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Wednesday 03rd of July 2019 |
Morning Africa |
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If you are tracking the NSE Do it via RICHLIVE and use Mozilla Firefox as your Browser. 0930-1500 KENYA TIME Normal Board - The Whole shebang Prompt Board Next day settlement Expert Board All you need re an Individual stock.
The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke |
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Can the #G20 summit end trade wars and political infighting? #G20OsakaSummit @AJEnglish @AJInsideStory Africa |
Leaders of the world's wealthiest economies are in Japan to discuss the biggest challenges to global free trade. The group of 20 summit, or G20, has been held every year for the past two decades. This year's summit in Osaka is supposed to unite leaders around issues such as free trade and climate change. But political tensions and the trade war between the United States and China are creating divisions. Can the participants find consensus? And how relevant is this meeting for the rest of the world?
Presenter: Divya Gopalan Guests: Felicitas Weber - project lead at the Business and Human Rights Resource Centre @FelWeber John Kirton - director of the G20 Research Group, an independent network of global scholars providing analysis on the G20 @jjkirton Aly-Khan Satchu - economist and CEO of Rich Management
Macro Thoughts
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17-JUN-2019 :: Now another Big Happening is the Crude Oil Market. Here Two powerful Gale Force Winds are at work. Africa |
The IEA has now twice downshifted Demand and what is clear is we are facing significant demand destruction and it is this Penny dropping which took down Oil more than 20% from its 2019 Highs and we are now at 5 month lows. However, what is not clear yet is the degree of Supply destruction we are facing. One third of all oil traded by sea, which amounts to 20% of oil traded worldwide, passes through the Strait of Hormuz. Insurance rates deman- ded for Tankers operating in the area are up to 20 times higher [@ Chigrl]. @ejmalrai reports Ali Akbar Velayati saying that “if Iran can’t export oil through the Persian Gulf, no-one in the Middle East will be able do this” and “ex- pects further attacks in the futu- re, given the US decision to stop the flow of oil by all means at all costs. Thus, oil will stop being delivered to the world if Iran can’t export its two million barrels per day”. The overwhelming confidence that Iran is displaying, both in rhetoric and action, is astounding says Stratfor.
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"Don't forget the real business of war is buying and selling" Africa |
“Don’t forget the real business of war is buying and selling. The murdering and violence are self-policing, and can be entrusted to non-professionals. The mass nature of wartime death is useful in many ways. It serves as spectacle, as diversion from the real movements of the War. It provides raw material to be recorded into History, so that children may be taught History as sequences of violence, battle after battle, and be more prepared for the adult world. Best of all, mass death’s a stimulous to just ordinary folks, little fellows, to try grab a piece of that Pie while they’re still here to gobble it up. The true war is a celebration of markets,” Thomas Pynchon said.
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White House's Navarro says China trade deal will take time: CNBC via @Reuters Law & Politics |
“We’re headed in a very good direction,” Navarro said in an interview with CNBC. “It’s complicated, as the president said, correctly, this will take time and we want to get it right. So let’s get it right.” “All we’ve done basically is to allow the sale of chips to Huawei and these are lower tech items which do not impact national security whatever,” Navarro said. “Selling chips to Huawei, a small amount of chips - less than $1 billion a year - in the short run is small in the scheme of things.”
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"Let's wait and Xi" said Citibank. Law & Politics |
''A lot of people are drawing a lot of unwarranted conclusions about the course of the US-China relationship based on a meeting, which probably didn’t resolve very much, and a press conference with a guy who is liable to say anything and completely reverse it a day later'' said @prchovanec
Xi understands that this negotiation is much more than a ''Reality TV'' show 90 minute engagement and a Time-out will give some respite from what is now becoming a sharp slow down with asymmetric cliff edge downside risks . Therefore, this is a Christmas truce (German: Weihnachtsfrieden; French: Trêve de Noël was a series of widespread but unofficial ceasefires along the Western Front of World War I around Christmas 1914]. However, this is 1914 and not 1918.
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Powering the Belt and Road Law & Politics |
The MERICS BRI Database has allowed us to identify projects related to renewable energy, fossil fuel and nuclear power projects; grid investments and upgrades; as well as key domestic and cross-border transmission-line projects (see map below). This has produced four insights about BRI-related projects in energy generation and distribution. Firstly, investment in power plants and grids dominates China’s spending on BRI-related infrastructure. Secondly, China is encouraging its energy companies to seek contracts abroad without necessarily prioritizing any sector - Beijing is neither leading a “green” revolution nor a fossil-fuel revival, but rather playing both sides. Thirdly, China’s energy projects are geographically diversified - Latin America is in the lead in terms of volume of completed investments (mostly into renewables and energy distribution), while Southeast Asia boasts the highest number of projects (mostly involving coal). Fourthly, China’s initial focus on energy projects creates the preconditions for the next phase of the BRI: industrial buildup and new China-centered supply chains.
