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Satchu's Rich Wrap-Up
Friday 07th of October 2016

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"The speed of the move looks like a kind of a flash crash, some sort of failure," Mumford @Business

 Some traders saw the possibility of human error, or a so-called “fat
finger,” with algorithms adding to selling pressure at a time of day
where liquidity is typically low.

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It's no coincidence that the frequency of crashes and bubbles has risen exponentially over the past 30 years, as pointed out by the late Charles P. Kindleberger in his book Manias, Panics and Crashes.

some banks quoted sterling at even weaker levels, with at least one
electronic trading platform recording a transaction as low as $1.1378

That's especially true in foreign exchange. The $4.1 trillion a day
market is traded almost entirely over the counter and about two-thirds
of activity happens in options, meaning leveraged bets rule. Add a
currency that's being widely shorted, like the British pound, to the
Molotov cocktail and it only takes one wrong trade when liquidity's
low for things to run amok.

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The Falcon cannot hear the Falconer The Second Coming BY WILLIAM BUTLER YEATS

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: somewhere in sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?

Home Thoughts

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"As long as you can start, you are all right. The juice will come." -Ernest Hemingway

I must admit I really do not enjoy hospitals. You are invariably in
there because of someone you care about. The spare white florescent
type light, the machines that blink and beep and tend to achieve a
kind of psychological control over me. Dad has been in the Aga Khan
Hospital and yesterday had a Pace-Maker put in.

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""'"We are not witnessing the flow of information so much as pure spectacle, or information made sacred, ritually unreadable''

‘’”We are not witnessing the flow of information so much as pure
spectacle, or information made sacred, ritually unreadable. The small
monitors of the office, home and car become a kind of idolatry here,
where crowds might gather in astonishment.’’

let me recommend this man

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Dr. Jeilan Mohammed

Seriously an outstanding Fellow and for anyone with a ''dicky'' heart
- he should be on speed dial.

His Team are pretty good as well.

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25-AUG-2014 Now given this new level of arrhythmia, friction,and a kind of unsettling ambiguity, how are we to navigate the Financial Markets.
Law & Politics

You see in the old days, these conditions would have created a flight
into the dollar. And interest- ingly the dollar has been punching
higher. If things tip big, the dollar might soar.

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Foreigners in London 'Horrified' by May's Immigration Vision
Law & Politics

Nevertheless, it’s clear that the premier has interpreted the U.K.’s
52 percent to 48 percent referendum outcome as an anti-immigration
message that gives her a mandate to bring in stringent measures to cut
down on the numbers coming into the country. She aims to cut net
annual immigration to below 100,000 from more than 300,000 currently.


Inward Immigration has crossed the Threshold in many developed
Countries. That is clear.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1117
Dollar Index 97.01
Japan Yen 103.83
Swiss Franc 0.9824
Pound 1.2456
Aussie 0.7575
India Rupee 66.845
South Korea Won 1116.88
Brazil Real 3.2288
Egypt Pound 8.8815
South Africa Rand 13.9352

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Commodity Markets at a Glance WSJ

The death of an asset class? Commodities to struggle to regain
stance in portfolios. Holger Zschaepitz


Gold -4% this week, on for its biggest fall in a year...since just
before December's US rate hike. @ReutersJamie


WTI trades above $50 for 1st time since June 24 Holger Zschaepitz


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Saudi Arabia's Post-Oil Plan Off to a Rough Start in Year One @Business
Emerging Markets

The first year of Saudi Arabia’s drive to reduce its oil dependence
may end with the opposite result.

A flurry of cost-cutting measures will likely push the non-oil economy
into recession, analysts say. That means that any overall growth in
2016 will be largely due to record crude output.

Efforts to manage the fallout from cheap oil gathered steam over the
past two weeks. Policy makers have suspended bonuses and trimmed
allowances for government employees. Ministers’ salaries were cut by
20 percent. The central bank also said it’s injecting about 20 billion
riyals ($5.3 billion) into the banking system to ease a cash crunch.

Austerity will help Saudis reduce a budget deficit that reached 16
percent of gross domestic product last year. But it will also likely
exacerbate the economic slowdown as consumption falls. A Bloomberg
survey shows overall growth at 1.1 percent this year, with Capital
Economics and BNP Paribas both predicting the first contraction since

“The hits to households are getting bigger and bigger,” said Jason
Tuvey, Middle East economist at Capital Economics in London.

