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Satchu's Rich Wrap-Up
Wednesday 02nd of August 2017

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Euro surged 3.6 percent versus the dollar last month, the most since March 2016, and is up almost 11 percent since the start of April.

That said, euro bulls are full of confidence. Risk-reversals, a
measure of demand for euro calls relative to puts, are around an
eight-year high for three-month tenors, a period that includes the
next Federal Reserve and ECB meetings. And euro net longs are hovering
around the highest since 2011 among hedge funds and other large
speculators, Commodity Futures Trading Commission data show.

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"When #words become unclear, I shall #focus with photographs. When #images become inadequate, I shall be content with #silence." Ansel Adams

"Don’t you think I was made for you? I feel like you had me
ordered—and I was delivered to you—to be worn." Zelda Fitzgerald to
Scott, 1919

I am so looking forward to spending a couple of nights at my favourite
place in the Maasai Mara [well the Fairmont Mara is just outside the
Reserve and in a conservancy].

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Good Morning World from A Bend in the @MaraFairmont River

I rather like the idea that it was once owned by Tiny Rowland.

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Rumi said "We come spinning out of nothingness, scattering stars like dust."

I learnt last week that nearly half of the atoms that make up our
bodies may have formed beyond the Milky Way and travelled to the solar
system on intergalactic winds driven by giant exploding stars.

“Science is very useful for finding our place in the universe,” said
Daniel Anglés-Alcázar, an astronomer at Northwestern University “In
some sense we are extragalactic visitors or immigrants in what we
think of as our galaxy.”

Political Reflections

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Xi shores up power with demand for army obedience and foreign respect
Law & Politics

President Xi Jinping has vowed China will never “swallow the bitter
fruit” of foreign meddling or invasion, in his latest move to assert
his authority ahead of a key political summit marking the end of his
first five-year term.

In a 50-minute speech at Beijing’s Great Hall of the People, the Mao
era arena of Communist party rule, Xi told members of the military
their calling was not as an aggressive or expansionist force.

“The Chinese people love peace … but we have the confidence to defeat
all invasions. We will never allow any people, organisation or
political party to split any part of Chinese territory out of the
country at any time, in any form,” Xi said to loud applause.

“No one should expect us to swallow the bitter fruit that is harmful
to our sovereignty, security or development interests.”


Xi Jinping's Orbit of Control continues to advance inexorably.

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10-year bond yields: @DavidInglesTV
Law & Politics

Japan 0.06%
Germany 0.49%
US 2.26%
Australia 2.68%
China 3.61%
Brazil 4.59%
India 6.44%
Argentina 13.2%
Venezuela 32.1%

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Apple sees revival in iPhone and iPad sales FT
International Trade

Apple signalled a continued recovery in iPhone sales after last year’s
declines, as it posted 7 per cent increase in revenues for its most
recent quarter and forecast a better than expected performance in the
three months to September.

The latest quarter also saw the iPad return to growth for the first
time in more than three years, up 15 per cent in unit terms, driven by
March’s introduction of a new lower-priced model and an update to its
Pro tablets in June.

Shares in Apple were up by more than 6 per cent after-hours, taking
the stock to a new all-time high above $159.

Apple’s overall revenues for the June quarter were $45.4bn, with
iPhone sales up 2 per cent to 41m units, broadly in line with
analysts’ expectations, while earnings per share beat forecasts at
$1.68 each, as net income grew 12 per cent to $8.7bn.

