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Satchu's Rich Wrap-Up
Thursday 27th of August 2020

Thomas Pynchon, Gravity's Rainbow

“I dream that I have found us both again,

With spring so many strangers' lives away,

And we, so free,

Out walking by the sea,

With someone else's paper words to say....

They took us at the gates of green return,

Too lost by then to stop, and ask them why-

Do children meet again?

Does any trace remain,

Along the superhighways of July?” 

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Covid is above all a disease of cities. Concentrated where population and economic activity are. @GoldmanSachs @adam_tooze

Covid is above all a disease of cities. Concentrated where population and economic activity are. Across US, wherever population is dense, mobility is still 20-30% down on pre-crisis levels. Plainly visible in NYC.  @GoldmanSachs

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China Fires Two Missiles Into Sea As "Warning To US" In Huge Escalation Following Spy Plane Breach
Law & Politics

Chinese media and regional sources are reporting what appears to be the biggest provocation yet amid the months-long US-China ratcheting tensions in the South China Sea.

"China launched two medium-range missiles into the South China Sea on Wednesday morning, a source close to the Chinese military said, sending a warning to the United States," The South China Post reports in a major breaking development. 

The launch is said to be in response to the major incident from Tuesday, wherein China's PLA military angrily denounced that a US U-2 spy plane allegedly entered a 'no-fly zone' off China's coast while the PLA conducted live-fire military drills. 

It was unclear exactly where the claimed breach of airspace happened, however. 

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Chinese military fires ‘aircraft-carrier killer’ missile into South China Sea in ‘warning to the United States’ @SCMPNews
Law & Politics

China launched two missiles, including an “aircraft-carrier killer”, into the South China Sea on Wednesday morning, a source close to the Chinese military said, sending a clear warning to the United States.

The move came one day after China said a US U-2 spy plane entered a no-fly zone without permission during a Chinese live-fire naval drill in the Bohai Sea off its north coast.

One of the missiles, a DF-26B, was launched from the northwestern province of Qinghai, while the other, a DF-21D, lifted off from Zhejiang province in the east.

Both were fired into an area between Hainan province and the Paracel Islands, the source said.

“This is China’s response to the potential risks brought by the increasingly frequent incoming US warplanes and military vessels in the South China Sea,” the source said. 

“China doesn’t want the neighbouring countries to misunderstand Beijing’s goals.”

In a rare move, the People’s Liberation Army is conducting drills almost simultaneously in four sea regions.

Earlier this month, the PLA also held exercises near Taiwan “to safeguard national sovereignty”, exercises that coincided with US Health Secretary Alex Azar’s trip to the island.

In July, the PLA conducted military exercises in the South China, East China and Yellow seas, as two US aircraft carriers conducted tactical air defence exercises in the South China Sea – manoeuvres the US said were “in support of a free and open Indo-Pacific”.

Besides aircraft carriers, the US has also sent numerous military jets and vessels to keep a close watch on Chinese activity.

The Chinese military drills have triggered unease among its neighbours. Vietnam asked China to cancel its Paracel Islands military drills, saying they violated Vietnam’s sovereignty and were detrimental to China-Asean talks on a South China Sea code of conduct.

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02-JUN-2020 :: Fast Forward The Markets are very complacent about A US China ‘’Hot War’’
Law & Politics

It has come to a Put Up or Shut Up moment Matters India Taiwan South China Sea et al. 

Neither Side have an ‘’Off Ramp’’ and the US Electoral Cycle and the ‘’Wolf Warrior’’ Strategy all point at more intensity rather than less.

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27-JUL-2020 :: US China ‘’Tit for Tat’’ went ‘’Rat a Tat Tat’’
Law & Politics

"Today we sit wearing masks and watching the pandemic’s body count rise because the CCP failed in its promises." - @SecPompeo

First, “Survival is the primary need of civilization.” Second, “Civilization continuously grows and expands, but the total matter in the universe remains constant.” Third, “chains of suspicion” and the risk of a “technological explosion” in another civilization mean that in space there can only be the law of the jungle. 

