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Satchu's Rich Wrap-Up
Wednesday 01st of August 2018

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Macro Thoughts

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The IMF shouldn't underwrite China's reckless lending via @bopinion

In all likelihood, Pakistan will seek a $12 billion bailout from the
International Monetary Fund this week, its 12th since the 1980s and
the largest one yet. This time, the IMF should think twice: Pakistan's
debt crisis isn't the result of an economic shock. It's the result of
reckless Chinese lending. Any new aid package will only worsen the
risk of similar problems arising elsewhere.

Under its Belt and Road Initiative, China extends lavish loans to
support infrastructure projects overseas. The catch is that these
deals typically require that the money be spent on Chinese goods,
services, and labor, and the repayment terms are generally opaque and
often onerous.

Pakistan shows how things can go wrong. China is investing some $62
billion across a range of projects there, including roads, ports,
energy plants and business parks. It sounds great -- until you look at
the details. One Pakistani concession guarantees Chinese power plants
annual returns of up to 34 percent for 30 years, all backed by the
government. By comparison, Pakistan's 10-year government bond yields
have generally fluctuated between 8 and 9 percent over the past year.

Worse, China is lending in U.S. dollars, so Pakistan must run an
increasingly large surplus to repay its loans. Unable to export enough
to generate a trade surplus, it has rapidly been depleting its
foreign-exchange reserves, thus leading it into the arms of the IMF
yet again.

Other recipients of China's largess have come under similar strain.
Venezuela secured Chinese loans with oil, then found that it couldn't
sell enough additional crude on global markets to generate the hard
currency needed to expand production. After Sri Lanka was unable to
repay loans, China took a 99-year concession on one of its ports.
Malaysia, Myanmar and Nepal are all reconsidering major Chinese
investments, and no wonder.

Belt and Road projects are so risky because their rationale is
political, not economic. Enshrined in the Communist Party constitution
in 2017, the program is a cornerstone of China's plans to expand its
influence and soft power globally. Most Belt and Road lending is
channeled through state-owned policy banks that are more concerned
with advancing foreign-policy goals -- such as winning over new allies
-- than with turning a profit.

One result is that credit is often extended with little regard for
financial viability or international lending standards. This helps
explain why so many of the early Belt and Road recipients have ended
up in financial distress. As China expands the program around the
world, other projects will almost certainly end in tears.

In considering its aid package, then, the fund should exclude any
repayment of Chinese debt or demand an exceptional haircut on it. It
must make clear that it distinguishes between commercial projects gone
awry and foreign-policy ventures that look an awful lot like a debt
trap. If China's leaders want to splurge overseas on dubious projects,
that's their business. But the IMF shouldn't have to clean up when
things go wrong.

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"But it is a curve each of them feels, unmistakably. It is the parabola."

“But it is a curve each of them feels, unmistakably. It is the
parabola. They must have guessed, once or twice -guessed and refused
to believe -that everything, always, collectively, had been moving
toward that purified shape latent in the sky, that shape of no
surprise, no second chance, no return.’’

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The Shadow of the Sun

The Shadow of the Sun (Polish: Heban, literally "Ebony") is a travel
memoir by the Polish writer and journalist Ryszard Kapuściński. It was
published by Penguin Books in 2001 with the English translation by
Klara Glowczewska. Kapuściński spent nearly 30 years in various
African countries such as Kenya, Rwanda, Nigeria, Ethiopia and more,
detailing his accounts as a white, foreign visitor, of the development
of the African states.[1]

Kapuściński's experience in Africa was unique, because he had the
opportunity to stay with people of various classes in society, staying
with ministers, as well as peasants in rural villages which gave him
an honest perspective on what was the current situation of the

The early pages of The Shadow of the Sun, a compendium of further
adventures in Africa, find Ryszard Kapuściński in Dar es Salaam in
1962, where he hears that Uganda is about to gain independence. He and
a friend, Leo, promptly set off for Kampala via the Serengeti, with
its teeming wildlife. "It's all improbable, incredible. As if one were
witnessing the birth of the world, that precise moment when the earth
and sky already exist, as do water, plants, and wild animals, but not
yet Adam and Eve." They have no maps, they're lost, and they're
confronted with an enormous herd – "stretching almost to the horizon"
– of buffalo. They press on regardless.[1]

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Ryszard Kapuscinski,

“Our world, seemingly global, is in reality a planet of thousands of
the most varied and never intersecting provinces. A trip around the
world is a journey from backwater to backwater, each of which
considers itself, in its isolation, a shining star. For most people,
the real world ends on the threshold of their house, at the edge of
their village, or, at the very most, on the border of their valley.
That, which is beyond is unreal, unimportant, and even useless,
whereas that which we have at our fingertips, in our field of vision,
expands until it seems an entire universe, overshadowing all else.
Often, the native and the newcomer have difficulty finding a common
language, because each looks at the same place through a different
lens. The newcomer has a wide-angle lens, which gives him a distant
diminished view, although with a long horizon line, while the local
always employs a telescopic lens that magnifies the slightest detail.”

