|Monday 20th of August 2018
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Currency Puzzles and a weaponised Dollar @Thestarkenya
The Global FX markets trade approximately $5.1 trillion of volume
every day. Foreign Exchange Markets are the deepest and most liquid of
all markets and because of the Leverage [''bang for your buck''] that
Participants can access, it remains a place which can serve up the
most exponential returns and of course because its symmetrical
exponential losses as well. George Soros and Stanley Druckenmiller
remain Legends in the FX World for taking more than a $1b off the Bank
of England in 1992, something I recall as if it were yesterday because
in those days I sat next to the FX desk at Credit Suisse First Boston
and watched it unfold in real time. In 1992, the FX markets were
''voice'' traded and most FX Traders came from the East End and many
of them were plain raucous. Today, algorithmic and computerised
Trading rules the roost and markets can move dramatically on
''semantics and linguistics''
Having watched the FX markets more closely than I have watched any
Woman except my wife, of course, let me deal with one Canard that
Canard being the imminent demise of the US dollar. Ever since I was a
little Boy in shorts in Mombasa reading the back pages of the
Economist, Folks have been talking about the Hegemony of the Dollar
and how this hegemony was set to be broken into tiny little pieces.
Iraq's Saddam Hussein was keen to throw the Dollar over and ended up
dead. Libya's Muammar Gaddafi spoke of a Dinar and ended up dead as
well. The Crypto Evangelists have been knocking with an evangelical
fervour that reminds me Folks who had been out all night at somewhere
like the Ministry of Sound, tired and strung out a little like Elon is
behaving of late. If You are betting on the collapse of the Dollar,
please note it might take an Eternity to pan out and this year it will
have proven extremely expensive.
A trade-weighted index of the U.S. dollar has climbed more than 5%
this year and is nearing its all-time high via @purviso.
President Trump has apparently embraced a Strong Dollar [and of course
coercive Financial Warfare] and tweeted this on 16 Aug 2018
Our Economy is doing better than ever. Money is pouring into our
cherished DOLLAR like rarely before, companies earnings are higher
than ever, inflation is low & business optimism is higher than it has
ever been. For the first time in many decades, we are protecting our
Year to Date the USD has rallied about 37% against the Argentina Peso
and the Turkish Lira, its +16.21% versus the South African Rand,
+14.55% against the Russian Ruble. I can find only 3 currencies that
have appreciated against the Dollar in 2018. The Mexico Peso is +3.2%,
The Kenya Shilling +2.5% and the Japanese Yen is +2.00%. The Kenya
Shilling is the 2nd best performing currency in the World in 2018 and
thats why I headlined the Article ''Currency Puzzles''
Essentially the US has been raising rates [making holding the Dollar
more attractive] and reducing the Supply of Dollars. Previously EM and
Frontier Markets had been showering in a Golden Flood of Cheap Dollar
Liquidity, had been borrowing Dollars like there was no Tomorrow but
are now scrambling to find those Dollars because the ''Golden shower''
has been switched off.
EM asset prices are being particularly badly hit. FX & FI, Citi. MSCI
EM now down 20% from 25-Jan peak, EM Currency Index is 16% down from
its peak vs the USD in mid-Feb, EMBI spread has increased by 101bp
The India Rupee is at a record Low, the Rand at levels which are worse
than when President Jacob Zuma was terminating his Finance Ministers
and even fell 10% intra day. President Erdogan instead of seeking to
bend the Arc of History towards Justice has been seeking to bend the
arc of monetary policy to his will [won't happen stay limit short
Reccip Tayyep]. According to calculations by Standard & Poor's,
Turkey's GDP could shrink to $594bn next year, lowest level since 2006
and an unprecedented drop in wealth. As recently as 2013, Turkey was
on the verge of a one-trillion-dollar economy. Turkey's total stock
market value is now $115bn, less than the stock market cap of
I believe we have embarked on a very big rally in the Dollar and that
there is a lot further to go. Now if you want to chance your arm in
this Market, You can. Take a look at EGM Securities and watch our
Daily Update on YouTube.
