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Satchu's Rich Wrap-Up
Monday 27th of March 2017

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Macro Thoughts

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27-MAR-2017 :: April is the cruellest month, breeding lilacs out of the dead land @thestarkenya

I have been reading Ngũgĩ wa Thiong’o and in his book ‘’Dreams in a
Time of War’’, he writes: ‘’Years later when I read T.S. Eliot’s line
that April was the cruellest month, I would recall what happened to me
one April Day in 1954, in chilly Limuru...The Day came back to me, the
now of it, vividly.’’

And then I jumped to the Opening Lines of the Poem to which Ngũgĩ is referring:

‘’April is the cruellest month, breeding

Lilacs out of the dead land, mixing

Memory and desire, stirring

Dull roots with spring rain.’’

And here we are approaching April and on the back of my mind, I was
thinking ‘’will it be cruel?’’

Internationally, April might well turn out very cruel for US President
Trump. Investors ran the dollar and the Dow Jones higher after
November 8 polls, and now are running them both right down. The
‘’Trump’’ trade has become the ‘’Chump’’ trade. Prices emit a very
clear signal, and the signal in all this noise is very pure. What is
also clear is that for all the Trump’s distractions, ‘’incidental’’
wire-taps [The US taps the Russian ambassador he walks into Trump
Tower (through the back door) for a meeting with his senior advisor
and son-in-law Jared Kushner (which Kushner does not declare)] are set
to confirm a simply unprecedented level of ‘’non-linear’’ coordination
between Team Trump and a Foreign Power. The failure to repeal
Obamacare speaks to a president who is out of his depth and New York
Times columnist Maureen Dowd described him thus ‘’because you’re
sitting around in a bathrobe getting your information from
wackadoodles on @FoxNews’’. Therefore, sell the dollar. Trump has
injected political risk into the US equation in a way that we have not
witnessed previously.

Crude oil in New York closed out at $48.21 which is a five-month low.
The price action is signalling a big risk of a further dramatic and
asymmetric move to the down-side. Keep an eye on Caracas, Riyadh,
Abuja, Luanda and all the rest. I expect April to be very cruel for
these capitals. Closer to home, the Central Bank of Nigeria has
engineered a powerful naira on the black-market from levels above
500.00 to the dollar to below 400.00. Given my outlook for the price
of oil, this naira rally is not sustainable.

In Nairobi, the stock market wobbled big. The Nairobi All Share
crashed -10.289% from the start of the year through March 9, and that
date was in fact a 47-month closing low. The NSE 20 Index closed at a
more than eight-year low at the end of January. The mood was dark.
Everywhere we turned, it seemed policy-makers were on a Kamikaze
mission to destroy shareholder value wherever they could find it. And
what with the election just around the corner, I remember folks
looking at me with some incredulity when I said: ‘That’s it for the
year, this is the low, it’s like an elastic band that’s been stretched
too far.”

Well The Nairobi All Share is +9.1874% since March 9. The Nairobi
NSE20 is +10.33% since Jan 30. A number of stocks have struck more
than 2017 highs. StanChart closed +15.34% in 2017 [plenty more upside
scope after reporting FY 16 PAT +42.679%], KCB +9.56% in 2017 [Sh3
final dividend], amongst others. Safaricom is marginally down for the
year as it recovers from what was an onslaught. It looks outstanding
value even after staging a +8.52% price rally in March. Local
institutions [overweight bonds and underweight equities] have been
caught wrong-footed, and need to re-balance their portfolios urgently
more in favour of equities.

The shilling closed the week just below 103.00 to the dollar. In
January, I recall a barrage of headlines which made you think that the
Shilling was tanking. I remember being at a conference at the Radisson
Blu and a Fellow pulling me aside and saying: “Look buddy, its all
about the risk of a big asymmetric move to the downside’.”

I have a fondness for the word “asymmetry” and its derivations. For
example, what happened in London where “a middle-aged crackpot in a
rented Hyundai’” [@rj_gallagher] caused havoc is an example of
asymmetric warfare. So I recalled that conversation ‘”the now of it,

The shilling will confound the naysayers through 2017. Oil is the key signal.

read more

The Waste Land Related Poem Content Details BY T. S. ELIOT

I. The Burial of the Dead

April is the cruellest month, breeding
Lilacs out of the dead land, mixing
Memory and desire, stirring
Dull roots with spring rain.

“You gave me hyacinths first a year ago;
“They called me the hyacinth girl.”

I think we are in rats’ alley
Where the dead men lost their bones.

