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Monday 03rd of April 2017 |
Morning, Africa |
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If you are tracking the NSE Do it via RICHLIVE and use Mozilla Firefox as your Browser. 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 http://www.rich.co.ke |
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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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