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Satchu's Rich Wrap-Up
Monday 01st of August 2016

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“We Don’t Fear the Future, We Shape it”

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Most active futures world-wide since 10:30 Everything is awesome (up) except VIX, $ and Feeder Cattle Eric Scott Hunsader

Home Thoughts

“You go away for a long time and return a different person - you never
come all the way back.” ― Paul Theroux, Dark Star Safari: Overland
from Cairo to Cape Town

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The strategic geopolitical centrality of the South China Sea is well known
Law & Politics

The strategic geopolitical centrality of the South China Sea is well
known: A naval crossroads of roughly $5 trillion in annual trade;
transit sea lanes to roughly half of global daily merchant shipping, a
third of global oil trade and two-thirds of all liquid natural gas
(LNG) trade.

It’s also the key hub of China’s global supply chain. The South China
Sea protects China’s access to the India Ocean, which happens to be
Beijing’s crucial energy lifeline.

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August 19th 2013 I have no doubt that the Indian Ocean is set to regain its glory days @TheStarkenya
Law & Politics

I have no doubt that the Indian Ocean is set to regain its glory days.
China's [and India's] dependence on imported crude oil is increasing
and the US' interestingly is decreasing. I am also certain the Eastern
Seaboard of Africa from Mozambique through Somalia is the last Great
Energy Prize in the c21st.  Therefore, the control of the Indian Ocean
becomes kind of decisive and with control China can be shut down quite
quickly. A Sine qua non of President Barack Obama's pivot to Asia is
US/NATO Power Projection over the Indian Ocean.

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The Power of Nightmares Wikipedia
Law & Politics

In the past our politicians offered us dreams of a better world. Now
they promise to protect us from nightmares.

The most frightening of these is the threat of an international terror
network. But just as the dreams were not true, neither are these

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City of Panic by Paul Virilio, translated by Julie Rose
Law & Politics

Paul Virilio's apocalyptic new work begins with fond memories of
Paris, the city of his birth, but by the end of the book all cities
have become "concentration camps". One thinks of London when he talks
of "a few atrophied cities that pride themselves on being the
epicentre of the world when they are merely lost citadels - in other
words, targets for firestorms!"; and the recent bombings give
Virilio's musings on "hyperterrorism" added resonance. In an era of
globalisation, he argues, a nation's borders are no longer external
but run through its cities. Nations will have to defend themselves not
abroad, but within their own dense metropolises ("the metropolitics of
globalisation will take over the geopolitics of nations"). Modern
warfare is "a war on civilians" which, aided by instantaneous
telecommunications, will result in "a world civil war" (the global
equivalent of the riots in Los Angeles after the footage of police
officers beating Rodney King was broadcast).

Virilio is an impressive commentator on the conditioning power of the
mass media and the way in which every shattering event - from natural
catastrophes to the Columbia shuttle disaster and the attack on the
twin towers - gets world coverage and is put on a loop. Our minds are
literally besieged by these Weapons of Mass Communication (as he calls
them), creating a "panic-driven tele-reality" and resulting in an odd
kind of "emotional synchronisation ... in which terror must be
instantaneously felt by all ... on the scale of a global terrorism".
Virilio maintains that the global village has created hyperterrorism
as its "integral accident" (just as derailment is the integral
accident of a train). The Pentagon is eager to exploit the audiovisual
impact of real-time mass communication (remember Saddam's statue being
toppled?), but unfortunately so are the terrorists. The same impulse
drives contemporary art, says Virilio, and he often returns to
Stockhausen's incendiary remark that 9/11 was "the greatest work of
art ever".

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Russia's Rise To Cyberwar Superpower
Law & Politics

"The Russians are top notch," says Chris Finan, an ex-director at
DARPA for cyberwar research, now a CEO at security firm Manifold
Technology, and a former director of cybersecurity legislation in the
Obama administration. "They are some of the best in the world... "
Slashdot reader blottsie quotes an article which argues the DNC hack
"may simply be the icing on the cyberwar cake":

In a flurry of action over the last decade, Russia has established
itself as one of the world's great and most active cyber powers. The
focus this week is on the leak of nearly 20,000 emails from the
Democratic National Committee... The evidence -- plainly not
definitive but clearly substantial -- has found support among a wide
range of security professionals. The Russian link is further supported
by U.S. intelligence officials, who reportedly have "high confidence"
that Russia is behind the attack...