In the words of the book’s hero, Luo Ji:

The universe is a dark forest. Every civilization is an armed hunter stalking through the trees like a ghost ... trying to tread without sound ... The hunter has to be careful, because everywhere in the forest are stealthy hunters like him. If he finds other life — another hunter, an angel or a demon, a delicate infant or a tottering old man, a fairy or a demigod — there’s only one thing he can do: open fire and eliminate them. In this forest, hell is other people ... any life that exposes its own existence will be swiftly wiped out.

Kissinger is often thought of (in my view, wrongly) as the supreme American exponent of Realpolitik. But this is something much harsher than realism. This is intergalactic Darwinism.

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15 OCT 18 :: War is coming
Law & Politics

The incident with the USS Decatur where a Chinese warship came within 45 yards of the USS Decatur in South China Sea is surely a precursor.

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When it comes to managing a pandemic, it seems female leaders really are better
Law & Politics

Jair Bolsonaro, president of Brazil, the runner-up in coronavirus deaths, has pooh-poohed the disease as a “little flu.”

By contrast, Angela Merkel, chancellor of Germany, which has generally managed the outbreak well, has impressed with explanations of the epidemiological R0 factor that went “viral” for their sobriety and clarity. 

Jacinda Ardern, prime minister of New Zealand, which has only 22 deaths from Covid-19 to date, has talked to Kiwis via Facebook Live from her home in a way that is casual and interactive but also reassuring and credible.

Erna Solberg, prime minister of Norway, with 264 deaths, has told her country’s children that “it’s OK to be scared when so many things happen at the same time,” acknowledging vulnerability even while projecting competence.

But in a new global analysis, Supriya Garikipati at the University of Liverpool and Uma Kambhampati at the University of Reading avoid stooping to mere anecdotes. 

Using data up to May 19, they matched the 19 countries led by women with their “nearest neighbors” according to a mix of factors including population, the economy, gender equality, openness to travel, health expenditures and the proportion of elderly people. They couldn’t use Taiwan (7 deaths), which is governed by a woman but doesn’t belong to the United Nations.

Their conclusion was unequivocal: On average, the countries run by women suffered half as many deaths from Covid-19 as the nations governed by men. 

And in individual pairings, “female” countries fared better than “male” ones (see chart). Why?

Part of the answer is that the female leaders generally ordered lockdowns much earlier, thus “flattening the curves” of their national outbreaks. 

Ardern, for instance, calls this approach “going hard and early” — she just went into another temporary lockdown after a new cluster of cases following 100 days of no local transmission at all. 

But that only raises the question of why women tend to come to that difficult decision so much faster than men.

One reason could be that women are more averse to risk, as most studies corroborate. 

But the choice facing leaders this spring wasn’t simply between more or less risk. 

It was a trade-off between one risk, that to life, and another, that of economic loss. 

So the difference between the men and women, as the study’s authors point out, was really that the women took less risk with lives and more with the economy, whereas men did the opposite. 

Over time, of course, death and economic loss become intertwined.

The women also tended to communicate very differently with citizens. It’s long been hypothesized that female leaders lean toward “a more democratic or participative style” whereas men are “more autocratic or directive.” 

That’s been hard to prove, but researchers are still studying whether women indeed bring more empathy to leadership or integrate more emotional information in their decision making. 

An interpersonal, empathetic and participatory approach certainly seems to help in managing a pandemic. 

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To thwart calamities, rulers should possess certain qualifications. Khaldun recognizes wisdom, logic, honesty, justice and education as the most desirable qualities in a ruler.
Law & Politics

I was reading Ibn Khaldun’s Muqaddimah which sought to explain the intrinsic relationship between political leadership and the management of pandemics in the pre-colonial period.

Historically, such pandemics had the capacity to overtake “the dynasties at the time of their senility, when they had reached the limit of their duration” and, in the process, challenged their “power and curtailed their [rulers’] influence...”

Rulers who are only concerned with the well-being of their “inner circle and their parties” are an incurable “disease”.

States with such rulers can get “seized by senility and the chronic disease from which [they] can hardly ever rid [themselves], for which [they] can find no cure”

To thwart calamities, rulers should possess certain qualifications. Khaldun recognizes wisdom, logic, honesty, justice and education as the most desirable qualities in a ruler.

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Angela Merkel Is Exasperated by Putin as Navalny Lies in a Coma @bpolitics
Law & Politics

With Russian opposition leader Alexey Navalny lying in an induced coma just minutes from Angela Merkel’s office in Berlin, the German Chancellor is at a loss over what to do about Russia’s Vladimir Putin.

