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Satchu's Rich Wrap-Up
Monday 14th of November 2016

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Macro Thoughts

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14-NOV-2016 :: Here comes President Trump @TheStarKenya

Donald Trump won the US election all ends up and for the first time
since 1928 won the Presidential vote, the Senate, the House and will
decide the Supreme Court's composition. It is a breath-taking win
especially when you consider that Trump was an insurgent candidate and
his Make America Great Again movement similarly an insurgent movement.

Trump confounded the pollsters and the traditional media echo chamber
and was ranked a rank outsider at 4-1 in a two horse race just a few
short hours before the final result was known. The result in the US
mimicked the Brexit result and what is clear to me is that we are
watching a populist wave or zeitgeist (some have characterised it as a
''whitelash'') which has now swept the United Kingdom and the US and
has Italy (where Matteo Renzi has called for a Referendum), France
(where Marine Le Pen is the most popular politician by a street) and
the Netherlands all in its crosshairs.

Comic-turned-politician Beppe Grillo, co-founder of Five Star, said

“This is the deflagration of an epoch. It’s the apocalypse of this
information system, of the TVs, of the big newspapers, of the
intellectuals, of the journalists.”

And this is another important point, traditional media has lost its
position of control. It’s been upended by the internet which allowed
insurgent politics to broadcast over the top.

Returning to President-elect Trump who deployed linguistic warfare
with devastating effect. The names he gave his opponents — Crooked
Hillary, Lyin’ Ted, Little Marco, ‘Low-energy’ Jeb — were devastating.

The open question now is how many of his campaign promises will he
fulfill and which ones because on a continuum they are some serious
outlier promises. The US Stock market slumped by its biggest single
percentage drop in the pre-market on Wednesday before taking back the
entire precipitous fall and closing at a fresh all time high by the
end of the day. The catalyst for that spectacular recovery was Trump's
victory speech which many took to signal a pivot. The speech was
conciliatory and the flavour was captured in comments Trump made when
he met with President Obama

US President-elect Donald Trump has said it was a "great honour" to
meet President Barack Obama for transition talks at the White House.

Mr Obama said he was "encouraged" by their "excellent" and
"wide-ranging" conversation, lasting over an hour.

Ian Bremmer of Eurasia Group opined that the Trump victory was "the
most profound domestic political transition of my lifetime."

“There are three aspects of American leadership that will be affected
by the Trump administration and the growing geopolitical recession:
the United States' role as world policeman, architect of global trade,
and cheerleader of global values.”

I am a Seller of Ian Bremmer's rather hyperbolic critique. Putting a
Stop-Loss into play with the Syrian rebels (who are a bunch of
ne'er-do-wells and paid mercenaries), reaching out to Vladimir Putin
indicate a trend-change in the way the US engages with the rest of the
World strikes me as an entirely sensible mid course correction. As
Trump has indicated China is the main adversary and its difficult to
understand why the US was seeking to send Vladimir into Xi Jinping's
ready embrace. To triangulate China, the US needs Russia on its side
and not on China's. Therefore, I see Trump playing a Ronald Reagan

From an economic and trade perspective, I expect Trump to be much more
aggressive with China. I think the QE [Quantitative Easing] consensus
is now a busted Flush. Remember a vast swathe of the pro-Brexit and
pro-Trump camps were the older white folks who have seen their savings
evaporate in the world of negative interest rates. This is the point.
They want a return on their savings and Theresa May and Trump get
that. The bond markets get it as well.

The US 30- year yield surged 32 basis points higher last week which is
the biggest weekly rise in seven years. There is more to come as the
cost of money is normalised. I like the tax cutting agenda. My theory
remains (and interestingly was validated a few years ago in Russia)
that when you reduce taxes to a level that folks feel is just and
equitable, The tax take surges because its just more convenient to pay
it. The infrastructure spend is long overdue. Higher interest rates
are going to propel a big Dollar rally from here on in and its only
just getting going. Emerging markets currencies which took a big
tumble last week are set to crater, I am afraid.

Let me leave with you a Transcript from the Sidney Lumet movie Network (1976)

''You think you merely stopped a business deal. That is not the case.
The Arabs have taken billions of dollars out of this country, and now
they must put it back! It is ebb and flow, tide and gravity. It is
ecological balance'' Sidney Lumet Network 1976.

