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Pentagon trying to stop Chinese air defense zone in disputed sea: Gertz
Law & Politics
Amid signs China will soon impose an air exclusion zone over the South
China Sea, the Pentagon is trying to head off another destabilizing
action by Beijing in the increasingly tense region.
Deputy Defense Secretary Robert Work last week made clear the United
States would not recognize China’s imposition of an air defense
identification zone over the sea.
“We will not recognize the ADIZ in the South China Sea,” Work told the
The deputy defense secretary noted that a similar Chinese strategic
move in the nearby East China Sea also remains unrecognized by the
Of plans for the creation of a new ADIZ in the South China Sea, Work
said such a declaration “does not have a basis in international law
and we’ve said over and over we will fly, sail and go wherever
international law allows.”
Thus China is seeking to avoid an head-on military confrontation with
the United States and instead is using legal, psychological and media
warfare to achieve its objective of turning the sea into a Chinese
The provocative article discussing the shoot down of a US military
aircraft is clearly is part of China’s war of nerves with the United
States and its efforts to solidify control over the South China Sea.
Things could come to a head soon. “The Chinese could declare an ADIZ
at any time,” said one Pentagon official in the know.
The Pivot will need to bare its Fangs again.
China begins operation of lighthouse on artificial island in South China Sea
Law & Politics
China's transport ministry held a "completion ceremony", marking the
start of operations at the 55-metre (180-ft) high lighthouse on Subi
Reef, where construction began in October, state news agency Xinhua
said late on Tuesday.
The U.S. guided missile destroyer USS Lassen sailed within 12 nautical
miles of Subi Reef in late October, drawing an angry rebuke from
China, which called it "extremely irresponsible".
Subi Reef is an artificial island built up by China over the past year or so.
Credit Suisse mess goes right to the top Breaking Views
“There is nothing that I don’t understand in investment banking”. So
said Tidjane Thiam on being unveiled as the new chief executive of
Credit Suisse last March. Given such reassuring chutzpah, investors
will be wondering how the former boss of insurer Prudential presided
over almost $1 billion of losses in the last six months. The failings
look both operational and strategic.
Thiam gave an official explanation in late March. Some high-risk
trades that had previously been reduced had been increased without the
knowledge of senior bank executives. He hadn’t been aware of the scale
of certain trading positions. Thiam asserted that he had only found
this out in January, and has blamed poor processes and a lack of
openness from traders for his and colleagues’ fogginess.
There is another way to explain the mess: Credit Suisse, and Thiam as
its leader, made four poor decisions.
The first was back in October. Back then, Thiam’s sensible objective
was to make investment banking earnings steadier by reducing volatile
positions. He immediately broke his own new rule. Credit Suisse
retained significant exposure to two businesses that are among the
most volatile from an earnings perspective: credit and securitised
products trading. Thiam himself termed these assets “ugly ducklings”,
but said that he didn’t mind that such trades have to be backed by
large amounts of regulatory capital, because they usually generate
Brutal market conditions compounded the error of muddling the bank’s
strategic approach. Credit Suisse suffered mark-to-market losses of
$633 million in the fourth quarter and another $346 million of
writedowns in the three months to March. The scale of the losses
relative to total exposures suggests many positions were unhedged.
Credit Suisse’s top management ought to have been on high alert before
the environment worsened given the risk the trades posed. Instead, the
impression is of a management team that took its eye off the ball.
That might be because of a second poor decision: not talking enough.
Credit Suisse’s top risk committee meets only four times a year to
discuss market and credit risk, less often than some rivals. But like
peers, the bank has informal sub-committees that meet more regularly.
None relayed the requisite information to Thiam or Chief Financial
Officer David Mathers. And Thiam only asked to discuss the size of
Credit Suisse’s positions on a case-by-case basis with trading head
Tim O’Hara at the end of January, according to company material quoted
by Reuters. O’Hara was new in the job, which might have made
communication less efficient than usual. But the severity of market
moves in December should have prompted earlier action.
Botched external communications were the third mistake. Chairman Urs
Rohner said at the end of March that there were no blind spots in
Credit Suisse’s trading books, seemingly contradicting Thiam’s tone,
if not the details of his comments. Risk-weighted assets in its
trading business were flat in the fourth quarter, despite Thiam saying
that Credit Suisse had cut back on some positions “very aggressively”.
Did not have the Pulse of the Trading Book.
USD/JPY broke the 110.00 level yesterday [105.00 Target]
The yen added 0.9 percent in a third day of gains, rising to 110.34
per dollar, the strongest level since the Bank of Japan eased monetary
policy in October 2014. The currency appreciated even after BOJ
Governor Haruhiko Kuroda said he will keep monitoring foreign-exchange
markets and reiterated the potential for additional stimulus.
“I don’t think we’re close to any type of levels where they would be
willing to intervene,” said Charles St-Arnaud, a senior
foreign-exchange strategist at Nomura Holdings Inc. in London. He sees
the dollar likely strengthening beyond 110 yen, and anticipates a
greater chance of intervention should it break below 108 yen.
