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Tuesday 04th of September 2018

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Macro Thoughts

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Iran's rial dropped sharply and forex traders shut shop on concerns over U.S. sanctions @business

Groups of Iranians gathered in front of several exchange bureaus in
Tehran on Monday but were prevented from entering. Nobody was willing
to sell dollars in the current climate, those interviewed said,
leading to a shortage of hard currency.

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BREAKING Iranian rial hits record low at 128,000 to the dollar @Jerusalem_Post

The Iranian rial hit a record low against the US dollar on the
unofficial market on Monday, amidst a deterioration in the economic
situation and the reimposition of sanctions by the United States.

The dollar was being offered for as much as 128,000 rials, according
to foreign exchange website Bonbast.com, which tracks the unofficial

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@Kaepernick7 Face of @NFL Protests, Is Face of New @Nike Campaign @nytimes

The ad reads: “Believe in something. Even if it means sacrificing everything.”

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Ruins of Kilwa Kisiwani and Ruins of Songo Mnara UNESCO H/T @rhaplord

The remains of two great East African ports admired by early European
explorers are situated on two small islands near the coast. From the
13th to the 16th century, the merchants of Kilwa dealt in gold,
silver, pearls, perfumes, Arabian crockery, Persian earthenware and
Chinese porcelain; much of the trade in the Indian Ocean thus passed
through their hands.
Located on two islands close to each other just off the Tanzanian
coast about 300km south of Dar es Salaam are the remains of two port
cites, Kilwa Kisiwani and Songo Mnara. The larger, Kilwa Kisiwani, was
occupied from the 9th to the 19th century and reached its peak of
prosperity in the13th and 14th centuries. In 1331-1332, the great
traveler, Ibn Battouta made a stop here and described Kilwa as one of
the most beautiful cities of the world.
Kilwa Kisiwani and Songo Mnara were Swahili trading cities and their
prosperity was based on control of Indian Ocean trade with Arabia,
India and China, particularly between the 13th and 16th centuries,
when gold and ivory from the hinterland was traded for silver,
carnelians, perfumes, Persian faience and Chinese porcelain. Kilwa
Kisiwani minted its own currency in the 11th to 14th centuries. In the
16th century, the Portuguese established a fort on Kilwa Kisiwani and
the decline of the two islands began.

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The Magic of Saida by MG Vassanji is situated in Kilwa in part

We return to East Africa in The Magic of Saida,  as Canadian medical
doctor,  Kamal Punja journeys back  to Tanzania in search of his first
love,  the woman Saida.  As Kamal walks around his hometown of  Kilwa
he recalls his childhood and relives the events that he witnessed. As
he travels around the countryside he remembers the lost history of
the region: the local wars between the tribal groups, the arrival of
the Sultans,  the slavery of  his grandmother,  the European wars
fought by colonial rivals, the displacements of  thousands of people
in East Africa and his own forced departure for Canada when Asians
were expelled.  Kamal's life is set against the historical events of
the struggle for independence of former African colonies and so his
story can be read in this post-colonial context.

Kamal's life is intertwined with the lost history of East Africa.
Vassanji is not only writing Kamal's story but  also recreating the
history of colonial intervention by Germany and Great Britain.  We are
reminded of this turbulent history in every chapter of the novel:
Chapter one begins with these words,

Kilwa was all history, Kamal said. The past haunted from the ruins and
graves;     it was there  in the references to the Germans who had
ruled there once, and the slaves who were sold    there,  he heard it
in his mother's tales and he heard it recited - majestically - by the
old poet,   Saida's grandfather. (9)

This old poet, Mzee Omari Tamin, is an important figure throughout the
novel and the history of Kilwa and the whole region. The novel begins
with Mzee Omari writing his major work, The Composition of the Coming
of the Modern Age, which is in fact his history of  colonialism in the
region from the point of view of the local Africans.

Kamal's  search for Saida is connected to his uncovering the fragments
of his family's past and the history of Kilwa.  Every chapter has a
clue to these missing people, and their stories.

