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Wednesday 04th of May 2016 |
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Macro Thoughts |
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The Calm Before the Coming Global Storm by PEPE ESCOBAR Law & Politics |
Major turbulence seems to be the name of the game in 2016. Yet the current turbulence may be interpreted as the calm before the next, devastating geopolitical/financial storm. Let’s review the current state of play via the dilemmas afflicting the House of Saud, the EU and BRICS members Russia, Brazil and China.
That does not mean that the House of Saud will win back the trust of both the US and Russia. Deep sources keep confirming that as far as Washington and Moscow are concerned, the House of Saud is expendable. Both are really energy independent (should the US want to be). Powerful Washington factions blatantly accuse Riyadh of “terror” – well, it’s way more complicated – while Moscow regards the House of Saud as following US orders to destroy Russia in an oil price war.
Ailing – on the way to dementia – King Salman and young Warrior Prince Mohammed would be finished if those famous 28 pages about 9/11 were released and the Saudi connection is incontrovertible. What next? Regime change. A CIA coup. A “trusted” Saudi military CIA asset elevated to power.
What’s left for the House of Saud is to play for time. High up in Riyadh the feeling is that relations with Washington won’t improve while Obama is president; the next president – whether Hillary or The Donald – will be a much better deal. So Plan A for now is to keep posing as essential to Washington in the “war on terra”; that means King Salman falling back on Mohammed bin Nayef, the Crown Prince, way more adept at it than the Warrior Prince, the conductor of the disastrous war on Yemen.
In parallel, Turkey’s Sultan Erdogan keeps advancing his play to take over oil in Iraqi Kurdistan, eventually diverting the whole supply to make Turkey energy independent – and thus a regional superpower. Moreover, in Pipelineistan terms, Erdogan absolutely also needs the Qatar gas pipeline through Saudi Arabia and Syria to gain energy independence from Russia. That also happens to be a major US goal. And that also portends perennial trouble for the Syria peace process.
Erdogan already has the German superpower at his feet in the shape of a groveling, begging Chancellor Merkel. Were Turkey on its way to become an energy power, Merkel would prostrate herself on that Ankara palace golden ground non-stop. The CIA intimates as much, when it analyzes how Turkey will keep “expanding its influence” in Iraq through the militias they support, at the expense of Iraq’s security and political unity.
Russia, Brazil and Hybrid War
Russia’s largest commodity exchange is actively courting international oil traders to join its emerging futures market. The goals are crystal clear; to disconnect the price-setting mechanism from the Brent oil benchmark and, crucially, to move away from the petrodollar. That also happens to be a key condition imposed by Beijing to the House of Saud for continuing to buy their oil.
Sophisticated Hybrid War-derived techniques may have been deployed full blast against Russia and Brazil. But against China, everything fizzles.
Yet all this is just the calm before the storm. The Empire is already striking back. There’s serious blood on the tracks ahead.
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Oil stable after two-day decline on stall in global growth Law & Politics |
International Brent crude futures LCOc1 were trading at $44.95 per barrel at 12.45 a.m. ET, down 2 cents from their last settlement.
U.S. West Texas Intermediate (WTI) futures were up 7 cents at $43.72 a barrel.
This followed two trading sessions in which Brent fell nearly 7 percent and WTI nearly 5 percent from end-April levels, with crude pulled down by rising output from the Middle East and renewed signs of economic slowdown in Asia.
"Asia's big markets continue to disappoint: Japan sank further, China relapsed, and India slipped," said Frederic Neumann of HSBC in Hong Kong, adding that exports were "stuck below the waterline" and "local demand looks wobbly, too."
In the United States, the economy is also stuttering.
"Year-on-year factory orders dropped for a 16th straight month," said the U.S.-based Schork Report. "The U.S. is set for sub-3 percent growth for a record 11th year," it said.
In oil production, U.S. output has fallen from a peak of over 9.6 million barrels per day (bpd) in summer last year to just over 8.9 million bpd currently. That, traders said, has helped lift oil prices away from decade lows under $30 per barrel touched earlier this year.
