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Wednesday 13th of April 2016 |
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Macro Thoughts
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The assorted sashimi plate. Photographer: Richard Vines/Bloomberg Africa |
“I want to be with those who know secret things or else alone.” ― Rainer Maria Rilke
“For beauty is nothing but the beginning of terror which we are barely able to endure, and it amazes us so, because it serenely disdains to destroy us. Every angel is terrible.” ― Rainer Maria Rilke
“The only journey is the one within.” ― Rainer Maria Rilke
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How China Upstage U.S. With a "Great Wall of Sand" WSJ Law & Politics |
Armed only with a set of revolving teeth, the Tian Jing Hao, Asia’s largest dredger, has pulled off a stunning naval upset.
Under the noses of the U.S. Seventh Fleet, this Chinese vessel led a civilian armada that built almost 3,000 acres of land atop submerged reefs in the Spratly Islands, altering a strategic balance that has held since the great naval battles of World War II established U.S. primacy in the Western Pacific.
The construction began shortly after the Philippines challenged China’s territorial claims in the South China Sea by filing a case at a U.N.-backed tribunal in The Hague in January 2014. Now, on the eve of a legal verdict, China has achieved its objective: a new geography in the world’s busiest commercial waterway where China’s claims overlap with those of five neighbors, also including Vietnam and Malaysia.
However the five judges decide the case, China has permanently altered facts on the ground in its favor.
The seven Spratly outcrops on which it has built runways, docks, radar and other facilities give China the ability to project new military force in its contest with America for regional mastery.
Possession, after all, is nine-tenths of the law. And China’s island-building may not have ended The Pentagon fears that Chinese dredgers might be planning a fresh round of construction on Scarborough Shoal that it effectively seized from the Philippines in 2012, which would give the People’s Liberation Army a jumping-off point just 140 miles from Manila. It’s bracing, too, for China to declare an Air Defense Identification Zone over the entire South China Sea, which China could enforce from its artificial islands. China has pledged to ignore the tribunal’s findings.
He thinks of himself as a child of the Pacific, born in Hawaii and partly raised in Indonesia, and the “pivot” to Asia has been his signature foreign-policy move. Yet he’s opted for restraint. Confronting China in the Spratlys by, for instance, trying to chase away the dredgers and their naval protection not only risks war but could derail cooperation with Beijing on crucial issues like climate change or North Korea.
Conclusions
China ratchets higher in increments and the US will have to Put Up or Shut Up. Putting Up will require something more than sabre-rattling
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Welcome to "Walking Dead Europe" Pepe Escobar Law & Politics |
Citizens of the EU – as in vibrant civil society manifesting in an array of nations - are increasingly keen on ditching the political EU, whose only functioning trait remains its status as a giant market. The rest is chaos: The euro is now synonymous with massive unemployment; Europeans aged 18-34 qualifying themselves as a “lost” or at least “sacrificed” generation; European “values” diluted by the rise of the populist extreme-right; “pacifism” transmuted into hot and cold war – from Syria to Russia; and European cities, from Paris to Brussels, under Salafi-jihadi assault.
Walking Dead Europe manifests itself in myriad ways - from a “No” to a referendum in the Netherlands to the creeping possibility of Brexit. Now add to this the ultimate insult a stark fact: What could the EU possibly offer to the world as a vision when it subcontracts the security gates of Fortress Europe to the wily, carpet-dealing antics of Turkey’s Sultan Erdogan?
Even avowed Europeanists such as Le Monde – a former great newspaper turned Empire of Chaos-cheerleading rag – are now distilling long essays about the malaise.
What lies ahead is not pretty. There is an element of The Sleepwalkers – Christopher Clark’s masterful account of how Europe marched to war in 1914. But mostly, a low-budget American show gave away the game. This is Walking Dead Europe.
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12 JAN 15 :: Europe Off Balance, The Star. Law & Politics |
Events in Paris – the #CharlieHebdo offices, then the ‘Bonnie and Clyde’ show in and around Paris, and finally the denouement in two separate locations – captured the airwaves completely.