Looking ahead to its fiscal fourth quarter, Apple said revenues would
be in a range of $49bn to $52bn, or a rise of between 5 and 11 per
cent year-on-year, potentially putting it ahead of Wall Street’s
consensus forecasts of around $49bn.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1828
Dollar Index 93.00
Japan Yen 110.80
Swiss Franc 0.9661
Pound 1.3207
Aussie 0.7962
India Rupee 64.115
South Korea Won 1124.04
Brazil Real 3.1262
Egypt Pound 17.85
South Africa Rand 13.2489

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U.S. crude #oil futures settle at $49.16/bbl. ⬇$1.01. -2.01% @Lee_Saks 48.77 Last

West Texas Intermediate crude retreated from above $50, falling 0.8
percent to $48.75 a barrel. The contract fell 2 percent on Tuesday,
the first decline in more than a week

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Water, Milk or Shampoo: Coconut's Versatility Stokes Planting Boom

Coconuts seem to be everywhere these days. Whether as “water” in
PepsiCo Inc.’s Naked drink range, as “milk” in Starbucks Corp.’s
coffees, as shampoo in L’Oreal SA’s products or even as a patty in
Beyond Meat’s vegan burgers, the tropical fruit has captured new
markets with a growing reputation as a healthy, natural product.

The popularity has been a boon for prices, with the cost of coconut
oil alone more than doubling since its low in 2013. But it hasn’t
translated into increased production as diseases, natural disasters
and ageing plantations kept global output stagnant over the past

That’s about to change thanks to a program of replantings and
rehabilitation across the tropics. Output of copra, the dried coconut
meat that’s used to make coconut oil, will jump more than 30 percent
in the decade to 2026 as yields in the biggest growers rebound,
according to a July 10 report by the Organization for Economic
Co-operation and Development and the United Nations’ Food and
Agriculture Organization.

“The international market is not only buying the oil, which they
purify into cooking oil,” Danilo D. Valdez, the managing director of
trading company Raco Commodities Phils. Inc., said in a July 20
interview. “They also have found out uses for virgin coconut oil,
coconut water, and those kinds of derivatives products from coconut
which are very good for people, that they’ve positioned for an organic
and healthy lifestyle.”

The key to the coconut’s popularity comes from the many products that
a single nut produces. One package offers a high-energy food, a
versatile oil, a nutrient-rich water, and coir - a fiber that’s used
to make rope and bedding. And that’s all contained in a water tight
package that helped it spread across the globe’s tropical regions from
the Philippines to the Caribbean.

Its versatility has led to the coconut being dubbed the “Swiss Army
Knife” of plants and has made it staple product in many countries. It
remains so important in the Philippines, the biggest producer of
copra, that the FAO estimates a quarter of its 100 million people are
dependent on industries associated with it.

“There’s great demand in foreign countries like South Korea and
Canada,” said Carlito D Villamayor, a coconut farmer in the Philippine
province of Quezon who’s switched his palms to make coconut sugar
rather than copra because prices are higher. “Now China is ordering
from us, so we have to increase our production.”

Investment in production will lift copra output by 1.1 million metric
tons by 2026, according to the OECD and FAO report. Plantation yields
in Southeast Asia will climb 15 percent in that time thanks to the
replanting of aged palms and rehabilitation of growing areas,
particularly in storm-hit parts of the Philippines and Indonesia -
which provide almost three quarters of global copra production between

That follows a decline of more than 5 percent in the 12 years to 2016
due to aged palms, pests and diseases, which effectively neutered the
1 million hectares of new coconut plantings in the past decade,
according to the FAO.

Following Typhoon Haiyan in 2013 “a main feature of the rehabilitation
program was to make the conditions of the affected coconut farmers
better than pre-typhoon conditions,” Philip Soliven, the president of
Cargill Inc.’s Philippine unit said in an interview. Cargill led a
replanting program in Leyte province that helped more than 400 coconut
farmers. A second phase program should help about 3,300 more in the
Philippines and Indonesia.

Coconut palms start bearing fruit about five years after planting,
which means supplies may begin picking up soon. Copra production in
the Philippines is forecast to rise to 2.255 million tons this year
from 2.081 million tons in 2016, Yvonne Agustin, executive director of
the United Coconut Association of the Philippines, said in an
interview from Manila. Exports will likely rise 6.5 percent this year,
she said.

It should be good news for lovers of coconut products, who may get
some relief, with that extra production potentially weakening prices.
But it’s potentially bad news for palm oil growers.

