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Macro Thoughts

Home Thoughts

“The most important lesson is also the most ironic.” —Ken Kesey

WASHINGTON — President-elect Donald J. Trump’s transition was in
disarray on Tuesday, marked by firings, infighting and revelations
that American allies were blindly dialing in to Trump Tower to try to
reach the soon-to-be-leader of the free world.

One week after Mr. Trump scored an upset victory that took him by
surprise, his team was improvising the most basic traditions of
assuming power. That included working without official State
Department briefing materials in his first conversations with foreign
leaders.

Two officials who had been handling national security for the
transition, former Representative Mike Rogers of Michigan and Matthew
Freedman, a lobbyist who consults with corporations and foreign
governments, were fired. Both were part of what officials described as
a purge orchestrated by Jared Kushner, Mr. Trump’s son-in-law and
close adviser.

The dismissals followed the abrupt firing on Friday of Gov. Chris
Christie of New Jersey, who was replaced as chief of the transition by
Vice President-elect Mike Pence. Mr. Kushner, a transition official
said, was systematically dismissing people like Mr. Rogers who had
ties with Mr. Christie. As a federal prosecutor, Mr. Christie had sent
Mr. Kushner’s father to jail.

Pro-Assad forces have intensified attacks on Syrian rebels, launching
a fierce aerial bombardment of besieged eastern Aleppo and missile
strikes from a Russian aircraft carrier stationed off the coast, the
day after Donald Trump and Vladimir Putin spoke on the phone.

The US president-elect and Russian president discussed “regulating the
conflict in Syria” and the need to combat “international terrorism and
extremism”, Putin’s office said in a statement.

Conclusions

The Rebels are now Dead-Enders

Over and over, the psychiatrists recalled, men would ask, “Why am I
here?” or “What’s my future?” — questions the doctors could not
answer. Sometimes, they said, their work felt futile.

Euro 1.0746
Dollar Index 100.03
Japan Yen 109.06
Swiss Franc 1.0000
Pound 1.2465
Aussie 0.7544
India Rupee 67.725
South Korea Won 1167.50
Brazil Real 3.4429
Egypt Pound 15.452
South Africa Rand 14.1568

Saudi Arabia has warned Donald Trump that the incoming US president
will risk the health of his country’s economy if he acts on his
election promises to block oil imports.

In a sign of the difficulties Mr Trump faces over his campaign pledges
to create “complete American energy independence” from “our foes and
the oil cartels”, Saudi Arabia’s energy minister pointedly reminded
the president-elect that the US “benefits more than anybody else from
global free trade”, adding, “energy is the lifeblood of the global
economy”.

“At his heart President-elect Trump will see the benefits and I think
the oil industry will also be advising him accordingly that blocking
trade in any product is not healthy,” Khalid al-Falih, who is also
chairman of Aramco, the state-run oil company, told the Financial
Times in Marrakesh, where he is leading Saudi Arabia’s delegation in
UN climate talks.

Multinational companies are selling their Venezuelan operations at
hefty discounts - or even giving them away - as they to seek to escape
the OPEC nation's soaring inflation and chronic supply shortages.

Six firms, including General Mills and oil producer Harvest Natural
Resources, have sold operations for as little as half their assessed
value on the companies' books, according to securities filings and
interviews with a dozen people knowledgeable about the deals.

One company, U.S. autoparts-maker Dana, last year sold its debt-laden
Venezuela operations to a local buyer for no cash compensation. Two
multinational corporations - Clorox and Kimberly-Clark - chose instead
to abandon their operations here.

Mexican wall formation  #USDMXN Aurelija Augulyte ‏
https://twitter.com/auaurelija/status/798490302797455360

Frontier Markets

"The Congolese have shown that they can responsibly resolve their
differences," Kabila told lawmakers, to applause that filled the room.

"I warn against and denounce all interference in Congolese affairs.
Our country ... has a right to have its sovereignty respected, and we
will never give that up."

Kabila blamed the violence squarely on his opponents.

