no longer the Price-Setter in the Oil markets, the US is.

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13-OCT-2014 It is the US that is the new price setter for the oil markets and this is a deep and important geopolitical development.

The US production in January averaged 9.2 million barrels per day,
compared to 8.6 mb/d in 2014. The EIA estimates an average 9.5 mb/d
production in 2016, which is close to the historically highest US
production levels of 9.6 mb/d in 1970.

read more


Today, there are an estimated 350 million middle-class consumers on
the continent. Many companies have already mobilized to capture this
emerging demand, but nearly as many have had to recalibrate their
growth expectations, discovering that delivering strong growth in
Africa’s markets is not as easy as merely being present with an
otherwise solid brand, awaiting demographic tailwinds.

Beyond the well-known infrastructure constraints, one of the more
overwhelming challenges is the complexity of the retail environment.
Modern trade is growing, but it is still small and underdeveloped
outside South Africa. This leaves companies to figure out how to reach
consumers in the hundreds of thousands of smaller, traditional and
informal outlets that account for the majority of CPG sales.
Currently, Nielsen tracks retail sales in 14 sub-Saharan countries
where traditional grocery stores account for about 50% of consumer
goods spend – there are over 550,000 of these outlets in the countries
monitored! But the most common shopping channel of all is the simple
table top: a stand set up on the side of the road or in a local market
to capture passing trade. Eighty percent of consumers shop from these
table tops, of which there are no less than 200,000 in Nigeria alone.

For example, Nielsen analyzed a range of new products in Nigeria,
Africa’s largest consumer-goods market. In the course of six months,
the highest- selling new product measured in Nielsen’s Retail Index
reached 65% of the retail universe of 745,000 outlets, while the next
nine best-selling products were available in just 30% of these
outlets. In what developed market would bestsellers 2-10 reach only
30% of possible outlets in six months? Consider the enormous launch
potential if these products had only reached more outlets and
consumers. This report aims to demonstrate how CPG companies can
overcome distribution challenges by getting much closer to a multitude
of small retailers upon whom success will in large measure depend.

In Madagascar, a Nielsen survey showed consumers went shopping 70
times a month on average, while in Kenya the average was 38. Some
Madagascar shoppers visited the same outlet two or three times a day.

Second, CPG companies will need to identify the best channels and
retailers for a given product category. In Lagos, we found laundry
detergents in distribution in no less than 100,000 outlets, an
impossibly large number to reach. But further analysis showed that 80%
of the sales value came from just 35,000 of those outlets, and a full
50% from a more manageable 10,000.

Simply knowing which stores have refrigeration can transform the sales
efforts of a purveyor of cold drinks. And all this data can be
delivered on a mobile phone or tablet.

Modern trade is at an early stage of development. 80% of consumers
shop in traditional outlets.
Brand familiarity and recommendations from others are strong purchase drivers.
Retail channel shopping preferences and the types of products
purchased vary significantly from country to country.
A small proportion of retail outlets can account for a
disproportionate portion of sales.

The African Development Bank estimates there are 55 million “wealthy”
people in Africa, that is, consumers whose per capita daily
expenditure is above U.S. $20. In population terms, that represents a
market the size of Italy or Spain. But these consumers account for
just 5% of the population. Reach today’s growing middle class of
around 350 million people, and the opportunities become significant

Many companies have already mobilized to capture this emerging demand.
But it is also the case that many have had to recalibrate their
expectations about how fast they can grow their businesses, struggling
to translate the opportunity into results.


But a second, perhaps more challenging one has since emerged: an
insufficiently detailed understanding of what is a highly-fragmented
retail system. Without such an understanding, it is hard to function
effectively within the system.

In young consumer markets, it is the retailer rather than the brand
that is initially trusted by consumers. Getting close to the retailer
is therefore a key component of an effective distribution strategy.


All three will depend upon a level of local market knowledge that only
analysis can deliver, combined with an intensive, customized approach
to working with retailers.

In most countries in Africa, the percentage of CPG sales made through
modern trade outlets is exceptionally small. Even in Kenya, regarded
as one of Africa’s most developed retail markets, traditional trade
still accounts for 70% of sales (Exhibit 3). It is true that large
African and international retailers such as Shoprite, Woolworths, and
Carrefour are making investments in modern trade formats. But
traditional outlets will continue to be a significant channel for
reaching consumers for some considerable time to come.


A very interesting report.

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Democratic Republic of Congo economy grew at 9.5 pct in 2014 -PM

Democratic Republic of Congo's economy grew at 9.5 percent in 2014,
one of its best performances since 1960, the year it secured
independence, Prime Minister Augustin Matata Ponyo said on Tuesday.

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@RDCongoBenelux Sep 10 Pr #Kabila posing "High Commander Medal of #National #Hero Order #Lumumba" over LT.Gen. #Bahuma coffin #Congo #DRC

Fitch warned that South Africa could lose its investment grade status.


"Our rating for South Africa is BBB with a negative outlook, so we are
signalling that a downgrade is more likely than not," he said.

