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Satchu's Rich Wrap-Up
 
 
Friday 26th of October 2018
 
Morning
Africa

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Real pleasure speaking with @KenGenKenya CEO @rebecca_miano on the occasion of #KenGenResults2018
Africa


Real pleasure speaking with @KenGenKenya CEO @rebecca_miano on the
occasion of #KenGenResults2018 and after she announced a 40cents
dividend and outlined a bullish growth strategy Interview will be
published on @RichTvAfrica  @NSE_PLC

Macro Thoughts

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Dollar Hits Third Straight 2018 High as Divergence Re-Emerges @business
Africa


A relatively upbeat Mario Draghi did little to dent the dollar’s rip
higher as investors re-focused on the divergent U.S. and euro-area
economies.
The greenback set a 2018 high for a third straight day even as the
European Central Bank chief said risks to euro-area growth remain
“broadly balanced,” as he kept rates at zero. His comments came after
a slate of dismal European figures, including a Purchasing Managers’
Index report that showed euro-area growth slowed.
That’s in contrast to the economic picture in America, according to
Citigroup Inc., given the strength of U.S. leading indicators and the
Federal Reserve’s commitment to hiking rates. While ECB officials were
“as optimistic as they could be,” that wasn’t enough to crimp the
greenback’s strength, said Calvin Tse, Citigroup’s North American head
of G-10 FX strategy.
“Investors have been wanting to buy the dollar on the back of data
divergence,” Tse said. “The better investment opportunities -- high
growth, high yields, a deep pool of liquid safe assets -- in most
scenarios, you want to be buying the U.S. dollar.”
The dollar rose against most of its Group-of-10 peers Friday, with the
Bloomberg Dollar Spot Index climbing 0.1 percent to the strongest
level since June 2017. The euro fell 0.1 percent to $1.1366, not far
above its year-to-date low.
Investors will get their next update on the state of the U.S. economy
with Friday’s third-quarter gross domestic product reading. Growth
likely cooled to a 3.3 percent annual rate of expansion, according to
a Bloomberg survey, from 4.2 percent in the prior period, which was
the quickest since 2014.

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Mirrors on the ceiling, The pink champagne on ice
Africa


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.

Home Thoughts

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Saudi Arabia admits Khashoggi murder was 'premeditated' @Jerusalem_Post
Law & Politics


"Information from the Turkish side affirms that the suspects in
Khashoggi's case premeditated their crime," a statement from the Saudi
public prosecutor said.
Saudi prosecutors are interrogating suspects on the basis of
information provided by a joint Saudi-Turkish task force, the
statement carried by the Saudi state news agency added.
Turkish President Tayyip Erdogan spoke to Saudi Arabia's de facto
ruler, Crown Prince Mohammed bin Salman, and the two discussed the
steps needed to bring to light all aspects of the killing, Saudi and
Turkish media said on Wednesday.
CIA director Gina Haspel heard an audio recording of the killing of
Saudi journalist Jamal Khashoggi during her visit to Turkey this week,
two sources told Reuters on Thursday.

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India's plans on archipelago in Mauritius cause unease Financial Times
Law & Politics


