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Macro Thoughts

“Cowry shells and dollars have value only in our common imagination.
Their worth is not inherent in the chemical structure of the shells
and paper, or their colour, or their shape. In other words, money
isn’t a material reality – it is a psychological construct. It works
by converting matter into mind.”

Home Thoughts

Political Reflections

Sudanese security forces deployed in numbers in Khartoum on Thursday
as demonstrators threatened to march on President Omar al-Bashir's
palace to demand his resignation after a month of escalating protests.
Simultaneous protests were called in 11 other cities, including
Atbara, a farming town in the east where demonstrators first took to
the streets on December 19 to protest against a government decision to
triple the price of bread.
The demonstrations have since escalated into broader protests against
Bashir's three-decade rule that have triggered clashes with the
security forces which have left at least 24 people dead, according to
officials.
Human rights groups have put the death toll higher.
Amnesty International said last week that more than 40 people had been
killed and more than 1,000 arrested.
Human Rights Watch said the dead included children and medical staff.
An AFP journalist saw security personnel, many in plainclothes,
stationed across the downtown area of Khartoum and along the expected
route of Thursday's march.
Several army vehicles mounted with machine guns were stationed outside
the palace.
Little traffic was seen at what is usually the height of the morning
rush hour as people stayed off the streets.
Riot police have moved swiftly to disperse previous protests, firing
tear gas to clear the streets of demonstrators chanting the movement's
slogan: "Freedom, peace, justice".
The protest movement has been spearheaded by the Sudanese
Professionals Association, a trade union representing doctors,
teachers and engineers among others, that has stepped into the vacuum
created by the arrest of many opposition leaders.
Despite the crackdown, the movement has escalated into the biggest
threat to Bashir's rule since he took power in an Islamist-backed
military coup in 1989.
The protesters accuse Bashir's government of mismanagement of key
sectors of the economy and of pouring funds into a military response
Sudan can ill afford to rebellions in the western region of Darfur and
in areas near the border with South Sudan.
Sudan has suffered from a chronic shortage of foreign currency since
the south broke away in 2011, taking with it the lion's share of oil
revenues.
That has triggered soaring inflation that has seen the cost of food
and medicines more than double, and frequent shortages in major
cities, including Khartoum.

The presidency went wrong, Mr Christie argues in Let Me Finish, when
Mr Trump began taking advice from his son-in-law. Jared Kushner, 38,
steered Mr Trump from poor decision to poor decision, Mr Christie
says, citing his own sacking as head of the presidential transition
team in November 2016.

The Labour leader gave his strongest backing so far to the idea that a
second referendum could be needed to settle Brexit. “If support for
the Labour alternative is blocked, our duty will then be to look at
other options, including that of a public vote,” he said.
May’s talks are "phoney" and a "stunt" because she is refusing to take
the prospect of a no-deal Brexit off the table, Corbyn told an
audience in Hastings, England. While he’s not taking part in talks, he
said he wants to help find a solution and he would back a deal based
on Labour’s Brexit plan. That means a customs union and strong single
market ties.

In the wake of Tiananmen, those atop the CCP who might have been
willing to contemplate eventual liberalization were purged. Deng and
his remaining colleagues then launched a three-pronged program to
counteract and contain the potentially destabilizing political effects
of continued economic reform. By allowing the Chinese people to enjoy
more of the fruits of their labors, the regime hoped to win their
loyalty, or at least their acquiescence. In addition, Beijing began
greatly to expand its investments in the tools of surveillance and
repression, including multiple domestic security forces. Finally, the
CCP began to implement an intensive, nationwide program of ideological
indoctrination, or “patriotic education.” The aim of this program was
to bolster popular support by promulgating a substitute for
Marxism-Leninism-Maoism in the form of a distinctive variant of
nationalism which, rather than emphasizing the great achievements of
Chinese civilization, stressed instead the “century of humiliation”
and the vital and as yet unfinished role of the Communist Party in
restoring national dignity.

In addition to strengthening its “Great Firewall” to block unwanted
internet content, the government is moving toward implementing a
nationwide “social credit” system that will use facial recognition
software and big data analytics to monitor the activities, track the
movements, and assess the political reliability of virtually every
man, woman, and child in China. This is a capability of which the 20th
century’s totalitarian dictators could only dream.

