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Satchu's Rich Wrap-Up
Friday 04th of March 2016

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Macro Thoughts

Home Thoughts

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The seafront in Lamu, Kenya. Photograph: Nigel Pavitt/Getty Images/AWL Images RM

Azure sky, clear sea and a busy seafront create the picturesque views
of Lamu Old Town, the oldest and Swahili settlement in east Africa and
an Unesco world heritage site.

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The Setting Sun Lamu

“My soul is from elsewhere, I'm sure of that, and I intend to end up
there.” ― Rumi

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The Colony Club Bespoke Sundae: Colony Grill Room

Love is an ice cream sundae, with all the marvelous coverings. Sex is
the cherry on top. Jimmy Dean

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NYT Opinion They bickered over size, and the subject wasn't the deficit.
Law & Politics


The @Realdonaldtrump is set to win this Nomination all ends up

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From a failed attempt to clear the Calais jungle to the appalling situation at the Greek-Macedonian border, the EU crumbles under the strain of a massive refugee crisis.
Law & Politics

“We are on the edge of an abyss”.

But what if this European slow motion debacle was not enacted as a Mad
Max dystopia, but rather brought about by a tsunami of Muslims
ultimately displaced by Western-engineered wars?

One of the key myths of the whole refugee crisis is that Erdogan’s AKP
government is doing all it can to contain it.

Nonsense. The crisis itself was engineered by Ankara in 2015 – when
refugees were  released from their holding camps in Turkey under
threat that they would not be cared for anymore. The refugee flood was
not a «spontaneous» creation, as Syrians, Iraqis and/or Afghans
suddenly decided to flee to the EU; it was directly instigated by
Ankara. And Erdogan from the start was already contemplating the Big
Prize; to bribe the EU, especially Merkel, to pay – at least 3 billion
euros – so most refuges remain not on Turkish soil, but on one of his
own neo-Ottoman sub-plots; a «safe zone» to be built inside Syrian

In parallel, Ankara is clearly at war in Southeast Anatolia against
the PKK Kurds. This is the number one priority, not smuggling of
refugees, not to mention fighting ISIS/ISIL/Daesh. Turkish Prime
Minister Ahmet Davutoglu could not be more straight to the point when
he visited Berlin late last year: the Erdogan/Davutoglu Plan A is to
annihilate the PKK Kurds. There is no Plan B.

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29-11-2010 FAR away in distant lands lies the Hermit Kingdom They all have had tiny little hands like the Elves in the Elves and the Shoemaker.
Law & Politics

FAR away in distant lands lies the Hermit Kingdom. This land is ruled
by The House of Kim and its capital is Pyongyang. The first and
‘Eternal’ Presi- dent was Kim Il-sung and his successor Kim Jong-il
whose designated successor is Kim Jung-un.

They all have had tiny little hands like the Elves in the Elves and
the Shoemaker. And this country has nuclear weapons and on its border
with its neighbour South Korea sit 25,000 American soldiers. Last week
the North shelled the South and issued all kinds of threats.


China fell into line once they got wind that the THAAD was on its way.

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The U.S. just sent a carrier strike group to confront China Navy Times
Law & Politics

The U.S. Navy has dispatched a small armada to the South China Sea.

The carrier John C. Stennis, two destroyers, two cruisers and the 7th
Fleet flagship have sailed into the disputed waters in recent days,
according to military officials. The carrier strike group is the
latest show of force in the tense region, with the U.S. asserting that
China is militarizing the region to guard its excessive territorial

Stennis is joined in the region by the cruisers Antietam and Mobile
Bay, and the destroyers Chung-Hoon and Stockdale. The command ship
Blue Ridge, the floating headquarters of the Japan-based 7th Fleet, is
also in the area, en route to a port visit in the Philippines. Stennis
deployed from Washington state on Jan. 15.

Pacific Command chief urges new capabilities as tensions mount with China

The Japan-based Antietam, officials said, was conducting a "routine
patrol" separate from the Stennis, following up patrols conducted by
the destroyer McCambell and the dock landing ship Ashland in late

The stand-off has been heating up on both sides. After news in
February that the Chinese deployed an advanced surface-to-air missile
battery to the Paracel Islands, U.S. Pacific Command head Adm. Harry
Harris told lawmakers that China was militarizing the South China Sea.

