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Satchu's Rich Wrap-Up
Tuesday 01st of March 2016

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29-FEB-2016 Africa Markets Meta-Trends and Why Barclays' Exit is a Vote of No Confidence in Zuma @TheStarKenya

Many reasons have been given including the fact that the sale of
Barclays Africa will add as much as 0.8 percentage points to Barclays’
core capital ratio, that the African unit’s return on equity of 9.3%
last year was below the bank’s target rate of 11%, that Africa
translates into Barclays carrying 100% of the ‘’reputational risk’’
without 100% control. For example, in South Africa the UK bank has a
minority of board seats.

The real reason in my view is the Zuma ‘’Zupta’’ volatility. The
Barclays Africa exit is a vote of no confidence in South Africa’s
President Jacob Zuma and by extension in South Africa’s gateway

Two days before South Africa’s Finance minister Pravin Gordhan
presented his budget last Wednesday, Zuma described Van Rooyen as the
most qualified finance minister his administration has had. Unless the
president is stopped, Barclays PLC’s move might well be the first in
what becomes an Avalanche of Exits.

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It's Getting Harder for Currency Traders to Make Money, Market Veteran Says

A case in point is the yen: It dropped the most in more than a year on
Jan. 29 after BOJ Governor Haruhiko Kuroda unexpectedly adopted
negative rates. It has surged more than 6 percent since, set for its
steepest monthly advance since 2008. Likewise, the euro has seen a
weekly gain of 3 percent or more on three occasions since the start of
2015 and dropped as much five times. There were no comparable moves in
the prior three years.

“We’re now starting to play a lot at the extremes of the ranges, and
what I mean by that is that the market not only mean reverts, but goes
back through to the other side of the price very quickly,” said
Killen. “So really, you’ve got these whipsaws between ranges.”

The yen traded at 113.02 per dollar as of 8:21 a.m. in London on
Monday after appreciating to 110.99 on Feb. 11, the strongest level
since October 2014. Three-month implied volatility climbed to a 2
1/2-year high on the day the yen peaked as traders digested the nearly
10 percent move from Jan. 29’s low of 121.69.

A lot of the electronification of the market, which by and large is a
good thing, has led to kill switches on a lot of that
algorithmic-provided liquidity.”

Average daily turnover in the U.K. dropped 21 percent in October from
a year earlier while volumes in North America slid 26 percent,
according to central banks in the two regions. A JPMorgan Chase & Co.
gauge of volatility climbed to its highest level in four years this
month, more than doubling from the unprecedented lows reached in

At the same time, a decline in currency trading revenues and the
rising cost of regulatory change has forced banks to turn to increased
automation and cut staff. There were 2,300 people working in
currency-market front-office jobs at the world’s biggest banks in
2014, a 23 percent drop from four years earlier, according to
Coalition Development Ltd., an analytics firm.

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Julie Christie and Omar Sharif in Doctor Zhivago

“I want to live every moment totally and intensely. Even when I'm
giving an interview or talking to people, that's all that I'm thinking

“I didn't want to be a slave to any passion anymore. I gave up card
playing altogether, even bridge and gambling - more or less. It took
me a few years to get out of it.”

“When one sees what happens in the world between the religions, the
different religions - killing each other and murdering each other,
it's disgusting and as far as I am concerned it's ridiculous. So I
thought I might be useful, I believe in God and I believe in religion,
but believe religions should belong to you. The extraordinary thing is
that the Jews believe that only the Jews can go to paradise, the
Christians believe that only a Christian can go to paradise and the
Muslims believe that only the Muslims can go to paradise. Now why
should God, in his great justice, make somebody born that cannot go to
paradise - it is absurd. Please forgive me I don't mean to say it's
absurd, people made it absurd.”

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Europe’s Fumbled Refugee Crisis, in Four Charts [Going 10x in 2016]
Law & Politics

Some 110,000 people have crossed the sea to Greece, Italy and Spain in
the first two months of this year, after about a million made the
journey in 2015. The EU’s 28 governments are as far apart as ever from
a common stance on how to cope with the crisis.

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Why Trump and Sanders Were Inevitable Politico
Law & Politics

The only wonder, perhaps, is that it took Trump and Sanders this long
to get here.

True, both men may fail in their respective insurgencies against the
establishment. After his weekend thumping in South Carolina and facing
long odds on Super Tuesday, Sanders could fade quickly as a candidate.
Trump, meanwhile, still faces a sharp backlash from Republicans, some
of whom are already saying publicly they can’t support him as their
party’s nominee. But make no mistake: The message that Sanders and
Trump are bringing to the stump isn’t going away soon, not until the
two parties acknowledge the deep flaws in the economic paradigm that
got us to this place of inequality, but which neither the Democratic
nor the Republican leadership have questioned deeply.

