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Macro Thoughts

Home Thoughts

Many Years ago, we saw an advertisement for a Golden Retriever in the
window of a Coffee Shop in Ratna Square in Nyali Mombasa. We went to
the House and there was one dog left and she kept following us about
and We all said she wants to be part of our Family. And Sahara came to
Nairobi and was with us ever since. Sahara is a beautiful incredibly
sensitive dog. She gave birth to three sets of Pups and the last was
just under a Year ago. And we kept 3 of the Pups, Bruno, Caesar and
Dewy [because he always looks mopey and sad]. Occasionally, the dogs
would all run out of the Gate disappear in the Coffee Fields and
return an hour or so later. Two days ago, Nishet tells me Sahara and
Bruno have disappeared, coincidentally a couple of days after our
Gardener left.
I said to Nishet he won their Trust and he has taken off with them.
Its quite sad.

“We shall meet in the place where there is no darkness.” ― George Orwell, 1984

“Power is in tearing human minds to pieces and putting them together
again in new shapes of your own choosing.” ― George Orwell, 1984

“The object of terrorism is terrorism. The object of oppression is
oppression. The object of torture is torture. The object of murder is
murder. The object of power is power. Now do you begin to understand
me?” ― George Orwell, 1984

the “surrealism of everyday immigrant life—one day you are in your
country, having fun, drinking mango juice, and the next day you are in
the Underground in London and your children are speaking to you in a
language you don’t understand.”

She opens the book, her first, with “I have my mother’s mouth and my
father’s eyes / On my face they are still together.”

 It’s East African storytelling and coming-of-age memoir fused into
one. It’s a first-generation woman always looking backward and forward
at the same time, acknowledging that to move through life without
being haunted by the past lives of your forebears is impossible.

By contrast, Obama is continually compared to Martin Luther King Jr.
In much of the world, especially among Africans, he is admired to the
point of being worshipped. He was awarded the Nobel peace prize in his
first year in office despite the fact that he had enlarged the war in
Iraq and extended it in Afghanistan. Now he has brought total war to
Syria, where at least a quarter million people have perished. He has
orchestrated the subversion of Venezuela, a country that freely gave
aid to many of Latin America’s most impoverished people. He has
encouraged neo-liberal politicians to overthrow Brazil’s president,
supervised a right-wing coup in Honduras, supported a neo-Nazi regime
in Ukraine, helped to overthrow the government of Libya and created a
failed state there, paid Kenya and Ethiopia to attack Somalia,
supplied bombs to Saudi Arabia to use on Yemenis, and built up
offensive US weapons on Russia’s borders. In Asia, his “pivot” has
reasserted Japan’s importance—a nation that has never apologized for
its role in World War II (not least for its kidnapping of more than
100,000 women whom it turned into sex slaves for its military). He
pressured South Korea to draw closer to Japan and threatens China with
drive-by aircraft carriers and provocative fly-overs.

Euro 1.1407
Dollar Index 93.94
Japan Yen 108.95
Swiss Franc 0.9720
Pound 1.4426
Aussie 0.7330
India Rupee 66.605
South Korea Won 1166.25
Brazil Real 3.4477
Egypt Pound 8.8810
South Africa Rand 15.1437

Dollar Index 3 Month Chart INO 93.94 [i am with @Goldmansachs -
Bull Trend is intact]


Greece's yields drop like a stone as ECB said to consider putting
new Greek waiver on agenda H/T

Gold 6 month INO 1270.15 [Buy Dips]


#Oil prices jump as US crude stockpiles fall for 1st time since
March. [Brent wants $50.00?]

The Brazil Real is firming on the basis that @dilmabr is about to be terminated.

Frontier Markets

Democratic Republic of Congo (Reuters) - Police in Democratic Republic
of Congo fired tear gas on Wednesday at thousands of supporters of a
leading opposition candidate for president who is being questioned
over government allegations of hiring mercenaries, a Reuters witness
said.

But, Jason Stearns, knows Katumbi as a populist person. "He is
somebody known to spread money around to seduce people. This has given
him very broad popularity," Stearns told DW. However, the expert has
expressed doubt over the popularity of Katumbi outside Katanga region,
saying - the opposition politician has spent a large part of his life
outside the Congo. "He is not well known in the west of the country.
He has rarely made appearances in Kinshasa and he allegedly doesn't
speak very good Lingala," Stearns said.

