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Satchu's Rich Wrap-Up
Wednesday 26th of October 2016

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Normal Board - The Whole shebang
Prompt Board Next day settlement
Expert Board All you need re an Individual stock.

The Latest Daily PodCast can be found here on the Front Page of the site


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#Mindspeak Presentation with Aly-Khan Satchu CEO Rich Management @alykhansatchu @YouTube

Macro Thoughts

Home Thoughts

Digital messages and images matter less than their instantaneous
delivery; the shock effect always wins out over the consideration of
the informational content. Paul Virilio

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Japan's Top Inventor Promises Amazing Sex, Killer Wigs, and Surefire Putters

At 88, Dr. Yoshiro Nakamatsu, a.k.a. Dr. Nakamats, is something of a
celebrity in Japan. He's a prolific inventor, claiming more patents
than anyone else in history. Some of his inventions, like the floppy
disk, are absolutely legit, and he created a suction device that has
become a staple in Japanese homes for handling things like soy sauce
and kerosene. Others, well, there's a wig with a built-in shuriken for
self-defense. Then there's a sex potion, LoveJet 69, that promises
orgiastic pleasures and, as if that weren't enough, increased life
span. Maybe they're related.

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Washington's 'Pivot to Asia': A Debacle Unfolding
Law & Politics

The “pivot to Asia” meant that the US was extending and deepening its
regional military alliances in order to confront and encircle Russia
and China.

The Philippine “pivot to China” quickly advanced from colorful
rhetoric to a major trade and investment meeting of President Duterte
and a huge delegation of Philippine business leaders with his Chinese
counterparts in Beijing in late October 2016.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0917
Dollar Index 98.57
Japan Yen 104.15
Swiss Franc 0.9925
Pound 1.2223
Aussie 0.7697
India Rupee 66.765
South Korea Won 1132.97
Brazil Real 3.1126
Egypt Pound 8.8825
South Africa Rand 13.7201

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Commodity Markets at a Glance WSJ

Gold 6 month INO 1275.58


Crude Oil Chart INO 49.44 [not believing the OPEC hype anymore]


After five straight years of declines, Anglo shares are surging.
They’re up 300 percent since the end of January and 272 percent for
the year, by far the biggest advance on the FTSE 100 Index.


Glencore Plc, another mining company, was the next-best performer, up
172 percent.

Emerging Markets

Frontier Markets

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IMF Sub-Saharan Africa Multispeed Growth IMF

Growth in sub-Saharan Africa looks set to slow to its lowest level in
more than 20 years. With lower commodity prices and a generally less
supportive global economic environment, average growth in the region
is foreseen to decelerate sharply to 11⁄2 percent this year—well below
population growth, and in sharp contrast to the high growth rates of
the past 15 years. While the projection is for a modest recovery for
next year (to nearly 3 percent), this is predicated on prompt action
to address the large macroeconomic imbalances and policy uncertainty
in some of the region’s largest economies.

Most of the non–resource-intensive countries—half of the countries in
the region—continue to perform well, as they bene t from lower oil
import prices, an improved business environment, and continuous strong
infrastructure investment. Countries such as Côte d’Ivoire, Ethiopia,
Kenya, and Senegal are foreseen to continue to grow at more than 6

In contrast, commodity exporters are under severe economic strains,
including the region’s three largest countries, Angola, Nigeria, and
South Africa.  e near-term prospects of oil exporters in particular
have worsened, notwithstanding the modest uptick in oil prices, as the
slowdown is becoming entrenched— activity among these countries is
expected to contract by 11⁄4 percent this year. Among other
resource-in- tensive countries, growth in the Democratic Republic of
Congo, Ghana, South Africa, Zambia, and Zimbabwe is decelerating
sharply or stuck in low gear.

Worryingly, in the face of strong  nancial and economic pressures, the
policy response in many of the hardest-hit countries has been slow and
piecemeal, often accompanied by stopgap measures such as central bank
nancing and the accumulation of arrears, and leading to rapidly rising
public debt. In oil-exporting countries with  exible regimes, exchange
rates have been allowed to adjust only with reluctance, resulting in
strong pressures on deposits and foreign exchange reserves. As a
result, the delayed adjustment and ensuing policy uncertainty have
been deterring investment and sti ing new sources of growth—making a
return to strong growth rates more di cult.