Trump and Sanders are thus in many ways the yin and yang of America’s
present discontent; both address, in different ways, the seething
sense of unfairness, of inequality in Americans. Their supporters tend
to be angry, somewhat less educated,
more-industrial-age-than-information-age-skilled Americans—and in
other cases, insecure young people just out of college, for whom
unemployment until the age of 30 still averages 12 percent—who believe
their political parties no longer represent them. Trump emphasizes
shutting down job-stealing immigrants and getting “better” deals from
the world; Sanders, imprisoning wealth-gobbling, spoiled Wall
Streeters and getting “fairer” deals from the world. Both candidates
plainly appeal to people who feel that no one is really standing up
for them and what used to be known as their middle class; people who
want more of the pie than they’ve been getting for a long time, and
people who realize that their political parties are at best
half-hearted about doing anything about that

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Currency Markets at a Glance WSJ
World Currencies

#Japan's Yen is the biggest winner in Feb w/ a gain of >7%.


Euro 1.0880
Dollar Index 98.24
Japan Yen 112.95
Swiss Franc 0.9979
Pound 1.3975
Aussie 0.7187
India Rupee 68.085
South Korea Won 1231.83
Brazil Real 4.0173
Egypt Pound 7.8282
South Africa Rand 15.7025

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The Japanese government got paid to borrow money for a decade for the first time, selling 2.2 trillion yen ($20 billion) of the debt at an average yield of minus 0.024 percent on Tuesday.
World Currencies

The sale drew bids for 3.2 times the amount of the securities offered,
the first increase in demand since an auction in December, according
to the Finance Ministry.

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Glencore Profit Slumps 69% as Prices for Metals, Oil Slide

Adjusted net income slid to $1.34 billion in 2015 from $4.29 billion a
year earlier, the Baar, Switzerland-based company said in a statement
Tuesday. That beat the $1.17 billion average of 15 analyst estimates
compiled by Bloomberg.

Profits from the world’s biggest mining companies are evaporating as
prices for copper, nickel, zinc and iron ore plunge because of gluts
and slowing demand from China, the biggest customer. To weather the
commodities collapse, Glencore is trying to save money and unveiled a
plan last year to lower debt as much as 40 percent to $18 billion by
scrapping its dividend, cutting costs and selling assets and new

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Africa’s Richest Woman Draws Scrutiny Over Source of Wealth WSJ Subscriber

Africa’s wealthiest woman, the eldest child of Angola’s longtime
ruler, is frank about the trouble facing her country’s oil-dependent

“The economic situation today is difficult,” said Isabel dos Santos,
whose Angolan investments include the nation’s top mobile operator and
a supermarket chain battling sinking consumer demand. “With the lower
oil prices, we are definitely feeling the pinch.”

The 42-year-old business magnate is feeling the pinch as well. The
value of her two-continent empire has fallen along with global
markets. Forbes magazine puts her net worth at $3.1 billion, down from
$3.4 billion last year and $3.7 billion in 2014.

Yet she remains a controversial focus of deal making in Angola and
Portugal, where she has invested hundreds of millions of dollars. In
both countries, her portfolio of dominant banks, retailers and
telecommunications companies makes her an object of media fascination
and persistent speculation that her capital comes from her father’s
access to state oil revenues.

Her €200 million ($218.5 million) deal to buy a majority stake in
Portuguese power-equipment maker Efacec Power Solutions SGPS last fall
prompted a group of European lawmakers to call for an investigation
into whether she has channeled public oil revenues into personal
investments. She is feuding with partners in an Angolan telecom
venture over alleged unpaid dividends. And she is in conflict with
Banco BPI SA, Portugal’s second-biggest traded lender, over the fate
of its Angolan unit.

In a rare interview, Ms. dos Santos defended her investments and her
country. She said she isn’t driven by money and drew a distinction
between her businesses and the regime run by her father, President
José Eduardo dos Santos.

“I’m not financed by any state money or any public funds,” she said.
“I don’t do that.”

The gulf between her fortune and Angola’s pervasive poverty, which has
widened during the 37 years of her father’s rule, has made Ms. dos
Santos a magnet for criticism from opposition politicians in Angola
and human-rights groups abroad.

Oil wealth has transformed Angola’s capital, Luanda, into one of the
world’s most expensive cities. But the World Bank says two-thirds of
the nation’s 24 million people live on less than $2 a day. Conditions
have worsened with the plunge in oil prices. Africa’s second-biggest
crude producer has shed thousands of jobs.