"No political agenda will justify violence, still less the loss of
human life," he said. "Trying to take power by the blood the Congolese
people is morally condemnable."

"In some months, the electoral register will be ready and the election
will be held," Kabila said, without giving a date.

Conclusions

Does not appear to be a President who is in a hurry to depart.

The Democratic Republic of Congo’s president urged all the country’s
political opposition to sign an agreement that will keep him in power
until delayed elections are finally held in April 2018.

The accord signed in October between the ruling party and a small
number of opposition groups is the “only way forward,” President
Joseph Kabila said Tuesday in a rare public speech, addressing both
houses of parliament.

“I cannot allow the Democratic Republic of Congo to be taken hostage
by a fringe of the political class,” he said.

The Democratic Republic of Congo’s state-owned copper producer signed
over millions of dollars in future payments to an offshore company
owned by billionaire Dan Gertler, according to advocacy group Global
Witness.

Congo’s Gecamines, which holds a 25 percent stake in the Kamoto
project of Katanga Mining Ltd., instructed the Glencore unit in
January 2015 to transfer the state mining group’s royalties to Africa
Horizons Investment Ltd., Global Witness said Tuesday by e-mail.
Africa Horizons is a unit of Gertler’s Fleurette Group.

“The contract we have seen provides no reason for Gecamines giving
away these royalties,” Pete Jones, a campaigner at the London-based
advocacy group, said in the statement. “Neither Gecamines nor
Gertler’s representatives have told us whether Gecamines received any
payment in return.”

Africa Horizons bought the royalty stream from Gecamines, Fleurette
said by e-mail, while declining to elaborate on the particulars of the
deal, citing a confidentiality agreement.

Conclusions

What good friends they are.

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,
10000?

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

“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.’’
http://www.rich.co.ke/media/docs/038NSX0405.pdf

Conclusions

The Minions are having to pay a price for getting entangled in the Zuma web.

The Presidency needs a war room just to keep track of the daily
scandals, exposés and controversies besieging President Jacob Zuma,
members of his Cabinet and government institutions. On one day, the
news cycle was consumed with another set of charges being laid against
the president, the Minister of State Security fending off revelations
about his involvement in a rhino horn trafficking syndicate, the
disclosure of an irate exchange between the National Director of
Public Prosecutions and the head of the Hawks over Pravin Gordhan’s
prosecution, a parliamentary inquiry into the SABC Board, and Zuma
writing to three National Prosecuting Authority officials asking why
he should not suspend them. How long can this go on? By RANJENI
MUNUSAMY.

Dollar versus Rand 1 Year Chart INO 14.155
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&t=c&a=50&w=1&v=d12

Nigeria All Share Bloomberg -9.72% 2016
http://www.bloomberg.com/quote/NGSEINDX:IND

Ghana Stock Exchange Composite Index Bloomberg -16.27% 2016
http://www.bloomberg.com/quote/GGSECI:IND

The owner of ‘Ourivesaria Imperial’ [Imperial Jewellery Shop] was
kidnapped on Tuesday in Maputo’s Sommershield neighbourhood.

According to Folha de Maputo, the abduction of  Norotam Ramuji took
place around 6:00 pm when five individuals armed with AKM-type
firearms kidnapped the 79-year-old businessman and disappeared without
a trace.

A police source reportedly confirms the incident and says that
investigations are ongoing.

On Monday (November 14), Mahebub Gulamo Rassul, the owner of the
‘Tiger Center’ shopping, escaped an attempted kidnapping as he was
leaving his commercial establishment, located in central Maputo, to go
home after a day’s work.

It is sometimes easy to forget that the Phenomenon of the real time of
Twitter and Social Media is a very recent one. The Velocity of Change
in this regard has been mentioned by Paul Virilio who said;

“Speed now illuminates reality whereas light once gave objects of the
world their shape.”

The new digital Universe has engulfed the World and Kenya is no exception.

I described President-Elect Trump as a c21st Linguistic warfare
specialist and he used linguistic warfare to devastating effect. The
names he gave his opponents — Crooked Hillary, Lyin’ Ted, Little
Marco, ‘Low-energy’ Jeb — were devastating.