Prices of coconut oil had a closing peak of $2,027.50 a ton this year
from a low of $745.25 in 2013 before before Typhoon Haiyan hit,
causing as much as $14.5 billion of damage, according to AIR
Worldwide, and affecting 33 million coconut trees in the Philippines’
Eastern Visayas region alone, according to the FAO.

Coconut oil closed at $1,726 a metric ton on Rotterdam on July 27.
Palm kernel oil, its rival and closest substitute peaked of $1,845 a
ton in January this year before easing to $1,085 on July 27.

“The premium of coconut oil over palm kernel oil is really very high,”
UCAP’s Agustin said. “Maybe if prices come down, it may attract
demand. There is always a demand for coconut production especially the
core demand, where no other oils can replace coconut oil in certain
usages. Even with prices now, which is much higher than palm kernel
oil, there’s still that core demand for coconut oil."

That demand doesn’t look like stopping, thanks mainly to Western consumers.

Starbucks in April launched another coconut-infused coffee beverage,
indulging customers who want more than just the option of having
single-origin coconut milk in their drinks. Toasted Coconut Cold Brew,
which is sweetened with flavors of toasted coconut and honey, comes on
the heels of its Coconut Milk Mocha Macchiato which Chief Marketing
Officer Sharon Rothstein said lifted sales.

Sales of PepsiCo’s Naked juice and coconut waters reached more than $1
billion last year. Jamba Inc. has introduced colada fruit smoothies
made with coconut water, while in Malaysia, Nestle SA launched a
coconut-flavored coffee mix. Food manufacturers are also rolling out
new products such as Beyond Meat vegan burgers made with coconut oil,
Dairy Crest Group Plc’s dairy-free coconut spread, McCormick & Co.’s
coconut milk cooking sauces, and Mondelez International Inc.’s savory
crackers made with dried coconut.

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Consumer price growth in developing economies eased to 3.1 percent in June, the lowest since the depths of the financial crisis
Emerging Markets

Consumer price growth in developing economies eased to 3.1 percent in
June, the lowest since the depths of the financial crisis, driven by a
dip in fuel prices. Inflation will probably remain subdued this year
and next, according to analysts at Capital Economics Ltd.

Frontier Markets

Sub Saharan Africa

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China formally opens first overseas military base in Djibouti

BEIJING (Reuters) - China formally opened its first overseas military
base on Tuesday with a flag raising ceremony in Djibouti in the Horn
of Africa, the same day as the People's Liberation Army marks its 90th
birthday, state media said.

Djibouti's position on the northwestern edge of the Indian Ocean has
fuelled worry in India that it would become another of China's "string
of pearls" military alliances and assets ringing India, including
Bangladesh, Myanmar and Sri Lanka.

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Malawi has issued an arrest warrant for its former President Joyce Banda over alleged abuse of office and money laundering offences

LILONGWE (Reuters) - Malawi has issued an arrest warrant for its
former President Joyce Banda over alleged abuse of office and money
laundering offences over a two-year period when she was in office, a
police spokesman said on Monday.

Banda's spokesman denied any wrongdoing.

The alleged offences were part of a wider corruption scandal uncovered
in 2013, in which senior government office siphoned millions of
dollars from state coffers, national police spokesman James Kadadzera

Investigations by police's fiscal and fraud department had "unearthed
credible evidence" against Banda, he said.

"The evidence gathered raises reasonable suspicion that the former
President committed offences related to abuse of office and money
laundering. The warrant of arrest is in force and necessary legal
formalities are being pursued," Kadadzera said in a statement.

Banda, who was Malawi's president for two years from 2012, left the
country when she lost in elections to incumbent Peter Mutharika and
has not returned since 2014.

It is not clear where she is now.

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Congo Misses Eurobond Payment as Government Contractor Chases Unpaid Bills

The Republic of Congo became the second African country this year to
miss a Eurobond payment after a contractor alleging the government
owes it money blocked the transfer of funds to debt investors.

