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Satchu's Rich Wrap-Up
Tuesday 05th of April 2016

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Normal Board - The Whole shebang
Prompt Board Next day settlement
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Macro Thoughts

Home Thoughts

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Panama Papers, "provides rare insights into a wold that can only exist in the shadows"
Law & Politics

Panama Papers, “provides rare insights into a world that can only
exist in the shadows. It proves how a global industry led by major
banks, legal firms, and asset management companies secretly manages
the estates of the world’s rich and famous: from politicians, FIFA
officials, fraudsters and drug smugglers, to celebrities and
professional athletes,” the German newspaper wrote.

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Who is who on the list? Notable Africans in the leaked 'Panama Papers' Mail and Guardian
Law & Politics

Clive Khulubuse Zuma, nephew of South African president

Clive Khulubuse Zuma is a nephew of South Africa’s president Jacob
Zuma. A mining magnate, Khulubuse Zuma reportedly has a lavish
lifestyle. In June 2015, a South African court found Zuma liable as
chairman in the collapse of a gold mining company that led to more
than 5,000 job losses.

Inside the Mossack Fonseca data: Offshore firm was accused of
questionable oil field deals.

Zuma was authorised to represent Caprikat Limited, one of two offshore
companies that controversially acquired oil fields in the Democratic
Republic of Congo. In late summer 2010, as published reports raised
questions about the acquisition, British Virgin Islands authorities
ordered Mossack Fonseca to provide background information on Zuma,
which the law firm had not previously obtained. That same year,
Mossack Fonseca decided to end its relationship with the companies.
Zuma and representatives of the companies have rejected allegations of
wrongdoing and claimed the oil deals are “quite attractive” to the DRC

Jaynet Désirée Kabila Kyungu, DR Congo member of parliament

Jaynet Désirée Kabila Kyungu is the twin sister of Joseph Kabila, the
president of the Democratic Republic of the Congo. Famed for secrecy
and meticulousness, she was elected to parliament in November 2011 and
took office in February 2012. Kabila is the president of the Laurent
Desire Kabila Foundation, named after her father, and owner of Digital
Congo, a television, Internet and radio conglomerate. In 2015, Jeune
Afrique reported that Kabila had become “the most influential person
in the president’s entourage.”

Inside the Mossack Fonseca data: Offshore company has holding in
Congo’s wireless communications business.

Keratsu Holding Limited was incorporated in Niue on June 19, 2001, a
few months after Kabila’s brother became president of the Democratic
Republic of the Congo. Jaynet Désirée Kabila Kyungu appeared as
co-director with Congolese businessman Kalume Nyembwe Feruzi. The DRC
company Keratsu Holding Ltd has owned stakes in one of the DRC’s major
mobile phone operators.

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List of people named in the Panama Papers
Law & Politics

Angola José Maria Botelho de Vasconcelos, Minister of Petroleum[1]
Botswana Ian Kirby, President of the Botswana Court of Appeal and
former Attorney General[1]
Democratic Republic of the Congo Jaynet Kabila, Member of the National
Republic of the Congo Bruno Itoua, Minister of Scientific Research and
Technical Innovation and former Chairman of the SNPC[1]
Kenya Kalpana Rawal, Deputy Chief Justice of the Supreme Court[1]
Nigeria James Ibori, former Governor of Delta State[1]
Rwanda Emmanuel Ndahiro, brigadier general and former chief of the
intelligence agency[8]
Zambia Attan Shansonga, former Ambassador to the United States[15]
Ghana John Addo Kufuor, son of former President John Kufuor[1]
Guinea Mamadie Touré, widow of former President Lansana Conté[1]
Ivory Coast Jean-Claude N’Da Ametchi, associate of former President
Laurent Gbagbo[1]
Senegal Mamadou Pouye, friend of Karim Wade, himself the son of former
President Abdoulaye Wade[16]
South Africa Clive Khulubuse Zuma, nephew of President Jacob Zuma[17]
United Nations Kojo Annan, son of former Secretary-General Kofi Annan[1]

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1358
Dollar Index 94.58
Japan Yen 110.44
Swiss Franc 0.9592
Pound 1.4228
Aussie 0.7567
India Rupee 66.085
South Korea Won 1152.91
Brazil Real 3.6217
Egypt Pound 8.8782
South Africa Rand 14.8616

Dollar Yen 1 Year Chart INO 110.44 [My Target remains 105.00 and
then even 95.00]


Aurelija Augulyte getting there #USDJPY


Australia holds rates for 11th month even as currency rally acts as
drag on economy


Sterling 1 Year Chart INO 1.4254 [Target 1.3650]


German 10y Bund yields start lower to the week. Drop to 0.126%


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Commodity Markets at a Glance WSJ

Gold 6 month INO 1224.38 [1,250 is the Pivot]


#Gold rush by #Russia makes up for billions lost in currency rout.


