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Macro Thoughts

‘Boris isn’t bluffing. Every action, every appointment, every word
since he entered Number 10 signals the same thing: Britain is leaving
the EU on October 31’ said the Telegraph’s Daniel J Hannan.

if he can swing it then he has to face down the “whispering death”
[Michael Holding who was thus nick- named because He was exactly that
when he opened the bowling for the West Indies] that will be the
foreign exchange markets

Home Thoughts

"The Return of Eva Per�n" is about the West playing fast and loose and
tragically with those values, with its own authenticity, to create the
Per�ns and the colonels and the brutal machismo of pillagers posing as
pioneer''

Argentina is the most complex of Naipaul's landscapes. It is an
overlay of so many illusions, so much rhetoric, such bad faith and
conspiracy against itself. It is a "sudden, artificial society," a
society imposed almost overnight on the desolate pampas so that
another wheat-and-cattle colony could be placed at Europe's disposal.
Its population was quite literally imported like machinery: a Spanish
and Italian proletariat came ready- made to provide the goods of the
good life for a new estancia aristocracy. And then came Buenos Aires,
because the country needed a capital. The original Buenos Aires was
copied, house by monument, from dead European models. There was
neither the esthetic energy not the imagination nor even the
confidence to let the city take its own form. Qualities like energy
and imagination are never in very great supply when people exist
mainly to consume the civilization of others, the civilization they
have left behind. There was, finally, nothing "Argentine" to express
itself in Buenos Aires except slums.

New York, New York
Frank Sinatra
Start spreadin' the news, I'm leavin' today
I want to be a part of it
New York, New York
These vagabond shoes, are longing to stray
Right through the very heart of it
New York, New York
I wanna to wake up, in a city that doesn't sleep
And find I'm king of the hill
Top of the heap
These little town blues
Are melting away
I'll make a brand new start of it
In old New York
If I can make it there, I'll make it anywhere
It's up to you, New York, New York
New York, New York
I want to wake up in a city that never sleeps
And find I'm a number one, top of the list
King of the hill, a number one
These little town blues, are melting away
I'm gonna make a brand new start of it
In old New York
And
If I can make it there
I'm gonna make it anywhere
It's up to you, New York
New York
New York

Political Reflections

The fear of invasion injects enough risk that capital will move.

This before China marks 70th anniv. of People’s Republic on Oct. 1.
Hard to see how Xi can make concessions to US.

In China, however, There is only one Decider that Decider was
pronounced as much by Xinhua in a historical announcement in March
2018

The Central Committee of the Communist Party of China “proposed to
remove the expression that ‘the president and vice-president of the
People’s Republic of China shall serve no more than two consecutive
terms’ from the country’s constitution.”  In one fell swoop, President
Xi Jinping was President for Life. President Xi is on a Pedestal and
is faced with the Strong Man Conundrum. The Political Brand will not
permit a retreat let alone a Surrender.
Friedrich Wu, a professor at Nanyang Technological University in
Singapore sums up the feelings of many when he describes them as “a
list of surrender demands for China to acquiesce to”. [FT]

“If there is a decoupling between the two economies, so be it. The
Chinese people can endure more pain than the spoiled and hubristic
Americans.”

Of course, the level of Chinese retaliation was the message and of the
ilk of the Shoe thrower in Iraq all those years ago.

China is planning to make its strategic nuclear missiles and advanced
fighter jets the centrepiece of its National Day military parade in
what military sources and analysts said was an attempt to show off its
achievements in overhauling its armed forces over the past few years.
Military analysts said the show of nuclear strength was intended to
demonstrate China’s enhanced deterrence and second strike capability,
especially to the United States.
“The parade is to celebrate the 70th anniversary of the founding of
the People’s Republic of China on October 1,” one military insider
said.
“So it should let the whole world see China’s achievement of military
modernisation under the leadership of President Xi Jinping since he
came to power [in 2012].”
The military insider, who spoke on condition of anonymity, said that
weapon systems such as DF-41 intercontinental ballistic missiles and
J-2 submarine-launched ballistic missiles have already been moved to
Beijing. A squadron of J-20 jets, the country’s first stealth fighter,
is also preparing for the event.
The DF-41 is capable of carrying multiple nuclear warheads and its
range of at least 12,000km (7,460 miles) means it can hit any target
on the US mainland.
“The deployment of DF-41 is a big step for China’s nuclear deterrence
because it is a more powerful ICBM with greater range and [can carry]
more warheads and boasts advanced technology,” he said.
He said the weapon was highly mobile, harder to detect than silo-based
systems and better able to survive a first strike.
He described it as the “ultimate symbol of the destructive potential
of China’s armed forces”, on a par with those of the US and Russia.
Another military source said that other nuclear weapons like the DF-26
anti-ship missile, and hypersonic missiles such as the DF-17 and DF-20
which are capable of breaching missile shields, would also be put on
display.

