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Macro Thoughts

Brigden, who says an overvalued bond market is “the biggest risk in
the world” for investors, told clients to take profits on
developing-nation debt last month, citing concerns that a correction
might trigger a major risk-off move.

“I really don’t like the set up in sovereign bonds, especially in
Europe,” he said. “If bund yields spike, the German stock index will
crash and take EM along for the ride.”

The end zone in american football is where a football team scores.
Some teams will start the move near their own end zone and string a
sequence of moves to get to the opponent's end zone. Occasionally, a
team will throw a ''hail-mary'' pass and make a score out of nowhere.

The dollar had been in a precipitous decline in 2017 and until last
week had crashed about 12 per cent lower versus the euro and as an
index [against a basket of currencies] was down 11 per cent. The $5.1
trillion (Sh529.74 trillion) a day foreign exchange markets [the most
liquid market in the world] had watched incredulously as Washington
metastasized into a new epicentre of global uncertainty and as the
special prosecutor Robert Mueller the third's hot breath could be felt
on President Trump's collar. President Trump is a unique individual
but his twitter account gives us surgical and real-time insights into
his mental state. President Trump had drawn a ''red line'' with
respect to the special prosecutor in a New York Times interview where
he had said 'probing his business and his family’s financial dealings
would be a “violation.” Last week, we learnt this red line has been
crossed.

Any financial expert will tell you that President Trump's financial
affairs are a ''smoking gun.'' Deutsche Bank loans were surely
''mirror'' transactions, where Deutsche Bank was a commission agent
interposed between Trump and the real lender. All those sales where
Trump proclaimed himself a ''genius'' because they were so off-market,
we would all be incredulous, were essentially just that
''incredible''. There is a prima facie case here and its in plain
sight. President Trump knows it and that's why he has been demanding
Al Pacino [a la Martin Scorsese's godfather] style demands of loyalty
from the likes of the now dispensed with FBI director James Comey.

What was interesting last week is that the dollar picked itself of the
floor and we witnessed a rebound into the end of the week. Its nascent
but it was noteworthy. It was as if the FX markets had reached the
conclusions that it is all in the price now, maybe not an impeachment
but pretty much everything else is baked into the price of the dollar.

The dollar is the elephant in the room [financial markets]. This week
we will need to study it closely for the signals that it emits.

I think the rebound will gather strength because just about everyone
has been lulled into a sense of security. And that the dollar which
was deep in its end-zone has just thrown a hail-mary pass, which is
set to make up a lot of ground.

Home Thoughts

“Sal, we gotta go and never stop going 'till we get there.'
'Where we going, man?'
'I don't know but we gotta go.”
― Jack Kerouac, On the Road

“Live, travel, adventure, bless, and don't be sorry.” ― Jack Kerouac

On a windswept Himalayan plateau usually frequented by seasonal yak
herders, hundreds of troops from China’s People’s Liberation Army and
the Indian Army are locked in a stand-off over a small but strategic
piece of land.

Bullets are not flying, but rhetoric is, with Beijing warning New
Delhi to “correct its mistake” by withdrawing its troops from the
contested terrain, that China calls its own.

India — which says it is has merely come to the defence of its tiny
neighbour Bhutan that also claims the land — has ruled out a
unilateral withdrawal, while insisting it wants a peaceful resolution
of the problem.

In the past few days, China has ratcheted up its official demands for
a swift Indian climbdown, raising fears of imminent escalation. A
senior Chinese diplomat in New Delhi has warned of “serious
consequences” if Indian troops fail to withdraw. The Chinese defence
ministry told India that “restraint has a bottom line”.

Analysts say the showdown on the Doklam Plateau — known as Donglong in
Chinese — reflects the increasingly bitter rivalry between the two
Asian neighbours, whose relations have deteriorated despite efforts to
reset ties and foster stronger economic relations.

“Doklam is not about a road,” wrote Praveen Swami, the strategic
affairs editor of the Indian Express newspaper. “It is a message about
China’s ire at India building alliances with its adversaries in Asia,
and with the US. Beijing seeks, through the threat of force, to
instruct India on how countries ought to conduct themselves.”

For its part, New Delhi is wary of what it sees as China’s efforts to
encircle India by increasing its influence over India’s neighbours,
including its rival Pakistan. New Delhi is also anxious about China’s
efforts to court Bhutan, whose international relations are in effect
controlled by India, to the growing resentment of some Bhutanese.

