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Satchu's Rich Wrap-Up
 
 
Thursday 19th of January 2017
 
Morning,
Africa

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Normal Board - The Whole shebang
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The Latest Daily PodCast can be found here on the Front Page of the site
http://www.rich.co.ke

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Such a pleasure to catch up with @cnni @CNNAfrica's tour de force the one and only @EleniGiokos
Africa


I thank H.E @BobGodec and the US Chamber for the Invitation to speak yesterday.

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Yellen trumps Trump on dollar
Africa


US Treasury yields rose too after Yellen said “waiting too long to
begin moving towards the neutral rate could risk a nasty surprise down
the road – either too much inflation, financial instability, or both.”

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A more lasting bottom is now in place for the pound, technical analysis suggests. via @S__K__G @markets
Africa


30-DEC-2016 :: My Optimal Portfolio at this moment looks like this 3.
Long Sterling versus the Shilling
http://bit.ly/2iBmR73

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Mexico Peso via @Schuldensuehner
Africa


09-JAN-2017 :: The Mexico Peso [sits at the bleeding Edge of Trump's Policies]

http://www.rich.co.ke/media/docs/PX_014NSX0901.pdf

Home Thoughts

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17 DEC 12 :: The Future is not seen in the Rearview Mirror [said @vkhosla]
Africa


VINOD Khosla who famously bagged a few billion dollars in Silicon
Valley was the fellow who said, ‘The future is not seen in the rear
view mirror.’

 The “Demographic arc of instability” outlined by these youthful
populations covers all of Sub-Saharan Africa. Now I know the
excitement about the demographic dividend is simply overwhelming but
remem- ber this is a binary thing, the demographic dividend could
easily morph into a time bomb.

Charles Dickens said the following in his book ‘A Tale of Two Cities’;

‘“It was the best of times, it was the worst of times . . . it was the
spring of hope, it was the winter of despair . . . we were all going
direct to heaven, we were all going direct the other way . . . ”

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12-DEC-2016 :: might not move aside easily but make no mistake its in the departure lounge
Law & Politics


might not move aside easily but make no mistake its in the departure
lounge and the open question is will it leave first class, coach or be
placed in shackles and placed at the back of the plane like our People
are when they are sent back from Europe because they have entered
illegally.

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12-DEC-2016 : "After the Arab Spring, this is the Black Spring"
Law & Politics


In 2014, I recall a certain Martin Aglo, who on the occasion of the
termination of Beautiful Blaise Campaore in the streets of
Ouagadougou, told Reuters: “After the Arab Spring, this is the Black
Spring”.

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12-DEC-2016 :: The demographic bulge is now arriving at voting age. This is that moment, its importance cannot be gainsaid.
Law & Politics


Africa is a very non-linear place but recent elections from President
Buhari of Nigeria through president-elect Barrow in the Gambia through
president-elect Akufo-Addo of Ghana (pictured below) is surely
signalling a trend-change is at hand.

The big picture point is in fact a demographic one. Many commentators
define the African population surge as a ‘’dividend’’ but what is
clear is that if it is allowed a Free and Fair vote its going be a
Terminator for a whole number of regimes.  The demographic bulge is
now arriving at voting age. This is that moment, its importance cannot
be gainsaid.

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14-NOV-2016 :: Here comes President @realdonaldTrump
Law & Politics


Donald Trump won the US election all ends up and for the first time
since 1928 won the Presidential vote, the Senate, the House and will
decide the Supreme Court’s composition. It is a breath-taking win
especially when you consider that Trump was an insurgent candidate and
his Make America Great Again movement similarly an insurgent movement.
Trump confounded the pollsters and the traditional media echo chamber
and was ranked a rank outsider at 4-1 in a two horse race just a few
short hours before the final result was known.  The result in the US
mimicked the Brexit result and what is clear to me is that we are
watching a populist wave or zeitgeist (some have characterised it as a
‘’whitelash’’) which has now swept the United Kingdom and the US and
has Italy (where Matteo Renzi has called for a Referendum), France
(where Marine Le Pen is the most popular politician by a street) and
the Netherlands all in its crosshairs.

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.”

And this is another important point, traditional media has lost its
position of control. It’s been upended by the internet which allowed
insurgent politics to broadcast over the top.

I am a Seller of Ian Bremmer’s rather hyperbolic critique. Putting a
Stop-Loss into play with the Syrian rebels (who are a bunch of
ne’er-do-wells and paid mercenaries), reaching out to Vladimir Putin
indicate a trend-change in the way the US engages with the rest of the
World strikes me as an entirely sensible mid course correction. 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.  erefore, I see Trump playing a Ronald Reagan
Game.