India will extend a runway and build port facilities on the Mauritian
archipelago of Agaléga in what security experts say is a significant
boost for New Delhi in its tussle with China for military influence in
the Indian Ocean.
Agaléga consists of two sparsely populated islands about 600 miles
north of Mauritius, a beach holiday destination that also boasts a
huge exclusive economic zone of 2.3m sq km, roughly the size of
India’s.
The exact nature of construction is shrouded in secrecy. However,
Abhijit Singh, a former Indian naval officer and head of the Maritime
Policy Initiative at the Observer Research Foundation in Delhi, said
the plan was to double the length of the runway to 3,000m and build a
jetty as well as a transponder system to identify ships as friend or
foe.
The runway extension would allow both Mauritius and India to land
bigger aircraft, which would give Delhi “better maritime awareness” in
that part of the Indian Ocean, said Mr Singh.
In written answers to questions from the Financial Times, Pravind
Jugnauth, Mauritian prime minister, confirmed that “India would be
allowed to utilise the facilities in Agaléga subject to prior
notification from the competent authorities of Mauritius”.
Afcons, an Indian company, has won the MRs3bn ($87m) contract for the
works that would be “fully funded by the government of India on a
grant basis” and include “a jetty and an airstrip with associated
facilities”, said Mr Jugnauth.
“This project is meant to improve the connectivity with mainland
Mauritius and also support economic development of Agaléga to the
benefit of the people,” he added.
The planned construction has however provoked opposition among many of
the roughly 300 Agalégans, some of whom fear the islands could be
ceded to India.
In 1965, before Mauritian independence from the UK, London split
another archipelago, the Chagos islands, from Mauritius, forcibly
relocating the inhabitants and allowing the US to build a military
base on Diego Garcia.
Many Agalégans fear they could suffer a similar fate. “I and all the
people of Agaléga are worried about this project because the Mauritian
government is hiding many things,” said Arnaud Poulay, an Agaléga
resident contacted by phone.
“We are against a military base on Agaléga,” he said. “I am very
frightened to be from Agaléga right now.”
José Moirt, a lawyer and rights activist, said Agaléga residents could
be expelled to make way for a base. “There is clearly a policy in
place for them to leave the island,” he said.
Mr Jugnauth denied any such threat, saying: “Not only will the people
of Agaléga be able to continue living on the island, Mauritian
sovereignty will not be affected.”
Brahma Chellaney, an Indian expert on security issues, said using
Agaléga as a “logistics hub” could help Delhi “sustain naval
operations in the south-west Indian Ocean”.
He described China as “an outside power” seeking a naval presence in
“India’s maritime backyard” in what he said was a provocation to India
and others. The US, France and Britain, he said, were also “getting
anxious about what China is up to”, including its recent construction
of a military base in Djibouti on the Red Sea as well as ports in Sri
Lanka and Pakistan.
When Narendra Modi, India’s prime minister, visited Mauritius in 2015,
the two countries signed a memorandum of understanding to “improve sea
and air transport facilities” on Agaléga, including the provision of
state of the art telecommunications equipment.
This May, Fazila Jeewa-Daureeawoo, Mauritian deputy prime minister,
gave a written response to the country’s national assembly in which
she said the agreement between India and Mauritius was “subject to
confidentiality and cannot be disclosed in part or in full”.
Mauritius, which Mr Modi has referred to as “little India”, has long
had close security ties with Delhi. In the 1980s, India helped it
establish a coast guard, supplying both ships and personnel.
Two-thirds of Mauritius’ 1.4m people are of Indian descent, the
majority brought in by Britain as indentured labourers in the 19th
century to work on sugar plantations.
India and China are involved in a tussle over the Maldives, a chain of
26 atolls in the Indian Ocean where voters last month ousted President
Abdulla Yameen, who had drifted away from Delhi’s influence and
decisively closer to Beijing.

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2018 FOCAC Beijing Summit: Chinese President Xi Jinping's speech at the opening ceremony
Law & Politics


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.

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06-AUG-2018 :: The Indian Ocean Economy and a Port Race. @TheStarKenya
Law & Politics


Professor Felipe Fernández-Armesto explains ''The precocity of the
Indian Ocean as a zone of long-range navigation and cultural exchange
is one of the glaring facts of history'', made possible by the
''reversible escalator'' of the monsoons. The Indian Ocean Economy
preceded the Atlantic Ocean Economy, where the Europeans only learnt
how to ''crack the code'' of the Atlantic winds [and a new 'Western'
culture arose on both sides of the ocean] long after the Indian Ocean.

As we scan the Blue Economy it is worth appreciating that Maritime
shipping is the lifeblood of Africa, with over 90% of the continent’s
imports and exports transported by sea. 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
hinterland], 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.