Holders of the Central African nation’s $363 million of securities due
in 2029 did not receive around $21 million in coupons and amortization
payments by the end of July, when the grace period expired, according
to Lutz Roehmeyer, a money manager at Landesbank Berlin Investment.
Two other bondholders, who did not want to be identified as they
aren’t authorized to speak about the matter, also said they hadn’t
been paid.

The government paid the funds to the Eurobond trustee, Delaware Trust
Co., in June but the transfer to the investors was blocked by a
restraining order obtained by Commissions Import Export SA, Moody’s
Investors Service said on July 28. The ratings company downgraded
Congo to Caa2 from B3 and said a default was “imminent.”

“Bondholders knew there was no chance the order would be lifted by
now,” said Roehmeyer of Landesbank Berlin, which manages $3 billion of
emerging-market assets and has owned some of Congo’s bonds for about a
year. “We are fairly optimistic we will get the payment. We’ll sit and
wait. If it’s over in the next quarter or so, that will be fine.”

Commisimpex, as the contractor is known, is claiming 1 billion euros
($1.18 billion) for work dating back to the 1980s and has pursued
litigation through U.S., French and U.K. courts over several years,
according to Moody’s. A court hearing will take place in New York on

Calls and emails to Congo’s finance ministry weren’t immediately
answered. Delaware trust didn’t respond to an emailed request for
comment sent on Monday.

Congo’s securities lost 12 percent in July, making them the
worst-performing Eurobonds in Africa, according to data compiled by
Bloomberg. The price rose slightly to 70.8 cents on the dollar by
12:32 p.m. in London. The country’s finances have been under pressure
since the 2014 oil-price crash reduced its export earnings.

“The government’s default on its sole Eurobond will exacerbate
liquidity pressures that have been increasingly acute since the oil
price shock,” Moody’s said. “Even if the trustee transfers the funds
to the bondholders in the following weeks or months, there will remain
a risk that future coupon payments could be blocked from reaching
bondholders as long as the legal dispute between Commisimpex and the
government continues.”

Mozambique is trying to restructure its external debts after it
defaulted on a $727 million Eurobond in January.

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Museveni okayed Crane Bank closure, says Mutable

The Bank of Uganda Governor, Mr Emmanuel Tumusiime-Mutebile, has
revealed that President Museveni gave the “go ahead” to close Crane
Bank whose management the central bank took over last October due to
its under-capitalisation.

“You would be mad to do such a thing (closing a bank) without briefing
him (the President) on such an important action. He (Museveni) said
‘go ahead’,” the governor told this newspaper in an interview on

Crane Bank, which a forensic audit later found was wholly owned by
businessman Sudhir Ruparelia, was Uganda’s fourth-largest commercial
bank by the time of its dramatic collapse.

The central bank sold some of its assets and liabilities to dfcu Bank,
but remained with the other liabilities the buyer could not take, and
these developments culminated in Crane Bank and BoU jointly suing Mr

The BoU Governor said he was “sorry” and would take responsibility for
“what went wrong” but added that “I am not criminally culpable”.

What did the forensic audit unearth?
It found out, among others, that some of the claimed shareholders were
not shareholders and the bank was owned by Sudhir almost 100 per cent.
As a result of that forensic audit, one of the claimed shareholders
Kantaria paid $8 million.

Where and to who was this money paid?
It was paid by Kantaria to Bank of Uganda. I can always check the
account to which it was paid and get back to you but it was paid to

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Shares in Nigeria's Dangote Cement rose 7.3 percent on Tuesday

Shares in Nigeria's Dangote Cement rose 7.3 percent on Tuesday after
the company increased the free float on its stock with a $236 million
stake sale to foreign investors.

Dangote Industries Limited, majority owned by Africa's richest man,
Aliko Dangote, sold a total of 416 million shares in Dangote Cement to
foreign investors at 210 naira ($0.576)each.

