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Satchu's Rich Wrap-Up
Tuesday 22nd of March 2016

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Macro Thoughts

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#Brexit woes send #pound volatility spread to 7-year high via @vkaramanis_fx

Home Thoughts

“The sky, at sunset, looked like a carnivorous flower.” ― Roberto Bolaño, 2666

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Sunset Christmas Day Tsavo

“I steal into their dreams," he said. "I steal into their most
shameful thoughts, I'm in every shiver, every spasm of their souls, I
steal into their hearts, I scrutinize their most fundamental beliefs,
I scan their irrational impulses, their unspeakable emotions, I sleep
in their lungs during the summer and their muscles during the winter,
and all of this I do without the least effort, without intending to,
without asking or seeking it out, without constraints, driven only by
love and devotion.”
― Roberto Bolaño, 2666

As time goes by, as time goes by, the whip-crack of the years, the
precipice of illusions, the ravine that swallows up all human
endeavour except the struggle to survive. ROBERTO BOLAÑO,

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Jon Williams So much for fasten your seatbelts! WH photo of Obama on AF1 as it came into land in #Havana. Excitement palpable


This is what the Republicans are missing. The Majority of Voters are
now younger and ''Born Free''

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The Biggest story in Jeddrey Goldberg's 20,000- word report
Law & Politics

The critique of orthodox national security policy thinking that Obama
outlined in interviews with Goldberg goes farther than anything
delivered on the record by a sitting president. It showed that Obama’s
view on how to define and advance U.S. “national security” diverges
sharply from those of the orthodox views of national security
bureaucracy and Washington foreign policy think tanks on
US“credibility,” the real interests the United States in the Middle
East and how the United States should respond to terrorism.

“There’s a playbook that presidents are supposed to follow,” Obama
told Goldberg. “[T]he playbook prescribes responses to different
events and those responses tend to be militarized responses.”

Such a “playbook” can be “a trap that can lead to bad decisions,”
Obama continued. “In the midst of an international challenge like
Syria, you can get judged harshly if you don’t follow the playbook,
even if there are good reasons why if does not apply.”

Goldberg writes that Obama “had come to believe that he was walking
into a trap – one laid both by allies and adversaries, and by
conventional expectations of what an American president is supposed to
do.” Obama was implying that he was being pushed into committing US
military force to the Syrian conflict less to eliminate the threat of
chemical weapons than to tilt the military balance in favor of the
opposition and to support “regime change” – something Obama did not
want to do.

 On the other hand, Obama’s public breakup with the national security
elite appears to represents a new stage in the politics of national
security in which broader resistance to those powerful interests may
possibly be feasible.

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Obama in Cuba
Law & Politics

Photographing the complexity and beauty of Cuba, one of the world’s
few remaining frontiers


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Putin's Syria Gamble Has Already Paid Off By Tobin Harshaw
Law & Politics

Vladimir Putin says he is withdrawing most Russian forces from Syria
because his "objectives" have been achieved. How to judge that boast?

On such goals as keeping the dictator Bashar al-Assad in power,
increasing Russian influence in the Middle East, restoring Moscow's
seat at the table of global power, and sending a message of strength
to Islamic extremists inside Russia's own borders, the jury is still

But it's not too early to consider Russian success on another front:
showcasing military strength to potential adversaries, allies and arms
buyers. "Essentially, Russia is using their incursion into Syria as an
operational proving ground," retired Air Force general David Deptula
told the New York Times last year. And Moscow proved quite a bit.

The Russian military had not been in a conflict of this scale since
its disastrous pullout from Afghanistan decades ago. The closest it
came was the five-day border fracas with Georgia in 2008, and while
the campaign was a political success, the Kremlin's military was
highly unimpressive against a weak opponent. Among other woes, its
intelligence operations were slipshod, with troops being repeatedly
being sent into ambushes; it lost six planes to either Georgian air
defenses or "friendly fire"; and its tanks proved under-armored and
ill-suited to night fighting. There were reports that Russian troops
took to stripping dead Georgian soldiers of their superior body armor.

Just seven years later, the Russians have done a great deal to redeem
themselves. In what was primarily an air campaign, they showed a good
ability to keep up the tempo of sorties -- by one estimate, at least
1,000 a month from its Syria-based squadrons of SU-24 fighter-bombers
and SU-25 ground-support craft -- indicating efficient base crews and
impressive logistics. Long-range bomber attacks from bases in Russia
hinted at improved air-to-air refueling capabilities. As for accuracy,
it was hard to judge the efficiency of Russia's upgraded GPS guidance
system because the planes used a lot of "dumb" munitions like the
cluster bombs that devastated civilian areas. Russia also allowed
brief glimpses of its new Mi-35M gunship helicopter.