Zhang Ye, a fellow of the PLA’s Naval Research Institute, wrote that
the stand-off was a “geopolitical competition in the disguise of a
border dispute”, and would enable India to increase its military
presence in the tiny Buddhist kingdom. “India is making use of Bhutan
to increase its geo-advantage over China,” he wrote.

Conclusions

.@NarendraModi is boxed in by his right wing and Xi Jinping is giving
him the Come-On.

A handful of big technology companies are becoming the next William
Randolph Hearst and Walt Disney: They wield enormous power over what
news and entertainment get made.

With Mr. Peña Nieto, Mr. Trump repeatedly threatened to impose a stiff
border tax to keep out Mexican products and complained about “pretty
tough hombres” who were bringing so many drugs over the border that
they had even made New Hampshire “a drug-infested den.” The biggest
point of contention came as the president insisted that the Mexican
president stop saying publicly that he would not pay for the wall that
Mr. Trump had promised to build on the border between the two
countries.

“If you are going to say that Mexico is not going to pay for the wall,
then I do not want to meet with you guys anymore because I cannot live
with that,” Mr. Trump said.

Fresh from his inauguration, he had his campaign victory on his mind,
boasting to Mr. Peña Nieto that “no one got people in the rallies as
big as I did” and to Mr. Turnbull that “they said I had no way to get
to 270” votes in the Electoral College “and I got 306.” He buttered up
Mr. Peña Nieto, telling the interpreter on their call that “he speaks
better English than me,” suggesting that the Mexican president would
be so popular that the Mexican people will amend their constitution to
allow him to run again and declaring that “it is you and I against the
world, Enrique, do not forget''

“We find this completely unacceptable for Mexicans to pay for the wall
that you are thinking of building,” Mr. Peña Nieto told Mr. Trump,
explaining how precarious his position was at home. “I would also like
to make you understand, President Trump, the lack of margin I have as
president of Mexico to accept this situation.”

Mr. Trump too was conscious of his own position: “On the wall, you and
I both have political problem. My people stand up and say, ‘Mexico
will pay for the wall,’ and your people probably say something in a
similar but slightly different language. But the fact is we are both
in a little bit of a political bind because I have to have Mexico pay
for the wall. I have to. I have been talking about it for a two-year
period.

“This is a stupid deal,” Mr. Trump said. “This deal will make me look terrible.”

“Mr. President, I think this will make you look like a man who stands
by the commitments of the United States.”

Mr. Trump was not buying it. “O.K., this shows me to be a dope,” he
said. “I am not like this but if I have to do it, I will do it, but I
do not like this at all.”

He said that he worried that the terrorists like those who killed
Americans in Boston, San Bernardino and New York could be admitted to
the country: “I am going to get killed on this thing.”

“You will not,” Mr. Turnbull insisted.

“Yes, I will be seen as a weak and ineffective leader in my first week
by these people. This is a killer.”

On his fifth day on the job as Donald Trump’s new chief of staff, John
Kelly gathered about 200 White House aides for a meeting where he
spelled out in blunt terms the way things are going to work in the
West Wing he now oversees.

The retired Marine Corps four-star general said he didn’t care whether
they had been part of the Trump campaign or had joined the
administration from Capitol Hill or another corner of the political
world, according to people who attended the meeting. They all work for
the president now, he told them, and they had to act as one team.

In his first week, Kelly also quickly moved to take control of the
door to the Oval Office. His predecessor, Reince Priebus, seemed
unable to stop White House staffers from popping in unannounced to see
the president -- dropping news articles on his desk that he would love
or hate, sharing ideas for tweets, or just getting valuable face time
with the boss. Trump, who’s known to be easily distracted, would
wave-in the visitors, even as his scheduled appointments sometimes
backed up. Kelly insists that anyone who wants to see the president
now must go through him.

Perhaps even more important, Kelly is testing his authority to tame
Trump’s sometimes reckless tweeting habits. While Kelly isn’t vetting
every presidential tweet, Trump has shown a willingness to consult
with his chief of staff before hitting “send” on certain missives that
might cause an international uproar or lead to unwelcome distractions,
according to three people familiar with the interactions. Kelly has
been “offering a different way to say the same thing,” the person
said.