Yet, more than ever, the aggregate growth number belies considerable
heterogeneity within the region. In the broadest of terms, the picture
is more one of two Africas: in one camp are some 23 commodity-
exporting economies, including the three largest in the region
(Angola, Nigeria, South Africa), which are under severe economic
strains and are depressing the overall growth  gure; in the other camp
are the remaining 22 economies in the region, which, for the most
part, continue to sustain reasonably high growth

Consequently, output among oil exporters is expected to shrink by 1.3
percent this year, weighed down by a deep contraction in Nigeria, but
also in Chad, Equatorial Guinea, and South Sudan, while Angola will
barely escape recession.

As this new reality of low prices sinks in, the resulting sharp
decline in sub-Saharan African exports to China—now the largest
single-country trading partner for the region—epitomizes this
realignment both in terms of price and demand for natural resources
(see Kolerus, N’Diaye, and Figure 1.4. Selected Commodity Prices,
Change since 2013 Saborowski 2016).  e slump in the value of exports
to that country for the 23 resource- intensive countries in the region
ranged from 40 to 50 percent in 2015, following a very rapid expansion
in the early 2010s on the back of China’s increasing appetite for
commodities at the time (Figure 1.5).

For one, rising in ation in many of the struggling countries is
eroding real income, as it has reached double-digit levels not seen in
some countries since the early 2000s (Figure 1.10). In many cases, the
increase has re ected pass-through of large currency depreciation
(Mozambique, South Sudan, Zambia), combined with foreign exchange
shortages (Nigeria), higher domestic fuel prices following fuel
subsidy reforms and loose monetary policy (Angola), or an increase in
administrative prices and a past lax fiscal stance (Ghana).

The consequences of this rapidly deteriorating outlook in many
countries have been particularly manifest in their growing  nancing
needs, given lower earnings from commodity exports. Indeed, the
current account deficit for the region as a whole in 2015 widened to
5.9 percent, its largest level since the early 1980s and up from just
2.1 percent in 2013. Among oil exporters, it even switched from a
surplus of 33⁄4 percent of GDP in 2013 to a de cit of 43⁄4 percent of
GDP in 2015. At the same time,  nancing has been less forthcoming, and
countries in most need have resorted to stopgap solutions that will
not be sustainable over the longer run.

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IMF Cuts 2016 Growth Outlook for Sub-Saharan Africa to 1.4% WSJ

NAIROBI, Kenya—A tale of two Africas is emerging as many economies
struggle to cope with the crash in prices for oil and other
commodities, while others are sustaining fast growth, the
International Monetary Fund said Tuesday in its twice-yearly report on
the region.

The IMF cut its full-year growth outlook for sub-Saharan Africa to
1.4% from an earlier expectation for 3% growth. It said any recovery
in 2017 will be modest, uncertain and will rely heavily on governments
in both ailing and booming economies in sub-Saharan Africa to
implement the right policies.

The region, which was once the world’s second fastest in growth terms,
has slowed dramatically over the past 18 months. Its largest economy,
Nigeria, is going into recession, while its second-largest and most
advanced, South Africa, is treading water.

But while about 23 oil exporters on the continent—including Angola and
fragile states like South Sudan—are paying the price for a lack of
diversification in their economies, others appear to be in much better

Ivory Coast, Kenya and Tanzania are among the countries that the IMF
singled out as better performers, attributing their resilience to high
investment in infrastructure and greater diversification.

For example, Ivory Coast’s economy is set to grow 8% this year and
next; Nigeria’s is expected to shrink by 1.6% this year and is seen
growing by 0.6% in 2017.

But Abebe Aemro Selassie, the IMF’s Africa division director, warned
of nuances within the two groups. South Africa, for example, isn’t
suffering from macroeconomic imbalances like Nigeria and Angola are.

“These three large economies are in a bad state, but here I have to be
very specific,” Mr. Selassie said in an interview. “The imbalance
story is more apt to the oil-exporting countries. South
Africa…[suffers from] a lack of structural reform over the years and
uncertainty that has crept in.”