"In my opinion China is clearly militarizing the South China Sea,"
Harris testified on Feb. 24. "You’d have to believe in a flat Earth to
believe otherwise."

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Inside China’s Plan for a Military That Can Counter U.S. Muscle
Law & Politics

With a series of edicts, speeches and martial ceremonies, President Xi
Jinping has over the past six months unveiled China’s biggest military
overhaul since the aftermath of the Korean War.

The plan seeks to transform the 2.3-million-member People’s Liberation
Army, which features 21st-century hardware but an outdated,
Soviet-inspired command structure, into a fighting force capable of
winning a modern war. China is shifting from a “large country to a
large and powerful one,” Xi explained in November. The restructuring
will be a major focus of the country’s new defense budget, which will
be announced Saturday as the annual National People’s Congress gets
under way in Beijing.

“A lot of countries do military reforms, but they are rarely as
tectonic as what we are seeing in China,” said Dean Cheng, a senior
research fellow at the Heritage Foundation in Washington who
specializes in military capabilities. “Any single one of these
elements constitutes a bureaucratic overhaul of the first order.”

In addition to the existing army, PLA Air Force and PLA Navy, a new
Rocket Force will be responsible for China’s nuclear arsenal and
conventional missiles while a Strategic Support Force will oversee
cyberwarfare and protect China’s financial system from attack.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0952
Dollar Index 98.18
Japan Yen 113.76
Swiss Franc 0.9969
Pound 1.4154
Aussie 0.7366
India Rupee 67.372
South Korea Won 1226.73
Brazil Real 3.8942
Egypt Pound 7.8298
South Africa Rand 15.5526

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Euro versus the Dollar 1 Year Chart 1.0952 [Its all about Draghi now]
World Currencies

#Germany's 2y Bund Yields hit fresh record low at -0.58% ahead of
next weeks ECB meeting H/T Holger Zschaepitz


Sterling 1 Month Chart INO 1.4154 [On the mend but for how long?]


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How to Fly Like an Asian Tycoon: Bring the Bling
World Currencies

Hermes tea sets. Burberry divans. Chanel blankets. Put those on the
shopping list if you want to fly like a tycoon in Asia.

And don’t forget the mahjong table and karaoke screen. Bright accents,
mahogany and carpets with gold stitching also would help you fit in

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Bullion for immediate delivery settled at $1,264.25 an ounce on Thursday. That marks a 20 percent gain from the recent closing low in December, meeting the common definition of a bull market.

On Friday, prices slipped to $1,259.91 at 11:09 a.m. in Singapore,
trimming the weekly gain to 3 percent. Gold rallied 19 percent this
year, beating gauges in Treasuries, currencies and equities amid
concerns the slowdown in China’s growth will hurt the global economy
and prompt further central bank stimulus. Bets have increased on the
Federal Reserve delaying interest-rate increases, helping boost the
investment appeal for bullion.

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08-FEB-2016 Kenya and East Africa on The Up as The Rest of SSA Slumps @TheStarKenya

For a while, I have been saying that Kenya and East Africa looks like
a bright star in what increasingly looks like a darkening sub-Saharan

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Barclays’ plan to quit Africa isn’t just about the African economic slowdown QUARTZ

Barclays’ business in Africa accounts for 20% of the British bank’s
earnings and has actually been growing. So why does it want to sell
its 62% stake in South Africa’s ABSA bank and essentially pull out of
Africa within the next three years?