Both race stolen cars towards the edge of a cliff. The first to eject
out of his car is branded a “chickie.”

International Markets

This is ‘’Voodoo Economics’’

“The disaster scenario is if yields fall dramatically from here,” said
one strategist. “Hypothetically, if the trade situation intensifies,
if maybe Hong Kong goes badly and Brexit seems like it results in a
hard exit ... then what you probably get is a massive rally again in
Treasurys.”
Bond yields are heading south, and there appears to be no stopping them for now.
The benchmark 10-year Treasury note yield, which influences everything
from business loans to home mortgages, has been hugging three-year
lows and was at 1.45% Wednesday. That’s below the 2-year yield of
1.5%, and the move has been signaling recession.
The 30-year Treasury bond yield fell to an all-time low 1.91%
Wednesday as yields around the world, which move opposite price, slid
to multi-year or record lows. U.S. rates followed a global move lower,
with the Japanese 10-year yield falling to a new negative three-year
low and the German 10-year bund yield sliding to its own record,
minus-0.72%.
For investors, he said a good place to hide might be in very
short-term Treasurys. For instance, the 1-month Treasury bill was
yielding 2.06%, well above other securities. “Why be a hero?” he said.

Euro 1.0077
Dollar Index 98.221
Japan Yen 106.12
Swiss Franc 0.9820
Pound 1.2195
Aussie 0.6739
India Rupee 71.993
South Korea Won 1216.66
Brazil Real 4.1689
Egypt Pound 16.5435
South Africa Rand 15.4570

Commodities

During the Hunts' accumulation of the precious metal, silver prices
rose from $11 an ounce in September 1979 to nearly $50 an ounce in
January 1980.[2] Silver prices ultimately collapsed to below $11 an
ounce two months later,[2] much of the fall occurring on a single day
now known as Silver Thursday, due to changes made to exchange rules
regarding the purchase of commodities on margin.[3]
“Hunt had a paranoid world view and it made sense to him to amass
silver and hang on to it.”
Hunt died Oct. 21 at the age of 88 of congestive heart failure after a
long battle with cancer and dementia, according to The Dallas Morning
News.
When he began buying silver with his brothers in 1973, it cost $2 an
ounce and a big consumer was Eastman Kodak to make film.
Before the Hunts were through, seven years later, they’d stockpiled
more than 200 million ounces, the price was soaring past $45 an ounce
and regulators were preparing to take measures to make sure nothing
like what Nelson Bunker Hunt had done would ever happen again.
The Hunts “moved the price of silver around the world,” said Thomas
Gorman, a partner at Dorsey & Whitney in Washington, D.C., who
successfully sued the Hunts for market manipulation.
Most traders buy and sell paper. The actual stuff represented by that
paper is delivered to someone else.
Hunt wanted the silver. He chartered three 707 jet aircraft to haul
the metal to warehouses in Switzerland and hired a dozen sharpshooting
cowboys to provide security, according to Knight.
In the late 1970s, the Hunts were accumulating so much silver they
needed surrogates to buy it for them, said George Gero, who traded the
metal at the Commodity Exchange’s open outcry pit in New York for the
investment bank Drexel Burnham Lambert.
“The main buyer for Nelson Bunker Hunt was Conti Commodities, and when
we saw the Conti broker coming to the pit, we’d all buy some silver,”
raising the price, said Gero, now vice president, global futures, for
RBC Capital Markets in New York.
Through the 1970s the price rose slowly, steadily. Then, in 1979,
quickly. Silver started the year around $6 an ounce and ended the year
at more than $32.
Everyone got in on the trade. Grandmothers sold the family cutlery.
Thieves were making off with silver jewelry and melting it down.
It got so bad that Tiffany, the New York-based jeweler, bought an
advertisement in The New York Times that said, “We think it is
unconscionable for anyone to hoard several billion, yes billion,
dollars’ worth of silver and thus drive the price up so high that
others must pay artificially high prices for articles made of silver
from baby spoons to tea sets, as well as photographic film and other
products.”
On Jan. 7, 1980, in response to the Hunts’ position, Comex and the
Chicago Board of Trade imposed emergency rules, including higher
margin requirements.
“They broke the ascent by basically outlawing the buying of silver,”
said Knight, who blogs at slopeofhope.com. “Only liquidation orders
would be accepted. It’s almost criminal what they did.”
On March 27, 1980 — what came to be known as “silver Thursday” — Comex
asked Bache Group, the Hunts’ broker, for $134 million.
The three Hunt brothers had $4.5 billion in silver holdings, $3.5
billion of it profit, Knight said. But they didn’t have $134 million.
A $180 million judgment against them pushed the Hunts into bankruptcy.
All Bunker Hunt had left from his billions were a few million, a
stable of racehorses and a $90 million tax bill to be paid over a
15-year period, Knight said.