  “What is that noise?”
The wind under the door.
“What is that noise now? What is the wind doing?”
Nothing again nothing.
“You know nothing? Do you see nothing? Do you remember

       I remember
Those are pearls that were his eyes.
“Are you alive, or not? Is there nothing in your head?”

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Don't worry. No one will ever mistake you for a politician NYT
Law & Politics

After this past week, they won’t even mistake you for a top-notch negotiator.

And you, Donald, are getting a reputation as a sucker. And worse, a
sucker who is a tool of the D.C. establishment.

They’re counting on you being a delusional dupe who didn’t even know
what was in the bill because you’re sitting around in a bathrobe
getting your information from wackadoodles on Fox News and then, as
The Post reported, peppering aides with the query, “Is this really a
good bill?”

You got played.

It took W. years to smash everything. You’re way ahead of schedule.

And I can say you’re doing badly, because I’m a columnist, and you’re
not. Say hello to everybody, O.K.?

Sincerely, Maureen

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Brexit and Donald Trump promised easy solutions to hard problems - but what happens when they don't deliver?
Law & Politics

Pollsters and analysts have labelled Brexit, the election of Donald
Trump and the rise of non-traditional left and right parties in Europe
as manifestations of “populism”. But the diagnosis may be misleading.

Populism is an oxymoron. Democracy inherently requires popularity,
with a majority or, at least, sizeable support needed for political
power. Avoiding the problems of imprecise labelling, an examination of
the underlying factors is more useful.


its going to take a very long time for the Penny to drop.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0847
Dollar Index 99.28
Japan Yen 110.27
Swiss Franc 0.9878
Pound 1.2528
Aussie 0.7629
India Rupee 65.115
South Korea Won 1114.03
Brazil Real 3.1081
Egypt Pound 17.9730
South Africa Rand 12.3925

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"If oil prices were to fall back to $40, we would see much larger deficits to finance," said Mathias Angonin, analyst at Moody's.

On Friday the price of Brent, the international benchmark, was at
$50.80 a barrel, while West Texas Intermediate, its U.S. equivalent,
was trading at $47.97.

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Tanzania Leader Warns Media After Minister Fired Over TV Dispute

Tanzanian President John Magufuli warned media organizations against
“inflammatory” reporting, a day after he fired a cabinet minister who
defended press freedom.

“Media owners, let me tell you: Be careful. Watch it,” Magufuli said
Friday in the commercial capital, Dar es Salaam. “If you think you
have that kind of freedom -- not to that extent.”

Magufuli on Thursday dismissed Information Minister Nape Nnauye, who
this week ordered an inquiry into a regional commissioner who tried to
force a privately owned media company to broadcast footage about a
paternity case involving a political rival. The commissioner, Paul
Makonda, is an ally of Magufuli, according to Dubai-based research
group Teneo Intelligence.

Since taking office in November 2015, Magufuli has sought to improve
government efficiency, firing dozens of public servants for
incompetence. In May, he dismissed his home affairs minister for
addressing parliament while allegedly drunk.

Ministers in the government should continue to work hard, Magufuli
said at a swearing-in ceremony for Harrison Mwakyembe, who replaced

“In Tanzania, there is a small group of people who like to complain,
instead of looking for solutions,” he said. “They want Tanzania to
fail. It’s unclear to me what their interests are.”

The president also warned attending journalists to avoid the kind of
coverage that could lead to violence, citing the Rwandan genocide in
1994, in which more than 800,000 people died. A United Nations-backed
tribunal found members of the Rwandan media responsible for broadcasts
intended to inflame the public to commit acts of genocide.

“The problems that have hit other countries were instigated partly by
our pens,” Magufuli said. The Rwandan genocide “started with small

Mwakyembe’s previous position as head of the Constitutional Affairs
Ministry will be filled Palamagamba Kabudi, a former law professor,
who was also sworn in on Friday.

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Congolese opposition calls for foreign cash to fund election FT

The Democratic Republic of Congo needs hundreds of millions of dollars
in foreign support to pull off its first peaceful transition of power
since independence in 1960, says one of the main contenders for the

Moise Katumbi, a businessman and leading opposition figure, estimated
that Congo, sub-Saharan Africa’s biggest country, would need $800m to
stage elections planned for November.

The government of President Joseph Kabila, whose constitutional
mandate expired in December, is claiming that it cannot pay for the
poll, which it estimates will cost $1.8bn, a figure many consider
hugely inflated.