Africa's Petrostates Are Imploding Foreign Policy
Africa’s petrostates are crashing hard. A cool $115 in the summer of
2014, a barrel of Brent crude, the international pricing benchmark,
now fetches below $40. And having failed to build massive foreign
exchange reserves like Saudi Arabia or other Gulf monarchies, African
oil exporters are now being forced to grapple with depreciating
national currencies, mounting inflation, and deep cuts in government
Some of these states are now dangerously unstable, staring down
popular unrest or domestic insurgencies that left unaddressed could
set them back years, if not decades, in development terms. The “Africa
rising” narrative, built on climbing income levels and an emerging
middle class on the continent, is now under strain.
But instead of across-the-board decline, Africa is witnessing a
gradual shift in the continental balance of economic power — away from
petrostates like Nigeria and Angola and toward less flashy but more
diversified economies like Ethiopia and Tanzania. After decades of
lavishing attention on the oil-powered economies of West Africa,
investors are now flocking to the economies of East Africa, which have
demonstrated their resilience to lower commodity prices and challenged
outdated perceptions of Africa as resource-dependent and burdened by
irredeemably poor governance.
The origins of Africa’s tectonic shift were remote — the shale boom in
the United States, a refusal of Saudi Arabia and OPEC countries to cut
production, and the economic slowdown in China — but its effects have
been profound. Less than two years after it claimed the title of
Africa’s largest economy, Nigeria is in an economic tailspin.Less than
two years after it claimed the title of Africa’s largest economy,
Nigeria is in an economic tailspin. The euphoria that swept the
country after its first-ever democratic transfer of power last year
has quickly given way to worries about the plummeting price of oil,
which accounts for 70 percent of government revenue.
And Nigeria is not the only African petrostate on the brink. The
continent’s second largest oil producer, Angola, has also felt the
sting of plummeting oil prices. No other petrostate in Africa —
perhaps not in the world — benefitted from the dramatic surge in oil
prices over the past decade as much as Angola. Emerging from a
devastating civil war in 2002, the West African nation watched the
price of crude rise more than three-fold at the same time as its
production doubled to nearly 2 million barrels per day. Between 2002
and 2014, the country generated a staggering $468 billion from its oil
Other major oil producers in Africa, like Equatorial Guinea, Gabon,
Sudan, and South Sudan, though never regional juggernauts, are now in
similarly precarious situations. But their slumping economies have
opened up space for a new group of more balanced emerging economies,
including Ethiopia and Tanzania, to emerge as leaders on the
As growth in Africa’s petrostates fades, the persistent gains in the
more robust economies of East Africa will increasingly attract the
attention of multinational corporations and international investors in
search of new opportunities. Overall, foreign direct investment in
Africa fell by a third in 2015, but it continues to surge into sectors
like telecommunications and financial services — and it is East
Africa’s more diversified economies that are better positioned to cash
in on rising private equity investment in these sectors.
None of this discounts the fact that some sectors in Africa’s
petrostates, like the entertainment industry in Nigeria, offer pockets
of growth. But it will be East Africa that leads the way. Countries
like Ethiopia, Kenya, and Rwanda have transformed into regional
powerbrokers and are increasingly becoming key international partners
for the United States, the European Union, and China. If oil prices
stay where they are, the gradual weakening — and possible implosion —
of Africa’s petrostates will shift the center of economic power on the
continent from west to east, redefining international perceptions of
Africa’s potential and reinvigorating hope for its future in the
Angola jails Christian sect members for up to 28 years over police murders
An Angolan court on Tuesday sentenced the leader of a Christian sect
and some of his followers to up to 28 years in jail for the killing of
nine police officers last year during a police raid on the group.
The raids ended with the capture of preacher Jose Kalupeteka, leader
of a millenarian sect called "The Light of the World", and his
followers a year ago. Thirteen sect members were also killed in
clashes, police said.
On Tuesday, provincial court judge Afonso Pinto sentenced Kalupeteka
and nine sect members to between 16 and 28 years in jail after their
trial on charges including murder, attempted murder, resistance to
police detention, illegal possession of weapons and damage to
Things have a Fin de siècle feel about them in Luanda
Friday night's prime-time television performance by President Jacob Zuma, on the back of the devastating Constitutional Court judgment the day before, was something to behold @TonyLeonSA
Gone was the customary giggle, the chuckle and the rictus. Zuma’s
qualified and exceedingly rare apology was delivered by someone who
would rather have been anywhere else in the world, reading from a
script that clearly discomforted him. Pointedly, given that the entire
country was awaiting it, he arrived seven minutes late. Either a
truculent indicator of contempt or an exercise in passive aggression.
"The ANC will not tear itself apart." That’s the reason the president
clings to office. But as celebrated cartoonist Zapiro depicts Zuma, he
is a political zombie.
At the weekend, a report suggested that US presidential candidate
Donald Trump, hoping to win the mantle of Nixon’s Republican Party, is
likewise a zombie candidate: "Damaged beyond the point of repair but
unlikely to be stopped."
