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Satchu's Rich Wrap-Up
Monday 26th of February 2018

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Macro Thoughts

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Leaving a mark ... a colour-enhanced hand stencil from La Pasiega in northern Spain, now dated back 66,700 years. Photograph: @Reuters

The potentially epoch-making announcement in the journal Science this
week of a new dating for art in some of Spain’s painted caves includes
the astounding discovery that a stencilled hand in Maltravieso cave is
at least 66,700 years old – a date reached by testing the calcite
deposits that have encrusted it over the millennia.

That is long before modern humans are known to have reached Europe on
their migration out of Africa. It is also more than 25,000 years
before the first paintings made by Homo sapiens in Europe were created
at Chauvet in France. The Maltravieso hand is not human, at least not
Homo sapiens. It has to be that of a Neanderthal, the early species
that hunted the big beasts of ice age Europe before our lot came
along, only to mysteriously vanish about 40,000 years ago, soon after
our arrival.

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28-AUG-2017 :: China Rising
Law & Politics

China’s parabolic rise has been simply breath-taking. Millions of
Chinese have been lifted out of poverty and China continues to expand
at a pace that other big economies can only dream about. Xi Jinping’s
One Belt One Road [OBOR] program binds the world to Beijing because
all the roads and railways have but one destination and that is China.
Washington has metastized into an epicentre of risk [Donald Trump
refers] and talk of a unipolar US-dominated world have largely
evaporated. President Putin refused to be rolled over by a Victoria
Nuland inspired ‘’Colour Revolution’’ in the Ukraine and drew a line
in the sand and one of the collateral consequences of that was to send
President Putin into the ready embrace of Xi Jinping. In fact, far
from being a unipolar world, we have entered a bipolar or even a
Tripolar world [US, China and Russia].

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. It is a mind-boggling
geopolitical advance any which way you care to cut it.

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Students have: @Ike_Saul
Law & Politics

- forced CNN town hall
- got new commitments from Rubio
- pressured POTUS to call for bump stock ban
- led advertisers to leave NRA
- dragged D'Souza, Ingraham, O'Reilly online
- saw Florida aide fired for lies
- raised *millions* for march

It's been 9 days.



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"Youthquake", defined as "a significant cultural, political, or social change arising from the actions or influence of young people"
Law & Politics

“Youthquake”, defined as “a significant cultural, political, or social
change arising from the actions or influence of young people”, has
been selected by Oxford Dictionaries as the 2017 word of the year.

The term saw a 401% increase in usage year-on-year as 2017 saw the
often-maligned millennial generation drive political change. The
publishers cited the UK and New Zealand general elections as examples
of young voters mobilising to support opposition parties.

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"Youthquake" defined as "a significant cultural, political, or social change arising from the actions or influence of young people"
Law & Politics

“Youthquake”, defined as “a significant cultural, political, or social
change arising from the actions or influence of young people”, has
been selected by Oxford Dictionaries as the 2017 word of the year.

The term saw a 401% increase in usage year-on-year as 2017 saw the
often-maligned millennial generation drive political change. The
publishers cited the UK and New Zealand general elections as examples
of young voters mobilising to support opposition parties.

read more

The youth vote slept in during Brexit then woke up for the UK snap election and nearly carried Jeremy Corbyn into 10 Downing Street
Law & Politics

The youth vote slept in during Brexit then woke up for the UK snap
election and nearly carried Jeremy Corbyn into 10 Downing Street. The
newly enfranchised youth vote is a big absolute number of first time
voters, and is a very big curve ball. Is this youth vote turned on?
Will it turn out? And how will it vote? My view is that this
demographic actually has the election in its hands. Will we see a
youthquake and if so how does it break?

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State media also said Pyongyang would regard any maritime blockade by the United States as an act of war. Independent
Law & Politics

Quoting a government source, a report said: “The US and Japanese
reactionaries must not act recklessly, keeping in mind that if they
dare to provoke the DPRK [Democratic People’s Republic of Korea] ...
with a wrong view of the changed world, they will only put their
security and existence in jeopardy”.