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One's relationship to windows changed in the city. A window was the border through which death was possibly likeliest to come.

One’s relationship to windows changed in the city. A window was the
border through which death was possibly likeliest to come. Windows
could not stop even the most flagging round of ammunition: any spot
indoors with a view of the outside was a spot potentially in the
crossfire. Moreover, a windowpane itself could so easily become
shrapnel, shattered by a nearby blast, and everyone had heard of
someone or other who had bled out after being lacerated by shards of
flying glass.

The effect doors had on people altered as well. Rumors had begun to
circulate of doors that could take you elsewhere, often to places far
away, well removed from this death trap of a country. Some people
claimed to know people who knew people who had been through such
doors. A normal door, they said, could become a special door, and it
could happen, without warning, to any door at all. Most people thought
these rumors to be nonsense, the superstitions of the feeble-minded.
But most people began to gaze at their own doors a little differently

They did not hear the agent approaching—or perhaps he had been there
all along—and they were startled by his voice just behind them. The
agent spoke softly, almost sweetly, his whisper bringing to mind that
of a poet or a psychopath. He instructed them to stand still and not
to turn around. He told Nadia to uncover her head, and when she asked
why he said it was not a request.

Nadia had the sense that he was extremely close to her, as if he were
about to touch her neck, but she could not hear his breathing. There
was a faint sound in the distance, and she and Saeed realized that the
agent might not be alone. Saeed asked where the door was and where it
led to, and the agent replied that the doors were everywhere, but
finding one the militants had not yet found, a door not yet guarded,
that was the trick, and might take a while. The agent demanded their
money and Saeed gave it to him, uncertain whether they were making a
down payment or being robbed.

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Asked whether he thought his rhetoric had gone too far in the campaign, Mr. Trump responded: "No. I won."
Law & Politics

Although he wasn’t specific, Mr. Trump suggested a shift away from
what he said was the current Obama administration policy of attempting
to find moderate Syrian opposition groups to support in the civil war
there. “I’ve had an opposite view of many people regarding Syria,” he

He suggested a sharper focus on fighting Islamic State, or ISIS, in
Syria, rather than on ousting Syrian President Bashar al-Assad. “My
attitude was you’re fighting Syria, Syria is fighting ISIS, and you
have to get rid of ISIS. Russia is now totally aligned with Syria, and
now you have Iran, which is becoming powerful, because of us, is
aligned with Syria. … Now we’re backing rebels against Syria, and we
have no idea who these people are.”

If the U.S. attacks Mr. Assad, Mr. Trump said, “we end up fighting
Russia, fighting Syria.”

On a different foreign hot spot, the Israel-Palestine situation, which
Mr. Trump called “the war that never ends,” he said he hoped to help
craft a resolution between them.

“That’s the ultimate deal,” Mr. Trump said. “As a deal maker, I’d like
to do…the deal that can’t be made. And do it for humanity’s sake.”

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Donald Trump Picks Reince Priebus as Chief of Staff and Stephen Bannon as Strategist
Law & Politics

President-elect Donald J. Trump on Sunday chose Reince Priebus, the
chairman of the Republican National Committee and a loyal campaign
adviser, to be his White House chief of staff, turning to a Washington
insider whose friendship with the House speaker, Paul D. Ryan, could
help secure early legislative victories.

In selecting Mr. Priebus, Mr. Trump passed over Stephen K. Bannon, a
right-wing media provocateur. But the president-elect named Mr. Bannon
his senior counselor and chief West Wing strategist, signaling an
embrace of the fringe ideology long advanced by Mr. Bannon and of a
continuing disdain for the Republican establishment.

The dual appointments — with Mr. Bannon given top billing in the
official announcement — instantly created rival centers of power in
the Trump White House.

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Asia Leaders Race to Decode Trump on the Future of Obama's Pivot
Law & Politics

An article published last week by Trump campaign advisers Alexander
Gray and Peter Navarro said Obama’s policy was “talking loudly but
carrying a small stick,” with the deployment of warships to Singapore
and marines to Darwin “token gestures.” Under Trump the Navy would be
expanded to “reassure our allies that the United States remains
committed in the long term to its traditional role as guarantor of the
liberal order in Asia.”