Beyond the forensic evidence that points to Russia, however, is the
specter of President Vladimir Putin. Feeling encircled by the West and
its expanding NATO alliance, the Kremlin's expected modus operandi is
to strike across borders with cyberwar and other means to send strong
messages to other nations that are a real or perceived threat.

The article notes the massive denial of service attack against Estonia
in 2007 and the "historic and precedent-setting" cyberattacks during
the Russian-Georgian War. "Hackers took out Georgian news and
government websites exactly in locales where the Russian military
attacked, cutting out a key communication mode between the Georgian
state and citizens directly in the path of the fight."


Its an extraordinary Advance and it would be churlish not to recognise
that fact.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1166
Dollar Index 95.67
Japan Yen 102.55
Swiss Franc 0.9703
Pound 1.3242
Aussie 0.7587
India Rupee 66.715
South Korea Won 1107.58
Brazil Real 3.2489
Egypt Pound 8.8799
South Africa Rand 13.8866

Dollar Index 3 Month Chart INO 95.67 [93.00 is key Support]


Euro versus the Dollar 3 Month Chart 1.1166 [lets see how far this
bounce gets]


Crazy ~1000pt price swings in Nikkei futures last night (across
all exchanges, this one from SGX) $NK_F


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Commodity Markets at a Glance WSJ

Gold is regaining its sheen @markets


Gold 6 month INO 1347.15


Crude Oil 1 Year Chart INO 41.62 [expect Fresh 2016 Lows]


Javier Blas ‏US crude #oil exports surged in May to all-time high
of 662,000 b/d (as previously reported by US Census) #OOTT


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01-AUG-2016 :: Emerging markets make a comeback @TheStarKenya
Emerging Markets

Emerging and frontier markets for the most part had a very difficult
time in 2015 and into the start of 2016. However, we have seen a
strong rebound as investors began to scan the markets for yield.
According to a report from Canadian brokerage Pavilion Global Markets
quoted in Barron’s, “the global search for yield means we expect
frontier market bonds and equities to do well in the next few months
and... conditions are increasingly supportive for frontier debt and
equity markets”. You might ask what has happened.  The catalyst for
this rally and search for yield was in part in the Brexit vote.
Markets quickly assumed the Brexit would force the Bank of England’s
hand and incline them towards further easing (interest rates are at a
record low of 0.5 per cent and expected to be cut further) and another
dosage of quantitative easing. Europe continues to face challenges and
a number of folks reckon Brexit makes Frexit, Nexit and even an
Italexit more likely, post-Brexit than less likely. Hopes of a
substantial recovery in the US were dashed after Friday’s GDP print,
which showed a 1.2 per cent annualised increase in the April-June
period, less than the 2.5 per cent median forecast.

Japan disappointed markets last week who were expecting its central
bank governor Haruhiko Kuroda to pull out the Bazooka and even launch
‘’Helicopter’’ money, but he chose to keep most of his powder dry.  is
very lacklustre international backdrop, and the sense that there is
very little pressure if any to tighten monetary conditions across the
world, has encouraged international investors to put risk-on in that
eternal ‘’RO-RO’’ battle (describes a process where investors move to
riskier potentially higher yielding investments and then back again to
supposedly lower yielding investments which are perceived to have
lower risk) that we have been witnessing.