The arrival of the asymmetric threat on the streets of Paris was deeply unsettling and will surely keep Europe off-balance and presages a ‘new normal’. As small boys, the Kouachi brothers were abandoned by their Algerian-born parents and brought up in a children’s home in Brittany, according to The Independent.
The economic blowback from the frozen conflict in Ukraine with Russia has exacted a price, as well. Economics and geopolitics are more intertwined than ever before. If European bond yields – they are at record all-time lows – are the ‘signal in the noise’, then this means Europe is in danger of a major ‘death-spiral’.
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The world economy will grow 3.2 percent this year, down from a projected 3.4 percent in January, the IMF said Tuesday World Economic Outlook. International Trade |
“Growth has been too slow for too long,” IMF chief economist Maurice Obstfeld said in remarks prepared for a press briefing. “There is no longer much room for error.”
“But by clearly recognizing the risks they jointly face and acting together to prepare for them, national policy makers can bolster confidence, support growth, and guard more effectively against the risk of a derailed recovery,” he said.
The IMF cited among the biggest risks as a “return of financial turmoil itself, impairing confidence and demand in a self-confirming negative feedback loop.”
“Consecutive downgrades of future economic prospects carry the risk of a world economy that reaches stalling speed and falls into widespread secular stagnation.”
One bright spot: The IMF upgraded its China growth forecasts by 0.2 percentage point for this year and next, following signs of “resilient domestic demand” and growth in services that offset weakness in manufacturing.
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.@IMFNews World Economic Outlook PDF International Trade |
World Economic Outlook have seen a renewed episode of global asset market volatility, some loss of growth momentum in the advanced economies, and continuing headwinds for emerging market economies and lower-income countries. In addition, several stresses of noneconomic origin threaten economic activity. Not only do these developments lead us to a further broad-based reduction in our baseline projections for economic growth in 2016 and 2017; they also suggest that possible nonbaseline outcomes are at the same time less favorable and more likely.
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South Sudan Rebel Team Says Members Seized Before Leader Arrives Africa |
South Sudanese security officers arrested 16 members of an advance rebel team in the capital, a spokesman said, about a week before the insurgents’ leader, Riek Machar, is due to return to the city.
The men were seized Tuesday while gathering to welcome a deputy rebel chairman to Juba, spokesman William Ezekiel said by phone from the city.
Presidential spokesman Ateny Wek Ateny said the 16 were arrested for moving around Juba without coordinating with security personnel. They are being questioned and may be charged if suspected of wrongdoing, he said by phone.
Machar has said he’ll travel to the city on April 18 to assume the role of vice president in a transitional government led by President Salva Kiir. Tens of thousands of people have been killed and more than 2 million have been displaced since conflict erupted in the oil-producing nation in December 2013.
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The entities behind dodgy Congo deal Africa |
THE Panama Papers data leak has unmasked the people originally behind a highly controversial Congolese oil deal that was fronted by President Jacob Zuma’s nephew Khulubuse Zuma.
One is South African businessman Mark Willcox, although in 2010, he told amaBhungane that he held no financial interest in the deal, however remote. Willcox was then CEO of Tokyo Sexwale’s Mvelaphanda Holdings, and Sexwale served in Zuma’s cabinet at the time.
The other is the family of controversial Israeli citizen and diamond scion Dan Gertler, a personal friend of Democratic Republic of Congo (DRC) President Joseph Kabila. Gertler’s stake was made public in 2012, two years after the deal.
Hidden behind layers of offshore opacity, Willcox and Gertler’s family were intended to be the original owners of Caprikat and Foxwhelp, the mysterious British Virgin Islands (BVI) companies to which Kabila handed highly sought-after oil rights in June 2010, according to the leaked papers.
Willcox said this week he never accepted these shares. The evidence appears to support this.
The papers indicate that Khulubuse Zuma held no formal stake, despite his 2010 claim that he was the sole owner.
