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Satchu's Rich Wrap-Up
 
 
Thursday 29th of September 2016
 
Afternoon,
Africa

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Opec members agree to cut output for first time since 2008 @Schuldensuehner
Africa


But @PutinRF_Eng has never cut @NicolasMaduro has to keep on pumping
because of China loans only KSA will cut to improve price
https://mobile.twitter.com/alykhansatchu/status/781434755166375936?s=03

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In U-Turn, Saudis Choose Higher Prices Over Free Oil Markets @Business
Africa


Saudi Arabia has ended its flirtation with free oil markets.

It took the kingdom’s new oil minister, Khalid Al-Falih, just six
months to blink, ending the country’s two-year policy of pump-at-will.

The decision at this week’s meeting of the Organization of Petroleum
Exporting Countries in Algiers to cut production was necessitated by
Saudi Arabia’s tattered finances. The kingdom has the highest budget
deficit among the world’s 20 biggest economies, may delay its first
international bond issue and now faces fresh legal uncertainty after
the U.S. Congress voted Wednesday to allow Americans to sue the
country for its involvement in 9/11.

“Saudi Arabia wants higher prices,” said Amrita Sen, chief oil analyst
at consulting firm Energy Aspects Ltd. in London.

The consequences could be vast. Giants such as Exxon Mobil Corp. may
soon be flush enough to revive abandoned projects. Finances of
cash-strapped OPEC countries like Venezuela will get a boost. Russia
and other independent oil-rich countries will have to decide whether
to follow Saudi Arabia’s lead. U.S. shale producers, which OPEC hoped
it could push into bankruptcy, will use higher prices to drill new
wells, and American consumers, who’ve enjoyed the lowest gasoline
prices in more than a decade, will pay more at the pump.

Just months ago, Al-Falih’s predecessor, Ali Al-Naimi, proclaimed it
didn’t matter whether oil prices went “down to $20, $40, $50, $60 a
barrel -- it is irrelevant.” Al-Falih now says prices, hovering under
$50 a barrel, need to rise to encourage long-term investment.

In 2014, when Saudi Arabia led OPEC’s pump-at-will policy, Riyadh
calculated that if it reduced output, prices wouldn’t rise enough to
compensate. This time is different.

“Saudi Arabia is betting that a small cut will pay for itself through
higher oil prices and hence higher revenues,” said Jamie Webster, a
fellow at the Center on Global Energy Policy at Columbia University in
New York.

For all the justifications, the last two years haven’t panned out as
Riyadh thought they would. At home, the kingdom has burned through
more than $150 billion of foreign-exchange reserves, government
contractors have gone unpaid, and this week the king announced
unprecedented pay cuts for civil servants.

Saudi Arabia will suffer a fiscal deficit equal to 13.5 percent of
gross domestic product this year, the International Monetary Fund
estimates. When it comes to economic growth, Saudi Arabia is slowing
sharply to about 1 percent this year while Iran, its nearby rival, is
accelerating toward 4 percent.

Brent crude lost 2 cents to $48.67 a barrel at 7:23 a.m. in London on
Thursday after surging 5.9 percent Wednesday, the most since April.

Conclusions

Iran will be exempt from capping production, a major concession by
Saudi Arabia.

Saudi Arabia has capitulated and it is now entirely dependent on them.
It is the Kingdom who will have to take their Oil off the market and I
estimate the bare minimum will be the removal of 2.5m barrels a day.

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Saudi Stock Plunge @Business
Africa


Home Thoughts


“It’s not a good idea to try and put your wife in a novel. Not your
latest wife, anyway.” —Norman Mailer H/T @ParisReview

“I like philosophy the way some people like politics, or football
games, or UFOs.” —John Gardner H/T @ParisReview

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MH17: Buk missile finding sets Russia and west at loggerheads
Law & Politics


Wilbert Paulissen, the head of the Dutch national detective force,
told the press conference: “MH17 was shot down by a 9M38 series
missile, launched from a Buk-Telar. This Buk-Telar was brought in from
the territory of the Russian Federation, and after launch was
subsequently returned to Russian Federation territory.”

Satellite data from the US and the European Space Agency identified
the launch site, along with testimony from numerous witnesses, he
said.