But while Barclays officials said that Africa’s economic climate was
not behind the decision, there are those who believe it is a factor.
Currency fluctuations, especially with the South African rand, where
the bulk of Barclays’ business in Africa is based, have hit the
company hard. On top of that, policy uncertainty by the Zuma
government compounded the volatility in the markets.
“This extreme volatility and the sharp devaluation in value when
profits were translated was I think the key to Staley looking for the
exit button,” Aly Khan Satchu, chief executive of Nairobi-based
investment firm Rich Management, told Quartz. “Capital yes,
reputational risks as well, but the big macro point was ‘rogue’

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29-FEB-2016 Barclays' Exit a Vote of No Confidence in Zuma @TheStarKenya

Many reasons have been given including the fact that the sale of
Barclays Africa will add as much as 0.8 percentage points to Barclays’
core capital ratio, that the African unit’s return on equity of 9.3%
last year was below the bank’s target rate of 11%, that Africa
translates into Barclays carrying 100% of the ‘’reputational risk’’
without 100% control. For example, in South Africa the UK bank has a
minority of board seats.

The real reason in my view is the Zuma ‘’Zupta’’ volatility. The
Barclays Africa exit is a vote of no confidence in South Africa’s
President Jacob Zuma and by extension in South Africa’s gateway

Two days before South Africa’s Finance minister Pravin Gordhan
presented his budget last Wednesday, Zuma described Van Rooyen as the
most qualified finance minister his administration has had. Unless the
president is stopped, Barclays PLC’s move might well be the first in
what becomes an Avalanche of Exits.

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Diamond eyes Barclays Africa assets FT

Bob Diamond, the forceful former Barclays chief executive, is
approaching investors to back a takeover bid for a swath of the UK
bank’s African empire that he helped to construct.

His audacious move comes after Barclays announced plans this week to
sell its African operations, which date back almost a century. The
retreat has raised concerns among customers and regulators about the
future of one of the continent’s biggest lenders.

“This is the opportunity of a lifetime for him,” said a person who
knows the Atlas Mara founder. “It is a very difficult transaction in
my view, but if anyone can pull it off it is definitely Bob.”

“I would have thought a split may be a solution here,” said one
banker. “But the optics are horrible for Barclays to sell to Bob
Diamond. They will not want to do this.”

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Rand's Wild Ride

It took just a hint of strife at South Africa’s National Treasury to
send the rand tumbling 3.5 percent in a day -- and one statement from
the president’s office to bring it right back again three days later.

Already afflicted by its status as a proxy for other emerging markets’
woes, now South Africa has to contend with a domestic crisis. Together
these drivers have seen the rand overtake the Brazilian real as the
most volatile major currency, which is deterring foreign investment.
Outflows from stock and bond markets reached 37.8 billion rand ($2.4
billion) since the beginning of November, wiping out the 34.5 billion
rand of inflows in the previous 10 months.

The South African currency has plunged 25 percent in the past year,
weighed down by a slump in commodity prices, slowing growth and the
prospect of U.S. rate increases. Now it’s also victim to investor
concerns about who holds the purse strings after President Jacob Zuma
fired his finance minister in December. The rand declined 0.8 percent
to 15.6805 per dollar by 1:59 p.m. in Johannesburg.

As well as being the most volatile currency among 16 peers tracked by
Bloomberg this year, traders expect the out-sized price swings to
continue. Implied three-month volatility overtook the real on Feb. 26
after climbing 310 basis points to 19.15 since the beginning of
December. That was when Zuma appointed an unknown lawmaker to replace
the respected Nhlanhla Nene at the finance ministry, only to change
his mind under pressure from business leaders and his own party and
reinstate Pravin Gordhan, who was finance minister from 2009 to 2014,
to the post.

The rand is the 18th most-traded currency, with a 1.1 percent share of
daily market turnover, according to a 2013 report by the Bank for
International Settlements. That makes it the most-traded African
currency and comparable with the Brazilian real and the Indian rupee.

The rand’s problem is it carries a political premium. It has weakened
7 percent since Dec. 9, when Zuma fired Nene, while the JPMorgan
Emerging Market Currency Index has lost 0.1 percent. That may drive
inflation even higher, eroding the competitive advantage that a
depreciating currency brings, the Treasury said in the budget review
presented to lawmakers on Feb. 24.

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Egypt EGX30 Bloomberg -13.08% 2016

"President Jonathan has nothing to fear from me," he pledged in his
acceptance speech, indicating he wanted to draw a line under the past.