With his campaign slogan to “Make America Great Again,” Trump can
ill-afford to pull back from Asia and the Pacific. The region boasted
six of the top 15 U.S. export markets last year, its companies selling
everything from power systems to fuel, high quality foods and
financial services. More than $5 trillion in trade passes each year
through the South China Sea, of which $1.2 trillion is U.S. related.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0799
Dollar Index 99.461
Japan Yen 107.39
Swiss Franc 0.9913
Pound 1.2560
Aussie 0.7547
India Rupee 67.515
South Korea Won 1168.47
Brazil Real 3.3918
Egypt Pound 16.6120
South Africa Rand 14.3388

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Trump managed to cause significant divergences in Markets last week: Will Trump make the USD great again? Aurelija Augulyte
Law & Politics

Trump managed to cause significant divergences in Markets last week:
despite the base commodity prices, inflation breakevens, equity prices
shooting up, the USD outperformed broadly. Will Trump make the USD
great again?

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Prime Minister Narendra Modi has roiled India with his shock invalidation of all the country's Rs500 and Rs1,000 notes, which account for about 86 per cent of the value of currency in circulation. @FT
Emerging Markets

In a full-page, front-page newspaper advertisement on Sunday morning,
Kotak Mahindra Bank urged middle-class Indians with debit or credit
cards to “lend a helping hand to those without bank accounts”, who
have been hit hard.

“Step in and swipe your card for them at a store. Or make a digital
cash transfer for someone,” the ad urged. “Together, let’s progress
towards cashless India.”

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Hybrid Wars: Strategies against Africa By Andrew Korybko

This tinderbox of a locale is defined as the convergence area between
Chad, the Central African Republic (CAR), Sudan, and South Sudan, and
it’s marked by an array of interlinked involvement between state and
non-state actors in each other’s affairs.

he next most conflict-prone area of regional overlap is the
mountainous area that straddles the DRC and Uganda, Rwandan, and
Burundian borders. After the end of the Second Congo War (“Africa’s
World War”), Ugandan and Rwandan pro- and anti-government militia
groups ended up controlling this part of the DRC and seizing the
profitable mining deposits located here. There’s a lot of legal and
illegal cross-border traffic between the two sides, and it’s well
known that conflicts from one part of the mountains could easily spill
over to the other due to the well-established economic and demographic
connections that link them. Burundi figures into the equation because
it’s the ‘weak man of East Africa’, a recent civil war state that is
now being pushed back to the brink as part of the US’ Hybrid War
agenda against China

The next interregional conflict overlap in Africa deals with terrorist
groups in the Sahara, in particular the interplay between
transnational militant organizations operating in the broad expanse
between Mali, Mauritania, Algeria, Niger, and Libya. The NATO War on
Libya destroyed the most prosperous and stable state in Africa and was
the catalyst for destabilizing the rest of the aforementioned states
‘downstream’ via the newly opened weapon and militant channel that was
created in the former Jamahiriya.

Formerly part of the British Empire and administered together with
Zambia and Zimbabwe as a member of the “Central African Federation” in
the closing days of colonialism, Malawi is categorized as part of the
Southern Cone sphere of regional influence because most of its
international trade runs through Mozambique. The landlocked country is
one of the world’s poorest and least-developed nations, and the
state’s dire poverty has created a situation where anti-government
sentiment can be easily manipulated.

While Malawi isn’t directly a part of China’s larger integrated Silk
Road network in Africa, the two countries have quickly moved closer to
one another economically over the past couple of years after the
African state disowned its prior decades-long relationship with
Taiwan, thus raising the covert consternation of the US and pushing
Washington to order its top diplomat in the country to prepare for a
coup and possible Hybrid War attempt.

Malawi’s geopolitical position is such that any large-scale
destabilization within the country’s borders could easily spread to
Mozambique, but most important for the research’s focus, it could also
just as likely move northwards to Zambia and Tanzania, two pivotal
countries that are involved in China’s transcontinental Silk Road

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Zimbabwe Life after Bob Economist

IN MANY of the poorest African dictatorships of recent decades, the
best-paved road ran from the presidential palace to the airport, in
case the Big Man and his entourage needed to escape in a hurry. That
is still the case in Harare, Zimbabwe’s capital, where the president’s
cronies know that they are not universally popular.