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Commodities |
After the poor factory data, tin, which is extensively used in the manufacturing industry, has been “probably the weakest link” among falling base metal prices, Richard Fu, head of Asia-Pacific region for Amalgamated Metal Trading, said by email.
Emerging Markets
Frontier Markets
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African eurobond 2nd quarter 2019 update. $103bn / 21 country space growing rapidly over past 3 years. @LinkedIn @gregorylbsmith Africa |
The now $103bn African sovereign eurobond space has been growing rapidly over the past three years. 21 African countries have issued sovereign eurobonds in US$ and Euros, with maturities of up to 30-years. Kenya and Egypt issued sovereign bonds in 2Q19, and South Africa and Kenya both repaid eurobonds. The narrative has shifted from only issuance to now include a growing track-record of eurobond repayment. Here is an update from the second quarter of 2019. Second quarter 2019 issuance $4.4bn was issued in 2Q19 (in US$ and euro), compared to $7.6bn in 1Q19. This takes issuance from the Africa sovereign eurobond space to $11.9bn in 2019 to date. This makes 2019 already the third largest year of African eurobond issuance. 2018 saw a record breaking $28.4bn of issuance, but it does not look like Africa will match that amount this year. Kenya issued two eurobonds on 15 May. The $900mn 2027s (paid pack in three equal annual parts, starting 2025). And $1.2bn 2032s. The proceeds were earmarked for a combination of liquidity management (paying back other debt) and for budget financing. Hence, it cannot all be counted as ‘new debt’. Kenya used 36% ($750mn) of the proceeds to pay back one of their debut eurobonds (issued in 2014) that came due on 24 June. Ghana came with a similar narrative in the first quarter. This active debt management is crucial for reducing repayment risks. Egypt issued two euro denominated bonds on 4 April. The EUR 750mn 2025s and EUR 1,250mn 2031s. This follows the $4bn, that Egypt issued in the first quarter (in USD). South Africa have not yet been to the eurobond market in 2019 but repaid a $2bn eurobond that came due on 27 May. Second quarter 2019 performance African eurobonds performed well in 1Q19 across the board, bouncing back from a tough 2018 as global market sentiment recovered. 2Q19 performance was also positive for the asset class. In 2Q19 average yields fell 48 basis points compared to a drop of 93 in 1Q19. The represents a half percentage point drop in yields (the cost of borrowing). The 98 African eurobonds ended June with an average yield of 6.3%, compared to 6.7% at the end of March, and 7.4% at the end of 2018. Yields on the US Treasury 10-year fell 40bpts to 2.0% in 2Q19, highlighting only a small reduction in the spread between the US paper and African eurobonds. The strongest performance in 2Q19 was achieved by Mozambique, Tunisia and Republic of Congo eurobonds. Rwanda, Namibia, and Tanzania all saw substantial gains. Only Zambia saw it performance deteriorate further in 2Q19, as prices for its three eurobonds saw a large decline in April and May. Second quarter 2019 snippets China’s approach to Africa debt has been changing. It has published its own debt sustainability framework to try and monitor whether Belt and Road borrowers go into debt trouble (it was published on the Chinese finance ministry website in April). China provided Zambia with $22mn of debt cancellation and a grant of $30mn. This is a positive, but only a small one (Zambia’s external debt is around $11bn, with around one third owed to China). Similarly, Ivory Coast got $34mn in debt relief and a $31mn grant in June. And Ethiopia got some debt relief in April. It all helps, but it is not a game changer. Seychelles had its only credit rating upgraded by Fitch in June from BB- to BB. They cited good performance with their IMF policy coordination programme (that’s been in place since end-2017). Solid economic growth and repeat budget surpluses have helped get debt down from 192% GDP in 2008 to 58% GDP in 2018. Over the same period GDP per capita increased by 48% from $11,123 to $16,472. Zambia’s credit rating was downgraded by Fitch in June from B- to CCC and by Moody’s in May. S&P kept Zambia on-hold at B- in February but shifted the outlook to negative.
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Even Passports Are Scarce as Zimbabwe Runs Out of Everything Africa |
Zimbabweans have been struggling with shortages of cash, fuel and electricity for months. Now, even passports are almost impossible to get. Tendai Mpofu applied for new passports for his sons more than two months ago. Their current ones expire this month, just when they’re due to travel to South Africa for a school sports event. It may be a long wait before they get new documents. With inflation at almost 100% and an acute lack of foreign currency, Zimbabwe is facing its worst economic crisis in more than a decade. While President Emmerson Mnangagwa has said that the passport company is refusing to print anything until the government has cleared its debts, others say Zimbabwe is simply too broke to import the ink and paper needed. An official at the passport office said the situation is “dire” and passports were only being issued for emergencies. Identity cards are also hard to come by - metal cards were replaced with plastic ones but now plastic is in short supply.
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