Mr Katumbi, who is the DRC’s most popular politician, according to a
recent survey, is in exile, having fled the country in May from what
he says were politically motivated charges, among them that he had
hired mercenaries. A court later gave him a three-year prison sentence
in absentia for illegally selling a property, although one of the
judges later said she had been coerced.

In an interview, Mr Katumbi, formerly governor of mineral-rich Katanga
province, said that Mr Kabila was using the cost of the election as an
excuse to cling to power.

“If Kabila continues like that, he’s going to kill the country,” he said.

Mr Katumbi, 51, repeated his vow to return to the DRC, despite the
risk of arrest, saying he would fly to Kinshasa as soon as an inquiry
led by the Catholic church had reviewed his alleged property offence.
He said he would charter a plane so as not to put fellow passengers at
risk if security forces tried to shoot it down.

“They’re going to say it’s a crash, and innocent people are going to
die. I would prefer to arrive on my own, and if they want to shoot,
they shoot me on my own,” he said.

Tatiana Carayannis, an authority on the DRC, said that the businessman
was in danger of losing relevance if he did not return soon. “He is
under pressure to shore up his street cred,” she said. “He has been
out of the country for a long time while young kids are getting locked

Mr Katumbi said he had to choose the right moment, and was no use to
anyone dead. “Kabila is scared about only one person, only me,” he
said. “He’s wasting time and he’s going to make his chance smaller and
smaller to leave a legacy.”

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South Africa All Share Bloomberg +2.30% 2017

The currency gained 10 percent against the dollar in 2017


Dollar versus Rand 6 Month Chart INO 12.3925


Ignazio Magnani‏ 🌍Egypt from Space Station by night 🇪🇬Cairo


Egypt Pound versus The Dollar 3 Month Chart INO 17.9730


On the black market, the naira gained 4.9 percent to a seven-month
high of 410 per dollar as individuals rush to sell the U.S. currency.

Nigeria All Share Bloomberg -5.28% 2017


Ghana Stock Exchange Composite Index Bloomberg +11.92% 2017


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Ivory Coast's government said it is seeking more assistance from the International Monetary Fund to support the nation's 2017 budget after cocoa prices slumped

“With cocoa prices falling, we have some new budget constraints,”
government spokesman Bruno Kone said by phone from the commercial
capital, Abidjan, on Sunday.

Ivory Coast will issue the request as representatives of the IMF
visits the West African nation until the first week of April for a
review of the country’s three-year extended credit facility agreement
of about $660 million. Cocoa futures in London have slumped by about a
third since reaching a six-year high in July.

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"The solution is not to tweak the law, but to remove it," Kenya Bankers Association Chief Executive Habil Olaka says.
Kenyan Economy

“The solution is not to tweak the law, but to remove it and consider
some proposals to make credit accessible. We know these problems and
we are trying to address them,” Kenya Bankers Association Chief
Executive Habil Olaka says.

During his State of the Nation address two weeks ago, President
Kenyatta expressed his frustration at the negative effects of the
interest rates law. “Our SMEs are complaining that they do not have
access to credit in spite of the fact that the cost of credit in Kenya
is the most affordable in the region after the capping of commercial
bank interest rates in September last year,” he said.

Experts say this was expected. “The introduction of the interest cap
and the floor was the catalyst for a Darwinian moment in the banking
sector. The Tier 1 banks were beneficiaries of a flight to quality of
which StanChart was the biggest beneficiary,” says Aly Khan Satchu,
the Chief Executive at Rich Management. It is StanChart that surprised
the market with double digit growth. The lender, whose results were
released on Thursday made a 45 percent jump in net profit from Sh6.3
billion to Sh9 billion on the back of increased lending to the
Government and lower cost of covering for bad loans. This was,
however, merely a readjustment since the lender reported a 39 per cent
drop in profit in 2015. Kenya Commercial Bank (KCB), the country’s
largest bank by assets, saw its net profit grow by 0.5 per cent in its
2016 full-year earnings to Sh19.72 billion, the slowest growth in
seven years. Co-operative Bank of Kenya also made an 8.2 per cent jump
in profit after tax to Sh12.6 billion from Sh11.7 billion the year

Satchu observes: “Tier 3 banks in their old format are now “zombies”
unless shareholders dig deep and pony up capital or get bought out.
“This Act is not going to work and it has not. We need to move quickly
and effectively to reverse it because credit is the lifeblood of this
economy and no Government chooses to walk into an election with an
economy in a recession.”