The United Nations Security Council unanimously imposed new sanctions
on North Korea on Saturday that could slash by a third the Asian
state’s $3 billion annual export revenue over its two intercontinental
ballistic missile tests in July.

The US-drafted resolution bans North Korean exports of coal, iron,
iron ore, lead, lead ore and seafood. It also prohibits countries from
increasing the current numbers of North Korean laborers working
abroad, bans new joint ventures with North Korea and any new
investment in current joint ventures.

“We should not fool ourselves into thinking we have solved the
problem. Not even close. The North Korean threat has not left us, it
is rapidly growing more dangerous,” US Ambassador to the United
Nations Nikki Haley told the council.

FAR away in distant lands lies the Hermit Kingdom. This land is ruled
by The House of Kim and its capital is Pyongyang. The first and
‘Eternal’ President was Kim Il-sung and his successor Kim Jong-il
whose designated successor is Kim Jung-un.

They all have had tiny little hands like the Elves in the Elves and
the Shoemaker. And this country has nuclear weapons and on its border
with its neighbour South Korea sit 25,000 American soldiers.

Euro 1.1787
Dollar Index 93.41
Japan Yen 110.72
Swiss Franc 0.9722
Pound 1.3054
Aussie 0.7934
India Rupee 63.705
South Korea Won 1127.14
Brazil Real 3.1317
Egypt Pound 17.7520
South Africa Rand 13.4098

U.S. crude #oil futures settle at $49.58/bbl. ⬆$0.55. +1.12%. @Lee_Saks

Frontier Markets

The Democratic Green Party of Rwanda’s candidate, Frank Habineza, had
0.45 percent, and the only other contender, Philippe Mpayimana, an
independent, garnered 0.72 percent.

Ethiopia has lifted a 10-month state of emergency imposed to quash
anti-government protests across the country that left hundreds of
people dead.

The restrictions on movement, gatherings and access to media were
initially imposed for six months and then extended, albeit in diluted
form.

The protests and the imposition of the state of emergency tarnished
Ethiopia’s reputation as a fast-growing and secure country that had
been a darling of the international investment community for the
previous decade.

Befeqadu Hailu, who has been detained several times in recent years
for his anti-government views, believes lifting the state of emergency
will make little difference to people’s lives in a country where there
is little tolerance of opposition views.

“The government used to do what it has done in the state of emergency
even before it was declared,” said Mr Hailu. “So I don’t see any
chance of it not doing so in the future. It’s more public relations
than a relief to society.”

The leaders of Tanzania and Uganda laid a foundation stone on Saturday
for the construction of a $3.55 billion-crude export pipeline that
would pump Ugandan oil for international markets.

The 1,445 km-project - set for completion by 2020 - will stretch from
landlocked Uganda's western region, where crude reserves were
discovered in 2006, to Tanzania's Indian Ocean seaport of Tanga.

The project will become "the longest electrically heated crude oil
pipeline in the world," said Guy Maurice, Senior Vice President of
Africa at Total Exploration and Production.

The SACP has 17 members in parliament who back the ruling African
National Congress because the two parties are in a political alliance,
together with the Congress of South African Trade Unions. The SACP
can’t join the opposition, which has an agenda to dislodge the ANC,
the website reported, citing Alex Mashilo, a spokesman for the party.

The Democratic Alliance, the biggest opposition party, filed the
no-confidence motion in April after Zuma’s decision to fire Pravin
Gordhan as finance minister prompted two ratings companies to
downgrade the nation’s foreign-currency debt to junk. While Zuma faces
mounting opposition within the ANC, only a handful of its lawmakers
have publicly said they will defy a party instruction and vote for his
ouster.

ECONOMIC WEEK AHEAD: Moody’s scheduled to give ratings update


Dollar versus Rand 6 Month Chart INO 13.4098
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt Pound versus The Dollar 3 Month Chart INO
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Nigeria All Share Bloomberg +39.26% 2017
http://www.bloomberg.com/quote/NGSEINDX:IND

Ghana Stock Exchange Composite Index Bloomberg +34.30% 2017
http://www.bloomberg.com/quote/GGSECI:IND

In a corner of Kibera, a large informal settlement clinging to muddy
slopes in the heart of Nairobi, men hawk illegal charcoal by the side
of the red-mud alleyways that criss-cross Kenya’s biggest slum. Kids
play football with a half-inflated ball. Nearby a group of men engage
in an animated discussion about Tuesday’s presidential, legislative
and local elections in a country where politics is part national sport
and part deadly obsession.