Traditional Media has been disrupted and President-Elect Trump and
Brexit confirm that disruption and how Insurgents can broadcast live
and direct and over the Top.

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.”

I have watched Central Bankers for Eternity. I ran interest rate
Trading desks and the Central Banker tends to be the lynch-pin when it
comes to interest rates. The Central Banker sits at the Apex of the
Banking System and so much hinges on his or her skill. The Central
Banker can be described as someone holding a Faberge Egg as all and
sundry try and jostle and make him spill the Egg. Today a Central
Banker has to navigate through an entirely different environment, an
environment where personal abuse is considered par for the course in
this new World of Trump. Dr. Patrick Njoroge who is the Governor of
the Central Bank of Kenya, is a Roman Catholic and a numerary member
of Opus Dei. Dr. Njoroge's credentials are impeccable and the way he
conducts his personal Life should surely be a lode-star for the Public
Service here in Kenya and the African continent. Therefore, the first
point to note is that launching a real-time linguistic warfare
campaign on the Governor and the Central Bank at this juncture is
inaccurate, unfair and in fact inimical to the National Interest.

The Governor is determined to bring the Banking Sector under control,
what is clear is that the Panoply of state Institutions have been slow
to engage at the same speed.

The Banking Sector remains fluid and multi-sided and confidence has
frayed and understandably but as Dr. Njoroge said during the Chase
Bank saga

"None of us have a right to shout fire in a crowded theatre and this
is what happened. We had some individuals who did shout fire and to me
that was very reckless because no bank can sustain the pressure of
everyone trying to withdraw their money at once."

As we scan the Banking Horizon, we can safely say that Paper and
digital trails are impossible to expunge. The Forensics will have the
final word. We have now entered a ''managed'' process of
consolidation. We are surely entering a new Era.

Condoleezza Rice spoke of ''The Birth Pangs of a new Middle East''

Post the Interest rate Bill and the Dubai, Imperial and Chase Bank
developments, we are also watching the birth pangs of a new Banking
Sector here in Kenya. It is impossible for me to imagine a more
qualified Surgeon than Dr. Njoroge to manage this. This is a fact.

Therefore, Lets not lose sight of the main goal which is a robust
Banking Sector optimised to propel Kenya Inc. into the Future.

Par Value:                  0.50/-
Closing Price:           41.00
Total Shares Issued:          665441775.00
Market Capitalization:        27,283,112,775
EPS:             11.75
PE:                 3.489

Group six month Period ended 30th September 2016

H1 Investment and Other Income 8.490289b versus 8.384441b +1.26%
H1 Operating and admin costs [5.130138b] versus [5.068977b] +1.20%
H1 Finance Costs [945.641m] versus [1.260767b] -24.99%
Share of associate profits 345.651m versus 192.264m
H1 Profit before Tax 2.760161b versus 2.246961b +22.83%
H1 Profit after Tax 2.057886b versus 1.907591b +7.87%
H1 EPS 2.57 versus 2.56
Investment Portfolio 62.802b versus 57.021b
Cash and Cash equivalents 5.384b versus 10.197b
Other Assets 17.697b versus 10.836b +63.31%
H1 Borrowings 19.327b versus 16.356b
Company NAV 61.12 versus 59.08

Company Commentary

a challenging macro-environment
Co. recorded a 5% growth in the book value of shareholder funds which
closed at 40.7b
NAV has increased from 13.8 in 2010 to 61.12 as at 30th September 2016
The Key profitability drivers during the period were
1. Consolidation of longhorn Publishers financial results for the first time
2. improved profitability in the Group's Portfolio Companies
3. Lower finance costs as a result of reduced forex losses on US
Dollar denominated borrowings and capitalisation of interest during
construction for the Group's real estate projects
In the prior year the Group completed an exit in Aon Insurance Brokers
limited and disposed of a portfolio of listed securities resulting in
a realised gain of 1.7b. No exit of similar magnitude this reporting
period
Bottling subsidiary invested 1..7b in capital expenditure on a new PET Line
During the Period the Company closed an 18 month bridge facility of
$30m. with FirstRand Bank Limited

Conclusions

They did not repeat the one-off AON extraordinary gain of 1.7b and
therefore this H1 Performance is strong when you account for that
fact.

