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Thursday 27th of October 2016 |
Morning Africa |
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If you are tracking the NSE Do it via RICHLIVE and use Mozilla Firefox as your Browser. 0930-1500 KENYA TIME 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 http://www.rich.co.ke |
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Between the New York close and the start of trading in Tokyo, foreign-exchange volumes dwindle to just 2 percent of peak turnover, according to Aite Group Africa |
The plunge in Britain’s pound earlier this month shows what’s at stake. At about 7 a.m. Singapore time -- while London dealers were sleeping and those in New York were finishing up their day -- sterling slumped more than 6 percent in just two minutes, reaching a 31-year low. After that, traders are more wary of leaving automatic sell orders known as stop-losses in place at times when fewer people are working and bouts of extreme volatility are more common.
“It’s always been a danger zone with respect to stop losses; certainly after this, people will think about it even more,” said Anthony Hall, head of foreign exchange, rates and credit in Asia Pacific at UBS Group AG, the world’s third-biggest currency trader. “If you think about how the structure of the market’s changing, how you would have executed orders and left stop losses in the past is no longer applicable today.”
The severity of the pound’s drop suggests that algorithms triggered an avalanche of automatic sell orders, adding to the downward pressure on the world’s fourth-most traded currency, according to UBS and Singapore-based DBS Group Holdings Ltd. UBS processed its highest volume of trades in a minute as sterling plunged, Hall said.
“Movements like this recent pound crash will likely happen again at some point in time,” said Peter Soh, head of foreign exchange in Singapore at DBS. “Looking back, say five years ago, moves of this intensity were unheard of.”
What’s changed is that post-2008 crisis regulations have caused global investment banks to pull back from dealing, while electronic traders take on a growing share of the $5.1 trillion-per-day market in their place. Lenders have backed off because, under the Volcker Rule, they are restricted from trading for profit with their own money. Computer traders have stepped in, more than tripling currency volumes in the last three years, according to Aite Group.
Liquidity across all currencies and foreign-exchange products hits a low of $16 billion from 8 a.m. to 9 a.m. Sydney time, which is currently two hours ahead of Tokyo, according to Javier Paz, a senior analyst in Salt Lake City, Utah at Aite Group. That’s before desks in the island state, Tokyo and Hong Kong are fully staffed. Liquidity climbs steadily, reaching about $550 billion at the London open. That compares with a peak of about $750 billion at the so-called 4 p.m. fix in London, when markets in the U.S. are also open, he said.
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12-SEP-2016 :: Mirrors on the ceiling, The pink champagne on ice @TheStarKenya Africa |
A lot of risk calculations are based on Value at Risk (VAR). Essentially, you overlay a volatility measure over the portfolio, and you calculate how much money is on the line. Central banks have suppressed volatility therefore in real terms; investors are now holding bigger positions at these current artificially suppressed levels. If volatility spikes, positions are going to be reduced en masse. Or to put it another way and to borrow the lyrics from the Eagles Hotel California:
Mirrors on the ceiling, The pink champagne on ice And she said “We are all just prisoners here, of our own device” Last thing I remember, I was Running for the door I had to find the passage back To the place I was before “Relax,” said the night man, “We are programmed to receive. You can check-out any time you like, But you can never leave! “
What is clear is that we are at the fag-end of this party. German 10-year bund yields turned positive for the first time since July.
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"I never had a failure," Mr. Trump said in one of the interviews, "because I always turned a failure into a success," glossing over the serial bankruptcies of his businesses in the 1990s. Law & Politics |
In an especially telling passage, Ivana recalls the first time she went skiing with Mr Trump, who expected to outshine her. He had no clue that she was in fact accomplished on the slopes.
“So he goes and stops, and he says, ‘Come on, baby. Come on, baby,’” she recalled. “I went up. I went two flips up in the air, two flips in front of him. I disappeared. Donald was so angry, he took off his skis, his ski boots, and walked up to the restaurant. ... He could not take it. He could not take it.” Only later did they retrieve his abandoned gear from the piste.
Mr Trump is meanwhile heard to brutally dismiss other men who, in his mind, have either slipped from their once high perches or embarrassed themselves publicly. One was Arsenio Hall, once a successful nighttime TV host who had virtually vanished from view until Mr Trump brought him on set for his Celebrity Apprentice series a few years ago.