Bloomberg reported that Hambantota Port has 'become a cautionary tale
for Xi’s Belt and Road aspirations. The idea was to take an
inconsequential harbor visited by fewer than one ship a month on
average and turn it into a modern, bustling seaport adorning a
southern Belt and Road maritime route. It hasn’t turned out so well.
Hambantota (population at the time 11,200) got a new port. The port at
Hambantota, was partly funded during the Rajapaksa administration by a
loan from the Export-Import Bank of China. By the time Rajapaksa was
voted out of office in 2015, more than 90 percent of Sri Lanka’s
government revenue was going toward servicing debt. Last year, with
Xi’s Belt and Road plan in full flow, a new Sri Lankan government
moved to ease the debt. In return for $1.1 billion, it basically
handed the seaport over to China.

 “All these huge projects are a waste,” says Sisira Kumara
Wahalathanthri, a local politician who opposes the current Sri Lanka
government. “No ships are coming to the port. No flights are coming to
the airport.”

I am bullish on the Blue Economy and in particular the Indian Ocean
Economy which is set to relive its glory days. Unlike the marvellous
song ''Everyones a Winner'' by Hot Chocolate, but There will be
Winners and Losers. Everyone is drinking the Indian Ocean ''Kool-Aid''
right now.

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August 19 2013 I have no doubt that the Indian Ocean is set to regain its glory days
Law & Politics


Professor Felipe Fernández-Armesto explains why ‘The precocity of the
Indian Ocean as a zone of long-range navigation and cultural exchange
is one of the glaring facts of history’, made possible by the
‘reversible escalator’ of the monsoon.’
I have no doubt that the Indian Ocean is set to regain its glory days.
China’s dependence on imported crude oil is increasing and the US’
interestingly is decreasing. I am also certain the Eastern Seaboard of
Africa from Mozambique through Somalia is the last Great Energy Prize
in the c21st.

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Is Africa being auctioned to China? @AfricanLiberty_ @nathaniel_luz
Law & Politics


“Africa would be free again, it would gain its place of pride and
independence from being a pawn on the chess board of world politics
and global dominance”.

As what can be referred to as “the rush for African markets” unfolds,
it would only be essential to remind ourselves that Africa’s
historical subjection to foreign political dominance and economic
subservience is a consequence of our leaders indiscretion and
shortsightedness to trade Africa away on the altar of the so-called
foreign aids and bilateral relations. And it is quite saddening that
this has been a prevalent narrative in most of Africa nations, even as
we begin to experience what can be called the “Chinese Power Play” in
Africa.

Africa has to learn that this “carrot and stick diplomacy” employed by
foreign aids donors would only make us weaker and susceptible to abuse
and misuse in the hands of her “savior nations”. There is no better
way to become stronger than to maintain the discipline of
self-reliance and limited aid seeking.

Africa needs no aid of any kind, especially from a country whose
altruistic motive is questionable. Africa needs a freer economy,
dependent on its available resources and intelligently managed by its
own people.

Communist China can never be the solution to Africa’s aspiration to
attain a state economic prosperity. As a matter of fact, it is
embarrassing for just a country to establish foreign ties with a whole
continent and more disgraceful for a country to give aids to a whole
continent, the underlying perception of such event is a caricature of
China-Africa neo-imperialism.

Mother Africa mourns for her children’s auctioned future. Its leaders
run in pants and ties to the Chinese feasts of modern slavery. Only
fools borrow to pay a debt.

No amount of favour or gift is enough to buy Africa’s future. But, our
leaders are selling our present and future for a piece of cake that we
cannot have back. What is left is to redeem the “auctioned future”
from the hands of the auctioneer? Heavily indebted Africa has given
its natural endowments, such as oil, minerals and land as collaterals
for “loan traps”. But we know that Africa’s future is not in its
natural endowments but in the hand of its children – the Cheetah
generation.

This generation would redeem the black pride and turn the game around.
Africa would rise again to take its pride of place. We need trade that
will benefit our people, not foreign aids that will keep us in eternal
debt.