Mr. Selassie warned against any narrative that lumps African economies
together and ignores their deep differences. “The true picture is one
of really varying growth,” he said.

He called on Kenya and other countries showing strong growth to build
buffers that will protect them from future shocks. “The time to fix
the roof is when the sun is shining,” Mr. Selassie said.

The IMF cut its growth projection for Ethiopia to 6.5% this year to
reflect the impact of a drought that hit several counties in the
region, but Mr. Selassie also said that political uncertainty was
bound to affect Africa’s second most populous nation as well.

Ethiopia, seen as a rising financial and geopolitical power in the
region, has been rocked by mass popular protests; earlier this month,
it declared a state of emergency. Use of the internet was curbed
countrywide, while freedom of movement was restricted in the capital,
Addis Ababa, through the use of curfews. The measures have been
criticized by rights groups, but the government claims it is trying to
protect lives and property after scores of foreign-owned businesses
were affected by the violent protests.

“Political uncertainty of any kind is detrimental to robust economic
activity,” Mr. Selassie said.

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Congolese oppose extension of Kabila's mandate, poll shows

if the presidential election were held today, 33 percent said they
would vote for former provincial governor Moise Katumbi, 18 percent
for opposition leader Etienne Tshisekedi and 7.8 percent for Kabila.
Kabila registered a 44 percent approval rating. Katumbi and Tshisekedi
received 85.8 and 65.3 percent ratings respectively.

The results, which varied little based on socio-economic status,
gender and religion, show a marked drop in support for Kabila, who
officially won 48.9 percent of the vote in 2011, a consequence of a
lack of economic development and poor security.

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As the pressure on Zuma grows, his actions become more desperate ISS

The new South Africa, epitomised by Mandela, was famed for its
principles. The government’s unilateral decision to withdraw from the
ICC is a reflection of how much those principles have eroded since
1994, a process only accelerated by Zuma’s administration. Is it
enough to save Zuma? Unlikely. But in renouncing international
justice, and effectively siding with war criminals, Zuma will add
another disgraceful element in the history of his disastrous rule, one
that hopefully future leaders will be able to undo.

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Ethiopian unrest triggers collapse in tourism FT Subscriber

A wave of anti-government protests and the imposition of a state of
emergency has triggered a collapse in tourism bookings in Ethiopia,
underlining the effect the unrest is having on one of Africa’s
best-performing economies.

As the demonstrations spread across the country, governments,
including the US, UK, Australia, Canada and Ireland, have advised
their citizens against all non-essential travel to the country or
Amhara and Oromia regions at the centre of the instability.

Tourism has become an important part of the economy, which has been
growing at an annual average of about 10 per cent over the past decade
as Ethiopia has attracted increasing levels of foreign investment.

The government estimates the sector contributes about 4.5 per cent of
gross domestic product, or $2.9bn. The indirect contribution, through
investment, is the same, while about 1.5m people are thought to earn
their living from the industry.

More than 750,000 foreign tourists visited Ethiopia last year, with
the US by far the largest country of origin, followed by China,
Britain and Germany, according to government data.

Kiros Mahari, the general manager of the Ethiopian Tour Operators
Association, said that “while there has been some unrest for a while,
the situation has been restored back to normal”.

Emma Gordon, an analyst at Verisk Maplecroft, a risk consultancy, said
such statements “come across as unbelievable”.

“The situation is quieter now than a few weeks ago, but the protests
have not stopped,” she said. “Strikes, ‘ghost town days’ and
non-violent protests are more common now because they’re so much
harder to police, even under the state of emergency.”

Ms Gordon predicted that once the protesters had worked out how to
cope with the state of emergency, which bans all protests, political
communication on social media, and political gatherings, “there will
be an upsurge in unrest”.

