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Satchu's Rich Wrap-Up
 
 
Friday 21st of September 2018
 
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Africa

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"My best case is that, as we get closer to US mid-term elections, we'll see @realDonaldTrump declare a victory over China, tariffs will come off and EM will rally for a few good months."
Africa


“The trade war is negative for EM. My best case is that, as we get
closer to US mid-term elections, we’ll see @realDonaldTrump declare a
victory over China, tariffs will come off and EM will rally for a few
good months.” ~ @RencapMan

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Investor who correctly called the end of the emerging bond rally now forecasts a rebound @business
Africa


A Bloomberg Barclays index of local-currency emerging-market debt has
fallen around 10 percent from a peak in late January. A similar gauge
of foreign-currency bonds has dropped 3.6 percent from a high on Jan.
8.

Home Thoughts

I miss my Layla and my Aysha.

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Colourful sunset in Watamu. Photo by Alice Bisi Shiundu
Africa


“I had a heady dream of loving her, as if she were an actress on a
stage of my own making; and as the night wore on, my imaginings
wandered into make-believe, and died beyond the tent of the mosquito
net, where Vincent was snoring, and the African stars were shining in
through our lone window, and nothing was quite real.”
― Colin Thubron, Night of Fire

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"Water is fluid, soft, and yielding. But water will wear away rock, which is rigid and cannot yield"
Africa


“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

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Pledging to give the British people a final say on Brexit would see a surge in @UKLabour support that would carry it to the brink of government @jeremycorbyn @Independent
Law & Politics


One by YouGov found promising a People’s Vote referendum would mean
Jeremy Corbyn’s party takes an additional 1.5 million votes,
potentially gaining dozens of commons seats.

A second unconnected study by ICM of specific constituencies indicated
such a pledge would see Labour win enough votes to hold and make gains
in marginal constituencies – even in those that backed leaving the EU.

Conclusions

so why isn't Jeremy going for it? Its a No Brainer

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WATCH: @EmmanuelMacron "those who say that we can easily be without Europe, that everything is going to be fine, that it's easy and will bring us lots of money are liars" #PeoplesVote
Law & Politics


French President @EmmanuelMacron makes clear that "those who say that
we can easily be without Europe, that everything is going to be fine,
that it’s easy and will bring us lots of money are liars"

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"Yet to everyone's confusion, some big countries outside the region did not seem to appreciate the peace and tranquillity in the South China Sea," he said. @SCMPNews
Law & Politics


“Yet to everyone’s confusion, some big countries outside the region
did not seem to appreciate the peace and tranquillity in the South
China Sea,” he said. “They sent warships and aircraft all the way to
the South China Sea to create trouble.”

The freedom of navigation operations conducted by major powers were “a
serious infringement of China’s sovereignty”, and “threatened China’s
security and put regional peace and stability in jeopardy”, he said.

Liu’s comments came after the British warship HMS Albion sailed near
the disputed Paracel Islands, a group of islands controlled by Beijing
in the South China Sea on August 31. The Chinese foreign ministry
protested against the move and urged Britain to stop its “provocative
actions”.

Also, last week, a Japanese attack submarine and three warships took
part in exercises in the South China Sea for the first time suggesting
Tokyo’s growing concern over Beijing’s expansion of man-made islands
and military assets there.

But, Liu said “freedom of navigation is not a licence to do whatever
one wishes”.

“Such ‘freedom’ must be stopped. Otherwise the South China Sea will
never be tranquil.”

Conclusions

There has been a deliberate attempt to push back against China in the
South China Sea. Is it just Optics? Will China just wait a little
patiently?

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Chinese President Xi Jinping met with Pakistan's Chief of Army Staff Qamar Javed Bajwa Wednesday @globaltimesnews
International Trade


Chinese President Xi Jinping met with Pakistan's Chief of Army Staff
Qamar Javed Bajwa Wednesday, calling on the two countries to firmly
support each other on issues concerning their respective core
interests.

