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Satchu's Rich Wrap-Up
 
 
Friday 30th of December 2016
 
Morning
Africa

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In Memoriam, [Ring out, wild bells] Lord Alfred Tennyson
Africa


Ring out, wild bells, to the wild sky,
The flying cloud, the frosty light:
The year is dying in the night;
Ring out, wild bells, and let him die.

Ring out the old, ring in the new,
Ring, happy bells, across the snow:
The year is going, let him go;
Ring out the false, ring in the true.

Ring out the grief that saps the mind
For those that here we see no more;
Ring out the feud of rich and poor,
Ring in redress to all mankind.

Ring out a slowly dying cause,
And ancient forms of party strife;
Ring in the nobler modes of life,
With sweeter manners, purer laws.

Macro Thoughts

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What to expect in 2017 and what happened in 2016
Africa


This interregnum between Christmas and New Year is an interesting one
in Nairobi and The opening stanza of The Love Song of J. Alfred
Prufrock BY T. S. ELIOT, came to my mind.
Let us go then, you and I,
When the evening is spread out against the sky Like a patient
etherized upon a table;
Let us go, through certain half-deserted streets, The muttering retreats
..........
To lead you to an overwhelming question ... Oh, do not ask, “What is it?”
Let us go and make our visit.

So lets take this opportunity to take a look at the markets in 2016.
Its been a dramatic Year in the markets with big headline political
events wrong-footing markets. The chances of BREXIT and the Election
of President Trump were considered the equivalent of three legged
ponies at the Epsom Derby, by the bookmakers. As we can see the new
Zeitgeist spread like wildfire and the World at the end of 2016 looks
nothing like it did at the beginning of the year. Vladimir Putin looks
like the biggest Geopolitical Winner in 2016 and this has been
reflected in the markets. The Russian Ruble has returned +21.31%
versus the Dollar and is the top-performing Currency versus the Dollar
in 2016. The Brazilian Real was a close second at +20.96%.
Interestingly SSA clocked positions 6 through 9 in the top 10 currency
rankings in 2016; 6. Zambia Kwacha +11.96%, 7. South Africa Rand
+11.00%, 8. Lesotho Loti +11.00%, 9. Swaziland +11.00%. 7 African
currencies ranked in bottom 10 Performers. The Biggest African Loser
in 2016 was the Egyptian Pound which retreated -58.84%, followed by
the Nigeria Naira -36.68%, Mozambique Metical -33.27%, Congolese Franc
- 21.14%. The British Pound retreated -16.99% through 2016. The reason
I am laying out the currency movements is because movements are
material and can juice or trash a portfolio, in the blink of an eye.
The Kenya Shilling has held its own against the Dollar when you factor
in the Carry [the interest rate you receive] and a Stand-Out in 2016.
I expect the Dollar to continue on another leg higher, the first leg
kicked off on November 8th with the election of Donald J. Trump. I am
of the view that Sterling has room to pop to the upside in 2017.
Closer to home, President Buhari has to capitulate and therefore I
expect another fall in the Naira. The Congolese franc could go just
about anywhere as buffers erode. The Zimbabwe Bond Note experiment is
predicted to end in a debacle sooner rather than later. The
best-performing currency in 2016 has been the crypto- currency BITCOIN
which is +120% in 2016. So armed with this currency overlay Road-Map
lets take a look at other Assets.

The Bloomberg Commodity Index is set to post its first yearly
percentage gain in six years— As of mid-December, it traded up 11.5%
for the year. The Commodity Complex has been led by Iron Ore which is
+92.7% in 2016, Zinc +72%, Brent Crude Oil +46%, Orange Juice +40%,
Palladium +29%, Sugar +18% after being considerably higher, Gold
+8.00%. Commodity markets are notoriously tricky to trade but I am
looking for Gold to go Lower [and in fact like the idea of a Long
BITCOIN short Gold Trade which has already run some] and for Crude Oil
to flatten out from close to these levels. The Agricultural markets
present an interesting Opportunity and I believe that Climate Change
[and now with a climate change denier in Office in the US], Investors
need to stay long a Basket of Agricultural commodities over the Long
term.

