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Macro Thoughts

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! “
What is clear is that we are at the fag-end of this party.

Conclusions

It took a long time to unwind but unwind it will

The UK is on the verge of financial and constitutional chaos, caught
like a “frog in the water” before it is boiled, according to the
former head of the CBI in a stark warning on the disastrous state of
Brexit negotiations.

Commenting on the snub delivered to prime minister Theresa May at last
week’s Salzburg summit of EU leaders, Mike Rake, formerly president of
the employers’ organisation and chairman of BT, said: “We are on the
edge of a constitutional and possibly an economic crisis. The
referendum result has already damaged our economy, reputation and
influence in the world. We risk being the frog in the water.”

Home Thoughts

I was thinking about my GrandMother's sister who was a Seller of Hats
in the Mombasa Old Town and an extraordinary herbalist. All that
knowledge disappeared with her.

Frenchman Emmanuel Rondeau captured this Bengal tiger staring straight
into his camera high in the Himalaya region of central Bhutan. The
photographer and a team of rangers travelled corridors linking the
country’s national park to look for this rare subspecies until he
finally met this beautiful male tiger. “Tigerland” was highly
commended in the “Animals in their environment” category. Photo by
Emmanuel Rondeau/Wildlife Photographer of the Year

President Donald Trump arrived at the United Nations this week looking
to rally global support against Iran and show that his policies on
North Korea were lowering the risk of nuclear war.
By Wednesday, he made clear he didn’t care whether he persuaded anyone.
"It doesn’t matter what world leaders think on Iran,” he said after
absorbing criticism from America’s allies up close, insisting that
“Iran’s going to come back to me and make a deal.”
The comment was emblematic of Trump’s entire approach at a meeting
many world leaders use to help narrow divides, not widen them. After
doubling down on his “America First” approach, with its insistence on
national sovereignty and rejection of globalism, he’ll leave New York
this week with allies and adversaries as frustrated as ever with the
U.S. over issues from trade to climate change to Iran’s nuclear
program.
“The world loathes what Trump says, but they pay deep attention to the
new credible threats of economic and military coercion,” said Charles
Lipson, professor emeritus of political science at the University of
Chicago. “Trump sees the old international order as fundamentally
unsustainable.”
As his UN trip wound down, Trump declined to acknowledge the distress
he appeared to have left in his wake. Asked about the laughter that
greeted the opening of his General Assembly speech, the U.S. president
said the audience was laughing with him, not at him.
“We had fun,” Trump said. “People had a good time with me.”

