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Satchu's Rich Wrap-Up
 
 
Tuesday 13th of February 2018
 
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Macro Thoughts

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Ernest Hemingway, The Snows of Kilimanjaro and Other Stories
Africa


“Kilimanjaro is a snow-covered mountain 19,710 feet high, and is said
to be the highest mountain in Africa. Its western summit is called the
Masai 'Ngaje Ngai', the House of God. Close to the western summit
there is a dried and frozen carcas of a leopard. No one has explained
what the leopard was seeking at that altitude.”

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Snow Peaks of Mount Kilimanjaro
Africa


“And that was the end of the beginning of that” ― Ernest Hemingway,
The Snows of Kilimanjaro and Other Stories

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The Autocrat's Achilles' Heel @ForeignAffairs
Law & Politics


Both Putin and Xi could be making a strategic error. They are staking
their countries' futures, and international trajectories, on one
thing: themselves.

Great power competition is back. Russia and China—two great powers
with autocrats at their helms—are actively testing the durability of
the international order as the West seemingly retreats. Russian
President Vladimir Putin, unfazed by Western sanctions, not only led a
disinformation campaign in Western democracies to disrupt major
elections, but continues to maintain Russia’s occupation of Crimea and
the Donbas region in eastern Ukraine. Chinese President Xi Jinping,
meanwhile, is projecting China’s military power into the South China
Sea and its economic might across Latin America, Africa, and Asia.
Both countries also seek to influence democratic states through the
use of “sharp power.” Aware of Russia and China’s growing reach, the
Trump administration made the right decision to identify the two
nations as U.S. competitors in its recently released National Security
Strategy and National Defense Strategy. For the first time since
September 11, 2001, great power competition, rather than global
terrorism, is considered the number one priority for U.S. national
security.

There seem to be no effective checks to Putin and Xi’s growing
ambitions. Both leaders, however, could be making a strategic error.
They are staking their countries’ futures, and international
trajectories, on one thing: themselves. Throughout their respective
reigns, Putin and Xi have taken steps to consolidate their personal
control on power. This may work as a stabilizing mechanism in the
short term, but in the long term, can exacerbate inherent domestic
tensions that could eventually undermine their rule. Putin and Xi face
two similar dilemmas as long-time autocrats of large countries:
managing brutal elite competition for loyalty and succession, and
balancing international ambitions with deepening tensions between the
central government and restive regions. As both leaders seek more
“wins” to justify their personal control at home, they may
increasingly pursue riskier and bolder foreign policies.

Conclusions

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China has established control over the South China Sea. It has created artificial Islands and then militarised those artificial islands across the South China Sea
Law & Politics


Apart from a few half-hearted and timid FONOPs [freedom of navigation
operations], China has established control over the South China Sea.
It has created artificial Islands and then militarised those
artificial islands across the South China Sea

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12-FEB-2018 :: Kim Yo Jong Cuts Through the Noise. @TheStarKenya
Law & Politics


I found myself quite transfixed by the events unfolding in
Pyeongchang, where South Korea was hosting the Winter Olympics. Kim
Jong-un (Chosŏn'gŭl: 김정은] has been the supreme leader of North Korea
since 2011, has advanced his country's Nuclear deterrent by a mile in
that period and thumbed his nose at President Trump, much to Trump's
chagrin. Kim Jong-un unleashed his secret weapon on the World, that
secret weapon being his sister Kim Yo Jong, who evidently bamboozled
South Korea's President Moon Jae-in [Twitter: 문재인 Verified account
@moonriver365].

"I wish I can see you in Pyongyang at an early date," Ms Kim Yo Jong
told Mr Moon.

Ms Kim Yo Jong delivered a formal invitation from the North Korean
leader Kim Jong-un to the South Korean president Moon Jae-in to visit
Pyongyang.

She added: “If you meet Chairman Kim Jong-un and exchange views on
many issues, the North-South relationship may quickly improve as if
yesterday would seem a far distant past''

"I hope the president will put a footprint in history that will be
long remembered by the future generation by playing a leading role in
opening a new era of unification.”

Ms Kim is the first member of North Korea’s ruling family to visit the
south since the Korean War ended in 1953 in a military stalemate and
without a peace treaty. Vice-President Pence found himself the Odd Man
Out in this headlong Korean rapprochement and purposefully did not
stand when the United Korea Hockey Team entered the Stadium.

