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Thursday 17th of August 2017 |
Morning Africa |
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The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke
Macro Thoughts |
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Shorting the Dollar Becomes a Very Crowded Trade Africa |
Being bearish the dollar is the second most crowded trade across markets, according to respondents in Bank of America Merrill Lynch Global Research’s August fund manager survey. The sentiment reflects just how much expectations for the greenback have shifted this year. From December to April, investors said being long the greenback was the single most overcrowded trade. Now, hedge funds and other large speculators are betting the dollar is poised for further declines, amassing the biggest net-short position in more than four years, CFTC data show.
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"History is the angle at which realities meet." - Don DeLillo, End Zone Africa |
Home Thoughts
“I had not yet learned to appreciate the slowly gliding drift of identical things; chunks of time spun past me like meteorites in a universe predicated on repetition.” ― Don DeLillo, End Zone
“The pattern match begins with a search for a substring of a given string that has a specified structure in the string manipulation language” ― Don DeLillo, End Zone
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"Wait a minute, I'm not finished. I'm not finished, Fake News," President Donald Trump said at a press conference, on Tuesday. Law & Politics |
Trump began by asking if the reporter was talking about the same Senator McCain who had voted against his side on Obamacare, and then continued by asking, “What about the alt-left that came charging at the, as you say, the alt-right? Do they have any semblance of guilt? Let me ask you this: What about the fact that they came charging with clubs in their hands, swinging clubs, do they have any problem? I think they do.” This was a repeat of the first comment he had made, on Saturday, in reaction to Charlottesville, placing undifferentiated blame on “many sides,” never mind the swastikas. He had revised that, on Monday, with a grudgingly delivered statement of what ought to have been obvious: that white supremacy and Nazism are bad ideologies. Now, in a couple of lines, he had tossed that aside, like an ill-fitting suit. But, as he said, he wasn’t finished. Trump kept talking, in louder, uglier terms.
“You had a group on one side that was bad and you had a group on the other side that was also very violent. And nobody wants to say that. But I’ll say that right now.” The bad group was the white nationalists; the “very violent” group was those who had come to object. In case anyone missed his point, he continued, “You had a group on the other side that came charging in—without a permit—and they were very, very violent.” Trump wasn’t putting the two sides on the same level; he was saying that the counter-protesters were worse. His outrage at the counter-protesters’ lack of a permit stood out all the more, given that he had spent the beginning of the briefing, which was meant to be about infrastructure and was held in the lobby of Trump Tower, complaining about how permits slowed down him and other builders.
As this story has played out, what has been striking is how put upon the President has seemed to feel when asked to condemn neo-Nazis. At the press conference, he kept insisting that this was a matter of being responsible—all the facts weren’t in yet. All the facts still aren’t in, but the swastikas and the Confederate flags were out from the first moment. The only way Trump wouldn’t have seen them is if he didn’t want to or didn’t care, or perhaps he viewed them with political opportunism, emblems of a base to be catered to. All those explanations—that he is indifferent; that he is calculating—remain on the table.
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Trump's comments "will not appease his enemies and they will not discourage his supporters." @BV Law & Politics |
And so it is with Trump. You may demand he condemn Nazis and eventually he might, half-heartedly -- but nothing will change in the real world. Trump will continue to retweet white supremacist trolls. He will continue to listen to Steve Bannon, the dark lord of the alt-right. He will return to what he really feels the moment the teleprompter is turned off. And his White House’s policies will continue to be dog-whistles to the kind of people who marched and killed in Charlottesville.
Everyone knows when Trump’s words mean something and when they mean nothing. On Tuesday, at Trump Tower, they meant something. On Monday, at the White House, they meant nothing. The day that Bannon is fired, that Trump unfollows and stops retweeting white nationalist trolls, that he gives up on his dumb wall -- perhaps then we can take any statements from him condemning Nazis seriously. Till then, stop asking him to make them.
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If a top Trump aide leaves, it could 'start a run on the bank' AXIOS Law & Politics |
A West Wing confidant tells us: "The danger for Trump now is that one senior resignation will start a run on the bank" — as soon as one top staffer quits, several others could follow. White House Chief of Staff John Kelly, exhausted and dismayed, was shown in iconic TV shots with his head hanging during Trump's blast. He's building a more rigorous system for the staff, but it's not taking with the president.
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TRUMP'S NEW COMMUNICATIONS DIRECTOR WILL LET HIM DO THE TALKING @VanityFair Law & Politics |
Hope Hicks may be the only person outside of Jared and Ivanka to truly understand that you can’t control Trump.
Frequently operating without a clear leader, the White House communications team has struggled to control Trump’s messaging—which is, it seems, the way he prefers it. Hence the strategic appointment of Hope Hicks, the 28-year-old Trump aide who has risen from campaign staffer to one of the president’s closest confidantes. The Daily Caller was the first to report that Hicks, who previously served as White House director of strategic communications, would step into Scaramucci’s shoes.
