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Wednesday 06th of March 2019

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Macro Thoughts

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we are "the universe itself becoming aware." @brainpicker

Dr. Batalha added: “It took 13.7 billion years for the atoms to come
together to create the portal to the universe which is my physical
self. So in that statement is this idea, or the fluidity of time and
space. And I kind of see it all at once. And I don’t know what ‘me’
is. I just feel part of everything. And I feel such deep gratitude for
being able to take this conscious look at the universe — at myself as
being part of the universe.”

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Earthrise (December 24, 1968) @brainpicker

You saw [Earth] for the first time as a tiny blue ball floating in
space. You realized that there were other, similar worlds far away, of
different size, different color and constitution. You got the idea
that our planet was just one in a multitude. I think there are two
apparently contradictory and still very powerful benefits of that
cosmic perspective — the sense of our planet as one in a vast number
and the sense of our planet as a place whose destiny depends upon us.

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Venezuela's collapse is a window into how the Oil Age will unravel by INSURGE INTELLIGENCE @NafeezAhmed
Law & Politics

For some, the crisis in Venezuela is all about the endemic corruption
of Nicolás Maduro, continuing the broken legacy of Chavez’s
ideological experiment in socialism under the mounting insidious
influence of Putin. For others, it’s all about the ongoing
counter-democratic meddling of the United States, which has for years
wanted to bring Venezuela — with its huge oil reserves — back into the
orbit of American power, and is now interfering again to undermine a
democratically elected leader in Latin America.
Neither side truly understands the real driving force behind the
collapse of Venezuela: we have moved into the twilight of the Age of
Oil isn’t running out, in fact, it’s everywhere — we’ve more than
enough to fry the planet. But as the easy, cheap stuff has plateaued,
production costs have soared. And as a consequence the most expensive
oil to produce has become increasingly unprofitable.
In a country like Venezuela, emerging from a history of US
interference, plagued by internal economic mismanagement, combined
with external intensifying pressure from US sanctions, this decline in
profitability became fatal.
For all the triumphant moralising in parts of the Western media about
the failures of Venezuela’s socialist experiment, there has been
little reflection on the role of this horrific counter-democratic US
foreign policy in paving the way for a populist hunger for nationalist
and independent alternatives to US-backed cronyism.
Described back in 1990 by the New York Times as “one of Latin
America’s oldest and most stable democracies”, the newspaper of record
predicted that, thanks to the geopolitical volatility of the Middle
East, Venezuela “is poised to play a newly prominent role in the
United States energy scene well into the 1990's”. At the time,
Venezuelan oil production was helping to “offset the shortage caused
by the embargo of oil from Iraq and Kuwait” amidst higher oil prices
triggered by the simmering conflict.
But the NYT had camouflaged a deepening economic crisis. As noted by
leading expert on Latin America, Javier Corrales, in ReVista: Harvard
Review of Latin America, Venezuela had never recovered from currency
and debt crises it had experienced in the 1980s. Economic chaos
continued well into the 1990s, just as the Times had celebrated the
market economy’s friendship with the US, explained Corrales:
“Inflation remained indomitable and among the highest in the region,
economic growth continued to be volatile and oil-dependent, growth per
capita stagnated, unemployment rates surged, and public sector
deficits endured despite continuous spending cutbacks.”
So it is convenient that today’s loud and self-righteous moral
denunciations of Maduro ignore the instrumental role played by US
efforts to impose market fundamentalism in wreaking economic and
social havoc across Venezuelan society. Of course, outside the
fanatical echo chambers of the Trump White House and the likes of the
New York Times, the devastating impact of US-backed World Bank and IMF
austerity measures is well-documented among serious economists.
Neoliberal reforms further compounded already existing centralised
nepotistic political structures vulnerable to corruption. Far from
strengthening the state, they led to a collapse in the state’s
regulative power. Analysts who hark back to a Venezuelan free market
golden age ignore the fact that far from reducing corruption,
“financial deregulation, large-scale privatisations, and private
monopolies create[d] large rents, and thus rent-seeking/corruption
 In the words of Corrales in the Harvard Review:
“… economic collapse and party system collapse — are intimately
related. Venezuela’s repeated failure to reform its economy made
existing politicians increasingly unpopular, who in turn responded by
privileging populist policies over real reforms. The result was a
vicious cycle of economic and political party decay, ultimately paving
the way for the rise of Chavez.”
The vast bulk of Venezuela’s oil is not conventional crude, but
unconventional “heavy oil”, a highly viscous liquid that requires
unconventional techniques to extract and flow, often with heat from
steam, and/or mixing it with lighter forms of crude in the refining
process. Heavy oil thus has a higher cost of extraction than normal
crude, and a lower market price due to the refining difficulties. In
theory, heavy oil can be produced at below break-even prices to a
profit, but greater investment is still needed to get to that point.
Instead of investing oil revenues back into production, Chavez spent
them away on his social programmes during the heyday of the oil price
spikes, with no thought to the industry he was drawing from — and in
the mistaken belief that prices would stay high. By the time prices
collapsed due to the global shift to difficult oil described earlier —
reducing Venezuala’s state revenues (96 percent of which come from
oil) — Chavez had no currency reserves to fall back on.
From 2013 to 2016, an intensified El-Nino cycle meant that there was
little rain in Venezuela, culminating in a crippling deficit in 2015.
It was the worst drought in almost half a century in the country,
severely straining the country’s aging and poorly managed energy grid,
resulting in rolling blackouts.
The crisis convergence unfolding in Venezuela gives us a window into
what can happen when a post-oil future is foisted upon you. As
domestic energy supplies dwindle, the state’s capacity to function
recedes in unprecedented ways, opening the way for state-failure. As
the state collapses, new smaller centres of power emerge, competing
for control of diminishing resources.
Alfred de Zayas, who finished his term at the UN in March 2018,
criticised the US for engaging in “economic warfare” against