Conclusions

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(Polish President Andrzej) Duda said: "I said that I would very much like for us to set up permanent American bases in Poland, which we would call Fort Trump" @Carter_PE
Law & Politics


(Polish President Andrzej) Duda said: “I was smiling when talking to
Mr. President. I said that I would very much like for us to set up
permanent American bases in Poland, which we would call Fort Trump.
And I firmly believe that this is possible.”

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12-FEB-2018 :: What we saw unfold in Pyeongchang marks a significant and iconic moment for the Mount Paektu Bloodline
Law & Politics


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).

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La mission militaire italienne au Niger debute finalement
International Trade


La mission militaire italienne au Niger, visant à aider les autorités
locales à contrôler les flux migratoires, va finalement débuter, huit
mois après avoir été votée par le Parlement italien, a annoncé jeudi
la ministre de la Défense Elisabetta Trenta.
"Après huit mois d'impasse, nous avons débloqué la mission au Niger
pour le contrôle des flux migratoires", a écrit Mme Trenta sur
Facebook, sans préciser ce qui avait bloqué, puis débloqué, la
situation.

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.1784
Dollar Index 93.97
Japan Yen 112.74
Swiss Franc 0.9573
Pound 1.3221
Aussie 0.7296
India Rupee 72.195
South Korea Won 1114.99
Brazil Real 4.0772
Egypt Pound 17.9150
South Africa Rand 14.2726

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It's official-cannabis is the new crypto
World Currencies


As one speculative frenzy fizzles, another arises from its ashes.
Marijuana Inc. is making more headlines than Crypto Corp. as the
stocks of companies linked to the cannabis craze get caught up in a
mania that’s sent prices surging.
References to “cannabis” in news articles nearly doubled the amount
mentioning “crypto” on Wednesday, according to data from curated
sources compiled by Bloomberg.
The 30-day realized volatility of Bitcoin has tumbled to near its
lowest level of the past year. Bitcoin hasn’t been as volatile as
Tilray currently is since January 2014.

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Brent for November settlement fell 70 cents to settle at $78.70 a barrel.
Commodities


Brent for November settlement fell 70 cents to settle at $78.70 a
barrel. The contract traded at a $8.38 premium to WTI for the same
month. Prices are up 6.3 percent since Trump first tweeted about OPEC
on April 20.

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As I draw my lines, Oct WTI has broken out, although the trade is in CLX or CLZ. $CL_F @PeterLBrandt
Commodities


West Texas Intermediate for October delivery, which expired Thursday,
fell 32 cents to $70.80 a barrel on the New York Mercantile Exchange.
The more-actively traded November contract slipped 45 cents to $70.32.

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Argentina's central bank now sees the peso at an equilibrium level Bloomberg
Emerging Markets


Argentina’s central bank now sees the peso at an equilibrium level,
chief Luis Caputo told market participants who attended a meeting with
him Thursday.

The statement comes after two days of strengthening by the peso
following a rout that sent it to a record intra-day low in late
August. Caputo also hinted that a revised deal with the International
Monetary Fund will continue to calm the markets and add clarity on
fiscal, monetary and exchange market fronts, in a meeting at the
central bank with local market participants.

Frontier Markets

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The Future Is in Africa, and China Knows It @bopinion
Africa


The biggest reason Africa will be important is population. Look up any
map of total fertility rates, and you can easily see that with a few
scattered exceptions, sub-Saharan Africa is the only place where
people still have large families. Though family sizes will decrease as
the continent becomes richer — this is already occurring — Africa is
still expected to experience much more population growth than anywhere
else:

By the end of this century a third of the world’s population, and a
greater fraction of its young people, will be African. The future of
Africa is synonymous with the future of the human race.

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10 NOV 14 ::Ouagadougou's Signal to Sub-Sahara Africa
Africa


What’s clear is that a very young, very informed and very connected
African youth demographic [many characterise this as a ‘demographic
dividend’] – which for Beautiful Blaise turned into a demographic
terminator – is set to alter the existing equilibrium between the
rulers and the subjects, and a re-balancing has begun.

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Police take away Ugandan opposition leader Kyagulanyi on his return from abroad
Africa


Police took away Ugandan opposition politician Robert Kyagulanyi as he
got off a plane at the country’s main airport on Thursday but a police
official denied he was under arrest and a government official said he
had been taken to his home.

