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Thursday 31st of March 2016

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Macro Thoughts

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The United States has told China it will not recognize an exclusion zone in the South China Sea and would view such a move as "destabilizing," U.S. Deputy Secretary of Defense Robert Work
Law & Politics

"We don't believe they have a basis in international law, and we've
said over and over (that) we will fly, sail and go wherever
international law allows," Work said.

"We have spoken quite plainly to our Chinese counterparts and said
that we think an ADIZ would be destabilizing. We would prefer that all
of the claims in the South China Sea be handled through mediation and
not force or coercion," he said.

Work spoke as Chinese President Xi Jinping prepared to visit
Washington for a nuclear security summit this week.


Who will blink first?

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How ISIS Built the Machinery of terror Under Europe's Gaze By RUKMINI CALLIMACHI
Law & Politics

The day he left Syria with instructions to carry out a terrorist
attack in France, Reda Hame, a 29-year-old computer technician from
Paris, had been a member of the Islamic State for just over a week.

His French passport and his background in information technology made
him an ideal recruit for a rapidly expanding group within ISIS that
was dedicated to terrorizing Europe. Over just a few days, he was
rushed to a park, shown how to fire an assault rifle, handed a grenade
and told to hurl it at a human silhouette. His accelerated course
included how to use an encryption program called TrueCrypt, the first
step in a process intended to mask communications with his ISIS
handler back in Syria.

The handler, code-named Dad, drove Mr. Hame to the Turkish border and
sent him off with advice to pick an easy target, shoot as many
civilians as possible and hold hostages until the security forces made
a martyr of him.

“Be brave,” Dad said, embracing him.

Mr. Hame was sent out by a body inside the Islamic State that was
obsessed with striking Europe for at least two years before the deadly
assaults in Paris last November and in Brussels this month. In that
time, the group dispatched a string of operatives trained in Syria,
aiming to carry out small attacks meant to test and stretch Europe’s
security apparatus even as the most deadly assaults were in the works,
according to court proceedings, interrogation transcripts and records
of European wiretaps obtained by The New York Times.

Abdelhamid Abaaoud who oversaw the Paris attacks, was known to Islamic
State operatives in Europe as “Dad.”

“It’s a factory over there,” Mr. Hame warned his interlocutors from
France’s intelligence service after his arrest. “They are doing
everything possible to strike France, or else Europe.”

One of the first clues that the Islamic State was getting into the
business of international terrorism came at 12:10 p.m. on Jan. 3,
2014, when the Greek police pulled over a taxi in the town of
Orestiada, less than four miles from the Turkish border. Inside was a
23-year-old French citizen named Ibrahim Boudina, who was returning
from Syria. In his luggage, the officers found 1,500 euros, or almost
$1,700, and a French document titled “How to Make Artisanal Bombs in
the Name of Allah.”

Within the hierarchy, Mr. Abaaoud was specifically tasked with
mounting attacks in Europe, according to the French police report and
intelligence brief.

“Abaaoud, known as Abou Omar, was the principal commander of future
attacks in Europe,” Nicolas Moreau, a French jihadist who was arrested
last year, told his French interrogators, according to the report by
France’s antiterror police. “He was in charge of vetting the
applications of future candidates.”

Mr. Abdeslam is believed to be the only direct participant in the
assaults to have survived, and he was arrested last week in Belgium
after a continentwide manhunt.

The attackers he had been helping successfully detonated their suicide
belts in seven locations in Paris, indicating that the group had
mastered both how to mix the compound and how to set it off.

The overpowering odor that comes with refining and storing TATP was
noticed by the building’s owner weeks before the bombings, Belgian
officials said, but he did not report it until after the attacks.

While each of the explosive vests used in Paris in November had about
a pound of finished TATP, the bombs used at the departure terminal of
the airport and inside a subway car in Brussels are estimated to have
weighed 30 to 60 pounds each, according to Claude Moniquet, a veteran
of France’s intelligence service who now heads the European Strategic
Intelligence and Security Center.

That marked another level of achievement in making the explosive: The
higher the volume of TATP, the more volatile it becomes.

The one thing the attackers had not thought of was that the taxi they
called to take them to the airport had room for only three suitcases,
so they abandoned the fourth upstairs, Mr. Moniquet said.