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Uhuru, Raila in very tight race, three polls show @TheStarKenya

Five days to the polls, President Uhuru Kenyatta and opposition chief
Raila Odinga are locked in a dead heat that may lead to a run-off,
three separate polls by three different pollsters suggest.

The surveys released yesterday show Raila has dramatically closed the
gap with Uhuru in the last few weeks.

The General Election is on Tuesday.

Infotrak indicates the ex-Prime Minister would lead the presidential contest.

A poll by the Radio Africa Research Department indicates Raila has
gained two percentage points over two weeks, while Uhuru has lost a
similar margin over a fortnight.

The poll conducted from 25-31 July shows, however, that Uhuru would
lead the crowded race of eight by 47 per cent against Raila’s 46 per

The countrywide survey of 4,508 respondents indicates seven per cent
of Kenyans are undecided.

Uhuru and Raila, both scions of the country’s founding fathers, are
engaged in a fierce battle and are scouring every village.

On July 19, a similar poll by Radio Africa gave Uhuru 49 per cent
against Raila’s 44 per cent.

The second Infotrak poll, conducted from July 27-31,indicates Raila
would lead by 49 per cent against Uhuru’s 48 per cent — if elections
were held at that time.

The survey of 5,000 respondents in all 47 counties indicates 2.2 per
cent of 19.6 million voters are still undecided.

But a third poll by research firm Ipsos, also released yesterday, puts
Uhuru ahead by 47 per cent against Raila’s 44 per cent.

In a similar poll two weeks ago, Uhuru was the young people’s favourite.

According to IEBC statistics, there are 9.9 million registered voters
aged between 18 and 34. This means that youths will have huge
influence in the race for State House.

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The Last Thing Kenya's Economy Needs Is a Chaotic Election Bloomberg Businessweek