There is a lot to discuss. Kibera is awash with rumours about recent
events. In the past few days, the man in charge of the electoral
commission’s technology system has been found dead, apparently
tortured; the opposition has accused the ruling party of plotting to
use the army to rig the election, a claim virulently denied; and a
house belonging to the president’s running mate became the scene of an
18-hour gun battle. If democracy is war by other means, then in Kenya,
home to one of the continent’s most fiercely contested political
cultures, sometimes it is hard to tell the difference.

Kenya’s elections are among the most important in Africa partly
because, despite its searing inequalities, the country is considered
an African success story. It has a diverse economy, visibly improving
infrastructure and one of the continent’s most tech-savvy and
entrepreneurial business classes. Multinationals, including General
Electric, Google, KPMG and Bayer, have made their regional hub in
Nairobi, a city where buildings spring up daily and new cars clog the
highways. China has poured money in too, helping to build roads and a
$4bn railway connecting Nairobi to coastal Mombasa. The country was a
pioneer of mobile money, an idea that is sweeping Africa.

Quinta Atiano, who lives in one of the tin-roofed dwellings that crowd
Kibera, says: “We have no problem so long as the elections are free
and fair. Violence will only come if this election is rigged.”

Like many in Kenya, Ms Atiano fears the chances of rigging are high.
Raila Odinga, the 72-year-old leader of the opposition National Super
Alliance, has spent months telling his supporters that he can lose
only if the vote is stolen. Claiming that he has been cheated of the
presidency twice before, this time he vows to topple Uhuru Kenyatta,
55, who won the contest last time round in a disputed result in which
he cleared the 50 per cent hurdle by a tiny margin.

Patrick Gathara, a political cartoonist and blogger, likens Kenyan
democracy to insanity, in which people take the same action every five
years, by going to the polls, yet expect a different outcome. In
reality, he says, the system stays the same, with the elites looking
after their own interests. “Politics in Kenya is like a soap opera. It
allows people to forget their real problems.”

There are other differences this time round, too, including the
increasing importance of a plugged-in, urbanised youth. Of Kenya’s
nearly 20m registered voters, more than half are under 35 and most of
the estimated 5m registered first-time voters are under 25, Mr Odinga
said in an interview with the Financial Times. “The youth are the ones
who are going to bring change,” he says. “The youth are no longer so
ethnically inclined.”

National polls, of varying reliability, barely separate Mr Odinga from
Mr Kenyatta, though political analysts say the benefits of incumbency
plus a five-year term characterised by heavy capital investment, tip
the scales in Mr Kenyatta’s favour. It is the seeming presumption of
victory by both sides that raises the spectre of violence.

Monetary authorities in Nairobi have been cracking down on selling,
hedging and even making bearish predictions, according to traders and
analysts. In a sign of the skittishness, none of 12 market
participants contacted by Bloomberg spoke on the record, citing
possible retaliation.

“There’s a hush-hush rule on traders: Either talk up the shilling, or
shut up,” said Kwame Owino, chief executive officer of the Institute
of Economic Affairs, an independent research institute based in
Nairobi that tracks Kenyan economic policy and financial markets.
“This kind of pressure isn’t sustainable, especially when you have an
open trading system. It will end in tears.”

The shilling is officially a free-floating currency, but it’s barely
budged for months, with volatility falling to a third of the average
for the benchmark emerging-market currency index last month. Traders
say Yale University-educated central bank Governor Patrick Njoroge, in
his post for two years, and deputy Sheila M’Mbijjewe have made their
desires clear that traders shouldn’t speculate.

Still, some traders shared stories of being summoned, along with their
bosses, to the central bank headquarters in Nairobi and getting
reprimanded for publicly speaking about possible shilling weakness in
public or for conducting trades that might hurt the currency. The
traders said they are keeping a low profile to avoid putting their
jobs at risk because their bosses don’t want to attract the wrath of
the central bank.