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4 FEB 19 :: "The edge... There is no honest way to explain it because the only people who really know where it is are the ones who have gone over," Hunter S Thompson.
Law & Politics

Access to oil defined 20th-century empires and the petrodollar
agreement was the key to the ascendancy of the United States as the
world’s sole superpower America’s war ma- chine runs on, is funded by,
and exists in protection of oil. Threats by any nation to undermine
the petrodollar system are viewed by Washington as tantamount to a
declaration of war against the United States of America. The Chavez
Revolution was always a rebellion in the Superpower’s back yard and
the machine was eventually going to bring it to heel by hook or by

Oriental Review’s Andrew Korybko headlines his Article ‘’A Venezuelan
coup could challenge OPEC+ and build “fortress America” and writes
Russia and China aren’t capable of directly defending Venezuela.

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04-MAR-2019 :: I am sure @NicolasMaduro must be asking himself, what did it take to get Chairman Kim a seat at Trump's dinner table
Law & Politics

I am sure Nicholas Maduro must be asking himself, what did it take to
get Chairman Kim a seat at Trump's dinner table. And the Point is
this, it took nuclear Weapons. And the Choice is binary, Dinner
''Grilled Sirloin with Pear Kimchi Marinated tender sirloin grilled
with sauce, served with kimchi fermented inside a pear'' or death ask
Muammar and Saddam.

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04-MAR-2019 :: The Week that was Trump, Kim, Michael Cohen Indo-Pak, Tea and The Shilling
Law & Politics

The World is just so fluid and fast moving and in fact the velocity
makes me plain dizzy. Lets start with what CNN's Stephen Collinson
headlined Trump's Hanoi Hail Mary failed to score. This was of course
the big Set Piece in Hanoi. Before Trump walked away, Trump and Kim
did manage to dine together and partook of Shrimp Cocktail, Chilled
shrimp, romaine leaves, thousand island dressing, diced avocado, fresh
lemon and herbs, Grilled Sirloin with Pear Kimchi Marinated tender
sirloin grilled with sauce, served with kimchi fermented inside a
pear. Dessert was a Hot runny centered chocolate cake, chocolate
crumble, with fresh berries and vanilla ice cream all washed down with
Dried Persimmon Punch. The Gastronomy of these Big Set-Piece
Geopolitical Events is unputdownable as are the Optics.

I am sure Nicholas Maduro must be asking himself, what did it take to
get Chairman Kim a seat at Trump's dinner table. And the Point is
this, it took nuclear Weapons. And the Choice is binary, Dinner
''Grilled Sirloin with Pear Kimchi Marinated tender sirloin grilled
with sauce, served with kimchi fermented inside a pear'' or death ask
Muammar and Saddam.

