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Satchu's Rich Wrap-Up
 
 
Wednesday 14th of December 2016
 
Morning
Africa

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Macro Thoughts

Home Thoughts

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Heathrow, au petit matin Pic by @lealolivas
Africa


“We’re all one beat away from becoming elevator music.” —Don Delillo

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Twilight bathes the sanctuary of Athena Pronaia at Delphi. PHOTOGRAPH BY VINCENT J. MUSI AT ARCHAEOLOGICAL SITE OF DELPHI
Africa


Pilgrims in ancient Greece may have offered sacrifices here before
consulting the oracle of Delphi.

i have been rereading Hanif Kureishi

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Dear @Hanifkureishi thoroughly enjoying "The Black Album" and zig zagging around London ~ feels like an age of innocence ~ now
Africa


“At the deepest level people are madder than they want to believe. You
will find that they fear being eaten, and are alarmed by their desire
to devour others. ” ― Hanif Kureishi, Something to Tell You

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If Assad Takes Eastern Aleppo He Thinks He Will Have Won the War PATRICK COCKBURN
Law & Politics


The Syrian armed forces are close to capturing the remaining
rebel-held districts in the enclave of east Aleppo, bringing them
their biggest victory in five years of war. The insurgent armed
forces, that were originally estimated to number between 8,000 and
10,000 fighters, have been retreating or giving up more readily than
had been expected. It is still possible that a hard core will hold out
in the ruins, but President Bashar al-Assad will be eager to crush any
remaining resistance so he can present the fall of east Aleppo as a
decisive turning point in the conflict.

Will this be true? There are so many players with such diverse agendas
in the Syrian civil war that past “turning points” have turned out to
be no such thing. But what is truly important about what we have just
seen in Aleppo is that the outside allies of the armed opposition to
Assad – Turkey, Saudi Arabia, Qatar and, in a somewhat different
category, the US – have not come to the rescue of the rebels whom they
have previously supported.

In reality, Assad was always likely to stay in power because the upper
ranks of his regime were united, he had a powerful army but, above
all, because Russia and Iran were always more committed to his
survival than Turkey, Saudi Arabia, Qatar and the US were to regime
change.

many Syrians have always said that the struggle for Aleppo would
decide the war. They may well be right.

Conclusions

Its now a Fait Accompli.

Vladimir Putin's Intervention which was decisive and started at UNGA See below

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05-OCT-2015 I quote: "I cannot help asking those who have caused the situation, do you realise now what you've done?"
Law & Politics


Within 24 hours of delivering that speech, Russia instructed that the
US should vacate Syrian Air Space. This message was not delivered to
Ashton Carter by his Russian counterpart Shoigu.

It was delivered to the US Embassy in Baghdad. And pretty soon after
that message was delivered, Russia began its intervention on the side
of President Bashar Assad of Syria.

You could hear the squealing start immediately from Ankara to Riyadh,
from the GCC to Washington. All these capitals have assets on the
ground in Syria, and what is clear is that Russia is not making a
distinction between IS or the ‘’moderate opposition fighting Assad’’
[which really means ‘’our’’ terrorists].

Lavrov said: “If it looks like a terrorist, if it acts like a
terrorist, if it walks like a terrorist, if it fights like a
terrorist, it’s a terrorist, right?”

Putin fancies himself the fly-catcher and syria the fly-trap. The
speed of execution confirms that Russia is once again a geopolitical
actor that will have to be considered. It is a breath-taking rebound.

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U.S. to halt some arms sales to Saudi, citing civilian deaths in Yemen campaign
Law & Politics


The United States has decided to limit military support to Saudi
Arabia's campaign in Yemen because of concerns over widespread
civilian casualties and will halt a planned arms sale to the kingdom,
U.S. officials told Reuters.

"It's not a matter of how smart or dumb the bombs are, it's that
they're not picking the right targets. The case in point ... is the
one on the funeral," the official said.

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China says damage to 'one China' principle threatens peace
Law & Politics


China’s Taiwan Affairs Office said on Wednesday any interference with
or damage to the “one China” principle would have a serious impact on
peace and stability in the Taiwan Strait.

US President-elect Donald Trump said on Sunday the United States did
not necessarily have to stick to its long-standing position that
Taiwan is part of “one China,” further upsetting China which was
already angered by Trump’s earlier telephone call with Taiwan
President Tsai Ing-wen.

Conclusions

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14-NOV-2016 As Trump has indicated China is the main adversary
Law & Politics


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.

