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Monday 03rd of April 2017
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Morning, Africa |
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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
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What's behind South African finance minister's sacking? @sapresident @AJInsideStory Africa |
Major cabinet reshuffle prompts criticism from both ruling party
members and the opposition amid economic turmoil.
Inside Story31 Mar 2017 17:43 GMT Africa, South Africa, Politics
President Jacob Zuma has sacked Finance Minister Pravin Gordhan just
months after appointing him to the job.
Nine other ministers have also been fired in an unprecedented cabinet reshuffle.
Zuma's decision is facing strong criticism from both ruling party
members and the opposition.
They are worried over South Africa's economy just at a time when many
believed it was starting to stabilise.
But Zuma argues "radical socio-economic transformation" is urgently
required to help lift South Africans out of poverty.
What is behind Gordhan's sacking? Does it reveal a deep division in the country?
Presenter: Sami Zeidan
Guests:
Bongani Mbindwane - ANC-supporter, businessman and newspaper columnist
Lawson Naidoo - executive director of Council for the Advancement of
the South African Constitution
Aly-Khan Satchu - CEO of Rich Management
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Go Limit Short South Africa Via @alykhansatchu @TheStarKenya Africa |
Who can forget that moment when Nelson Mandela walked out of prison
and just about everyone in the World was watching? The Rainbow Nation
was born and we all knew at that moment [even President De Klerk] that
we were watching the first president of a free South Africa and not a
long-term prisoner blinking in the harsh sunlight. South Africa is the
biggest economy in SSA [it lost the lead briefly to Nigeria but has
regained Top-Dog Status], the Rand is the nineth most traded currency
world-wide and therefore South Africa is not a tucked away African
country but the big cheese. Events in South Africa unfold on the
World-stage. Investors who might find buying T-Bills in Harare a
stretch, will quite happily trade the Rand, buy a share or two at the
JSE. South Africa is on the radar of global investors in a way other
Sub-Saharan countries can only dream about.
President Jacob Zuma by recalling his Finance Minister Pravin Gordhan
from an international road-show was sending a message about who is the
top-dog. From the moment of the recall through his summary dismissal
alongside his deputy and eight other cabinet members, South African
assets have gotten hammered.
The South African communist party said in an emailed statement on
Friday. “Once more it lays bare a disturbing reality. Increasingly our
country is being ruled not from the Union Buildings, but from the
Gupta family compound.”
The ANC sits at a cross-roads.
Julius Malema the articulate ''fire-brand'' leader of the EFF said to Power FM
''When I was sitting there looking at old veterans, I realised that
the real ANC is outside the ANC with no role to play'' For now its
seems the ANC has been personalised in the court of King Zuma and
folks are more concerned about their own positions being liquidated
rather than the party's position.
I will turn to the market reaction which was violent momentarily.
President Zuma accused Gordhan and his deputy, Mcebisi Jonas, of
setting up secret meetings to start what was called operation check
mate to undermine Zuma. He (Zuma) lay the charge that Gordhan was
working in cahoots with ''white monopoly capital.'' President Zuma
struck in the dead of night when most folks are tucked up in bed. In
the space of 15 months, President Zuma has now fired two very
competent finance ministers. Competency is clearly not one of the
terms of reference. This Kamikazi Treasury midnight ''smash and grab''
is what it is and if you ever want an example of ''Political'' risk
this is as near a perfect example you are going to find. It is clear
also that Gordhan and Jonas were doing some highly effective blocking
and tackling at the Treasury [Nuclear Energy, State Parastatals, the
Guptas].
I was at a Financial Times Africa conference last year at Claridge's
and the FT's Lionel Barber asked Pravin Gordhan
"When you communicate with @SAPresident about implications of a
downgrade, does he understand?"
South Africa GDP has been in the slow lane around or close to a 1% GDP
expansion rate. The currency was the second best performing currency
in 2017 [after the Mexico Peso]. The Indian Ocean Dipole had
distributed much better rains down South [when Agriculture does well
in Africa the Economy tends to see better diffusion] There were some
green shoots. And I suspect that was the story that Gordhan was
telling international investors. All of that was before the Night of
the Long Knives. The Rand crashed -7.5% last week and had its worst
week for more than a year. I expect it to fall further. Charlie
Robertson of Renaissance Capital tweeted
''Each 1% fall in the ZAR shrinks South Africa's GDP by about $3bn.
Perhaps this is the economic transformation Zuma is seeking?''
I expect a downgrading to Junk Status [2 notch downgrade] in very
short order. This downgrade will accentuate the negative Feed-Back
Loop as investors hit the eject button. A Ratings downgrade will
effect big government parastatals like Eskom.