The red flag here is the shooting down of an SU-24 fighter by Turkey's
American-made F-16s in November. Given the unresolved ambiguities of
the situation, it's hard to draw any firm conclusions, and in any case
the Russian plane wasn't designed for the sort of dogfighting at which
the F-16 excels.

The Russians also showed surprising capabilities in smart weapons. In
October, they launched 26 cruise missiles from Buyan-M-class corvettes
floating in the Caspian Sea. While Western intelligence claims that
some fell way short of the target -- in Iran, actually -- the fact
that such small warships were capable of employing the sophisticated
Kalibr NK missile system came as a shock.

In December, cruise missiles fired underwater by a super-stealthy
Rostov-on-Don submarine in the Mediterranean struck targets near
Islamic State's de facto capital, Raqqa. Given that such sea-based
missiles are vastly more expensive than dropping bombs from planes,
one can assume that the real aim was sending a message to Washington.

Russia also deployed some hardware that there was little reason to
suppose would ever be used: sending the missile cruiser Moskva off the
coast of Syria and placing advanced S-400 ground-to-air missile
systems at the airbase near Latakia. This impressive air-defense
assemblage might have seemed a bit much given that the Syrian rebels
and Islamic State jihadists didn't have a single plane, but the real
point was flexing muscles, and the U.S. clearly took notice.

The Syria campaign should do nothing to hamper Russia's soaring arms
sales, at 25 percent of the global market as compared to America's 33
percent over the last five years, despite Ukraine-related sanctions.
Moscow is rumored to be locking its top client, India, into $7 billion
in purchases including S-400 air defenses and three Admiral
Grigorovich-class frigates now under construction. The two nations
have long discussed a joint building operation of a next-generation
fighter jet. India's mortal enemy, Pakistan, made its first-ever deal
with Moscow for four helicopters last summer, and more may be on the
way, especially if a Republican-led group in Congress continues to try
to block fighter-jet sales to Islamabad.

What most concerns the U.S. and its Middle Eastern allies, though, is
Moscow's courtship of Iran. After the signing of the nuclear-weapons
deal last summer, Russia agreed to make good on a long-promised sale
of an advanced air-defense system to Tehran, and discussed possible
sales of multirole Su-30 aircraft and Russia's main battle tank.
Republicans in Congress are pressuring the Barack Obama administration
to block any such sales using United Nations sanctions, but in the
long run there's little doubt that Moscow and Tehran will strengthen
ties over weapons deals -- another Putin objective furthered by his
risky decision to make Assad's war his own.


Russia Military Power has made an exponential surge

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Calestous Juma ‏#ICC Trial Chamber III declares Jean-Pierre #Bemba Gombo guilty for war crimes and crimes against humanity
Law & Politics

“I believe this is a very important day for international criminal
justice especially when it comes to sexual and gender-based crimes,”
chief prosecutor Fatou Bensouda told AFP, adding it was a “historic


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Jean-Pierre Bemba Gombo (born 4 November 1962)[1] is a politician in the Democratic Republic of the Congo.
Law & Politics

He was one of four vice-presidents in the transitional government of
the Democratic Republic of the Congo from 17 July 2003 to December
2006. Bemba also leads the Movement for the Liberation of Congo (MLC),
a rebel group turned political party. He received the second highest
number of votes in the 2006 presidential election. In January 2007 he
was elected to the Senate.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1250 The euro eased to $1.1246 EUR=, recoiling from Thursday's
one-month high of $1.1342.
Dollar Index 95.30 The dollar index last traded at 95.352 .DXY,
pulling further away from a five-month trough of 94.578 set on Friday.
Japan Yen 111.95 Against the yen, the greenback popped back above
112.00 yen JPY=, recovering from a 16-1/2 month trough of 110.67
plumbed last week.
Swiss Franc 0.9691
Pound 1.4377
Aussie 0.7590 The Australian dollar has been on a tear, putting on
nearly 6 U.S. cents in a few short weeks to reach an 8-1/2 month high
of $0.7681. It has since drifted off to $0.7571.
India Rupee 66.615
South Korea Won 1159.29
Brazil Real 3.6194
Egypt Pound 8.8797
South Africa Rand 15.2567

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Atlanta Fed President Dennis Lockhart said there was sufficient economic momentum to justify a further rate hike "possibly as early as the meeting scheduled for end of April".
World Currencies

San Francisco Federal Reserve Bank President John Williams told Market
News International that April or June would be "potential times for a
rate hike."