As a trade war heats up between the U.S. and China, military tensions
are also rising.
China on Tuesday refused a U.S. warship entry to Hong Kong next month,
according to the U.S. Consulate General in Hong Kong, and Beijing’s
top naval officer canceled a high-level meeting with his U.S.
counterpart after being recalled to China, according to Lieutenant
Colonel Dave Eastburn, a Pentagon spokesman.
The moves come as a worsening trade war prompts concern in Beijing
over whether President Donald Trump’s latest tariffs are part of a
master plan to stop China from threatening American dominance of the
Indo-Pacific. The Trump administration last week levied unprecedented
penalties on a Chinese military procurement agency and its director
for allegedly purchasing Russian combat aircraft, claiming a violation
of U.S. sanctions.
“It all adds up,” said Jean-Pierre Cabestan, who teaches U.S.-China
relations at Hong Kong Baptist University. “It plays into the hands of
the conservatives like Xi Jinping in China’s leadership that Trump’s
real intent is to contain China’s rise.”
Trump’s latest assault came Wednesday when he accused China of trying
to interfere in coming U.S. midterm elections in November. Trump said
he had evidence, but didn’t provide any. He also said he and Xi might
no longer be friends.
“We do not and will not interfere in any country’s domestic affairs,”
Chinese Foreign Minister Wang Yi said at a session of the United
Nations Security Council, through a translator. “We refuse to accept
any unwarranted accusations against China.”
The U.S. State Department said its sanctions on the Chinese military’s
Equipment Development Department -- which oversees China’s defense
technology -- weren’t intended to undermine the military capabilities
or combat readiness of any country, but rather to impose costs on
Russia in response to alleged interference in the U.S. election
process. Among Russia’s arms customers, only China has been targeted
by American sanctions.
The list of Chinese grievances against the Trump administration has
mounted since the president unleashed his trade war, placing tariffs
on hundreds of billions of dollars of Chinese goods.
“In China, they are debating how they can respond and there are hawks
who say, ‘We have to strike back,’” said Collin Koh Swee Lean,
research fellow at Singapore’s S. Rajaratnam School of International
Studies. The country’s military actions this week are a way of
“showing displeasure without crossing the line into something more
serious.”
China has employed similar messaging in the past. In 2016, Beijing
denied a U.S. carrier strike group’s request for a Hong Kong port
visit during a period of heightened tension with the U.S. over the
South China Sea.
Washington has also adeptly deployed the tactic. To protest China’s
militarization of artificial structures it has created in the waters,
the U.S. earlier this year disinvited the Chinese from participating
in the 2018 Rim of the Pacific exercises -- drills held in the Pacific
every two years that bring together the militaries of two dozen
nations.
China will likely continue finding ways to express its
dissatisfaction, without derailing its attempts to resolve the trade
war via conciliation.
Beijing took umbrage in August, when U.S. senators pushed for
sanctions against seven Chinese officials and two surveillance
equipment manufacturers after reports that China is forcing as many as
1 million Muslims into “re-education” camps in its far western region
of Xinjiang. On Monday, China’s Defense Ministry issued a sharply
worded statement expressing dissatisfaction after the U.S. approved
the sale of a $330 million military equipment package to Taiwan.
Taiwan has been an escalating point of tension between the U.S. and
China since Trump’s election. Before he took office, he tweeted about
his protocol-breaking phone conversation with Tsai Ing-wen, the
island’s Beijing-skeptic president. He subsequently questioned the
One-China policy, which has guided U.S.-China ties since the 1970s.
The British warship HMS Albion sailed by the Chinese-occupied Paracel
Islands in the disputed South China Sea earlier this month, adding to
China’s sense that countries were joining forces with the U.S. to
stymie its expansion in the waters -- of which Beijing claims more
than 80 percent -- said Koh. An international arbitration panel in the
Hague ruled in 2016 that China’s claims have no legal standing.
France’s Defense Minister Florence Parly said at June’s Shangri-La
Dialogue security conference in Singapore that French and British
naval forces would sail together through “certain areas” in the South
China Sea. The U.S. Navy routinely conducts freedom of so-called
freedom of navigation operations to demonstrate its right to sail
there.
Japan this month held a submarine exercise in the South China Sea. It
led Chinese Foreign Ministry spokesman Geng Shuang to caution that the
“relevant non-regional country” should refrain from undermining peace
and security.