Turkey Lira plunge on par w/ Mexico & Asian crises of the 1990s. (Chart via SRP)
I attended a Funeral on Sunday of an Aunt of mine, Sultana. She has 3
sons with whom we had been close 40-45 years ago. And as I sat, i
could not help but think that time flies so fast, seeing faces I had
known so well all those years ago. And as I scanned the room, i found
another cousin staring at me a little like the way Herbert Lom stared
at Inspector Clouseau, which was disconcerting but that story is for
another day. Our Cemetery is in a place called Kariokor which is now a
curious drive. Kariokor is an area of Nairobi where Artisans do
metal-beating and that kind of physical, energetic and typically
raucous thing. It can feel like driving through an underworld and then
you arrive at the Kurbistan [cemetary] and you hear prayers that have
been prayed for 100s of years. It was a little surreal.
Kariakor: During the First World War a contingent of Africans were in
the British army as carrying luggage. The Carrier Corps, as they were
known, carried everything the soldiers needed to survive during the
East African Campaign of the First World War. Their base in Nairobi
was around the present day Kariakor area. The locals simply called the
place Carrier corps which with a local dialect influence sounded like
“Kariako” and it’s today still called by that name.
BREAKING NEWS!!! A member of the Ascend just became the first Afghan
woman to summit Mt. Noshaq, Afghanistan’s highest peak at 24,580 ft.
(Mt. Everest is 29,000') A stunning moment for women’s empowerment in
Afghanistan and the world! Photo by @julieahotz
.@narendramodi risks paying political price after rupee hits all-time low @FinancialTimes
Law & Politics
Narendra Modi used to see the value of the rupee, India’s national
currency, as a mirror, reflecting the strength of the nation’s leaders
and their economic stewardship.
During the 2013 “taper tantrum” — when emerging market currencies were
battered by US interest rate rises — Mr Modi, then Gujarat’s chief
minister, blamed the incumbent Congress-led government for the rupee’s
“Rupee is crumbling against the dollar. Rupee is in the ICU due to
Congress,” he declared at the time.
This week, with Mr Modi prime minister since 2014, the rupee hit an
all-time low, below the psychologically significant Rs70 to the dollar
mark, as investors reassessed emerging market risk after the Turkish
@elonmusk Confronts a Fateful @Tesla Tweet and an 'Excruciating' Year @nytimes
Law & Politics
Elon Musk was at home in Los Angeles, struggling to maintain his
composure. “This past year has been the most difficult and painful
year of my career,” he said. “It was excruciating.”
The year has only gotten more intense for Mr. Musk, the chairman and
chief executive of the electric-car maker Tesla, since he abruptly
declared on Twitter last week that he hoped to convert the publicly
traded company into a private one. The episode kicked off a furor in
the markets and within Tesla itself, and he acknowledged on Thursday
that he was fraying.
At multiple points in an hourlong interview with The New York Times,
he choked up, noting that he nearly missed his brother’s wedding this
summer and spent his birthday holed up in Tesla’s offices as the
company raced to meet elusive production targets on a crucial new
Asked if the exhaustion was taking a toll on his physical health, Mr.
Musk answered: “It’s not been great, actually. I’ve had friends come
by who are really concerned.”
And some board members have expressed concern not only about Mr.
Musk’s workload but also about his use of Ambien, two people familiar
with the board said.
That morning, Mr. Musk woke up at home with his girlfriend, the
musician known as Grimes, and had an early workout. Then he got in a
Tesla Model S and drove himself to the airport. En route, Mr. Musk
typed his fateful message.
Mr. Musk has said he saw the tweet as an attempt at transparency. He
acknowledged Thursday that no one had seen or reviewed it before he
Tesla’s shares soared. Investors, analysts and journalists puzzled
over the tweet — published in the middle of the day’s official market
trading, an unusual time to release major news — including the price
Mr. Musk cited. He said in the interview that he wanted to offer a
roughly 20 percent premium over where the stock had been recently
trading, which would have been about $419. He decided to round up to
$420 — a number that has become code for marijuana in counterculture
“It seemed like better karma at $420 than at $419,” he said in the
interview. “But I was not on weed, to be clear. Weed is not helpful
for productivity. There’s a reason for the word ‘stoned.’ You just sit
there like a stone on weed.”