The German leader is frustrated that Putin has shown no flexibility, according to two officials familiar with her thinking who asked not to be identified discussing internal deliberations. 

Merkel is a conduit to the West for Putin and moreover tends to choose her language carefully.

But her tone has shifted. Less than two hours after doctors in Berlin determined that Navalny, a prominent Putin critic, had likely been poisoned, 

Merkel demanded Putin “fully investigate this act as a matter of urgency.”

The speed with which she responded, according to the officials, was meant to send the signal to the Kremlin how seriously Merkel takes the matter.

It tops a list of grievances that includes a murder in broad daylight in a Berlin park last summer and a 2015 cyberattack on the Bundestag, Germany’s lower house.

A Russian speaker who grew up in East Germany, Merkel has sought to leverage her position to open a channel with Putin, who served as a KGB lieutenant in Dresden in the years before the Berlin Wall collapsed in 1989.

The issue is that whatever sway she might have had appears to have largely faded. 

All the condemnation over Russia’s annexation of Crimea did not change the facts on the ground even though Putin was excluded from the Group of Eight.

And with U.S. President Donald Trump mired in a presidential campaign and Merkel’s long tenure in power coming to an end next year, Putin may well feel emboldened to act without fear of retribution.

In fact, his chief spokesman simply brushed her off saying there was no need to investigate because it had not yet been proven that Navalny was poisoned. 

The opposition figure was flown to Berlin on Saturday after he’d fallen ill on a flight to Moscow on Thursday.

The speaker of the lower house of Russia’s parliament, Vyacheslav Volodin, suggested the whole episode may be “a provocation by Germany and other members of the EU aimed at creating more allegations against our country.”

A medical team at Berlin’s Charite hospital said on Monday that they had found traces of a cholinesterase inhibitor, a possible nerve agent, even if the specific substance hadn’t yet been identified.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1830

Dollar Index 92.878

Japan Yen 106.02

Swiss Franc 0.9074

Pound 1.3205

Aussie 0.7255

India Rupee 73.8388

South Korea Won 1183.905

Brazil Real 5.6085

Egypt Pound 15.8333

South Africa Rand 16.8477

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23-SEP-2019 :: I, therefore, am putting out a ‘’conviction’’ Buy on Netflix at Friday’s closing price of $270.75. $NFLX
World Of Finance

My Mind kept to an Article I read in 2012 ‘’Annals of Technology Streaming Dreams’’ by John Seabrook January 16, 2012.

 “This world of online video is the future, and for an artist you want to be first in, to be a pioneer. With YouTube, I will have a very small crew, and we are trying to keep focused on a single voice. There aren’t any rules. There’s just the artist, the content, and the audience.”

“People went from broad to narrow,” he said, “and we think they will continue to go that way—spend more and more time in the niches— because now the distribution landscape allows for more narrowness’’.

And this brought me to Netflix. Netflix spearheaded a streaming revolution that changed the way we watch TV and films. 

As cable TV lost subscribers, Netflix gained them, putting it in a category with Face- book, Amazon, and Google as one of the adored US tech stocks that led a historic bull market [FT]. 

Netflix faces an onslaught of competition in the market it invented. After years of false starts, Apple is planning

to launch a streaming service in November, as is Disney — with AT&T’s WarnerMedia and Com- cast’s NBCUniversal to follow early next year.

 Netflix has corrected brutally and lots of folks are bailing big time especially after Netflix lost US subscribers in the last quarter. 

Even after the loss of subscribers in the second quarter, Ben Swinburne, head of media research at Mor-

gan Stanley, says Netflix is still on course for a record year of subscriber additions. 

Optimists point to the group’s global reach. It is betting its future on expansion outside the US, where it has already attracted 60m subscribers. 

And this is an inflection point just like the one I am signaling in the Oil markets. Netflix is not a

US business, it is a global business. The Majority of Analysts are in the US and in my opinion, these same Analysts have an international ‘’blind spot’’ 

Once Investors appreciate that the Story is an international one and not a US one anymore, we will see the price ramp to fresh all-time highs. 

I, therefore, am putting out a ‘’conviction’’ Buy on Netflix at Friday’s closing price of $270.75.