Ms. dos Santos’s investments have suffered as well. Angola’s currency,
the kwanza, has lost half its value against the U.S. dollar in a year,
eroding the value of the country’s businesses. In Portugal, her most
important investment—an 18.6% stake in BPI—has shed a fifth of its
value over the past year amid a weak market view and a failed takeover
attempt by its largest shareholder.

Ms. dos Santos was born in the Soviet Union, where her father was
studying engineering. She earned her degree in the same field at
King’s College London and returned to Angola in the early 1990s during
a lull in the country’s civil war.

She said she used her savings to open a “shack” called Miami Beach,
now one of Luanda’s most expensive nightclubs. With a friend she
launched a trucking company to keep the club and other businesses
stocked with beer and soft drinks.

“I’m just tremendously independent,” Ms. dos Santos said. “I always
had this wish to stand alone and not be in my parents’ shadow.”

When Angola’s government sought investors to build a mobile-phone
network in the late 1990s, Ms. dos Santos said she used earnings from
both businesses to bid about $1 million for the license. Today, Unitel
SA, which Ms. dos Santos oversees as chairwoman, is valued at more
than $5 billion.

“Her privileged position just allows her to get things done quickly
and efficiently,” said Alexander Thomson-Payan, an American whose TGI
Group competes with Unitel to sell mobile phones in Angola. “After
all, she knows the boss.”

Unitel is embroiled in a dispute with a foreign business partner. The
company is fighting Brazil’s Oi SA in court over what the Latin
American telecom operator said are $600 million in unpaid dividends to
Portugal Telecom SGPS, a Portuguese company Oi merged with in 2013.
Portugal Telecom bought a quarter of Unitel in 2000.

Oi executives said they discovered during their merger with Portugal
Telecom that Unitel hadn’t paid dividends to its shareholder for
years. In May, Ms. dos Santos kicked an Oi executive out of a Unitel
shareholders meeting in Luanda, according to a person present at the
meeting. Ms. dos Santos said that didn’t happen.

Ms. dos Santos said Unitel had paid the dividends in Angola, but that
Oi hadn’t repatriated them. Oi said it has yet to receive any

Ms. dos Santos’s hard-nosed business dealings are also creating
controversy in Portugal, where her disagreements with BPI’s management
over the fate of its Angolan unit risk putting the lender at odds with
its supervisor, the European Central Bank.

Instead, Ms. dos Santos’s Unitel, which owns 49.9% of the Angolan
unit, offered €140 million to increase its stake in the Angolan unit
to a majority at what CaixaBI Investment Bank analyst Andre Rodrigues
calculated then would be a low price. He valued the bank at between
€1.8 billion and €2.6 billion when compared with peers, while Ms. dos
Santos’s bid valued it at €1.4 billion. BPI turned down her bid in

Ms. dos Santos said she understands the ECB’s need to mitigate foreign
risks and said her bid is a fair price.

Concerns about the source of her wealth burst into the open in
October, when five members of the European Parliament asked the
European Commission to investigate her purchase of a majority stake in
Efacec, saying “legitimate doubts arise on whether the Angolan state
might be indirectly financing ‘private’ major acquisitions of Ms.
Isabel dos Santos, incurring in numerous illegalities under Angolan

A European Commission official said it has raised the issue with
Portuguese authorities, who are responsible for carrying out due
diligence if they notice suspicious activities. The Portuguese
Financial Intelligence unit didn’t answer requests for comment.

The parliamentarians seeking the investigation said in their letter to
the European Commission that Ms. dos Santos is a “politically exposed
person” under EU law—people who hold positions that could be
abused—and pointed to circumstances of the deal that they found

The purchase was made by Winterfell Industries, a company set up in
December 2014, registered on the Portuguese island of Madeira and
controlled by Ms. dos Santos, the parliamentarians said.

Two months before the deal closed, the parliament members wrote, Mr.
dos Santos issued a presidential order authorizing Angola’s state
electricity company to purchase 40% of Winterfell from Ms. dos Santos
for an undisclosed sum. Since the purchase, Efacec has become the
supplier of three dams being built in Angola.

In the interview, Ms. dos Santos said that the state hadn’t yet
concluded its purchase of the Winterfell stake and that Winterfell’s
purchase of the equipment manufacturer had been paid out of her own
pocket with backing from commercial banks.

She said she doesn’t get money from her father and hardly sees him.

“He is very busy, and I’m very busy,” she said.