Some leading figures in ZANU-PF, the ruling party, are said to have
shipped belongings abroad already. Some apparently keep bags packed
for the moment that Robert Mugabe, the 92-year-old president who has
ruled for 36 years, keels over or is pushed aside in a palace coup.
Others are said to be sleeping in different places every night, to
confound potential assassins or soldiers who they think might be sent
to kill or arrest them.

Recently he is said to have delayed the start of a cabinet meeting
because he was waiting for Joice Mujuru to arrive, forgetting that he
had fired her as vice-president two years ago.

Old habits die hard. Mr Mugabe’s government has again been spending
too much. Despite solemn promises to the IMF to come close to
balancing its budget, the deficit this year will be about $1bn, a
massive 8% of GDP. It has been burning through its dollar reserves at
such a clip that earlier this year it seemed unable to pay civil

But the Reserve Bank of Zimbabwe can still be creative. It came up
with a ploy to “print” American dollars by filching them from accounts
in Zimbabwean banks and replacing them with worthless IOUs. Thus it
turned each dollar into two dollars: one in electronic form in a bank
(one might call it the Electronic Zimbabwe Dollar, or EZD) and the
second a normal dollar that the government gets to spend.

Although Zimbabwe does not officially have its own currency, its EZD
is behaving a lot like one. It can be used at home (in electronic
format) but not abroad. When banks ask the central bank for real
dollars to pay for imports they wait months for the money, if they get
it at all. Black-market dealers now convert electronic dollars into
real ones at a premium of 10-15%. Many market traders now insist on
being paid in cash. Airlines are doing the same.

How long can all this last? The soldiers who prop up Mr Mugabe’s
regime are said to have insisted on being paid in real cash, not funny
electronic dollars. Imported goods are running out. Inflation will
soon reflect the growing spread between real dollars and electronic

Zimbabweans have long yearned for the post-Mugabe era. Sadly, it will
probably not mean a restoration of real democracy. And cleaning up the
mess Mr Mugabe has made will take years.

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25-JUL-2016 Countries like Zimbabwe feel like they are right at the Edge that Hunter S. Thompson described

“The Edge...There is no honest way to explain it because the only
people who really know where it is are the ones who have gone over''

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Development Minister Gerd Mueller said Germany would in coming weeks release details of what he called a new "Marshall Plan with Africa''

We have to invest in these countries and give people perspectives for
the future,” he told a news conference.

“If the youth of Africa can’t find work or a future in their own
countries, it won’t be hundreds of thousands, but millions that make
their way to Europe.”

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"Kabila has performed a coup d'etat against himself by signing that agreement (to delay elections), because he made an oath to protect the constitution." Etienne Tshisekedi,

Valentin Mubake, Tshisekedi’s political adviser, said civil war was “a
predictable consequence” of the government’s delaying tactics.

“Elections are the only solution. Anything else will lead to war. The
people will take to the streets. Kabila will kill one or two million
of them but he won’t be able to kill 70 million,” he said.

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Julien Paluku, governor of DRC's North Kivu province, said Ugandan authorities no longer knew the whereabouts of Sultani Makenga, who was the military chief of the M23 rebellion.

"We were in contact with the Ugandan intelligence services who
confirmed that, since Friday, ex-Colonel Makenga may have fled and the
Ugandan services have not been able to locate him," Paluku told
Reuters on Saturday.

Julien Paluku, governor of Democratic Republic of Congo's North Kivu
province, said Ugandan authorities no longer knew the whereabouts of
Sultani Makenga, who was the military chief of the M23 rebellion.

"We were in contact with the Ugandan intelligence services who
confirmed that, since Friday, ex-Colonel Makenga may have fled and the
Ugandan services have not been able to locate him," Paluku told
Reuters on Saturday.

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Eskom CEO Brian Molefe to Step Down Following Gupta Graft Report

Brian Molefe, the chief executive officer of South Africa’s
state-owned power utility, said he will leave Eskom Holdings SOC Ltd.
following the release of a report by the nation’s graft ombudsman into
the influence of the wealthy Gupta family on the state and the

Molefe, who joined Eskom in April 2015, was accused in a report by the
Public Protector published Nov. 2 of favoring the Gupta family, which
is in business with President Jacob Zuma’s son, by handing out
coal-supply contracts and helping them buy Optimum Coal Holdings Ltd.
He and Eskom deny wrongdoing.

“Brian is the fallen angel for investors,” said Peter Attard Montalto,
a London-based economist at Nomura International Plc. He is “now
implicated in alleged grand corruption and rent extraction.”

