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Satchu's Rich Wrap-Up
 
 
Friday 31st of March 2017
 
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Africa

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Macro Thoughts

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Best performing currencies in 2017 via @FT
Africa


Home Thoughts


It was only my second night in Africa, yet something had begun to grow
inside me which I could not stop, as if my childhood dreams had
finally found the place where they could materialize. I had arrived
where I was always meant to be. I did not know how it could be
practically achieved, but I was certain beyond any shadow of a doubt
that it was here that I wanted to live.
Kuki Gallmann

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lemn sissay @lemnsissay
Africa


 "I Walk through doors backwards
 And keep my eye on the light".
 "I do the same" said dawn
 "To night".

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Colourful sunrise in the capital today. Photo by @iam_olet
Africa


.@parisreview “I’m just James Ellroy, the self-promoting demon-dog.
You call it swagger, I call it joie de vivre.” —James Ellroy

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@alykhansatchu It's going to be a massive self-reinforcing negative feedback Loop on SA Assets
Law & Politics


Only those who will risk going too far can possibly find out how far
one can go.--T.S. Eliot

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Zuma's Night of Long Knives Risks ANC Split, Credit Rating
Law & Politics


South African President Jacob Zuma fired Finance Minister Pravin
Gordhan and eight other cabinet members in a high-stakes power play
that may threaten his own presidency and place the nation’s investment
grade credit rating at risk.

Gordhan was replaced by Home Affairs Minister Malusi Gigaba, who has
no financial or business experience, while lawmaker Sfiso Buthelezi
takes over from Mcebisi Jonas as deputy finance minister. The cabinet
overhaul came in a late-night move that threatens to split the
105-year-old ruling African National Congress and trigger a revolt
against the president. The rand extended losses, heading for its worst
week in more than a year.

“Those walking into the Treasury tomorrow will not reassure anyone
that the top institution protecting South Africa’s fiscal stability is
in safe hands,” said Anne Fruhauf, vice president at New York-based
risk adviser Teneo Intelligence. “The move invites a massive backlash
from the anti-Zuma faction.”

The rand tumbled, weakening 1.2 percent to 13.4399 per dollar by 2:40
a.m. in Johannesburg on Friday after slumping 1.9 percent the day
before. It has plunged 7.5 percent this week, the most of 150
currencies tracked by Bloomberg.

“In the space of 15 months, Zuma has fired two well-regarded finance
ministers,” said Nicholas Spiro, a partner at London-based Lauressa
Advisory Ltd., which advises asset managers. “Unlike when Nene was
fired, the opposition to Zuma within his government is now much
stronger, presaging a full-blown political crisis. The rand will be
punished even more severely and the whiff of a junk rating is in the
air.”

Zuma made 20 changes to his administration, capping a dramatic week
when he ordered Gordhan on Monday to cancel a series of meetings with
investors in the U.K. and the U.S. and return home. The South African
Communist Party, an ally of the ANC, slammed the decision to recall
Gordhan and warned against firing him.

“This as an open attack on the Treasury to replace people who are
anti-corruption with people loyal to Zuma to help the Zuma faction win
in December,” said Peter Attard Montalto, an economist at Nomura
International Plc in London. “This is an attack on the institution of
National Treasury and as such will trigger multiple downgrades.”

read more





@SAPresident to Face Mass Cabinet Walkout If He Fires Gordhan
Law & Politics


The president is still considering his next move. By firing Gordhan,
Zuma also risks a market meltdown. If he doesn’t, he may appear weak
as he seeks to secure his choice as successor as ANC leader in
December.

“Zuma is caught between the proverbial rock-and-a-hard-place,” Daniel
Silke, director of Political Futures Consultancy in Cape Town, said by
email. “Should he reconstitute his cabinet in his own image, he risks
unleashing an unintended set of political consequences that could
either fracture his own party or be the making of a rapid downfall.”