South Africa All Share Bloomberg +6.87% 2015 [244 points below a
record high reached 24th Feb]


Dollar versus Rand 6 Month Chart INO 11.7451


Egypt Pound versus The Dollar 3 Month Chart INO 7.6306


Egypt EGX30 Bloomberg +6.18% 2015


Nigeria expects to lower its forecast for 2015 economic growth
NGGDPQ=ECI again, after cutting its forecast to 5.54 percent in
January, after oil prices fell and the currency weakened further last
month, the country's statistics bureau said.


Yemi Kale told the Reuters Africa Investment Summit on Tuesday he did
not expect a reduction of more than 1 percent in the 5.54 percent
forecast. Final figures will be released by half-year, he said.

Nigeria lowered its forecast for economic growth in January from
2014's 6.22 percent after the government cut spending because the
price of oil had slumped.

"Because of the changes in the macro-variables ... we are not sticking
with those forecasts any longer. The exchange rate, crude oil forecast
have changed," Kale, the head of the National Bureau of Statistics,
told Reuters by telephone.

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“When we were young, the government would always say, ‘You are the future of tomorrow.’ Now we just try to make our own strides, because if you wait for them, you’ll starve.”

“For years they have left us . . .” Gloria was saying about Nigeria’s
leaders, and just then there was a click, and then quiet. The buzzing

“Oh,” said Victor, looking up, surprised. “They have brought the light.”

A ceiling fan began whirring. The television blinked on. A newscaster
began talking about the election, and an army operation against Boko
Haram in the northeast, all of which seemed to exist on another
planet. A few minutes later, the power blinked off again, and the
buzzing resumed.

Festac, which used to be called Little London, is now decaying, and
residents are bracing for election-related violence. (Andrew
Esiebo/For The Washington Post)

read more

Nigeria All Share Bloomberg -11.70% 2015 [+3,106 points since 13th Feb]

A burnt pickup truck is seen in front of a building that Boko
Haram insurgents used as their base before being driven out by the
Chadian military in Dikwa March 2, 2015.


A black and white Boko Haram flag still flutters on top of a deserted
villa in the Nigerian town of Dikwa, overlooking a courtyard filled
with dirty mattresses and charred vehicles.

Inside the villa's pink and white walls, blood trickled into corridors
and a pile of insurgents' bodies lay in a heap in a wardrobe.

The scene was the result of a dawn attack by troops from neighboring
Chad, who are driving deep into Nigerian territory in an offensive
aimed at helping end a six-year insurgency that has killed thousands
and now sucking in neighboring armies.

"They resisted ferociously. This huge villa was their command center,"
a Chadian soldier who fought in the battle told a Reuters reporter
visiting the town after fighting subsided.

Oil-rich Nigeria's main cities are facing acute gasoline shortages as
importers feel the pinch of a plummeting local currency, tighter
credit lines and unpaid government subsidies, oil traders and local
industry sources said.


As queues of double-parked cars stretch outside filling stations in
the capital Abuja, empty tanks elsewhere are forcing consumers onto
the black market just weeks before presidential elections on March 28
in Africa's biggest economy.

"I have spent 12 hours here," taxi driver Bartholomew Odey Akpa told
Reuters on Monday. "I work at the airport as a car hire ... and there
is no fuel for me to go."

Nigeria exports around two million barrels per day of crude but a
neglected refining system means it is almost wholly reliant on imports
for the 40 million litres per day of gasoline it consumes.

Ghana Stock Exchange Composite Index Bloomberg -3.68% 2015


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Oil prices would probably need to rise to about $75 to $85 a barrel from around $60 currently for @TullowOilPLC and Africa Oil to go ahead with their Kenyan project, the chief executive of Africa Oil said.
Kenyan Economy

“We still need oil prices to recover probably above today’s levels to
pull the trigger on the project sanction,” he said. “I am quite
confident that oil prices will recover by the end of the year.”

Raising capital has become more expensive. Africa Oil raised $125
million in a private placement last month with shares priced at $2.74
each, while in November 2013 it raised $435 million in a placement at
$8.35 a share.

Mr Hill said the firm had enough cash to meet its needs until the end
of 2015 based on its slowed spending programme.

Africa Oil had hoped to sell or “farm out” part of its stake by early
2016, but falling oil prices could delay that.


read more

@Ukenyatta directs State firms to place all their adverts on digital outlets
Kenyan Economy

“We are spending hundreds of millions of shillings in advertising
through the media. Let the ministries and other public bodies
advertise through the digital platform we just launched and save that
money for use in other things,” said Mr Kenyatta.

“Those targeting government jobs and contracts can get that
information on the new portal,” he added.

The move, if fully effected, could significantly weigh down the
incomes of local media houses, which rely heavily on government
advertisements for revenues.

This would worsen the situation for the three leading media houses —
Nation Media Group, Standard Group and Royal Media Services — which
have incurred losses after the Communications Authority of Kenya
switched off their television stations three weeks ago.