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MH17 Machine Gun-Like Holes Indicate Shelling from a Military Aircraft
Law & Politics


The cockpit shows traces of shelling! You can see the entry and exit
holes. The edge of a portion of the holes is bent inwards. These are
the smaller holes, round and clean, showing the entry points most
likely that of a 30 millimeter caliber projectile.

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25-AUG-2014 The signal announcing this new arrhythmic normal was the disappearance of #MH370
Law & Politics


Picking up the signal through the noise of our world in 2014 is no
easy thing. In fact, my view is the new normal is a very arrhythmic
world. 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’’

His excellency Johan Borgstam told me the signal announcing this new
arrhythmic normal was the disappearance of the MH370. Since then
planes have been falling out of the sky like flies. And the
uncertainty around MH370 and MH17 which is sharpened by the way the
story is seemingly turned on and off took me back to Don Delillo

‘’”We are not witnessing the flow of information so much as pure
spectacle, or information made sacred, ritually unreadable. The small
monitors of the office, home and car become a kind of idolatry here,
where crowds might gather in astonishment.’’

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President Vladimir Putin is fast turning Russia into an outlaw nation. New York Times
Law & Politics


Mr. Putin fancies himself a man on a mission to restore Russia to
greatness. Russia could indeed be a great force for good. Yet his
unconscionable behavior — butchering civilians in Syria and Ukraine,
annexing Crimea, computer-hacking American government agencies,
crushing dissent at home — suggests that the furthest thing from his
mind is becoming a constructive partner in the search for peace.

International Markets

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.1233
Dollar Index 95.53
Japan Yen 101.52
Swiss Franc 0.9715
Pound 1.3024
Aussie 0.7671
India Rupee 66.765
South Korea Won 1100.26
Brazil Real 3.2168
Egypt Pound 8.8815
South Africa Rand 13.6651

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India's rupee extended losses, and local stocks and bonds declined after the nation said it carried out surgical strikes Wednesday night on terrorist camps in Pakistan.
Emerging Markets


The rupee fell 0.5 percent to 66.7750 per dollar as of 12:39 p.m. in
Mumbai, halting a five-day gain. The benchmark S&P BSE Sensex dropped
1 percent while the yield on sovereign notes maturing in September
2026 surged seven basis points to 6.85 percent.

India carried out the surgical strikes on Wednesday night, Director
General of Military Operations Ranbir Singh said in New Delhi, adding
that operations have since ceased

Frontier Markets

Sub Saharan Africa

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East African nations urged to take advantage of strong growth @FT
Africa


Patrick Njoroge, the governor, told the Financial Times that low
commodity prices, regional integration and the diversification of east
Africa’s economies were “sources of resilience” for the region.

“We want to exploit them. We will do that by investors coming in, The
economy has to be driven by the private sector,” he said. “That
confluence of factors is making what would appear to be a perfect
storm, a positive storm. It won’t last for ever and it will only be
there in terms of opportunities for a period of time.”

Kenya, east Africa’s dominant economy, is forecast to grow about 6 per
cent this year, while neighbouring Tanzania and Uganda are expected to
expand by 7 per cent and 5.6 per cent, respectively. In contrast,
Nigeria, Africa’s top oil producer and most populous nation, is
enduring its first recession in more than two decades, while growth in
South Africa, the continent’s biggest mining destination, is expected
to be flat.

Mr Njoroge said a major driver of his region’s success was the
deepening links between the members of the EAC, the trade group formed
in 2000. It comprises Kenya, Tanzania, Uganda, Rwanda, Burundi and,
since earlier this year, South Sudan.

Apart from South Sudan, where the economy has collapsed amid civil
war, the countries are net oil importers and do not rely on commodity
exports. Instead, their economies are becoming increasingly linked
through customs unions and lower tariffs.

The International Growth Centre, a research body based at the London
School of Economics, reported this year that bilateral trade between
the bloc’s members had increased 213 per cent on average as a result
of the EAC’s customs union.

But the EAC is not always united. Tanzania is refusing to sign an
economic partnership agreement with the EU, claiming it will undermine
its manufacturing base. If the deal is not signed Kenya, as the only
middle income economy in the bloc, will face tariffs of more than 20
per cent on some goods, putting tens of thousands of jobs at risk.

