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Satchu's Rich Wrap-Up
Wednesday 07th of February 2018

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Macro Thoughts

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The Era of Easy Money Is Ending, and the World Is Bracing for Shocks @nytimes

Investors concluded that interest rates would rise faster than they
had anticipated, almost certainly in the United States, and perhaps
eventually in Europe and Asia, too. They yanked their treasure out of
stocks and entrusted it to safer repositories of wealth like bonds and

“Business cycles across different markets are more correlated than
they have ever been,” said Mr. Saroliya, of Oxford Economics. “It’s
the global supply chain.”

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18-SEP-2017 :: 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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Zuma's Office Denies Claim He Plans to Fire Ramaphosa as Deputy @Business
Law & Politics

“The allegations are completely baseless,” Zuma’s spokesman, Bongani
Ngqulunga, said in an emailed statement.

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Zuma's Resignation Appears Nearer as ANC Delays Crisis Meeting Bloomberg
Law & Politics

South African President Jacob Zuma appeared a step closer to resigning
after the ruling African National Congress delayed an emergency
meeting to discuss whether to force him from office.

The decision by the ANC’s National Executive Committee, its top
decision-making body, to postpone its meeting until later this month
came after “constructive” talks between Zuma and Deputy President
Cyril Ramaphosa, party spokesman Pule Mabe said late Tuesday.
Ramaphosa replaced the president as leader of the ruling African
National Congress in December.

“My supposition is that the postponement of the NEC means the core
issue around Zuma’s exit has been resolved and now they are ironing
out the details,” Richard Calland, an analyst at risk advisory company
the Pater Noster Group, said by phone from Cape Town.

 The rand has been the best performer in the world against the dollar
since his Dec. 18 election as ANC leader, and was 1.5 percent stronger
at 11.9432 per dollar at 10:09 p.m. in Johannesburg.

“Zuma is gone,” said Xolani Dube, a political analyst at the Xubera
Institute for Research and Development in the port city of Durban. “I
expect his resignation to be announced tomorrow.”

While Zuma has survived repeated attempts by the opposition in
parliament to remove him from office and two previous votes in the
NEC, this month would have been the first when he isn’t head of the

“Ramaphosa has sidelined President Jacob Zuma quicker than expected,
prompting most of Zuma’s allies to withdraw their support,” Darias
Jonker, an Africa analyst at risk-advisory firm Eurasia Group, said by
email. “Zuma will likely leave office this month one way or the

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Turkey Establishing Long-Sought US "Safe Haven" in Northern Syria
Law & Politics

Turkey’s recent incursion into northern Syria is poised to finally
establish the long-sought after “buffer zone” or “safe haven” called
for by US policymakers since as early as 2012.

While the US and Turkey are currently feigning a diplomatic row over
the incursion – with Turkey’s targeting and displacement of Kurds
allegedly backed by the United States – it is clear that recent claims
by the US regarding its expanding support of Kurdish militias it has
been arming and backing in Syria was done as an intentional pretext
for Turkey to justify an otherwise indefensible invasion of Syrian

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Russian-Turkish axis in Syria faces meltdown @asiatimesonline
Law & Politics

Two things differentiate the downing of a Russian Su-25 ground-attack
jet in the western province of Idlib on February 3 from the drone
attacks on the Russian air base at Hmeimim a month earlier.

One, Russia could thwart the attack on January 5 by a wave of drone
aircraft but singularly failed to anticipate the use of man-portable
air defense systems by extremists operating in Idlib under Turkish
watch. Russia lost an ace fighter pilot in the latter attack.

Notably, however, an influential lawmaker – Dmitry Sablin, coordinator
of the Russia-Syria parliamentary friendship group – went ahead to
“speculate,” saying: “We have information that the MANPADS used to
bring down our jet was brought into Syria from a neighboring country
several days ago. Countries from whose territory weapons arrive, that
are then used against Russian servicemen, must understand that this
will not go unpunished.”

Idlib province is situated right on Syria’s border with Turkey. It is
supposed to be a “sealed border” under strict surveillance by Turkish
security agencies. If what Sablin alleged was based on factual
information, Russian intelligence recently monitored the transfer of
MANPADS from Turkey to extremists.