Once upon a time, risk-on used to float all boats, but this time
around we are seeing a great deal of selection. Crude oil continues to
tank and therefore, conditions for the oil producers (in my view) will
remain challenging. However, this positive risk-on spill-over can be
seen, for example, in the South African rand which breached the
14.0000 mark for the first time this year.  e rand gained more than
two per cent to 13.8325 against the dollar, reaching its strongest
level since November 4.  e rand is the preeminent ‘’RORO’’ proxy, and
this surge in the value is a loud and clear signal. Coming closer to
home, we are presented with a dichotomy or what I previously
characterised as a bifurcation at the Nairobi Securities Exchange.  e
Nairobi All Share is -2.27 per cent
in 2016 when compared to the NSE 20 Index which is -13.66 per cent
over the same dates which is a more than 1,000 basis point
under-performance in the NSE 20 Index. Safaricom closed at a record
every day last week except on Monday. Safaricom has been an outlier
with CEO Bob Collymore presiding over an extraordinary golden age for
shareholder value creation, during his tenure. Safaricom ranks in the
top percentile of value creation for shareholders, anywhere in the
world. Guerrilla-style attempts to wrestle the price lower in
Safaricom and the GOK Eurobond have failed miserably. Furthermore,
these attempts have diminished their biggest proponents to the point
of zero credibility. Standard Chartered has also had an exceptional
year when compared to the rest of the banking sector (which has been
soft, and if interest rate caps are introduced it is going to get even
softer). We are no longer in an environment where risk-on floats all
boats.  e leaky boats are getting zero traction.

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. U.S. grew at a seasonally and inflation adjusted annual rate of 1.2% in Q2 2016. via @WSJ
Emerging Markets

Japanese Bond Yields.


#Brazil View of Sugarloaf mountain and Botafogo from Corcovado
Hill in #RiodeJaneiro #AFP Photo by @YasuyoshiChiba


Frontier Markets

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Congo Turns Away Plane Carrying Opposition Leader @moise_katumbi @business

Democratic Republic of Congo authorities refused to clear a plane
carrying presidential hopeful Moise Katumbi to land in the central
African nation amid campaigns for national elections.

“I wanted to return to my country and participate, despite threats of
arrest made against me by the Minister of Justice,” Katumbi said in an
e-mailed statement.

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Dollar versus Rand 6 Month Chart INO 13.8866 [ZAR Has bust resistance]

The currency breached the 14.0000 mark for the first time this year as
data showed the second straight monthly trade surplus, adding to a
record in May.

The rand gained more than 2 percent to 13.8325 against the dollar,
reaching its strongest level since November 4, but pared gains to 1.8
percent at 13.8820 by 1519 GMT.

"Recent trends suggest a much lower current account deficit than last
year, which could help support the rand and reduce the chances of
higher interest rates," said Nedbank's economists in a note.

South Africa recorded a trade surplus of 12.53 billion rand ($886
million) in June, higher than the 7.2 billion rand analysts polled by
Reuters had expected.

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Egypt EGX30 Bloomberg +13.95% 2016

Nigeria All Share Bloomberg -2.21% 2016


Ghana Stock Exchange Composite Index Bloomberg -9.96% 2016


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@Safaricomltd share price data here +16.87% 2016 [record closing High]
Kenyan Economy

Par Value:                  0.05/-
Closing Price:           19.05
Total Shares Issued:          40065428000.00
Market Capitalization:        763,246,403,400
EPS:             0.95
PE:                 20.053

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CIC Insurance reports H1 2016 EPS +75% Earnings here -29.83% in 2016
Kenyan Economy

Par Value:
Closing Price:           4.30
Total Shares Issued:          2615538528.00
Market Capitalization:        11,246,815,670
EPS:             0.43
PE:                 10.000

CIC Insurance Group Limited H1 2016 results through 30th June, 2016
vs. 30th June, 2015

H1 Gross written  premium 6.263928b vs. 6.931171b -9.627%
H1 Net earned premiums 5.026669b vs. 5.621921b -10.588%
H1 Investment income and other gains 1.242137b vs. 1.588156b -21.787%
H1 Total income 6.268806b vs. 7.210077b -13.055%
H1 Net claims and policy holders benefits [3.190323b] vs. [4.300161b] -25.809%
H1 Operating and other expenses [2.343671b] vs. [2.332058b] +0.498%
H1 Total expenditure [5.533994b] vs. [6.632219b] -16.559%
H1 Finance cost [325m] vs. [325m] –
PBT 399.042m vs. 269.284m
Profit for the period 367.388m vs. 209.370m +75.473%
EPS 0.14 vs. 0.08 +75.000%
Total equity 7.618112b vs. 7.160747b +6.387%
Cash & cash equivalents at the end of the period 4.479876b vs.
2.216997b +102.070%