Emerging Markets

I would be adding to short positions in the Australia Dollar [a Global
Trade Proxy and Global Trade is slowing] and the South African Rand.
The Periphery will get smashed as we are seeing it unfold in Lusaka.

The peso fell 1.8%, while stocks extended three days of losses.
A technical team from the IMF is in Buenos Aires to decide whether to
give out the next disbursement of a $56 billion loan deal.
In a statement following a meeting with IMF officials, Fernandez said
he agreed with the objectives of the IMF deal, but added that the IMF
and the current government generated the current crisis and are now
responsible for reversing the “social catastrophe.”
“Alberto Fernandez’s statements after the IMF meeting created noise,”
said Joaquin Gonzalez Gale, FX trader at INTL FCStone in Buenos Aires.
“Today, anything he says is blown out of proportion.“

Frontier Markets

Sub Saharan Africa

Zimbabwe, the country I serve as finance minister, has been in the
news for restricting the use of the US dollar and other international
currencies as legal tender.
Why would we want to return to our own currency, given such recent,
home-made, experience of monetary turmoil?
The answer can be found in our recent history. Following
hyperinflation at the close of 2009, and to stem the instability
produced by bad governance and fiscal ill-discipline, a mixture of
other nations’ bills — the US dollar, British pound, South African
rand, the euro, the Chinese renminbi and the Botswanan pula — became
Zimbabwe’s medium of exchange in place of the Zimbabwean dollar.
But while this curtailed household prices — its primary purpose —
today it is outdated. It is overlooked that this was a tourniquet, not
a cure.
Dollarisation has acted as a break on Zimbabwe’s economic development
as we are a country reliant on exports. The strong dollar stifled our
competitiveness.
Without our own currency, we have had no control of monetary policy.
We have had no mechanism to stimulate economic activity — not exports,
nor foreign direct investment — or to deal with downturns in
international markets.
That is why the government must introduce its own new, and permanent,
fiat currency.
To be clear, at this time, in this year, any and every responsible
Zimbabwean government would be doing the same as we are today.
This is not a “political” decision, therefore, but simple economic and
geopolitical necessity.
Zimbabwe’s recovery will still depend on export-led growth.
Had the opposition been in office, they too would now be introducing a
new currency — just the same — despite their present protestations to
the contrary.
As the former chief economist at the African Development Bank, I have
witnessed the results of currency volatility across many contexts. I
have seen what works — and the reverse.
And that is why, in June of this year, the government made the RTGS —
a quasi-currency that will act as a bridge to the introduction of a
sovereign currency later this year — the sole legal tender in
Zimbabwe.
To an outsider, it may seem puzzling that the government chose to
implement this now. Plenty of foreign exchange is required to
stabilise the introduction of a new currency and leaven its inevitable
inflation. Zimbabwe’s reserves could not be described as abundant.
Yet, with the US dollar strengthening over the years against the
currencies of Zimbabwe’s major trading partners, exports were
continually losing competitiveness. A fresh tranche of foreign
exchange in the required volume and timeframe was improbable.
Sooner or later, the current administration knew it would have to
introduce a new, national currency. Prevarication would only place
Zimbabwe in a weaker position. It was a choice between short-term
turbulence now or far greater anguish later.
The compromised position Zimbabwe found itself in would always mean
there would be some damage — though it will presage a revival. With a
weaker currency, exports will gain in competitiveness, bringing
much-needed foreign exchange to counteract the inflationary pressures
the nation is currently experiencing.
There is also an imperative to develop a market for Treasury bills and
long-dated bonds and create a yield curve. A monetary policy committee
will be appointed soon to buttress monetary policy conduct.
The Zimbabwe dollar, comprising RTGS and bond notes, is now the
designated sole legal tender in Zimbabwe — pending the rollout of a
fiat currency later in the year.
Initially, the government introduced it alongside the other
currencies, with the intention of it becoming the main currency of
exchange in place of the dollar, which would primarily be used as a
reserve of value.
The theory was not borne out in reality. Every day, the RTGS was
shedding 1 per cent of its value against the dollar, hampering its
transition to the primary currency of domestic exchange.
Change had to be driven more forcefully: it was clear the RTGS had to
be designated the sole legal tender.
Admittedly, the government did not manage this without fault.
The implementation was too indiscriminate, with international and
export facing companies under its purview, causing disruption to the
flow of business.
The government has recognised this was wrong and rectified it.
International facing companies can again trade in foreign exchange.
Only to carry out transactions in the domestic market they must first
convert into RTGS dollars.
For the moment, it is causing some economic turbulence — something no
serious government would wish to be the result of their policy.
But this was always to be expected. There is no way to fully avoid it.
And a commitment to better their citizen’s future requires the same
government to make sometimes difficult choices.
Zimbabwe was once the exporting breadbasket of Africa. Now, its
balance of payments is negative. But with control of our currency, we
can reclaim the best parts of our past — and resume our place in the
world economy as an export-led nation in the near future.
Mthuli Ncube is Zimbabwe’s minister for finance and economic
development and a visiting professor at the Saïd Business School at
the University of Oxford. He was formerly chief economist and
vice-president of the African Development Bank