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Iran is new transit point for Somali charcoal in illicit trade taxed by militants: U.N. report
Law & Politics


Criminal networks are using Iran as a transit point for illicit Somali
charcoal exports that earn Islamist militants al Shabaab millions of
dollars annually in tax, U.N. sanctions monitors said in a report seen
by Reuters.

In the unpublished annual report to the U.N. Security Council, the
monitors add that domestic revenue generation by al Qaeda-affiliated
al Shabaab "is more geographically diversified and systematic" than
that of Somalia's federal government.

The report says that since March the main destination for shipments -
using fake country of origin certificates from Comoros, Ivory Coast
and Ghana - has been ports in Iran, where the charcoal is packaged
into white bags labeled "Product of Iran".

"The bags were then reloaded onto smaller, Iran-flagged dhows (boats),
and exported to Port Al Hamriya, Dubai, UAE, using certificates of
origin falsely indicating the 'country of manufacture' of the charcoal
as Iran," the monitors wrote.

read more




Currency Markets at a Glance WSJ
World Currencies


Euro 1.1343
Dollar Index 96.80
Japan Yen 112.04
Swiss Franc 1.0017
Pound 1.2793
Aussie 0.7028
India Rupee 73.465
South Korea Won 1143.10
Brazil Real 3.7064
Egypt Pound 17.9080
South Africa Rand 14.7101

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Anheuser-Busch InBev NV plunged after the world's largest brewer cut its dividend in half as it seeks to pay down a $109 billion debt mountain swelled by the acquisition of rival SABMiller Plc in 2016.
World Currencies


The stock dropped as much as 11 percent amid a global selloff, marking
the steepest decline since 2008 and destroying 16 billion euros ($18
billion) of market value. The Budweiser maker pointed to the plunge in
emerging-market currencies, which is crimping profits after sales
growth in the third quarter slowed to the weakest pace in more than a
year.

read more









Zimbabwe lifts import ban after cash crunch prompts panic buying @ReutersAfrica
Africa


Zimbabwe lifted a ban on the import of basic goods and foodstuffs on
Tuesday after shelves were emptied in recent weeks by consumers
panicking over a deepening currency crisis.
“Cabinet noted with concern that the basic commodities continued to be
in short supply,” Information Minister Monica Mutsvangwa said in a
statement.
“As a way forward, Cabinet resolved ... to allow both companies and
individuals with offshore funds and free funds to import specified
basic commodities currently in short supply, pending the return to
normalcy.”

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"The initial, knee-jerk reaction of the market to the budget was understandably negative" and investors started to price in less benign ratings reviews. - @raziakkhan via @Moneyweb
Africa


Razia Khan, chief Africa economist at Standard Chartered:
“The initial, knee-jerk reaction of the market to the budget was
understandably negative” and investors started to price in less benign
ratings reviews. Still, “we believe that the tax-buoyancy assumptions
in the medium term are deliberately conservative” “Even the revenue
‘miss’ in the current year is arguably due more to VAT rebates — a
good thing, which ultimately strengthens tax compliance — rather than
just the growth slowdown.” “Although the higher debt path outlined may
trigger some concern, this is no justification for a downgrade in
itself” from Moody’s.

Hans Gustafson, strategist at Swedbank
It will be a “very challenging” for South Africa with “a higher
borrowing requirement in an environment with tight US liquidity and
weaker growth globally.” “The rand needs to incorporate a higher risk
premium.”

Mehul Daya, analyst at Nedbank:
It’s a “double whammy” for the rand and local-currency bonds as the
budget was disappointing and a weaker euro is strengthening the
dollar. This means South African assets face internal as well as
external headwinds.

Kevin Daly, money manager with Aberdeen Standard Investments:
South Africa’s budget was “somewhat of a disappointment” given that
the deficit target for 2018-19 was increased to 4% from around 3.5%.
“But we don’t think this is enough to prompt action by Moody’s to
change the outlook to negative.”