Company Commentary

Gross premium income declined by 10% ''pursue quality of quantity business''
Claims incurred declined by 26%


Big drop in claims incurred juiced H1 EPS

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N.S.E Today

I attended a Breakfast hosted by the French Ambassador Remi Marechaux
on the occasion of the first visit to Kenya of a French Foreign
Minister Jean-Marc Ayrault, for fifteen years.
CS Amina Mohamed, Sally Kosgei and many other Heavyweights were in attendance.
The EPA was naturally front and centre.
The Governor of the Central Bank Dr. Patrick Njoroge was also in
attendance and forthright and said
"We are very confident we have it under control"
Crude Oil was last trading at $41.26 a Barrel in New York and looks
like its in a spiral all the way to a Fresh 2016 Low and this has
important ramifications for SSA.
The Nairobi All Share maintained its rebound to close +0.52 points at 142.91.
The Nairobi NSE20 fell back 28.06 points to close at 3460.60.
Equity Turnover was 746.754m.

N.S.E Equities - Commercial & Services

Safaricom was the most actively traded share at the Securities
Exchange and rallied +1.83% to close at a Fresh record closing High of
19.40 with 17.379m shares worth 337.57m. Safaricom has closed at a
record High for 5 consecutive sessions. Safaricom is +19.01% [vastly
outperforming the Nairobi All Share which is negative for the Year] in
2016 and this is without accounting for The Final Dividend of 76cents
a share and the Special Dividend of 68cents a share which was the
latest Trigger for the Price surge to a record high for 5 consecutive
sessions. Accounting for the Dividend Flow and Safaricom has returned
+27.85% Year To Date. My 2016 Price target remains 22.50 which I set
in January this year. The Core-Business is a rock-solid Franchise and
Data +42.71% at the FY Mark remains parabolic in my opinion.

WPP-Scangroup which rallied +7.97% Friday off a 2016 Low after
releasing H1 Earnings where H1 EPS surfed +53.488% better to clock
66cents a share, fell back -7.348% to close at 15.05. At -49.83% in
2016 and on a Trailing PE of 13.43 I would have thought WPP's Sir
Martin Sorrel must be running the slide-rule and considering adding to
WPP'S majority position.

N.S.E Equities - Finance & Investment

CIC Insurance reported a +75% acceleration in H1 2016 EPS [Earnings
Per Share]. H1 Gross written premium declined -9.627% but H1 Net
claims and policy holders benefits came down nearly 3x at fast to
clock [3.190323b]. CIC Insurance could not get any upside Traction and
closed unchanged at 4.30 and remains -30.64% through 2016.

Equity Bank traded 2nd at the Securities Exchange and eased back
-1.32% to close at 37.50 and traded 3.386m shares worth 127.713m.
Equity Bank is -6.25% in 2016.
COOP Bank closed unchanged at 14.50 and traded meaningful volume of
4.077m shares. COOP Bank is -19.44% in 2016.
Standard Chartered closed unchanged at 209.00 and on good ticket
action of 264,000 shares. StanChart has been a Bull Outlier at the
Securities Exchange [and especially when compared to its Peers] and
has served up a +17.89% Price Gain [shareholders received a 1 for 10
Bonus] and a +26.61% Return when the Dividend is factored in.
StanChart has been a Big Beneficiary of the Deposit Flight to Quality
and interestingly the CEO Bill Winters was a strong Buy Signal in the
Noise when he visited in person and spoke of Kenya being a Jewel in
the Crown. The Parent Stanchart PLC is similarly outperforming its
I@M Bank was high-ticked +3.96% to close at 105.00 and traded just 100 shares.

N.S.E Equities - Industrial & Allied

EABL eased -0.69% to close at 287.00 and traded 75,600 shares. EABL
reported FY16 Earnings last Friday where FY EPS ticked +7.774% higher
to clock 12.20. EABL's flag-ship Tusker Beer retreated -27.00% Year on
Year but by tilting towards the mass market EABL rode a 134 per cent
surge in the sales of Senator.

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

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