Their taxi driver told the Belgian newspaper DH that the customers had
refused to let him help them load the heavy bags, and that during the
drive to the airport, they sat in tense silence.

The driver could not help but notice a strong odor wafting into the
taxi from the sealed trunk.

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Activating the Sleepers: Islamic State Adopts a New Strategy in Europe Der Spiegel
Law & Politics

The Belgian bombs thus heralded a new approach for Islamic State in
Europe -- one that does not bode well for those trying to prevent acts
of terrorism -- because the threat is no longer limited to individuals
known to the police or already on wanted lists, but also comes from
those in the shadows in the second or third rank. Even jihadists who
have not yet been identified by officials are now capable of striking

This approach reflects the one used in IS' main battle grounds of
Syria and Iraq. For some time there, unsuspected aggressors, who have
been discreetly trained, have infiltrated targeted circles and built
up long-term sleeper cells. Or men from regions neighboring a target
are recruited to wait and attack at the right moment.

This is a modus operandi that has been employed by terrorists against
prominent and often well-defended opponents multiple times -- it's how
Abu Khalid al Suri, the Syrian emissary for al-Qaida boss Aiman
al-Zawahiri, was betrayed by one of his own employees and killed in
early 2014 by IS despite all possible protective measures being taken
at his top secret hideout.

A rebel commander who had fled after Islamic State had taken over
Raqqa was abducted by his own driver in Turkey, who was working under
the orders of IS. And the founder of the secret activist network Raqqa
Is Being Slaughtered Silently was massacred in his apartment in the
Turkish city of Sanliurfa by an IS agent who had infiltrated the
opponents months before, posing as a supporter.

The people behind this terror are proving to be surprisingly
farsighted, patient planners and not rash actors -- and this applies
in both Europe and Syria. This is the new and long underestimated side
of IS.

The length Islamic State goes to in order to install sleeper cells is
illustrated by a lesser-known case -- one in which IS attempted to
infiltrate opposition forces.


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Hassan-i Sabbāh (Persian: حسن صباح Hasan-e Sabbāh) or Hassan al-Sabbāh (Arabic: حسن الصب
Law & Politics

Hassan-i Sabbāh (Persian: حسن صباح Hasan-e Sabbāh) or Hassan al-Sabbāh
(Arabic: حسن الصباح Ḥasan aṣ-Ṣabbāḥ) (1050s-1124) was a Nizārī
Ismā‘īlī missionary who converted a community in the late 11th century
in the heart of the Alborz Mountains of northern Persia. He later
seized a mountain fortress called Alamut and used it as the
headquarters for a decentralized Persian insurrection[citation needed]
against the dominant Seljuk Turks. He founded a group of fedayeen
whose members are often referred to as the Hashshashin, or

His search for a base from which to guide his mission ended when in
1088 he found the castle of Alamut in the Rudbar area (modern 'Qazvin,
Iran'). It was a fort that stood guard over a valley that was about
fifty kilometers long and five kilometers wide. This fortress had been
built about the year 865; legend has it that it was built by a king
who saw his eagle fly up to and perch upon a rock, a propitious omen,
the importance of which this king, Wah Sudan ibn Marzuban, understood.
Likening the perching of the eagle to a lesson given by it, he called
the fort Aluh Amu(kh)t: the "Eagles' Teaching".[14]

Hassan’s takeover of the fort was conducted without any significant
bloodshed. To effect this transition Hassan employed a patient and
deliberate strategy, one which took the better part of two years to
effect. First Hassan sent his Daʻiyyīn and Rafīks to win over the
villages in the valley, and their inhabitants. Next, key people
amongst this populace were converted, and finally, in 1090, Hassan
took over the fort by infiltrating it with his converts.[15] Hassan
gave the former owner a draft drawn on the name of a wealthy landlord
and told him to obtain the promised money from this man; when the
landlord saw the draft with Hassan’s signature, he immediately paid
the amount to the fort's owner, astonishing him. Another, probably
apocryphal version of the takeover states that Hassan offered 3000
gold dinars to the fort's owner for the amount of land that would fit
a buffalo’s hide. The terms having been agreed upon, Hassan cut the
hide into strips and linked them into a large ring around the
perimeter of the fort, whose owner was thus undone by his own greed.
This story bears a striking resemblance to Virgil's account of Dido's
founding of Carthage.