Molefe is leaving “in the interests of good corporate governance,” he
said in a statement e-mailed by the Johannesburg-based power utility
Friday. “I do so voluntarily.”

Mobile-phone records show Molefe called Ajay Gupta 44 times from
August last year through March, while Gupta called the Eskom CEO 14
times, according to the report.

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Rand Set for Biggest Weekly Slump Since August as Bonds Dumped

South Africa’s rand extended losses to a third day and headed for the
biggest weekly slump since August on concerns that Donald Trump will
pursue policies that will spur capital outflows from developing
economies and weaken their exports.

The rand fell as much as 2.5 percent before trading 1.4 percent weaker
at 14.3120 per dollar by 3:30 p.m. in Johannesburg. The weekly decline
of 5.1 percent is the most since the five days ended Aug. 26, when
local markets were roiled by concerns that Finance Minister Pravin
Gordhan would be arrested. The most the rand had lost before that was
in December, when President Jacob Zuma fired then-Finance Minister
Nhlanhla Nene. Three-month implied volatility on the rand is at the
highest since Oct. 17 and the most among emerging markets.

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Tullow, Total's Uganda Oil Exports Face Delays on Infrastructure

Output from Ugandan crude deposits being developed by companies
including Tullow Oil Plc and Total SA is unlikely to be exported as
soon as the nation expects because of the scale of the infrastructure
projects required to transport the fuel out of the country.

The government of Uganda, where oil was discovered in 2006, has said
it expects to begin shipping crude within five years. To do that, it
must overcome challenges facing other countries in the region like
Mozambique and Tanzania, where a lack of finance and technical
capacity to build multiple, capital-intensive infrastructure projects
is delaying the start of natural-gas production.

Landlocked Uganda has an estimated 1.7 billion barrels of recoverable
oil at fields in the Lake Albert basin that the government expects
Tullow, Total and China’s Cnooc Ltd. to start pumping by 2021. The
government has estimated it will receive $43 billion of revenue from
the resource over 25 years.

Developing the fields to commercial production requires about $8
billion, though engineering design work on the project has “yet to
start,” said George Cazenove, a spokesman for Tullow. For production
to start in 2021, Tullow would have to make a final investment
decision on the project by 2018, according to Cazenove. The crude
would then need to be ferried along a yet-to-be constructed
1,400-kilometer (870-mile) pipeline to the Indian Ocean port of Tanga
in neighboring Tanzania. The government this week opened a tender for
surveys of the route for the conduit.

“Market realities will also likely contribute to delays,” with crude
prices having dropped 45 percent over the past two years .

“Low oil prices will be a drag on project timelines as operators
grapple with a difficult financing environment,” Allenson said.

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Hedge Funds Line Up Against Mozambique in Tuna Bond Battle

Hedge funds and some of the world’s biggest emerging-market bond
investors are girding for a fight with Mozambique and its other

The country’s attempt to reach a restructuring agreement by the end of
the year suffered a blow when a group of five investors, who hold 60
percent of its $727 million of Eurobonds, said the notes should be
treated differently from loans to two state companies and talks
couldn’t begin until an International Monetary Fund program was in
place. Mozambique wanted to negotiate with creditors as one group,
while the Washington-based lender has said a deal with the bond and
loan holders should come first.

The move by the investors, who include Franklin Templeton and New
York-based hedge fund Greylock Capital Management LLC, came two weeks
after the government said it needed to restructure around $2 billion
of foreign debt, including the Eurobonds, which were sold barely six
months ago in a swap for more expensive debt owed by a state
tuna-fishing business known as Ematum. Yields on the sovereign
securities, due in January 2023, soared by more than 900 basis points
to almost 25 percent and overtook Venezuela’s to become the highest in
the world.

“It’s not the fault of bondholders and they shouldn’t expect any
willingness by us to accept” writedowns, Lutz Roehmeyer, who helps
oversee about $12 billion in assets at Landesbank Berlin Investment,
including Mozambique’s Eurobonds, said by phone. “They should go into
default on those loans to the state companies. There’s no need to pay
the loans on time.”