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- Ryszard Kapuscinski, The Shadow of the Sun

“Herein lies the attractiveness of ethnic agitation: its ease and
accessibility. The Other is visible, everyone can recognize and
remember his image. One doesn’t have to read books, think, discuss: it
is enough just to look.”

“Dawn and Dusk - these are the most pleasant hours in Africa. The sun
is either not yet scorching, or it is no longer so - it lets you be,
lets you live.” ― Ryszard Kapuściński

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@nelsonchamisa , 40, has age on his side and is hoping to appeal to the frustrated youth and trigger a voting 'youthquake' as Nairobi-based commentator Aly-Khan Satchu terms it @RonakGopaldas
Law & Politics

@nelsonchamisa , 40, has age on his side and is hoping to appeal to
the frustrated youth and trigger a voting ‘youthquake’ as
Nairobi-based commentator Aly-Khan Satchu terms it. Indeed, the
self-styled ‘@BarackObama of Zimbabwe’ @RonakGopaldas

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John Mahama, Chief Observer @commonwealthsec group "there will be a winner and there will be a loser" @harumutasa
Law & Politics

"there will be a winner and there will be a loser but Zimbabwe as a
country will be the overall winner if everybody plays their part well.
Whoever wins must be magnanimous in victory, and whoever loses must be
gracious in defeat.”

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Forget collusion. Conspiracy's the watchword in Mueller's filings
Law & Politics

Donald Trump and his circle have long focused on a different buzzword,
saying that there was no collusion with Russians, and subsequently
that if there was collusion, Trump wasn’t aware of it. Now comes Trump
attorney-cum-spokesman Rudy Giuliani. ”I don’t even know if that’s a
crime, colluding about Russians,” Giuliani told CNN this week. Trump
echoed that in a tweet: “Collusion is not a crime.”

That is at once technically correct and, according to former federal
prosecutor Mimi Rocah, beside the point.

“To say there’s no crime of collusion means nothing,” said Rocah.
“That label isn’t in the criminal statutes. But that doesn’t matter
because the conduct that underlies collusion can be, under certain
circumstances, conspiracy to defraud the U.S.”

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The iPhone's average selling price remained above $700 for the third straight quarter, helping Apple revenue rise by more than 17% @business
International Trade

The iPhone’s average selling price remained above $700 for the third
straight quarter, coming in at $724. Why does this matter to Apple
Inc.? If that price had been the same as it was at this point in 2017,
the company’s total revenue would have increased 6.5 percent in its
fiscal third quarter. Instead, revenue rose by more than 17 percent

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#Apple shares up about 3% after results as comp beats w/ Q318 report: Revenues of $53.3bn, above forecasts of $52.4bn @Schuldensuehner
Law & Politics

EPS of $2.34 vs. $2.18 exp. But iPhone sales slight miss w/ 41.3M,
est. 41.6M. At post-mkt high of $196 current mkt cap at $949.2bn, shy
of $1tn mark. (via BBG)

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Apple Revenue (Billions)...@charliebilello
International Trade

2018 (est): 261
2017: 229
2016: 216
2015: 234
2014: 183
2013: 171
2012: 157
2011: 108
2010: 65
2009: 43
2008: 37
2007: 25
2006: 19
2005: 14
2004: 8.3
2003: 6.2
2002: 5.7
2001: 5.4
2000: 8.0
1999: 6.1
1998: 5.9
1997: 7.1
1996: 9.8
1995: 11

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1682
Dollar Index 94.65
Japan Yen 112.06
Swiss Franc 0.9928
Pound 1.3113
Aussie 0.7409
India Rupee 68.595
South Korea Won 1120.84
Brazil Real 3.7546
Egypt Pound 17.8703
South Africa Rand 13.3388

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12-SEP-2016 :: Mirrors on the ceiling, The pink champagne on ice
International Trade

If volatility spikes, positions are going to be reduced en masse. Or
to put it another way and to borrow the lyrics from the Eagles Hotel

Mirrors on the ceiling,
The pink champagne on ice
And she said “We are all just prisoners here, of our own device” Last
thing I remember, I was
Running for the door
I had to find the passage back
To the place I was before
“Relax,” said the night man,
“We are programmed to receive.
You can check-out any time you like,
But you can never leave! “
What is clear is that we are at the fag-end of this party.

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Trump suspends duty-free status for clothes imports from Rwanda

President Donald Trump has suspended Rwanda’s right to export clothing
duty-free to the United States over Kigali’s decision to increase
tariffs on imports of used clothing and footwear, the U.S. Trade
Representative’s office said.