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20-MAR-2017 :: Policy Making Agility is Key for a Thriving Economy @Thestarkenya
Kenyan Economy

And here people is a key issue between countries that win and
countries that lose. Its all about the speed that policy-making

Like Lao Tzu has said: “Men are born soft and supple; dead they are
stiff and hard. Plants are born tender and pliant; dead, they are
brittle and dry. thus whoever is stiff and inflexible is a disciple of
death. Whoever is soft and yielding is a disciple of life.  The hard
and stiff will be broken. The soft and supple will prevail.”

This is not the time to be stiff and inflexible, this is the time to
be soft and supple.

The Central Bank of Kenya lifted its moratorium on licensing of new
commercial banks, now it’s the turn of policy-makers to move with
despatch as well.

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@BRITAMEA BRITAM Holdings reports FY 16 EPS 1.28 Earnings here
Kenyan Economy

Par Value:
Closing Price:           10.10
Total Shares Issued:          1938415838.00
Market Capitalization:        19,577,999,964
EPS:            1.28
PE:              7.89

FY Revenue 20.291844b vs. 19.605675b +3.500%
FY Less : Reinsurance premium ceded [2.898259b] vs. [3.231953b] -10.325%
FY Net earned premiums 17.393585b vs. 16.373722b +6.229%
FY Interest and dividend income 4.232846b vs. 3.128572b +35.296%
FY Net unrealised fair values losses on financial assets [2.444727b]
vs. [2.836211b] -13.803%
FY Total income 22.360214b vs. 20.130987b +11.074%
FY Insurance claims and loss adjustment expenses [8.987829b] vs.
[10.250558b] -12.319%
FY Amounts recoverable from reinsurers 1.201053b vs. 2.405947b -50.080%
FY Change in actuarial value of policyholder benefits 2.785611b vs.
[2.769604b] +200.578%
FY Net insurance benefits and claims [5.001165b] vs. [10.614215b] -52.882%
FY Interest payments/ increase in unit value [1.742978b] vs.
[0.495774b] +251.567%
FY Operating and other expenses [7.094697b] vs. [6.716741b] +5.627%
FY Finance costs [1.177264b] vs. [0.802155b] +46.763%
FY Commissions expense [3.547258b] vs. [3.291904b] -15.316%
FY Total expenses [18.563362b] vs. [21.920789b] -15.316%
FY Profit/ [Loss] before tax 4.239133b vs. [1.194938b] +454.758%
FY Profit/ [Loss] for the year 2.480204b vs. [1.009458b] +345.697%
EPS 1.28 vs. [0.52] +346.154%
Final Dividend 30cents for a share
Shareholders’ funds 17.877596b vs. 17.674448b +1.149%
Total assets 83.642609b vs. 77.632352b +7.742%
Insurance contract liabilities 18.744957b vs. 21.786744b -13.962%
Cash and cash equivalents at the end of the year 5.967017b vs.
4.767253b +25.167%

Company Commentary

Key achievements for this period include achieving regionalisation
Operating in 7 countries
increased diversification of the product portfolio asset management,
property and micro-insurance businesses


Looks attractive at these Levels.

@BritamEA "We still retain our position as the market leaders in unit
trusts, with stellar growth in our Assets Under Management now at KES
@BritamEA "Insurance penetration slowed down to 2.77% from 2.82 in
2016 with Life insurance at 0.997% and Non Life at 1.775%" -

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Kenyanwallstreet These Four Individuals Own More than 53% Of Britam
Kenyan Economy

*Peter Munga 36%
*Benson Wairegi 4.64%
*Equity CEO James Mwangi 3.47%
*Jimna Mbaru 9.01%

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Kenya Shilling versus The Dollar Live ForexPros 102.465
Kenyan Economy

The shilling will confound the naysayers through 2017. Oil is the key
signal @thestarkenya


Nairobi All Share Bloomberg -2.05% 2017 [+9.1874% since 8th March 2017]


Nairobi ^NSE20 Bloomberg -3.40% 2017 [+10.33% since Jan 30th 2017]


3,077.81 -5.04 -0.16%

Every Listed Share can be interrogated here


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Brookside is preparing to exit the Tanzanian market with the sale of its entire stake in the subsidiary to French partner Danone.
Kenyan Economy

Danone, which bought a 40 per cent stake in Brookside Dairy’s business
three years ago, has written to Tanzania’s Fair Competition Commission
(FCC), expressing its intention to fully acquire the business for an
undisclosed amount.
“The FCC has received notification that Brookside Holdings Limited of
Dubai, United Arab Emirates, intends to acquire 100 per cent of the
issued share capital in Brookside Dairy Tanzania Limited,” the
competition watchdog said in a notice.
“Brookside Tanzania is in the business of purchasing, distributing and
selling dairy products in Tanzania and the FCC is currently
investigating the intended acquisition.”
Danone is buying the stake through Brookside Holdings which, despite
having similar names as the Kenyan dairy giant, is a fully-owned
subsidiary of the French food conglomerate.