There were actually three Kilwas: the Island, called Kisiwani, the
ancient stone city now in  ruins; Kamal’s Kilwa, which saw its heyday
in the nineteenth century trade in ivory and   slaves; and Masoko, the
markets…scattered about the main road to the harbour. (16)

In The Magic of Saida Vassanji reminds us that a thriving slave trade
existed in East Africa for many centuries and long before the arrival
of Europeans.  The Swahili-Arab slave traders moved slaves from
Nkhotakota on Lake Malawi to Kilwa. The Prazeros were a slave trading
tribe along the Zambezi River. In several places in the novel Kamal
mentions slavery  as a part of  the history of Kilwa since this is
vital for the lost story which he is trying to recover. In one scene
the young boy Kamal tells his mother about finding human bones on a
hidden beach. She explains to him:

"The sea holds many secrets, you understand?  Kilwa is a old town.
Slaves were brought here, from the south. Many died. Others?-sent off
to Zanzibar, Bagamoyo, Arabia, India. Know this. Those are the bones
of our ancestors." So she told him. Know this. Eyes fixed into him.
But before she said "India." she had drawn a long breath. There were
African slaves in India? Slaves everywhere?  (49)

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1600
Dollar Index 95.24
Japan Yen 111.09
Swiss Franc 0.9700
Pound 1.2859
Aussie 0.7190
India Rupee 71.235
South Korea Won 1115.05
Brazil Real 4.1563
Egypt Pound 17.9405
South Africa Rand 14.8868

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Another emerging-market meltdown? Don't rule it out via @bopinion
Emerging Markets

Emerging-market stresses have been building since at least 2013.
Investors may have forgotten the effect of the “taper tantrum” on the
so-called Fragile Five – Brazil, India, Indonesia, Turkey and South
Africa – a term coined by Morgan Stanley to describe their
vulnerability to capital outflows. Monetary accommodation, lower
current-account deficits and growth disguised the underlying
challenges, attracting more capital to those markets.
The textbook recipe for an emerging-market crisis requires a large
dose of debt and an associated domestic credit bubble, including
misallocation of capital into uneconomic trophy projects or financial
speculation. Then add: a weak banking sector, budget deficits,
current-account gaps, substantial short-term foreign-currency debt and
inadequate forex reserves. Season with narrowly based industrial
structures, reliance on commodity exports, institutional weaknesses,
corruption and poor political and economic leadership.
Based on these criteria, the number of emerging markets at risk
extends well beyond Turkey and Argentina. Like Tolstoy’s families,
each nation has different sources of unhappiness.

Total emerging-market borrowing increased from $21 trillion (or 145
percent of GDP) in 2007 to $63 trillion (210 percent of GDP) in 2017.
Borrowings by non-financial corporations and households have jumped.
Since 2007, the foreign-currency debt – in dollars, euros and yen – of
these countries doubled to around $9 trillion. China, India,
Indonesia, Malaysia, South Africa, Mexico, Chile, Brazil and some
Eastern European countries have foreign-currency debt between 20
percent and 50 percent of GDP.
In all, EM borrowers need to repay or refinance around $1.5 trillion
in debt in 2019 and again in 2020. Many are not earning enough to meet
these commitments.
Turkey and Argentina have twin deficits (combined budget and
current-account gaps as a percentage of GDP) of 8.7 percent and 10.4
percent, respectively, that require financing. Pakistan has a twin
deficit well above 10 percent. Brazil, India, Indonesia, South Africa
and Ukraine are at or above 5 percent on that basis. In India, if
state governments are included the number approaches double figures.
Those gauges are rising in China, Malaysia, Mexico, Colombia, Chile
and Poland.

Then look at reserve coverage – foreign-exchange holdings divided by
12-month funding needs for the current account, short-term debt
maturities and amortization of long-term debt – which measures the
capacity to meet immediate foreign-currency obligations. Turkey and
Argentina score 0.4 and 0.6 respectively, meaning they can’t cover
their needs without new borrowings. Pakistan, Ecuador, Poland,
Indonesia, Malaysia and South Africa have reserve coverage of less
than 1. Chile, Hungary, Colombia, Mexico and India have coverage of
less than 2. Brazil and China come in at 2.5 and 3.1 times,

China and India face well-documented difficulties in their financial
systems. The true level of Chinese non-performing loans may be several
times the official 1.75 percent. India’s NPL ratio is around 10
percent of all loans.