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OPEC The Cartel's Last Stand? @gadfly Commodities |
Since its creation more than half a century ago, OPEC has become the textbook case of a successful cartel. The 14-member club of crude exporters, which pumps 40 percent of the oil used every day, has held immense sway over the price of a critical commodity — and the global economy. OPEC’s obituary has been written many times, as waves of new technologies and petroleum discoveries upended the global energy trade. Yet the Organization of Petroleum Exporting Countries has just as often defied its critics. It’s facing a new fight for survival as the U.S., once its biggest customer, unleashes record supplies of shale oil and the planet turns to renewable energy. The group is deploying its most trusted tool — cutting output to boost prices — but whether such tactics can still succeed is unclear.
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Zinc surged as much as 2.4 percent to $3,029 a ton on the London Metal Exchange, the highest level since 2007 Commodities |
Zinc surged as much as 2.4 percent to $3,029 a ton on the London Metal Exchange, the highest level since 2007, and traded at $3,023 at 10:47 a.m. in London. Aluminum gained as much as 1.3 percent to $2,075.50 a ton, the most since November 2014, while nickel, copper and lead all traded higher.
Base metals rallied to a two-year high last week, as tracked by the LMEX Index, amid better-than-expected demand in China and a weakening dollar. The Chinese government is stepping up moves to shut illegal plants this year, both to cut excess capacity and strengthen efforts to protect the environment.
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Zimbabwe Seeks Immunity in South Africa for Grace Mugabe Africa |
Zimbabwe’s government has requested diplomatic immunity in South Africa for President Robert Mugabe’s wife Grace Mugabe after a charge of assault was laid against her.
“Mrs. Mugabe’s legal team has asked for diplomatic immunity and the request is under consideration,” Clayson Monyela, spokesman for South Africa’s Department of International Relations and Cooperation, said by phone on Wednesday. “It will be considered by our political principals.”
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Angola's UNITA open to coalition of opposition parties after election Africa |
Angola's UNITA is willing to form a coalition government with other opposition parties after elections next Wednesday if the ruling MPLA party loses power for the first time since independence in 1975, its presidential candidate said.
The National Union for the Total Independence of Angola (UNITA) won just 18 percent in the last election in 2012 and the People's Movement for the Liberation of Angola (MPLA) won a landslide 72 percent.
But with Angola in the midst of an economic crisis caused by a fall in oil prices, the opposition is hoping to grow its tally, though a lack of credible polling in the country makes the result unpredictable.
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Congo's President Denis Sassou Nguesso admitted Monday that his oil-rich country was facing a serious economic crisis Africa |
Congo’s President Denis Sassou Nguesso admitted Monday that his oil-rich country was facing a serious economic crisis, though he said it was not an “irreparable disaster”.
He notably called on former rebel chief Frederic Bitsamou, leader of the so-called Ninja rebel group and accused of violence against communities in the south of the country, to turn himself in to the authorities.
The public debt of Congo, a small central African country of 4.5 million people, represents 117 percent of its GDP, according to the International Monetary Fund, which recently said that Brazzaville had hidden part of its debt from the IMF.
“Our country has real difficulties, nobody should hide them,” Sassou Nguesso said in a speech broadcast on the 57th anniversary of the country’s independence.
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This Bank's Stock Price Has Jumped 50,000% Since 2002 Africa |
Nothing, outside a financial-market collapse on the scale of the Great Recession, can faze Capitec Bank Holdings Ltd.
The lender’s stock has gained in all but one of the years since it began trading in February 2002, jumping more than 50,000 percent, the most among banks across emerging markets during that period. Even as South Africa battles an economy ravaged by political unrest, the shares have climbed 24 percent this year, about nine times the rate peers on the FTSE/JSE Africa Banks Index.
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Kenya's opposition is heading to court to contest the election's result Quartz Africa Kenyan Economy |
Kenya’s opposition leader Raila Odinga said he will challenge the results of the general election at the Supreme Court, standing by his claims that the electoral system was hacked and the results rigged in president Uhuru Kenyatta’s favor. In a press conference in the capital Nairobi, Odinga questioned the electoral commission’s tallying process, and termed Kenyatta’s re-election as “null and void.”
“We have now decided to move to the Supreme Court and lay before the world the making of a computer generated leadership,” Odinga, flanked by members of his NASA coalition, said.
In the much-anticipated speech, Raila condemned the government’s heavy-handed response to opposition protesters and the recent closure of civil and human rights organizations. Kenyans, he added,”are being told not to protest against a leader they believe is being imposed on them through computer-generated fraud,” Odinga said. “We refuse to sit and watch Jubilee turn our country into a banana republic and a playground.”
More than 15 million Kenyans voted in the Aug. 8 polls, delivering a resounding victory for president Uhuru Kenyatta who won by over 54% to Odinga’s 44.7%. But as the results started trickling in on the evening of the vote, Raila and his NASA coalition held a press conference at 2 am in the morning calling the results “fake” and “fictitious.” They later claimed that the voting system was hacked in the president’s favor, and called it an “attack on our democracy.”