While legend holds that after capturing Alamut Hassan thereafter
devoted himself so faithfully to study, that in the nearly 35 years he
was there he never left his quarters, excepting only two times when he
went up to the roof. This reported isolation is highly doubtful, given
his extensive recruiting and organizational involvement in the growing
Ismā'īlī insurrections in Persia and Syria.[16] Nonetheless, Hassan
was highly educated and was known for austerity, studying,
translating, praying, fasting, and directing the activities of the
Daʻwa: the propagation of the Nizarī doctrine was headquartered at
Alamut. He knew the Qur'ān by heart, could quote extensively from the
texts of most Muslim sects, and apart from philosophy, was well versed
in mathematics, astronomy, alchemy, medicine, architecture, and the
major scientific disciplines of his time.[17] In a major departure
from tradition, Hassan declared Persian to be the language of holy
literature for Nizaris, a decision that resulted in all the Nizari
Ismā'īlī literature from Persia, Syria, Afghanistan and Central Asia
to be transcribed in Persian for several centuries.[14]

From this point on his community and its branches spread throughout
Iran and Syria and came to be called Hashshashin or Assassins, also
known as the Fedayin (Meaning 'The Martyrs', or 'Men Who Accept

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1328
Dollar Index 94.96
Japan Yen 112.33
Swiss Franc 0.9651
Pound 1.4343
Aussie 0.7654
India Rupee 66.355
South Korea Won 1143.28
Brazil Real 3.5961
Egypt Pound 8.8787
South Africa Rand 14.9150

Dollar Index  Chart INO 94.91 [Key Support is at 93.00+]


Euro versus the Dollar Chart 1.1328 [1.1450 is KEY RESISTANCE]


Global stocks - measured by MSCI World - have all but erased their 2016 loss


#Ireland sells first 100 year Bond to complete comeback trail


#Japan's Nikkei has dropped almost 12% in 1Q 2016, worst quarter
since Q3 2015


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Commodity Markets at a Glance WSJ

Gold Chart INO 1227.25 [1,250.00 is key]


Crude inventories rose to highest level in BBG DOE history.


Crude Oil 1 Year Chart 38.00 [Set to fall away to $30.00 Level]


Emerging Markets

Frontier Markets

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Zambia's Lungu in trouble, as opposition gains backing of ex-ruling party leader Scott and defections mount Mail and Guardian

ZAMBIA’S main opposition party’s chances of winning general elections
in August received a boost with the announcement of support from Guy
Scott, a former acting president of the southern African nation.

Scott, 71, served as president for three months after Michael Sata
died in office in 2014 and helped President Edgar Lungu’s ruling
Patriotic Front win power. Miles Sampa, a former deputy commerce
minister under Lungu, also agreed to work with the United Party for
National Development (UPND) before the vote, the opposition party said
in an e-mailed statement. More PF members may follow because they’re
being sidelined, Scott said in a phone interview Tuesday.

“I can’t cry about it; that’s not going to bring anything back,” he
said. “The only thing to do is to go and wallop them.”

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Angola Raises Benchmark Rate to at Least Three-Year High

Angola’s central bank raised the country’s benchmark interest rate to
the highest in at least three years as the inflation rate climbed to
more than 20 percent.

The benchmark rate was increased by two percentage points to 14
percent, Banco Nacional de Angola said in a statement on its website
on Tuesday.

The Luanda-based bank increased the standing lending facility rate to
16 percent from 14 percent, while the overnight standing liquidity
absorption facility rate rose to 2.25 percent from 1.75 percent.

Inflation accelerated to 20.3 percent in February, driven by higher
domestic fuel prices and a weak currency. The kwanza has lost 17
percent of its value against the dollar since the start of the year,
the worst performer of 23 African currencies tracked by Bloomberg

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South Africa All Share Bloomberg +3.55% 2016

52,495.46 +708.26 +1.37%

South Africa’s rand strengthened beyond 15 against the dollar for the
first time since Dec. 21 and was set for its first quarterly advance
in four years


The rally in the South African currency took the increase in the
quarter to 3.4 percent, the first three-month gain since March 2012.