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@lionelbarber "When you communicate with @SAPresident about implications of a downgrade, Does he understand?" Pravin Gordhan @ftlive @FT
Law & Politics


"Welcome to the underground" says Pravin Gordhan after
@lionelbarber tells Pravin he met @Julius_S_Malema in a safe house in
Kruger

 pic.twitter.com/pjXDsgz9Oa

Park Geun-hye, South Korea’s Ousted Leader, Is Arrested and Jailed
to Await Trial @CraigFerriman [Powerful Photo]

https://twitter.com/CraigFerriman/status/847675792704262144

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Former national security adviser Mike Flynn seeks immunity to testify in Russia inquiries @business
Law & Politics


Robert Kelner released a statement on Thursday evening saying Mr Flynn
"certainly has a story to tell, and he very much wants to tell it,
should the circumstances permit".

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05-DEC-2016 :: "We have a deviate, Tomahawk."
Law & Politics


Beppe Grillo, the comic turned leader of the Five Star movement in
Italy 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.”

He is right, traditional media has been disrupted and the insurgents
can broadcast live and over the top. From feeding the hot-house
conspiracy frenzy on line (‘’a constant state of destabilised
perception’’), timely and judicious doses of Wikileaks leaks which
drained Hillary’s bona fides and her turn-out and motivated Trump’s,
what we have witnessed is something remarkable and noteworthy.

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

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


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.”

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The United States launched more airstrikes in Yemen this month than during all of last year
Law & Politics


The United States launched more airstrikes in Yemen this month than
during all of last year. In Syria, it has airlifted local forces to
front-line positions and has been accused of killing civilians in
airstrikes. In Iraq, American troops and aircraft are central in
supporting an urban offensive in Mosul, where airstrikes killed scores
of people on March 17.

Two months after the inauguration of President Trump, indications are
mounting that the United States military is deepening its involvement
in a string of complex wars in the Middle East that lack clear
endgames.

Rather than representing any formal new Trump doctrine on military
action, however, American officials say that what is happening is a
shift in military decision-making that began under President Barack
Obama. On display are some of the first indications of how complicated
military operations are continuing under a president who has vowed to
make the military “fight to win.”

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Sterling is now headed for its first quarterly advance since mid-2015
International Trade


Sterling, which earlier this month was 2017’s worst-performing
Group-of-10 currency, is now headed for its first quarterly advance
since mid-2015.

Three-month implied volatility was at 9.1 percent on Wednesday when
Prime Minister Theresa May launched the Brexit process, less than half
the level seen in the run-up to the June 23 referendum. The pound was
little changed after the trigger of Article 50 and traded steady at
$1.2431 on Thursday.

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.0681
Dollar Index 100.52
Japan Yen 111.85
Swiss Franc 1.0005
Pound 1.2454
Aussie 0.7656
India Rupee 64.845
South Korea Won 1118.55
Brazil Real 3.1496
Egypt Pound 18.2405
South Africa Rand 13.4532

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Euro versus the Dollar 3 Month Chart 1.0684 [BUY with a 1.0600 STOP]
World Currencies


.@Diageo_News hit a record high, up 0.4 per cent to £23.28. cost
savings are on track H2 prospects look stronger @FT

https://www.ft.com/content/c6a8a8d2-0d97-11e7-a88c-50ba212dce4d

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Tullow shares slide on worries over $750m cash call FT
Commodities


Tullow Oil hit a seven-month low on Monday amid fears that its $750m
cash call signals a reversion to its high-spending past.

The decision last week by Paul McDade, Tullow’s incoming chief
executive, to launch a rights issue has undermined its investment
thesis of organic debt reduction and production growth, said Merrill
Lynch.

Shareholders will be paying a heavy price with the share count
increasing 50 per cent, just to hit a year-end debt reduction target
that would have been reached anyway by mid-2018, it forecast.

“With ‘growth’ mentioned numerous times on Friday’s conference call,
we believe new management may be tempted to prioritise growth [and]
exploration at a time when investors are looking for free cash flow,”
said Merrill.

“We are concerned about a potential loosening of capital expenditure
discipline established over the last three years.”

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17 OCT 16 ::Ethiopia's Reputation Shattered by Political Tensions @TheStarKenya
Africa


The government need to change tack and effect a course correction and
history shows us that this course correction is one of the most
difficult things to pull off.