Investors into the US Equity markets earned +9.00% via the S&P and
this was further juiced by the strong Dollar. Frontier Markets saw
nearly a $1b pulled in 2016 and were a serious Under-performer in
2016. The Nairobi All Share is - 9.77% in 2016, the NSE20 is -22.52%.
Here in Nairobi, You had to have your wits about you. A Strategy that
has worked like a Peach was to just buy Safaricom and just hang onto
it. During Bob Collymore's tenure, Safaricom has returned more than
700% which return ranks right up there with the top 1% percentile of
world- wide returns over that period. Safaricom has posted a +26.93%
return in 2016 and without that underpinning the Nairobi Securities
Exchange would have crumbled completely. Kenya Airways closed out the
year +20.4% and enjoyed a Michael Joseph Pop. KenolKobil was a big
Stand-Out posting a near enough 50% return. Banking stocks weighed
real heavy on the Indices and only one banking Stock Standard
Chartered Bank registered a positive return in 2016 up around 20% on a
Total Return Basis. The Interest rate Cap Action is forcing a
fundamental re-configuring of the Banking sector. Investors are
nervous that it could turn Darwinian. The stampede into GOK Bonds is
now easing and whilst valuations look close to rock-bottom, we do have
an election year in front of us.

My Optimal Portfolio at this moment looks like this

1. Long BITCOIN. 2. Long BITCOIN short Gold on a Spread. 3. Long
Sterling versus the Shilling. 4. Long Safaricom 5. long the Dollar
Index. 6. Short the Naira.

Here's to wishing you a profitable 2017.

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Far finger or algo trades went crazy? Euro spiked 1.6% in minutes as big orders surprise market Holger Zschaepitz
Africa


Home Thoughts


“I dream that I have found us both again,
With spring so many strangers' lives away,
And we, so free,
Out walking by the sea,

With someone else's paper words to say....

They took us at the gates of green return,
Too lost by then to stop, and ask them why-
Do children meet again?
Does any trace remain,
Along the superhighways of July?”
― Thomas Pynchon, Gravity's Rainbow

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Listen to the 360-degree spatial sounds of Africa's wildlife in the dead of the night @WIRED Audio
Africa


Think about the most nightmarish place to be stranded at night. An
abandoned mental hospital, perhaps? A Justin Bieber concert?
Nope—trifles compared to standing smack in the middle of an African
savanna.

Check out the BBC video above. Listen to the 360-degree spatial sounds
of lions grumbling and hyenas cackling and elephants trampling through
the bush. Click and drag to look around as very dangerous creatures
sneak up on you. And understand just how perilous life is for Africa’s
animals in the dead of the night. Also, appreciate that humans have
largely removed themselves from the food chain.

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@MarthaPlimpton Carrie, watching her mother from the wings.
Africa


"’Temporal bandwidth,’ is the width of your present, your now. It is
the familiar ‘? t’ considered as a dependent variable. The more you
dwell in the past and in the future, the thicker your bandwidth, the
more solid your persona. But the narrower your sense of Now, the more
tenuous you are.” (Gravity's Rainbow, 1973)

“What goes around may come around, but it never ends up exactly the
same place, you ever notice? Like a record on a turntable, all it
takes is one groove's difference and the universe can be on into a
whole 'nother song.” ― Thomas Pynchon, Inherent Vice

read more


Rodrigo Duterte says he once threw a suspect from helicopter
Law & Politics


The former prosecutor said he once hurled a Chinese man suspected of
rape and murder out of a helicopter.

“If you are corrupt I will fetch you using a helicopter to Manila and
I will throw you out. I have done this before, why would I not do it
again?” Duterte said during a speech to victims of a typhoon on
Tuesday, a clip of which was posted on a video feed of the president’s
office.

read more








U.S. Strikes Back at Russia Over Interference With 2016 Election Bloomberg Politics
Law & Politics


President Barack Obama retaliated against Russia for cyberattacks
aimed at interfering with the 2016 presidential campaign, imposing
sanctions on top Russian intelligence officials and agencies,
expelling 35 Russian operatives from the U.S. and releasing technical
evidence on the hacking.

“All Americans should be alarmed by Russia’s actions,” Obama said in a
statement Thursday. “These data theft and disclosure activities could
only have been directed by the highest levels of the Russian
government.”

Trump once said the hacking could have been the work of “somebody
sitting in a bed someplace” and told reporters Wednesday that “we
ought to get on with our lives” instead of rehashing the cyberattack.

“We are starting from the fact that these decisions were taken by
President Obama, and Trump will be the head of state in three weeks,”
Peskov said. “Of course we’ll take this factor into account.”

read more


White House sanctions Russia over election hacking
Law & Politics


"These actions follow repeated private and public warnings that we
have issued to the Russian government, and are a necessary and
appropriate response to efforts to harm US interests in violation of
established international norms of behavior," the president said in a
statement.

"Russia's cyber activities were intended to influence the election,
erode faith in US democratic institutions, sow doubt about the
integrity of our electoral process, and undermine confidence in the
institutions of the US government," his statement read. "These actions
are unacceptable and will not be tolerated."