It added the statement was issued “as the US and Japan are going to
extreme lengths to bring the raging wind of war to the Korean

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Inside North Korea's Hacker Army @business
Law & Politics

Jong wasn’t involved in those attacks, but for half a decade before
defecting, he was a foot soldier in North Korea’s hacker army. Unlike
their counterparts elsewhere, who might seek to expose security
vulnerabilities, steal corporate and state secrets, or simply sow
chaos, North Korean hackers have a singular purpose: to earn money for
the country, currently squeezed by harsh international sanctions for
its rogue nuclear program. For most of the time Jong spent as part of
this brigade he lived and worked in a crowded three-story home in a
northeastern Chinese city. The hackers he shared it with were required
to earn up to $100,000 a year, through whatever means they could, and
were allowed to keep less than 10 percent of that. If they stepped out
of line, the consequences could be severe.

Experts in the South Korean government say that over the years, North
Korea has sent hundreds of hackers into neighboring countries such as
China, India, and Cambodia, where they’ve raised hundreds of millions
of dollars. But actually finding one of these cyberwarriors is, for
obvious reasons, difficult.

Kim has also moved to make more smartphones available to North Korea’s
25 million citizens and begun rewarding computer scientists with nicer
homes and higher salaries. And he’s sent increasing numbers of them
into neighboring countries, where internet access is better and they
can more easily hide their tracks. Defectors say programmers cross the
border clutching bean paste, hot pepper paste, dried anchovy, and
other comforts of home.

International Markets

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.2310
Dollar Index 89.748
Japan Yen 106.62
Swiss Franc 0.9364
Pound 1.3997
Aussie 0.7861
India Rupee 64.90
South Korea Won 1076
Brazil Real 3.2365
Egypt Pound 17.6655
South Africa Rand 12.5391

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The white paper says the Petro is built on the Ethereum network, while the user guide the government published says it's on the Nem network @business
Emerging Markets

Also, I keep reading that the petro is a cryptocurrency that is
"backed by oil." What does that mean? First of all: It means that you
need to trust Venezuela's government to exchange oil for petros.
(There are efforts to build decentralized pegged coins, but for the
most part a peg requires someone to maintain it.) Obviously the petro
does not give you a security interest in any oil. So the petro is
unsecured oil-indexed debt of a government that is sliding into
default and that has been barred from the international debt markets.

But it's worse than that! Venezuela doesn't even promise to give you
any oil. The oil peg is just this:

The Bolivarian Republic of Venezuela guarantees that it will accept
Petro’s as a form of payment of national taxes, fees, contributions
and public services, taking as a reference the price of the barrel of
the Venezuelan basket of the previous day with a percentage discount
of Dv.

Imagine that someone told you, without using words like "crypto" or
"blockchain," that Venezuela was planning to issue perpetual
zero-coupon unsecured debt that could be used to pay taxes in
Venezuela at a valuation pegged to the price of oil, but that
Venezuelans wouldn't be able to buy that debt. I think it would be
fairly clear that there is no use case for that debt. The Venezuelans
who could use the debt to pay taxes can't buy it with their bolivars.
The foreigners who can buy it will get nothing from it: It doesn't pay
interest and can't be redeemed for cash. It is simply a joke, a
product for nobody. But if you add "on the blockchain!" then that
somehow obscures all of the actual economics of the product.

Frontier Markets

Sub Saharan Africa

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Tensions high as DR Congo ruling party supporters storm cathedral

Kinshasa (AFP) - Tensions soared in Democratic Republic of Congo on
Saturday as hundreds of ruling party supporters stormed Kinshasa
cathedral after authorities banned a planned church-backed rally
against President Joseph Kabila.