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Africa as you've probably never seen it before, courtesy of NASA
Africa


The undulations of the the Roter Kamm impact crater in southwest
Namibia are pictured in 1994. The crater is believed to be about five
million years old. (NASA/JPL)

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Why Egypt's ruler loves Donald Trump The Economist
Africa


DONALD TRUMP’S decision to give up his salary as president was not
inspired by similar gestures made by previous American leaders, such
as Herbert Hoover and John F. Kennedy. Rather, Mr Trump was “following
in the footsteps” of Abdel-Fattah al-Sisi, the president of Egypt,
claimed two Egyptian newspapers. Mr Sisi, after all, is Mr Trump’s
“role model”, said an Egyptian television host. He was on top of Mr
Trump’s guest-list for the inauguration, reported an Egyptian news
website.

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Nigeria got around $3 billion of orders for its $500 million of notes, according to a person familiar with the matter
Africa


Nigeria got around $3 billion of orders for its $500 million of notes,
according to a person familiar with the matter, who asked not to be
identified. High demand for the deal, a tap of an existing $1 billion
bond due in 2032, allowed bookrunners Citigroup Inc. and Standard
Chartered Plc to price it with a 7.5 percent yield after initially
offering 7.8 percent. The yield fell further to 7.35 percent as of
1:27 p.m. in Lagos, dropping for a third day.

Nigeria’s Eurobonds have earned investors 16 percent in the past year,
beating the average for emerging-market sovereign notes of 8.4
percent. Holders of naira-denominated notes lost 38 percent in dollar
terms during that time, the most after Egypt among 31 emerging markets
tracked by Bloomberg.

It’s a similar story with Nigerian stocks. They’re the world’s worst
performers in the past year in dollar terms, losing 35 percent.

Little will change until Nigeria lets its currency drop, according to
Roehmeyer. The central bank has kept the naira at around 315 per
dollar since August, while the black-market rate has plummeted to 380
as the dollar squeeze worsens.

“There’s an easy fix,” said Roehmeyer. “You just have to look at what
Egypt did when it floated the pound in November. That would do the
trick in Nigeria. If the naira was free floating, like in Egypt it
would overshoot, maybe to 450 per dollar or even 500. Then, it would
appreciate to about 400.”

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Kenya Budgets Increased Spending Ahead of General Elections @BBGAfrica
Kenyan Economy


Treasury Secretary Henry Rotich told lawmakers the government planned
to increase spending to 2.287 trillion shillings ($22.2 billion) in
the fiscal year that starts in July, a 2.6 percent increase from
2016-17.

“We shall continue to progressively reduce the fiscal deficit and
ensure the continued sustainability of our debt,” Rotich said Thursday
in the capital, Nairobi. “The sharp reduction of the deficit reflects
reduced expenditures owing to the one-off expenditures mainly those
related to the general elections and the drought, which are not
expected to recur.”

The budget has been brought forward from the usual June date to allow
enough time for parliament’s approval before it’s dissolved ahead of
elections on Aug. 8. Growth in East Africa’s largest economy risks
being weighed down by a drought and a law capping the interest
commercial banks can charge to 4 percentage points above the central
bank’s key rate.

Treasury sees the fiscal budget narrowing to 6 percent of gross
domestic product from an estimated 9 percent. It plans to raise 268
billion shillings from domestic markets in the coming fiscal year and
to borrow an additional 256 billion shillings externally to help plug
that shortfall, Rotich said.

Treasury will amend the Public Finance Management Act to allow the
issuance of Sukuk bonds as a source of financing in the coming year,
Rotich said.

Rising debt-service costs could significantly undermine the
government’s targets to narrow the fiscal deficit to 5.2 percent of
GDP in 2018-19, Ahmed Salim, Dubai-based vice president of Teneo
Strategy, said in a note before the budget was presented.

“We’ve got to accept we are in an election year and there’s some Pump
priming that’s needed in the economy,” Aly-Khan Satchu, chief
executive officer of Nairobi-based Rich, an adviser to companies and
wealthy individuals, said by phone. “It’s an expansive budget. It’s a
big number to be financing. Overall it was a bullish election-minded
budget.”