What Mr. Musk meant by “funding secured” has become an important
question. Those two words helped propel Tesla’s shares higher.
Mr. Musk has said he was referring to a potential investment by Saudi
Arabia’s government investment fund. Mr. Musk had extensive talks with
representatives of the $250 billion fund about possibly financing a
transaction to take Tesla private — maybe even in a manner that would
have resulted in the Saudis’ owning most of the company. One of those
sessions took place on July 31 at the Tesla factory in the Bay Area,
according to a person familiar with the meeting. But the Saudi fund
had not committed to provide any cash, two people briefed on the
Another possibility under consideration is that SpaceX, Mr. Musk’s
rocket company, would help bankroll the Tesla privatization and would
take an ownership stake in the carmaker, according to people familiar
with the matter.
But shortly after the Times published its interview with Mr. Musk, he
added through a Tesla spokeswoman that Antonio Gracias, Tesla’s lead
independent director, had indeed contacted him to discuss the Aug. 7
Twitter post, and that he had agreed not to tweet again about the
possible privatization deal unless he had discussed it with the board.
In the interview, Mr. Musk added that he did not regret his Twitter
post — “Why would I?” — and said he had no plans to stop using the
social media platform. Some board members, however, have recently told
Mr. Musk that he should lay off Twitter and focus on making cars and
launching rockets, according to people familiar with the matter.
The S.E.C. investigation appears to be intensifying rapidly. Just days
after the agency’s request for information, Tesla’s board and Mr. Musk
received S.E.C. subpoenas, according to a person familiar with the
matter. Board members and Mr. Musk are preparing to meet with S.E.C.
officials as soon as next week, the person said.
In the interview on Thursday, Mr. Musk alternated between laughter and tears.
He said he had been working up to 120 hours a week recently — echoing
the reason he cited in a recent public apology to an analyst whom he
had berated. In the interview, Mr. Musk said he had not taken time off
of more than a week since 2001, when he was bedridden with malaria.
“There were times when I didn’t leave the factory for three or four
days — days when I didn’t go outside,” he said. “This has really come
at the expense of seeing my kids. And seeing friends.”
He blamed short-sellers — investors who bet that Tesla’s shares will
lose value — for much of his stress. He said he was bracing for “at
least a few months of extreme torture from the short-sellers, who are
desperately pushing a narrative that will possibly result in Tesla’s
Referring to the short-sellers, he added: “They’re not dumb guys, but
they’re not supersmart. They’re O.K. They’re smartish.”
Mr. Musk’s tweets on Aug. 7 were the most recent of several flare-ups
that had drawn scrutiny. He wrangled with short-sellers and belittled
analysts for asking “boring, bonehead” questions. And after sending a
team of engineers from one of his companies to help rescue members of
a stranded soccer team, he lashed out at a cave diver who was
dismissive of the gesture, deriding him on Twitter as a “pedo guy,” or
To help sleep when he is not working, Mr. Musk said he sometimes takes
Ambien. “It is often a choice of no sleep or Ambien,” he said.
Mr. Musk said he had no plans to relinquish his dual roles as chairman
and chief executive.
But, he added, “if you have anyone who can do a better job, please let
me know. They can have the job. Is there someone who can do the job
better? They can have the reins right now.”
Odey Says @Tesla Feels Like It's Entering Final Stage of Life @business
Law & Politics
Crispin Odey said Tesla Inc.’s short sellers may finally start to see
their bets against the electric-carmaker pay off.
“Shorts like Tesla have been difficult to hold on to,” the hedge fund
manager wrote in a letter to investors. “However, Tesla feels like it
is entering the final stage of its life,” he wrote, comparing Chairman
Elon Musk’s behavior to that of Donald Crowhurst, the amateur sailor
who set off in the 1960s on a solo voyage around the world and never
Tesla’s shares have been on a wild ride as investors fretted that Musk
may have violated securities rules by tweeting prematurely about plans
to take his company private. After initially surging after his Aug. 7
tweet, they’ve since plunged, with losses deepening on Friday after
Musk told the New York Times that no one saw or reviewed that tweet
before he posted it. The billionaire frequently teared up in the
interview and discussed the strain of heading the company, the
In spite of all the blow back that Musk has gotten from his
detractors, Telsa is still valued highly by its investors. At $53.4
billion, it has a greater market capitalization than Ford Motor Co. or
General Motors Co. Its shares have posted an annualized gain of more
40 percent since 2010, far more than the broader market.