However, director of public communications and head of government
advertising at the Ministry of Information Communication Technology
Dennis Chebitwey said media houses should not expect significant
impact on their revenues since the government would also spend on
their existing online platforms.

read more

Nairobi Security Exchange on a red hot winning streak The Star
Kenyan Economy

The Nairobi Securities Exchange has been on a Kerry Packer type
winning streak. Kerry Packer was an Australian tycoon who founded
World Series Cricket which was a break away professional cricket
competition staged between 1977 and 1979. World Series Cricket started
the innovation process which re-invented cricket.

Kerry Packer was a famous and lucky gambler and apparently walked into
Vegas one evening and there is a noisy Texas Oil-Man around whom all
the attractive girls are buzzing like bees and he calls over the
waiter and asks;

''How much is that man worth''

The waiter responds '' $60m.''

Packer walks over and introduces himself and takes out a coin and says
'' “I’ll toss you for $60m''

Packer was, more remarkably, once reported to have won 20 hands of
baccarat in a row at Las Vegas.

Finally, Kudos to the Cabinet Secretary National Treasury Henry Rotich
for stepping up on the Capital Gains Tax.

Kenya Shilling versus The Dollar Live ForexPros


Nairobi All Share Bloomberg +6.2% in 2015


Nairobi ^NSE20 Bloomberg +7.1% in 2015


Every Listed Share can be interrogated here


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N.S.E Today

This was a Banner Session with Equity Turnover clocking 1.992b which
is the highest volume session of the Year.
The Securities Exchange has been seeing some profit taking after a
powerful 8 week Surge.
The All Share ticked 0.27 points lower to close at 172.80. The All
Share is +6.083% and has corrected 2.653% off an All Time reached on
the 25th of February.
EABL which has retreated 15.71% since 19th February has pressured the All Share.
The Nairobi NSE20 eased 13.37 points to close at 5461.08.
The NSE20 ticked 13.37 points easier to close at 5461.08.
The NSE20 is +6.872% and is outperforming the All Share for the first
time in a more than 37 month bull market and this speaks to a Rally
that has broadened out.
The NSE20 is just below a 7 year high reached Monday.
there were 14 Winners and 22 Losers today.
Safaricom traded 16.00 at the Finish Line which is above its all time
closing High.

N.S.E Equities - Commercial & Services

Safaricom traded 3rd at the Securities Exchange and firmed 0.32% to
close at 15.45 but was trading at session Highs of 16.00 +3.9% at the
Finish Line. Safaricom traded heavy volume action of 22.042m shares
worth 341.289m. There were 2 Buyers for every seller signalling
Safaricom which is +9.96% in 2015 is all set to reset all time closing
Highs of 15.85 [set on 25th February last week] as early as tomorrow.
Closing the Session at 16.00 and above the record closing High is a
very loud signal in the Noise.

N.S.E Equities - Finance & Investment

Kenya Commercial Bank closed unchanged at 59.00 and traded 2.009m
shares worth 119.447m. There were Buyers for 3x the volume traded
during the session at the Closing Bell. Someone is quite properly
mopping up shares here. I think the unchanged dividend has led to some
loose shares becoming available but this supply will be extinguished
soon ahead of a move to 66.00. The Full Year Results spoke for
themselves. Kenya Commercial Bank is +3.508% Year to date.

Equity Bank closed unchanged at 53.00 and traded 1.866m shares worth 99.022m.

NIC Bank reported FY 2014 Earnings where pretax profit rose 24 percent
last year to 6.23 billion shillings [$68.4m]. NIC Bank's loan book
grew by more than a fifth to 102.04 billion shillings, while total
assets were up by 20 percent at 145.78 billion shillings. NIC Bank
closed unchanged at 63.00 and is +9.56% in 2015. There have been
persistent rumours that NIC Bank and CBA have been looking at a
possible merger.

National Bank reported FY 2014 Earnings where the net profit  declined
to Sh870.7 million compared to Sh1.1 billion in 2013. The Profit
suppression was characterised by the CEO Munir Ahmed

"We have supplemented that with the voluntary retirement for 190 staff
where we paid 1.1 billion shillings."

"We are changing the wheels of a moving car," Ahmed said to Reuters

National Bank also proposed a Bonus Issue and a Rights Issue [13b
shilling cash call] and this news rallied the price +4.04% to close at
25.75 on 255,100 shares traded. National Bank is +4.0404% in 2015.

Centum bounced +1.68% to close at 60.50 and was trading at 61.00
+2.52% at the closing Bell. Centum traded a super normal 8.896m shares
[1.336% of the Company's shares and a material Piece of the Centum
Action] worth 538.357m. Centum bagged some big gains recently on the
sale of its stake in UAP Insurance. Centum is -0.81% Year to date.

N.S.E Equities - Industrial & Allied

EABL saw elevated volume action and eased back 1.01% to close at
295.00 and traded its highest volume session in 2015 with 2.463m
shares worth 729.011m changing hands. EABL announced that they are
seeking to raise  11 billion shillings ($120.48 million) through a
medium-term note Program. EABL has retreated 15.71% since closing at a
2015 high of 350.00 on 19th February when it close +13.63% for the
Year. EABL is now -4.22% and this price correction has overshot
massively. The First Half results were muscular and neither the
Keroche expansion News or the MTN Program justify the depth of this

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

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