For instance, they said the central bank is asking local banks to
justify all hedging contracts arranged for clients wanting protection
against future shilling declines. To avoid the hassle, some exporters
are opting not to take any protection at all, three traders said.

Treasury Secretary Henry Rotich said Kenya’s debt, estimated by the
International Monetary Fund at 54 percent of gross domestic product
last year, is “sustainable” and only a sharp depreciation in the
currency would alter that view.

“If the shilling depreciated by a huge margin, it would impact on debt
repayments,” Rotich said in a July 31 phone interview. “But for us, it
is a significant depreciation that will have an impact and by
significant, I mean by a magnitude of 20 percent. If the dollar goes
beyond 120 shillings, for example, that is when it will have a big
impact on our debt.”

“What we need to ask ourselves is this: Will this escalate into a
crisis and will that crisis lead to a very big slide? I fear that is
what will happen,” Owino said.

“The man on the street has found themselves worse off rather than
better off. This is a conundrum the incumbent party is rowing
against,” says Aly Khan Satchu, a Nairobi-based financial analyst.

“Kenyans really don’t know what the truth is.”

The winner of Kenya’s presidential elections on Tuesday is likely to
be determined by voting in just nine of the country’s 47 counties,
where the two main candidates are battling for dominance.

President Uhuru Kenyatta’s ruling Jubilee Party and his main rival,
opposition leader Raila Odinga, have roughly equal support in 38 of
the East African nation’s counties, according to data provided by
pollster Infotrak and risk analysts Control Risks. Jubilee is ahead in
five of the battleground counties, while support for Odinga’s National
Super Alliance, a five-party coalition, dominates in four, data from
the two companies, Ipsos Kenya and Verisk Maplecroft show.

The newly enfranchised youth vote is a big absolute number of first
time voters, and is a very big curve ball. Is this youth vote turned
on? Will it turn out? And how will it vote?

Moving the dial a few percentage points might make all the difference.

Nairobi All Share Bloomberg +18.62% 2017
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Safaricom Ltd. of Kenya plans to introduce an e-commerce platform
within eight months targeting formal retail and informal online
trading in East Africa’s biggest economy, directors at the company
said.

Known as Masoko, Swahili for markets, it will offer products ranging
from electronics to beverages and cosmetics, and provide a tool for
people currently buying and selling goods on social-media platforms
such as Facebook, Director of Enterprise Business Rita Okuthe said in
an interview. The portal is currently undergoing in-house testing,
Safaricom Chief Executive Officer Bob Collymore said.

“This offering will not be holding inventory and neither will it be an
anyone-can-sell arena,” Collymore said in an interview in the capital,
Nairobi. “Safaricom is carefully screening all the merchants before
giving them access to the platform.” Okuthe said the goal was to
become “a little bit more” than an African equivalent of Amazon.com
Inc.’s Marketplace.

Safaricom is looking for ways to build on the success of M-Pesa, its
mobile-phone money transfer service that dominates the Kenyan economy
and is used by subscribers to pay for everything from utility bills to
groceries and gasoline. The company accounts for 75 percent of the
country’s 40.6 million Internet users, while M-Pesa handled 432.5
billion shillings ($4.2 billion) of mobile commerce transactions in
the first quarter, more than half the total 627.5 billion shillings
($6.04 billion), according to data published by the industry
regulator.

Safaricom, based in Kenya’s capital, Nairobi, is mulling partnerships
with logistics companies and could use global positioning systems to
make deliveries in the absence of a national addressing system, Okuthe
said. It’s aiming to cut delivery times from the current 72-96 hours,
she said.

The platform could potentially be used by services including Africa
Internet Group’s Jumia, Kilimall International and OLX, a unit of
Johannesburg-listed Naspers Ltd. in the first phase of operations,
according to Okuthe.

“If you look at Facebook and Instagram, there’s a lot of
online/offline selling that happens and one of the reasons why they’re
popular in Kenya is because small-scale, middle-scale merchants use it
as a sales tool,” Okuthe said. “What we are going to be doing is
formalizing that. At least five in 10 Kenyans have bought something
they first saw online.”

The company will work with manufacturers and farmers looking for
direct market access and reduce supply-chain inefficiencies including
transportation costs and poor infrastructure, Okuthe said.