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Young Africa: new wave of politicians challenges old guard @guardian @burke_jason
Africa


A wave of young politicians and activists are challenging ageing
leaders across much of Africa, reflecting seismic shifts on the
continent that are poised to dramatically change the lives of hundreds
of millions of people.
The new generation of politicians are in their mid-30s and can barely
remember the cold war or the conflicts that brought many autocrats or
ruling parties to power. Often educated and urban, they are at the
intersection of massive changes that experts say may dramatically
strengthen democracy in Africa in decades to come.
William Gumede, an analyst in Johannesburg, South Africa, said: “It is
something to be wildly optimistic about … The big question is: how do
we harness this, how do we support these younger leaders?”
The average age of African leaders is 62, which means that the
continent with the youngest citizens has the oldest rulers.

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ZAMBIA Bonds crash as donors cut funding @Africa_Conf
Africa


Cuts in aid payments are compounding the debt crisis as the government
loses credibility after bogus denials

President Edgar Lungu's sacking on 19 September of Minister of
Community Development and Social Services Emerine Kabanshi – at the
centre of the row over the fraud in payments for the country's poorest
families – will do nothing to lessen the deepening crisis in the
country. A bigger corruption scandal in the education ministry
involving potentially tens of millions of dollars is under
investigation, we hear.

Officials, requesting anonymity, have told Africa Confidential that
President Lungu was informed about six months ago about corruption in
the system of payments – known as social cash transfers (SCTs) – to
hundreds of thousands of poor people. Kabanshi, with the support of
Lungu, had overruled civil servants who had wanted to end the Zampost
contract, our sources say.

Contradictory government statements, sometimes demonstrably false, and
revelations of wasteful spending and of hugely over-priced contracts
have hit major companies' investment plans (AC Vol 59 No 18, Graft
worsens cash squeeze).

The yields on US$1 billion Zambian-issued Eurobonds nearly hit 18%
over 18 and 19 September as government denials of any debt crisis or
bad relations with donors took their toll of investor confidence.

The statement added that the President wanted 'a speedy and decisive
investigation'. In fact, Lungu and senior officials had known about
the fraud for several months. Donors had already voiced their concerns
to the government after of discoveries by the Auditor-General. The
government's failure to act despite knowing about the Zampost fraud
exacerbated Britain's anger over the fraud, and the UK demanded $4 mn.
in payments from the Department for International Development be
returned.

Britain's actions remained secret until Africa Confidential's report,
and Information Minister Dora Siliya denied that any suspension of aid
had taken place. Then, in a tweet, British High Commissioner Fergus
Cochrane-Dyet confirmed the aid been suspended, publicly contradicting
the minister's version of events.

The row over the departmental frauds has drawn attention to the debt
crisis, about which government officials are also in denial. Africa
Confidential has reported that some $489 mn. had been set aside for
debt repayment in the first half of 2018, but a government statement
claimed this was false, citing $342 mn. as the true figure (AC Vol 59
No 18, Bonds, bills and ever bigger debts). The government figure,
however, only included interest, not interest plus repayments of
principal, which was the figure we used. In June, the government
promised to cut public spending and stop new borrowing.  The
government currently estimates its foreign debt at $9.3 bn. However,
project loans with Chinese companies not included in that figure total
as much as $5 bn., many of them governed by contracts that do not
allow government to hold up disbursements.

After the June pledge, however, came the news of Zambia's purchase of
two military transport aircraft for over $95 mn. with a commercial
loan. Zambia also contracted provisional loans for Israeli electronics
worth $400 mn.

One of the most serious payments shortfalls is hitting drugs suppliers
to the health ministry, to which donors have also suspended payments.
Because of government non-payment, 'health kits', packages of
essential and commonly-prescribed drugs which are distributed to the
remote countryside, have all but disappeared from view, said a senior
doctor. Hospitals and doctors' surgeries suffer a chronic shortage of
supplies.