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#SaudiArabia Figures out today show that earnings picked up in June to $7.2bn as crude prices rose (with Saudi & OPEC lowering production) @PaulWallace123

#SaudiArabia seems to be past the worst in terms of declining revenue from #oil exports. Figures out today show that earnings picked up in June to $7.2bn as crude prices rose (with Saudi & OPEC lowering production). Though, they're still way down from 2019 & earlier this year.

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China agrees to restructure debt of more than 10 countries: FM Spokesperson @appcsocialmedia

“Now we have received debt relief requests from over 20 countries, and have reached agreement with more than 10 of them by the end of July. Consultations are being held between China and other requesting countries and progress has been made in this regard,” Zhao Lijian said during his regular briefing while giving update on progress for the G20 debt standstill scheme.

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Zimbabwe Is Stuck Without International Support, Treasury Says @bpolitics

Zimbabwe is being forced into a corner by the refusal of multilateral lenders to lend the country more money as the southern African nation faces economic meltdown, according to the government’s top treasury official.

“Its very difficult to run the economy without any external support,” George Guvamatanga, the finance and economic development secretary, said in an interview. 

“You need a buffer to support you and without it that’s where the temptation to print money comes.”

Shunned by multilateral lenders since defaulting on payments in 1999, Zimbabwe still owes $7.66 billion to various international financial institutions, including the World Bank, the European Investment Bank, the Paris Club and the African Development Bank.Mnangagwa remains unmoved, saying the demonstrations were an “insurrection” that sought to overthrow his administration.

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Kiir forms yet another committee headed by Wani Igga to looking into #SouthSudan’s economic crisis. @dekuekd

No single committee headed by Wani has ever delivered a public report and or made recommendations that have ever been implemented.

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.@WorldRemit to Acquire @sendwaveapp Sendwave in $500 Million Payments Deal @technology

WorldRemit Ltd., a U.K. online money transfer company, has agreed to buy Africa-focused, app-based remittance firm Sendwave as the global pandemic intensifies demand for digital banking.

The cash and stock deal is worth more than $500 million, according to a person with knowledge of the matter. 

The combined company will be valued at more than $1.5 billion, according to one of the people, who asked not to be identified as the information is private.

WorldRemit Chief Executive Officer Breon Corcoran said the company is betting that the pandemic-fueled shift to digital banking will become permanent. 

“What we saw immediately after lockdown orders is a real acceleration toward digital,” with the rate of new account activations more than doubling this year, he said in an interview.

“This is a fast-growing part of the broader payments space and increasingly our businesses will be viewed as more akin to Venmo or Paypal,” he said.

The Sendwave acquisition will help bolster WorldRemit’s coverage of Africa. Sendwave, backed by startup incubator Y Combinator, allows customers in North America and Europe to send instant payments to friends and relatives in countries including Ghana, Nigeria, Senegal and East Africa. Sendwave will continue to operate as an independent business and retain its management, employees and key partners, the companies said.

Founded in 2010 by Ismail Ahmed, a former London student who had struggled to send money home to Somalia, WorldRemit’s investors include Accel and TCV, early backers of Facebook Inc.

While the pandemic has pushed more people to bank digitally, they are sending less money overseas, according to the World Bank. 

The organization is predicting a 20% decline in global remittances this year because of the economic crisis stemming from the pandemic. 

Decreasing wages and employment opportunities for migrant workers who typically send money back to family and friends are projected to drag down remittances to low and middle-income countries to $445 billion this year. 

The World Bank estimates that figure will recover to $470 billion next year.

WorldRemit and Sendwave have increased their combined revenues by more than 50% to $280 million in the 12 months ending in June compared with a year earlier, as their customers conducted about $7.5 billion in transfers, the companies said.

Corcoran said WorldRemit would continue to look for acquisitions and has no current plans for an initial public offering.

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South Africa’s Central Bank Expects Economy to Shrink 40.1% @markets

South Africa’s economy probably contracted by an annualized 40.1% in the second quarter, according to central bank forecasts.

The monetary policy committee used that estimate for the quarterly drop in gross domestic product at its July meeting, where it cut the benchmark interest rate by 25 basis points, the Pretoria-based Reserve Bank said in an emailed response to questions. 

That compares with a forecast for a 32.6% contraction shown in its June 29 annual report and will be the biggest decline since at least 1990.