Kim was surely counting on President Trump being a soft touch because
after all at the very moment they were sitting down for a chat,
Michael Cohen [The erstwhile Consiglieri] was opening with the
following  in front of the House Oversight Committee

“He is a racist. He is a con man. He is a cheat,” Cohen said in
testimony that outlined everything from Trump’s alleged involvement in
hush money payments to porn actress Stormy Daniels to his purported
knowledge of Roger Stone’s communications with WikiLeaks. The
President was at risk of being seen as a straw Man.

The Indian Sub-continent entered unprecedented Territory, we witnessed
the first  tit-for-tat air strikes between India and Pakistan since
the 1971 war. The First Casualty in any War is the Truth and when I
dialled up Indian and Pakistan TV, it was mind boggling, the decibel
level was at 11. Planes were shot down, an Indian Air Force Pilot Wing
Commander Abhinandan who sports the most compelling handle-bar
moustache I have ever seen was captured and then released. The Indian
Army said they killed hundreds of Militants in their attack but has
provided no evidence and Pakistan is suing the Indians for
''eco-terrorism'' Of course, Narendra Modi is up against an Election
and his entire political raison d'être has been built on the basis of
Make India [or is Hindutva?] great again. He cannot back down or it
will be a Jimmy Carter type moment. On the other side, we have a
neophyte Prime Minister Imran Khan whom I must admit has displayed a
very deft touch.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1305
Dollar Index 96.88
Japan Yen 111.825
Swiss Franc 1.0048
Pound 1.3145
Aussie 0.7033
India Rupee 70.651
South Korea Won 1129.25
Brazil Real 3.7758
Egypt Pound 17.471
South Africa Rand 14.2140

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10 NOV 14 ::Ouagadougou's Signal to Sub-Sahara 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. We need to ask
ourselves; how many people can incumbent shoot stone cold dead in such
a situation – 100, 1,000, 10,000? This is another point: there is a
threshold beyond which the incumbent can’t go. Where that threshold
lies will be discovered in the throes of the event. Therefore, the
preeminent point to note is that protests in Burkina Faso achieved
escape velocity. Overthrowing incumbents is all about acceleration,
momentum and speed best characterised by the Ger- man word

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"I am continuing for (one) year the national emergency declared in Executive Order 13288." Trump extends U.S. sanctions against Zimbabwe by a year @ReutersAfrica

U.S. President Donald Trump on Monday extended by one year sanctions
against Zimbabwe saying that the new government’s policies continue to
pose an “unusual and extraordinary” threat to U.S. foreign policy.
The renewal comes despite calls by African leaders, including South
Africa’s President Cyril Ramaphosa, for the sanctions to be lifted to
give the country a chance to recover from its economic crisis.
“The actions and policies of these persons continue to pose an unusual
and extraordinary threat to the foreign policy of the United States,”
Trump said in a notice announcing the extension, adding: “I am
continuing for (one) year the national emergency declared in Executive
Order 13288.”

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04-MAR-2019 :: President Buhari won the election in Nigeria. The turnout was 36 per cent compared to about 45 per cent last time.

The Stock Market is not enamoured with the idea of more ‘’baba go
Slow’’ economics and slumped on the news.

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Breaking: PM #AbiyAhmed, Pres. Mohamed Abdullahi Mohamed en route to #Nairobi for talks w. Uhuru Kenyatta @addisstandard

A source tells AS PM Abiy has stepped up efforts to resolve recent
diplomatic deadlock b/n #Kenya & #Somalia “which resulted in a
positive develp't."

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Kenya is discussing a new standby credit facility with the International Monetary Fund @IMFNews after the expiry of a previous programme last year @ReutersAfrica

The $989.8 million arrangement expired last September after the
government failed to meet the fund’s conditions for an extension,
including the repeal of a cap on commercial lending.
“I can just confirm that discussions on a new programme are ongoing,”
Jan Mikkelsen told Reuters without offering more details.
The government is preparing to issue a $2.5 billion Eurobond and
analysts say it would get better interest rates if it secured the
standby credit arrangement with the IMF before it goes to market.


A condition precedent for?

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28-JAN-2019 :: Thats a $3.5b call right there. How we now deal with the balance sheet is key. However, a $3.5b call now is tactically the right call, it kicks the can down the road.