From an economic and trade perspective, I expect Trump to be much more
aggressive with China. I think the QE [Quantitative Easing] consensus
is now a busted Flush.

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@rhodes44 : "What I take issue with is that we were spinning. We believed in these things" Rhodes told @politico
Law & Politics


Rhodes’ colleagues have said he achieves a “mind meld” with Obama when
writing speeches. Over the past decade, the onetime aspiring fiction
writer has evolved, to the dismay of critics who cite his lack of
prior experience, into a bona fide policy adviser and even a diplomat:
Rhodes participated in secret talks with Cuba that led to restored
diplomatic relations with the U.S. and was instrumental in Obama’s
historic visits to closed-off Myanmar.

Michael Crowley: Is there any way to sum up on a bumper sticker—or at
least a postcard—what the foreign policy legacy of the last eight
years is?

Ben Rhodes: A single word I would apply is engagement. We’ve engaged
diplomatically around the world. We’ve engaged former adversaries.
We’ve engaged publics. We’ve sought to work through multilateral
coalitions and institutions with the purpose of repositioning the
United States to lead.

A lot of what we did was to restore the United States at the center of
the international order. People have criticized us for presiding over
a decline. I think we make the opposite argument: that we were in
decline and that we—by both husbanding our resources, investing in our
economy, and being opportunistic diplomatically—tried to set the
United States up for being in a stronger position in a changing world
than where we were when we came in.

Rhodes: I would say a couple of things. One, the Arab Spring obviously
overwhelmed the circuits. There’s an intensity [to the period from]
2011 to 2014, when a 100-year storm took place in three years.1 Two,
there is a discordance between the nature of power in the current
moment and how Washington thinks about foreign policy that you can
only appreciate if you’re in these jobs. A lot of thinking in both
political parties was understandably shaped by the 1990 to 2002
window, when the United States had a great deal of freedom of action.
We could get anything through the U.N. Security Council that we
wanted, with some small exceptions. We could, frankly, interfere in
the internal affairs of other countries in a host of different ways.
We could count on Russia being on its back foot as we enlarged NATO.
We had some time before the Chinese started to try to shape events in
their neighborhoods. And we could even have the hubris to think that
it made sense to invade and occupy Iraq. What hasn’t changed is the
United States is still, by far, the most powerful country. But what
has changed is there are other power centers that are going to ensure
that there are limits on certain things that the United States wants
to do.

Rhodes: I went through an evolution on Syria. I came into this job
shaped by the post-Rwanda view of liberal interventionism3—suspicious
of some amount of U.S. military intervention, but also seized with the
necessity of acting in certain situations. I was a vocal advocate of
[going into] Libya,4 and in the early days of the Syrian conflict, I
was an advocate for military action in Syria. And I believe that I was
wrong about that. Everything that I have learned about watching that
conflict unfold suggests to me that the president’s refusal to get
into a military conflict with the Assad regime was actually one of his
best decisions.

The only country in the world that was prepared to join us was France.
And we had no domestic legal basis. We actually had Congress warning
us against taking action without congressional authorization, which we
interpreted as the president could face impeachment.

Crowley: Really? Was the prospect of impeachment actually a factor in
your conversations?

7 “It is essential you address on what basis any use of force would be
legally justified and how the justification comports with the
exclusive authority of Congressional authorization under Article I of
the Constitution,” House Speaker John Boehner wrote to Obama in 2013.
Rhodes: That was a factor.

The world order and American actions in the world have deep wiring. We
found that when we came into office. It took us a long time to turn
the ocean liner around a dust-up with the Iranians or the Chinese
could get out of hand very fast.

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The Real Meaning of Putin's Press Conference Atlantic
Law & Politics


“You haven’t yet commented on the report that, allegedly, we or in
Russia have been collecting kompromat on Donald Trump, including
during his visit to Moscow, as if he were having fun with prostitutes
in a Moscow hotel,” said the reporter with the pro-Kremlin LifeNews.
“Is that true? Have you seen these files, these videos, these tapes?”

Dodon looked half mortified, half amused as he looked over toward a
laughing Putin.

“You know,” Putin said, “there’s a category of people who leave
without saying goodbye, out of respect for how things have come
together, so as to not disturb anything. Then there are people who
endlessly say goodbye. The departing [U.S. presidential]
administration, in my opinion, is in the second category.”

Then he tried, barely, to suppress a smirk.