Certainly, the Economic and Financial Crimes Commission (EFCC) has not
implicated the former head of state in any of its ongoing

But his glaring absence is increasingly posing problems for state
prosecutors as the preliminary stages of cases are heard in court and
trials get under way.

Former Nigerian president Goodluck Jonathan


Nigeria has about as much electricity as Edinburgh. That is a problem Economist


At the moment the country’s big stations produce a pitiful 2,800MW,
which is about as much as is used by Edinburgh. Only just over half of
Nigerians have access to electricity, and it is still harder for
businesses to hook up to the grid than almost anywhere else.

Nigeria All Share Bloomberg -9.87% 2016


25,816.29 +419.46 +1.65%

Ghana Stock Exchange Composite Index Bloomberg -1.25% 2016


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More African elephants are being killed for ivory than are being born, despite poaching levels falling for the fourth year in a row in 2015.

The new data, released on UN world wildlife day on Thursday, shows
about 60% of elephant deaths are at the hands of poachers, meaning the
overall population is most likely to be falling.

“African elephant populations continue to face an immediate threat to
their survival, especially in central and west Africa where high
levels of poaching are still evident,” said John Scanlon,
secretary-general of the Convention on the Trade in Endangered Species
(Cites), which collects the data. At least 20,000 elephants were
killed for ivory in 2015.

Interpol estimates the illegal wildlife trade is worth $10-20bn a
year, the fourth most lucrative black market after drugs, people and
arms smuggling and it is often linked to organised crime. The UN says
it not only harms endangered wildlife but also fuels conflicts, feeds
corruption and undermines poverty eradication efforts.

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Robert Mugabe to nationalise Zimbabwe's diamond industry

The president of Zimbabwe, Robert Mugabe, has said his government will
take possession of all diamond operations because existing miners had
robbed the country of its wealth.

Mugabe made his comments a week after the ministry of mines ordered
all mining companies to halt work and leave the Marange fields, saying
they had not renewed their licences. At the time it denied it was
seizing the mines.

 Whether it's Mexico's gold or Zimbabwe's diamonds, mining is riven
with violence and business is complicit

“The state will now own all the diamonds in the country,” Mugabe said
during a two-hour interview with state broadcaster ZBC TV. “Companies
that have been mining diamonds have robbed us of our wealth, that is
why we have now said the state must have a monopoly,” Mugabe said.

The largest diamond mine in Marange, Mbada Diamonds, sued the
government at the high court on Monday and was allowed to take control
of its mining assets.

Chinese-run Anjin Investments also challenged the government ban at
the same court on Wednesday, according to a court application seen by

Mugabe said he told the Chinese president, Xi Xinping, during his
visit to Zimbabwe last December that his government was not getting
much from Chinese-owned mining firms.

Zimbabwe was the eighth-largest diamond producer in the world with
4.7mcarats in 2014, according to industry group Kimberley Process.
Last year the government received $23m (£16.2m) in royalties and other
fees from diamond mines, down from $84m in 2014.

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.@KenGenKenya share price data and H1 Earnings here +4.222% 2016 at a 2016 High
Kenyan Economy

Par Value:                  2.50/-
Closing Price:           7.40
Total Shares Issued:          2198361344.00
Market Capitalization:        16,267,873,946
EPS:             5.24
PE:                 1.412

Kenya Electricity Generating Company Limited H1 through 31st December
2015 vs 31st December 2014
H1 Electricity revenue 14.757370b vs. 11.658780b +26.557%
H1 Profit before tax 8.384061b vs. 3.790142b +121.207%
H1 Tax [expense]/ income [2.715716b] vs. 1.137646b -338.714%
EPS 2.58 vs. 2.24 +15.179%

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21-DEC-2015 The Teflon Shilling and Other Matters @TheStarKenya
Kenyan Economy

The shilling has been seriously resilient at a time when the interest
rate prop has dived. Naysayers [and commentary and research indicate
they have been in a majority) have surely been looking for a move to
110 by now. It is not going to happen and I am in fact looking for a
move in to double digits in first quarter 2016.