The growing pessimism about Saudi Arabia’s short-term outlook
highlights the challenge facing Deputy Crown Prince Mohammed bin
Salman, the architect of economic policy, as he seeks to prepare the
kingdom for the post-oil era without provoking a backlash from a
population accustomed to state largesse.

Even before announcing his so-called Vision 2030 in April, the
government had raised the prices of fuel and utilities. It’s also
weighing plans to cancel more than $20 billion of projects, people
familiar with the matter have said. The International Monetary Fund
expects the budget shortfall to drop below 10 percent of GDP in 2017.

National Commercial Bank, the kingdom’s biggest lender by assets, said
in a report on Wednesday that third-quarter corporate earnings “are
expected to be on the negative side.” “The weak outlook” has also
deterred companies from going public.

Policy makers are trying to soften the blow of austerity. The central
bank ordered lenders to restructure loans that Saudis can no longer
afford. In an interview with Bloomberg News in April, Prince Mohammed
said the government is developing a mechanism to provide cash to low-
and middle-income Saudis who rely on subsidies.

The likely contraction in the non-oil GDP this year breaks a long
streak during which its share of the overall economy increased
steadily to more than 55 percent in 2015, according to official data.
Growth, however, was fueled by public spending that relied on revenue
from hydrocarbon exports to invest in infrastructure projects and
create government jobs for Saudi nationals.

That made the spending cuts all the more painful. While the non-oil
GDP grew 0.4 percent in the second quarter this year after contracting
in the previous three months, private-sector activity was flat.

“With cuts to government spending and fiscal reforms, we don’t see
growth coming from anywhere in the non-oil sector this year,” said
Monica Malik, chief economist at Abu Dhabi Commercial Bank.

Prince Mohammed in April acknowledged the short-term challenges to
growth. “We don’t expect it in the early years because they are years
of reform, but after the years of reform we will expect very high
growth,” he said.

His plan targets increasing the number of nationals seeking
private-sector jobs to 50 percent by 2020, compared with a “regional
benchmark” of 40 percent. The kingdom also aims to sell stakes in
several state-run entities.

While structural reforms will have long-term benefits, their impact in
the near term will be “tough,” said Simon Williams, HSBC Holding Plc’s
chief economist for central and eastern Europe, the Middle East and
North Africa.

The benchmark Tadawul All Share Index is down 20 percent this year,
the third-worst performer among more than 90 global indexes tracked by
Bloomberg. The MSCI Emerging Markets Index has climbed 14.8 percent.

Mohamed Abu Basha, Cairo-based vice president of research at
investment bank EFG Hermes, said he expects non-oil GDP to contract in
the third quarter and “probably” in the last three months of the year.
“The recent decision to freeze wage raise next year will obviously
impact more 2017 growth –- sentiment wasn’t already that great,” he
said by e-mail.

Higher oil prices would help, but “$50 per barrel still isn’t enough,”
said Williams of HSBC. “Earnings at that level don’t bring the economy
back to life, they only slow the pace of deterioration."

Frontier Markets

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Schaeuble Says G-20 to Focus on Africa as Political Risks Grow

German Finance Minister Wolfgang Schaeuble said his country will lead
a push among the world’s biggest economies to improve living
conditions in Africa, as concerns about migration increase political
tensions in Europe.

Speaking at a panel discussion in Washington before meetings of
international finance chiefs, Schaeuble said Germany will promote
investments in Africa when it takes the helm of the Group of 20
nations at the end of this year.

“The continent of major concern, for political reasons and for
economic reasons and instability as well, is by far Africa,” he said.

His remarks follow Chancellor Angela Merkel’s comments this month to
German newspaper Die Zeit, where she said that a stable Africa is
“strategically” important for Europe.

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+ 15. African borrowing levels surge anew - FT.com

Between 2000 and 2011, the median ratio of general government debt to
gross domestic product of 18 major sub-Saharan countries fell from 80
per cent to 30 per cent, according to data from Fitch Ratings, thanks
to a wave of debt forgiveness and restructuring under the “heavily
indebted poor countries” initiative of the IMF and the World Bank.

Ethiopia, Cameroon, Angola and Ivory Coast alone were excused $20bn of
debt principal between them, according to data collated by Fitch.

As a result, the median debt servicing cost of the 18 countries
tumbled from 14.4 per cent of government revenues in 2001 to a low of
4.8 per cent in 2011.

