|Monday 25th of January 2016
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0930-1500 KENYA TIME
Normal Board - The Whole shebang
Prompt Board Next day settlement
Expert Board All you need re an Individual stock.
The Latest Daily PodCast can be found here on the Front Page of the site
It was a pleasure hosting Albert Mugo and his @KenGenKenya Team at
Mindspeak on Friday.
We are currently in the Edit suite
Pedestrians are seen in front of the US Capitol in Washington, DC, as snow continues to fall, Jan. 22, 2016.
This party – the "Bomb Party" of the novel's alternative title – fills
the longest chapter of the book. The party is held outside sometime
around New Year's Day, and the guests are kept warm via enormous
bonfires around Dr. Fischer's lawn. The meal is exquisite. Following
dinner, Dr. Fischer explains the rules for that night's experiment. He
has hidden six crackers in a bran tub. Inside five of them are cheques
for two million francs apiece, with the name left blank. Inside the
sixth is a small bomb. The guests are expected to draw crackers and
open them one by one.
Oil prices soared 10 percent on Friday, one of the biggest daily rallies ever Reuters
Oil prices soared 10 percent on Friday, one of the biggest daily
rallies ever, as bearish traders who had taken out record short
positions scrambled to close them, betting the market's long rout may
finally be over.
U.S. crude CLc1 climbed 9 percent and Brent LCOc1 bounced 10 percent on Friday.
U.S. crude was last up 0.9 percent at $32.49 a barrel. The contracts
had descended to as low as $26.19 last week, their lowest since May
2003. Brent crude rose 1.3 percent to $32.59 a barrel after dropping
on Wednesday to $27.10, lowest since November 2003
Volatility in the cocoa-futures market is soaring
A measure of 60-day price volatility on Thursday climbed to a 13-month
high. Cocoa has dropped 16 percent from a four-year high of $3,429 a
metric ton on Dec. 7 on indications that pricey beans curbed demand.
On Wednesday, aggregate trading volumes for both futures and options
rose to records.
FDI flows into Africa fell 31.4% year-on-year last year to $38bn, with Central and Southern Africa registering the largest declines.
FOREIGN direct investment (FDI) into SA fell 74% to $1.5bn last year,
a far steeper decline than experienced by the rest of the continent,
according to the Global Investment Trends Monitor published by the
United Nations Conference on Trade and Development (Unctad).
FDI flows into Africa fell 31.4% year-on-year last year to $38bn, with
Central and Southern Africa registering the largest declines.
On a global basis, Unctad projects a decline in global FDI this year,
but commentators think that despite SA’s weak profile, the country
still offers attractive investment opportunities in the medium to
Standard Bank chief economist Goolam Ballim said SA would continue to
benefit from the African growth story and would continue to be a
magnet for capital in the longer term.
"One has to acknowledge that we are in a world where global growth is
generally slowing or anaemic and the price of capital is becoming more
expensive, led by the US Federal Reserve’s tightening. This
environment will suppress generalised investment flows, especially to
more risky or novel markets, and some would regard Africa within that
"With a slighter longer-term viewpoint, the demographics and
generalised income biases still favour emerging markets, including
many African economies.
"And SA, as Africa’s most established economy, will continue to serve
as a partial launch pad for interests into the rest of the continent.
Also, SA in its own right still offers opportunities in its emerging
classes that are moving up the income and consumption curves," Mr
Don’t underestimate the power of Africa’s informal sector in a global economy QUARTZ
The informal economy in Africa is big business. The International
Labour Organisation (ILO) estimates that its average size as a
percentage of gross domestic product in sub-Saharan Africa is 41%.
This ranges from under 30% in South Africa to 60% in Nigeria, Tanzania
It is also a huge employer. It represents about three-quarters of
non-agricultural employment, and about 72% of total employment in
sub-Saharan Africa. About 93% of new jobs created in Africa during
that 1990s were in the informal economy.
The International Labor Office defines the informal economy as:
All economic activities by workers or economic units that are—in law
or practice—not covered or sufficiently covered by formal
Today the informal economy appears to be as important as ever to
Africa and its future development.
Rezidor Plans to Build 35 Hotels Across Africa in Four Years
The company officially starts operating the Radisson Blu Hotel in the
Kenyan capital, Nairobi, on Friday. The hotel was developed by a
Kenyan investor and three Scandinavian funds at a cost of 9 billion
shillings ($88 million), Neumann said in an interview in the city. The
other properties will be built by 2020, he said.
“We see Africa as the continent of opportunity,” Neumann said. “We
have been focusing on Africa for some time and we are now recognized
for having the largest amount of hotel rooms under development” in
Carlson Rezidor will open a second hotel in Kenya under the Park Inn
brand in the Nairobi suburb of Westlands at the end of this year and a
third one under the Radisson Blu Residences brand next door to the
official residence of Kenya’s president in 2017, Neumann said.
“This is a country which has an enormous future,” he said. “It has
unparalleled natural beauty and Nairobi is an international great
city. Kenya Airways is a recognized international airline, which is
very important for the African continent and we together need to do
everything possible to promote this city and this country.”