He has yet to announce clearly his plans, but contrary to the
constitution which only allows a two-term limit, some of his party
members have asked him to run again - a proposal that has solicited
protests across DRC. Kabila is in a difficult position now, says
Stearns. "He received a lot of fierce resistance from various sectors,
so he retreated from that option. I think the default option for him
is to pray for time,"

President Joseph Kabila has been in power for 15 years. He has shown
no sign of preparing to leave office; despite him calling for a
"national dialogue" to allow for a peaceful vote. Opponents viewed the
demands as a trap, which could allow his supporters to put off polls
for two to four years until they can organize "credible" elections.

Conclusions

Aly-Khan Satchu ‏@alykhansatchu  Kabila has a cunning Plan
@bbcjuliankeane @bbcworldservice @bbcBola but can he keep the Street
under control?


#Congo high court says Kabila stays in power if polls not held |
Top News | Reuters

“The revolutionary contingent attains its ideal form not in the place
of production, but in the street, where for a moment it stops being a
cog in the technical machine and itself becomes a motor (machine of
attack), in other words a producer of speed.’’

As we look around the world today, we can see a battle for the
‘street’ from the streets of Bujumbura to the streets of Baltimore. In
November last year, I wrote about Ouagadougou’s signal to sub-Saharan
Africa and concluded that: We need to ask ourselves how many people
can incumbent shoot stone cold dead in such a situation – 100, 1000,
10000?

This is another point: there is a threshold beyond which the incumbent
cannot 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.

South Africa All Share Bloomberg +2.83% 2016


Dollar versus Rand 6 Month Chart INO 15.1399


Egypt EGX30 Bloomberg +7.10% 2016

STRATEGISTS are criticising Nigeria’s latest plan to rescue its
currency — this time by relying on Chinese cash.

On a visit to Beijing last month, President Muhammadu Buhari signed a
currency agreement aimed at encouraging trade with China and reducing
Nigeria’s demand for dollars to relieve pressure on its dwindling
foreign reserves.

While the deal, details of which are still being negotiated, helps
China’s push into Africa’s largest economy, it will buy Nigeria a few
months, at most, before it is forced to follow the lead of other oil
exporters and devalue, according to Citigroup and Bank of America.

The naira-yuan swap agreement is "very unlikely" to relieve pressure
on the naira or Nigeria’s reserves, says Andrew Howell, a New
York-based frontier-markets strategist at Citigroup, the world’s
biggest foreign-exchange trader. "The market wants to see a clear path
towards achieving a sustainable exchange rate, where supply and demand
for foreign exchange are balanced."

Nigeria has held the naira at 197-199 to the dollar since March last
year, even as oil revenue and export earnings plummeted and other
crude producers from Angola to Russia let their currencies weaken.
Reserves have fallen 29% since mid-2014 to the lowest in more than 10
years as the central bank’s capital controls slowed foreign investment
to a trickle.

While the level of devaluation implied by naira forward contracts has
dropped as Mr Buhari resists calls to let the currency weaken, they
still predict a 37% decline in the next year. With the economy set to
expand this year at the slowest pace since 1999, according to the
International Monetary Fund, Mr Buhari last week signed off on a
record budget that leaves the government with a deficit of
2.2-trillion naira ($11bn).

The recent rebound in oil prices has not helped: Nigeria needs to
produce 2.2-million barrels a day and sell them at $38 a barrel to
meet its fiscal targets. Production slumped to 1.7-million barrels in
April, the lowest since 1994, because of militant attacks on oil
facilities in the Niger delta. The country relied on oil and gas for
about 70% of government revenue and 90% of export earnings in 2014.

Details of the currency swap agreement, such as its size, maturity and
exchange rate, have yet to be announced, making it hard for investors
to have faith in the accord.

The People’s Bank of China did not respond to faxed questions and
Isaac Okorafor, a spokesman for the Abuja-based Central Bank of
Nigeria, declined to comment when contacted by phone.

Beijing has signed several bilateral currency swaps in the past eight
years, including with South Korea, Malaysia and Argentina, in a push
to let the yuan trade more freely.

SA, which took on a 30-billion yuan ($4.6bn) three-year swap in April
2015, is the only African country to have agreed such a deal with
China. Nigeria and China are considering a swap of about 20-billion
yuan, Lagos-based newspaper ThisDay reported last month, citing
unidentified sources in the Nigerian president’s office.