Unlike Trump, who tends to react immediately and viscerally, Classic
Putin likes to keep people waiting in suspense. Whenever something big
and important happens, don’t expect Putin to speak. For days. When
pro-democracy protests broke out in Moscow in 2011, Putin was silent
for more than a week. He was one of the first to personally
congratulate Trump on his election victory, but he said nothing
publicly about the results of the election until November 21, nearly
two weeks after the fact. When he meets with pretty much anyone—Queen
Elizabeth, the Pope, the parents of children who were killed in a
plane crash—he keeps them waiting for him. (The Queen waited 14
minutes, the Pope for 50 minutes, and the grieving parents for two
hours at a cemetery.

Classic Putin is both a master bureaucrat and a salt-of-the-earth guy;
he is fluent both in cunning bureaucratese—as when he described the
alleged prostitutes referred to in the dossier as “women of decreased
social responsibility”—and in the language of the muzhik, the hearty,
salty Russian man—as when he then joked that, regardless of anything
else, Russian prostitutes “are undoubtedly the best in the world.”

“There’s an impression as if, having practiced in Kiev, they want to
organize a Maidan in Washington just to keep Trump from taking
office,” Putin said.

What Putin’s comments showed is that he is, finally, after all these
years of frustrated ego, the senior partner in this relationship. He
has to defend Trump’s sullied reputation; he has to defend his
undermined legitimacy; he is now Trump’s protector, guarding him the
way a mob capo might protect a diamond shop. And that’s Classic Putin,
too.

05-DEC-2016 :: Putin's Parabolic Rebound

http://www.rich.co.ke/media/docs/PX_014NSX0512.pdf

05-OCT-2015 :: Putin is a GeoPolitical GrandMaster @TheStarKenya

http://www.rich.co.ke/media/docs/038NSX0510.pdf

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.0635
Dollar Index 101.26
Japan Yen 114.63
Swiss Franc 1.0069
Pound 1.2276
Aussie 0.7525
India Rupee 68.185
South Korea Won 1176.51
Brazil Real 3.2317
Egypt Pound 18.8905
South Africa Rand 13.6072

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World Currencies


“The idea that this is likely to happen sooner rather than later
caught the market offside,” said Alvise Marino, a foreign-exchange
strategist at Credit Suisse Group AG in New York. “Everything he said
tends to confirm fears that a Nafta repeal as early as next week is a
distinct possibility,” he said.

The loonie has rallied this year, part of a broad-based surge against
the U.S. dollar, which has wilted amid a revaluation of growth
prospects under a new administration. Still, Bank of Canada Governor
Stephen Poloz flagged Trump uncertainty as a factor in saying a rate
cut is still a possibility. Meanwhile, the peso has led losses among
major currencies amid concern trade with U.S. will fizzle as the
nation accounts for 80 percent of the Latin American country’s
exports.

The Mexican peso fell 2 percent to trade at 21.9544 per dollar on
Wednesday, while the Canadian dollar dropped 1.7 percent to trade at
1.3269 per dollar.

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Commodities


Late times are bad, but if there’s one way to make a sushi chef go
ballistic—at least internally—it’s watching a customer mash a mound of
wasabi in a pool of soy sauce and then dunk the sushi in it. So it
bears repeating: At a good sushi bar, every piece is precisely
composed by the chef. Not only are you insulting the chef with your
soy-wasabi bath, you’re upsetting the delicate flavor balance of a
piece of fish that you're paying a lot of money for (at Nakazawa, $150
at the sushi bar; $120 in the dining room). Still, if you’re
determined to be the boss of your sushi, the chef will hand over a
little extra wasabi and/or soy sauce; the word "please" is helpful.

Emerging Markets

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Citigroup, Top Africa Loan Arranger, Sees M&A Boosting Lending
Africa


Citigroup Inc., sub-Saharan Africa’s top loan arranger in 2016,
expects increased sovereign demand and mergers and acquisitions to
drive lending in the region this year as low valuations spur deals.

“Lots of financing activity is expected in 2017,” Aziz Rahman, the
bank’s head of corporate finance in the region said in an interview on
Monday. Loans to sovereigns and corporates will increase as M&A deals
rise and infrastructure spending picks up, he said. A total of $34.3
billion in loans were arranged for borrowers in the region last year,
according to data compiled by Bloomberg.

Citigroup reclaimed its position as the top loan arranger in
sub-Saharan Africa for the first time since 2008, edging out Standard
Chartered Plc, which held the top spot since 2011. The U.S. lender,
which operates in 12 countries in the region, helped arrange $3.5
billion in loans, while the London-based bank arranged $2.5 billion,
the data showed.