Events in Turkey and Argentina show how these weaknesses become
exposed. Global liquidity tightening, led by the U.S. Federal Reserve
increasing rates and unwinding its bond purchases, reduces capital
inflows and increases the cost of borrowing. Trade tensions,
sanctions, the breakdown of the global institutional structure and
rising geopolitical risks exacerbate those
Weaknesses in the real economy and the financial system feed each
other in a vicious cycle. Capital withdrawals undermine currencies,
driving down prices of assets such as bonds, stocks and property. The
reduced availability of finance and higher funding costs add to
pressure on over-extended borrowers, triggering banking problems that
feed back into the economy. Credit rating and investment downgrades
extend the cycle.

Turkey and Argentina may be special cases. But given the fundamental
problems, other emerging markets are likely to come under pressure. As
Herbert Stein's 1976 law states: “If something cannot go on forever,
it will stop.”

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[The End of] Halcyon Days @TheStarKenya
Emerging Markets

Wikipedia has an article on: halcyon days and it reads thus,

From Latin Alcyone, daughter of Aeolus and wife of Ceyx. When her
husband died in a shipwreck, Alcyone threw herself into the sea
whereupon the gods transformed them both into halcyon birds
(kingfishers). When Alcyone made her nest on the beach, waves
threatened to destroy it. Aeolus restrained his winds and kept them
calm during seven days in each year, so she could lay her eggs. These
became known as the “halcyon days,” when storms do not occur. Today,
the term is used to denote a past period that is being remembered for
being happy and/or successfuL

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12-SEP-2016 :: Mirrors on the ceiling, The pink champagne on ice
Emerging Markets

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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China's Xi offers $60bn in financial support to Africa @AJENews @AJELive #FOCAC2018

Speaking at the opening of a major summit with African leaders in
Beijing on Monday, Xi said the figure included $15bn in grants,
interest-free loans and concessional loans, a credit line of $20bn,
$10bn for "development financing" and $5bn to buy imports from the

Chinese companies will be encouraged to invest no less than $10bn in
African countries in the next three years, he added.

Government debt from China's interest-free loans due by the end of
2018 will be written off for indebted poor African countries, as well
as for developing nations in the continent's interior and small island
nations, Xi said.

"China-Africa cooperation must give Chinese and African people
tangible benefits and successes that can be seen, that can be felt,"
he said.

Al Jazeera's Adrian Brown, reporting from Beijing, said economists and
some international financial institutions worry that Chinese loans are
burying some countries under massive debt.

"It's hard to think of any country in Africa that has not been touched
by China," he said, adding that China rejects the claim of "debt-trap

Beijing loaned around $125bn to the continent from 2000 to 2016,
according to data from the China-Africa Research Initiative at
Washington's Johns Hopkins University School of Advanced International

Every African country is represented at the business forum apart from
eSwatini, self-ruled Taiwan's last African ally that has so far
rejected China's overtures to ditch Taipei and recognise Beijing.

African leaders in attendance include South Africa's Cyril Ramaphosa,
Egypt's Abdel Fattah el-Sisi, Zambia's Edgar Lungu and Gabon's Ali

Ramaphosa defended China's involvement on the continent, saying FOCAC
"refutes the view that a new colonialism is taking hold in Africa as
our detractors would have us believe".

Before FOCAC, Rwandan President and current chair of the African Union
Paul Kagame had also dismissed the concerns, telling the official
Xinhua news agency talk of "debt traps" were attempts to discourage
African-Chinese interactions.

However, Aly-Khan Satchu, an economic analyst based in Kenya's
capital, Nairobi, told Al Jazeera the concerns over "debt-trap
diplomacy" were "real".

"There are worries that this infrastructure has been inflated in
price, and that it is highly unlikely to make a return on investments
that is necessary for these countries to get in order to pay back the
debt," he said.

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China's Xi says funds for Africa not for 'vanity projects' Reuters #FOCAC2018

Chinese funds are not for “vanity projects” in Africa but are to build
infrastructure that can remove development bottlenecks, Chinese
President Xi Jinping said on Monday, telling Chinese firms they also
had to respect local people and the environment.

Xi said at a business forum before the start of a triennial China
Africa summit their friendship was time-honoured and that China’s
investment in Africa came with no political strings attached.

“China does not interfere in Africa’s internal affairs and does not
impose its own will on Africa. What we value is the sharing of
development experience and the support we can offer to Africa’s
national rejuvenation and prosperity,” Xi said.