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Zero rate bread and maize flower #BudgetKE2017 @Nikhil_hira
Kenyan Economy


Deficit at 6.4% financed by both internal and external sources
#BudgetKE2017 @Nikhil_Hira
Finalising a line of credit from EXIM Bank India for various sectors
#BudgetKE2017 @Nikhil_Hira
CS says Islamic banking  becoming a major source of financing, wants
to position Kenya as a hub #BudgetKE2017 @DeloitteKenya
Betting and gaming becoming widespread with negative social
implication - tax to go to 50% on all categories #BudgetKE2017
@Nikhil_Hira
Corporate tax for new vehicle assembles to be reduced to 15% for 5
years #BudgetKE2017 @Nikhil_Hira

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Kenya finance minister expects steady growth ahead of election Reuters
Kenyan Economy


Growth is expected to be 5.9 percent in 2017, the same rate of
expansion in the first three quarters of last year, he said.

"But growth could be lower if the ongoing drought persists and the
slowdown in private sector credit is not reversed," Rotich warned.

East Africa has been suffering from severe drought and aid groups say
2.7 million Kenyans need food aid.

Rotich set the fiscal deficit at 524.6 billion shillings ($5.10
billion) or 6 percent of the gross domestic product, down from 9.0
percent in the current fiscal year, he said.

Rotich increased expenditure and net lending up to 2.29 trillion
shillings this year, up from 2.27 trillion in last year's budget.

"The net external financing will amount to 256 billion or 2.9 percent
of GDP and will be mainly on concessional terms," Rotich told
lawmakers.

The balance, 268.6 billion shillings or 3.1 percent of GDP, will be
borrowed from the local market, he said.

read more


Chase Bank owners to lose control on sale Nation
Kenyan Economy


“Potential strategic investors interested in taking an equity interest
in CBL (Chase Bank Limited) are hereby invited to provide an EoI,
(Expression of interest) not later than 5pm (East Africa Time) on
Friday, April 21, 2017,” said CBK in a statement.

read more


Kuki Gallmann's Kenya safari lodge burned down @BBCAfrica
Kenyan Economy


Ms Gallmann, who is best known internationally for her memoir I
Dreamed of Africa, has not commented.

read more




@Kenya_Re Kenya Re reports FY EPS 16 -7.843% Earnings here
Kenyan Economy


Par Value:                  2.50/-
Closing Price:           19.05
Total Shares Issued:          699949068.00
Market Capitalization:        13,334,029,745
EPS:             4.70
PE:               4.053

Leading reinsurance and insurance provider.

Kenya Reinsurance Corporation Limited FY 2016 results through 31st
December 2016 vs 31st December 2015
FY Gross premiums written 13.244591m vs. 13.060341m +1.411%
FY Less : retrocession premiums [604.722m] vs. [494.546m] +22.278%
FY Net earned premiums 12.686760b vs. 12.016078b +5.582%
FY Investment income 3.079298b vs. 3.041138b +1.255%
FY Fair value gains on revaluation of investment properties 813.513m
vs. 729.599m
FY Total income 17.031238b vs. 16.411126b +3.779%
FY Gross claims incurred and policyholder benefits [7.013734b] vs.
[7.391724b] -5.114%
FY Net claims incurred [6.680518b] vs. [7.061610b] -5.397%
FY Cedant acquisition costs [3.635256b] vs. [3.402811b] +6.831%
FY Operating and other expenses [1.832360b] vs. [1.318950b] +38.926%
FY Provision for doubtful debts [665.018m] vs. [113.619m] +485.305%
FY Total outgo [12.813152b] vs. [11.896990b] +7.701%
FY Profit before tax 4.218086b vs. 4.514136b -6.558%
FY Profit for the year 3.287284b vs. 3.554250b -7.511%
EPS (Basic and diluted) 4.70 vs. 5.10 -7.843%
Dividend per share 0.80 vs. 0.75 +6.667%
Total Equity 24.133297b vs. 21.932865b +10.033%
Total Assets 38.494310b vs. 35.954134b +7.065%
Cash and cash equivalents at 31st December 4.545481b vs. 6.276010b -27.574%
Number of outstanding shares : 699,949,068