M-Pesa will be among a number of payment methods including other
online wallet services and cards by Visa Inc. and Mastercard Inc.
Safaricom plans to roll out Masoko by the end of March, and later
expand the platform beyond Kenya, Okuthe said, without specifying what
other markets the company is considering.

“We have some very big ambitions in terms of how big we want to scale
and wherever we want to go,” Okuthe said.

The consensus is that KQ is in dire straits with only two options at
its disposal; a complex balance sheet restructuring or close the
airline, sell its assets and cherish the Pride of Africa’s good
memories.
However, for now at least, the National Treasury is not keen on
playing mortician but it is also unwilling to pump in more taxpayer
funds into the airline it affectionately describes as a “strategic
national asset.”
“As a major shareholder (government owns 26.7 per cent of KQ), we are
keen to secure the airline’s future and ensure it has a healthy
liquidity profile and remains operational,” Henry Rotich, the National
Treasury Cabinet secretary, is quoted as saying.
The government’s answer to this financial quandary — saving the
airline without spending a dime — has birthed a complex restructuring
plan whose details have been drip-released to the public in recent
weeks.
After a year or so of combing through the numbers and tens of meetings
between KQ officials, the airline’s creditors and major shareholders
KLM and the Treasury, it was announced that the government would be
guaranteeing Sh77.3 billion in loans.
In exchange for offering this guarantee cushion, the Treasury got the
lenders to commit to new concessions — including extending the loan
tenure and reducing interest payable every cycle in order to give KQ
some breathing space.
Local lenders have also committed Sh18.1 billion in new credit to KQ
to principally secure aircraft engines refurbishment.
But how did KQ amass this large amount of debt? The money is
collectively owed to international lenders — Barclays Bank Plc,
Citibank and JP Morgan —and 11 local banks.
The US banks, through the Export-Import Bank of the United States of
America (US Exim), lent KQ Sh54.07 billion to finance the
aforementioned acquisition of aircraft, which also served as the
facility’s security.
This asset safety net has now been transferred to the Treasury with KQ
noting that the value of the aircraft in question is “greater than the
level of the debt that is subject to the government guarantees.”
Local lenders had more appetite for risk, unwavering in their
short-term unsecured support to the airline despite its evident bad
health — KQ has recorded losses for five successive years since 2013.
During this period, these banks increased their advances to the
airline by over four times from Sh5.3 billion to Sh23 billion, which
is now being guaranteed by the Treasury.
READ: Eleven banks get Sh23bn Kenya Airways shares in bailout plan
KQ owes Equity Bank  Sh5.2 billion, National Bank  (Sh3.5 billion),
Co-operative Bank  (Sh3.3 billion), CBA Group (Sh3.1 billion), and
Sh2.1 billion each to NIC Bank , DTB  and KCB Group , according to
documents seen by the Business Daily.
I&M Bank and Ecobank are claiming Sh824 million each from the
cash-strapped airline, while Chase Bank and Jamii Bora Bank are owed
Sh721 million and Sh412 million respectively.
KQ also owes the government Sh27 billion, a tab taxpayers picked up
after an interesting series of transactions. The Treasury, in May
2015, and with Parliament’s approval, lent KQ Sh4.2 billion to help
the struggling airline meet its obligations, including paying staff
salaries.
This shareholder loan matured a year later but the airline is yet to
wire a single shilling to the Treasury, instead channelling any free
cash to more demanding creditors who have made a beeline for its
finance office.
In September 2015, the government guaranteed a Sh20.6 billion
short-term credit from the African Export-Import Bank (Afreximbank),
payable by 2018.
The Treasury silently took up this obligation at some point in the
year to March 2017, perhaps appraised of the reality that KQ was never
going to meet the fast-approaching repayment deadline.
These obligations — when lumped together with those owed to other
types of creditors including lessors — pile up to about Sh242 billion.
KQ’s financial tribulations are huge and it is clear why the national
carrier is struggling to meet its commitments. The balance sheet
reorganisation will unlock “cash-flow relief” of Sh37 billion over
five years — through tenure adjustments — and reduce its total debt
exposure by Sh51 billion.
The plan will also leave KQ in a positive equity position of Sh11.8
billion from the current negative Sh44.9 billion. This is just a small
part of the intricate plan that has been developed by several firms
including PTJ Partners (restructuring advisor) and White & Case
(international counsel) with Mbuvi Ngunze, former KQ chief executive
as lead advisor.