I have been reading Yuval Noah Harari and in his best-seller he says
this about money;
“Money is accordingly a system of mutual trust, and not just any
system of mutual trust: money is the most universal and most effi-
cient system of mutual trust ever devised.”

Rwanda 29
Kenya 61:
Zambia 87
Ghana 114
Uganda 127
Nigeria 146
Tanzania 144
Zimbabwe 155
Ethiopia 159
Burundi 168

Kenya

Par Value:
Closing Price:           48.25
Total Shares Issued:          826,810,738
Market Capitalization:      39,893,618,108
EPS:             9.615
PE:              5.018

I&M Holdings Limited HY 2019 results through 30th June 2019 vs. 30th June 2018
HY Financial assets at fair value through other comprehensive income
13.702006b vs. 8.064426b +69.907%
HYOtherfinancialassetsatamortisedcosts32.713386b vs. 28.066861b +16.555%
HY Loans and advances to customers 172.163870b vs. 162.823320b +5.737%
HY Total assets 317.053693b vs. 283.070163b +12.005%
HY Deposits from customers 237.242298b vs. 210.897814b +12.492%
HY Total shareholders’ equity 55.434479b vs. 47.814506b +15.937%
HY Net interest income 7.017658b vs. 6.865763b +2.212%
HY Net fee and commission income 1.993989b vs. 1.884038b +5.836%
HY Revenue 9.011647b vs. 8.749801b +2.993%
HY Net trading income 2.042071b vs. 1.477452b +38.216%
HY Change in expected credit losses and other credit impairment
charges [1.108719b] vs. [1.411851b] -21.471%
HY Net operating income 10.321513b vs. 9.060399b +13.919%
HY Operating expenses [4.505942b] vs. [4.161836b] +8.268%
HY Operating Profit 5.815571b vs. 4.898563b +18.720%
HY Share of profit of joint venture 404.069m vs. 499.477m -19.102%
HY Profit before income tax 6.219640b vs. 5.398040b +15.220%
HY Profit for the period 4.525867b vs. 3.868111b +17.005%
Basic and diluted EPS 10.38 vs. 8.78+18.223%
No interim dividend

Conclusions

Whats interesting [versus its Tier 1 Piers] is that they are much
lighter GOK securities.
Price to Book is around 1.00
Attractive on any further price reverses

Par Value:                  2.50/-
Closing Price:           37.75
Total Shares Issued:          188542286.00
Market Capitalization:        7,117,471,297
EPS:             5.9
PE:                 6.398