Oil drops to 1mth low as Saudi Arabia said its participation in
any output freeze dependent on major producers (BBG)


Saudi Arabia versus Iran Oil


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Congolese troops deployed on the streets of Brazzaville BBC

Troops have been deployed on the streets of Brazzaville, the capital
of the Republic of Congo. Witnesses told the BBC this comes after a
military barracks was attacked.

An anonymous official told the AP news agency that police are fighting
members of a militia called the Ninjas.

The Ninjas were a main anti-government force in the 1998-99 civil war.


The Street is infinitely more muscular than it was.

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The Bank of Uganda reduced its key rate to 16 percent on Monday from 17 percent, the first cut since May 2014

The Bank of Uganda reduced its key rate to 16 percent on Monday from
17 percent, the first cut since May 2014, after raising borrowing
costs by six percentage points last year to support the shilling. The
currency depreciated by nearly 18 percent in 2015.

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The Africa Integration Index is here, and it has some unlikely winners and surprises

a relationship of necessity—nearly 90% of Ethiopian imports come
through Djibouti’s port, serviced by at least 1,500 trucks daily. And
as Ethiopia’s state-dominated economy continues to boom, this number
is projected to grow to 8,000 in just five years.

In November, the first train  started operations, relying on diesel as
the power lines come up, and it could be life-saving. It is actually
an old track that fell into a state of disuse, but the work on it now
means it has at least seven times more capacity, capable of carrying
3,500 tonnes of goods.

The inaugural Africa Regional Integration Index is focused on the
eight major blocs that prop up the AU, and which are known as Regional
Economic Communities (RECs).

The index is compiled by the AU, the African Development Bank (AfDB),
and UN Economic Commission for Africa (UNECA).

The biggest surprise of the day was the identification of the
Intergovernmental Authority on Development (IGAD) as the best
performer in regional infrastructure, one of five categories the index
measures and the most visible face of continental integration.

IGAD is at times overshadowed by other blocs, but got a new lease of
life when it was picked to lead efforts to resolve South Sudan’s
often-intractable conflict.

Its eight members include both Ethiopia and Djibouti, the port city
which perhaps fittingly houses its headquarters.

“When regional infrastructure works better, business costs fall as
transport corridors speed goods across boundaries and more customers
access services as mobile phone roaming expands,” the authors say.

“When visa or work permit restrictions are cut, gains in time and
resources open up, which supports more competitive businesses and
economies,” the index noted, while allowing for skills gaps to be
plugs and talent to move more easily.

A third category also had experts at the report’s launch purring—that
of “productive integration”. A measure of value addition, or the
intermediate goods or services that a business uses towards the
finished article, it has been a source of angst on the continent, as
data shows resource exports still dominate.

The five-member East African Community (EAC) was the highest scoring
in value addition, but perhaps interesting was the placing of Benin
above Nigeria in their shared ECOWAS bloc, explained by its proximity
to the regional giant, to which it re-exports manufactured products.

Kenya ranked highest in three of the four blocs it is a member of—EAC,
IGAD and Comesa, the Common Market for Eastern and Southern Africa.

Other categories index were trade integration, on which the EAC was
the top performer, and financial integration, which all blocs are
lagging on, it being in the nascent stages.

Another surprise was that the biggest economies are not the best
integrated—Algeria, DR Congo, Egypt, Ethiopia, Nigeria and Tanzania
all have room for “more progress”, the index, developed jointly with
the AfDB and the UN’s Economic Commission for Africa, notes.

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South Africa All Share Bloomberg +2.37% 2016

51,895.14 +311.01 +0.60%

Dollar versus Rand 1 Year Chart INO 14.86 [Its still a Sell]


@SAPresident Zuma


Egypt EGX30 Bloomberg +8.15% 2016 [22 week Highs]


7,577.02 +55.82 +0.74%

Nigeria All Share Bloomberg -11.50% 2016


25,349.07 -158.02 -0.62%

Ghana Stock Exchange Composite Index Bloomberg -4.30% 2016


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Tuna and Gunships: How $850 Million in Bonds Went Bad in Mozambique WSJ Subscriber

Mozambique is becoming a case study on the perils of rushing into
markets at the edge of the world’s financial system.

Global investors who in 2013 thought they were lending a state-owned
company $850 million to buy a tuna fishing fleet learned within months
that the funds had been diverted to buy ships for the navy. Two years
later, they were told Mozambique intended to restructure the bonds,
because the fishing company’s revenue wasn’t holding up.