Mozambique, one of the world’s poorest nations, went from being lauded
two years ago by the IMF’s Managing Director Christine Lagarde to
being ravaged by a combination of excessive borrowing, plummeting
commodity prices and delayed investments in massive natural gas
fields. The crisis worsened in April when the IMF and other donors cut
aid after they discovered around $1.4 billion of secret loans issued
several years ago by two state firms, Proindicus and Mozambique Asset

Finance Minister Adriano Maleiane was “visibly stressed” when he made
a presentation to investors on Oct. 25, according to Anne Fruhauf, an
analyst at New York-based Teneo Intelligence. Public debt has rocketed
from 40 percent of gross domestic product in 2012, the year before
Mozambique took on the loans, to 113 percent, higher than anywhere in
sub-Saharan Africa apart from Eritrea and Cape Verde, according to the
IMF. Mozambique forecasts its net foreign reserves will be $1.1
billion next year, down almost 60 percent from 2014.

The government said it would have no money left over for debt payments
in 2017, which include a $60 million coupon on the Eurobond due Jan.
18. In Maputo, the capital, many stores are empty and Mozambicans are
battling inflation of 26 percent. Since the start of 2015, the local
metical has lost 58 percent of its value against the dollar, making
external debt more expensive to service.

“Mozambique is in a really, really difficult place,” Alex Vines, head
of the Africa Program at London-based Chatham House, said in an
interview in Johannesburg on Nov. 4. “They’re on this cliff-edge. They
don’t have money.”

The creditor group comprises Franklin Templeton and AllianceBernstein
LP, which between them manage $1.2 trillion of assets, and three hedge
funds: Greylock and NWI Management LP, both New York-based, and
London’s Pharo Management LLC. They called on other bondholders to
join their group, but said it will be closed to the loan investors.
Charles Blitzer, who spent 8-1/2 years at the IMF, most recently as
assistant director in the capital markets department, is advising the

The loans to Proindicus and MAM, due in 2020 and 2021 respectively,
were originally provided by Credit Suisse Group AG and Russia’s VTB
Group, though the banks syndicated some of the debt. Mozambique is
being advised by Lazard Freres, an investment bank, and law firm White
& Case.
What is Mozambique trying to do?

Maleiane and President Filipe Nyusi want to delay debt payments until
the country starts profiting from offshore gas fields that were
discovered by Anadarko Petroleum Corp. and Eni SpA at the start of the
decade. Until then, money will be tight. In its presentation,
Mozambique said exports are “expected to significantly increase in the
early 2020s,” with government revenue rising to $12.3 billion in 2025
from $2.5 billion today.

“They need to buy themselves time,” Phillip Blackwood, a managing
partner at EM Quest Ltd., which advises Denmark’s Sydbank A/S on about
$2.5 billion of emerging-market assets including Mozambique’s bonds,
said by phone from London.

Mozambique hoped to talk to investors this month before concluding a
framework for a “debt resolution proposal” in December, according to
the presentation. That was meant to help it negotiate new funding from
the IMF early next year. The formation of the creditor group and its
demands mean that timetable probably won’t be kept.

“There’s not a basis for trust,” said Roehmeyer. “I think it’ll take
roughly half to three-quarters of a year to sort out.”

The bond group has also said that it won’t start talks until an audit
of Proindicus, MAM and Ematum is completed. The government has chosen
New York-based risk analysis firm Kroll to carry that out.

A spokesman for the Finance Ministry said Nov. 3 in an interview that
the government wants to extend its maturities to 2023 and 2024, rather
than impose outright losses on creditors. A day later, the ministry
backtracked, saying in a statement it was looking at all options.

The bondholders, who say they already made a concession earlier this
year when they agreed to swap out of the Ematum notes into the
longer-dated Eurobond, seem in no mood to back down. Some are also
calling on Mozambique to cut its spending.

“The holders of the Eurobond are on firmer footing because they’ve
already taken a restructuring, whereas the loan holders haven’t,”
Blackwood said. “The loan holders really need to restructure and push
out their payments, as the bondholders already have. Mozambique also
has to make some budget cuts. It can’t just say that there’s no money

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"Depositors are afraid of placing deposits with zombie banks, so they don't get funding to grow their book and grow out of the zombie loans"

"Depositors are afraid of placing deposits with zombie banks, so they
don't get funding to grow their book and grow out of the zombie
loans," said Kokkie Kooyman, a portfolio manager at Cape Town-based
Denker Capital.