Musk has recently berated short-sellers, but said in the interview
that they are “not dumb guys, but they’re not supersmart. They’re O.K.
They’re smartish.” Tesla is Odey European Inc.’s second-biggest equity
Tesla does not have the infrastructure or underwriting ability to
control the used car market for its vehicles and will face increased
competition from other electric car makers, Odey wrote.
At its August peak, the carmaker had more than $13 billion worth of
shares sold short, an amount that’s equivalent to about a quarter of
its total available for trading. While that’s an unusually high
amount, 42 companies had at least a third of their shares sold short
as of Thursday. The $13 billion pales in in comparison to Alibaba
Group Holding Ltd., the Chinese Internet monolith, where bearish bets
recently approached $25 billion.
What’s set Tesla apart from other giant short positions is the
duration of the bets. While most of these event-driven short bets tend
to unwind quickly, investors’ skepticism over Tesla has persisted.
Hedge fund managers from Jim Chanos to David Einhorn have been among
the carmaker’s most vocal public critics, while Aristides Capital
reported its biggest position is a Tesla short.
Odey has for years anticipated a market sell-off and suffered as his
predictions haven’t panned out, with his flagship hedge fund
plummeting in 2016 and 2017. Odey European Inc., which manages 202
million euros ($230.6 million), has seen a recovery recently, posting
positive returns every month this year. It rose 2 percent in July and
is up 25.8 percent this year, according to the firm’s July investor
“The path this fund has taken to reach this place was so painful, but
now I would not swap this portfolio for anyone else’s,” Odey wrote in
the letter. “It is a pity you daren’t give it a try.”
Bobi Wine, at a rally in Arua, before he was arrested & tortured: "We
find ourselves in a situation where we have been postponing a problem
hoping it will solve itself, until a time has come for us to do what
we must do…"
@NationMediaGrp reports H1 2018 PAT -35.5% 2018 Earnings here
Par Value: 2.50/-
Closing Price: 89.50
Total Shares Issued: 188542286.00
Market Capitalization: 16,874,534,597
Nation Media reports H1 2018 Earnings through 30th June 2018 versus
through 30th June 2017
H1 2018 Revenue 4.9231b versus 5.2742b -6.70%
H1 2018 Profit before Tax 1.1031b versus 1.1909b -7.4%
H1 2018 Provision for overdue debts [291.6m] versus [17.5m]
H1 2018 Profit after Tax 529.2m versus 819.8m -35.5%
H1 2018 Cash and Cash Equivalents 2.445b versus 2.9752b
H1 2018 1.50 Interim Dividend -40%
Revenues Nation -9.00% East African 0% Business Daily 0% Daily Monitor
+3.00% Mwananchi -12.00%
Direct Costs Nation -8.00% East African +42% Business Daily +7.00%
Daily Monitor +7.00% Mwananchi -24%
Operating results Daily Nation -13% East African +>100% Business Daily
-10% Daily Monitor +27% Mwananchi +48%
NTV Kenya Revenues -10% Direct Costs -21% Operating results ->100%
NTV Uganda revenues +1.00% Direct Costs +42% Operating results -32%
Digital Revenues +6% Direct Costs +27% Operating Results +20%
Outstanding GAA debt: Kshs 856 million; 85% overdue (Kshs 726m) Discussions with government ongoing; cred2it4su.s3pended Seeking alternative sources of revenue
Nation Media released their 1H18 results this morning before market
open. PAT declined by 35.5% y/y to KES 592.2m.
ü Top-line mainly affected by the NTV closure at the beginning of the
year following the second elections. Company couldn’t bill advertisers
and most of them took a wait-and-see approach.
ü Bottom line was mainly affected by the provision for bad debt -
Outstanding GoK debt currently stands at KES 856m of which 85% is
overdue (past 90 days).
ü Provisions for overdue debts stood at KES 291.6m compared to 17.5m in 1H17.