However, a fresh wave of borrowing by sub-Saharan nations has this
year pushed average debt to GDP ratios back above 50 per cent for the
first time since 2005. This figure is likely to hit 51.4 per cent this
year and 53.3 per cent in 2017 in the 18 countries rated by Fitch, the
agency says, as shown in the first chart.

Debt servicing costs have also risen sharply, despite the concessional
nature of almost two-thirds of the fresh lending (stripping out loans
to South Africa) and an era of low global interest rates. They are
likely to reach 9.1 per cent of government revenues this year, the
highest level since 2004, and 9.9 per cent in 2017, Fitch says.

“Caution is really needed now [in terms of debt ratios]. There is no
clear trend of stabilisation,” said Jan Friederich, a senior director
in the sovereigns and supranationals group at Fitch.

“It is a concern,” said Yvonne Mhango, sub-Saharan economist at
Renaissance Capital, an emerging markets focused invested bank, who
argues that part of the reason sub-Saharan Africa sailed through the
global financial crisis of 2008-09 largely unscathed was its low debt

However, Ms Mhango said many African countries were now having to
battle a separate crisis caused by low commodity prices while also
coping with an increased stock of debt.

“We have seen countries delay fiscal consolidation at a time when it
should be a priority,” she added.

Mr Friederich said there were two drivers behind the rise in African
debt levels: the commodity slump, which had led to a “sharp decline in
fiscal revenues among exporters”, and a reliance by some countries on
infrastructure investment to fuel economic growth.

In September, Ghana sold a $750m Eurobond that will be partly used to
fund capital projects, even though the government’s debt servicing
cost-to-revenue ratio, at 27.7 per cent, is already the highest among
the 18 sub-Saharan countries rated by Fitch, as the second chart

Central government capex will exceed 10 per cent of GDP this year in
Rwanda, Uganda, Lesotho, Mozambique and Ethiopia, according to Fitch.

But although debt-funded infrastructure investment “will help remove
constraints on long-term growth,” Mr Friederich said, “its benefits
may not fully materialise until governance and business environments
improve”. As a result, the “near-term impact on sovereign debt ratios
will be negative”.

“These countries really should have better roads, bridges, schools,
all kinds of infrastructure. But the problem is that the return on
these investments in terms of GDP growth isn’t strong enough to
stabilise the debt ratio,” he added.

In reality, overall public spending on infrastructure is likely to be
higher still than the official data suggest, given that some of it
will be channelled through state-owned enterprises.

In other countries, like Ghana, the problem is excessive use of debt
to fund government payrolls.

Elevated debt servicing costs, which already account for more than 10
per cent of central government revenues in Nigeria, Zambia, Kenya,
Uganda, South Africa and Gabon, as well as Ghana, are likely to be
storing up further problems.

“Rising debt servicing costs are an obstacle to fiscal consolidation
among sub-Saharan African sovereigns, and larger or unchanged deficits
will lead to further increases in public debt, pushing debt ratios
higher,” Mr Friederich said.

Fitch forecasts that the debt/GDP ratio will increase in each of the
18 countries covered by Fitch, bar the Seychelles, between 2012 and
2017. The largest increases are expected to be in Mozambique (60
percentage points), Zambia (37pp) and Cape Verde (36pp), as the last
chart shows.

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Exxon Is Hit With Fine From Chad Five Times Country's GDP @Business

Exxon Mobil Corp. was ordered to pay a record $74 billion fine in Chad
for underpaying royalties in the central African nation where the
company has been drilling for 15 years, according to a court document.

The fine is about five times more than Chad’s gross domestic product,
which the World Bank estimates at $13 billion. The High Court in the
capital, N’Djamena, announced its ruling Oct. 5 in response to a
complaint from the Finance Ministry that a consortium led by Exxon
hadn’t met its tax obligations. The court also demanded the
Texas-based oil explorer pay $819 million in overdue royalties,
according to the document.

The penalty exceeds the $61.6 billion financial blow BP Plc incurred
after the Deepwater Horizon disaster in 2010 killed 11 rig workers and
fouled the Gulf of Mexico with crude for months, and is more than 70
times larger than the $977.5 million Exxon was ordered to pay
fishermen and other victims of the 1989 Valdez oil spill in Alaska.
Chad is unlikely to collect most of the fine, said Jeffery Atik, who
teaches international law at Loyola Law School in Los Angeles.

“Nobody is going to cooperate outside of Chad in enforcing this
judgment,” Atik said in a telephone interview. “This leaves Exxon
exposed to possibly losing everything it has inside Chad but that’s
such an extraordinary number, I can’t imagine the assets they have
there are worth that much.”