Now, they are learning that Credit Suisse Group AG, which led the bond
sale with a Russian bank, had made another sizable loan to Mozambique
around the same time of the original bond sale.

The end result is that Mozambique is deeper in debt, paying higher
interest on the new restructured bonds and weathering a downgrade of
its credit rating to “selective default.” Investors are left with
bonds that are likely worth less than they thought before learning
about the other loans. And there still isn’t much to show in the way
of tuna.

Buyers of the tuna bonds officially endorsed the restructuring Friday,
with about 85% voting to accept the deal. The restructuring replaced
debt that had originally yielded 8.5% with new government bonds
yielding 14.4%. Standard & Poor’s Ratings Services cut its credit
rating of Mozambican debt to selective default status Friday, calling
the exchange “distressed.”

The episode presents another mess for Credit Suisse CEO Tidjane Thiam
as he attempts to reduce the bank’s reliance on investment banking in
risky markets. The bank managed the restructuring, which helped tie
off the problem of the rapid failure of the original bonds it helped

But investors want to know why they weren’t told about the other loans
until after they had cast their votes for the restructuring. The loans
made by Credit Suisse and other lenders—at least $787 million
worth—could diminish the value of the new bonds.

“Why wasn’t it disclosed?” said Marcus Boeckmann, an emerging-market
debt-fund manager at Candriam Investors Group in London, who
participated in the bond exchange without knowing of the incremental
loans. “That would clearly be a negative.”

While Credit Suisse didn’t inform bondholders of the existence of the
loan until many had agreed to the restructuring late in March, it had
included the debt in the calculation of Mozambique’s consolidated
public debt that it provided to investors during the exchange, a
person familiar with the offering said.

Between the bonds and loans, Credit Suisse and other banks helped
Mozambique borrow at least $1.47 billion in 2013 alone, representing a
25% increase on the roughly $6 billion national debt reported at the
end of 2012. The debt has become all the more onerous over the past
year as Mozambique’s currency depreciated 29%. The government obtained
a $289 million rescue loan from the International Monetary Fund in
October to bolster its finances.

Investors chasing higher yields and the commodities boom rushed into
Africa in recent years. When Mozambique, a country with rich offshore
natural-gas deposits, proposed in 2013 to sell $850 million in
government-guaranteed bonds for a new state-owned tuna fishing
company, Credit Suisse and Russian bank VTB Group easily sold the debt
to buyers that included big money managers like AllianceBernstein LP,
Aberdeen Asset Management PLC and Franklin Templeton Investments.

The bonds were sold by a company called Empresa Mocambicana de Atum,
or Ematum, over several months in 2013 ending in September. A
preliminary offering document for the bonds gave a short description
of how the proceeds would be used—for “the fishery activity of tuna
and other fish resources”—and included no financial projections,
according to a copy of the document reviewed by The Wall Street
Journal. Fund managers said they invested in the deal without much
knowledge of how the fishing company would operate because they
trusted in the government guarantee backing the bonds.

Later in September, however, the contractor to build the tuna boats
announced it also would be building expensive military speedboats. In
public budgetary documents, the government said it had decided to
split the funds into commercial and noncommercial uses.

The news shocked investors. “We had a lot of questions from clients
who had corporate governance concerns,” said Kevin Daly, a portfolio
manager on the emerging-market fixed-income team at Aberdeen Asset
Management. “There was a lot of stigma attached to this bond.”

Attempts to reach Mozambique’s finance ministry and Ematum were
unsuccessful. Investors who spoke with the finance minister said they
were told the country always thought the proceeds could be used for
equipment to protect the tuna fleet.

Meanwhile, Ematum was pulling in at most 5% of the tuna it had
expected, according to bond investor Marco Ruijer, who reviewed the
company’s financial statements. In June 2015, the government announced
plans to restructure the debt.

Mr. Ruijer manages $5 billion in emerging-market debt at NN Investment
Partners. He traveled to Mozambique in September to meet with the
finance minister to get more information on the restructuring. At the
last minute, the meeting was canceled.

“It was a big mess,” he said.

By February the bond’s price had fallen to 74 cents on the dollar,
reflecting fears that Mozambique would miss a principal payment due
March 11. The government made the payment, then offered to swap
holders of the remaining bonds into more traditional government bonds.
Investors would have to hold the bonds for years longer than the
original debt, but would get much higher interest.

What the investors didn’t know is that in 2013, Credit Suisse and VTB
had lent $622 million to another state-owned company called Proindicus
SA to fund the purchases of navy ships and radar installations to
protect against piracy, a person familiar with the loans said. The
following year, the bank approached investors about expanding the loan
to as much as $900 million, the person said.