Kim Jong-un has accelerated PyongYang's nuclear program and
notwithstanding US Chatter of a ''bloody nose'' strike, what is clear
the Kim has an effective deterrent now. In his Mind, I am sure he was
in an existential race against time to avoid the Fate that he saw
meted out on Saddam Hussein and Colonel Gaddafi. I am not in a
position to pronounce on the repugnance of the Regime in PyongYang and
by most accounts it has been a repugnant one with respect to its
Citizens who at times appear to be just bit-Players on a giant and
grandiose canvas, where the Kims have a la William Randolph Hearst
created their Cinema.

At a Geopolitical Level, We have to see things for what they are. The
US has been triangulated. Kim has his nuclear deterrence. His Sister
Kim Yo Jong is now playing the soft Power Game.

“Water is fluid, soft, and yielding. But water will wear away rock,
which is rigid and cannot yield. As a rule, whatever is fluid, soft,
and yielding will overcome whatever is rigid and hard. This is another
paradox: what is soft is strong.” Lao Tzu

South Korea is set to be peeled off and going by his Puppy dog smiles
President Moonriver will be in PyongYang before You can pronounce Kim
Yo Jong correctly.  Russia always had their back. China was never
interested in bringing him to heel. After all, he is the Buffer State
between China and more than 30,000 US Soldiers parked on their door
step in South Korea. What we saw unfold in Pyeongchang marks a
significant and iconic moment for the Mount Paektu Bloodline [a
three-generation lineage of North Korean leadership descended from the
country's first leader, Kim Il-sung].

 🇰🇵| The crater atop Mount Paektu, #NorthKorea. @EPhotographed

https://twitter.com/EPhotographed/status/946437641817526273

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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
California:
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! “

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.2300
Dollar Index 90.10
Japan Yen 108.28
Swiss Franc 0.9385
Pound 1.3845
Aussie 0.7872
India Rupee 64.225
South Korea Won 1082.50
Brazil Real 3.2954
Egypt Pound 17.7165
South Africa Rand 11.9332

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Platform vs pipeline strategy HBR
International Trade


Back in 2007 the five major mobile-phone manufacturers—Nokia, Samsung,
Motorola, Sony Ericsson, and LG—collectively controlled 90% of the
industry’s global profits. That year, Apple’s iPhone burst onto the
scene and began gobbling up market share.

By 2015 the iPhone singlehandedly generated 92% of global profits,
while all but one of the former incumbents made no profit at all.

How can we explain the iPhone’s rapid domination of its industry? And
how can we explain its competitors’ free fall? Nokia and the others
had classic strategic advantages that should have protected them:
strong product differentiation, trusted brands, leading operating
systems, excellent logistics, protective regulation, huge R&D budgets,
and massive scale. For the most part, those firms looked stable,
profitable, and well entrenched.

Certainly the iPhone had an innovative design and novel capabilities.
But in 2007, Apple was a weak, nonthreatening player surrounded by
800-pound gorillas. It had less than 4% of market share in desktop
operating systems and none at all in mobile phones.

As we’ll explain, Apple (along with Google’s competing Android system)
overran the incumbents by exploiting the power of platforms and
leveraging the new rules of strategy they give rise to. Platform
businesses bring together producers and consumers in high-value
exchanges. Their chief assets are information and interactions, which
together are also the source of the value they create and their
competitive advantage.

Understanding this, Apple conceived the iPhone and its operating
system as more than a product or a conduit for services. It imagined
them as a way to connect participants in two-sided markets—app
developers on one side and app users on the other—generating value for
both groups. As the number of participants on each side grew, that
value increased—a phenomenon called “network effects,” which is
central to platform strategy. By January 2015 the company’s App Store
offered 1.4 million apps and had cumulatively generated $25 billion
for developers.

Apple’s success in building a platform business within a conventional
product firm holds critical lessons for companies across industries.
Firms that fail to create platforms and don’t learn the new rules of
strategy will be unable to compete for long.

Platforms have existed for years. Malls link consumers and merchants;
newspapers connect subscribers and advertisers. What’s changed in this
century is that information technology has profoundly reduced the need
to own physical infrastructure and assets. IT makes building and
scaling up platforms vastly simpler and cheaper, allows nearly
frictionless participation that strengthens network effects, and
enhances the ability to capture, analyze, and exchange huge amounts of
data that increase the platform’s value to all. You don’t need to look
far to see examples of platform businesses, from Uber to Alibaba to
Airbnb, whose spectacular growth abruptly upended their industries.

Though they come in many varieties, platforms all have an ecosystem
with the same basic structure, comprising four types of players. The
owners of platforms control their intellectual property and
governance. Providers serve as the platforms’ interface with users.
Producers create their offerings, and consumers use those offerings.