Par Value:                  1/-
Closing Price:           23.75
Total Shares Issued:          378865102.00
Market Capitalization:        8,998,046,173
EPS:             1.12
PE:                 21.205

The largest marketing services company in East Africa.

H1 Revenue 1.998379b vs. 2.570570b -22.259%
H1 Operating and administrative expenses [1.898301b] vs. [2.397632b] -20.826%
H1 Other income 9.693m vs. 17.780m -45.484%
H1 Net interest income 140.198m vs. 237.860m -41.059%
H1 Foreign exchange loss [5.489m] vs. [33.508m] -83.619%
H1 Profit before tax 244.480m vs. 395.070m
Basic and diluted EPS 0.39 vs. 0.66 -40.909%
No interim dividend

Company Commentary

Revenue decreased by 22% over the corresponding prior year period to 2.0b
The reduction was in line with budget and was driven by 1 Pan-African
client significantly reducing their level of marketing spend across
the region plus reduced scope of work with several other clients and
with our core client in Gabon.
A 21% reduction in operating expenses
EPS declines 42% to 0.39
While the Group has seen significant revenue pressure in H1 2017, this
was compounded further by the strong comparative period in 2016.
We expect revenues to be stronger in H2
No interim dividend.

Conclusions

Soft H1 Earnings.

Par Value:                  2.50/-
Closing Price:           21.50
Total Shares Issued:          699949068.00
Market Capitalization:        15,048,904,962
EPS:             4.7
PE:                 4.574

Kenya Reinsurance Corporation Ltd H1 2017 results through 30th June
2017 vs. 30th June 2016
H1 Gross written premiums 7.504451b vs. 7.096326b +5.751%
H1 Net written premium 7.331968b vs. 6.718950b +9.124%
H1 Net earned premium 7.089182b vs. 6.475500b +9.477%
H1 Investment income 1.671447b vs. 1.720906b -2.874%
H1 Total income 8.805540b vs. 8.224865b +7.060%
H1 Claims and policyholder benefits [3.617066b] vs. [3.555123b] +1.742%
H1 Net claims and policyholder benefits [3.607150b] vs. [3.549674b] +1.619%
H1 Cedant acquisition costs [2.101120b] vs. [1.905152b] +5.399%
H1 Total outgo [6.511216b] vs. [6.012590b] +8.293%
H1 Profit before tax 2.294324b vs. 2.212275b +3.709%
H1 Profit for the period after tax 1.622097b vs. 1.564088b +3.709%
EPS 2.32 vs. 2.23 +4.036%
Total Shareholders’ Funds 25.908013b vs. 24.133297b +7.354%
Total Assets 40.736039b vs. 38.494310b +5.824%
Cash and cash equivalents at the end of the period 5.459451b

Conclusions

Plenty of headroom for the price off a PE pf 4.574.

Par Value:                  5/-
Closing Price:           320.00
Total Shares Issued:          19600000.00
Market Capitalization:        6,272,000,000
EPS:             28.7
PE:                 11.150

H1 Sales 547.277m vs. 437.347m +25.136%
H1 Gains arising from changes in fair value less cost to sell of
non-current biological assets 20.000m vs. 19.054m +4.965%
H1 Cost of production [460.210m] vs. [381.361m] +20.676%
H1 Gross profit 107.067m vs. 75.040m +42.680%
H1 Distribution costs [52.207m] vs. [53.978] -3.281%
H1 Operating profit 58.477m vs. 23.829m +145.403%
H1 Finance income 46.985m vs. 39.748m +18.207%
H1 Profit before income tax 105.462m vs. 63.577m +65.881%
H1 Profit for the period 73.203m vs. 45.388m +61.283%
Basic and diluted EPS 3.73 vs. 2.32 +60.776%
Total Equity 3.801861b vs. 3.323285b +14.401%
Cash and cash equivalents at the end of the period 1.143772b vs.
731.663m +56.325%
No interim dividend

Conclusions

Strong Results led by Avocados.