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17-OCT-2016 :: Ethiopia's Reputation Shattered by Political Tensions @TheStarKenya

Ethiopia has always loomed large in my imagination from the time at
prep school when my Ethiopian friend Ezana Haile, could not go home
and came to spend the vacation with us in Mombasa. I recall reading  e
Emperor by Ryszard Kapuściński and in that book Kapuściński recounts
the tale of Lulu, Haile Selassie’s lap dog that was allowed to piss on
the shoes of dignitaries, and the courtier whose job for 10 years was
to wipe those shoes clean with a satin cloth.  at book also speaks to
how the cushion bearer [ e Emperor was very short and therefore had to
perched on cushions so as not to be beneath his subjects] became an
all-powerful figure at the Imperial Court. Kapuściński was
subsequently trashed for his poetic licence in his reportage but I
accept his mea culpa:

“You don’t understand a thing. I’m not writing so the details add up –
the point is the essence of the matter.”

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Mozambique Yields Hit Record After Admitting Debt Distress

Mozambique’s bonds tumbled after the African nation, home to some of
the world’s richest gas reserves, stunned investors by declaring a
state of debt distress.

The former Portuguese colony will need to restructure its debts with
the hope that the International Monetary Fund will resume aid,
according to a 20-page presentation posted late Tuesday afternoon on
the Finance Ministry website. Creditors will be reluctant to have that
conversation and take the heavy losses, though the alternative is

President Filipe Nyusi’s government this year already restructured
more than $800 million in loans it received for a fleet of
tuna-fishing vessels, repackaging the debt as $727 million of
Eurobonds. To restructure the securities, it will have to convince
investors, such as Lutz Roehmeyer, who bought about $1 million worth
of tuna bonds in 2014 and 2015, who believe they were tricked.

“They couldn’t keep their budget under control, and it’s their fault,
not the fault of the bondholders, and I don’t have any mercy for the
officials,” said Roehmeyer, who helps oversee about $12 billion in
assets at Landesbank Berlin Investment.

He said he began buying tuna bonds when the ratio of debt to gross
domestic product appeared to be low.

“Now we know why, because they were fake,” he said.

The country’s debt ratio will reach almost 113 percent of GDP this
year after $1.4 billion in previously undisclosed loans were uncovered
in April, the IMF said. In its presentation, the finance ministry took
an even grimmer view, putting it at 130 percent of GDP.

Yields on the bonds, due in 2023, jumped as much as 583 basis points
Tuesday to a record 21.11 percent in Maputo.

“The debt-sustainability situation in Mozambique is completely dire,”
Robert Besseling, the Johannesburg-based executive director at
business-risk consultancy Exx Africa, said by phone. “I cannot imagine
that the bondholders will be delighted by this, but obviously a
restructuring will be better than taking a haircut or potential

With exports collapsing and its dependence on imports rising, the IMF
predicts Mozambique will run a current account deficit of 146 percent
of GDP by 2021, compared with 33.5 percent this year. That would be
the highest, by far, in the world.

Roehmeyer said he has little faith in the oil and gas projections
after this “big, unpleasant surprise.”

“Officials already knew when they restructured the sovereign debt in
the beginning of 2016 that the debt figures were false and they misled
investors,” he said.


From hero in 2014 to Zero in 2016

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24-OCT-2016 This is a key indicator to watch in assessing the side effects of the interest rate Act.
Kenyan Economy

Recent moves by the CBK to steer interest rates lower were in part
certainly triggered by this sharp slow-down.  This is a key indicator
to watch in assessing the side effects of the interest rate Act.

I attended the @KenGenKenya FY Investor Briefing this morning

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Kenya Shilling versus The Dollar Live ForexPros
Kenyan Economy

Nairobi All Share Bloomberg -6.22% 2016


Nairobi ^NSE20 Bloomberg -20.71% 2016


3,203.99 -10.51 -0.33%

Every Listed Share can be interrogated here


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CEO Steps Into Minefield Confronting Kenya's Worst Bank: Chart via @markets
Kenyan Economy

National Bank of Kenya Ltd. is the East African nation’s
worst-performing bank stock this year. It has the highest
non-performing loan and cost-to-income ratios and must overcome the
loss of key executives in the wake of an internal audit, according to
Maurice Oduor, a money manager at Cytonn Investments Management Ltd.
The biggest challenge facing new Chief Executive Officer Wilfred Musau
will be raising capital from the Kenyan Treasury and National Social
Security Fund, which together own 70 percent of the Nairobi-based
lender as well as preference shares that can be converted into equity.