As Apple demonstrates, firms needn’t be only a pipeline or a platform;
they can be both. While plenty of pure pipeline businesses are still
highly competitive, when platforms enter the same marketplace, the
platforms virtually always win. That’s why pipeline giants such as
Walmart, Nike, John Deere, and GE are all scrambling to incorporate
platforms into their models.

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Crude Oil 1 Year Chart INO 59.61
Commodities


Emerging Markets

Frontier Markets

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ANC will order President Jacob Zuma to resign @FT
Africa


The ANC’s national executive committee decided to sack Mr Zuma after a
marathon 13-hour meeting into the early hours of Tuesday that capped
weeks of intrigue and political paralysis, as the president resisted
pressure from party leaders to stand aside.

The party has been gripped by a power struggle since Mr Ramaphosa, the
deputy president, defeated Mr Zuma’s preferred candidate to be elected
the ANC’s leader in December. Supporters of Mr Ramaphosa insisted that
the president resign immediately to allow his successor to begin the
task of turning around Africa’s most industrialised economy, root out
graft and revive the fortunes of the ANC ahead of general elections
next year.

As the talks dragged on Mr Ramaphosa visited Mr Zuma at his official
residence in the capital of Pretoria just before midnight on Monday.
An official letter confirming the sacking could be sent to Mr Zuma
later on Tuesday. An ANC spokesperson could not be reached for
comment.

No party member has resisted an order by the NEC to leave a government
post. Thabo Mbeki resigned as president in 2008 after being told to
step down by the NEC months after he lost a party leadership battle to
Mr Zuma.

However, Mr Zuma could refuse to heed the NEC because its decisions
are not legally binding. Should he do so, the ANC would be forced to
remove him through parliament, which elects the president, prolonging
the political crisis.

“The ANC would be the major loser if the matter goes to a
no-confidence vote . . . it will smack of deep division, a party
unable to exert internal discipline and will reflect poorly on
Ramaphosa’s ability to strike a deal directly with Zuma,” said Daniel
Silke, director of the Political Futures consultancy.

“He is not going to start getting scared by the NEC given the stakes
here,” Ralph Mathekga, an independent political analyst, said.

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18-DEC-2017 :: President Zuma has laughed [His chuckle should be trademarked] in the face of his adversaries like a Political Sorcerer
Africa


President Zuma has laughed [His chuckle should be trademarked] in the
face of his adversaries and like a Political Sorcerer or the ‘’Teflon
Don’’ has shrugged off all sorts of scandal.

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18-DEC-2017 :: If Ramaphosa succeeds in wresting the Leadership of the ANC, South African Asset prices will enter the sweetest of sweet spots
Africa


If Ramaphosa succeeds in wresting the Leadership of the ANC, South
African Asset prices will enter the sweetest of sweet spots. Global
Investors will surely buy the Rand by the bucketload and we could see
a further meaningful rally in the order of 10% towards 12.00 versus
the Dollar.

read more






Gupta banker @bankofbaroda quits South Africa
Africa


Bank of Baroda said on Monday it would shut its doors in South Africa
at the end of March as part of a plan to rationalise its branches in
international markets.

“The branch will stop taking new / incremental deposits and disbursing
loans with effect from 1st March 2018,” it said in a statement.

Baroda has about 3.9 billion rand ($325.99 million) worth of assets in
South Africa, significantly smaller than 1.2 trillion rand and 979
billion rand at Standard Bank and FirstRand, respectively.

“The business in South Africa is not very significant and will not
have any major impact on the financials of the bank,” the parent
company said in an emailed response to Reuters.

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25-SEP-2017 :: Reputational Risk and a Cautionary Tale from South Africa @TheStarKenya
Africa


What this scenario informs us is that, clearly, both global businesses
have insufficient oversight over what have become far-flung operations
and that the bottom-line has blinded headquarters to what is going on
on the ground. This is a startling situation.

read more




The $45-billion economy is the seventh biggest in sub-Saharan Africa and will probably expand 8.3 percent this year, the fastest growth rate on the continent
Africa


Ghana plans to publish overhauled economic data that will show its
gross domestic product is bigger than currently estimated.

The West African nation will remeasure economic output using 2013
prices instead of 2006 previously and the basket of activities used to
value the economy is being expanded due to new industries that have
come in since 2006, Asuo Afram, head of economic statistics at the
Ghana Statistical Service, said by phone.