What Xi Jinping and his colleagues have in mind is not a transitional
phase of authoritarian rule to be followed by eventual liberalization,
but an efficient, technologically empowered, and permanent one-party
dictatorship: an illiberal version of “the end of history.”

The surveillance technologies and social control techniques being
perfected by Beijing have already begun to spread, as Chinese
companies build out telecommunication networks around the world and
provide support to like-minded regimes.

International Markets

Economists forecast 6.2 percent growth this year, more than twice the
global rate. But that’s down from about 6.6 percent in 2018, already
the slowest in almost three decades. When China sneezes these days,
many companies far from its shores risk catching a cold, including
makers of airliners and handbags, growers of soybeans and operators of
tourist attractions.
Size, mainly. China’s $12 trillion economy accounts for almost a third
of global growth each year.
The official manufacturing index slid into contraction territory in
December for the first time since 2016. Measures of new orders and new
export orders slipped despite some manufacturers front-loading
shipments to avoid potentially higher U.S. tariffs. Industrial
production was the weakest in a decade in November and industrial
profits fell for the first time in almost three years.
Chinese consumers accounted for roughly a third of the $121 billion
spent on luxury goods worldwide in 2017. Many of those purchases are
made outside China, making companies like Louis Vuitton, Gucci and
Hermès heavily dependent on globe-trotting mainlanders. Indeed, the
whole travel and tourism sector is nervous. About one of every four
jets that Boeing Co. builds is bound for China. The country also
accounts for more than a fifth of the money spent annually by outbound
tourists, almost twice as much as the next-biggest spender, the U.S.
All of this means that China’s growth rates are on a gradual glide
path downward, and managing the current slowdown is more about
ensuring the pace isn’t too abrupt, rather than engineering a vigorous
rebound.

This is not a figure, but a bombshell. Xiang Songzuo probably knew
what he was doing when he told his audience that China’s growth was
actually four times weaker than what the authorities claimed.
By doing this, Xiang reignited a sensitive debate about the
credibility of official Chinese statistics among investors anxious
about the slowdown in the world’s second-largest economy.
The senior scholar from the prestigious Renmin University in Beijing
claimed that the real GDP growth for 2018 was just 1.67%, which was
considerably lower than the official target of 6.5%.
“We cannot trust official statistics. There are no reliable official
data available which is a real challenge to assess the state of the
economy,” Xie Guozhong, an independent economist based in Shanghai,
said.
Even Premier Li Keqiang admitted privately that he did not rely on
official GDP data to get a proper sense of the country’s economic
activity, according to a US diplomatic cable revealed by Wikileaks.
During a conversation with the US ambassador in 2007 when he was head
of the Communist Party in Liaoning province, Li explained that he
looked instead at three other key numbers. They were electricity
consumption, railway cargo volume and banking loans.
Known as the “Li Keqiang Index,” it is considered one model by
analysts and economists assessing the health of China’s economy.
Overall, many China-based economists believe the actual GDP number is
below the official figure, with one source in Beijing claiming it was
in a “range of 4 to 5%.”
“Our China Activity Proxy (CAP) points to a slowdown to near 5% growth
in November. One striking feature of the November data is how
consistently weak it has been, with property the solitary bright
spot,” Julian Evans-Pritchard, the senior China economist at Capital
Economics, said in a note.

Euro 1.1396
Dollar Index 96.06
Japan Yen 109.34
Swiss Franc 0.9938
Pound 1.2970
Aussie 0.7193
India Rupee 71.055
South Korea Won 1122.15
Brazil Real 3.7506
Egypt Pound 17.89
South Africa Rand 13.7252

Added 8.84 million paid global streaming subscribers in 4Q, vs 9.18
million expected.

Commodities

Emerging Markets

Frontier Markets

Sub Saharan Africa

The meeting was chaired by the Chairperson of the AU, and attended by
a number of Heads of State and Government or their representatives
from SADC, the ICGLR, ECCAS, ECOWAS, IGAD, EAC, the African members of
the UN Security Council, the AU troika, as well as by the Chairperson
of the AU Commission.
The meeting was briefed on the electoral process in the DRC and
subsequent developments by the Deputy Prime Minister and Minister of
Foreign Affairs of the DRC.
The meeting also received updates from the Chairpersons of the ICGLR,
SADC and the AU Commission, and had in-depth exchanges of views
thereafter.
The Heads of State and Government attending the meeting concluded that
there were serious doubts on the conformity of the provisional
results, as proclaimed by the National Independent Electoral
Commission, with the votes cast.
Accordingly, the Heads of State and Government called for the
suspension of the proclamation of the final results of the elections.