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SUB-SAHARAN AFRICA Time for a Policy Reset IMF Africa |
Executive Summary Economic activity in sub-Saharan Africa has weakened markedly, but, as usual, with a large variation in country circumstances. Growth for the region as a whole fell to 31⁄2 percent in 2015, the lowest level in some 15 years, and is set to decelerate further this year to 3 percent—well below the 5 to 7 percent range experienced over the past decade. • e sharp decline in commodity prices has put severe strains on many of the largest sub-Saharan African economies. Oil exporters, which include Angola and Nigeria, continue to face di cult economic con- ditions (with growth for oil exporters as a whole forecast to slow further to 21⁄4 percent this year from 6 percent in 2014), but so do non-energy-commodity exporters, such as Ghana, South Africa, and Zambia. Meanwhile, Guinea, Liberia, and Sierra Leone are only gradually recovering from the Ebola epidemic, and several southern and eastern African countries, including Ethiopia, Malawi, and Zimbabwe, are su ering from a severe drought. • At the same time, many other countries continue to register robust growth. Most oil importers are generally faring better, with growth in excess of 5 percent and even higher in countries such as Côte d’Ivoire, Kenya, and Senegal. In most of these countries, growth is being supported by ongoing infrastructure investment e orts and strong private consumption. e decline in oil prices has also helped these countries, though the windfall has tended to be smaller than expected, as exposure to the decline in other commodity prices and currency depreciations have partly o set the gains in many of them. Although this overall markedly weaker picture begs the question as to whether the region’s recent growth momentum has stalled, our view is that medium-term growth prospects remain favorable. Clearly, with the advent of a far less supportive external environment, the immediate outlook for many sub-Saharan African countries remains di cult and clouded by downside risks. But beyond these current challenges, the underlying drivers of growth that have been in play domestically in the region over the past decade or so—most importantly, the much improved business environment—generally continue to be in place, and favorable demographics are poised to support these drivers over the coming decades. However, to realize this potential, a substantial policy reset is critical in many cases. • To date, the policy response among most commodity exporters to the historically large terms-of-trade shock has generally been behind the curve. A year and a half into the shock, and with scal and foreign reserves running low and nancing constrained, a robust and prompt policy response is needed urgently to prevent a disorderly adjustment. For countries outside monetary unions, exchange rate exibility, coupled with supportive monetary and scal policies, should be the rst line of defence.
Conclusions
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.@realDonaldTrump in South Sudan @nickturse Africa |
There’s a fever-dream, schizophrenic quality to the war in South Sudan. The conflict began in an orgy of violence, then ebbed, only to flare again and again. As the war has ground on, new groups have emerged, and alliances have formed while others broke down. Commanders switch sides, militias change allegiances.
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Embassy cable: Juba 'more dangerous than ever' Africa |
The militarization of Juba by the South Sudanese government and rebel SPLM-IO has made the capital more dangerous than any time since the signing of the 2005 Comprehensive Peace Agreement, according to a leaked cable from the Kenyan Embassy in South Sudan.
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Kenya's economy grew by 5.6 percent last year, slightly faster than the year before Kenyan Economy |
The agricultural sector, which contributes nearly a quarter of Kenya's economic output, also grew 5.6 percent in 2015 from 3.5 percent the previous year, the director general of the Kenya National Bureau of Statistics, told a news briefing.
"This was partly influenced by abundant rainfall characterised by the el Nino weather phenomenon," Zachary Mwangi said.
Despite expansion in some other sectors, tourism continued to suffer from worries about security after a spate of attacks in the past two years or more by Islamist militants, he said.
Visitors dropped 12.6 percent to 1.18 million during the year while earnings edged down 2.9 percent to 84.6 billion shillings ($837.6 million).
The balance of trade improved, but still recorded a deficit of 997 billion shillings in 2015 from 1.081 trillion shillings the previous year. Exports in the period rose 8.2 percent and imports decreased by 2.5 percent, the director general said.
The decline in imports was driven by the drop in prices of oil, which makes up the bulk of Kenyan imports.
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ARM Cements reports FY Loss after Tax 2.89b 2015 Earnings here Kenyan Economy |
Par Value: 5/- Closing Price: 36.75 Total Shares Issued: 495275000.00 Market Capitalization: 18,201,356,250 EPS: -5.84 PE:
A mineral extraction and processing company which manufactures lime, cement and other industrial fertilisers.
FY Revenue 14.735935b vs. 13.743185b +7.224% FY [Loss]/ profit before tax [3.539156b] vs. 2.018133b -275.368% FY [Loss]/ profit after tax [2.890841b] vs. 1.493393b -293.575% FY Other comprehensive income for the year net of income tax 10.612967b vs. 0.000847b FY Total comprehensive income for the year 7.722126b vs. 1.494240b +416.793% EPS [5.84] vs. 3.01 -294.020% Dividend – vs. 0.60 Total assets 51.936664b vs. 36.912580b +40.702% Cash & cash equivalents at the end of the period [3.382783b] vs. [2.735632b] +23.656%
Company Commentary
EBITDA margin grew from 23% to 26% unrealised Exchange Loss 0f 3.7b Co. has agreed a $140m Equity Investment from CDC Group Co. to apply $110m to Debt reduction demand for Cement in East Africa increased by more than 10% last year
Conclusions
CDC Group have a smart trade. They can bring cheaper Funding to the business, in the first place.