Mr Buhari and central bank governor Godwin Emefiele claim that letting
the naira drop would hurt Nigerians by raising prices in a country
that imports the bulk of its finished goods. Most businesses are
forced to use the black market exchange rate, which trades about 60%
weaker than the official rate, at 320 to the dollar. That is boosting
inflation, which accelerated to 12.8% in March, the highest in almost
four years.

"Nigeria runs a persistent trade deficit with China," says Oyin Anubi,
a London-based economist at Bank of America. "Unless China is willing
to take more naira than it needs to buy Nigerian crude, which it
doesn’t tend to do in big quantities, then Nigeria’s deficit in
foreign exchange, whether yuan or dollars, is likely to continue."

Investors are shunning Nigerian stocks and bonds until there is a
devaluation, says Mr Howell at Citi, who predicts the central bank
will be forced to let the currency depreciate to 226 per dollar by the
end of 2016. Investors who still hold Nigerian assets are reluctant to
sell as they would struggle to the buy foreign-exchange needed to exit
the country, he says.

Nigerian equities have dropped 10% this year, the most in Africa after
Zambia’s. The Nigerian Stock Exchange all share index has lost more
than 25% since Mr Buhari was sworn into office at the end of May last
year.

Local-currency government bonds have lost 6% in dollar terms, the only
debt not to have gained among 31 emerging markets monitored by
Bloomberg, aside from Egypt and Mexico.

While Mr Buhari may use a swap with China to try and delay a
devaluation, it will not give him much respite, JPMorgan Chase says.
The deal may simply increase the nation’s trade deficit with China,
which ran to $15bn in 2015.

"It’s unlikely to have any meaningful impact in the short term," says
Yvette Babb, a sub-Saharan Africa strategist at the New York-based
lender, which forecasts an exchange rate of 240-260 to the dollar by
year-end. "A swap has limited ability to influence the structural
mismatch between supply and demand."

Conclusions

China will need to pony up a lot more. Carlo who visited a few weeks
ago [and was conducting corporate Governance seminars in Nairobi] saw
Nigeria through a Geopolitical Lens and was convinced that China saw
it as a strategic Necessity to pick up Nigeria and make the monies
available.
This seems to be @NGRPresident's calculation.
I however believe its not going to be sufficient to bail out the Naira
Policy and therefore risks of a disorderly disruption via the FX
markets remain elevated.

Nigeria needs a “substantial review” of its foreign-exchange policies,
including further consideration about devaluing the naira, Vice
President Yemi Osinbajo said.

Africa’s largest economy is facing dollar shortages as oil revenue
declines due to weaker prices and a drop in production to the lowest
in more than 20 years.

“There has to be a substantial re-evaluation of the foreign-exchange
policy, especially with the view to increasing FX supply and capital
importation,” he said, adding that he’s “confident” that measures can
be put in place to “attract FX.”

"What would I do with an apology? I need something tangible," he said,
rubbing his fingers together in a gesture commonly used to refer to
money. The audience laughed.

Amid shortages of fuel and hard currency, Nigeria’s government has
raised pump prices by 67 percent, saying in a statement that the step
will improve supply and competition.

The business community in Nigeria, particularly the downstream oil
sector, and foreign investors had been hopeful that President
Muhammadu Buhari would lift subsidies immediately upon taking office
nearly a year ago, writes Maggie Fick in Lagos.

Historically Africa’s top oil producer, Nigeria heavily subsidies
gasoline that is mainly imported due to the decrepit state of its
local refineries. The subsidy system is rife with fraud, according to
multiple international audits and a government report that found $6bn
in fraudulent claims were made in 2012.

The increasingly costly subsidy system is seen as increasingly
unsustainable due to the collapse in the price of Nigeria’s main
export, oil.

But the former military ruler has to date held off on removing
subsidies, a decision that analysts have said suggests he is not
heeding market realities. The same charge has been leveled against him
when it comes to the value of the naira. Mr Buhari maintains that he
is not convinced that devaluing the currency will benefit everyday
citizens in the import-dependent country of 180m.

A statement signed by the minister of state for petroleum, Emmanuel
Ibe Kachikwu, and seen by the Financial Times made a case for taking
the tough decision to raise prices:

We share the pains of Nigerians but, as we have constantly said, the
inherited difficulties of the past and the challenges of the current
times imply that we must take difficult decisions on these sorts of
critical national issues. Along with this decision, the federal
government has in the 2016 budget made an unprecedented social
protection provision to cushion the current challenges.