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Nairobi All Share Bloomberg -0.34% 2016 [+1.04% yesterday] 7 week Highs
Kenyan Economy

145.21 +1.50 +1.04%

Nairobi ^NSE20 Bloomberg -2.68% 2016


3,932.48 -0.38 -0.01%

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.@Barclays_Kenya share price data here -8.49% this week
Kenyan Economy

Barclays Plc decision to sell off its stake in Barclays Africa — which
holds nearly 69 per cent shareholding in the Kenyan subsidiary — could
run into headwinds @Citi say


Barclays Plc decision to sell off its stake in Barclays Africa — which
holds nearly 69 per cent shareholding in the Kenyan subsidiary — could
run into headwinds due to scarcity of ready buyers and regulatory
obstacles, investment bankers at Citi say.

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CFC Stanbic share price data and FY Earnings here +3.03% 2016
Kenyan Economy

Par Value:                  5/-
Closing Price:           85.00
Total Shares Issued:          395321638.00
Market Capitalization:        33,602,339,230
EPS:             14.38
PE:                 5.911

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

FY Loans and advances 128.163157b vs. 101.210110b +26.631%
EPS 12.41 vs. 14.38 -13.700%
Final Dividend 5.40 Total Dividend per share 6.15 vs. 6.15
Cash and cash equivalents at 31st December 39.588922b vs. 22.610152b +75.094%

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N.S.E Today

The Nairobi All Share surged +1.205% to close at a 2016 closing High.
This caps a real strong week for the All Share which has rallied
+4.0645% over 5 sessions.
The Nairobi NSE20 rallied +1.245% to close at 3981.4 an 8 week closing High.
The Results Season has been the Catalyst for a re-rating at the Bourse
and with a 6% GDP 2016Tail-wind I remain confident Equities will
perform in 2016.

The Shilling was trading at 6 month Highs of 101.30 and it has been a
serious Out performer when compared with its SSA Peers.
Equity Turnover clocked 283.47m which is thin confirming that a Lot of
Supply was extinguished in this week's Uptick.

N.S.E Equities - Commercial & Services

Safaricom firmed +0.59% to close at 17.00 and set a 2016 closing High
for the 2nd consecutive session. Safaricom traded 4.946m shares worth
84.079m. Safaricom has surged +4.93% this week and underpinned what
has been a strong week at the Bourse.

Kenya Airways firmed +1.12% to close at 4.50 and traded 1.324m shares.

N.S.E Equities - Finance & Investment

Kenya Commercial Bank rallied +1.82% to close at a 7 week high of
41.75 and traded 913,400 shares. KCB has rallied +5.69% since
releasing its Full Year Earnings and that is a fit and proper response
to what were bulky Earnings showing a lot of Future Promise.
Equity Group spiked +4.91% higher to close at a 16 week high of 42.75.
Equity Group traded 605,800 shares and Buyers outpaced sellers by a
Factor of 2 to 1.
CFC StanBic Holdings [which wore a 7b shilling South Sudanese related
hit - we learnt via their Earnings Release] firmed +1.18% to close at
86.00 and was stretching as high as 87.50 +2.94% at the Finish.

Barclays Bank which had come under pressure this week as the news
broke that Barclays PLC was looking to down-shift its Africa Position
and had retreated -8.46% Monday through Thursday finished the week on
a higher note, rebounding +2.53% to close at 12.15. Barclays traded
873,500 shares. Given the Barclays PLC announcement, Protecting the
Franchise will surely be a Full-On Task.

N.S.E Equities - Industrial & Allied

KenGen soared +8.11% to close at a 16 week high of 8.00. Todays spike
higher was on solid volume action of 5.534m shares worth 44.247m. I
had mentioned that KenGen was in a Price disequilibrium and that we
would see a dynamic and bullish move when it emerged from its
disequilibrium. KenGen has rallied +54.45% since closing at an all
time Low late January. This is exactly the shape of the move I was
speaking of.

Bamburi Cement rallied +4.21% to close at 198.00 and has rallied
13.142% through 2016 and as such is a Bull Outlier in 2016.

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

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