The political exposure of the deal to Kabila, Jacob Zuma, and Sexwale raised concerns in 2010, but everyone involved denied that the politicians played any role.
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IMF Cuts South Africa's 2016 Economic Growth Forecast to 0.6% Africa |
The International Monetary Fund cut its forecast for economic growth in South Africa for a second time this year after the central bank raised borrowing costs and as policy uncertainty increased.
Gross domestic product in Africa’s most-industrialized economy will probably expand 0.6 percent in 2016, compared with January’s estimate of 0.7 percent and last year’s 1.3 percent growth, the Washington-based lender in its World Economic Outlook report on Tuesday. The IMF lowered its projection for 2017 to 1.2 percent from 1.8 percent.
The forecast of weaker growth is due to “lower export prices, elevated policy uncertainty, and tighter monetary and fiscal policy,” the IMF said.
The IMF cut its 2016 growth forecast for sub-Saharan Africa by 1 percentage point to 3 percent and reduced next year’s estimate to 4 percent from 4.7 percent. The World Bank on Monday lowered its 2016 projection for the region by 0.9 percentage points to 3.3 percent.
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Cash Flees South Africa in Longest Run of Outflows Since '99 @business Africa |
South African investors are shifting cash overseas at the most-sustained pace since outflows triggered by the end of apartheid as political upheaval undermines confidence in the continent’s second-biggest economy.
Money poured out of the country for the 16th consecutive quarter in the final three months of 2015, the longest streak of quarterly outflows since the five years through September 1999, according to central bank data. An increase in South Africans investing abroad followed a gradual relaxation of exchange controls almost each year since 1995, about a year after Nelson Mandela’s African National Congress won the first all-race elections.
Investec Asset Management has seen 60 percent of domestic flows shift into its offshore funds in the first three months of this year, compared with 40 percent in the prior quarter, the company said on Monday.
“We see a net outflow of rand across all our desks,” said Andrew Rissik, the managing director of foreign-currency trading at Sable Group Ltd., a London-based money manager with 100 million pounds ($142 million) in assets. “Poor decisions by Zuma and the ruling party triggered a widespread urge to move assets abroad.”
Direct investments by South Africans abroad more than doubled in the fourth quarter from the previous three months to 37.4 billion rand, the most since the third quarter of 2014, according to data from South Africa’s central bank, released on March 8.
Conclusions
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Is Lagos the Most Dangerous Party City on the Planet? By Adam Skolnick via @playboy H/T @rencapman Africa |
It was midnight on Saturday and the club was heating up. Some men were decked out in black tie, others in Ankara print caftans and matching fezzes. They leaned on the bar in double-breasted sports coats and Windsor knots, and glided across the dance floor in high-dollar sneakers, draped in silver and gold chains, eyeballing women of all shapes and shades who dazzled in designer gowns, slinky dresses, short shorts or miniskirts, by turns accentuating or revealing ample curves, long legs or an elegant neckline.
It was my second night in Lagos, Nigeria, and once more I was in a room of clinking glasses and rumbling bass, a room filled with Nigeria’s upper crust bouncing to indigenous Afro-pop. Everything was washed in hot pink. Beams from a bank of rotating lights glinted off gaslight chandeliers and mirrored ornaments behind the bar. Bottles of Dom Pérignon set in buckets of dry ice left vapor trails as they streamed from the bar in the arms of statuesque African beauties conveying them to booths manned by oil or telecom executives, real estate developers, entrepreneurs and their guests.
But Lagos, for all its money, glamour and status as the world capital of Afropop, seems immune to all that. Thanks to its crime-riddled reputation, it has become the dark frontier of the global party circuit, a place of cognac-washed clubs, B-boy block parties and Afrobeat root systems. There are no carbon-copy full-moon raves or overly organized pop festivals featuring homogenous EDM robots with $100 haircuts. Instead Lagos offers the elusive electrical charge that all travelers crave: the authentic, even if that means having to watch your back on the street at all times.