Nation Media Group Limited HY 2019 results through 30th June 2019 vs.
30th June 2018
HY Turnover 4.5804b vs. 4.9231b -6.961%
HY Profit before tax 580.8m vs. 761.8m -23.760%
HY Income tax expense [177.1m] vs. [232.6m] -23.861%
HY Profit after tax 403.7m vs. 529.2m -23.715%
HY Other comprehensive income/ [ loss] 13.0m vs. [74.2m] +117.520%
HY Total comprehensive income 416.7m vs. 455.0m -8.418%
HY Profit attributable to owners of the parent 417.5m vs. 453.6m -7.959%
EPS 2.21 vs. 2.41 -8.299%
Interim dividend per share 1.50 vs 1.50 –
HY Equity 8.2943b
Cash and cash equivalents at the end of period 1.6006b vs. 24458b -34.557%
The Directors are pleased to announce the unaudited Group results for
the six months ended 30th June 2019.
The Group turnover at Kshs 4.6 billion was 7.0% lower than same period
last year while total comprehensive income at Kshs 416.7 million was
8.4% below last year.
The Group performance was adversely impacted by the suppressed
economic environment across the region resulting in reduced
advertising volumes, increase in global prices of newsprint and
investment in new projects.
The drop in revenue and increase in direct costs was cushioned by
reduction in provision for doubtful debts owing to improved debt
collection particularly from Government and cost savings realized from
improved efficiency and productivity.
The Group is continuously undertaking initiatives aimed at growing new
revenue sources and has recorded significant incremental growth from
the new revenue streams compared to same period last year.
The Group also continues to focus on optimizing current operations as
well as growing revenue through more differentiated product offering
across all platforms to ensure improved performance.
INTERIM DIVIDEND
The Directors have resolved to declare an interim dividend of
Kshs.1.50 (60%) per share (2018: Kshs.1.50 per share) for the half
year, on the issued share capital of 188,542,286 ordinary shares of
Kshs.2.50 each. The total interim dividend payout will amount to
Kshs.282.8 million (2018: Kshs.282.8 million).
The dividend will be paid less withholding tax where applicable on or
about 30th September 2019, to shareholders registered at the close of
business on 13th September 2019.
The register of members will be closed from 16th to 20th September
2019, both dates inclusive.
By order of the Board

Conclusions

See My Comments From the FY Results they still apply

Conclusions
Its a Top Quality Franchise but we have seen a more than 5 year
decline in Turnover, EPS and the Dividend Pay Out is at a decade low.
The Trend speaks to a perfect storm of the Switch to Digital [However,
In Africa we have not seen the switch to paid digital subscription
unlike the New York Times and the Washington Post and the FT, for
example]. So there has been a big macro gale force wind and Print has
been in the firing line and the Daily Nation was always the Cash Cow.
The violence of Dr. Kiboros comments speaks to a deep level of
unhappiness about the local conditions which have been adversarial for
quite a time [counterintuitively that absolutely informs us that they
have been meeting their watchdog role] The Share Price has retreated
dramatically over time and at todays valuation the business is worth
$115.18m which is clearly too low. The dividend is the equivalent of
8.09% which is in fact juicy. I would have thought this is a share
worth looking at more closely particularly on any reverses. Of course,
the question is about the PIVOT. It is after all a Schumpeter level
moment in this industry. And can the pivot lead to a rebound across
all the metrics. I would say Yes eventually.

Par Value: 5/-
Closing Price: 29.00
Total Shares Issued: 81731808.00
Market Capitalization: 2,370,222,432
EPS: 2.41
PE: 12.033
The Standard Group PLC HY 2019 results through 30th June 2019 vs. 30th June 2018
HY Revenue 2.403211b vs. 2.398838b +0.182%
HY Total operating cost [2.289148b] vs. [2.128270b] +7.559%
HY Finance costs (net) [86.353m] vs. [90.507m] -4.590%
HY Profit before income tax 27.710m vs. 180.061m -84.611%
HY Profit after income tax 19.399m vs. 126.043m -84.609%
Basic and diluted EPS 0.59 vs. 1.36 -56.618%
Total assets 4.628538b vs. 4.336386b +6.737%
Total shareholders’ equity 1.932987b vs. 1.991299b -2.928%
Cash and cash equivalents at the end of the year [232.162m] vs.
[345.605m] -32.824%
GROUP RESULTS
The Board of Directors is pleased to announce the un-audited results
for the six-month period ended 30th June 2019.
The Group reported a profit before tax of Kshs.27M for the six-month
period compared to Kshs.180M for the same period in 2018.
However, turnover remained relatively stable at Kshs.2.4B compared to
KShs.2.39B for the same period in 2018 despite reduced spending by key
advertisers and Government.
Operating costs increased by 8%, mainly due to investments that were
made in new products during the year.
Direct costs also increased, largely caused by a 40% increase in
international newsprint prices which increased the cost of our print
products.
The Group launched a number of new products during the year, which
were aligned to its strategic goals.
These included 2 TV channels (KTN Burudani TV & KTN Farmers TV), 2
radio stations (Spice FM & Vybez Radio), 2 monthly magazines (Travelog
& Pulser) and a revamped Digger Classifieds section in The Standard
Newspaper with a strong digital presence.
Outlook 2019
Given the recent investments in new products and the ongoing project
aimed at transforming our news gathering and dissemination processes,
the Board is confident that the Group will be in a position to post
positive performances.
The strategic focus towards deepening customer engagements, offering
more niche media products and services is expected to broaden the
revenue base, with the full benefit to be realised from the year 2020.

Conclusions

Its all about the Pivot just like it is for Nation Media