Other properties under development include a Radisson Blu and a Park
Inn Hotel in the Rwandan capital, Kigali, with a combined total of 460
rooms that are expected to open by May. In the Ethiopian capital,
Addis Ababa, a second Radisson Blu Hotel will be built, while the
company is also constructing properties in Uganda and South Sudan.
“Today we already have 31 hotels on the African continent in
operation, the other 35 are coming on so that is a real force,”
Neumann said. “We want to make Radisson Blu the leading brand in
Africa in the upscale market.”
25-JAN-2016 Who is the Puppeteer? @TheStarKenya
A puppeteer is a person who manipulates an inanimate object, such as a
puppet, in real time to create the illusion of life. The puppeteer may
be visible to or hidden from the audience. A puppeteer can operate a
puppet indirectly using strings, rods, wires, electronics or directly
by his or her own hands placed inside the puppet or holding it
externally. You have to admit that there has been a concerted effort
to undermine the bona fides of the government’s Eurobond issues. When
I was in London, I used to enjoy going to the Royal Festival hall and
listening to the orchestra play. And over the last few weeks it is as
if I was at the festival hall. Ah look! That’s the violin, then you
might open the Nation and say to yourself that’s the percussion and
oh, look over there the string instruments and on and on it has gone.
A seriously good orchestra of course plays their individual musical
instruments well and makes sweet music together. The ‘Eurobond
Orchestra’ made some good points but its now become an awful racket, a
cacophony even [a harsh, discordant mixture of sounds]. The orchestra
made sweet music whilst the audience was the domestic echo-chamber but
then once the puppeteer took it outside the confines of the Kenyan
hot-bed things have begun to unravel.
To impugn the Federal Reserve, JP Morgan and Qatar National Bank [the
second largest bank in Africa and the Middle East in terms of assets
and therefore on the roster by right] and to sweep them up in a $1b
heist exhibits a fundamental ignorance of how capital flows around the
world and is a self-harm type of accusation to make. Just think about
this why would these institutions put their neck on the line for a
transaction that probably represents 0.00001 per cent of their
revenues? It would be an insane risk-reward trade especially in the
new normal where banks and institutions are so nervous around
‘’risk-taking’’ and every transaction has a compliance officer all
over it like a bad rash. Big global institutions are not interested in
getting caught on the wrong side of the new 21st century compliance
policeman. The fact that Barclays PLC is searching for an exit out of
Barclays Africa informs us of this and why this game is not worth the
candle. President Jacob Zuma behaved like a fugitive at Davos last
week [skipping all his panel discussions] and this orchestra of ours
with its behind the scenes conductor [puppeteer] would be behaving no
differently if they took this cacophony outside our borders.
Let’s now turn to the economy and inspect what’s happening because a
lot is and if you blink you are going to miss a positive story.
According to Charles Robertson [author of the Fastest Billion] and
chief economist Renaissance Capital.
‘’A big improvement in both the budget and the current account.....
the authorities are squeezing those deficits hard, really hard...We
esti- mate that the budget deficit was 11 per cent of GDP in the 12
months through March 2015 but was aggressively cut to eight per cent
through September 2015...a three point improvement is impressive in
any country to achieve it in six months
is remarkable. The current account deficit is on track to meet 7.6 per
cent of GDP annual target’’
This is big and I have already written about it and its continuing to
trend better and informs us why the shilling has been so “teflon’’. As
an investor you have to seek the signal in the cacophony and the
shilling is emitting a very powerful signal.
Razia Khan of Standard Chartered Bank swung through Nairobi last week;
“we are still relatively optimistic and looking at the con- tinuation
of the growth uptrend in Kenya which we think we will be within reach
of six per cent from 2016,” said Khan. Take a look around Africa and
you will note that there are winners and losers and that Kenya is very
definitely with the winners. I expect South Africa and Nigeria to be
close to zero per cent GDP in 2016.
Another point to note is that we have gotten lucky with the weather. I
once joked that to be a good economist in Kenya, you need to be a good
meteorologist. The way I see it we have been really lucky. There is
plenty of collateral damage from the El Niño weather pattern but we
have gotten lucky. The agri-economy is doing just fine.
Africa Confidential in its latest edi- tion wrote: “Secondly, the
commodity price crash cannot all be blamed on China and it is not
blighting all Africa’s exports. For example, export earnings from
cocoa, coffee and tea look set to hold up in both the increasingly lu-
crative specialist markets and in the traditional bulk purchase
The dream of oil is now over the horizon but there is a lot of
positive momentum out there and its not getting drowned out by the
cacophony but is beginning to rise above it.
World's Biggest Tea Auction Seen as a `House of Collusion'
“I think automating your system will go a long way to dispel some of
the perceptions that this is a house of collusion,” Kenyatta said.
“People believe that you just come here to showcase, but the real
deals are done at night.”