“Dead as a doornail,” was his assessment of Mr Hall, “dead as dog meat.” He went on, showing disgust over empathy: “Couldn’t get on television. They wouldn’t even take his phone call.”
He summoned similar disdain for a well known Wall Street banker who got drunk at a charity event at the Waldorf Hotel and had to be carried out with all of Manhattan society and his peers in the financial world looking on. (Mr Trump does not drink.)
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Pope Francis the manager - surprising, secretive, shrewd Law & Politics |
Father Ernest Simoni, a 88-year-old Albanian, was watching Pope Francis on television this month when, to his astonishment, he heard the pontiff mention his name.
Francis announced that the simple, white-haired Roman Catholic priest, who had spent many years in jail during Albania's communist dictatorship, was to become a cardinal.
It was the first that Simoni, or any of the other 16 new cardinals named by Francis at the same time, had heard of their elevation to the prestigious rank.
"I did not believe either my ears or eyes," Simoni told Reuters in Albania. "The pope said it, but I could not believe it. 'Can he be talking about another Ernest?' I said to myself."
But more significantly, the pope had also kept nearly the entire Vatican hierarchy in the dark about his decision, which he announced on Oct. 9 to thousands of pilgrims.
The episode illustrates how Francis has used his own distinct management style to try to shake up the Church since his election in 2013. He is keeping his cards close to his chest as he tries to push through a progressive agenda to make the Church more welcoming in the face of conservative opposition.
Conclusions
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Here's How @GoldmanSachs Lays People Off International Trade |
The first “plant layoff” notice came in February: 43 people would lose their jobs.
The second arrived six weeks later, increasing the cuts to 109 workers. Then a third, in April, for 146 more. And a fourth, in June: 98. Three more notices followed, including 20 dismissals announced last week.
The “plant” in question -- Goldman Sachs Group Inc.
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Tata Sons former boss Cyrus Mistry says group could see $18 billion in writedowns - letter Emerging Markets |
Group companies in the salt-to-software Tata Sons conglomerate faces potential writedowns to the tune of close to $18 billion due to investments in unprofitable businesses, according to an internal letter that ousted Chairman Cyrus Mistry sent to the company's board.
Mistry was shunted out of the company on Monday by the Tata Sons board for reasons not officially made public by the group, however, sources told Reuters that Mistry had lost favor with family patriarch Ratan Tata and the powerful trusts, which own two-thirds of the group.
Mistry said in the letter that Indian Hotels Co, passenger-vehicle operations of Tata Motors Ltd, the loss-making European steel operations of Tata Steel, its telecom venture and a ultra mega western Indian power plant of Tata Power are "legacy hotspots" of the company.
"A realistic assessment of the fair value (of) these businesses could potentially result in a write down over time of about Rs118,000 crores ($18 billion)," said Mistry in an e-mail seen by Reuters.
A spokesman for Tata Sons declined to comment. A spokeswoman for Cyrus Mistry declined to comment.
Frontier Markets
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Zitamar News @ZitamarNews Mozambique 26 October: Bankrupt Africa |
Good afternoon. We wrote in May that the three controversial state-backed loans, to ProIndicus, EMATUM, and MAM, “threaten to bankrupt Mozambique.” That threat has now become reality: as of yesterday, the government officially cannot pay. And its options at this point look dire.
Public debt now stands at 130% of GDP, against the IMF’s threshold for sustainability of 40%. To get to that level, Mozambique would have somehow to make almost $9 billion of debt disappear. Thankfully, and despite what the government’s advisors say, that does not appear to be a precondition to normalising relations with the IMF.
The presentation the government made to its creditors in London yesterday, with its upbeat assessments of the country’s prospects as a gas exporter - is simply asking them to make the same mistake again. Or, in the case of EMATUM investors who fell for the swap deal in March, for the third time.
Conclusions
In 2014 Mozambique was a Poster Child
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Gordhan Squeezes Taxpayers to Avoid South Africa Junk Rating Africa |
South Africa will increase taxes and limit spending as it tries to fend off a junk credit rating after signaling it will miss budget deficit, debt and growth targets for the next three years.