The agency will release the revised GDP and economic growth figures
for 2014 to 2017 on May 23 and the data points to a bigger economy
than previously estimated, Afram said, declining to give a number
because the calculations haven’t been finalised.

The $45-billion economy is the seventh biggest in sub-Saharan Africa
and will probably expand 8.3 percent this year, the fastest growth
rate on the continent, according to World Bank projections, on
increased oil output and stronger credit growth.

“We have discovered new activities in the areas of oil and gas,
information and communication technology, construction and education,”
Afram said. “While oil and gas activity was part of recent estimates,
the data has improved and also downstream activity has expanded. In
ICT, voice used to dominate, but these days there is a lot of data
use. Information on household economic activity has also improved.”

The statistical service revised GDP upwards by 75 percent in 2010, the
last time it recalculated figures, and then moved the base year to
2006 from 1993. Nigeria, Kenya and Tanzania all revised their GDP data
in 2014, resulting in increases of between 25 percent and 75 percent
in the sizes of these economies.

read more



Acacia Mining has scrapped its 2017 dividend after core earnings fell by more than half because of a ban on unprocessed mineral exports in Tanzania, it said on Monday.
Africa


The company, which is majority owned by Barrick Gold, said full-year
earnings before interest, tax, depreciation and amortisation (EBITDA)
fell 38 percent to $257 million after taking a $644 million impairment
charge.

read more


Tanzanian president pledges to make country more investment friendly XINHUA
Africa


"In 2018, the government will continue taking efforts aimed at making
the country more conducive to both local and foreign investments,"
said a statement by the Directorate of Presidential Communication at
State House in the commercial capital Dar es Salaam.
The statement said the President made the pledge at a sherry party he
had hosted on Friday night for members of the diplomatic corps and
international organizations based in the country.

A gorgeous golden hour in Dar-es-Salaam! 🇹🇿 Photo: sarajabril on IG

https://twitter.com/MyDaressalaam/status/961886177434525696

read more



Base Resources is pleased to announce the acquisition of the Toliara Sands Project in Madagascar @BaseTitanium 19 Dec 2017
Kenyan Economy


Base Resources is pleased to announce the acquisition of the Toliara
Sands Project in Madagascar. "This is a transformational acquisition
for Base Resources and represents a significant step in execution of
the Company’s strategic plan" - Tim Carstens MD

read more


Base has released its quarterly report for Q4 2017 @BaseTitanium Jan 11
Kenyan Economy


For an update on the Kwale Mine's operations, production data, a
market update and our excellent safety record please see the
announcements section of the website http://basetitanium.com/

read more


Base to raise A$100m for Madagascar's Toliara heavy minerals project
Kenyan Economy


I paid a visit to the De La Rue Facility and that was indeed an
Eye-Opener. Unfortunately I cannot share with you the Pallets and
Pallets of Cash.

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It was a real pleasure visiting @DeLaRuePlc Kenya. Fascinating visit. obviously a little like Fort Knox.
Kenyan Economy


It was a real pleasure visiting @DeLaRuePlc Kenya. Fascinating visit.
obviously a little like Fort Knox. Printing currencies for >30
Countries out of Kenya. Thank You

read more


Warning Signs Flash for Kenyan Shilling as It Climbs Amid Crisis @business
Kenyan Economy


The currency of East Africa’s biggest economy rose 0.9 percent last
week to 100.8 per dollar, a fifth straight week of gains and its best
streak since 2015. It’s now near its strongest level since June 2016.

That rise has sent the dollar’s 14-day relative strength index versus
the shilling plunging to 6.5, its lowest in more than a decade and
well below the level of 30 that some technical traders see as a signal
it’s oversold.

Equities have more or less risen steadily since Kenya’s election
re-run in October, even though the main opposition alliance has
refused to accept defeat. On Jan. 30, it held a mock ceremony to swear
in its leader, Raila Odinga, as the “people’s president,” which the
administration of President Uhuru Kenyatta said was illegal. It
retaliated by arresting opposition officials and closing down some
television channels.

“The media crackdown will be ignored because the markets have
discounted the opposition’s asymmetric strategy to close to zero,”
said Aly-Khan Satchu, head of Nairobi-based Rich Management, an
adviser to companies and wealthy individuals.

Kenya’s Eurobonds have also proved resilient, thanks in part to
investors craving the higher yields that emerging markets offer. While
Kenya’s 2024 dollar yields have risen around 60 basis points since
early January, its spread over U.S. treasuries, which have more than
halved since mid-2016, is still near all-time lows.

That will help the government, which is in a rush to sell as much as
$3 billion of Eurobonds in the next two months.