The new Finance Minister said "The principle stands that it will be
implemented at a pace and scale that the country can afford ... I
don't think we will or should try to be reckless about it"
Sell everything and go Limit Short.
Macro Thoughts
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"Two" by Satyajit Ray Africa |
In 1964, renowned filmmaker Satyajit Ray was asked to create a short
film for ‘ESSO World Theater’, a cultural showcase presented on
television and funded by the American oil company Esso. Asked to write
and direct the film in English, Ray opted instead to make a film
without words. The result is a poignant fable of friendship and
rivalry
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Trump ready to tackle North Korea alone - @FT exclusive Law & Politics |
Donald Trump has warned that the US will take unilateral action to
eliminate the nuclear threat from North Korea unless China increases
pressure on the regime in Pyongyang.
“China has great influence over North Korea. And China will either
decide to help us with North Korea, or they won’t,” Mr Trump said in
the Oval Office. “If they do, that will be very good for China, and if
they don’t, it won’t be good for anyone.”
But he made clear that he would deal with North Korea with or without
China’s help. Asked if he would consider a “grand bargain” — where
China pressures Pyongyang in exchange for a guarantee that the US
would later remove troops from the Korean peninsula — Mr Trump said:
“Well if China is not going to solve North Korea, we will. That is all
I am telling you.”
While Mr Trump is increasingly worried about North Korea, his view on
Europe has moderated. He stressed that Brexit would be a “great deal
for [the] UK and . . . really good for the European Union” but said he
was less convinced that other countries would follow the UK out of the
EU. “I think that it [the centre] is really holding. I think they have
done a better job since Brexit.”
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Destined for war? China, America and the Thucydides trap @FT Law & Politics |
In November 2013, I attended a meeting with President Xi in the Great
Hall of the People in Beijing, where he told a group of western
visitors: “We must all work together to avoid Thucydides’ trap.”
The phrase, a reference to the ancient Greek historian’s observations
about the war between Sparta and Athens in the fifth century BC, was
coined by Allison to describe the dangers of a period in which an
established great power is challenged by a rising power. Allison, the
author of a classic study of the Cuban missile crisis, calculates that
in 12 out of 16 such cases, the rivalry has ended in open conflict.
This time, he argues, may be no different: “China and the United
States are currently on a collision course for war — unless both
parties take difficult and painful actions to avert it.”
A big difference, however, may be that Xi’s vision of the “great
rejuvenation of the Chinese nation” seems much more fully formed than
that of the new US president. As the journalist and academic Howard
French tells it in Everything Under the Heavens, China’s leader is
essentially seeking to return his country to the position it has
traditionally exercised in Asia — as the dominant regional power, to
which other countries must defer or pay tribute. “For the better part
of two millennia, the norm for China, from its own perspective, was a
natural dominion over everything under heaven,” writes French. In
practice, this meant “a vast and familiar swath of geography that
consisted of nearby Central Asia, Southeast Asia and East Asia”.
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"It's a beta White House." NewYorker Law & Politics |
Mike Allen, Axios’s editor-in-chief, reported that one of the
officials in the meeting “views the Trump White House in terms that
could be applied to the iterative process of designing software. It’s
a beta White House.”
Allen went on, “The senior official . . . said the White House was
operating on similar principles to the Trump campaign: ‘We rode
something until it didn’t work any more,’ the official said. ‘We
recognized it didn’t work, we changed it, we adjusted it and then we
kind of got better . . . [T]his was much more entrepreneurial.’ In the
White House, he said, ‘we’re going to keep adjusting until we get it
right.’ ”
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"The most ridiculed man on the planet" @VanityFair's GRAYDON CARTER Law & Politics |
Trump may be a joke, but the chaos and destructive forces around him
are not. If he can cause this much havoc during his first few months
in office, imagine what the country and the world will look like at
the end of four years. Watch him when he walks into a crowd of people.
There is a slight grimace, a tightening of the mouth that to me
indicates a hesitation, perhaps based on fear. The thing is, if Trump
has made any sort of arrangement with the Russians—Kremlin, oligarchs,
F.S.B., Mob, or any combination of the four—to drop the Obama-era
sanctions in return for past favors, the hoo-ha surrounding his
Russian connections now makes that almost impossible to deliver.
Whatever support he has received from the Russians over the years
presumably came with promises of a payback. If Trump can’t follow
through on this, he might be in serious trouble.
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False Flag Dog-Wag Warning Law & Politics |
nation’s ubiquitous, elite-generated, paranoia-inducing “message of
fear about terrorism…helps explain why Trump’s candidacy took off like
moon rocket in November and December of 2015, the period of the
terrorist attack in Paris and the murders in San Bernardino.”