read more

N.S.E Today

Lots of Drama down South. The [South African] Presidency has confirmed
that Finance Minister Pravin Gordhan and his deputy Mcebisi Jonas have
been instructed to return immediately to South Africa. No reasons for
the instruction were provided. A one sentence statement issued by the
Presidency at 11:49am read:
President Jacob Zuma has instructed the Minister of Finance, Mr Pravin
Gordhan and Deputy Minister Mcebisi Jonas to cancel the international
investment promotion roadshow to the United Kingdom and the United
States and return to South Africa immediately.
it look certain that President Jacob Zuma will finally pull the
trigger and reshuffle his Cabinet.
The South African Rand which was trading at a 20 month High of 12.32
versus the Dollar when the news broke was last trading at 12.644
-1.87% on the day
The Kenya Shilling was last trading at 102.86 and probably firms some
more from here.
The Nairobi All Share rallied +0.62% to close at an 11 week high of 131.42
The Nairobi NSE20 Index gained 20.34 points to close at 3098.16 a 10th
January closing High.

N.S.E Equities - Agricultural

Williamson Tea and Kapchorua Tea both issued FY Profits Warnings.

I quote from Williamson Tea's Profit Warning Announcement

''The anticipated decline in FY Profits is attributed in part to
uneven and unpredictable weather patterns but more so the primary
cause is an inability to control aggressive and rising labour costs''

''With Union and Collective Bargaining Agreement disputes residing in
court and therefore unknown, the Future remains uncertain and
challenging. Management are taking appropriate measures on
cost-cutting wherever possible''

Don't get yourself in a twist because both Williamson Tea and
Kapchorua Tea trade at egregious discounts to their Net Asset Value.
Williamson Tea corrected -4.44% lower to close at 172.00.

Sasini Tea and Coffee firmed +1.11% to close at a Fresh 2017 High of
22.75 and is +18.489% in 2017.

N.S.E Equities - Commercial & Services

Safaricom rallied +1.355% to close at a 6 and 1/2 week high of 18.70
and traded 13.249m shares. 19.15 which is the unchanged mark for 2017
is a near term target.

Nation Media Group was high ticked +8.602% and closed at 101.00 which
is a 2017 closing High. NMG has rallied a startling +18.82% in March.

N.S.E Equities - Finance & Investment

StanChart Kenya firmed +1.376% to close at a more than 5 month high of
221.00. StanChart has been the Bull Outlier at the Securities Exchange
and is +16.93% in 2017.
KCB firmed +2.38% to close at 32.25 and is +12.17% in 2017. KCB has
rallied +27.77% in March.
DTB pushed +4.17% higher to close at a 14 week high of 125.00. DTB is
+5.93% in 2017.
Equity Bank firmed +0.83% to close at 30.50 on good volume of 5.052m shares.

BRITAM Holdings reported FY 16 Earnings this morning where FY Revenue
upshifted +3.500% to clock 20.291b, FY Profit after Tax clocked 4.239b
versus a FY Loss in 15 of [1.009b], FY Earnings Per Share was 1.28
versus a -52cents FY EPS in 2015. BRITAM announced a 30cents a share
dividend. BRITAM spoke to the fact that they are now operating in 7
countries and that tweeted that  "We still retain our position as the
market leaders in unit trusts, with stellar growth in our Assets Under
Management now at KES 109B" BRITAM looks inexpensive at these Levels.
BRITAM responded +4.455% higher to close at 10.55 and traded 131,700
shares. BRITAM EA is +5.5% in 2017.

Jubilee Insurance reported FY 16 Earnings during the Trading session
where FY 16 Revenue increased +13.854% and registered 24.7b, FY Profit
after Tax surged +17.778%, FY EPS clocked 50 shillings a share
+17.096%. Jubilee is paying a FY Dividend of 7.50 a share making that
an 8.50 Total Pay-Out and announced a Bonus share issue where I bonus
share would be given for every 10 held. Jubilee did not trade today at
the Exchange and is -3.46% in 2017. These were very solid results and
I expect some upside price action from these levels. Jubilee is
-3.469% in 2017

The Nairobi Securities Exchange surged +7.53% to close at 12.85.

N.S.E Equities - Industrial & Allied

KenolKobil ticked -0.39% to close at 12.80 and on heavy volume action
of 4.184m shares.

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