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Ivory Coast records GDP growth of 10.3 percent in 2015 - president

Ivory Coast's economy grew by 10.3 pct in 2015, fulfilling one of
President Alassane Ouattara's election promises to create double digit
growth, he said on Monday, while the rate was well above an
International Monetary Fund figure of 8.6 percent.


Its an Outlier in SSA.

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'Backward integration key to Africa's growth prospects' - Africa CEO Forum

That the continent only accounts for a dismal 2% of the global cocoa
revenue despite producing about 70% of the world's cocoa does not
surprise AfDB's President Akin Adesina.

"It is time to industrialise Africa and diversify its economies [...]
Africa must become a global power house in food and agriculture" he
says. "But to do that, we must to solve our energy problem. Business
can't be done in the dark."

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Museveni suspends pipeline decision after meeting Uhuru

A joint statement by Kenya’s Energy and Petroleum minister, Charles
Keter, and his Uganda counterpart, Irene Muloni, said the two heads of
state agreed to hold further talks in Kampala in a fortnight to allow
their technical teams to complete comprehensive reviews of what it
would take to build a crude oil pipeline through Tanzania and Kenya.

“The two leaders (Mr Kenyatta and Mr Museveni) agreed to meet after
two weeks to allow their officials harmonise their presentations,” the
ministers said, adding that the technical teams would focus on
comparative costs of building a pipeline through Kenya and Tanzania as
well as ease of construction on either route.

The technical teams are further expected to provide absolute
assessment of the viability of the pipeline given the proven crude
reserves, including the suitability of Lamu, Tanga and Mombasa ports
as export options.

The Nairobi meeting came just weeks after Mr Museveni and Tanzanian
president John Magufuli reached a deal to build a 1,120 kilometre oil
pipeline between Tanga and Uganda where an estimated 6.5 billion
barrels of oil were discovered in the Albertine basin near the border
with Democratic Republic of Congo (DRC).

Last week, Tanzania said oil marketer Total, which has a stake in
Uganda’s crude oil discoveries, had set aside $4 billion (Sh408
billion) to build a pipeline from the Ugandan oilfields to the
Tanzanian coast and that Dar es Salaam wants the three-year
construction schedule shortened.

Total has previously also raised security concerns over the Kenyan
route which would run close to the volatile northeastern region where
militant groups such as Al-Shabaab remain a threat.

Some industry players, including Britain’s Tullow which has interests
in Kenya and Uganda, however, argued that connecting the Kenyan
fields, which have estimated total recoverable reserves of 600 million
barrels, alongside Uganda’s deposits would make the pipeline project
cheaper with shared costs.


Pipelanistan Wars.

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South Africa All Share Bloomberg +6.18% 2016 [19 month highs]

53,824.28 +633.72 +1.19%

Dollar versus Rand 6 Month Chart INO 15.2381 [Sell the Rand]


Welcome to Sharpeville


Egypt Pound versus The Dollar 3 Month Chart INO


Egypt EGX30 Bloomberg +6.97% 2016 [+22.55% in March and in a Bull Market]


Nigeria All Share Bloomberg -9.56% 2016


Ghana Stock Exchange Composite Index Bloomberg -3.94% 2016


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ZIMBABWE Clearing decks and debts Africa Confidential

Zimbabwe has approached Algeria for US$900 million to help clear its
debt-repayment arrears, financial sources in Harare have told Africa
Confidential. Zimbabwe owes $1.8 billion to international financial
institutions, including the World Bank, the International Monetary
Fund and the African Development Bank and needs to clear the arrears
in order to gain access to new credit. Total foreign debt stands at
$10.8 billion. The broad terms of a debt repayment schedule were
agreed with international creditors on the sidelines of the annual
meetings of the IMF and WB in Lima, Peru, last October.