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6 JUN 16 :: "The revolutionary contingent attains its ideal form not in the place of production, but in the street"

I returned to Paul Virilio and his extraordinary book – Speed and
Politics. “The revolutionary contingent attains its ideal form not in
the place of production, but in the street, where for a moment it
stops being a cog in the technical machine and itself becomes a motor
(machine of attack), in other words a producer of speed.’’

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Congo's Kabila discusses possible successors in private meetings

Democratic Republic of Congo President Joseph Kabila is meeting
members of his ruling coalition to discuss who will be its candidate
in presidential elections this year, party and government officials

The central African nation is scheduled to hold parliamentary and
presidential votes on Dec. 23 that have been delayed since 2016 by the
electoral commission’s inability to organize them. While the
constitution bars Kabila from seeking a third term, he’s yet to say
whether he’ll be a candidate. Attempting to extend his 17-year rule
risks destabilizing Africa’s biggest copper and cobalt producer, which
hasn’t had a peaceful transfer of power since independence in 1960.

Representatives of about a dozen groups that make up the Common Front
for Congo, known as the FCC, were invited individually to Kabila’s
farm outside the capital, Kinshasa, for consultations that are
ongoing, the officials said Monday. Two said he asked each group to
come back to him with a list of four preferred potential presidential

“We are in deliberation to think about the profile of the candidate,”
said Ferdinand Kambere, the deputy permanent secretary of Kabila’s
party, the People’s Party for Reconstruction and Democracy. The PPRD
is expected to deliver its four names on Tuesday, Kambere said,
without saying who it will nominate.

Kabila said July 19 his commitment to the constitution is
“unequivocal,” but his persistent refusal to rule himself out of the
next election is fueling fears among his opponents and the
international community that he plans to change or reinterpret the
rules. Several senior allies have said the president has the right to
run in December, arguing a modification adopted in 2011 introduced a
completely new constitution.

Tryphon Kin-Kiey, a former minister of parliamentary affairs and
senior FCC member, said his representatives met Kabila on July 28.

“Lots of groups will name him among the four names,” Kin-Kiey said.
“Some groups give four names; others give only one name, the name of
Kabila.” Kin-Kiey wasn’t present at the meeting because he was abroad,
but was fully briefed on what took place.

Kabila’s deputy chief-of-staff, Jean-Pierre Kambila, said Kabila
didn’t request specific names of potential FCC candidates. Instead,
“he asked them to reflect on the criteria” that should apply to
choosing a candidate, according to Kambila.

Congo Communications Minister Lambert Mende said he was at the
president’s farm on Monday and his group had not at that point been
asked to prepare a list of names.

Registration for presidential candidates opened last week and the
final day to file applications with the country’s electoral commission
is Aug. 8.

“The candidate will emerge naturally,” Kambila said. “There are still
eight days.”

A poll released Tuesday by New York University’s Congo Research Group
found that Katumbi and Felix Tshisekedi, head of Congo’s largest
opposition party, would score best in an election -- both securing 19
percent of the vote. Bemba would come third with 17 percent, while
only 9 percent of voters would choose Kabila, according to the survey.

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We are releasing the poll days before both Bemba and another
opposition leader, Moise Katumbi, are expected back in the country
from exile. It suggests that :

The December presidential elections will be highly contentious.
Sixty-two percent of those polled do not trust the National
Independent Electoral Commission (CENI) to carry out free and fair
elections, and the same percentage does not have faith that courts
will decide electoral disputes fairly. A plurality (45 percent) says
that if President Kabila’s candidate wins, they will not accept the
results. Around half of the respondents said they would participate in
a demonstration if elections are rigged or delayed.
In the race for the presidency, the opposition is still far more
popular than the ruling coalition. However, Felix Tshisekedi,
Jean-Pierre Bemba, and Moise Katumbi are now in a statistical tie at
between 17 and 19 percent. Bemba has climbed 16 percent since our
November 2017 poll. If the opposition does not unite and the
electorate splits its vote, our results indicate that the ruling
coalition could win as large a share of the vote as each opposition
candidate. Indeed, if all of the potential candidates in President
Kabila’s coalition were to run, they would together obtain around 19
percent of the vote (15 percent without Adolphe Muzito).
Should the opposition have a common candidate? The question has become
all the more important after Bemba’s release; 57 percent of the
respondents would like the opposition to unite behind one candidate
for the presidential election. Respondents favored Moise Katumbi (28
percent) and Felix Tshisekedi (26 percent), and Bemba (20 percent) for
that position.
There is widespread approval for the release of Jean-Pierre Bemba from
the International Criminal Court, a decision published several weeks
before the poll took place. Eighty-three percent thought his acquittal
was a good thing, compared with 66 percent who thought his sentence
was unfair in the poll we conducted in October 2016. Nonetheless––or
perhaps because of his acquittal––a majority of Congolese (68 percent)
still have a good opinion of the International Criminal Court (ICC).
The campaign for a third term for Kabila is gaining steam. Compared
with last February, the number of people who would vote for Kabila has
increased slightly from 6 to 9 percent at the national level, and from
21 to 37 percent in the former Province Orientale, his last and only
Finally, respondents are fairly evenly split on whether elections
should be delayed so that the process can be rendered more credible.
Thirty-six percent are not in favor of revising the voting register to
eliminate irregularities and a similar percentage says it does not
want to change the distribution of seats to reflect corrections to the
electoral law. Still, despite their impatience, 66 percent of the
respondents are not in favor of electronic voting machines.