“China’s cooperation with Africa is clearly targeted at the major
bottlenecks to development. Resources for our cooperation are not to
be spent on any vanity projects but in places where they count the
most,” he said.

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#FOCAC2018 @UKenyatta

The money will be channelled to projects aligned to the Chinese
Government’s Belt and Road Initiative covering telecommunication,
construction of roads, bridges and sea ports, energy, and human
capacity development #FOCAC2018

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Xi Jinping announces 8 new initiatives, an additional $60b for Africa and a clean up of the debt maturing by this year of its LDCs, highly indebted, landlocked and Small Islands States.

The $60 billion will include $15 billion of aid, interest-free loans
and concessional loans, a credit line of $20 billion, a $10 billion
special fund for China-Africa development, and a $5 billion special
fund for imports from Africa ⁦ @ReutersLive ⁩ #ChinaDebtTrap

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By so doing, they've specialized in the inflation of hopes than in the closing of deals. @ragehomaar

African bureaucrats refuse to spend time understanding factors
influencing pledged funds from China. Instead, they concoct new
schemes when old ones fail to fly. By so doing, they've specialized in
the inflation of hopes than in the closing of deals.

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The Chinese KNOW EXACTLY what they are doing. Meanwhile, our own Leaders go there to naively, gleefully and with huge dose of inferiority complex, sign on to BAD DEALS.

The Chinese KNOW EXACTLY what they are doing. If you read their Loan
Agreements with African countries, you will see how TIGHT they cover
their exposure. Meanwhile, our own Leaders go there to naively,
gleefully and with huge dose of inferiority complex, sign on to BAD

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03-SEP-2018 :: Inflexion points are difficult to discern but this is one right here.

I refer you to Uganda. Bobi and Barbi Wine have now arrived in the US.
But what caught my attention was a Video of Revelers at a Tarrus Riley
concert who while chanting ‘People Power’ threw bottles at @BebeCoolUG
while he was on stage performing and later ended his performance.
Inflexion points are difficult to discern but this is one right here.

A Debt crisis and a political inflexion point where those who fought
for Independence hand over to the ''Born Free'' Generation is in fact
a ''double whammy''

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ZAMBIA Bonds, bills and ever bigger debts @Africa_Conf

The government has all but expelled an IMF official, as the debt
continues to spiral and the role of Chinese projects in it raises more
concern Having allocated US$500 million to external debt service this
year, the government's liquidity crisis drags on as relations with
donors and international financial institutions plummet.Lusaka asked
the International Monetary Fund to withdraw its resident
representative Alfredo Baldini on the grounds that he was supposedly
'spreading negative talk' among the donors, a source in Lusaka said.
The rift is a blow to any chance – practically non-existent though it
already was – of a deal.

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Local Risks Worsen South Africa's Pain Amid Emerging-Market Rout

The premium investors demand to hold South African debt rather than
U.S. Treasuries, known as the sovereign spread, has climbed 63 basis
points since the beginning of August to 336, the highest level since
November 2016, according to JPMorgan Chase & Co. indexes. The
emerging-market premium increased 43 basis points in the same period.
A cocktail of negative economic news, political risks and falling
commodity prices accelerated a slide in South Africa’s rand and bonds
sparked by crises in Turkey and Argentina and escalating trade
tensions between the U.S. and China. President Cyril Ramaphosa’s
announcement on Aug. 1 that the ruling party backed an amendment to
the constitution to seize land without compensation has weighed on the
currency, along with worries over rules governing mining.
“Emerging-market vulnerabilities have not eased; in fact, they have
intensified, which could imply that the rand is likely to remain on
the back foot over the near-term,” Walter de Wet and Reezwana Sumad,
analysts at Nedbank Group Ltd. in Johannesburg, said in a report. The
currency could weaken above 15 per dollar if a land-reform
Constitutional amendment has the effect of undermining property
rights, they said. “Foreign investor sentiment remains a key risk.”
The rand weakened 1.1 percent to 14.8452 per dollar by 11:56 a.m. in
Johannesburg. Yields on South Africa’s $2 billion of 2028 Eurobonds
climbed two basis points to 5.9 percent, bringing the increase since
the beginning of August to 43 basis points.

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27-AUG-2018 :: The ZAR gets caught up in the CrossFire. @TheStarKenya

President Trump the linguistic and financial warfare specialist has
the Machine-Gun and the ZAR is in its line of Fire.