Out in front of Sip Lounge, blinged-out revelers, the ajebotas (“butter eaters,” Yoruba slang for rich kids) stepped from tinted Range Rovers and Lexus SUVs amid nearly invisible beggars—the disabled, the orphaned, the displaced. Along the way they kept their eyes peeled. It wasn’t the beggars they were concerned about, nor was it the overt presence of danger that raised their antennae. It was the potential for mayhem.
Lagos is a city of approximately 20 million people where some 9,000 millionaires float upon a sprawling mass of ajepakos (Yoruba slang that roughly translates as “twig eaters”).
But in Africa the music is everywhere. Lagos is the laboratory and the loudspeaker, conjuring and blaring Africa’s continental soundtrack to all 54 countries of the motherland.
At two a.m. one of the biggest stars in the room, Burna Boy, stood in his booth, wearing a straw hat and a gold medallion over his white T-shirt. He took a long pull from the Hennessy bottle in his right hand and reached for the mike with his left. The hype man set the mood. All heads turned. DJ Obi, a Lagos mainstay, laid down a beat, and Burna Boy launched into his hit “Like to Party.”
Imagine hitting the clubs in Toronto or New York and seeing Drake or Jay Z grab the mike. That rarely happens, but in Lagos clubs, when artists turn up—which they often do—they almost always deliver. The promise of priceless impromptu performances and ostentatious displays of wealth are two reasons the Lagos club scene is world-class.
If you were to track Nigerian music on a historical graph, you would see a spike in international interest and record sales around the heyday of legendary highlife acts such as King Sunny Adé, defined by joyful guitar licks, and Fela Kuti—the rebellious political activist and progenitor of the infectious, brass-heavy Afrobeat sound. Both became international stars in the 1970s.
The trappings of true wealth in Lagos include a fat yacht and a mansion in Ikoyi. Bizzle craves both and is angling to open his own clubs to get there. “Owo ni koko,” he said. “That’s Yoruba for ‘Money is the main thing.’ ”
The next day I met him at a late-afternoon pool party hosted by another of Bizzle’s partners, Quilox nightclub. The pool, set in a private entertainment facility, was lined with curtained cabanas—the type you see in Las Vegas—and the event lured heavyweights from across the spectrum of Lagosian arts and industry. Despite the flash, though, the venue itself was unfinished. The view from the bathroom overlooked construction rubble. We were partying steps from a dirt parking lot off the thrumming Lekki-Epe Expressway, which connects the residential neighborhood of Lekki with Victoria Island—home to hotels, restaurants, banks and oil company offices.
“Help me,” she gasped. The driver swerved, narrowly missing her. She spun and fell to her knees on the asphalt.
“What the fxxk,” I yelled.
“It’s a trap,” the driver said, accelerating and leaving her in the dust. “I’m telling you, it’s a trap. If we go back, there will be a mob of men who will rob us and maybe kill us.” My driver had once been held up by a mob in the street and was eventually locked in his own trunk. “They could have automatic weapons, those guys.”
I turned back. Aside from the girl, the street was completely empty. Was he right? Was she bait, or was she the one in danger? I’d like to say we went back to check, but this was Lagos after all, so we kept driving.
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China has offered Nigeria a loan worth $6 billion to fund infrastructure projects, the Nigerian foreign minister said on Tuesday. Africa |
The announcement came as both countries signed a currency swap deal to boost trade. Nigeria has been in talks with China on an infrastructure loan for months.
Nigeria is Africa's largest economy and its top oil producer. But its public finances have suffered as the price of crude oil dropped around the world.
Although President Muhammadu Buhari wants to triple capital spending in 2016, he also needs to plug a projected deficit of $11.1 billion.
"It is a credit that is on the table as soon as we identify the projects," Nigerian Foreign Minister Geoffrey Onyeama told reporters after Buhari met Chinese President Xi Jinping. "It won't need an agreement to be signed. It is just to identify the projects and we access it."
There was no immediate comment from China.