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N.S.E Today

Crude Oil in New York is back below $50.00 a Barrel.
The IMF released their Flag-ship SSA Economic update yesterday which
was hard-hitting.
We learnt that Growth in sub-Saharan Africa looks set to slow to its
lowest level in more than 20 years. Average growth in the region is
foreseen to decelerate sharply to 11⁄2 percent this year—well below
population growth.
Countries such as Côte d’Ivoire, Ethiopia, Kenya, and Senegal are
foreseen to continue to grow at more than 6 percent and were cited as
The policy response in many of the hardest-hit countries has been slow
and piecemeal.
The World Bank has ranked Kenya the third most reformed country in the
world in the area of starting a business.
The Doing Business 2017 report indicated Kenya rose to position 92 out
of the 190 surveyed economies. This was 21 positions up from last
year's ranking, which placed it at 113.
The Nairobi All Share closed 0.06 points lower to close at 136.58.
The Nairobi NSE20 which is in a bear market [its fallen just over 20%
in 2016] eked out a +0.69 point gain to close at 3204.69

N.S.E Equities - Commercial & Services

Safaricom was the most actively traded share at the Securities
Exchange and closed unchanged at 20.00 with 8.903m shares worth
178.064m. Safaricom will release Earnings in the first week of
November. Safaricom reported a FY EBITDA acceleration of +16.681% and
Investors will be watching the tilt versus that FY Trajectory.

Kenya Airways will be reporting H1 2016 Earnings tomorrow morning.
This Earnings Release is already in the public domain. and it is
expected that Kenya Airways will report a Loss but 1/2 of that
reported in the previous H1. Kenya Airways formally announced today
that the Chairman Ambassador Awori would be stepping down and would be
replaced by Michael Joseph. MJ has the gravitas and the Track Record
to perform what is a complex Turnaround. I estimate Kenya Airways
needs up to $1b and serious leadership is required in order to
persuade owners of capital to pony it up. Gulf Carriers like Qatar
Airways are surely in Pole position. What is also clear is that GOK
does not have the resource envelope to fund this. Kenya Airways which
had rallied +91.3% since 20th September [when it closed at a 2016 and
Multi-Year Low] through yesterday when it closed at a 14 month high of
6.60, finally met some profit taking. Kenya Airways, however, firmed
+2.272% to close at a Fresh 2016 high of 6.75 and traded a brisk
1.993m shares. Kenya airways traded a wide range of 6.05-7.20 and was
trading at 6.45 at the closing Bell.

N.S.E Equities - Finance & Investment

Kenya Commercial Bank announced this morning that KCB has lent $120
million through mobile channel, without collateral, using data
analytics for screening, which increasingly looks like the Future. KCB
closed unchanged at 27.25 and traded 1.101m shares.
StanChart PLC firmed +1.08% to close at 187.00 and traded just 2,100
shares. There were Buyers showing for 2,000% more shares than were
traded, signalling StanChart is pointed higher notwithstanding posting
a +17% Return Year to Date.

The Nairobi Securities Exchange retreated -3.115% to close at 15.55
and traded 1.633m. The NSE is correlated to trading volumes and the
share price has softened in line with a slow-down in Turnover.

N.S.E Equities - Industrial & Allied

I attended the KenGen Investor Briefing this morning. KenGen reported
a +29% Year on Year Increase in Headline Revenue which is an Outlier
when set aside other Utility type Peers. Investors were disappointed
with the Dividend Pass which snapped a 10 Year Dividend Pay Out Track
Record. The MD Albert Mugo explained

"Dividend Policy of 30% of PAT is unchanged but we are in a growth
spurt hence the need to pass''

There was an explanation around ''compensating Tax'' and I suspect
Investors will be satisfied that they have forgone dividends for
faster growth which will pay better dividends in the future.

Mr. Mugo also confirmed that KenGen is ''the largest geothermal
Producer in Africa"

KenGen firmed +1.709% to close at 5.95 and traded 305,600 shares but
in an interesting development Buyers outpaced Sellers by a Factor of 7
to 1.

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

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