The president also hinted that this is merely the White House’s public
response to the alleged hacks and that it would retaliate outside of
the public eye.

"These actions are not the sum total of our response to Russia’s
aggressive activities," he continued. "We will continue to take a
variety of actions at a time and place of our choosing, some of which
will not be publicized."

Conclusions

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05-DEC-2016 PEOTUS @RealdonaldTrump was an ideal candidate for this kind of support. Trump is a linguistic warfare specialist.
Law & Politics


Trump is a linguistic warfare specialist. Look at the names he gave
his opponents: Crooked Hillary, Lyin’ Ted, Little Marco, ‘Low-energy’
Jeb — were devastating and terminal.  The first thing is plausible
deniability (and some folks here at home need to remember those
words).

The second thing is non-linearity, you have to learn how to navigate a
linear system (the new 21st digital ecosystem) in a non-linear way.

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05-DEC-2016 ("a constant state of destabilised perception"), timely and judicious doses of @Wikileaks leaks which drained @HillaryClinton's bona fides and her turn-out and motivated @realdonaldTrump's
Law & Politics


From feeding the hot-house conspiracy frenzy on line (‘’a constant
state of destabilised perception’’), timely and judicious doses of
Wikileaks leaks which drained Hillary’s bona fides and her turn-out
and motivated Trump’s, what we have witnessed is something remarkable
and noteworthy.

Putin has proven himself an information master, and his adversaries
are his information victims.

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How Trump Made Russia's Hacking More Effective David Frum Atlantic
Law & Politics


The information is delegitimizing. The president-elect of the United
States reportedly owes his office in considerable part to illegal
clandestine activities in his favor conducted by a hostile, foreign
spy service. It’s hard to imagine a crisis of presidential legitimacy
more extreme than that. But that’s no argument against airing this
information. It’s precisely why the information must be aired.

Without Trump’s own willingness to make false claims and misuse
Russian-provided information, the Wikileaks material would have
deflated of its own boringness. The Russian-hacked material did damage
because, and only because, Russia found a willing accomplice in the
person of Donald J. Trump.

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05-DEC-2016 The specialist is monitoring data on his mission console when a voice breaks in, "a voice that carried with it a strange and unspecifiable poignancy".
Law & Politics


The specialist is monitoring data on his mission console when a voice
breaks in, “a voice that carried with it a strange and unspecifiable
poignancy”.
He checks in with his flight-dynamics and conceptual- paradigm
officers at Colorado Command:
“We have a deviate, Tomahawk.”
“We copy.  There’s a voice.”
“We have gross oscillation here.”
“ There’s some interference. I have gone redundant but I’m not sure
it’s helping.”
“We are clearing an outframe to locate source.”
“ Thank you, Colorado.”
“It is probably just selective noise. You are negative red on the
step-function quad.”
“It was a voice,” I told them.
“We have just received an affirm on selective noise... We will
correct, Tomahawk. In the meantime, advise you to stay redundant.”
 The voice, in contrast to Colorado’s metallic pidgin, is a melange of
repartee, laughter, and song, with a “quality of purest, sweetest
sadness”.
“Somehow we are picking up signals from radio programmes of 40, 50, 60
years ago.”

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US hits #Russia w/ tough sanctions over election hacking. Markets don't mind as strong Ruble & low default risk show @Schuldensuehner
Law & Politics


.‏@RussianEmbassy  President Obama expels 35 🇷🇺 diplomats in Cold
War deja vu. As everybody, incl 🇺🇸 people, will be glad to see the
last of this hapless Adm.

https://twitter.com/RussianEmbassy/status/814564127230271489

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.0532
Dollar Index 102.31
Japan Yen 116.77
Swiss Franc 1.0201
Pound 1.2276
Aussie 0.7229
India Rupee 67.945
South Korea Won 1205.94
Brazil Real 3.2546
Egypt Pound 18.1340
South Africa Rand 13.6276

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Good morning Europe. Just to remind everyone there what happened today to your currency. @DavidInglesTV
World Currencies


Euro stabilizing now.. but that massive pop was a cool 160 pips. Looks
to be algo-driven amid thin liquidity David Ingles

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What a spectacular 2016 price range: WTI #oil has traded as low as $26.05 a barrel and as high as $54.51 a barrel @JavierBlas2
Commodities


Oil has traded near or above $50 a barrel since the Organization of
Petroleum Exporting Countries agreed Nov. 30 to cut output for the
first time in eight years. Non-OPEC producers including Russia will
also trim supply. Iraq is committed to reducing output by as much as
210,000 barrels a day from January, Oil Minister Jabbar al-Luaibi said
in an interview with Kuwait’s state-run news agency Kuna.