ü We understand that discussions with GoK are currently ongoing. The
company highlighted that credit to the government has been suspended.
ü ‘Legacy’ media (traditional media) continues to face challenges.
ü Digital continues to show improved performance - revenues up 6% y/y
and direct costs down 27% y/y.
Still a slog. Like for like at -7.4% before Provisioning.
Print Revenues at the Flagship Nation -9.00%
Digital doing well as you would expect.
@StandardKenya Group reports H1 PAT 2018 +267.57% Earnings here
Par Value: 5/-
Closing Price: 30.50
Total Shares Issued: 81731808.00
Market Capitalization: 2,492,820,144
H1 2018 Earnings through June 30th 2018 versus through June 30th 2017
H1 2018 Revenue 2.398838b versus 2.439529b -1.667%
H1 2018 Total Operating Costs [2.128270b] versus [2.315528b] -8.087%
H1 2018 Profit before Tax 180.061m versus 37.297m +382.77%
H1 2018 Profit After Tax 126.043m versus 34.290m +267.57%
H1 EPS 1.36 versus [0.34]
Key Drivers of the above performance were efficiency and costs
optimisation for the group.
Trade debtors grew by 10% for the period under review.
Headline Revenue -1.667% but Total Operating Costs -8.087%.
@KeEquityBank balance sheet increased by 7.3% to Kshs 542.0 bn #Cytonninvest @CytonnInvest
This growth was largely driven by a 37.5% increase in government
securities to Kshs 158.9 bn from Kshs 115.6 bn in H1’2017
Gross non-performing loans increased by 20.1% to Kshs 24.5 bn in
H1’2018 from Kshs 20.4 bn in H1’2017. Consequently, the NPL ratio
deteriorated to 8.5% in H1’2018 from 7.4% in H1’2017. General Loan
Loss Provisions (LLPs) increased by 23.2% to Kshs 9.6 bn from Kshs 7.8
bn in H1’2017. Thus, the NPL coverage improved to 79.9% in H1’2018
from 69.5% in H1’2017, due to the relatively faster increase in the
loan loss provisions. The increase in the non-performing loans was
attributed to three major corporate clients. Large enterprises
contributed the largest proportion of NLPs at 17.0%, with micro
enterprises and agriculture contributing 14.9% and 8.1%, respectively,
.@KeEquityBank share price data and H1 2018 Earnings here
Par Value: 0.50/-
Closing Price: 50.00
Total Shares Issued: 3702777020.00
Market Capitalization: 185,138,851,000
6 Month earnings through 30th June 2018 versus through 30th June 2017
H1 Total Operating Income 32.758867b versus 30.919276b
H1 Loan Loss Provision 787.392m versus 1.860344b -57.67%
H1 Staff Costs 5.226063b versus 5.158500b
H1 Total Operating Expenses 17.288152b versus 17.627060b -1.92%
H1 Profit before Tax 15.470715b versus 13.292216b +16.389%
H1 Profit after Tax 10.941384b versus 9.338685b
H1 EPS 2.90 versus 2.47 +17.408%
They have a muscled up Balance Sheet with plenty of Firepower.
These are Good results.
I like the regional Footprint which is gaining some meaningful traction.