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U.S. ready to confront Beijing on South China Sea: admiral
Law & Politics


The United States is ready to confront China should it continue its
overreaching maritime claims in the South China Sea, the head of the
U.S. Pacific fleet said on Wednesday, comments that threaten to
escalate tensions between the two global rivals.

China claims most of the resource-rich South China Sea through which
about $5 trillion in ship-borne trade passes every year. Neighbors
Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have
claims.

The United States has called on China to respect the findings of the
arbitration court in The Hague earlier this year which invalidated its
vast territorial claims in the strategic waterway.

But Beijing continues to act in an "aggressive" manner, to which the
United States stands ready to respond, Admiral Harry Harris, head of
the U.S. Pacific Command, said in a speech in Sydney.

"We will not allow a shared domain to be closed down unilaterally no
matter how many bases are built on artificial features in the South
China Sea," he said. "We will cooperate when we can but we will be
ready to confront when we must."

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Goldman Sachs Group Inc. and JPMorgan Chase & Co., the best performers since the Nov. 8 vote with gains exceeding 20 percent
International Trade


Goldman Sachs Group Inc. and JPMorgan Chase & Co., the best performers
since the Nov. 8 vote with gains exceeding 20 percent, account for
roughly one-third of the 1,578-point increase in the 120-year-old
gauge

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.0641
Dollar Index 100.85
Japan Yen 114.98
Swiss Franc 1.0113
Pound 1.2667
Aussie 0.7499
India Rupee 67.525
South Korea Won 1168.55
Brazil Real 3.3353
Egypt Pound 18.5475
South Africa Rand 13.6417

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The commodity price rout and Africa's unusual electoral cycle @LSEforBusiness
Africa


The ongoing electoral cycle in Sub-Saharan Africa is turning out to be
somewhat unusual. In the Nigeria March 2015 poll, the People’s
Democratic Party suffered its first loss since the end of military
rule in 1999, whilst in South Africa’s August 2016 municipal election
the ruling Africa National Congress (ANC) registered its worst
performance since the end of apartheid in 1994. Elsewhere, attempts to
prolong the incumbent’s reign in Burkina Faso were forestalled by an
eruption of protests in October 2014, bringing to an end Blaise
Compaore’s 27-year rule. It would seem elections in the region are at
a tipping point, the traditional incumbent re-election bias is at a
historic low and the ground is fast shifting beneath the feet of the
political establishment. What has triggered the turn of the tide?

Consider, for instance, that whereas between 2000 and 2015 East Asia
and Latin America reduced the working poverty population (the share of
workers living in households with consumption of less than USD 2.0 per
day per person, according to the International Labour Organization) by
86.7 per cent and 50 per cent, respectively, sub-Saharan Africa has
lagged behind its peers, reducing its own by a measly 0.6 per cent.

Labour productivity, for instance, has been on a near flat-line over
the last decade, growing by 35.2 per cent between 2000 and 2015
against East Asia’s 194.7 per cent (International Labour
Organization). The sad narrative in this trend is that even at the
best of times sub-Saharan Africa has been plagued by comparatively
muted growth in labour productivity, creating a potential drag on
long-term growth prospects.

With Gabon, Ghana and Angola set to go the polls in August 2016,
December 2016 and August 2017, it will be interesting to observe
whether the trend witnessed in Nigeria and South Africa is replicated.
The short-term imperative for sub-Saharan Africa is to ensure
transition, where it happens, takes place in an environment of managed
expectations.

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"you have lost the election, President Jammeh, and you must give up power peacefully," @AmbassadorPower said.
Africa


"Everybody is singing from the same sheet of music and the song is
clear: you have lost the election, President Jammeh, and you must give
up power peacefully,"  @AmbassadorPower said

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Soros-Backed LeapFrog Raising $800 Million for Africa Purchases
Africa


LeapFrog Investments Ltd. plans to raise $800 million for its latest
fund as the private-equity firm seeks stakes in African banks,
insurance brokers and payment companies to tap into rising demand
among low-income consumers.

Overseas Private Investment Corp., the Washington-based development
financing unit of the U.S. government, has approved an investment of
as much as $200 million in the fund, the buyout company’s third, said
Karima Olokun-Ola, a partner at LeapFrog in London. Billionaire George
Soros invested in LeapFrog’s first fund through his Soros Economic
Development Fund because the financial-services market is
under-served, she said.