Over the last few months, there has been a significant reduction in US
rate expectations. Expectations around growth have tilted lower. This
downshifting has seen the US interest curve shift significantly lower
and this in turn has boosted Frontier and SSA Sovereign debt prices
and lowered yields. For example, Kenya’s 30 Year Eurobond denominated
in Dollars was close to 10% and has rallied about 100 basis points off
those levels. Therefore, from a tactical perspective it was good to
see the Treasury move with despatch to seize the opportunity. We
learnt last week that Kenya is seeking proposals for issuance of
$2.5bn Eurobond - source ‘’They want to assess whether it would be
cheaper to borrow in euros or dollars’’ the source told Reuters. Kenya
also announced that it had picked Standard Bank and TDB for $1 Billion
of Syndicated Loans. Thats a $3.5b call right there. Now its obvious
we are fully loaded and this is a pheno- mena that’s not unique to us.
How we now deal with the balance sheet is key. However, a $3.5b call
now is tactically the right call, it kicks the can down the road.

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@KCBGroup share price data reports FY 2018 EPS +21.773% and #KCBFYResults2018

Par Value:                  1/-
Closing Price:           42.20
Total Shares Issued:          3066056647.00
Market Capitalization:        129,387,590,503
EPS:            7.83
PE:              5.389

KCB Group PLC FY 2018 results through 31st December 2018 vs. 31st December 2017
FY Kenya Government securities 79.362566b vs. 63.511079b +24.959
FY Loans and advances to customers (net) 455.880284b vs. 422.684637b +7.854%
FY Total Assets 714.312591b vs. 646.668939b +10.460
FY Customer Deposits 537.459617b vs. 499.549179b +7.589
FY Total shareholders’ funds 113.661138b vs. 105.965873b +7.262%
FY Loans and advances interest income 52.711906b vs. 50.818258b +3.726%
FY Government securities interest income 12.983467b vs. 12.365068b +5.001%
FY Total interest income 66.280698b vs. 63.673096b +4.095%
FY Customer deposits expense [15.464365b] vs. [13.615312b] +13.581%
FY Total interest expenses [17.450162b] vs. [15.288323b] +14.140%
FY Net interest income/ [Loss] 48.830536b vs. 48.384773b +0.921%
FY Fees and commissions on loans and advances 7.441206b vs. 5.595408b +32.988%
FY Other fees and commissions 6.797540b vs. 9.099026b -25.294%
FY FX trading income 4.374312b vs. 4.665498b -6.241%
FY Other income 4.360140b vs. 3.640515b +19.767%
FY Total other operating income 22.973563b vs. 23.000810b -0.118%
FY Total operating income 71.804099b vs. 71.385582b +0.586%
FY Staff costs [17.007482b] vs. [19.146769b] -11.173%
FY Other operating expenses [13.245599b] vs. [12.503115b] +5.938%
FY Total other operating expenses [37.945263b] vs. [42.271381b] -10.234%
FY Profit before tax and exceptional items 33.858836b vs. 29.114201b +16.297%
FY Profit after tax and exceptional items 233.994970b vs. 19.705130b +21.770%
Basic and diluted EPS 7.83 vs. 6.43 +21.773%
Dividend per share 3.50 vs. 3.00 +16.667%
Total NPL and Advances 28.572777b vs. 32.371150b -11.734%
Net NPL and Advances 14.192184b vs. 12.020472b +18.067%

@KCBGroup tweets

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Sustained revenue growth and prudent cost management helped raise KCB Group PLC full year 2018 net profit by 22% to a record KShs. 24.0 billion #KCBFYResults2018


•       Strong growth in the domestic demand and expansion of credit,
especially to household’s trade and manufacturing.
•       Expectations is high on the major national projects on the SGR and
the facilitation of improved access to modern energy services
•       A favourable monetary policy in 2018 with BOT slashing its discount
rates from 9% to 7%
•       Robust activity in the manufacturing, oil and mining sectors
expected to drive growth over 6% in 2019
•       Growing fiscal deficit driven largely by public infrastructure investment
•       Favourable weather conditions are key to the largely agricultural economy
•       Sustained >7% growth over the last decade
•       Primary drivers of the economy diversifying to service, trade and
ICT, over and above the mainstay, Agriculture
•       Made in Rwanda initiatives and international conferences boosting
tourism and inflow of foreign currency
•       Improved economic conditions following the signing of the peace agreement
•       Reduced internal conflicts and a moderate improvement in the oil
prices supporting the growth of the economy
•       Oil production is expected to recover fully in 2019 boosting the
inflow of foreign currency into the economy
•       Moderate recovery of the predominantly agricultural economy
•       Annual GDP growth improving from to 0.5% in 2017 to 2.8%
•       Positive outlook after the referendum held in 2018
•       Opportunities in mining and the hydropower capacity
The Directors have resolved to recommend a final dividend of Shs.2.50
per ordinary share of the company having paid an interim dividend of
Shs. 1.00 per ordinary share of the company on 30 November, 2018.
Subject to the shareholders’ approval, the final dividend will be
payable to the members of the company on the register at the close of
business on Monday, 29 April, 2019. If approved, the full dividend per
ordinary share for the year ended 31 December, 2018 will be Shs.3.50.
Message from the Directors
The above Statement of Financial Position and Statement of
Comprehensive Income are extracts from the Group’s, Bank’s and
company’s financial statements which have been audited by KPMG Kenya
and received an unqualified opinion. The complete set of audited
financial statements, statutory and qualitative disclosures can be
accessed on the institution’s website www.kcbgroup.com. They may also
be accessed on the institutions head office located at Kencom House,
Moi Avenue, Nairobi.