The contraction in the second quarter is mainly due to strict lockdown measures to contain the coronavirus that resulted in plunging production and demand for goods and services, and a decrease in income and employment levels, the central bank said. 

Supply chains were disrupted as the nation’s trading partners were also impacted by the pandemic.

South Africa shut down industries from March 27 to limit the spread of the virus, with almost almost all activity except essential services halted for five weeks. 

The restrictions were eased from May 1, allowing the phased reopening of some businesses and sectors. 

Still, many companies have closed down permanently and some of those that resumed operations are still limited as to which services they may offer.

The Reserve Bank said in July that the economy may contract 7.3% this year. The projections used at MPC meeting that month show GDP will expand on a quarterly basis in the three months through September, which means the technical recession will be over after four quarters.

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N.S.E Equities - Finance & Investment

Par Value:                  5/-

Closing Price:           23.00

Total Shares Issued:          1497745029.00

Market Capitalization:        34,448,135,667

EPS:             8.69

PE:                 2.647

NCBA reports H1 2020 Earnings 

Profit after tax (PAT) declined 38.3% y-o-y to KES 2.6 BN. 

+341.2% y-o-y increase in bad debt charge to KES 7.6 BN. 

Earnings per share (EPS) KES 1.76.

Total income +15.9% y-o-y increase to KES 21.3 BN (-5.1% q-o-q). 

Fees and commission income rose 43.5% y-o-y to KES 7.2 BN 

Operating expenses (less loan loss provisions) declined 1.0% y-o-y to KES 9.4 BN 

Pre-provision operating profit rose 33.7% y-o-y to KES 11.9 BN 

Loan loss provisions saw a 341.2% y-o-y upswing to KES 7.6 BN 

loan book grew 4.0% y-o-y to KES 248.3 BN (+1.0% q-o-q).

P/B multiple of 0.5x 


Its difficult to compare because of the merger.

Looks inexpensive. 

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I&M Holdings reports H1 2020 Earnings
N.S.E Equities - Finance & Investment

Par Value:                  

Closing Price:           44.95

Total Shares Issued:          826810738.00

Market Capitalization:        37,165,142,673

EPS:             12.47

PE:                 3.605


Half Year 2020 Results 

-3.6% y-o-y decline in total income to KES 11.1 BN and an

+8.5% y-o-y increase in operating expenses to KES 5.0 BN 

The EPS KES 3.69.

Net interest income declined 1.4% y-o-y to KES 6.9 BN 

a 3.4% y-o-y increase in interest income to KES 13.1 BN 

9.4% y-o-y increase in interest expense to KES 6.2 BN.

Non-funded income declined 7.1% y-o-y to KES 4.2 BN

Other operating income saw a 7.4% y-o-y increase to KES 1.2 BN.

Operating expenses (less loan loss provisions) rose 8.5% y-o-y to KES 5.0 BN mainly on the back of a 21.9% y-o-y increase in other operating expenses to KES 1.8 BN. 

Staff costs for the period remained flat at KES 2.3 BN.

Pre-provision operating profit declined 11.8% y-o-y to KES 6.1 BN. 

I&M's loan loss provision expense saw a 7.0% y-o-y decline to KES 1.0 BN. 

profit before tax -27.7% y-o-y to KES 4.5 BN.

Profit after tax (PAT) saw a 29.5% y-o-y decline to KES 3.2 BN. 

On a trailing basis, I&M is trading at a P/E ratio of 3.8x and a P/B of 0.6x 


In Line with its Peers 

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Nairobi Securities Exchange reports H1 2020 Earnings
N.S.E General

Par Value:                  

Closing Price:           7.00

Total Shares Issued:          259503194.00

Market Capitalization:        1,816,522,358

EPS:             0.3

PE:                 23.333

NSE reports H1 2020 Earnings

H1 Revenue 292.383m versus 295.877m

H1 Total Income 366.807m versus 364.336m

H1 Admin Expenses [237.863m] versus [339.404m]

H1 Profit Before Tax 142.763m versus 29.895m

H1 Profit After Tax 110.491m versus 13.548m

H1 EPS 0.43 versus 0.09

Equity Turnover increased by 6.5%

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by Aly Khan Satchu (www.rich.co.ke)
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August 2020

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