Kenya is the world’s largest exporter of black tea, the country’s
biggest generator of foreign-currency earnings. The Mombasa auction
handled 358.6 million kilograms (791 million pounds) of the leaves in
2015, compared with 390.2 million kilograms a year earlier, according
to data compiled by Tea Brokers East Africa Ltd., a Mombasa-based
trader of the crop. The sale competes with the Colombo auction in Sri
Lanka, which traded 315.5 million kilograms of tea last year, compared
with 333.5 million kilograms in 2014, according to data e-mailed by
the Sri Lanka Tea Board.
The Stock Market snapped its losing Streak.
The Nairobi All Share rebounded 0.48% off a 13 month low to close at 137.13
The Nairobi NSE20 Index bounced 5.06 points off a 43 month low to
close at 3752.45
Equity Turnover picked up speed and clocked 1.497b.
N.S.E Equities - Agricultural
Sasini Tea and Coffee firmed +3.66% to close at 21.25 and was trading
at 22.00 +7.32% at the closing Bell.
Africa Confidential in its latest Edition said ''“Secondly, the
commodity price crash ….is not blighting all Africa’s exports. For
example, export earnings from cocoa, coffee and tea look set to hold
up in both the increasingly lucrative specialist markets and in the
traditional bulk purchase markets.’’
N.S.E Equities - Commercial & Services
Safaricom rallied +0.99% to close at 15.25 and was trading at close to
session highs at 15.35 +1.66% at the Finish Line. Safaricom has room
to rebound meaningfully and is oversold. Safaricom traded 4.81m
Kenya Airways up-ticked +1.08% to close at 4.70 and traded 352,400 shares.
Standard Group surged +8.03% to close at 30.25.
N.S.E Equities - Finance & Investment
Kenya Commercial Bank closed unchanged at 38.50 on heavy duty volume
action of 24.365m shares worth 943.612m. Kenya Commercial Bank's price
was leaning higher and the weighted average was 38.73 and KCB closed
out the session trading at 39.00 +1.3%. Kenya Commercial Bank trades
on a Trailing P/E Ratio of 6.838 which is inexpensive.
Kenya Commercial Bank share price data here
Par Value: 1/-
Closing Price: 38.50
Total Shares Issued: 2984227692.00
Market Capitalization: 114,892,766,142
Diamond Trust Bank rallied +3.24% to close at 191.00 and sprinted as
high as 199.00 +7.57% at the Finish line. Todays thrust higher was on
unusually strong volume with 783,600 shares worth 149.67m changing
Equity Bank edged 1.298% easier to close at 38.00 and closed the
session trading at 37.50 -2.6%. Equity traded 4.284m shares.
CFC Bank firmed +1.25% to close at 81.00 and traded 550,500 shares.
There has been good volume action in the counter this year.
Barclays Bank traded soft and closed -2.53% at 11.55 and traded
410,100 shares. There was a very big Supply showing on the board and
Barclays PLC chatter around down-sizing Africa has not been helpful.
N.S.E Equities - Industrial & Allied
EABL rallied +1.56% to close at 259.00 and traded 251,300 shares ahead
of an imminent earnings Release. I expect an Earnings Release that
comfortably outpaces consensus estimates.
ARM Cement Limited issued a Cautionary announcement pre-market opening
''further to the Cautionary Announcement made on 23rd December 2015 on
the subject of a proposed equity investment of USD 125 million by an
international institutional investor (“the Investor”), the process for
the proposed investment remains ongoing. Pursuant to a term sheet
signed on 30 December 2015, the Investor proposes to make an equity
investment of up to USD 125 million by subscribing for convertible
preference shares in the Company. This long term structured instrument
is likely to be of seven years tenor and, on conversion to ordinary
shares in the Company, is not expected to reach the threshold which
would require a mandatory take-over bid, based on the Company’s
current issued share capital.
The Investor is in the process of conducting its due diligence on the
Company. The detailed terms of the investment shall be contained in
definitive agreements to be entered into between the Company and The
The finalisation of the proposed investment is subject to several
conditions, including, but not limited to, completion of satisfactory
due diligence and definitive agreements and regulatory and shareholder
ARM eased 2.85% to close at 34.00 and traded 68,900 shares.
@Armcement1 25-JAN-2016 Cautionary Announcement
KenGen firmed +0.92% to close at 5.50 and traded 1.254m shares. The
share price is in disequilibrium and this is evidenced by the PE Ratio
which is close to 1.0000.
Flame Tree Group (NSE: FTGH) ''has today signed an agreement to
acquire, a leading colour cosmetic brand in Kenya, subject to approval
from the Competition Authority. The acquisition will position Flame
Tree Group as a key player in the niche colour cosmetic prestige
segment. Suzie Wokabi the founder of SuzieBeauty will also join Flame
Tree Group as the Creative Director for the prestigious cosmetic
segment'' FTG Holdings surged +7.85% to close at 7.55 and traded
FlameTree Group Holdings 25-JAN-2016 Cautionary Announcement
Sameer Africa rallied +8.33% to close at 3.90. There were 20 Buyers
for every Seller which explains todays price move.
Transcentury slumped -9.19% to close at 7.90.