For Turkey, the knot is three-fold. Firstly, it cannot come to terms
with the new reality that Russia (which has civilizational ties with
Greece and Cyprus) has today become the dominant power in the Eastern
Mediterranean. Secondly, it disapproves of ongoing Syrian military
operations, supported by air power, to regain control of Idlib from
opposition groups that have enjoyed Turkish support. And, above all,
thirdly, Erdogan’s grand design to establish a permanent Turkish
foothold in Syria (which was ruled by the Ottomans), will remain a
pipedream so long as Russia underpins Syria’s unity and territorial
integrity. Turkey has all along viewed Moscow’s links with the Kurds
in Afrin suspiciously.

Typically, therefore, Erdogan will now seek a modus vivendi with the
US. Of course, it will be a dream come true for the US if the hairline
crack in the Russian-Turkish axis in Syria widens and becomes a rift
in the coming weeks. In their opposition to the establishment of
Russian bases in Syria, Washington and Ankara are on the same page.

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Ozone layer is thinning over densely populated areas, scientists say @thetimes
Law & Politics

The ozone layer is recovering over Antarctica but thinning over highly
populated areas, potentially exposing more than a billion people to
harmful radiation, researchers have warned.

The hole in the protective layer has been closing over Antarctica
since ozone-damaging chemicals were banned by the Montreal Protocol,
an international treaty, in 1987, but scientists have found that it is
thinning in the lower stratosphere above more densely populated parts
of the globe.

International Markets

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Volatility explodes @ReutersJamie
International Trade

VIX above 50% for, remarkably, only third time ever (if you count Sept
'08-March '09 as one "time"). LTCM, Asia crisis, dotcom bubble,
Greece, euro debt crisis, Brexit ... none of that got the VIX above
50. But it did today. Shows how complacent/skewed the market was.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.2389
Dollar Index 89.56
Japan Yen 109.23
Swiss Franc 0.9351
Pound 1.3966
Aussie 0.7881
India Rupee 64.145
South Korea Won 1084.83
Brazil Real 3.2350
Egypt Pound 17.6505
South Africa Rand 11.9537

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When facing correlated sell-off across markets, investors look to reduce positions and the most crowded FX positions are short USD. OCTAVE is also bullish USD @TCommodity
World Currencies

In local US hours USD selling has reversed to buying as US data has
repeatedly beaten consensus. When facing correlated sell-off across
markets, investors look to reduce positions and the most crowded FX
positions are short USD. OCTAVE is also bullish USD.

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27-NOV-2017 :: Bitcoin "Wow! What a Ride!" @TheStarKenya
World Currencies

“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.’’

read more

Cryptocurrencies Under Pressure After Bitcoin Dips Below $6,000
World Currencies

The biggest virtual currency sank 2.4 percent to $6,933 at 8:16 a.m.
in New York, rebounding from as low as $5,922, according to Bloomberg
composite pricing. Alternative coins Ripple, Ether and Litecoin also
fell at least 3.5 percent.

“Crypto is being driven by daily negative news,” said Craig Erlam, a
senior market analyst in London at online trading firm Oanda Corp.
“There’s regulation speculation in India, South Korea, and the U.S.
And then there’s hacking, the Facebook situation and finally the
Tether story has people worried as well.”

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The cliff edge is fast approaching for bitcoin miners (via @gadfly)
World Currencies

A 70 percent price drop since the heady days of mid-December has cut
profitability to the bone. With the cryptocurrency hitting $6,000 on
Tuesday, only the biggest and most efficient can stay above water, but
even these are balancing on a knife edge, according to a Gadfly

Unless you're an outfit running the fastest rigs bought at wholesale
prices -- -- 67 percent of all mining power is in the hands of four
pools -- chances are you're losing money. The arms race among
participants has brought 40 percent more mining power online since
Bitcoin prices went above $19,000 on Dec. 18. That's resulted in the
rebalancing system built into the digital currency making it 51
percent more difficult to complete a block, according to data from

Miners forced to work ever harder for each Bitcoin have shrugged off
this escalating requirement for computational power -- up 18-fold in
two years -- because a 21-fold price increase over the same period
made the cost worth the investment.