Credit Suisse didn’t tell the tuna bondholders about the loans until
March 24, a day after the bulk of them had approved the restructuring
in an early vote, people familiar with the matter said. The disclosure
was triggered by a downgrade from S&P on March 15 that tripped a
clause making the loans immediately repayable, one of the people said.

Unless they are also restructured, the Proindicus loans are scheduled
to be fully repaid by 2021, two years before the new bonds fall due,
according to a person familiar with the matter. In the event
Mozambique defaults on its debts, the existence of the additional
loans could reduce recoveries for bondholders, investors said.


Quite a Story.

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AfDB to treble financial support to Mozambique to $1.7 bln

Sudan Gov’t Launches Online Stock Market With US $34.8M Funding from AFDB


The Sudanese Government has announced the launch of an online stock
market in the country’s capital, Khartoum – a landmark development in
the Sudan’s financial history.

This was launched last week at the Khartoum Stock Exchange, which it
is hoped will strengthen the country’s financial governance and

The African Development Bank, which funded the project at a cost of US
Dollars 34.8 Million said the e-trading system will be instrumental in
promoting the rapid development of the KSE, improving transparency and
financial management, and reducing the risks associated with physical

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France approves Sh28bn for Kenya's infrastructure
Kenyan Economy

A bulk of the money Sh13.8 billion (120 million euros) will be used to
finance the Last Mile Connectivity Programme.

Of this, 90 million euros is being given to the country as a
Concessional Loan, with the remaining 30 million euros as a grant.

The French government is also providing Sh15.1 billion (15 million
euros) for phase two of the Roads 2000 Programme, Sh60 billion (60
million euros) as a non-sovereign loan for the Meru Wind Farm, and 19
million euros for the Ruiru II Dam that will see an increased water
supply in the cosmopolitan Nairobi area.

The bilateral talks also saw Treasury CS Rotich secure 33 million
euros for the East Africa Development Bank.

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Nairobi All Share Bloomberg +0.81% 2016
Kenyan Economy

146.88 -0.15 -0.10%

Nairobi ^NSE20 Bloomberg -0.80% 2016 [3 month Closing High]


4,008.50 +12.12 +0.30%

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N.S.E Today

The Nairobi NSE20 rallied +8.14 points to close at a Fresh 3 month
High of 4016.64
The Nairobi All Share shaved off 0.15 points to close at 146.73.
Equity Volume picked up speed to clock 896.023m more than twice the
volume of the previous session.

N.S.E Equities - Commercial & Services

Safaricom closed unchanged at 16.80 and on heavy duty volume action of
18.096m shares worth 304.001m. Safaricom is +3.067% in 2016 and will
rally from here and into the release of the FY Earnings in about 6
weeks time.

N.S.E Equities - Finance & Investment

Standard Chartered rallied +3.25% to score a Fresh 2016 Closing High
of 254.00. StanChart has ramped +37.29% higher in 2016 and is a Bull
Outlier at the Securities Exchange in 2016.
Kenya Commercial Bank closed unchanged at 41.75 but closed out the
session trading 42.25 +1.2%. KCB traded 2.984m shares and Buyers
continue to outpace Sellers by a meaningful margin signalling further
upside Traction.
Equity Group firmed +0.62% to close at 40.50 and stretched as high as
41.00 +1.86% at the closing Bell. Equity traded 6.997m shares worth

National Bank slumped by the daily allowable maximum to close -9.87%
at a 2003 Low of 10.95. National Bank is -30.476% Year To Date.

BRITAM EA surged +9.28% today to close at 12.95 a 3 month High. BRITAM
EA has bagged a +19.35% 2 session Gain and this Run higher was
triggered by the news that the Mauritian Government had struck a deal
with existing shareholders re the Dawood Rawaat stake. This clearing
of an overhang of supply  has been view as positive for the stock.
BRITAM EA traded 467,700 shares.

N.S.E Equities - Industrial & Allied

Bamburi Cement firmed +1.04% to close at 194.00 and traded 366,200
shares. Bamburi Cement is +10.85% Year To Date and this move was
verified by the release of muscular FY Earnings.

Transcentury fell back -4.59% to close at a 2016 Low of 5.20.
Transcentury is -36.96% in 2016 and this is an All Time Low. Its
difficult to see an outcome where Ordinary Shareholders are not
completely extinguished.
EA Cables [which is majority owned by Trancentury] rebounded +7.87%
off a 2016 closing Low to close at 6.85. EA Cables remains -35.37% in

BAT Kenya was low-ticked -9.19% to close at 771.00 on just 700 shares.
BAT is a Buy at this Level tomorrow morning.

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

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