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Ethiopian protesters ramp up attacks on foreign firms @FT

Ethiopian anti-government protesters are escalating attacks on foreign
investors as anger grows over the regime’s crackdown on
demonstrations, in which hundreds of people have been killed.

Activists torched a Turkish textile factory and attacked a mine owned
by Aliko Dangote, Africa’s richest man, damaging trucks and machinery
on Tuesday, days after more than 50 people were killed when police
fired tear gas and rubber bullets to disperse protests at a religious
festival. The US embassy in Addis Ababa said an American woman died on
Tuesday when her vehicle was struck by rocks thrown by Ethiopians on
the outskirts of the capital.

The violence comes after a wave of protests this year that were
originally triggered over a land dispute in the Oromia region of
central and southern Ethiopia. They have since escalated into broader
demonstrations against the autocratic government and spread to other
regions, threatening the stability of one of Africa’s best-performing

Addis Ababa has responded with force — activists accuse security
forces of firing live ammunition on unarmed demonstrators and say
hundreds have been killed in the protests.

Washington has called the government’s approach to the unrest
“self-defeating,” while the EU on Wednesday called for the authorities
to address the “wider aspects of the grievances”.

Activists and analysts say the attacks on foreign firms are becoming
increasingly co-ordinated.

More than two dozen foreign companies, including flower farms and
other agribusinesses have suffered millions of dollars in damage in
recent weeks, according to Verisk Maplecroft, a UK-based consultancy.

Juan Carlos Vallejo, co-owner of Esmeralda Farms, pulled out of the
country after his business was attacked several weeks ago.

“Right now, everyone is really scared,” he said. “We never expected
something like this to happen. I don't think anyone is going to want
to invest here any more.”

Ethiopia has been one of Africa’s star performers, recording 10 per
cent annual growth and attracting tens of billions of dollars in
foreign investment over the past decade thanks to a carefully planned,
state-led development and industrialisation policies.

But it is also a tightly controlled society, with the Ethiopian
People’s Revolutionary Democratic Front — which has governed with an
iron grip since 1991 — and its allies controlling all the seats in

Dissent is swiftly repressed and the political opposition was severely
weakened by a government crackdown — during which scores of people
were also killed — after disputed 2005 elections.

“We have made clear that Ethiopia’s prosperity depends on the ability
of its government to maintain a stable and predictable investment
climate and to expand political space,” a western diplomat said.

The current protests began in Oromia region last November over plans
to expand Addis Ababa into Oromo lands. The initiative was shelved but
the government’s aggressive response to the protests saw them spread
to northern areas, which are dominated by the Amhara ethnic group.

Both the Amhara and Oromo are frustrated by the political dominance of
the Tigray minority, which makes up 6 per cent of the 100m population,
analysts say. The Oromo and Amhara comprise some two-thirds of

Awol Allo, an Ethiopian law lecturer at Keele University, said foreign
investors were being targeted because “they are seen as the source of
legitimacy for the government.”

“The government has to attract foreign investment to keep the economy
growing and has to provide land and services cheaply,” he said.
“People are taking out their anger on investments by foreigners to
undermine the government.”

The government has sought to play down the protests, blaming overseas
agitators and criminal elements.

Analysts say the Tigray-dominated regime has maintained its grip in
part by keeping the larger ethnic groups divided. But they add that
now the Oromo and Amhara have united in their opposition to the
government, it will be hard for the authorities to appease them
without making significant concessions.

However, Rashid Abdi, an analyst at the International Crisis Group,
said some ministers, and the Tigray-controlled military, are loath to
do this.

“The protests have now reached a serious level, a different scale,” he
said. “We should not exaggerate and say the government is going to
keel over tomorrow, but it portends future trouble unless they get a
grip. What’s worrying is that so far they haven’t.”

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May 2015 ''The revolutionary contingent attains its ideal form not in the place of production, but in the street''

PAUL Virilio (born 1932) is a French cultural theorist and urbanist.

In his book ‘Speed and Politics’ he says: “The revolutionary
contingent attains its ideal form not in the place of production, but
in the street, where for a moment it stops being a cog in the
technical machine and itself becomes a motor (machine of attack),
becomes in other words a producer of speed.’’