Citigroup last year helped to arrange a total of $1 billion in loans
for Africa’s largest mobile operator MTN Group Ltd. and $666 million
in lending to South African-born retailer Steinhoff International
Holdings NV. The New York-based bank held 16 percent of the region’s
market share, while Bank of America Corp. held a 12 percent share and
Standard Chartered accounted for 11 percent, according to the data.

Still, lending in Africa doesn’t come without risks. Mozambique said
on Monday that it won’t honor a $59.8 million coupon payment on Jan.
18, which would be Africa’s first sovereign default in five years.

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Counter-intuitively, South Africa [with its entrenched institutions] looks significantly less politically risky than many other SSA countries
Africa


The Rand closed the Year +11% versus the Dollar] as Investors started
to factor in Pravin Gordhan's fight-back against rogue policy-making.
The Cause and Effect was best witnessed around the time when David Van
Rooyen momentarily gained control of the Treasury. Policy-making is a
factor for Investors and in a low growth environment it will have an
outsize impact on returns.

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Shoprite Wins as S. Africans Seek Cheap Food to Beat Inflation
Africa


South African shoppers have been hurt by an inflation rate that
climbed to a 10-month high of 6.8 percent in December, led by surging
food costs following the worst drought since at least 1904. That’s
been compounded by unemployment of 27 percent and economic growth in
2016 that was the slowest in seven years.

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"The possibility of a devaluation is certain; the question is the timing" Nigeria Naira
Africa


That expectation by seven of the nine economists polled this week
comes even though Central Bank Governor Godwin Emefiele has said he
would not devalue the naira <NGN=D1>.
"The possibility of a devaluation is certain; the question is the
timing," said Aly-Khan Satchu, an analyst and investor at Rich
Management in Nairobi.
"They are eventually going to capitulate at some point this year, a
similar scenario to Egypt at the end of last year - a big devaluation
in the official rate."
Nigeria stubbornly held on to an official peg of 197 naira to the
dollar for 16 months, until June of last year, hurting the economy. It
subsequently floated the currency but maintained some measures to
prevent further weakening. The naira currently trades at 305 per
dollar.
Dollar shortages meant the currency fell to close to 500 against the
dollar last week on the unapproved open retail market [nL5N1F3400].

Conclusions

If President Buhari thinks China is going to underwrite an overvalued
Naira i Think he is mistaken

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Mozambique Won't Blink First as Battle With Bondholders Heats Up
Africa


The $727 million bonds due January 2023 fell to 55.35 cents on the
dollar on Monday, having a reached a record low of 50 cents last week.

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Nakumatt agrees stake sale to fund for $75m
Africa


Nakumatt, Kenya's biggest supermarket chain by sales, has agreed to
sell a 25 percent stake to a foreign fund for $75 million, part of an
effort to bolster its balance sheet and pay off debts, its managing
director said on Wednesday.

"We are already at final stages with the investor. We are just waiting
for the money to come," Atul Shah told Reuters, without naming the
fund involved.

The deal is part of the chain's plan to overhaul its balance sheet and
restructure a $75 million debt tranche owed to four local banks, Shah
said. Expansion and other investments have pushed its debt up overall
to $150 million.

"Nakumatt is going through some financial stress. We are out looking
for funds and we are restructuring," Shah said, adding the cash was
expected before the end of February and would help the firm extend the
tenor of its debts to more than five years.

The equity deal with the foreign fund values the business at $300 million.

"It is a fair valuation," Shah said, noting the business had expanded
from a single small store to a regional network in 24 years.

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A brutal start to 2017 at the NSE @TheStarKenya
Africa


My view is that just about everything negative is now baked into the
price. Baron Rothschild is credited with saying “the time to buy is
when there’s blood in the streets”. He should know. Rothschild made a
fortune buying in the panic that followed the Battle of Waterloo
against Napoleon.  e world’s second wealthiest person Warren Buffett
has warned: “You pay a very high price in the stock market for a
cheery consensus.” So my first overarching point is that valuations
are at rock-bottom levels, and it is at these moments that the smart
investor sits up and takes notice.

In these kinds of bearish conditions, it’s important to pick your
spots. Just buying the index is not an optimal strategy. We have
witnessed serious divergences in price performance. It’s therefore a
more Darwinian environment.

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Nairobi ^NSE20 Bloomberg -7.95% 2017
Africa


2,932.79 +3.11 +0.11%

Every Listed Share can be interrogated here

http://www.rich.co.ke/rcdata/nsestocks.php

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