For South Africans, both in the governing party and outside it, the
question to be answered appears in the tagline of an Old Mutual
advertisement, ironically for a retirement product: "How much is
Uber to start operating in Ghana, Tanzania and Ugand
UBER Technologies plans to start operating in three new African
countries by the end of June, extending its reach two-and-a-half years
after introducing its ride-hailing service in the continent.
The company is set to expand to Ghana, Uganda and Tanzania, Alon Lits,
the general manager of Uber Africa, said in an interview. Last week,
Uber started in Mombasa in Kenya and Abuja in Nigeria, after entering
SA in 2013.
Uber is gaining users in Africa as travellers and commuters seek
alternatives to often unreliable or non-existent public transport, Mr
Lits said. Uber, whose rivals in the continent of more than a billion
people include smaller providers such as Taxify and Zapacab, is also
benefiting from customers embracing pooled rides, which allows them to
reduce the bill per person.
"This is a smartphone-friendly continent and the lack of
public-transport infrastructure means Uber is filling a gap in the
market," said Mr Lits. "The global executives are very happy with the
growth of Uber in the African market."
Uber began its African operations in Johannesburg, Cape Town and
Durban. The service has doubled its passenger numbers roughly every
six months, even amid unclear regulations and opposition from drivers
of traditional metered taxis.
"In 2014, we had a million trips booked, during the first six months
of 2015 two-million trips were booked, and we have seen the trend
continue," Mr Lits said.
Kenya's central bank governor said inflation could fall further in
coming months and that a proposal by lawmakers to cap commercial
lending rates would be "extremely harmful".
Governor Patrick Njoroge told a news conference on Wednesday
commercial banks lending rates still needed to come down and that the
current account deficit in East Africa's top economy was expected to
come to down 8 percent of gross domestic product.
Rumours about Chase Bank circulated on Social Media and it was pointed
out that Deloitte had in fact qualified the Accounts. Chase Bank is
not listed at the Securities Exchange.
NTV Kenya reported that Chase Bank has replaced Chairman Zafrullah
Khan with Muthoni Kuria and that Duncan Kabui has also left his
position as Group MD. Paul Njaga remains CEO.
Various Reports indicate this was at the behest of the Central Bank.
What is crystal clear is that Deposit Flight to Quality post Imperial
Bank is signalling that market forces will lead a consolidation
process and that this is now plain unavoidable. The Challenge is
around keeping it orderly.
The Shilling pushed higher to a fresh 6 month High of 101.27 and it
It was a very thinly traded market today at the Nairobi Securities Exchange.
The Nairobi All Share firmed 0.15 points to close at 146.88.
The Nairobi NSE20 pushed up +13.37 points to close at 4,030.00 which
is a Fresh 2016 High.
Equity Turnover was subdued at 141.216m.
N.S.E Equities - Agricultural
Kakuzi was high-ticked +9.67% to close at 329.00. Kakuzi is +3.785%
and has further to run after releasing really attractive FY Earnings
where FY EPS surged +229.498% to clock 26.92. They hit an ''Avocado''
Sasini Tea and Coffee rallied +4.47% to close at 19.85 and traded 1,400 shares.
The Soft Commodity space is in a good place and these Companies remain
N.S.E Equities - Commercial & Services
Safaricom faded -0.3% to close at 16.75 and traded 2.605m shares worth
43.718m. My price Target for 2016 is 22.50 [without accounting for the
Dividends and Safaricom is a dividend machine] which is a +25.55%
Uplift from here.
N.S.E Equities - Finance & Investment
Kenya Commercial Bank rallied +1.19% to close at a 2016 closing High
of 42.25 and traded out the session at 42.75 +2.4% trading. KCB traded
183,200 shares and had Buyers for 9x the volume traded. KCB and
StanChart look to me the biggest Beneficiaries re the current
Standard Chartered closed unchanged at a 2016 High of 254.00 and
traded 65,300 shares. StanChart Kenya is +37.29% in 2016 and is one of
the Beneficiaries of the Deposit Flight to Quality.
You would have expected Barclays to also be a Beneficiary but the 3
Year GO SHOP Provision Barclays has placed on its Africa operations
means that will not happen. Barclays Bank firmed +0.45% to close at
10.95. Barclays is -19.48% Year To Date.
I&M Bank traded 154,800 shares worth 16.254m all at 105.00 +0.96%. I&M
is +5.00% in 2016 and i believe is yet to complete its Buy-Out of GIRO
National Bank followed on yesterdays limit down move to close -2.73%
at a Fresh 13 Year Low of 10.65. National Bank is -32.3% in 2016.
BRITAM EA followed on a +19.35% 2 session bump higher with a further
bounce of +3.088% to close at 13.35.
N.S.E Equities - Industrial & Allied
Total Kenya firmed +0.53% to score a Fresh 2016 Closing High of 19.00
and is +4.109% in 2016 and further to run to the Up Side.