Had Bitcoin stayed at its 50-day moving average of $13,200, then the
average miner could expect to print $80 per week in profit at current
levels of computation (hash rate) and difficulty. This is based on the
very generous assumption that a miner is running Bitmain Technologies
Ltd.'s Antminer S9 at 13.5 TH/s (retail price $2,320), one of the most
advanced systems available, and the set-up is in China at wholesale
prices. 1 Older equipment will have lower returns, and a lot of those
mines are still online.

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WTI Crude Oil 63.73

Emerging Markets

Frontier Markets

Sub Saharan Africa

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It looks like the #Congo government is switching gears, from "glissement" toward elections. But what kind of elections? Should donors support this? Should the opposition boycott?

For most of the past three years, the lament of diplomats and human
rights activists alike has been summed up by one word: glissement.
Kabila does not want to hold elections, as he is term limited, so he
plays for time by creating artificial delays. The focus of advocacy
was on the urgent need for elections––some (the Rassemblement, LUCHA,
Human Rights Watch, as well as others) then changed tack toward
demanding Kabila’s resignation, a transition sans Kabila, after losing
faith that Kabila would ever hold credible elections. Those
differences of approach were not initially very apparent––everybody
wanted Kabila to leave, just some wanted it to happen before

Now, after years of dragging their feet, the ruling coalition has now
apparently begun to shift gears. According to three senior western
diplomats in Kinshasa, a senior UN official, and an opposition leader
I spoke with this past week, the government has now finally decided on
holding elections. There are numerous indications of this: parliament
approved a new electoral law in just two weeks, the CENI wrapped up
the voter registration with just minor delays, and the government has
allocated $80 million more to elections than CENI asked for in 2018.
Government officials have even begun to speak in clearer terms about
Kabila’s departure:  the head of the election commission, not known
for his bravado, said that elections must bring about “alternance,”
which requires Kabila’s departure, and the information minister said
that Kabila would name his successor by July (although he has begun to
talk that back).

Not everybody agrees with this analysis––one foreign diplomat I talked
with said it was still more likely that the government will pursue
delays for as long as it can.

And heading toward elections is certainly not without huge risks for
the incumbent and his ruling coalition. Kabila is extremely
unpopular––in our February 2017 opinion poll, only 24 percent approved
of him. (Don’t take it from us: In June 2016, Gallup said Kabila only
enjoyed 28 percent approval, one of the lowest for an African
president.) And if Kabila does not mess with the constitution, he is
barred from another term and thus will have to designate a successor.
Some have argued that the recent reorganization of the PPRD, and the
new representative threshold (political parties now have to win 1% of
votes at the national level to allowed to sit in parliament), would
allow him to become president of a much stronger, more dominant party
and to control his successor from behind the scenes. That, too, is a
risky gambit––the world is full of leaders who have tried the
Putin/Medvedev switch and have failed: just look to the neighboring
Angola, where the much stronger Dos Santos was unable to rein in his

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Ethiopia's revolution at the top Africa Report

Whatever happens, this will most likely be a make-or-break year for
the EPRDF. Regional governments are growing stronger and demanding
full realisation of the autonomy promised by the federal constitution
but largely ignored by Meles. “The constitution was on pause for 26
years,” says Fetsum Berhane, a political analyst and former government
adviser. “The regional states are only now realising how powerful they

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Ivory Coast Plans $1.2 Billion Sale of Eurobonds @BBGAfrica

Ivory Coast plans to sell the equivalent of as much as $1.2 billion of
bonds as the nation seeks to lock in borrowing costs before further
U.S. Federal Reserve rate hikes, according to three people familiar
with the matter.

While the country hasn’t yet appointed deal advisers, it wants to hold
a roadshow for the sale of 850 million euros ($1 billion) to 1 billion
euros of debt before the end of March, said two of the people, who
asked not to be identified because the information isn’t public. Ivory
Coast will sell dollar and euro securities, and is considering a third
tranche denominated in the euro-pegged CFA franc that’s used in eight
countries in West Africa, said two of the people.

The nation will join other issuers in sub-Sarahan Africa such as
Nigeria and Ghana that are rushing to sell debt at a time when the Fed
remains on its policy-tightening path, pushing yields higher. Rates on
Ivory Coast’s $1 billion of dollar bonds due March 2028 have climbed
53 basis points from a record low in January to 5.82 percent, driven
up by the global sell-off of stocks and emerging-market assets that
began on Friday.