Mr Njoroge said EAC members have also learnt from the EU not to push
political union too fast.

“If you let the politics run too far ahead then you end up having
bigger problems that you cannot resolve,” he said.

The former International Monetary Fund economist also warned that the
“confluence of positive factors” would not persist unless policymakers
prioritised “sharing out the dividends of growth”.

He said people’s expectations, particularly the youth, were not being met.

“If you don’t do this well then we’ll end up having a Tunisia kind of
operation,” Mr Njoroge said, referring to the uprising in December
2010 that led to the Arab Spring. “What I worry is that the
expectations of a young man here today are very high and we have to
match those expectations in terms of giving them opportunities.”

Kenyans will vote in elections in 2017 and the opposition led a number
of protests this year, raising fears of a repeat of the politically
motivated violence that followed disputed 2007 elections. But Mr
Njoroge said he thought politicians had learnt from previous polls and
would refrain from inciting clashes.

He also predicted the country's economic policies would be unlikely to
change regardless of who wins because he had yet to hear any potential
candidate articulate an alternative vision.

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U.S. slaps sanctions on Congo general, former senior police official
Africa


Major General Gabriel Amisi Kumba and John Numbi, a former senior
police official, were placed on a list of "specially designated
nationals," said a Treasury Department announcement.

Any financial assets they have in the United States are blocked and
Americans are generally barred from engaging in financial transactions
with them.

The decision to sanction the pair followed "increasing indications
that the Government of the Democratic Republic of Congo continues to
suppress political opposition in the country, often through violent
means," the Treasury said.

Amisi oversees security forces in four provinces, including Kinshasa.
Units under his command "reportedly have engaged in violent repression
of political demonstrations," including January 2015 protests in which
at least 42 people died, the announcement said.

Numbi, the former national inspector of the country's police force,
used "violent intimidation" to secure victories for pro-Kabila
gubernatorial candidates in March 2016 provincial elections, it said.

While no longer a government official, Numbi "is reportedly an
influential adviser to Kabila," the announcement added.

At the same time, the U.S. Embassy in Kinshasa warned U.S. citizens of
continued insecurity in Congo and said it could only offer very
limited emergency services to them.

The State Department ordered the departure of family members of U.S.
personnel and also authorized voluntary departure of non-emergency
government personnel, it said in an email.

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May 2015 ''The revolutionary contingent attains its ideal form not in the place of production, but in the street''
Africa


PAUL Virilio (born 1932) is a French cultural theorist and urbanist.

In his book ‘Speed and Politics’ he says: “The revolutionary
contingent attains its ideal form not in the place of production, but
in the street, where for a moment it stops being a cog in the
technical machine and itself becomes a motor (machine of attack),
becomes in other words a producer of speed.’’

As we look around the world today, we can see a battle for the
‘street’ from the streets of Bujumbura to the streets of Baltimore. In
November last year, I wrote about Ouagadougou’s signal to sub-Saharan
Africa and concluded that: We need to ask ourselves how many people
can incumbent shoot stone cold dead in such a situation – 100, 1000,
10000?

This is another point: there is a threshold beyond which the incumbent
cannot go. Where that threshold lies will be discov- ered in the
throes of the event.

Therefore, the preeminent point to note is that protests in Burkina
Faso achieved escape velocity.

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Bond Investors Warm to Nigeria as It Plans First Deal Since 2013 @business
Africa


Nigeria, heading for its first full-year economic contraction in 25
years and in need of funding to cover a record budget deficit, may
take heart from the performance of its dollar debt as it prepares to
tap the Eurobond market for the first time since 2013.

Gains in the nation’s U.S. currency-denominated securities drove
yields to the lowest in 15 months, handing investors returns above the
emerging market average this year. In contrast, local-currency bonds
are the worst performers among peers, according to data compiled by
Bloomberg. The dollar bonds have been helped by the clamor for yield
as developed nations from the U.S. to Japan hold interest rates at or
near record lows.

The performance of Nigeria’s dollar notes signals investors are
comfortable the government has sufficient reserves to cover its
foreign obligations. And high demand for Ghana’s Eurobond earlier this
month bodes well for Nigerian Finance Minister Kemi Adeosun’s plan to
issue $1 billion this year, according to NN Investment Partners in The
Hague.