Additional taxes, details of which will be announced in February, will raise an extra 43 billion rand ($3.1 billion) over the next two years, while the government’s expenditure ceiling will be trimmed by 26 billion rand, Finance Minister Pravin Gordhan said in his mid-term budget speech Wednesday in Cape Town. He lowered growth forecasts until 2018 and projected wider fiscal deficits.
The Treasury forecasts a fiscal gap of 3.4 percent of gross domestic product in the current year, and that it will narrow to 2.7 percent by March 2019. The February budget targeted a deficit of 3.2 percent this year, 2.8 percent in fiscal 2018 and 2.4 percent the year after that. The growth forecast was trimmed by 0.4 percentage points for each year until 2018, with an expansion of 0.5 percent projected this year, rising to 2 percent by 2018.
The growth slowdown “reflects global realities -- a protracted slowdown in trade, lower commodity prices and a high risk of external volatility,” the Treasury said. “It is also the result of continued structural constraints and low levels of investor confidence. Perceptions of elevated political risk and concerns about the ability of public institutions to make decisions on difficult trade-offs and manage change have undermined confidence.”
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Three investors lined up to buy Crane Bank - government Africa |
The government has confirmed that at least three prospective investors have already expressed interest in acquiring the troubled Crane Bank. Finance minister, Matia Kasaija, told a meeting organised by the Uganda Bankers Association (UBA) yesterday. Mr Kasaija said government would run the bank until the right investor is found.
“We are going to run that bank and it will survive. Once it has survived, we have already seen people who want to come in and invest some money. We already have three suitors who want to come and put in money. The bank will remain. No bank is going to be closed,” he said.
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@KenyaAirways reports H116 Loss after tax 4.783b Earnings here Kenyan Economy |
Par Value: 5/- Closing Price: 6.75 Total Shares Issued: 1496469035.00 Market Capitalization: 10,101,165,986 EPS: -17.53 PE: -0.385
H1 Revenue 54.748b vs. 56.720b -3.477% H1 Direct costs [32.758b] vs. [34.794b] -5.852% H1 Fleet ownership costs [8.497b] vs. [13.143b] -35.350% H1 Overheads – Other [10.446b] vs. [10.959b] -4.681% H1 Total operating costs [53.799b] vs. [58.896b] -8.654% H1 Operating profit/ [Loss] 949m vs. [2.176b] +143.612% H1 Finance costs [3.752b] vs. [3.476b] +7.940% H1 Fuel derivatives [251m] vs. [1.312b] -80.869% H1 Other costs [1.677b] vs. [4.897b] -65.755% H1 Loss before income tax [4.726b] vs. [11.856b] +60.138% H1 Loss after tax [4.783b] vs. [11.952b] +59.982% H1 Net profit margin [8.71%] vs. [21.1%] -12.400% H1 Loss per share [3.20] vs. [7.99] -59.950% H1 Gain/ [loss] on hedged exchange differences on borrowings 1.545b vs. [15.047b] -110.268% H1 Total comprehensive income for the period [3.238b] vs. [27.898b] -88.393% Total assets 158.568b vs. 158.415b +0.097% Total equity [38.905b] vs. [35.667b] -9.078% Cash and cash equivalents at the end of the period 12.425b vs. 7.467b +66.399%
Company Commentary
Kenya Airways records an operating Profit of 949m - Passenger numbers grew 4.2% to 2.2m Cabin Factor +3.3% to 71.5% 14 percentage points increase in Intra Africa Traffic Yields down 7% Operating margin improved by 5.6 percentage points
Conclusions
An Improvement in the Trajectory but the big ticket challenges remain -
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Drought Threatens Output Target in World's Biggest Tea Exporter Kenyan Economy |
Tea production in Kenya, the world’s biggest exporter of the black variety of the leaves, may miss the government’s targeted 25 percent increase this year as an extended dry spell damages the crop. Coffee output will also be hurt.
The La Nina weather phenomenon, which causes dryness in eastern Africa, is replacing the rain-inducing El Nino effect that resulted in heavy rainfall from October to December and helped boost tea output in the Central and Rift Valley growing regions by more than a third in the first eight months of 2016 from a year earlier.