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Trans-Century reports FY Loss after Tax 2.422b 2015 Earnings here Kenyan Economy |
Par Value: Closing Price: 4.70 Total Shares Issued: 280284476.00 Market Capitalization: 1,317,337,037 EPS: -7.09 PE:
FY Revenue 11.790227b vs. 10.249593b +15.031% FY Cost of sales [9.259631b] vs. [7.668666b] +20.746% FY Gross profit 2.530596b vs. 2.580927b -1.950% FY Operating expenses [2.499253b] vs. [2.582795b] -3.235% FY Loss on sale of investment – vs. [1.035015b] FY Results from operating profit [1.047349b] vs. [1.404597b] -25.434% FY Forex losses [1.117495b] vs. [0.184351b] +506.178% FY Net Finance costs [1.908724b] vs. [0.709605b] +168.984% FY Loss before income tax [2.956073b] vs. [2.114202b] +39.820% FY Loss for the year [2.422574b] vs. [2.277929b] +6.350% Basic EPS [7.09] vs. [8.53] -16.882% Total equity attributable to equity holders of the company 1.464293b vs. 3.558722b -58.853% Cash & cash equivalents at the end of the year [402.711m] vs. [454.760m] -11.445%
Company Commentary
Group grew revenues by +15% We experienced strong performance in our Engineering Division +9.00% growth in Revenue Power Division revenues declined 30% ''We benefited from improved local utility order book coming towards the end of the year which is a bright spot in our continuing effort to get more government business to go to local manufacturers ''
Group's overall performance was also negatively impacted by
1. Foreign Exchange Losses due to sharp depreciation of regional currencies against the USD 2. Low Sales in our export markets due to unfavourable political environment prevailing in the region 3. Impairment of receivables in line with a more conservative financial management policy 4. Increased depreciation due to capital expenditure
Post Balance Sheet Events - Settlement with Bond-Holders
settlement agreement with convertible bondholders, the result of which was to reduce the convertible bond debt to $40m As part of that reduction, the group will write back the principal and interest charges amounting to $19.4m in 2016
The outlook is positive for our core businesses.
Conclusions
Results signal a core Business that remains intact.
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N.S.E Today |
The Kenya Shilling was last trading at 100.598 versus the Dollar which is a 9 month High. The Nairobi All Share eased -0.75 points to close at 145.72. The Nairobi NSE20 Index fell back below the 4,000 level to close at 3989.71. Equity turnover clocked 511.418m.
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N.S.E Equities - Commercial & Services |
Safaricom will report Full Year Earnings a week today and these results will set the tone for the Nairobi indices. I expect an Earnings Surprise to the Upside. Safaricom ticked -0.29% easier to close at 16.90 and traded 8.721m shares.
Nation Media was up-ticked +2.35% to close at 174.00 on low volume of 1,500 shares.
The Kenya Bureau of Statistics reported that Total Visitors to Kenya dropped 12.6 percent to 1.18 million 2015 and this lead TPS Serena a whopping -6.52% lower to close at a Multi-year closing low of 21.50 on better than normal volume of 50,300 shares
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N.S.E Equities - Finance & Investment |
I&M firmed +0.9% to close at 112.00 and traded 299,600 shares. I&M is +12.00% in 2016 and last we heard was processing the acquisition of Giro Bank. Kenya Commercial Bank retreated -4.819% to close at 39.50 and traded 1.707m shares. This looks like a fumble and KCB will pop back towards 42.00 in short order. Equity Bank was the most actively traded share at the Exchange and closed unchanged at 40.00 with a chunky block of 5.074m shares worth 202.96m changing hands. Equity Bank is unchanged in 2016.
NIC Bank firmed +1.35% to close 37.50 and NIC released Q1 2016 after the closing Bell. NIC Bank reported a +28.699% acceleration in Q1 Total operating income which clocked 4.092282b Q1 Profit after tax and exceptional items was behind -0.308%. at 990.789m. NIC Bank increased its Loan loss provision to [1.315115b] vs. [0.421167b] previously. |
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N.S.E Equities - Industrial & Allied |
Crown Paints rallied +6.79% to close at 55.00 making that a 10% 2 session gain since releasing FY Earnings.
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