West Texas Intermediate for February delivery dropped 29 cents, or 0.5
percent, to settle at $53.77 a barrel on the New York Mercantile
Exchange. The contract gained 16 cents to $54.06 on Wednesday, the
highest close in almost 18 months. Total volume traded was about 36
percent below the 100-day average at 2:55 p.m. Prices are up 45
percent this year.

read more





Crackdown on protests threatens Ethiopia's economic boom FT Subscriber
Africa


Foreign investors, notably from China, have this year ploughed $2.5bn
into an economy that has experienced double-digit annual growth over
most of the past decade. But behind the façade, cracks are appearing
in the model that helped Ethiopia become one of Africa’s star economic
performers.

The consequence for the authoritarian government, which derives much
of its legitimacy since taking power 25 years ago from delivering
development in the absence of many basic freedoms, is unprecedented
uncertainty, analysts say.

Ethiopia is in the third month of a state of emergency imposed to
quell demonstrations against the regime, with hundreds of people
killed in a brutal crackdown on protests that began more than a year
ago. Foreign-owned businesses, particularly in textiles and flower
farming, have been targeted in attacks that have caused tens of
millions of dollars of damage.

“By sacrificing rule-of-law and predictability to achieve short-term
stability, the Ethiopian government has damaged its reputation by
reinforcing the perception that it is more authoritarian than
democratic,” said a western diplomat who engages with foreign
companies.

For visitors to Addis Ababa, the most noticeable impact of the
crackdown is the complete lack of mobile internet and severe
disruption to online services. Deloitte, the global advisory firm, has
estimated the shutdown is costing the economy $500,000 a day.

“We have some foreign tourists staying but far fewer than usual,” says
the manager at an Addis Ababa hotel who asked not to be named. “And
there are practically no western business travellers. The Chinese are
still coming though.”

The Ethiopian economy is still growing strongly — by 8 per cent this
financial year according to official data. Although three percentage
points lower than previously forecast it has come against the backdrop
of a bad drought.

David Cowan, Citi’s chief Africa economist, believes the reality is
worse and questions an IMF prediction that foreign direct investment
will be $4.45bn in 2016-17, nearly $1bn more than its previous
estimate.

“I don’t see where the increase in FDI is going to come from,” he
says. “I don’t see it from the multinationals, many of which are in a
consolidating mode.”

Many are also pessimistic about how the country can create enough jobs
when non-Ethiopians continue to be banned from investing in the
banking, telecom and retail sectors.

“Successful economies have deep and diverse private sectors and
Ethiopia’s just isn’t there,” said one investor, who asked not to be
named. “It’s doing some things well but the gaps in its strategy —
both economic and political — are glaring and I don’t see any
inclination to address them.”

Conclusions

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Egypt Pound versus The Dollar 3 Month Chart INO 18.1305 [Big Bounce in the Pound]
Africa


Nigeria's central bank sold about $1 billion on the forward market
last week to clear a backlog of dollar obligations in selected
sectors, traders said on Thursday, its largest special auction since a
currency peg was removed in June.

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.@SanlamKenya profits warning Announcement here
Kenyan Economy


''marked-to-market Fair value losses'' [Bonds and Equities] and
''negative persistency experience in the life book''
''Lower income from property sales''
increase in expenses

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@SanlamKenya share price data here -53.75% 2016
Kenyan Economy


Par Value:                  5/-
Closing Price:           27.75
Total Shares Issued:          144000000.00
Market Capitalization:        3,996,000,000
EPS:             -0.43
PE:                 -64.535

H1 EPS [0.89] vs. 1.86 -147.849%

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Investors valuations signal eight NSE companies that are ripe takeover targets BD Africa
Kenyan Economy


The price-to-book ratio of eight companies out of the 20 that make up
the NSE 20 Share Index is below one, meaning that the market value of
their stock is below their net assets value.

Sasini, WPP Scangroup, KCB , DTB, Stanbic Holdings Plc, Kenya Power,
Kenya Electricity Generating Company (KenGen) and Centum are the eight
firms that are trading at a discount to their liquidation value.

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Kenya Shilling versus The Dollar Live ForexPros 102.50
Kenyan Economy


Nairobi All Share Bloomberg -9.88% 2016

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

Nairobi ^NSE20 Bloomberg -21.88% 2016

http://j.mp/ajuMHJ

3,156.59 -25.66 -0.82%

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