Reuters reported that People again formed long queues to fill up their
cars in the capital, with others panic-buying basic goods like
cookingoil and sugar. There are $9.3 billion of Zollars in banks
compared to $200 million in reserves, official data showed, a mis-
match that creates a premium for the U.S. dollar and fans the black
market. On the black market, the premium for the U.S. dollar spiked to
a new record on Saturday, reaching 165 percent from 120 percent on
Monday, traders said that means buying $100 in cash via a bank
transfer cost $265, up from $220 earlier this week. The Government’s
‘’Voodoo Economics’’ where it spent $1.3b pump-priming the economy
ahead of the election [money it did not have] was the straw that broke
the camel’s back.

Zimbabwean consumer prices rose at a new post-hyperinflation record
pace in December, adding to the economic woes of a country that’s
reeling from foreign-exchange and fuel shortages.

Inflation accelerated to 42.1 percent, from 31 percent in the previous
month, the Zimbabwe National Statistics Agency said in a statement
emailed Thursday. While that’s well below the 500 billion percent the
International Monetary Fund estimated it reached in 2008, there are
big price discrepancies depending on whether goods are paid for
electronically or with banknotes, casting doubt on the official
figure.

Within hours of his address, Obiang’s attempt at a coup d’état was
thwarted by the same soldiers who he called upon to support it.
In terms of socioeconomic conditions, the Gabonese state has found
itself in a precarious economic crisis which the government of
President Ali Bongo Ondimba has sought external funding to resolve.
The funding to cover public spending is necessary to mitigate the
effects of a widespread austerity program announced in June 2018. The
program came with broad staff reductions in the civil sector and cuts
to welfare initiatives.
Political divisions have also been laid bare by the debate over an
heir. There were rumors of dissatisfaction with Bongo’s chosen heir
since it was widely suggested that, akin to his father, he wanted to
hand over the mantle to his son, Noureddin Edouard Bongo-Valentin. The
twenty-five-year-old was said to have already assumed residency in the
Presidential Palace—the only one of Bongo’s children to have done
so—and to have accompanied his father to official events. Importantly,
in the most recent set of reforms passed by Bongo, the age limit for
candidates to be eligible for the Gabonese presidency was lowered from
40 to 18 years, a conspicuous move given Noureddine Bongo’s age.
Bongo’s half-brother, Frédéric Bongo, has also set a stiff challenge.
Given his position as head of the country’s intelligence service and
his close relationship with top Gabonese military brass, it has been
claimed that he was a firm favorite to take over the presidency.
The degree of grievances with the government are also unlikely to be
resolved, particularly given the prevailing socioeconomic conditions
in the country. Add to that the questions regarding the capacity of
the president to resolve these quandaries, and last week’s coup
attempt might be a sign of worsening instability for the Bongo
family’s dynastic reign over Gabon.