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Nigeria Inflation Soars to Almost Four-Year High of 12.8% Africa |
Inflation in Africa’s largest economy and oil producer accelerated to 12.8 percent on an annualized basis, the highest since July 2012, from 11.4 percent in February, the Abuja-based National Bureau of Statistics said by e-mail on Tuesday. Food prices rose 12.7 percent in March from a year ago, compared with 11.4 percent in the previous month, driven up by transportation costs, the planting season and foreign-exchange movements, the statistics agency said.
“The central bank can’t continue raising rates only,” Babajide Solanke, an analyst at Lagos-based FSDH Merchant Bank Ltd., said by phone before the data were released. “They should probably look at adjusting foreign exchange controls now.”
The International Monetary Fund has lowered its 2016 growth forecast for Nigeria by almost one percentage point to 2.3 percent and said the effect of the lower price of oil, where Nigeria earns most of its income, will be “durable.”
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Kenya's KCB Open to Banking Deals After Third Lender Collapses Kenyan Economy |
KCB Group, Kenya’s biggest lender by assets, said it has an interest in new market opportunities after a local newspaper reported it may be among potential buyers of Chase Bank Kenya Ltd., which collapsed last week.
“KCB is open to the potential consolidation in the market, but nothing specific has been pinned down,” KCB spokeswoman Judith Odhiambo said in an e-mailed response to questions. “We continue to pursue various options and opportunities and cannot specifically discuss a particular entity.”
Business Daily, a Nairobi-based newspaper, reported earlier on Monday that KCB is one of at least five companies interested in buying Chase Bank. The list includes Equity Group, Centum Investments Ltd., Commercial Bank of Africa Ltd. and I&M Holdings Ltd., it said.
Chase Bank collapsed last week after a run by depositors. It’s the third Kenyan lender to be seized by the authorities since Patrick Njoroge was appointed governor of the central bank in June. Imperial Bank Ltd. was taken over by the regulators in October, while Dubai Bank Kenya Ltd. went into liquidation in August after running out of money.
The central bank placed Chase Bank in receivership on April 6, a day after the lender’s chairman and group managing director resigned when it announced restated earnings with a qualified opinion by auditors. On Sunday, Njoroge announced the regulator would provide support to banks facing liquidity constraints because of the “anxiety” caused by Chase’s closing.
“We will avail a facility to any commercial or microfinance bank that comes under liquidity pressures arising from no fault of its own,” Njoroge said in a statement e-mailed by the bank. “We will avail this facility for as long as is necessary to return stability and confidence to the Kenyan financial sector.
Smaller banks in Kenya are starved of liquidity, with seven of the nation’s 42 institutions holding 80 percent of the financial system’s cash, according to the regulator. At the same time, they’re also having to struggle against an increase in non-performing loans with not enough money set aside to cover them.
On April 8, the police ordered the arrest of Chase Bank Chairman Zafrullah Khan and Group Managing Director Duncan Kabui. It also asked for the detention of six other directors from state-owned National Bank Ltd. who were placed on forced leave last month pending an internal audit.
I&M CEO Arun Mathur didn’t immediately return a call by Bloomberg requesting comment. Calls to Equity CEO James Mwangi’s mobile phone didn’t connect. Centum didn’t immediately respond to e-mailed questions and Commercial Bank of Africa denied it’s interested in Chase.
“We are not in discussions,” CBA Group Managing Director Isaac Awuondo said by phone. “We have not evaluated the opportunity.”
Shareholders in Chase Bank include Amethis Finance, a Paris-based company focused on investing debt and equity in Africa, responsAbility Participations AG, a Swiss investment company known as rAP, and KfW, the German development-finance group, according to an April 2015 document published on the lender’s website. Amethis, responsAbility and KfW didn’t immediately respond to e-mailed requests for comment.
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NSE suspends Chase Bank's Sh10bn trading @BD_Africa Kenyan Economy |
“Notice is hereby given on the suspension of trading of the Chase Bank Fixed Rate Notes listed on the Fixed Income Securities Market Segment of the NSE, in line with directives received from the Capital Market’s Authority, effective April 8, 2016,” said the NSE in a statement released Tuesday.