@Kenya_Re Managing Director, Jadiah Mwarania highlights there was
increase in the net assets by 6% from 21B➡24.1B
#KenyaReInvestorBriefing

Conclusions


Its an inexpensive share on a P/E Basis.

read more




Family Bank Profits Slump By 82%, Blames Social Media Attacks Kenya Wallstreet
Kenyan Economy


Mid Tier lender, Family Bank Kenya has reported a drop of 82,21% in
its full year 2016 after tax profits to Sh352.5 million from the
previous year’s  Sh1.98 billion.

From the financial results, the drop was mainly as a result of
increase in loan loss provisions and high expenses which rose from Sh
6.4 Billion to Sh 8.4 Billion as at December 2016.

The Bank’s Managing Director David Thuku said “We did take a hit on
our bottom-line arising from the turbulence we faced last year. The
sustained social media attacks which led to significant withdrawals
took a further toll on our profitability.”

Customer deposits fell by 34% to Sh41.4 billion compared to Sh62.71
Billion posted in 2015 while total loans and advances to customers
fell by 10% to Sh50 billion from Sh55.9 billion.

read more


BOC Kenya reports FY EPS 16 -14.98% Earnings here
Kenyan Economy


Par Value:                  5/-
Closing Price:           89.50
Total Shares Issued:          19525446.00
Market Capitalization:        1,747,527,417
EPS:             6.47
PE:               13.833

FY Revenue 1.076719b vs. 1.186420b -9.246%
FY Earnings before finance income and taxes 132.368m vs. 160.175m -17.360%
FY Net finance income 58.314m vs. 61.546m -5.251%
FY Profit before tax 190.682m vs. 221.721m -13.999%
FY Profit for the year 126.323m vs. 148.600m -14.991%
Basic EPS 6.47 vs. 7.61 -14.980%
Final dividend 3.00 vs. 3.00 –
Total dividend 5.20 vs. 5.20 –
Total equity 1.689449b vs. 1.714106b -1.438%
Cash and cash equivalents at the end of the year 71.417m vs. 400.568m -82.171%
Number of outstanding shares : 19,525,446

Company Commentary


2016 was a challenging year for the Group.
the landscape in the gases and welding products market is expected to
continue being very competitive and the playing field not necessarily
even

Conclusions


Soft results. Difficult to see where the rebound is going to come from right now

read more


Kenya Orchards reports FY 16 Earnings here
Kenyan Economy


Par Value:                  5/-
Closing Price:           95.00
Total Shares Issued:          12868124.00
Market Capitalization:        1,222,471,780
EPS:             0.29
PE:                 287.879

FY Earning through 2016
FY Revenue 64.586481m vs. 60.974312m +5.924%
FY Cost of sales [56.607847m] vs. [54.194111m] +4.454%
FY Gross profit 7.978634m vs. 6.780201m +17.675%
FY Administrative expenses [1.882518m] vs. [2.062130m] -8.710%
FY Selling and distribution expenses [0.110827m] vs. [0.117189m] -5.429%
FY Finance costs [0.413651m] vs. [0.197581m] +109.358%
FY Profit before tax 5.295028m vs. 4.328873m +22.319%
FY Income tax [1.531920m] vs. 24.586775m
FY Profit and total comprehensive income for the year 3.763108m vs.
28.915648m -86.986%
EPS 0.29 vs. 2.24 -87.054%
Shareholders’ funds 9.733660m vs. 6.025552m +61.540%
Cash and cash equivalents at the end of the year [2.352993m] vs.
[0.323641m] -627.038%
No dividend
Number of shares : 12,868,124

read more


Kenya Shilling versus The Dollar Live ForexPros 102.88
Kenyan Economy


Nairobi All Share Bloomberg -2.18% 2017 [+4.43% in March]

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

130.43 -0.18 -0.14%

Nairobi ^NSE20 Bloomberg -2.00% 2017 [+4.29% in March]

http://j.mp/ajuMHJ

3,122.51 -5.93 -0.19%

read more






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