For Ike Ochiango, who sells long-life milk to informal traders in
Nairobi’s sprawling Kibera slum, Kenya’s Aug. 8 presidential election
is bad for business. “People are not buying,” says the 26-year-old, as
he takes a break from pulling his makeshift handcart laden with
cartons along a rutted dirt road in the traffic-choked capital. “They
are afraid of violence and that their shops will be looted.”
The fear is well-founded: Assassinations, intimidation, and
gerrymandering have marred previous elections in the East African
nation. The memory of an anarchic 2007 vote, and an ensuing killing
spree in which at least 1,100 people died, is fresh in the minds of
many Kenyans. This year’s campaign has also been fraught, with
preparations behind schedule, the opposition up in arms over balloting
procedures, and numerous clashes between rival political parties and
the police. The prospect of renewed political turmoil poses further
risks to an economy that was one of Africa’s top performers over the
past decade, when growth averaged 5.2 percent a year. Now Kenya is
contending with a crippling drought and rising government debt. Growth
plummeted in the aftermath of the disputed election, to 1.7 percent in
2008 from 7.1 percent the year before. The government expects the
economy to grow 5.5 percent in 2017.
About 180,000 personnel from the police, the electoral commission, and
other government agencies have been deployed to secure the vote, and
the European Union, African Union, and the Commonwealth have sent
observers. Robert Besseling, the Johannesburg-based executive director
of EXX Africa Ltd., a political risk advisory firm, warns that large
parts of the country remain highly susceptible to electoral
mischief-making. “There remains ample scope for vote-rigging,” he
says. “Allegations of electoral fraud are the primary trigger for
outbreaks of violence. Partisan supporters and militia groups will
mobilize to protect their ethnic and political interests.” Kenya is
home to more than three dozen ethnic groups.
About 19.6 million people have registered to participate in the
election of a president, a deputy, 47 senators, and 290 members of the
lower house. (Kenya’s senate has 67 seats, but only 47 are elected;
the balance are nominated to give greater representation to women,
youth, and the disabled.) A candidate must win a majority of the
popular vote and at least a quarter of ballots cast in more than half
of the nation’s 47 counties to win the presidency, failing which a
runoff must be held within 30 days.
While eight hopefuls have entered the race, opinion polls show only
the incumbent, Uhuru Kenyatta, 55, and former Prime Minister Raila
Odinga, 72, have a realistic chance of winning. A July poll by Ipsos
Kenya showed Kenyatta with 47 percent support and Odinga with 43
percent. Emma Gordon, an analyst at Verisk Maplecroft, a U.K.-based
risk advisory firm, gives Kenyatta an even chance of a first-round
victory but cautions that the race is too close to accurately call.
The contest is a rematch of one held five years ago that Kenyatta won
in the first round by the narrowest of margins. Odinga cried foul, but
the Supreme Court rejected his allegations of vote-rigging. This time,
Odinga has the backing of five of the main opposition parties, which
have united under the banner of the National Super Alliance to try to
unseat Kenyatta’s Jubilee Party.
Kenyatta, the son of Kenya’s founding father and first president, has
pledged to boost investment in infrastructure, expand access to health
care and education, and create an additional 1.3 million jobs a year.
Odinga, for his part, says he will crack down on corruption,
revitalize industry, and cut the fiscal deficit to less than 3 percent
of gross domestic product. The budget gap stands at 10.2 percent, and
the government debt-to-GDP ratio has ballooned to more than 50
percent, from less than 40 percent eight years ago, as Kenyatta’s
administration raised borrowing to fund it. The next administration
will have to curtail debt if Kenya is to retain its status as one of
Africa’s most-favored investment destinations, according to John
Ashbourne, Africa economist at Capital Economics Ltd. in London.
“Kenya certainly does not look as promising as it did a few years
ago,” he says. “If debt levels continue to rise, then Kenya could get
into trouble relatively quickly. There is an additional risk, in that
we expect that Kenya’s economy will slow in 2017, so revenue will
probably be below target.”
Corruption, a lack of jobs, and rising grain prices resulting from the
worst drought in three decades are more pressing concerns for the
electorate, Ipsos surveys show. Inflation is running at a five-year
high, and the cost of milled corn, a staple food known as unga in
Kenya, has soared more than 50 percent over the past year. Almost half
the population of 47 million survives on less than $2 a day. The
government warns that more than 3 million people are at risk of going
While Kenya’s economic challenges may sway some votes and induce a
higher turnout in opposition strongholds, politicians’ personalities
and ethnic loyalties will be more decisive factors if past elections
are anything to go by. Kenyatta can count on the support of his fellow
Kikuyu, the largest of more than 40 ethnic groups; his running mate,
William Ruto, should help him secure backing from the fourth-largest
group, the Kalenjin. Odinga, an ethnic Luo, has strong support among
the country’s third-biggest group and is banking on the wide diversity
of his coalition’s other leaders to draw other voters.
With more than half of registered voters below the age of 35, another
key to the outcome will be whether political parties can persuade
young people to participate, says Ndung’u Wainaina, executive director
of the International Center for Policy and Conflict in Nairobi.
Abdul Azizi, 27, is unemployed and doesn’t see the benefits of voting.
“All the politicians are the same,” he says. “They are rich. We are
struggling to get half a kilogram of unga. We are dying poor, like
dogs. Life is going to be hard after elections. Nothing will change.”
BOTTOM LINE - Because of ethnic politics, President Uhuru Kenyatta has
a good shot at capturing another term even though the price of food
staples has skyrocketed and public debt has soared.

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Britain's SFO opens investigation into BATS in Africa

British American Tobacco said on Tuesday that Britain's Serious Fraud
Office has opened a formal investigation into possible historic
misconduct by the company in Africa.

The maker of tobacco brands including Dunhill and Lucky Strike said it
has been investigating a number of allegations of misconduct, that
were originally made towards the end of 2015, through its legal
advisers and by liaising with the SFO.

The company said in a statement that it intends to co-operate with the

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by Aly Khan Satchu (www.rich.co.ke)
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August 2017

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