La Nina may cut precipitation in the final three months of this year, and “the tea leaves are becoming dry and falling off,” Johnson Irungu, the Agriculture Ministry’s director of crops, said in an Oct. 25 interview in the capital, Nairobi. Production volumes shrank after the bumper harvest in the first quarter, meaning the industry may fall short of a 500 million-kilogram (1.1 million-pound) government target for the year, he said.
Kenya is the world’s largest grower of the leaves after China and India, but exports 95 percent of its output, making it the biggest shipper of the crop. Last year, the East African nation produced 399.5 million kilograms and made $1.24 billion from exports. It harvested 308.1 million kilograms in the first eight months of 2016.
The average African tea price dropped 16 percent this year to $2.29 per kilogram at the latest weekly auction in Mombasa, the world’s biggest for the leaves. Revenue may decline this year if prices at the auction don’t pick up, Irungu said.
Kenya’s coffee crop is also being damaged by the drought, according to industry officials.
“If the dry spell continues then coffee leaves will fall off and the coffee quality and quantity will drop further,” Coffee Research Institute Director Gichuru Elijah said in an interview. “We are slightly worried.”
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N.S.E Today |
Internationally Bond Yields in the UK and in Europe have been backing up, admittedly off seriously repressed levels. The Dollar is at a 7 month high as Investors bet a rate hike is a Racing Certainty in December in the US. President Zuma might well have met a worthy Adversary in his Finance Minister Pravin Gordhan who is making the President look very exposed in a Sun Tzu way. If the President is brought under control then the rand could rally very sharply. The Nairobi All Share firmed +0.24 points to close at 136.82. The Nairobi NSE20 Index ticked -3.14 points lower to close at 3201.55. Equity Turnover clocked 283.17m and has been on mute in October.
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N.S.E Equities - Commercial & Services |
Kenya Airways reported H1 16 Earnings this morning. H1 16 Revenue shaded -3.477% lower to register 54.748b. Kenya Airways reported an operating Profit of 949m. The Loss before Income Tax improved +60.138% to clock -4.726b. Passenger numbers grew +4.2% to 2.2m.
“Restoring KQ will not happen automatically. We have to look at areas like on-time performance, our debt, pricing and the destinations we fly to. KQ can be salvaged. It is a great airline with a new fleet.” Chairman Michael Joseph.
Clearly this is a significant improvement although Kenya Airways was unable to snap a sequence of losses. Total Equity remains negative at -38.905b. though Cash and cash equivalents improved +66.399% to clock 12.425b
The Trajectory has improved but it remains a big turnaround. Kenya Airways which had surged +37.75% to a 15 month high in 2016 through this morning, Kenya Airways retreated -8.148% to close at 6.20 and traded 1.936m shares. The Point to note is that Kenya Airways was trading at 6.75 and unchanged at the Finish Line, signalling this bout of profit taking might prove very short.
Safaricom closed unchanged at 20.00 and traded 6.139m shares worth 122.764m. I attended the Betway Kenya Launch yesterday in the company of the CEO of Safaricom [amongst others] and Betting has certainly lifted SMS Revenues into strong double digit growth territory. Safaricom report H1 2016 Earnings November 4th.
Marshalls EA surged by the daily limit of +9.75% to close at 9.00 and traded the grand total of 100 shares giving a ticket value of $9.00. Marshall's reported a FY Loss for the Year of 17.431m and Cash and cash equivalents at the end of the year declined -33.277% to just 7.940m .
Sameer Africa traded a chunky block of 812,900 shares to close unchanged at 2.50.
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N.S.E Equities - Finance & Investment |
Barclays Bank rebounded 1.89% to close at 8.05 on heavy volume action of 4.336m shares. Barclays Bank is -30.51% on a Total Return basis through 2016 and evidently someone is calculating this might be overdone. Barclays Bank trades on a Trailing PE of just above 5.00. Standard Chartered firmed +1.604% to close at an 8 week High of 190.00. StanChart traded 18,200 shares with Buyers outpacing Sellers by a wide margin. StanChart has been seen as a Safe Haven for Investors during this period of enormous turbulence and downside price action in the banking Sector.
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N.S.E Equities - Industrial & Allied |
KenGen eased -0.84% to close at 5.90 and was well traded with 2.7m shares changing hands. KenGen posted strong Earnings with meaningful double digit gains in Revenue. Investors will lift the price when they start to see through the dividend pass.
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