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US hotels and airlines slash prices as Trump policies hit tourism @FT International Trade |
“I think that because of some of the perceived positions coming out of
the current administration, the US as a destination is potentially
looking less attractive as a product,” said Mr Khosrowshahi, speaking
to the Financial Times during a visit to London.
“One of two things is going to happen. Either the US has to go on sale
in order to keep volumes up, or volumes are going to come down. When
we look at our business, the leading indicator is pricing. Pricing has
come down.”
The WTTC has forecast that the travel and tourism sector, which
contributed $1.5tn to the US economy, or 8.1 per cent of its GDP, will
grow at 2.3 per cent in 2017 — a contraction of 0.5 percentage points
compared with last year.
“When you land and we tell you your luggage is coming out of baggage
claim, we should offer you ‘do you want an Uber to your hotel?’ Or,
‘If you click right now, you can get a Hertz rental car for 20 per
cent off, because Hertz has some extra cars in its parking lot’,” he
said. “We’re talking to everybody right now but stringing it together
is pretty challenging.”
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U.N. Security Council agrees lower troop cap for Congo mission Africa |
The U.N. Security Council has agreed a compromise on a reduced troop
cap of 16,215 for its peacekeeping mission in Democratic Republic of
Congo, the United Nations' largest and most expensive, after the
United States asked for it to be cut by a quarter, diplomats said on
Thursday.
The 15-member body is due to vote on Friday to renew the mandate for
the $1.2 billion operation, known as MONUSCO, amid U.N. warnings that
violence is spreading across the central African state ahead of
planned elections before the end of 2017.
"We have an agreement," French U.N. Ambassador Francois Delattre told
reporters on Thursday.
The United States had wanted the troop cap to be cut to 15,000,
diplomats said. Despite a request by Secretary-General Antonio
Guterres to add two extra police units - 320 officers - the council
has agreed to a Washington demand to keep the current total of 1,050
officers, according to the draft resolution.
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South Africa faces its moment of truth @FT view Africa |
Mr Zuma’s next move — to sack his finance minister Pravin Gordhan and
stack his cabinet with yet more cronies — was a gamble. It has
exacerbated splits within the ruling ANC and forced a gathering crowd
of opponents into recognising the stark choice they face. They must
either end this rotten presidency early by democratic means, accept a
formal split within the movement that fought for nearly a century to
liberate South Africa from minority rule, or surrender to nepotism,
autocracy and accelerating economic decline. There is little doubt
this is a pivotal moment.
Mr Gordhan played a courageous role in standing up to vested
interests, blocking their thinly disguised bid to capture state
institutions for selfish ends, and staunching wasteful public
spending. His efforts were rewarded by the markets. In the 15 months
since he was re-appointed as finance minister, the rand went from
being among the world’s worst performing currencies to becoming, this
year, one of its best.
Until this week that is. Most of those rewards were reversed in
anticipation of Mr Zuma’s midnight reshuffle on Thursday. This places
two protégés inside the national treasury, which along with the
central bank has until now maintained a global reputation for
excellence, resisting a generalised trend towards decay.
Predictably, the rand has plummeted, bank shares plunged and bond
yields spiked. The rating agencies have also warned that Mr Gordhan’s
removal could prompt a downgrade to junk status for the first time
since the end of apartheid — something that the outgoing finance
minister has fought tooth and nail to avert.
Mr Zuma, in other words, has risked it all. Either this is because he
is confident that the system is already rigged sufficiently in his
favour. Or it is because the rumblings of discontent have backed him
into a corner.
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Ivory Coast Plays Blame Game for Cocoa Crisis in Top Producer Africa |
As London futures tumbled toward the end of last year, many of the
hundreds of exporters that had bet on higher prices were forced to
default on their contracts. With fewer buyers, beans started to pile
up in the country, helping push prices even lower. The problem left
the state facing losses of more than $300 million and prompted it on
Thursday to cut the minimum price it pays farmers for the smaller of
two annual crops starting next month by 36 percent.
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Kenyan Inflation Jumps to Five-Year High as Drought Bites Kenyan Economy |
Consumer prices surged 10.3 percent in March from 9 percent in
February, the Kenya National Bureau of Statistics said in a statement
emailed from the capital, Nairobi, when they broke through the Central
Bank of Kenya’s 7.5 percent ceiling. The rate is the highest since
June 2012 when inflation registered at 10.1 percent after peaking at
19.7 percent in November 2011.
The food and non-alcoholic drinks index, which accounts for about a
third of the inflation basket, increased to 18.6 percent in March from
a year ago, KNBS said. The government has proposed to waive taxes on
imports of white corn to alleviate a shortage of the staple caused by
lack of during the so-called short rains season over October to
December, Treasury Secretary Henry Rotich said in a budget speech
Thursday.