"We have come to take possession of Our Lady of the Congo Cathedral to
take part in Sunday mass... and defend the homeland," Papy Pungu,
youth wing leader of the People's Party for Reconstruction and
Democracy (PPRD), told AFP, vowing to "spend the night here".

Authorities banned Sunday's anti-Kabila march after previous protests
on New Year's Eve and January 21 saw 15 people killed by security
forces, according to tolls given by organisers and the UN.

The government says just two people died at those protests.

Witnesses said the arrival at the cathedral of the PPRD supporters,
many wearing red berets, sowed panic in the capital's northern
Lingwala municipality.

"They arrived aboard several Transco (public transport) buses and
stormed the shrine of the Virgin. It's a provocation," local
parishioner Felicite Mbula told AFP.

"The church is closed, we couldn't hold mass this evening," she added.

The capital was already on edge after authorities banned the
anti-Kabila protest, with two similar rallies having been brutally put
down last month.

On Saturday evening, tensions were high in Kinshasa, where police put
up barricades, searched vehicles and checked people's IDs.

Kinshasa governor Andre Kimbuta told the Catholic organisers in a
letter that without an agreed route, the city authorities "cannot
guarantee proper supervision" of the demonstration.

Kimbuta's decision came after organisers were invited to discuss
possible routes but the meeting ended without a deal when members of a
key opposition group did not turn up.

Sunday's planned march was called by the Lay Coordination Committee
(CLC), an organisation close to the church, an influential social and
spiritual force in the troubled country.

The church hierarchy has repeatedly urged the population to remain
"vigilant" against the Kabila regime.

Kabila in January accused the church of interfering in Congolese
politics, saying: "Give to Caesar what is Caesar's and to God what is

On Saturday, the cabinet accused the clergy of undertaking "partisan
political activism", according to the minutes of a meeting chaired by

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Transparency Key to Realising Kenya's Debt. @TheStarKenya

The Government of Kenya sold $2b worth of Eurobonds last week. The $1b
10 Year Bond was priced at 7.25% versus an initial price guidance of
7.625% and the $1b 30 Year Bond was priced at 8.25% versus 8.625%
initial guidance. Investors placed $14b worth of orders which was a
solid Outcome considering that the Road-show was buffeted by a Moody's
downgrade [Moody's downgraded Kenya's debt rating to B2 from B1] and
by the news that the IMF had choked off access to a $1.5b facility
[The funds, approved by the IMF in March 2016, were available for
Kenya to access if it faced “exogenous shocks”]. Kenya is the 3rd
African Issuer this Year. Egypt and Nigeria each attracted $12 billion
of orders when they sold $6.5 billion of debt between them last week.
Egypt's 10 Year Bond was sold at 6.59% and Nigeria at 6.5%. There is
more to come from the Continent with Cote D'Ivoire [expected to sell
Euro-denominated debt] Ghana is apparently looking for $2b and South
Africa, Senegal and Angola also slated to sell. The flurry of issuance
adds to an already-record debt tally for sub-Saharan Africa, which has
ballooned to over $200b from less than $30b in 2007, Bank for
International Settlements data shows. The Government of Kenya might
well tap these bonds in short order and sell up to a further $1b. At
that point, we will have ''maxed'' out the Eurobond market.

I am of the view that the net proceeds need to be put to be put to
work transparently and effectively. The Economy needs an Adrenaline
shot. Private Sector Credit growth is still close to 0 and the credit
crunch is real.

Razia Khan [chief Africa economist at Standard Chartered] told the
Financial Times' John Aglionby that the “need for fiscal consolidation
is fully realised” at the Finance Ministry.

“Whether this is taken on board by all actors in Kenya is a different
matter,” she said. “There will have to be a broader buy-in that this
is the way to go.”