Dollar versus Rand 6 Month Chart INO 14.925 [SELL THE RAND]


Egypt EGX30 Bloomberg +6.84% 2016


7,485.06 -82.4 -1.09%

Nigeria All Share Bloomberg -11.28% 2016


Ghana Stock Exchange Composite Index Bloomberg -4.07% 2016


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.@worldbank said it forecast Kenya's gross domestic product would expand 5.9 percent in 2016 and 6 percent in 2017, from 5.6 percent last year.
Kenyan Economy

"The most recent Kenya Economic Update ... attributes this positive
outlook to low oil prices, good agriculture performance, supportive
monetary policy, and ongoing infrastructure investments," it said
ahead of the report's launch in Nairobi.

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Kenya signs $5.42 bln railway extension deal with Chinese firm
Kenyan Economy

In December the government, seeking to reduce transport costs and
boost trade, secured a $1.5 billion loan -- also from China -- to
extend the track from the capital to the Rift Valley town of Naivasha.

Wednesday's deal with CCCC, worth 549 billion shillings ($5.42
billion), is to extend the line from Naivasha to the town of Malaba on
the Ugandan border, said Wilson Nyakera, principal secretary in
Kenya's transport ministry.

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Equity says it paid Sh4.5bn for Congo bank acquisition @BD_Africa
Kenyan Economy

Equity Bank has for the first time disclosed details of its
acquisition of ProCredit Bank in the Democratic Republic of Congo.

The bank said the transaction completed last September was valued at
Sh4.54 billion, lower than the Sh6 billion estimate by analysts.

The transaction involved Equity Bank ceding 1.8 per cent stake in the
group to ProCredit with an additional Sh1.6 billion being cash

“The company issued 70,897,782 additional ordinary shares to finance
the acquisition of ProCredit Bank DRC, a subsidiary operating in the
Democratic Republic of Congo. The value of the shares was calculated
with reference to the quoted price of the shares of the company at the
date of acquisition, which was Sh40.70 per share,” reads Equity Bank’s
annual report.

Equity paid a goodwill of Sh2.2 billion for the Kinshasa based lender
formed in 2005 by international development companies and ranked
seventh largest bank by assets in DRC.

ProCredit had more than 170,000 customers distributed in 23 branches
at the time of the acquisition. It had net assets of Sh2.9 billion
including a loan book of Sh13.3 billion, Sh7.7 billion in cash and
deposits and properties and equipment valued at Sh1.9 billion.

Among its liabilities were customer deposits of Sh18.6 billion and
borrowed funds of Sh2.6 billion.

The other shareholders with 21 per cent in ProCredit are German
Development Bank KfW with 12 per cent and the International Finance
Corporation (IFC) holding nine per cent.

Equity booked an after tax profit of Sh126 million from the Congolese
operation and estimates it would have earned Sh414 million if the deal
had been completed at the beginning of the year. This would have made
DRC the most profitable regional subsidiary of Equity Bank.

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Equity Bank share price data here
Kenyan Economy

Par Value:                  0.50/-
Closing Price:           39.75
Total Shares Issued:          3702777020.00
Market Capitalization:        147,185,386,545
EPS:             4.59
PE:                 8.66

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@National_Bank reports FY Loss after Tax of 1.153477b 2015 Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           13.10
Total Shares Issued:          308000000.00
Market Capitalization:        4,450,600,000
EPS:             -3.75