Ivory Coast issued $1.25 billion of 16-year bonds with a 6.25 percent
rate and 625 million euros of eight-year notes yielding 5.125 percent
in an auction that attracted almost $10 billion in bids in June.

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Kenyan opposition says some members' passports suspended in crackdown @fastFT @johnaglionby

Dennis Onyango, a spokesman for Mr Odinga, said people in government
were “trying to reinvent the clock”. “The last time passports were
suspended was in the Moi era but not even Moi behaved like this,” he
said, referring to former strongman Daniel arap Moi, who ruled Kenya
for 24 years until 2002.

Mr Miguna’s supporters took to the streets of several towns in western
Kenya on Tuesday to protest against his treatment. At least one person
was killed in Mr Miguna’s home town, Ahero, by a stray bullet as
police fired in the air to disperse demonstrators.

Mr Onyango said about 14 people had their passport suspended. They
include Senator James Orengo, Jimmy Wanjigi, the opposition’s main
financier, and David Ndii, a prominent economist.

He said the government repression could trigger violence in the next
few days. “The mood for resistance is stronger now than it was in the
past,” he said. “There are now millions of people who believe the
government can be fought.”

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N.S.E Today

The Dow Jones staunched it preciptious lurch lower yesterday and
gained 567 points after Monday's 1175 point drop and Fridays 666 point
The VIX traded above 50% for, remarkably, only the third time ever (if
you count Sept '08-March '09 as one "time"). LTCM, Asia crisis, dotcom
bubble, Greece, euro debt crisis, Brexit ... none of that got the VIX
above 50. [Jamie Reuters]
President Zuma looks set for the Eject Button and this rallied the Rand bigly.
Raila Odinga has called for new elections in an Interview with
BBCHARDtalk's Zainab Badawi.
 MarkMacfarlane EVP_EastAfrica for Tullow Oil PLC said
"The exploration and appraisal campaign in Kenya has confirmed the
presence of substantial oil resources in the South Lokichar Basin…East
Africa is on the verge of becoming a major oil exporting region.”
The Nairobi All Share corrected -1.802% to close at 178.11
The Nairobi NSE20 corrected -0.814% to close at 3729.34.
Equity turnover was 1.101b after trading 1.997b the previous session.
Clearly we imported contagion from international markets over the last
2 sessions

N.S.E Equities - Commercial & Services

Safaricom which traded its highest volume of shares for 6 months
yesterday [42.11m shares] retreated -3.39% to close at 28.50 and
traded 20.681m shares worth 590.785m. Safaricom is +6.54% in 2018 and
has corrected -5.00% off a record closing high of 30.00 reached 26th
January. Clearly over the last two trading sessions, we have seen some
spillover into the share price [It is after all held by a lot of
Foreign investors] but the session closed out with Safaricom solidly
bid at 28.25.

The Media Counters rebounded finally.
Nation Media Group rebounded +1.89% to close at 108.00 and traded
14,500 shares. Nation Media was caught up in the Fake News Wars and
carried the Obituary notice of Jimmy Wanjigi, who is widely reported
to be alive and well though minus a passport.
Standard Group was high ticked +8.66% to close at 34.50 on just 200
shares worth of business.

N.S.E Equities - Finance & Investment

KCB Group retreated -2.162% to close at 45.25 and traded 5.318m shares
worth 241.900m. KCB closed the session trading at 45.50 signalling
that a base might have been found today.
Equity Group eased -1.72% to close at 42.75 and traded 896,300 shares
worth 38.357m. Equity is +7.54% in 2018.

N.S.E Equities - Industrial & Allied

KenolKobil firmed +1.35% to close at 15.00 and traded 5.256m shares
worth 79.071m. KenolKobil is +7.142% in 2018 and I venture has further
to go.
Total Kenya spiked +7.48% higher to close at a 2018 High of 28.75 and
traded just 4,000 shares. Buy Side Demand was 10x the volume traded.
Total Kenya is +22.34% in 2018 and self-evidently an Out-Performer.

EABL closed unchanged at 249.00 and traded 211,400 shares worth
52.814m. EABL's more resilient price action might be signalling
International Investors are in fact underweight EABL. EABL is +4.621%
in 2018.

Bamburi Cement closed unchanged at 175.00 and traded 226,500 shares.


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

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