Nigeria’s main opposition candidate, Atiku Abubakar, said he would
appoint a new central bank governor and float the naira if he wins
next month’s election.
Godwin Emefiele is not doing a good job, Abubakar said, adding that
he’d make the change when the governor’s first term ends in June.
“I don’t think he’s pursued the right policies,” Abubakar, 72, said
Wednesday in an interview in Nigeria’s commercial capital, Lagos. “We
have to have the right people in there.”
Under Emefiele, who was appointed in 2014, Nigeria has tightened
capital controls and closely managed the naira’s value. The governor
has consistently said this is the best way to curb inflation and boost
manufacturing by discouraging imports. The country now has a system of
multiple exchange rates, which several foreign investors have
criticized.
Isaac Okorafor, a spokesman for the central bank in Abuja, the
capital, declined to comment.
The monetary policy committee has kept the key rate at a record high
14 percent since 2016. Inflation accelerated to a seven-month high in
December, increasing chances that the central bank will maintain its
tight monetary policy stance next week.
A former vice president and wealthy businessman with 26 children and
four wives, Abubakar has touted his pro-market approach that includes
selling stakes in the state oil company, Nigerian National Petroleum
Corp. He insisted he could overcome resistance from NNPC staff and
vested interests to that policy.
“There is really a mafia in there, people who benefit personally at
the expense of the country,” he said. “But I have the political will
and courage to do it. We don’t intend to privatize the whole of NNPC,
but reduce the government’s interest to a minority and allow the
private sector to drive the oil and gas industry.”
Abubakar said that a statement from his party in November stating it
would reduce gasoline prices -- Nigeria’s are already among the lowest
in the world and subsidized -- was a “mistake” by an aide. It’s better
to let market forces determine pump prices, and Nigeria needs to sell
its four loss-making state oil refineries, he said.
He accused President Muhammadu Buhari, a 76-year-old ex-military
ruler, of planning to rig the Feb. 16 vote.
“Fears of rigging are credible,” said Abubakar. “I have never seen,
since 1999, a government so repressive and anti-democratic.”
He also said the president was incompetent when it came to running the
economy of Africa’s biggest oil producer.
“The president doesn’t even know what’s going on around him,” Abubakar
said. “He’s aloof. You can see that he’s clueless in the way the
country’s been governed since he came to office.”
Abubakar is the candidate of the People’s Democratic Party, which was
in power for 16 years after Nigeria ended military rule in 1999. It
lost the last vote in 2015 as Buhari of the All Progressives Congress
became the first opposition candidate to win office in a democratic
vote since independence from Britain in 1960. Abubakar served as
former President Olusegun Obasanjo’s deputy between 1999 and 2007.
The campaign has been a tense affair fought on the themes of Buhari’s
failure to revive an economy that’s been anemic since oil prices
crashed in 2014 and accusations by the president’s camp that Abubakar
acquired his wealth corruptly.
“I’m not a rent-seeking politician,” Abubakar said. “That’s absolutely
incorrect. Anyone who has evidence of corruption against me, let him
come out.”
Abubakar is seeking to win votes in Buhari’s northern base, while
claiming parts of the south and center where the president is less
popular. Both men are northern Muslims in a nation roughly equally
divided between Christianity and Islam.
Whoever is elected must work to provide jobs for the more than 50
percent of the population under the age of 30. The West African
nation’s education and health systems have been gutted by corruption,
a lack of investment that leaves children without books and the flight
of qualified doctors abroad.
Abubakar said he enjoyed reading about politics and economics in his
spare time and watching Arsenal, the London soccer club he’s supported
for 25 years.
While he described himself as a centrist who admires politicians on
the left and right, he looks up to former U.K. Prime Minister Margaret
Thatcher.
“She was a great prime minister, an architect of the reform of the
U.K.’s economy and privatization, which I strongly believe in,” he
said.

Conclusions

He is spot on.

Kenya

Started 11 years ago as a service to allow Kenyans without access to
the banking network to transfer money via mobile phones, M-Pesa now
offers loans and savings in conjunction with local banks, as well as
merchant payments services.
Safaricom, part-owned by South Africa’s Vodacom and Britain’s
Vodafone, launched the new overdraft feature called Fuliza on Jan. 7
this year.
“We got a million (customers) by day eight and by day eight we had
lent $10 million. Now we are probably at $15 million,” CEO Bob
Collymore told Reuters in an interview.
“If you don’t have enough cash, you simply draw down from the
overdraft and you keep drawing down until you have got to your
overdraft limit, which is predetermined by an algorithm.”
Fuliza is underwritten by Kenyan lenders KCB Group and CBA Group,
which already had partnerships with Safaricom to offer short-term
loans on the M-Pesa platform.
Collymore said he would welcome any potential takeover of the smallest
operator, Telkom Kenya, by No.2 operator Bharti Airtel, following
recent media reports of such a deal.
As the market leader with 65 percent of mobile phone users, or 30
million subscribers, Safaricom has long been dogged by regulatory
proposals to clip its wings to boost competition.
“It is a good thing because what you create is an entity which has got
at least 30 percent market share. There is a critical mass that any
player needs to get to, to be operating sensibly,” he said of the
potential Airtel/Telkom deal.
If the reported takeover of Telkom by Airtel goes through, it could
render the competition report unnecessary, Collymore said.
“It will be obsolete,” he said. “The conditions which you studied
(competition in the sector) a few years ago are no longer relevant.”

Par Value:                  0.05/-
Closing Price:           23.80
Total Shares Issued:          40065428000.00
Market Capitalization:        953,557,186,400
EPS:             1.38
PE:                 17.246