April 20, 1973: Born in Baku, Azerbaijan, then part of the Soviet
Union, where her father José Eduardo dos Santos studied engineering.
Early 1990s: Graduates from King’s College London with a degree in
engineering science and management.
1992: Mr. dos Santos reaches a truce with rebel leader Jonas Savimbi,
clearing the way for many Angolans including Ms. dos Santos to return
to Angola.
1995: Ms. dos Santos opens Miami Beach nightclub along the Angolan
capital’s most exclusive surf.
1999: Ms. dos Santos wins a bid to start Angola’s private mobile
operator, Unitel SA.
December 2000: Portugal Telecom SGPS SA buys 25% of Unitel, of which
Ms. dos Santos owns 25%.
2002: Marries Congolese businessman and art collector Sindika Dokolo.
2005: Buys into Portuguese energy conglomerate Galp Energia SA. Ms.
dos Santos owns 45% of a vehicle controlled by Angola’s oil company
Sonangol that owns 45% of Portuguese company Amorim Energia BV, which
owns 38% of Galp.
April 2005: Bank BIC Angola is created with Isabel dos Santos owning
25%. She has since raised her stake to 42.5%.
January 2008: Bank BIC Portugal established, with Isabel dos Santos
owning 25%. She has since raised the stake to 42.5%.
September 2008: Banco BPI SA sells a 49.9% stake in its Angolan unit to Unitel.
December 2008: Ms. dos Santos buys 9.69% of BPI from Banco Comercial
Português SA. She now owns 18.6% of BPI.
December 2009: Ms. dos Santos buys 10% of Portuguese telecom Zon
Multimedia SGPS SA. She now owns, in a partnership with telecom Sonae
SGPS SA, 50.01% of Nos SGPS SA, the product of a merger between Zon
and another telecom.
October 2015: Ms. dos Santos, through vehicle, buys 65% of Portugal’s
Efacec Power Solutions SGPS SA.
A 2014 European Union ruling placed Angola among countries whose debt
is riskier than that of its own members. That resulted in a tighter
central bank limit on BPI’s exposure to Angola—no more than 25% of the
bank’s funds, a limit BPI exceeds by more than €3 billion. The central
bank has given BPI until April to raise capital or shed its Angolan
operations. BPI proposed spinning off the Angola unit as a
free-standing company while keeping control, but Ms. dos Santos
blocked the move in a shareholders vote on Feb. 5.

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Zimbabwe: Stranded in Stasis ICG

Zimbabwe is floundering, with little sign of meaningful reform and
sustainable, broad-based recovery. Political uncertainty and economic
insecurity have worsened; the Zimbabwe African National Union –
Patriotic Front (ZANU-PF) government has consolidated power, as the
opposition stumbles, but is consumed by struggles over who will
succeed President Robert Mugabe. Upbeat economic projections by
international institutions are predicated on government rhetoric about
new policy commitments and belief in the country’s potential, but
there are growing doubts that ZANU-PF can “walk the talk” of reform.
Conditions are likely to deteriorate further due to insolvency,
drought and growing food insecurity. Economic constraints have forced
Harare to deal with international financial institutions (IFIs) and
Western capitals, but to regain the trust of donors, private investors
and ordinary citizens, the government must become more accountable,
articulate a coherent vision and take actions that go beyond personal,
factional and party aggrandisement.

Mugabe, though 92 and visibly waning, shows no sign of stepping down.

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South Africa All Share Bloomberg -2.32% 2016

Dollar versus Rand 6 Month Chart INO 15.7025


Egypt EGX30 Bloomberg -12.26% 2016


Nigeria All Share Bloomberg -14.22% 2016


Ghana Stock Exchange Composite Index Bloomberg -1.14% 2016


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In DNA, Clues to the Cheetah’s Speed and Hurdles

With their spotted coats and black “teardrop” facial markings,
cheetahs are a favorite of tourists on photographic safaris. The
animals race across the African savanna at speeds reaching 70 miles
per hour because of their unique physiology: elongated legs,
aerodynamic skull, enlarged adrenal glands and heart muscles, and
claws that grip the earth like football cleats. Considered critically
endangered, cheetahs number only about 10,000 today, with most living
in southern and eastern Africa.

What the genomic analysis reveals is not encouraging: The cheetah has
less than 5 percent of the genomic diversity of other wild cats, a
level much lower than even inbred domestic dogs and cats and the
lowest among the 30 mammals whose genomes have been sequenced. Genetic
diversity in an animal is determined by variation in enzyme genes
inherited by an animal’s two parents and is critical to its healthy
reproduction and immunity to disease.

Scientists began to suspect that the cheetah was “genetically
monotonous” several decades ago. Surgical skin grafts done
experimentally among unrelated cheetahs were tolerated without the
normal rate of tissue rejection, as if all the animals were identical
twins. Cheetahs in captivity were difficult to breed and had unusually
high mortality rates among the cubs. And the animals showed high
vulnerability to outbreaks of disease.

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

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