It remains a singular East African Francise
The PE Ratio is 5.389. Thats a steep discount.
The Price has room for a meaningful 15%-20% advance

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28-JAN-2019 :: A move below a 100.00 would catch a lot of people off-guard.

Every January every year every forecast about the shilling predicts a
10%-15% devaluation. Its mind boggling. The key levers with regard to
the shilling are the price of fuel [We have to write a cheque every
month], inward Remittances [flew off the chart last year and its not
clear to me if that bump will turn out to be ‘’amnesty’’ affected] and
I think we underestimate the regional ‘’safe-haven’’ status that the
Kenya Shilling has earned. A move below a 100.00 would catch a lot of
people off-guard.

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@SanlamKenya reports FY 2018 EPS Loss [14.01]

Par Value:                  5/-
Closing Price:           23.50
Total Shares Issued:          144000000.00
Market Capitalization:        3,384,000,000
EPS:             -14.01

Sanlam Kenya PLC FY 2018 results through 31st December 2018 vs. 31st
December 2017
FY Gross written premium income 6.345825b vs. 6.369847b -0.377%
FY Outward reinsurance premium [974.017m] vs. [953.632m] -0.694%
FY Net written premium 5.371808b vs. 5.416215b -0.820%
FY Investment income 2.183767b vs. 2.285310b -4.443%
FY Fair value [losses]/ gains [1.983581b] vs. 368.951m -637.627%
FY Impairment of financial assets [12.795m] vs. [1.125243b] -98.863%
FY Total income 5.913423b vs. 7.374761b -19.815%
FY Gross benefits and claims paid [5.544822b] vs. [5.408384b] +2.523%
FY Net change in investment an contract liabilities [239.674m] vs.
290.581m -182.481%
FY Net claims and policyholder benefits [5.124182b] vs. [4.534482b] +13.005%
FY Fees and commissions expense [715.134m] vs. [735.150m] +2.723%
FY Other operating and administrative expenses [2.000047b] vs.
[1.843601b] +8.486%
FY Total benefits, claims and other expenses [8.042923b] vs.
[7.123696b] +12.904%
FY [Loss]/ profit before tax [2.129500b] vs. 251.065m -948.187%
FY Share of loss of an associate 0.314m vs. [4.107m] -107.645%
FY [Loss]/ profit before tax [2.129186b] vs. 246.958m -962.165%
FY [Loss]/ profit for the year after tax [1.979426b] vs. 53.045m -3,831.598%
EPS (Basic & diluted) [14.01] vs. 0.21 -6,771.429%
No dividend
Total capital and reserves 1.587038b vs. 4.051950b -60.833%
Total assets 29.101630b vs. 29.811484b vs. 28.442590b -2.381%
Cash resources at the end of the year 2.679107b vs. 2.541211b +5.426%

Company Commentary

Several Institutions in which the Group's Long term Insurer had
invested came under financial distress which led to the impairment of
1.14b in investments, primarily debt notes and equity in Kaluworks,
Real People and Athi River Mining
The Company's reserving basis was revised reflecting a more prudent
basis prescribed by the Regulator which led to an additional 0.65b
reduction in earnings.


They took a big hit but it was already factored in.

Sanlam Kenya PLC H1 2018 results through 30th June 2018 vs. 30th June 2017


The Question is whether they have taken the whole hit
H1 Impairment of financial assets [1.152329b]

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by Aly Khan Satchu (www.rich.co.ke)
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March 2019

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