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24 APRIL 2018 big ticket blow-up in any African country might all be the catalyst [Zambia looks a likely candidate]. @BDliveSA's @RonakGopaldas
Africa


According to Aly-Khan Satchu, a Nairobi-based investment analyst,
"liquidity has so far muted political risk and concerns from some bond
vigilantes are that African governments are dangerously overloaded on
debt. Therefore this could well be the calm before a storm. The
question is what might trigger this pivot. A non-benign interest rate
structure, a sharp deterioration in the US-China trade war or big
ticket blow-up in any African country might all be the catalyst
[Zambia looks a likely candidate].

I think the rally has farther to go, that there will be more
granularity and pricing about African eurobond pricing, which has
become very homogenous and that we are at some point in the future
going to witness a big asymmetric downside move."

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The MPC has decided to keep the repurchase rate unchanged at 6.5% per annum. @SAReserveBank
Africa


The MPC has decided to keep the repurchase rate unchanged at 6.5% per
annum. Four members preferred an unchanged stance and three members
preferred a 25 basis points increase.

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South Africa All Share Bloomberg -4.97% 2018
Africa


Dollar versus Rand 6 Month Chart INO 14.2726

http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt Pound versus The Dollar 3 Month Chart INO 17.9150

http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Nigeria All Share Bloomberg -15.07% 2018

http://www.bloomberg.com/quote/NGSEINDX:IND

Ghana Stock Exchange Composite Index Bloomberg +7.52% 2018

http://www.bloomberg.com/quote/GGSECI:IND

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28-MAY-2018 :: The choice of that moment is the greatest riddle of history. @TheStarKenya
Kenyan Economy


Let me start with a quotation from Ryszard Kapucinski’s Shah of
Shahs.’’It is authority that provokes revolution... is occurs when a
feeling of impunity takes root among the elite: We are allowed
anything, we can do anything.  is is a delusion, but it rests on a
certain rational foundation. For a while it does indeed look as if
they can do whatever they want. Scandal after scandal and illegality
after illegality go unpunished.  The people remain silent. they are
afraid and do not yet feel their own strength. At the same time, they
keep a detailed account of the wrongs, which at one particular moment
are to be added up.  e choice of that moment is the greatest riddle of
history’’

“Kenya’s budget is now approaching two trillion shillings; a third of
it is being wasted through corruption,” said Kinisu [Reuters].  The
figure is in excess of $6b. It is a mind-boggling figure. It is a
disease and the symptoms of this disease are seen just about
everywhere in our Economy.

read more


Kenya assembly backs halving of fuel tax amid anger at living costs @ReutersAfrica
Kenyan Economy


“The clause (Kenyatta’s proposal) which was under consideration at
that point was carried,” Muturi said amid heated protests by lawmakers
demanding the removal of the tax.

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Aly-Khan Satchu commended the @cbkkenya for effective foreign exchange operations that have made the Shilling one of the best-performing currencies in the world.
Kenyan Economy


He, however, warned that the external situation which was favourable
has changed into a dark turbulent and in some cases even a violent
World, with this the shilling is bound to slide.
“The IMF facility is an important signal and throwing away an
insurance policy which was designed to protect Kenya from an exogenous
situation that we have found ourselves in 2018 is a bold and many feel
a singularly reckless move,’’ Satchu said.
He said that Kenya’s borrowing is set to spike particularly
domestically which will bear the brunt akin to entering a perfect
storm without an umbrella.
He said that diaspora remittances are now holding the country’s forex reserves.
“The path of least resistance is to the downside, notwithstanding the
spike in inward remittances and outlier CBK forex operations. I feel
that if the Shilling surpasses the 107 mark, the situation will get
worse,’’ he added.
Last week, while launching budget-making process for 2019/2020 and
2020/2022, Treasury Cabinet secretary Henry Rotich said that although
the IMF facility has expired, Kenya is in no hurry to apply for
another one since it is working towards easing dependency on
precautionary arrangements.
“The IMF arrangement with Kenya has expired. The fact that we did not
tap into it last year when the country experienced tough economic
times caused by prolonged drought shows that we are self-reliant and
can do without it,” Rotich said.
The International Monetary Fund granted Kenya the $1.5 billion (Sh150
billion) facility on March 14, 2016, and secured a six-month extension
in March this year to September 14.

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Africa


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