“There’s appetite for African risk,” Marco Ruijer, who oversees about
$8 billion of emerging-market debt at NN Investment, including
Nigerian Eurobonds, said by phone on Sept. 27. “They could do a deal
quickly, even next week, if the oil price stays stable. And they could
issue more than $1 billion if they wanted, depending on the price.”

Nigeria is he continent’s second-biggest oil producer, and relies on
crude for 90 percent of exports. The 50 percent slump in oil prices
since 2014 has left the government with a funding shortfall of 1.8
trillion naira ($5.7 billion).

Yields on Nigerian securities due in July 2023 have dropped to 6.61
percent from a record 9.37 percent on Jan. 15, a gain of 23 percent
for bondholders in the period. That compares with average profits on
emerging market sovereign Eurobonds of 16 percent, according to
Bloomberg indexes. Nigeria’s local-currency securities, meanwhile,
have lost 7.7 percent this year, the only debt to decline in 31
emerging markets tracked by Bloomberg.

Nigeria last sold a Eurobond in July 2013. A deal this year would come
in the wake of West African neighbor Ghana’s sale of $750 million of
debt on Sept. 8, which was more than four times oversubscribed.
Nigeria would probably have to offer a yield of around 7.25 percent to
7.35 percent on a $1 billion 10-year bond, and closer to 7.5 percent
on a bigger deal, Ruijer said.

But with $24.6 billion of reserves, investors aren’t concerned that
Nigeria would default on its $1.5 billion of outstanding Eurobonds.
Its debt is equivalent to 13 percent of gross domestic product, the
lowest among major economies in sub-Saharan Africa, according to the
IMF.

Angola’s bonds due in November 2025 yield 9.53 percent, while those of
Gabon maturing in June 2025 have yields of 8.25 percent

Conclusions

African Issuers should take advantage of the current circumstance
which has seen a Global Hunt for yield drive yields to very attractive
levels for Issuers.

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Kenya economy on track for 6 pct growth, says central bank Reuters
Africa


"The economy is doing relatively well," Patrick Njoroge told Reuters
in his office, saying it was on target for the 6 percent expansion
forecast by the government.

"This is the time for investors to actually place a long term bet on
the economy."

But he said the Monetary Policy Committee now faced a tougher job
determining how policy, such as last week's rate cut by 50 basis
points, would feed through into the wider economy since the decision
to cap commercial lending rates.

"You are not perfectly sure whether lowering rates increases or
decreases credit growth. If that doesn't complicate monetary policy, I
don't know what does," he said

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Lower cost of loans increases banks lending @BD_Africa
Africa


Kenya’s biggest lender by assets KCB on Wednesday reported a five-fold
increase in average monthly lending to individuals, signalling rising
interest in borrowing since the coming into force of a new law capping
of interest rates.

The bank said it had lent out Sh6.3 billion in three weeks,
disapproving earlier fears that the new loan prices would deter banks
from lending to individuals, who are deemed to carry the highest risk
in the lending market.

“We were lending Sh1 billion a month in new personal loans under the
old regime, but that has now risen to Sh6.3 billion in the past three
weeks,” said KCB chief executive Joshua Oigara, adding that most of
the lending had come as top-ups on existing loans.

“More than 50,000 customers have topped up their loans since September
1, some applying even before the new rates were gazetted on September
14,” he said.

Co-operative Bank is therefore projecting that its loan book will grow
by 12.3 per cent to about Sh234.2 billion for the financial year
ending December 31 from Sh208.6 billion last year.

Standard Chartered Bank Kenya chief executive officer Lamin Manjang
was, however, more cautious in his response to the new developments,
insisting that while the banking sector is experiencing significant
changes following the enactment of new legislation, definitive trends
will only become clearer in the longer term.

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Kenya Shilling versus The Dollar Live ForexPros
Africa


Nairobi All Share Bloomberg -7.47% 2016
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -21.36% 2016
http://j.mp/ajuMHJ

3,177.70 -29.01 -0.90% [3,116.82 is the 2016 Low from 30th August]

Every Listed Share can be interrogated here
http://www.rich.co.ke/rcdata/nsestocks.php

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by Aly Khan Satchu (www.rich.co.ke)
 
 
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September 2016
 
 
 
 
 
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