 
3,775.89 +2.37 +0.06%

There was an interesting report carried by Bloomberg today captioned
''Kenya's central bank is taking an unusual approach to protecting its
currency: intimidation''
“There’s a hush-hush rule on traders: Either talk up the shilling, or
shut up,” said Kwame Owino, chief executive officer of the Institute
of Economic Affairs.
“This kind of pressure isn’t sustainable, especially when you have an
open trading system. It will end in tears.”
“What we need to ask ourselves is this: Will this escalate into a
crisis and will that crisis lead to a very big slide? I fear that is
what will happen,” Owino said.
I actually disagree with Mr. Owino. The Shilling is freely
convertible, this is the overarching point at a time when so many
Countries have placed restrictions.
I believe Remittances [which is our biggest FX Earner now] is in fact
undercounted by about half, further supporting the Shilling.
Therefore, I for one, see the Shilling whilst carrying a residual
aysmettric downside risk [if we revisit 2007] will once again surprise
as it has surprised all the Naysayers.
Kenya Shilling was trading at 103.975 versus the Dollar.
The NSE closed firm ahead of tomorrow's General Election.
A win for President Kenyatta would translate into a further and sharp
rerating higher.

Kakuzi reported First Half Earnings where H1 Sales clocked a +25.136%
surge, H1 Profit after Tax rallied +61.283% and H1 Earnings Per Share
clocked 3.73 +60.776%. On 8th May 2017, I wrote ''Avocados [which are
not in the commodity basket] have found an off-ramp and are at
all-time highs'' The Kakuzi results were seriously juiced by the
Avocado component of Kakuzi's product range. I continue to see Avocado
prices in a steep price uptrend and therefore remain bullish the
Kakuzi share price. Counterintuitively, after such muscular Earnings,
Kakuzi traded 1,500 shares all at 305.00 -4.69%. Kakuzi is +1.94% in
2017 and has plenty of upside scope.

WPP ScanGroup reported soft H1 Earnings where H1 Revenue clocked a
22.259% decline and H1 EPS declined -40.909%. WPP ScanGroup said in
their accompanying commentary;

''The reduction was in line with budget and was driven by 1
Pan-African client significantly reducing their level of marketing
spend across the region plus reduced scope of work with several other
clients and with our core client in Gabon''

WPP ScanGroup closed unchanged at 23.75 and is +30.85% in 2017 and
that looks stretched.

Bloomberg carried an article captioned ''Safaricom Sees Amazon as
Model for Kenya E-Commerce Platform'' Known as Masoko, Swahili for
markets, it will offer products ranging from electronics to beverages
and cosmetics, and provide a tool for people currently buying and
selling goods on social-media platforms such as Facebook, Director of
Enterprise Business Rita Okuthe said in an interview.

“This offering will not be holding inventory and neither will it be an
anyone-can-sell arena,” Collymore said in an interview in the capital,
Nairobi. “Safaricom is carefully screening all the merchants before
giving them access to the platform.” Okuthe said the goal was to
become “a little bit more” than an African equivalent of Amazon.com
Inc.’s Marketplace.

I have been mentioning that Safaricom was imminently making a move on
E-Commerce and I see it as a Game-Changer. Safaricom closed unchanged
at 23.50 and sits pretty at +27.78% on a Total Return basis in 2017.

Kenya Airways shareholders voted to approve a financial restructuring
plan to create new shares and convert debt into equity at a special
meeting on Monday. The plan is essential for the indebted airline to
continue operating and return to profit, Michael Joseph, chairman of
the board, told shareholders before they voted overwhelmingly to back
the plan. Kenya Airways rallied +3.571% to close at 4.35 and was
trading at limit up 4.60 +9.52% at the finish line.

Uchumi rallied +7.24% to close at 3.70 and traded 514,100 shares.

Kenya_Re reported a +4.036% increased in  H1 2017 Earnings per share.
Kenya Re said ''The first half of 2017 has presented its own set of
challenges with the most prominent being premium undercutting within
the Kenyan market'' Kenya Re is a cheap share on a Trailing P/E of
less than 5. Kenya Re rowed back 25cents to close at 21.25 on light
trading

KenGen rallied +1.8% to close at 8.50 and sits +46.55% in 2017 and
probably heads to 10.00.
KPLC rallied +3.571% to close at 8.70.

Crown Berger [which is +78.57% in 2017] traded 1.626m shares all at
75.00 unchanged. Crown Berger trades on a PE Ratio 40.451, which is
seriously excessive unless Crown is now an Amazon or a Netflix.

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