Abdulla Yameen, the pro-China president of the Maldives, conceded
electoral defeat today (September 24) to opposition leader Ibrahim
Mohamed Solih, widely viewed as an ally of India.
Solih won a resounding 58.3% of the popular vote, but a delighted New
Delhi could not wait until the final tally was announced to heap
diplomatic praise on the democratic result.
Beijing has not yet reacted to the outcome of an election that was
widely viewed as a proxy battle for which side the small island
republic will take in the two Asian giants’ battle for influence in a
strategically important part of the Indian Ocean.
To be sure, China and the Maldives’ friendly relations predated
Yameen’s rise to power in 2013. But it was during his presidency — and
much to the chagrin of the country’s traditional ally India — that
much closer ties were developed.
In September 2014, China’s president Xi Jinping visited the Maldives
and a deal was struck with a Chinese firm to upgrade its international
airport, which is located on Hulhule, a separate island near the
capital Male.
China also undertook to build a 1.4-kilometer bridge linking Hulhule
with Male which was completed on August 30 this year and then
inaugurated by Yameen. In December 2014, only two months after Xi’s
visit, the Maldives signed a Memorandum of Understanding with Beijing
in support of Xi’s ambitious Belt and Road Initiative (BRI), one of
the first countries worldwide to do so.
They were also coming together strategically. Earlier this year China
and the Maldives announced plans to build a Joint Ocean Observation
Station in Makunudhoo, the westernmost atoll in the north.
A writer for The Times of India wrote at the time that the proposed
facility would “allow the Chinese a vantage point of an important
Indian Ocean shipping route…[and] effectively open a Chinese maritime
front against India.”
Whether that is the case — or if the Chinese are simply interested in
keeping a close eye on vital shipping lines, including those that
transport its oil imports from the Middle East — is open to
speculation.
But the opposition Maldivian Democratic Party (MDP), part of the
alliance that supported Solih at the recent election, suggested at the
time that it could be used for military purposes. It was a strategic
red line that India did not want China to cross, but what India could
do to prevent it from happening was never made clear by Indian
security officials and analysts.
The Maldives is a tiny country in terms of area and population — only
417,000 people live on its 298 square kilometers of land — but its
more than 1,000 coral islands and atolls cover a huge maritime area
stretching 750 kilometers from the north to the south.
Because of its proximity to India, New Delhi has always considered it
to be within its regional sphere of influence. That’s been seen in
past Indian interventions to quell unrest in the archipelago.
India, which was effectively sidelined under Yameen, will surely do
what it can to back up the new president’s claim to power through a
peaceful and stable transition. How China will react to Solih’s
election and its likely loss of influence in an island nation that has
become strategically important to its rising regional interests
remains to be seen.

Conclusions

This is noteworthy because Xi Jinping had specifically targeted Indian
ocean Islands at FOCAC. Furthermore it means that India has won a
small victory but don't forget Xi is in Gwadar, He is the Plateau and
in Hambantota.

September has just set in Beijing, bringing with it refreshing breeze
and picturesque autumn scenery.
As an ancient Chinese scholar once observed, “Only with deep roots can
a tree yield rich fruit; only filled with oil can a lamp burn
brightly.”
In addition, for those of Africa’s least developed countries, heavily
indebted and poor countries, landlocked developing countries and small
island developing countries that have diplomatic relations with China,
the debt they have incurred in the form of interest-free Chinese
government loans due to mature by the end of 2018 will be exempted.

Today from Massawa, Eritrea [admittedly on the Red Sea] to Djibouti,
from Berbera to Mogadishu, from Lamu to Mombasa to Tanga to Bagamoyo
to Dar Es Salaam, through Beira and Maputo all the way to Durban and
all points in between we are witnessing a Port race of sorts as
everyone seeks to get a piece of the Indian Ocean Port action. China
[The BRI initiative], the Gulf Countries [who now appear to see the
Horn of Africa as their hinter- land], Japan and India [to a lesser
degree] are all jostling for optimal ‘’geo-economic’’ positioning.
Overlay the Geopolitics and its worth noting that the Geopolitics has
become much more fluid. Fluidity has been engendered by the
spectacular arrival of Prime Minister Abiy in Ethiopia [which is
land-locked, of course but a key Future Taker of Port facilities] who
has made peace with President Afawerki’s Eritrea and is surely set to
undercut Djibouti and even LAPPSET, both Projects which seem to me to
have been predicated to some degree on a permanent Freeze between
Ethiopia and Eritrea. Investments in Ports have a long lead time and I
am not certain that those same investments are able to re-calibrate at
the speed with which the Geopolitics is moving. The Big Risk is that
some these Port investments will be ‘’Hambanota’’-ed.

1 🇹🇭 #Bangkok 20m intl visitors
2 🇬🇧 #London 19.8m
3 🇫🇷 #Paris 17m
4 🇦🇪 #Dubai 16m
5 🇸🇬 #Singapore 14m

Kenya has a competitive advantage in hotels and tourism thanks to
decades of experience. Yet Kenya only earns about $1bn (1% of GDP)
from this. Thailand and Mauritius get 10 times more as % of GDP.
Morocco about 7 times more. Big potential

Euro 1.1703
Dollar Index 94.51
Japan Yen 112.66
Swiss Franc 0.9669
Pound 1.3128
Aussie 0.7228
India Rupee 72.675
South Korea Won 1112.15
Brazil Real 4.0322
Egypt Pound 17.9185
South Africa Rand 14.2236

This is known as a compound fulcrum. Comes from P&F charting. I was
among first few to identify the $BTC parabola in 2017, and first to
identify this CF. Be interesting to watch it resolve. But when it
resolves ...!