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21-MAR-2016 :: Eurobond Tales and The Noise Around it, @TheStarKenya
Kenyan Economy

In 2014, The Government of Kenya issued two Eurobonds. The First Bond
was the KENINT 5.875% [Coupon] 24-JUN-2019 [Maturity Date] and the
second the KENINT 6.875% 24-JUN-2024.  This First Offering drew bids
of $8.8 billion and the GOK sold $500m of the 5 Year and $1.5b of the
10 Year Bond. Subsequently the Government ''tapped'' both issues added
$250 million to the five-year tranche of the Eurobond, paying a 5.0
percent yield and $500 million to the 10-year tranche at 5.9 percent.
Its worth noting that the Treasury received a higher price in the Tap
i.e they sold Bonds for more than a 100.00 [the price was around
106.00 for the 10 Year Bond] but will be redeeming those same bonds at
100.00 making a Turn, which Few Commentators noted at the time. The
Tap was a slick piece of work by The Treasury. [Remember a simple
Lesson when it comes to Bonds - Prices rise Yields go down - Prices
Fall Yields go up]

The 10 Year Bond Price traded a high Price around 106.00 through April
2015. Subsequently from April 2015 through January 2016 The Price of
our Eurobond fell from 106.00 to a low price of 84.00 in December 2015
/ January 2016. That 84.00-106.00 Price Range equates to a 9.80%-5.9%
Yield Range. At a rate of 9.80% we were essentially shuttered out of
the Capital Markets, momentarily. Now its worth overlaying the News
Flow over the Time-Frame I have outlined and you will recall that the
High Yield coincided with the political Furore around the Eurobond. I
recall being at a Farewell party for the then outgoing British High
Commissioner and coming across the Opposition Leader and I could not
help saying

''Mpira Mpira You are scoring Goals.''

And credit is due for what was a seriously effective ''political''
onslaught. Subsequently, the same Opposition Leader held a News
Conference with the Foreign Correspondents Association of East Africa.
And in that News Conference, it was alleged that the Federal Reserve
Bank was complicit in the Eurobond Heist. Such an accusation was just
not credible it was incredible. It was a comment that spoke to a
complete lack of understanding about how Central Banks operate and
impugning the Bona Fides of the Federal Reserve was also
mind-boggling. And it speaks to how we are in a domestic Bubble but
simply extrapolating our Hot-House into the International Sphere was
seriously naive.

It turns out that the Press Conference was a Buy Signal. International
Investors understood at that moment that There was no ''Beef'' in the
Propaganda. Since hitting a high yield of 9.8% and a low price of
84.00, the Bond has rallied practically in a straight line and the
Yield was last at the 7.65% level with the Price just a whisker away
from 95.00. Thats a stunning rebound and our Bond has outperformed all
its SSA Peers in 2016.

The IMF have further boosted this Rally, by approving New Arrangements
for Kenya Totaling US$1.5 billion, which is the biggest commitment by
the IMF for an arrangement of this nature, in Africa. Kenya has an
outstanding relationship with the IMF as evidenced when Madam Lagarde
visited in 2014. We are a Poster-Child right now [and lets keep it
that way] in Africa for the IMF.  Madam Lagarde tried to cajole
President Buhari earlier in the Year into relaxing his intransigence
over the Naira unsuccessfully. South Africa's Zuma must have a limit
short Position in the South African Rand because he is seemingly
determined to crash it. The President of Zambia dialled up the IMFlast

What we see around Africa today is a lot of irrational Actors. We look
a lot more rational in the comparison.

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Moody's says IMF loan will 'shield' Kenya
Kenyan Economy

“At roughly 20 per cent of Kenya’s current stock of reserves, the IMF
facility would provide a significant boost to official foreign
exchange reserve buffers (which were $7.3 billion as of 10 March),
which would mitigate the effect of any external shock,” said Moody’s
lead country analyst for Kenya Rita Babihuga, in a research note on
the loan.

The IMF on March 14 announced it had approved the precautionary loan,
which is one of the largest-ever granted to a sub-Saharan African

“In particular, by targeting a reduction in the fiscal deficit of 3
per cent of GDP over the next two years as well as continued public
financial management reforms, the IMF program further commits Kenya to
its stated objective of fiscal consolidation and will help prevent
policy slippages, particularly as the country approaches general
elections in 2017,” said Ms Babihuga who termed the loan as a “credit

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Uchumi axes 5 branches, 253 jobs to stop 'financial bleeding'
Kenyan Economy

Uchumi Supermarkets Limited on Monday shut down five of its outlets in
Kenya to cut costs.

Chief executive Julius Kipng’etich said the closure of the branches is
aimed at reducing the retailer’s operational costs enabling it to
concentrate its efforts on a leaner structure.

Mr Kipng’etich defended the shock move even at a time the loss-making
retailer is implementing a growth strategy, insisting that the
publicly traded retailer “is well on track to recovery”.

“Their closure will enable us channel our resources to fewer branches
and optimize operations for maximum gain,” said Mr Kipng’etich.