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Kenya Shilling versus The Dollar Live ForexPros 102.15
Kenyan Economy


Nairobi All Share Bloomberg -9.49% 2016 [12 week Lows]

http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -21.91% 2016 [14 month closing Low]

http://j.mp/ajuMHJ

3,155.57 -3.32 -0.11%

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Treasury lines up Sh500m for Uchumi bailout
Kenyan Economy


Uchumi’s proposed rescue package is contained in this year’s
supplementary Budget estimates tabled in the National Assembly on
Thursday last week.

The government owns a 14.67 per cent stake in the loss-making Uchumi
and is the second biggest shareholder behind tier III lender Jamii
Bora, which controls 14.90 per cent of the retail chain.

The Nairobi bourse listed retailer mid this year survived a winding up
suit and is currently battling headwinds such as frequent stock outs,
Sh3.6 billion suppliers’ dues, and debts to lenders amounting to Sh2.5
billion as at half year to December 2015.

Treasury Secretary Henry Rotich termed the Sh500 million bailout
package as “equity participation”—which however does not explain
whether it will be in the form of a rights issue or a shareholder
loan.

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N.S.E Today


The FED announces its Interest rate decision today and a 25 basis
point increase in the FED Funds rate is 100% priced in.
Since the November 8th vote in the US we have seen a big sell-off in
Bond yields which has strengthened the Dollar.
I expect a strong Dollar under President Trump.
US Crude Oil was last trading at levels of $53.00 a barrel but i
expect the bullish post OPEC Flush to ease.
Here in Africa
"Everybody is singing from the same sheet of music and the song is
clear: you have lost the election, President Jammeh, and you must give
up power peacefully,"  @AmbassadorPower said
President Jammeh is in the Departure Lounge but is simply negotiating
his Exit terms - probably keen on getting a guarantee that he will not
be prosecuted.
This Point was made by the London School of Economics and is an important one
''It would seem elections in the region are at a tipping point, the
traditional incumbent re-election bias is at a historic low and the
ground is fast shifting beneath the feet of the political
establishment. What has triggered the turn of the tide?''
The Kenya Shilling was last trading at 102.155 versus the Dollar.
The Exchange could not snap a losing streak which has seen the All
Share fall to a 12 week low and the NSE20 Index fall to a 14 week Low.
The Nairobi All Share closed -0.24 points at 131.63.
The Nairobi NSE20 fell 7.09 points to close at 3148.48
Turnover was lackadaisical at 379.146m



N.S.E Equities - Agricultural


Sasini Tea and Coffee announced a macadamia nut extension to their
activities and this news surged the price +6.44% to close at 19.40 and
traded 7,000 shares.
Eaagads rallied +7.95% to close at 22.75 a 1 month high. Eaagads is a
Coffee Pure-Play and in fact a real-estate play as is most of the
counters in this esoteric segment.



N.S.E Equities - Commercial & Services


Safaricom closed unchanged at 18.90 and traded 3.555m shares worth
67.272m. Safaricom has corrected -12.09% off a record closing High
from early November. That Price correction has surely run its course.

This year's  supplementary Budget estimates tabled in the National
Assembly on Thursday last week, included a 500m shilling rescue
package for Uchumi.  The government owns a 14.67 per cent stake in the
loss-making Uchumi and is the second biggest shareholder behind tier
III lender Jamii Bora, which controls 14.90 per cent of the retail
chain. Treasury Secretary Henry Rotich termed the Sh500 million
bailout package as “equity participation”—  Uchumi had 5 Buyers for
every Seller and rallied +8.33% to close at 3.25.

Nation Media bounced +2.28% off a 5 year closing Low to close at 89.50
on light volume of 1,400 shares.
Standard Group closed unchanged at 18.00 and remains -35.71% in 2016.



N.S.E Equities - Finance & Investment


Equity Group closed unchanged at 30.00 and traded 966,200 shares.
There was a Sell-side Imbalance with 4x the shares traded offered for
sale during the session.

HFC fell -4.78% to close at 11.95 and traded shares as low as 11.30
-9.96% and limit down. HFC is -38.65% through 2016 on a Total Return
Basis. HFC's share price has been hit by recent court related
revelations.

The Nairobi Securities Exchange which was -44.04% in 2016 through this
morning [The Bear market and sharply lower volumes] closed unchanged
at 13.85 and traded 1.733m shares.

Jubilee closed unchanged at 485.00 and traded 46,300 shares.



N.S.E Equities - Industrial & Allied


EABL [the purveyor of Fine single Malt whiskies and Kenya's iconic
Tusker Beer] was the most actively traded share at the Exchange and
closed unchanged at 238.00 with 638,500 shares worth 151.964m changing
hands. EABL has retreated -9.16% over the last 4 weeks and is now
deeply oversold.


--



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