“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.’’

India raised customs duties on products ranging from aviation fuel to
footwear as it seeks to narrow the current-account deficit and support
the rupee.
The taxes on 19 items, imports of which were valued at 860 billion
rupees ($12 billion) in the financial year ended March, will be
effective Thursday, the finance ministry said in a statement
Wednesday.
While Indonesia’s rupiah has lost about 9 percent against the dollar
this year, India’s rupee has dropped more than 12 percent, as rising
oil prices push the nation’s trade deficit wider and fuel inflation.

Frontier Markets

Ghana is planning to sell $5-10bn of debt that will not mature for 100
years, as the first tranche of what will grow to become a $50bn
fundraising.
This should be interesting.
Ghana finance minister Ken Ofori-Atta discussed the plan in an
interview in Accra on Tuesday, elaborating on comments made earlier
this month by the country’s president Nana Akufo-Addo during a meeting
with Chinese president Xi Jinping in Beijing.
“We hope to issue this bond as a shelf offering with zero interest in
the first five years,” Mr Ofori-Atta said in the interview.
The GDP of Ghana is around $47bn and it has a debt-to-GDP ratio of 65
per cent. No African nation has done a century bond before, and only a
handful have sold 30-year debt in the last couple of years.
Last year, such an — ahem — optimistic project might have stood a slim
chance of finding a sympathetic ear among investors. After all,
Tajikistan managed to raise $500m to finance a Soviet-era dam project
and Argentina sold a $2.75bn century bond. It's fair to say a certain
sense of exuberance was at large among emerging market sovereign debt
investors.
Since then, unfortunately for Ghana, matters have evolved somewhat.
The IMF is worried about the risks that emerging economies are taking
in the debt markets. Meanwhile the summer sell-off which began in
currencies has rippled out to debt markets, eroding issuers’ ability
to finance ambitious debt structures. Argentina's century bond, sold
at a yield of 7.9 per cent, now trades at around 9.13 per cent.
Investors are not in the mood to contemplate $10bn of 100-year Ghanaian debt.
“It beggars belief,” said Kevin Daly, a portfolio manager at Aberdeen
Standard Investments. “Really? That was my first response when I heard
about it — really? It’s one thing for Argentina to do it — and people
were shaking their heads about that — but we were in a much more
benign environment back then. They would have an extremely difficult
time trying to persuade people to buy anything of that magnitude and
maturity.”
In capital markets terms this is not just a moon shot, it’s a mission to Mars.
Good luck Ghana, and whoever’s advising you.

There are no more ‘’Quaaludes’’ and policy makers will no longer be
able to pop them. ‘’In prescribed doses, Quaaludes promotes
relaxation, sleepiness and sometimes a feeling of euphoria. It causes
a drop in blood pressure and slows the pulse rate. These properties
are the reason why it was initially thought to be a useful sedative
and anxiolytic It became a recreational drug due to its euphoric
effect’’.

At least a quarter of Africa’s population - about 268 million - are
pastoralists living on about 43 percent of the continent’s land mass,
the African Union estimated in 2013.

“If you look at the gulf separating various positions, things look
very pessimistic,” Leenco said. “On the other hand, Ethiopia’s
challenges are massive, and if the political actors really feel
responsible they have no choice but to negotiate a compromise, or else
the alternative is a total breakdown of order.”

The World Bank has approved $80 million in loans to Somalia to fund
public finance reforms, marking the first disbursement to the
government of the conflict-ridden country in 30 years, the bank said.
Last week, the International Monetary Fund said it expected the
economy to grow by 3.1 percent this year from 2.3 percent in 2017, as
it recovers from drought last year.