"The zombie loans on the balance sheets prevent loans for new projects
that will allow the country to grow."

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Moody's has downgraded Shelter Afrique's long-term issuer rating from Ba1 to Ba3, and placed it on review for further downgrade pending an internal investigation.
Kenyan Economy

Moody’s cited the housing financier’s deteriorating financial position
marked by a weaker liquidity position as reason for its decision.

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East African Portland Cement FY16 PAT -42.074% Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           27.00
Total Shares Issued:          90000000.00
Market Capitalization:        2,430,000,000
EPS:            46.06
PE:                 0.58

A key provider of Cement and Cement products in Kenya for over 70 years.

Full Year Results through 30th June 2016

FY Revenue 8.871456b versus 8.417621b +5.39%
FY Cost of Dales 7.283948b versus 6.591115b +10.511%
Gross Profit 1.587508b versus 1.826506b -13.084%
FY Other Operating Income 78.768m versus 208.751m
FY Expenses [3.250847b] versus [2.612836b] +24.41%
Other Operating Expenses [1.015803b] versus [347.202m]
FY Loss from Operations [1.584571b] versus [0.577759b]
FY Finance Costs [618.125m] versus [369.327m]
FY Exchange [Loss] Gain [305.807m] versus 178.834m
Gain on Land compulsorily acquired by Government for SGR 0 versus 836.962m
Fair Value Gain on Investment Property 6.238797b versus 7.273113b
FY PBT 3.734752b versus 7.342071b -49.13%
FY PAT 4.145755b versus 7.157070b -42.074%
FY EPS 46.06 versus 79.52


The Cement business served up a -1.584b loss for the FY 16.
The Fair Value Gain on Investment Property was worth +6.238b

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Williamson Tea reports H116 loss After Tax of [263.114m] Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           182.00
Total Shares Issued:          17512640.00
Market Capitalization:        3,187,300,480
EPS:             40.3
PE:                 4.516

Williamson Tea reports H116 Earnings through 30.09.2016 versus through

H1 Turnover 1.731368b versus 1.529611b
[Loss] Profit from Operations before biological assets valuation
[96.276m] versus 207.536m
[Decrease]/Increase in fair value of biological assets [200.478m]
versus 159.216m
Finance [costs]/Income [28.438m] versus 120.312m
Share of results of associated Companies [50.685m] versus 56.748m
[Loss] profit before Taxation [375.877m] versus 543.812m
Tax credit/[charge] 112.763m versus [163.144m]
[Loss] profit after Tax [263.114m] versus 380.668m
[Loss] EPS [13.21] versus 41.66


Turnover +13% due to higher crops
Higher crops throughout tea growing areas depressed prices to very low
levels last seen briefly in 2014
Cost of production continues to rise which when coupled with low
prices has resulted to a loss
In June 2016 an Industrial Court judgement awarded over 50% wage and
benefit increases to our workers for years 2014 and 2015. Award was
challenged by the Tea Industry and is awaiting Judgement by the court
of Appeal
The unknown Outcome of the next judgement adds considerably to the
uncertainty of the next 6 months
''In short the outlook is gloomy''


Buy on dips. NAV is a multiple of the share price, notwithstanding the
earnings dip.

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Kapchorua Tea reports H116 Loss after Tax 89.686m Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           82.00
Total Shares Issued:          7824000.00
Market Capitalization:        641,568,000
EPS:             29.95
PE:                 2.738

Kapchorua Tea reports H116 Earnings through 30.09.2016 versus through 30.09.2015

H1 Turnover 675.744m versus 525.742m
H1 [loss] Profit from Operations before biological assets valuation
[60.501m] versus 43.870m
H1 [Decrease]/Increase in fair value of biological assets [62.328m]
versus 50.634m
[Loss]Profit before Taxation [128.123m] versus 143.448m
[Loss] Profit after Taxation [89.686m] versus 100.414m
H1 EPS [11.46] versus 25.67


Turnover increased by 29% due to higher crops.
In short the outlook is gloomy


NAV is 272.00 but in fact is a lot higher -
Buy on dips

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Kenya Shilling versus The Dollar Live ForexPros
Kenyan Economy

Nairobi All Share Bloomberg -3.91% 2016


Nairobi ^NSE20 Bloomberg -19.22% 2016


3,264.26 +17.54 +0.54%

Every Listed Share can be interrogated here


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

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