Mr. Rotich said he would curb spending and boost revenue to reduce the
budget deficit from 8.9 per cent last June to 4 per cent by June 2021
and “come up with a package of reforms that will help us get out of
the current [interest rate cap] arrangement so we can extend credit to
the private sector”. Mr. Rotich has to wield the Knife and will have
to walk the Talk because we are now running out of road. Take a look
at Zambia if you want to see what happens when you reach the end of
the road.

Jan Mikkelsen, the IMF’s Kenya resident representative, said the two
reforms were “key” to extending the facility. The IMF has been a solid
Cheerleader of Kenya Inc. We are now boxed in and we cannot afford to
lose the IMF precautionary Facility. The markets have given us the
benefit of the doubt but to assume it will do so again is a
sub-optimal Trade.

“We don’t need the IMF resources at the moment but we need a
precautionary or insurance arrangement,” Mr Rotich said. “So we’d
definitely like to continue with the same facility.”

Ronak Gopaldas in an article captioned ''For vulnerable African
countries, a reliance on Chinese financing could pose a threat to
sovereignty'' speaks to  ‘debt-trap diplomacy’ – a predatory system
designed to ensnare countries into a straightjacket of debt servitude.
Brahma Chellaney, in a 2017 article for Project Syndicate, explains
that Chinese loans are collateralised by strategically important
natural assets with high long-term value (even if they lack short-term
commercial viability). This is the point, we have surged our borrowing
but the assets in which we invested are evidently lacking in
short-term viability. We now need to be seized of the need to make our
investments viable and quickly.

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@KenGenKenya reports H1 EPS -11.429% Earnings here

Par Value:                  2.50/-
Closing Price:           8.55
Total Shares Issued:          6243873667.00
Market Capitalization:        53,385,119,853
EPS:             1.37
PE:                 6.241

Results for the 6 months period ended 31st December 2017

HY Electricity revenue 14.924b vs. 14.676b +1.690%
HY Steam revenue 3.154b vs. 2.465b +27.951%
HY Other income 535m vs. 598m -10.535%
HY Revenue 18.613b vs. 17.739b +4.927%
HY Operating expenses [4.648b] vs. [4.392b] +5.829%
HY Steam costs [1.793b] vs. [1.279b] +40.188%
HY EBITDA 12.172b vs. 12.068b +0.862%
HY Depreciation and amortization [5.195b] vs. [4.529b] +14.705%
HY EBIT 6.977b vs. 7.539b -7.455%
HY Interest income 732m vs. 632m +15.823%
HY Finance costs [1.628b] vs. [1.605b] +1.433%
HY Profit before tax 6.081b vs. 6.566b -7.387%
HY Profit for the period 4.095b vs. 4.625b -11.459%
Basic EPS 1.86 vs. 2.10 -11.429%
Diluted EPS 0.62 vs. 0.74 -16.216%
Cash and cash equivalents balance at 31st December 701m vs. 6.545b -89.290%
No interim dividend

Company Commentary

Interest income increased from 632m in Dec 2016 to 732m in Dec 2017
EBITDA increased from 12.068b to 12.172b
PBT declined from 6.566b to 6.081b due to increased depreciation and
amortisation cost.
on course to complete ongoing construction of 158MW Olkaria V power
plant by 2019
Total Revenue 18.613b versus 17.739b +4.93%
This was due to higher energy revenues from geothermal and increased
steam revenue following the completion of the Olkaria-Suswa
transmission line.
Steam Revenue increased from 2.465b to 3.154b due to completion of new
wellhead plants and improved power evacuation following completion of
Olkaria-Suswa transmission line.
Operating expenses +5.83%
Depreciation and amortisation expenses increased by 14.7% from 4.529b
to 5.195b due to capitalisation of completed Wellheads and Wells
towards the end of the last financial year.


headline Revenue +4.927% at 18.613b.
HY EBITDA 12.172b +0.862%
Note depreciation and amortisation +14.705% to [5.195b].
which crimped EPS -11.429%
Growth Curve intact but depreciation and amortisation weighed.
Steam Revenue was +27.951%

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

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