Nairobi All Share Bloomberg -4.54% 2016
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -19.28% 2016
http://j.mp/ajuMHJ

The yield on Kenya’s $2 billion bond due June 2024 has shot up 170
basis points to 8.54 percent, last time I looked.
This back up in Yields has all occurred since Trump won the Election.
The Dollar is on the rampage across the board.
Kenya Shilling is at 101.852 versus the Dollar.
The Nairobi All Share popped +0.97 higher to close at 140.06
The Nairobi NSE20 Index firmed +10.76 points to close at 3272.47
Equity Turnover clocked 437.363m.

Safaricom firmed +1.23% to close at 20.50 and traded 4.934m shares. H1
16 Earnings justify a higher price and any price correction will be
short-lived ahead of a run towards 25.00 Fresh Record Highs.

WPP-ScanGroup was up-ticked +6.74% to close at 19.00 with just 1,300
shares changing hands.

Nation media eased -0.51% to close at a fresh 2016 and multi-Year Low
of 97.50. Nation Media has slumped -41.88% in 2016 and the price
spiral lower seemingly not ready to abate.

Barclays Bank reported Q3 2016 Earnings where EPS decreased by -5.1%
Total operating income increased by 12.5% to 24.4bn. Non-operating
income grew by 16.3% to KES 7.6bn, driven mainly by +38.5% growth in
foreign exchange income and 2.1x increase in other income. Barclay
Bank’s loans and advances stood at KES 158.8bn (+9.3% ytd., +3.6% q/q)
and customer deposits increased by 9.6% ytd to KES 180.9bn (-1.1%
q/q).  Barclays Bank set aside 3.14 billion shillings for bad credit,
three times more than the year-earlier period, as non-performing loans
jumped 49 percent to 10.4 billion shillings. Barclays Bank closed
unchanged at 8.85. Barclays Bank is -31.98% on a Total Return Basis
and the 2nd worse performing bank share in 2016 ahead of only National
Bank which is -49.52% over the same dates after being high-ticked
+9.65% today to close at 7.95 on just 500 shares.
Stanchart rallied +2.717% to close at 189.00 and traded 3,700 shares.
Stanchart is the Banking Outlier at the Securities exchange having
registered a +18.41% Total Return in 2016. Mr. Bill Winters and the
Board of StanChart PLC made their second visit to Kenya this month and
again cited StanChart Kenya as an Outperformer.
Equity firmed +1.56% to close at a 10 week high of 32.50 on good
volume of 1.692m shares.

Centum reported H1 16 Earnings this morning before the Opening Bell.
H1 Investment and Other Income clocked 8.490289b +1.26%,  H1 Finance
Costs reduced by -24.99% to [945.641m]  H1 Profit before Tax surged
+22.83% to register 2.760161b.  Centum estimates its Net Asset Value
at 61.12
Centum said ''The Key profitability drivers during the period were
1. Consolidation of longhorn Publishers financial results for the first time
2. improved profitability in the Group's Portfolio Companies
3. Lower finance costs as a result of reduced forex losses on US
Dollar denominated borrowings

They did not repeat the one-off AON extraordinary gain of 1.7b and
therefore this H1 Performance is strong when you account for that
fact.  The Group's cash and cash equivalents decreased to KES 5.4bn
(-47.2%). The Company has stated that the Two Rivers Mall is complete
and expects it to be launched in 1Q17.

Centum closed unchanged at 41.00 on subdued trading of 33,400 shares.
Centum is -9.67% in 2016.

Sanlam Kenya ticked +0.76% firmer to close at 33.00 with 750,800
shares changing hands.

kenGen followed on yesterdays +3.54% rally with a further +6.83% surge
to close at 6.25 a 3 week high. KenGen traded 2.364m shares and
remains egregiously if not absurdly priced at these levels.