As we look around the world today, we can see a battle for the
‘street’ from the streets of Bujumbura to the streets of Baltimore. In
November last year, I wrote about Ouagadougou’s signal to sub-Saharan
Africa and concluded that: We need to ask ourselves how many people
can incumbent shoot stone cold dead in such a situation – 100, 1000,

This is another point: there is a threshold beyond which the incumbent
cannot go. Where that threshold lies will be discov- ered in the
throes of the event.

Therefore, the preeminent point to note is that protests in Burkina
Faso achieved escape velocity.

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The official death toll from the Bishoftu disaster stands at 52. This is an extraordinary number.

Even taken at face value, this makes the deadly stampede one of modern
Ethiopia’s bloodiest episodes. But we can’t take anything at face
value. This is a country where information is tightly controlled, and
where casualty counts are routinely underplayed by government spin

Other reports, from rights groups, suggest we should take that
official death toll and double it. Still others, from activist
organisations, say we should multiply it by 10. Whatever the truth –
and we may never have an exact reckoning – far too many people died in
Bishoftu on Sunday when an ordinary religious festival turned into a

One suspects, however, that the fate of the dead protesters is not the
Ethiopian government’s primary source of grief. The lives of perceived
political opponents are cheap, after all: the death toll from this
latest round of political unrest, which began in November 2015, has so
far claimed at least 500 lives, and this is a conservative estimate.

Instead, the government is mourning something altogether more precious
to it: the precipitous erosion of its authority, which grows more
fragile with every new round of demonstrations.

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Flowers blooming in the West Coast National Park in South Africa in September. Credit Heather Dithers

It’s happened. Summer is over — in the top half of the world. But
while the fiery colors of fall are beginning their descent upon the
green leaves of America’s East Coast, a rainbow of spring flowers is
blooming into a short-lived, colorful carpet for a South African
desert. Superblooms can bring impressive palettes to deserts across
the world, but few erupt as consistently or on schedule as the flower
show in South Africa’s Namaqualand.

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For now, the U.S. position toward Kabila is far more hard-line than Western and African counterparts.

South Africa All Share Bloomberg +1.81% [Gold might start to weigh more heavily]


Dollar versus Rand 6 Month Chart INO 13.92 Last


Nigeria All Share Bloomberg -2.13% 2016


Ghana Stock Exchange Composite Index Bloomberg -11.33% 2016


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An artist's impression of the 67-storey Hass Towers, which real estate developers Jabavu Village Ltd and White Lotus Projects are constructing in Nairobi's Upper Hill.
Kenyan Economy

It will include the 45- storey Hilton Nairobi set to be completed in 2020

The Sh11 billion twin towers building, whose construction has begun in
Nairobi’s Upper Hill, is scheduled to be completed by 2020.

Developers of the property were thrown into the limelight earlier in
the week when Hilton Worldwide announced that it would be setting up
its third shop under a franchise agreement with its owners.

When complete, Hass Towers will be one of the largest and most modern
properties in Nairobi’s Upper Hill area and will be located about 200
metres from The Montave – another upmarket mixed development.

property financed by Dubai investors. Both are expected to reaffirm
Nairobi’s position as Africa’s prime real estate investment city. The
67- storey Hass Towers is set on a three-acre plot and will dwarf
other buildings in Nairobi, including the 43-storey complex that
Chinese firm Avic is building in Westlands and the recently completed
UAP Towers.

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Chandaria Industries is set to build a Sh5 billion tissue paper manufacturing factory in Tatu Industrial Park expected to double its production capacity.
Kenyan Economy

The firm has leased 29 acres of land at Tatu City, a residential and
commercial real estate development, where it will set up the factory
within the next four years.

Chandaria, which already has another factory that produces a range of
tissue and hygiene products, expects the new facility will entrench
its market dominance. The firm currently produces 1,200 tonnes of
hygiene products every month.

“It (factory) will be in addition to our existing manufacturing
facility and headquarters in Ruaraka,” group chief executive Darshan
Chandaria said Thursday during the signing of the lease with Tatu

“The new facility will be built on 29 acres and will employ at least
1,000 people. We will increase our tissue paper manufacturing capacity
by at least double our existing capacity.”

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Kenya Shilling versus The Dollar Live ForexPros
Kenyan Economy

Nairobi All Share Bloomberg -5.61% 2016 [+6.077% since closing at a
multi-year low on 5th September]


Nairobi ^NSE20 Bloomberg -19.22% 2016 [+4.72% since closing at a
multi-year low 30th August]


3,264.03 -20.81 -0.63%

Every Listed Share can be interrogated here


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

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