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Tuesday 22nd of March 2016 |
Morning Africa |
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Macro Thoughts |
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Sunset Christmas Day Tsavo Africa |
“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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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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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 out.
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.
Conclusions
Russia Military Power has made an exponential surge
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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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'Backward integration key to Africa's growth prospects' - Africa CEO Forum Africa |
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 Africa |
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.
Conclusions
Pipelanistan Wars.
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ZIMBABWE Clearing decks and debts Africa Confidential Africa |
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 week.
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 country.
“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 positive”.
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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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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.
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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.
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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 shares.
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.
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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.
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