Dollar versus Rand 6 Month Chart INO 14.2236 [Cyril squeezed the shorts]
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 17.9185
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Nigeria All Share Bloomberg -13.81% 2018
http://www.bloomberg.com/quote/NGSEINDX:IND

Ghana Stock Exchange Composite Index Bloomberg +9.84% 2018
http://www.bloomberg.com/quote/GGSECI:IND

Nairobi has hit back at Dar es Salaam by imposing new tariffs on
Tanzania products like flour after the neighbouring country ignored a
deal that granted Kenyan-made chocolate, ice cream, biscuits and
sweets unrestricted entry into its market.
This came after Tanzania and Kenya failed to resolve the trade war
sparked by use of imported materials in goods made in the countries,
setting the stage for a fresh round of the trade war.
Tanzania maintains that it has retained 25 per cent import duty on
Kenyan-made confectioneries such as chocolate, ice cream, biscuits and
sweets, citing use of imported industrial sugar.
Tanzania will also continue to levy 25 per cent duty on Kenya’s edible
oils as well as the Tembo cement brand produced by Bamburi Cement
Factory which it says are made from imported palm and clinker
respectively.

"The #Kenyan govt. expected to sign a deal for China to finance the
3rd stage, from Naivasha to Kisumu, on the banks of Lake Victoria, at
the triennial China-Africa summit in Beijing. But #China balked at
agreeing to pay half the estimated $3.8bn cost."

Conclusions

Nairobi All Share Bloomberg -12.32% 2018
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -22.16%
http://j.mp/ajuMHJ

Eulogies for:
Mumias
Uchumi
Deacons
National bank
Atlas
Express
Athi river
EA Cables
EA portland
Home afrika
Trans century

Kenya Orchards has been writing its last will.
Eveready is heavily repenting sins

The US Fed raised interest rates a quarter point to a target range of
2% to 2.25%.
In a brilliant Pivot [because its Vladimir's finger prints which are
all over the 2016 Election] President Trump pronounced that Chinese
interference in the US at "unacceptable level"
U.S.-China Military Tensions have also ratcheted higher. China on
Tuesday refused a U.S. warship entry to Hong Kong next month.
The Election in Maldives has geopolitical ramifications. The Indians
who have been surrounded from the Doklam Plateau to Gwadar to
Hambantota will consider the Opposition's victory as sand in the eye
of Xi Jinping but make no mistake Xi has Narendra surrounded.
The Indian Ocean is a contested zone.
"She's [First Lady] making a big trip to Africa," President rump said
"We both love Africa. Africa is so beautiful, the most beautiful part
of the world, in many ways."
Oil prices are at a 4 year High and the likes of Total are predicting
a triple digit price per barrel.
The Nairobi All Share pushed +0.50 points higher to close at 150.60
The Nairobi NSE20 Index rose +2.16 points to close at 2891.40
All the Indices closed higher there was a significant loss in momentum
signalling we could turn lower.

Safaricom closed unchanged at 24.75 and traded 14.903m shares worth
372.144m. Safaricom entered a bear market Friday, reversed out of the
Bear on Monday and currently sits +3.125% the bear market level. I do
not expect the Excise Duty increase to slow down the M-Pesa curve
meaningfully. This is a Buy Zone.

Deacons slumped -9.09% to close at an all time low of 50cents and is
-85.71% in 2018.

KCB Group rowed back -0.51% to close at 40.50 and traded 3.411m shares
worth 138.624m.
Equity Group closed unchanged at 40.00 and transacted 3.173m shares.
DTB Kenya firmed +2.339% to close at 175.00.

KenGen firmed +1.515% to close at 6.70. Kenyan's share price shipped
some contagion off Kenya Power but I expect a substantial widening of
the KenGen and KPLC spread in favour of KenGen.
KPLC closed unchanged at a record Low of 4.60 and remains -46.875%
through 2018.

EABL was up-ticked +2.702% to close at 190.00 on just 700 shares of business

Bamburi Cement closed -0.68% at a 2018 Low of 147.00 and traded
327,900 shares. Bamburi is -17.5% in 2018 and trades on a Trailing PE
Ratio of 32.37.
ARM Cement announced ''The extension of suspension in trading of the
company’s shares is for a further twenty one (21) working days with
effect from September 28, 2018''

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