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ANC resolves to push through amendment to #SouthAfrica constitution to further plan for land seizure without compensation - rand plunges @BBGAFRICA

South Africa’s ruling party decided to complete a proposed amendment
to the nation’s constitution to make it clearer under what conditions
land can be expropriated without compensation, prompting the rand to

This brings the African National Congress closer to the populist
Economic Freedom Fighters party, after the ANC said earlier that land
redistribution will only be done in a manner that doesn’t harm the
economy, agricultural production or food security. In May, the party
said the government should test the nation’s current laws on land
because it may not be necessary to change the constitution to ensure
expropriation without payment.

Proposals to change the constitution has raised concern among some
investors that it signaled a shift to a radical land-reform strategy.
The rand erased gains against the dollar after Tuesday’s announcement,
and was 0.8 percent weaker at 13.3739 at 7:37 a.m. in Johannesburg

While the constitution’s property clause currently allows the state to
expropriate land with just and equitable compensation and also
expropriate without compensation in the public interest “it has become
patently clear that our people want the constitution be more explicit
about expropriation of land without compensation, as demonstrated in
the public hearings,” President Cyril Ramaphosa said in a televised

The ANC will contest national elections next year in the first ballot
since the opposition won control of several key municipalities,
including the biggest and richest city, Johannesburg, and the capital,
Pretoria, in 2016.

“This is a surprising and premature announcement by the ANC because
parliament is still in its review process on changing the
constitution,” Lawson Naidoo, executive director of the Council for
the Advancement of the South African Constitution, said by phone.
“Parliament still has to gather and evaluate the many submissions that
have been made. We are in a pre-election phase and the ANC
announcement is part of that.”

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@CBKKenya now says shilling does not need @IMFNews guarantee @BD_Africa
Kenyan Economy

The Kenyan economy is well protected against capital outflows and does
not need the International Monetary Fund’s (IMF) precautionary credit
facility that Kenya could draw in case of distress, Central Bank of
Kenya (CBK) Governor Patrick Njoroge says.

Treasury and other State officials are meeting with the IMF staff team
this week in a fresh round of review that could see Kenya allowed or
denied further access to the standby facility.

But speaking at a news conference in Nairobi on Tuesday, following a
Monetary Policy Committee interest rate decision on Monday, Dr Njoroge
said the facility would be crucial to provide liquidity to the
financial system, if necessary.

However, he added that the country’s external position was strong at
the moment, underpinned by strong remittances and exports.

The governor said a “comfortable” level of foreign reserves, which
stood at $8.87 billion (Sh891.4 billion), equivalent to 5.92 months of
import cover earlier this month, compared to $7.06 billion (Sh709.5
billion) equivalent to 4.73 months of import cover at the beginning of
this year, provides another layer of defence against a decline or
retreat in capital flows.

“The IMF is in town and they are reviewing our performance. We are
confident in terms of our objectives…but at this point, we don’t need
the money from that perspective. We have 5.9 months of import cover.
We are pretty comfortable in that sense,” he said.

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Diaspora inflows grow to record Sh26.8bn in June @bd_africa
Kenyan Economy

Diaspora remittances rose 72 per cent in June to a record Sh26.8
billion ($266.2 million) compared to a similar month last year,
reflecting lower costs of remitting money and the effect of the tax
amnesty for remitting assets stashed abroad.
Latest data from Central Bank of Kenya (CBK) shows Kenyans living
abroad have now sent home a total of Sh138.6 billion in the first six
months of the year, up from Sh89.2 billion in the corresponding period
in 2017.
“The 12-month average inflows to June 2018 sustained an upward trend
to $203.9 million ((Sh20.5 billion) from $146.6 million (Sh14.7
billion) in the 12 months to June 2017.”
Remittances have helped the shilling appreciate by 2.7 per cent
against the greenback this year.

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Kenya Shilling versus The Dollar Live ForexPros 100.48
Kenyan Economy

Nairobi All Share Bloomberg -0.43% 2018


Nairobi ^NSE20 Bloomberg -11.19% 2018


Every Listed Share can be interrogated here


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by Aly Khan Satchu (www.rich.co.ke)
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August 2018

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