National Bank of Kenya Limited FY 2015 results through 31st December
2015 vs. 31st December 2014
FY Loans and advances to customers – net 67.803990b vs. 65.641491b +3.294%
FY Customer deposits 110.622469b vs. 104.733709b +5.623%
FY Total assets 125.440316b vs. 123.091996b +1.908%
FY Loans and advances income 8.934150b vs. 7.562961b +18.130%
FY Total interest income 12.248203b vs. 10.697180b +14.499%
FY Customer deposits expense [5.112772b] vs. [3.620665b] +41.487%
FY Total interest expenses [5.850664b] vs. [3.899729b] +50.027%
FY Net interest income 6.397539b vs. 6.797451b -5.883%
FY Non interest income 3.157554b vs. 3.136743b +0.663%
FY Loan loss provision [3.719128b] vs. [0.525307b] +607.991%
FY Staff costs [3.620758b] vs. [3.710219b] -2.411%
FY Other operating expenses [2.853593b] vs. [2.282967b] +24.995%
FY Total operating expenses [11.193078b] vs. [7.502509b] +49.191%
FY Profit before tax and exceptional items [1.637985b] vs. 2.431685b -167.360%
FY Exceptional items – vs. [1.128554b]
FY Profit after tax and exceptional items [1.153477b] vs. 0.870702b -232.477%
EPS [3.75] vs. 3.11 -220.579%
Total Non performing loans and advances 9.963684b vs. 7.048129b +41.366%
Net NPL exposure 6.724977b vs. 4.784720b +40.551%
Cash and cash equivalents at 31st December 12.036461b vs. 8.701584b +38.325%

The bank attributed the loss to heavy provisions and loan impairment
charge which increased by Sh3.2 billion over the period.
The bank’s non-performing loan portfolio is said to have skyrocketed
in the final quarter of 2015.
NBK acting managing director Wilfred Musau said the reduction in
profits resulted from heavy bad debt provisions and higher interest
“Increasing provisions is a prudent practice in accounting. We have
further put elaborate steps in place to manage the recovery of this
position, ” Ms Musau said.


Well we knew this was coming.

Strong Results but see Tweets from Sunil Sanger below at the time of
H1 2015 Earnings

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@Sang252 @alykhansatchu The rise in profits in Q2 is from writing back NPL provisions. Ratio of Provisions to NPLs at 11.2% v 32.5% in Q1.
Kenyan Economy

@Sang252 @alykhansatchu Risk Weighted Assets down from 88.6 Bn to 80.6
Bn despite increase in lending.


†@Sang252 @alykhansatchu Banking industry's ratio of Provisions to
NPLs is 41.3%. Ratio of 11.2% far below all other listed banks.


While Tullow, which discovered Uganda’s oil, has a seat at the talks,
the pipeline decision is “above our pay grade”


read more

Total Kenya reports FY PAT 2015 +13.406% Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           18.25
Total Shares Issued:          175028706.00
Market Capitalization:        3,194,273,885
EPS:             2.57
PE:                7.1011

Leading multinational energy company.

Total Kenya Limited FY 2015 results through 31st December 2015 vs.
31st December 2014
FY Gross sales 138.027279b vs. 170.725560b -11.153%
FY Indirect taxes and duties [17.773285b] vs. [15.623868b] +13.757%
FY Net sales 120.253994b vs. 155.101692b -22.468%
FY Cost of sales [113.263567b] vs. [148.351545] -23.652%
FY Gross profit 6.990427b vs. 6.750147b +3.560%
FY Other income 766.065m vs. 487.693m +57.079%
FY Operating expenses [4.905099b] vs. [4.548854b] +7.832%
FY Finance income 127.073m vs. 8.541m
FY Finance costs [39.428m] vs. [272.336m] -85.522%
FY Net foreign exchange loss [320.342m] vs. [149.186m] +114.727%
Profit before tax 2.618696b vs. 2.276005b +15.057%
Profit for the year 1.615003b vs. 1.424088b +13.406%
EPS 2.57 vs. 2.26 +13.717%
Dividend 0.77 vs. 0.70 +10.000%
Cash & cash equivalents as at 31st December [1.453450b] vs. [6.841453b] +78.755%

Company Commentary

Sales volumes increased by 7% to 1,736 KMT in 2015
Company maintained its leadership position in the Inland market in 2015
Net Sales decreased by 22% due to the drop in international Oil Prices
Co. recorded a 4% growth in margins from 6.75b to 6.99b in 2015
Other Income increased by 278m mainly as a result of disposal of
assets classified as held for sale
Co. suffered a Forex Loss of 320m
0.77 Final Dividend


Solid results and a solid franchise

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Kenya Shilling versus The Dollar Live ForexPros 101.296
Kenyan Economy

Nairobi All Share Bloomberg +0.62% 2016


Nairobi ^NSE20 Bloomberg -1.47% 2016


3,981.33 -14.23 -0.36%

Every Listed Share can be interrogated here


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

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