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Ghana considering $50 bln century bond, president @NAkufoAddo says @ReutersAfrica

President Nana Akufo-Addo said during a meeting with Xi in Beijing on
Sunday: “The Ministry of Finance and economists in Ghana are looking
at floating a $50 billion century bond. This will provide us with the
resources to finance our infrastructural and industrial development.”

The announcement drew scepticism in financial markets, with analysts
expressing doubts over Ghana’s capacity to undertake such a

“While the estimate of Ghana’s likely infrastructure investment need
over the next century may well total more than $50 billion, Ghana’s
ability to raise anything like $50 billion in a single issue is
doubtful, given the country’s current financing capacity,” said
Standard-Chartered Bank chief economist Razia Khan.


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(EABL) has raised its stake in Serengeti Breweries to 72.5 per cent after converting a Sh15.3 billion loan to the Tanzanian subsidiary into equity. @BD_Africa
Kenyan Economy

The Nairobi Securities Exchange-listed firm, whose ownership
previously stood at 51 per cent, made the transaction to ease the
subsidiary’s debt burden. Serengeti’s minority shareholders, who were
diluted in the deal, could restore their original 49 per cent stake in
the future by ceding half of their dividend entitlement going forward.
“On July 1, 2017, the company entered into an agreement with the
non-controlling shareholders of its subsidiary, Serengeti Breweries
Limited (SBL), to convert all its outstanding loans receivable to the
subsidiary into equity shares, without proportionate capital
contribution by the non-controlling shareholders,” EABL says in its
latest annual report.
“The transaction resulted in an increase in the effective control of
the subsidiary from 51 per cent to 72.5 per cent.”

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EABL share price data and FY 18 Earnings here
Kenyan Economy

Par Value:                  2/-
Closing Price:           199.00
Total Shares Issued:          790774356.00
Market Capitalization:        157,364,096,844
EPS:             7.19
PE:                 27.677

FY Revenues of KES 73.5bn
FY Profit Before Tax 11.7b versus 13.3b -12.00%
FY Profit After Tax 7.3b versus 8.5b -15.00%
FY EPS 7.19 versus 9.71 -26.00%
Final Dividend 5.50

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LongHorn Kenya reports FY 2018 EPS +36.375% Earnings here
Kenyan Economy

Par Value:
Closing Price:           4.50
Total Shares Issued:          369940476.00
Market Capitalization:        1,664,732,142
EPS:             0.49
PE:                 9.184

Longhorn Publishers PLC FY 2018 results through 30th June 2018 vs.
30th June 2017
FY Revenue 1.696318b vs. 1.451774b +16.844%
FY Cost of sales [781.140m] vs. [702.173m] +11.246%
FY Gross profit 915.178m vs. 749.601m +22.089%
FY Distribution costs [134.591m] vs. [169.445m] -20.570%
FT Administrative Expenses [422.452m] vs. [350.812m] +20.421%
FY Operating profit 358.364m vs. 231.696m +54.670%
FY Finance costs [85.218m] vs. [52.549m] +62.169%
FY Profit before income tax 273.146m vs. 179.147m +52.470%
FY Profit for the year 183.604m vs. 133.876m +37.145%
EPS 0.67 vs. 0.49 +36.735%
Total Assets 2.407529b vs. 1.858734b +29.525%
Cash and cash equivalents at the end of year 418.780m vs. 11.649m +3,494.987%
Dividend 0.42 vs. 0.38 +10.526%


product diversification, entry into new markets and growth of the
digital offering.
Growth of operating margin from 16% - 21%
Expanding into new territories within Southern Africa and Francophone


Strong FY Earnings.

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Top 5 digital lenders by marketshare in #Kenya (out of 49): @TheKageniMind

1. Mshwari - 29%
2. KCB Mpesa - 12%
3. Equity Eazzy - 4%
4. Tala - 1.8%
5. Mcoop Cash - 1.3%

47% of borrowers repaid late while 12% defaulted.

(Source: @FSDKe)

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Kenya Shilling versus The Dollar Live ForexPros
Kenyan Economy

Nairobi All Share Bloomberg -3.08% 2018


Nairobi ^NSE20 Bloomberg -14.38% 2018


Every Listed Share can be interrogated here


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

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