Foreign investors’ bullishness is largely down to their belief that
political tension will wane, growth will accelerate and interest-rate
caps, which have dented the banking sector, will be removed, according
to David Willacy, a foreign-exchange trader at INTL FCStone Ltd. in
London.

Still, “I would not be a surprised if we see a small retrace in the
shilling, or even if we see the central bank coming in to buy dollars,
since this can be an opportunity to build reserves,” he said.

read more




#PressRelease @KRACare Revenue up 9.6% against backdrop of depressed business environment
Kenyan Economy


#PressRelease Revenue up 9.6% against backdrop of depressed business
environment Overall Revenue for first half of FY 2017/18 grew by Sh
62.5 billion to Sh 712.2 billion from Sh 649.7 billion recorded in the
previous year,

read more







 
 
N.S.E Today


The Yen is rallying sharply.
President Zuma's Fate still hangs in the balance and it is expected
that the ZAR and the All Share are revving up for a sharp move higher
on the news.
"In 2018, the government will continue taking efforts aimed at making
the country more conducive to both local and foreign investments,"
said a statement by the Directorate of Presidential Communication at
State House in Dar es Salaam
Acacia Mining which is ensnared in President Dr. John Magufuli's
crosshairs has scrapped its 2017 dividend after core earnings fell by
more than half because of a ban on unprocessed mineral exports in
Tanzania, it said on Monday [Reuters]
The company, which is majority owned by Barrick Gold, said full-year
earnings before interest, tax, depreciation and amortisation (EBITDA)
fell 38 percent to $257 million after taking a $644 million impairment
charge.
The Ghana All Share is the World's best Index in 2018 and has posted a
+26.44% Return so far this year. The $45-billion economy is the
seventh biggest in sub-Saharan Africa and will probably expand 8.3
percent this year, the fastest growth rate on the continent
[Bloomberg]
The Kenya Shilling was last at 101.21 than 100.8 per dollar, reached
last week after a fifth straight week of gains and its best streak
since 2015. It’s now near its strongest level since June 2016
[Bloomberg]
The Government of Kenya has apparently embarked on a road show where
the intention is to sell up to $3b worth of Eurobonds. While Kenya’s
2024 dollar yields have risen around 60 basis points since early
January, its spread over U.S. treasuries, which have more than halved
since mid-2016, is still near all-time lows.
Eurobond markets remain uniquely benign for SSA sovereign Issuers and
Many from Cote D'Ivoire, Ghana through Kenya are all queued to sell.
The Nairobi All Share rebounded +0.57 points to close at 178.35.
The NSE20 rowed back -1.66 points to close at 3727.65.
Equity Turnover clocked 514.124m.



N.S.E Equities - Commercial & Services


After selling off -2.59% the previous session, Safaricom bounced
+0.88% to close at 28.50 and was trading at session highs of 29.00
+2.65% at the Finale. Safaricom traded 6.864m shares worth 197.068m.

According to Kenyanwallstreet who cited Business Today, NTV General
Manager Linus Kaikai has been appointed Chief Operating Officer of
Royal Media Services (RMS), a position previously held by new lands CS
Farida Kearney. Nation Media eased -1.85% to close at 106.00 and
remains -8.62% in 2018.



N.S.E Equities - Finance & Investment


Equity Group closed unchanged at 43.00 and traded 1.81m shares. Equity
is +8.176% in 2018.
KCB rebounded +1.11% to close at 45.50 and traded 1.088m shares. KCB
is +6.43% in 2018.
CO-OP Bank firmed 5 cents to close at 17.05 and traded 1.772m shares.
CO-OP Bank is +6.5625% in 2018.



N.S.E Equities - Industrial & Allied


Unga spiked +28.21% the previous session after Seabord Corporation
made public its offer of Sh40 a share and plans to take Unga private
in a notice published in the daily newspapers. Shares traded as high
as 60.00 a share yesterday. Investors clearly believe Seabord's offer
is mean and that they will have to pay up some more. Today Unga had 20
Buyers for Every Seller [which is an egregious imbalance] and rallied
4% to close at 39.00. Unga closed out the session trading at session
highs of 41.25 +10.00% and above Seabord's Offer price. Unga is
+34.48% in 2018 and will surely top its NAV [Net Asset Value] which is
49.2.

KenolKobil rallied +2.00% to close at 15.30 and is +9.28% in 2018.

Bamburi Cement closed unchanged at 175.00 and traded 248,500 shares.

EABL closed unchanged at 249.00 and traded 130,400 shares.


--



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