@KCBGroup share price data and H1 2018 Earnings here
Par Value: 1/-
Closing Price: 49.50
Total Shares Issued: 3066056647.00
Market Capitalization: 151,769,804,027
KCB Group PLC FY 2018 results through 31st December 2017 vs. 31st December 2016
H1 2018 Group Earnings through 30th June 2018 versus through 30th June 2017
H1 Loans and Advances to Customers [net] 421.508507b versus 406.975972b +3.57%
H1 Total Assets 667.681636b versus 630.608038b +5.879%
H1 Loan Loss Provision 827.684m versus 2.012647b -58.87%
H1 Staff Costs 8.599757b versus 9.085443b -5.34%
H1 Total Operating Expenses 6.833934b versus 6.529052b +4.66%
H1 Profit before Tax 17.095226b versus 14.752082b +15.88%
H1 Profit after Tax 12.111360b versus 10.260882b +18.034%
H1 EPS 3.95 versus 3.345 +18.086%
Interim Dividend 1 shilling a share
.@Barclays_Kenya share price data here
Par Value: 2/-
Closing Price: 12.00
Total Shares Issued: 5431536000.00
Market Capitalization: 65,178,432,000
Barclays Bank of Kenya Ltd. Q1 2018 results through 31st March 2018
vs. 31st March 2017
Barclays Bank Kenya reports H1 2018 Earnings versus H1 2017 Earnings
H1 2018 Total Assets 316.628855b versus 268.186848b
H1 2018 Customer Deposits 216.808933b versus 188.652234b
H1 2018 Total Interest Income 14.138810b versus 13.136813b
H1 2018 Net Interest Income 10.966521b versus 10.544100b
H1 2018 Total Non Interest Income 4.696931b versus 4.394476b
H1 Total Operating Income 15.663452b versus 14.938576b
H1 2018 Loan Loss Provision 1.716942b versus 1.353470b +26.85%
H1 2018 Total operating expenses 10.377635b versus 9.786409b +6.04%
H1 2018 Profit before Tax 5.285817b versus 5.152167b +2.59%
H1 2018 Profit After Tax 3.762069b versus 3.542638b +6.194%
H1 2018 EPS 0.69 versus 0.65 +6.153%
H1 2018 Dividend 0.20 unchanged
The Dollar paused for breath on the International FX Exchanges today
in part because There is set to be some ''Jaw Jaw'' between the US and
China admittedly at a low level.
The Kenyan shilling has appreciated by 2.3% year to date versus the
Dollar making it the 2nd best performing currency world-wide in 2018.
Commodity Markets from Gold to Copper to Sugar and now even Oil have
been getting creamed off the back of the Trade War which was seen as
suppressing commodity based Demand.
Its been results season at the Nairobi Securities Exchange and both
Nation Media and Standard Group have now issued their H1 Earnings.
The Nairobi All Share shaved off -0.28 points to close at 174.31.
The Nairobi NSE 20 Index firmed +0.63 points to close at 3336.39.
Equity Turnover was lackadaisical at 417.527m.
N.S.E Equities - Commercial & Services
Nation Media Group reported a -6.7% decline in H1 2018 Revenue which
clocked 4.9231b, they upticked H1 Provision for overdue debts to
[291.6m] from [17.5m] previously and therefore reported a -35.5%
decline in H1 2018 Profit after Tax. The Flagship Daily Nation
reported a -9.00% H1 Revenue decline. The Government owes NMG 856m of
which 726m is overdue and for which they have now provisioned
[291.6m]. Digital Media revenues increased 6%. Self-evidently, its
still a slog and I am sure the Future is not seen in the rear view
mirror and is more a digital Future than a Print one. Nation Media
eased -2.23% to close at 87.50 on light trading. NMG is -22.413% on a
Total Return Basis in 2018.
Standard Kenya Group reported a +267.57% acceleration in H1 2018 PAT
2018. H1 2018 Revenue declined -1.667% but Standard took a knife to
costs which declined -8.087%. Standard said that ''Key Drivers of the
above performance were efficiency and costs optimisation for the
group'' and that ''Trade debtors grew by 10% for the period under
review'' Standard did not trade and is -6.153% in 2018 on a Total
Safaricom was the most actively traded share and closed unchanged at
29.00 and is +8.411% in 2018 and that is excluding an imminent and
juicy Final Dividend. Safaricom traded 7.496m shares.
N.S.E Equities - Finance & Investment
COOP Bank which reported H1 2018 Earnings last week where H1 Total
Assets increased +3.93% to 398.426995b and H1 EPS expanded +7.96% to
1.22, traded 2nd at the Exchange and firmed +0.29% to close at 17.15.
I&M Holdings was marked down -8.62% to close at 106.00 and traded 38,100 shares.
N.S.E Equities - Industrial & Allied
KenGen firmed +1.54% to close at 6.60 and traded 230,700 shares.
Plenty of headroom here.
ARM Cement1 which rallied +8.82% on friday before being placed into
administration has been suspended from trading at the Nairobi
Securities exchange. ARM is -60.76% in 2018 with CDC having gotten
absolutely creamed on their $140m investment.