Marek Drimal, analyst at Societe Generale:
“The headline figures are discouraging, but they will not necessarily
lead to a Moody’s downgrade to non-investment grade” “That being said,
South Africa is facing a prolonged period of weak growth, elevated
inflation, sizeable current-account deficits, and longer-term risks of
a downgrade.” Reserve Bank should raise rates in November. Rand will
probably fall to 16 per dollar by the end of the year and 17 by the
end of September 2019. The land-reform debate will “periodically
stress financial markets”

read more




South Africa All Share Bloomberg -14.02% 2018
Africa


Dollar versus Rand Chart INO @pineconemacro 14.7101

https://twitter.com/pineconemacro/status/1055758202263011328

Egypt Pound versus The Dollar 3 Month Chart INO 17.9080

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

Nigeria All Share Bloomberg -14.90% 2018

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

Ghana Stock Exchange Composite Index Bloomberg +9.64% 2018

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

read more


.@KenGenKenya reported FY 2018 PBT +2.487% share price data here
Kenyan Economy


Par Value:                  2.50/-
Closing Price:           7.35
Total Shares Issued:          6243873667.00
Market Capitalization:        45,892,471,452
EPS:             1.20
PE:               6.125

KenGen PLC FY 2018 Results through 30th June 2018 vs. 30th June 2017
FY Electricity revenue 29.286b vs. 29.007b +0.962%
FY Steam revenue 6.222b vs. 5.189b +19.907%
FY Fuel charge 9.623b vs. 9.069b +6.109%
FY Revenue 45.290b vs. 43.432b +4.278%
FY Reimbursable expenses (Fuel and water costs) [9.406b] vs. [8.979b] +4.756%
FY Revenue less reimbursable expenses 35.884b vs. 34.453b +4.153%
FY Other income 275m vs. 553m -50.271%
FY Depreciation and amortization [10.148b] vs. [9.244b] +9.779%
FY Expenses [9.970b] vs. [9.764b] +2.110%
FY Steam costs [3.549b] vs. [2.796b] +26.931%
FY Operating profit 11.442b vs. 13.545b -15.526%
FY Finance income 3.341b vs. 1.333b +150.638%
FY PBT 11.746b vs. 11.461b 2.487%
FY Income tax expense [3.855b] vs. [2.455b] +57.026%
FY PAT 7.891b vs. 9.006b -12.381%
Basic and diluted EPS 1.20 vs. 1.37 -12.409%
Dividend per share 0.40 vs. –
Total Assets 379.353b vs. 376.730b +0.696%
Total equity 190.104b vs. 182.836b +3.975%

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Tax expense for the year was Kshs 3,855 million compared to Kshs 2,455 million the previous year. @KenGenKenya
Kenyan Economy


The prior year’s tax expense was lower largely due to effect of tax
incentive (investment deduction) granted on commissioning of new
geothermal wellhead plants.

read more




KenGen Financial highlights In a nutshell. #KenGenResults2018
Kenyan Economy


Conclusions

A Year on Year Revenue Gain of 4.277% in what was a period that
included not one Election but 2 and a drought is singularly a positive
outcome.
Finance Income +150.63% - They are managing their balance sheet more
effectively.
Energy Sales +6.00% to 7,989 Gwh - What was interesting here is that
with regional Interconnections and with a possible switch from a
diesel powered SGR to an electric one - The energy curve might will
steepen and accelerate.
By Ending the dividend drought - KenGen is sending a positive Signal
and its loud and clear. Rebecca spoke of a 33% Dividend Pay Out
Strategy.
a Trailing PE of 6.125 leaves plenty of scope to the upside for the
share price.

read more


Kenya Shilling versus The Dollar Live ForexPros
Kenyan Economy


Nairobi All Share Bloomberg -14.85% 2018

http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -23.88% 2018

http://j.mp/ajuMHJ

Every Listed Share can be interrogated here

http://www.rich.co.ke/rcdata/nsestocks.php

read more



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