Ongoing rains, if adequate, may alleviate price pressures only after
June, according to Faith Atiti, a senior economist at Nairobi-based
Commercial Bank of Africa.
“Prices may have peaked this month and will start to come down in
coming months,” Atiti said by phone. “We expect inflation to stay
above 7.5 percent until around June as drought effects normally lag
for some period.”
Conclusions
Market is looking through this Food-drought specific inflationary
related surge. Every other component in the basket is subdued.
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CBA Group Reports 87% Growth in Earnings, Driven By Fees From M-Shwari Kenyan Wallstreet Kenyan Economy |
Kenya’s Largest Private Bank, Commercial Bank of Africa has released
its financials for the full year period ended 31st December 2016
recording an increase of 87 per cent in profit after tax to Sh 6.72
Billion from Sh 3.59 Billion.
The Bank’s total non interest income rose by 53 per cent to Sh 10.272
Billion largely driven by “Fees and commissions on loans and advances”
which grew by 51 per cent to Sh 5.73 Billion. Income from the Bank’s
mobile lending product, popularly known as M-Shwari is classified
under “Fees and commissions on loans and advances.”
Conclusions
They have left into the Future.
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Uchumi set to get Sh1.3bn in bailout plan Kenyan Economy |
“We expect the next tranche (of Sh700 million) shortly hopefully in
the month of April or May. There is also a third tranche (of Sh600
million) coming to support Uganda and Tanzania but under a separate
package. In total the package will come to Sh1.8 billion,” said Uchumi
chief executive Julius Kipng’etich on the sidelines of the retailer’s
AGM held in Nairobi.
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N.S.E Today |
The Rand which crashed -7.5% last week versus the Dollar on the news
that President Zuma had terminated his Finance Minister Gordhan and
his Assistant Jonas, fell a further -1.13% today.
It is widely predicted that the Ratings Agencies will cut South Africa
to ''Junk'' status.
This downgrade will further juice the negative Feed-back loop we are
seeing across South African Assets.
The Shilling was last trading at the 103.21 Level and has been
seriously well-behaved and has even taken a 5 year high in the
Inflation rate, in its stride.
The Inflationary Surge is correlated to Food/Drought. The food and
non-alcoholic drinks index, which accounts for about a third of the
inflation basket, increased to 18.6 percent in March from a year ago,
KNBS said
The markets are looking through the headline inflation number noise
and are seeing an otherwise benign inflationary basket.
The Nairobi All Share rallied +0.758% to close at 131.50
The Nairobi NSE20 Index closed +6.31 points better at 3106.21
Turnover was slow at just 276.580m
Local Institutions are egregiously underweight the equity market.
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N.S.E Equities - Commercial & Services |
Safaricom rallied +2.5% to close at 18.45 and traded 11.256m shares
worth 207.741m. Safaricom has traded a 16.00-19.15 range in 2017 and
is in fact -3.655% in 2017 but has rebounded +15.3125% off its 2017
closing Low from 9th March. Safaricom, of course, took a big hit when
it seemed the Regulator was targeting the M-PESA Platform to be hived
off. The Short term Price Target is 19.15 and then I expect progress
through 20.00. Some Folks have expressed concern about the 50% Betting
Tax and how that might crimp Earnings. Bob always told me ''Look
Betting is the Jam on the cake'' The Cake is undervalued at these
levels and there is plenty of scope for price appreciation from here.
Uchumi responded +6.38% higher to close at 2.50 following the
interview with the CEO who told the Nation
“We expect the next tranche (of Sh700 million) shortly hopefully in
the month of April or May. There is also a third tranche (of Sh600
million) coming to support Uganda and Tanzania but under a separate
package. In total the package will come to Sh1.8 billion,” said Uchumi
chief executive Julius Kipng’etich on the sidelines of the retailer’s
AGM held in Nairobi.
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N.S.E Equities - Finance & Investment |
Interestingly, Commercial Bank of Africa which is not listed at the
Securities Exchange reported FY 16 Earnings where FY Profit after Tax
surged +87%. You can safely say that CBA has leapfrogged into the
Banking Future, with some assistance from M-Shwari.
Equity Bank closed unchanged at 33.00 and traded 527,400 shares. This
is a 2017 closing High and Equity is +10.00% in 2017.
KCB Group which was +20.869% Year To date through this morning
corrected -2.16% to close at 34.00 on light trading of 156,700 shares.
NIC Bank rallied +4.62% to close at 28.25 and was in fact trading
session highs of 29.00 +9.43% at the finish line.
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N.S.E Equities - Industrial & Allied |
Trans-Century traded the grand total of 100 shares all at 6.30 +9.57%.
On the 28th of March this year, Trans-Century announced a 24.99% share
acquisition by Kuramo Capital.
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