We believe in the long term, that improved supply and competition will
drive down prices.

When former president Goodluck Jonathan tried to end subsidies four
years ago, the price of a litre of petrol doubled overnight and caused
a nationwide strike that forced Mr Jonathan to reverse course.

The step will likely be viewed positively by investors and by the oil industry

Ghana Stock Exchange Composite Index Bloomberg -10.67% 2016
http://www.bloomberg.com/quote/GGSECI:IND

Mozambique's consumer inflation quickened to 17.29 percent
year-on-year in April from 13.61 percent in March, the statistics
office said on Wednesday.
http://af.reuters.com/article/investingNews/idAFKCN0Y210H

Conclusions

Thats a Spike right there.

Mobile money and data services drove strong profit growth over the
past year at Safaricom, Kenya’s dominant telecoms operator, as mobile
phones increasingly become essential to people’s livelihoods.

Bob Collymore, chief executive, said falling device prices and cheaper
services meant cell phones were now “a tool, not a luxury”.

The number of smartphones in Kenya rose 128 per cent in 2015 to 7.8m,
Safaricom said. There are now 37.7m mobile subscribers in the country,
a penetration rate of more than 83 per cent.

“The mobile phone is ubiquitous,” said Mr Collymore, as Safaricom,
which is 40 per cent owned by the UK’s Vodafone, reported a 19 per
cent increase in profit after tax to Ks38.1bn ($375m) for the year to
March. People are “relying on it for their productivity”, he added.

Revenue from Safaricom’s Mpesa mobile money platform increased 27.2
per cent to Ks41.5bn while mobile data revenue rose 42.7 per cent to
Ks21.2bn. The total value of Mpesa transactions rose 27 per cent to
Ks5.27tn.

Aly-Khan Satchu, a Nairobi-based investment analyst, said the results
showed “the democratisation of data in Kenya”. “It’s no longer the
preserve of the elite.”

The success of Mpesa has been helped by Kenya’s large unbanked
population. South Africa’s Vodacom announced on Monday that it would
axe its Mpesa service on June 30 citing “high levels of financial
inclusion in South Africa” for its poor take up.

Revenue from voice and SMS services were the poorest contributors to
the increased profit, rising 3.9 per cent and 10.6 per cent
respectively. But voice, at Ks90.8bn, remained the biggest contributor
to total revenue of Ks195.7bn, an increase of 19.8 per cent.

Safaricom’s market share fell from 67 per cent to 64 per cent in the
year to March but the company attributed this to an adjustment in the
way it counted active customers, bringing its figures in line with
rivals. Its customer base rose 7.75 per cent to 25.16m.

Mr Collymore advised that there was likely to be slower growth in
2016. Earnings before interest, tax, depreciation and amortisation are
expected to rise by a maximum of 10.8 per cent, compared with 16.7 per
cent growth in the year that has just ended.

“Growth has to plateau at some point,” said Mr Collymore. “You cannot
see exponential growth indefinitely.”

However, Eric Musau, an analyst at Standard Investment Bank, said that
Safaricom has often given a soft outlook at the start of its financial
year and then revised up its forecasts.

Safaricom reorganised its operations over the past year, dividing the
country into six regions, with area managers being given greater
autonomy after its centralised strategy failed to win over customers
in some places.

FY Service revenue 177.784089b vs. 156.246631b +13.784%
FY Total revenue 195.685224b vs. 163.364121b +16.681%
FY Voice Revenue 90.8b versus 87.37b +3.93%
FY MPesa Revenue 41.5b versus 32.63b +27.18%
FY SMS Revenue 41.50b versus 32.63b +10.59%
FY Mobile Data Revenue 21.15b versus 14.82b +42.71%
EPS 0.95 vs. 0.80 +18.750%
Dividend per share 0.76 vs. 0.64 +18.750%
FY 17 Guidance we expect EBITDA for FY17 to be in the range of 89b-92b.

Nairobi All Share Bloomberg +0.35% 2016
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -2.63% 2016
http://j.mp/ajuMHJ

3,934.43 +17.69 +0.45%

Every Listed Share can be interrogated here
https://rich.co.ke/rcdata/nsestocks.php