Chase Bank collapsed on April 7 following failure to pay customer deposits after it ran out of cash.
The bank suffered massive withdrawals, some of it done online, as it was hit by a crisis of confidence resulting from a restatement of the bank’s financial statement to reveal massive nonperforming loans.
On the day the restated results were published, the managing director and the chairman were replaced, triggering further uncertainty.
“This (suspension) follows the placement of Chase Bank (Kenya) limited under receivership by Central Bank of Kenya (CBK) with effect from April 7, 2016, thereby prohibiting payment of any claims by the bank’s creditors,” said NSE. “The shareholders, investors and general public are asked to take note of the suspension.”
The CMA approved the issuance of the bond in June last year. However, the company only managed to raise Sh4.8 billion in the first tranche which got listed on the NSE in June.
The coupon rate of 13.25 per cent is the second highest of the outstanding bonds on the NSE fixed-income board.
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N.S.E Today |
The Nairobi all Share snapped a losing streak which had seen the All Share retreat 1.844% since the 7th of April and edged +0.06 points firmer to close at 144.78. There are strong indications that the MSCI Frontier Index will eject Nigeria from its Index because of the restrictions on the Naira. This will support Big Cap Stocks in Nairobi as Investors re-calibrate their SSA exposures. The Nairobi NSE20 Index could not snap its losing streak which started 7th April and closed -15.86 points lower at 3909.47. The Nairobi NSE20 has retreated -3.57% since 7th April when its closed at a 2016 High of 4,054.29. Equity turnover clocked 484.513m. The Equity Market has traded lower but on light volume since the Chase Bank news broke.
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N.S.E Equities - Commercial & Services |
Safaricom firmed +0.3% to close at 16.75 and traded 4.066m shares. Safaricom will surely be a big Beneficiary if Nigeria is removed from the MSCI Frontier Index as SSA Funds will recalibrate in favour of Nairobi.
TPS Serena Hotels traded 5,500 shares all at 25.00 +5.26%. TPS Serena is unchanged in 2016 and will surely glide higher on the back of a Tourism recovery. I expect the Tourism Curve to head higher but in a shallow shape but this will underpin TPS Serena. What is helping is the diffusion of Terror - its everywhere - whereas before it felt like Kenya was only in the cross-hairs.
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N.S.E Equities - Finance & Investment |
Kenya Commercial Bank closed unchanged at a 2016 Closing High of 42.50 and was the most actively traded share at the Exchange and traded 5.472m shares worth 237.72m. Yesterday Judith Sidi Odhiambo was quoted by Bloomberg saying “KCB is open to the potential consolidation in the market, but nothing specific has been pinned down,” KCB spokeswoman Judith Odhiambo said in an e-mailed response to questions. “We continue to pursue various options and opportunities and cannot specifically discuss a particular entity.” This speaks to the enviable position that KCB finds itself in. The Flight to Quality [seven of 42 institutions hold 80 percent of the financial system's cash, according to the regulator] and the inevitable consolidation process favour the Group. Standard Chartered firmed +0.4% to close at 249.00 and is an Outperformer at the NSE this Year posting a blistering +27.69% Price Increase in 2016. Equity Group rowed back -1.23% to close at 40.00 and traded 3.013m shares. Sellers outpaced Buyers through the session and hence the downside price action. Barclays Bank Kenya eased -0.48% to close at a Fresh Multi Year Low 10.25 and traded 243,300 shares. Barclays Bank has slumped -24.63% through 2016 as Investors fret about Franchise Erosion and this period of Limbo as Barclays PLC looks for a Buyer for its shareholding in BAG.
National Bank retreated 4% to close at 9.60 and has slumped a whopping -39.04% in 2016.
The NSE rallied +4.58% to close at 28.50.
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N.S.E Equities - Industrial & Allied |
EABL rebounded +1.89% to close at 270.00 and traded 36,100 shares. EABL is set to rebound further and will also be favoured by the Ejection of Nigeria from the MSCI Frontier Index.
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