The affected branches are Taj Mall, Embu, Eldoret Sugarland, Nakuru and Kisii.

The closures will render redundant 253 employees, who will be laid off.

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Uchumi share price data
Kenyan Economy

Par Value:                  5/-
Closing Price:           5.20
Total Shares Issued:          364959616.00
Market Capitalization:        1,897,790,003
EPS:             -10.85
PE:                 -0.479

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N.S.E Today

Nairobi has lagged a very muscular rebound in South Africa [The All
Share was +6.18% in 2016 and at 19 week highs] and in Egypt where the
EGX30 has ramped +22.55% in March alone and firmly into a Bull Market.
The Devaluation of the Egyptian Pound was the Catalyst for the Rally
in Cairo.
What has happened in Egypt would happen in Nigeria if the President
relaxed his No Devaluation stance.
The Nairobi All Share rallied +0.69% to close at 146.08.
The Nairobi NSE20 bounced 18.84 points better to close at 3957.06.
Both Indices have room to the Top Side.
Equity Turnover clocked 783.149m.
Nation Media reported FY Earnings, Safaricom was real firm and traded
shares as high as 17.00 +3.34%, BAT which is +9.808% in 2016 closed at
a Fresh 2016 High.
Pan Africa closed limit down and is -33.33% Year to date and
Transcentury which is -35.15% in 2016 closed at an all time Low.

N.S.E Equities - Commercial & Services

Nation Media reported Full Year Earnings where FY Revenue declined
-7.578% to 12.339b, FY Profit before Tax declined -22.097% and FY
Earnings Per Share clocked 11.8 versus 13.1 last time around. The
Dividend Pay Out was maintained at 10 shillings a share some 84.74% of
the Full Year EPS and hence a high and handsome Pay Out Ratio.  Cash
and cash equivalents at the end of the year whilst -11.252% still was
a very healthy 3.0633b. In the accompanying Commentary, Nation Media
said that  ''Group's Profit after Tax declined ..adverse performance
was due to revenue shortfall with the broadcasting Division affected
by the disruptions of television signal transmission, following the
switch from analogue to digital broadcasting early in the year'' They
also spoke to ''Profitability was also adversely effected by foreign
exchange losses'' a common refrain except for the Agricultural
Companies who surfed currency weakness to higher profits. Nation
signed off the commentary saying ''The Group Outlook for 2016 is
generally positive, with the commissioning of the new 2b state of the
art printing Press and business opportunities presented by the group's
leading position in the digital space'' Nation Media saw a far better
H2 when compared to H1 and i think the bad news is now fully baked
into the Price. Nation Media did not trade and is -5.23% in 2016.

Safaricom rallied +1.82% to close at 16.75 and stretched as high as
17.00 +3.34% session highs during the trading session. Safaricom's
strong thrust higher was on heavy-duty volume of 16,109,900 worth
270.513m. Buyers outpaced Sellers by a wide Margin through the
session. My Price Target for Safaricom in 2016 is 22.50.

N.S.E Equities - Finance & Investment

Kenya Commercial Bank closed unchanged at 41.25 and traded 5.904m
shares worth 243.54m. KCB has rallied +4.43% in March.
Equity Group rebounded +1.88% to close at 40.50 and traded 2.638m
shares worth 107.044m.
Standard Chartered Bank firmed +0.48% to regain a 2016 closing High of
209.00 Standard Chartered is +7.179% Year To Date and the Offer Side
is very thin.
Barclays Bank firmed +1.27% to close at 11.90 and was trading at 12.30
+4.68% session highs at the Finish Line. Barclays Bank traded 799,100

The Nairobi Securities Exchange surged +4.255% to close at 24.50 on
heavy trading action of 2.662m shares worth 65.209m.

BRITAM EA rallied +7.00% to close at 10.70 to narrow its year to date
loss to -17.69%.
Pan Africa which recently reported FY Earnings where FY Profit for the
year after tax slumped -95.68% to 27.350m, closed limit down -9.0909%
at 40.00. Pan Africa Insurance Co has slumped -33.33% in 2016.

N.S.E Equities - Industrial & Allied

BAT firmed +0.23% to close at 862.00 a Fresh 2016 High and is +9.808% in 2016.

ARM Cement rallied +4.38% to close 29.75 and traded 27,900 shares. An
Announcement around the Strategic Investor might be imminent.

Trans-Century slumped -9.32% to close at a Fresh 2016 Low of 5.35.
Trans-Century is now -35.15% in 2016 ahead of a D-Day Bond Redemption.

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

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