In his speech on Wednesday (Aug. 16), Odinga called on Kenyans to exercise civil disobedience and for “all African democrats” to show solidarity with Kenyans. “We shall hold vigils, moments of silence, beat drums and do everything else to peacefully draw attention to the gross electoral injustices being meted on our country,” Odinga said. “We will not accept and move on.”
Conclusions
I believe the ''We got him'' document was a Plant and therefore, to make an argument on the basis of that document is untenable. This is now absolutely a Fait Accompli.
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14-AUG-2017 :: Finding the Off-Ramp. @TheStarKenya Kenyan Economy |
What we have learnt is that 5%-6% GDP growth (whilst better than most of Africa) after being diluted by population expansion is not effecting meaningful trickle-down. It was this fact (re-characterised as a refrain ‘’You cannot eat GDP’’) which the opposition failed to leverage, to their own chagrin. erefore, we have to find a GDP Off-Ramp, one where the economy speeds up to 8% and more. Kenya has to dash for growth, that’s a sine qua non for the next five years.
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.@Coopbankenya reports H1 2017 PAT -10.427% Earnings here Kenyan Economy |
Par Value: 1/- Closing Price: 17.55 Total Shares Issued: 5867179554 Market Capitalization: 102,969,001,172 EPS: 2.2 PE: 7.977
H1 Kenya government Securities held to maturity 47.617600b vs. 41.674100b +14.262% H1 Loans and advances to customers (net) 252.612566b vs. 221.288801b +14.155% H1 Total Assets 383.326294b vs. 363.008665b +5.597% H1 Customer deposits 285.753364b vs. 278.252423b +2.696% H1 Total shareholders’ funds 64.477546b vs. 57.936673b +11.290% H1 Total interest income 19.257831b vs. 21.472095 -10.312% H1 Net interest income 13.418210b vs. 14.462694b -7.222% H1 Total non-interest income 7.106144b vs. 6.849420b +3.696% H1 Total operating income 20.524354b vs. 21.312114b -3.696% H1 Loan loss provision [1.509311b] vs. [1.310000b] +15.215% H1 Total other operating expenses [11.347233b] vs. [10.963659b] +3.499% H1 Profit/ [Loss] before tax and exceptional items 9.177121b vs. 10.348456b -11.319% H1 Profit/ [Loss] before tax 9.269421b vs. 10.445933b -11.263% H1 Profit/ [Loss] after tax and exceptional items 6.637412b vs. 7.410084b -10.427% Basic & diluted EPS 1.13 vs. 1.52 -25.658% No interim dividend Gross NPL and Advances 12.222665b vs. 10.253392b +19.206% Total NPL and Advances 11.251117b vs. 9.037452b +24.494% Liquidity ratio 35.3% vs. 41.6% -6.300% Cash and cash equivalents 16.362935b Number of Shares : 5,867,179,554
Bank Commentary
a commendable performance against the backdrop of a tight operating environment especially with the capping of interest rates, general economic slowdown in an election year, currency devaluation and hyperinflation in South Sudan. Cost to income ratio at 47.9% H1 2017 versus 52.1% in FY 2016 6.53m account-Holders, 8,000 Banking Agents 580 ATMs 3.33m customers all-telco Mco-op Cash Mobile Wallet 90% of customer transactions via alternative delivery channels
Conclusions
Better than respectable Earnings in a challenging environment and they have a largely captive Customer Base which is a significant area of leverage.
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TPS Serena Hotels @serenahotels reports H1 EPS [1.09] 2017 Earnings Kenyan Economy |
Par Value: 1/- Closing Price: 27.00 Total Shares Issued: 182174108.00 Market Capitalization: 4,918,700,916 EPS: 0.54 PE: 50.000
TPS manages 15 hotels and resorts across East Africa under the Serena brand name.
H1 Sales 2.621823b vs. 2.656219b -1.295% H1 Profit before exchange loss, interest, depreciation and taxation 80.251m vs. 180.980m -55.658% H1 Exchange loss on foreign currency loans [45.703m] vs. [10.569] -332.425% H1 Net interest cost [70.752m] vs. [54.781m] -29.154% H1 Depreciation on Property, plant and equipment [194.582m] vs. [189.786m] -2.527% H1 Loss before income tax [230.786m] vs. [74.156m] -211.217% H1 Loss after taxation [188.796m] vs. [57.627m] -227.617% H1 Loss per share attributable to equity holders of the company [1.09] vs. [0.43] -153.488% Equity 9.411265b vs. 9.571263b -1.672% Cash and cash equivalents at the end of the period 771.248m vs. 12.647m No interim dividend
Commentary
During the First half of 2017, the domestic and to some extent the foreign leisure tourism segment in East Africa witnessed a slow but encouraging growth in business levels compared to last year. satisfactory growth in the corporate segment current indications for the Kenyan Safari segment look much healthier particularly for Mara and Laikipia. Kenya coastal region continues to record low materialisation from the foreign leisure market segment as a result of lack of charters and international scheduled flights into Mombasa from source markets Nairobi Serena has been operating only with 46% of its room inventory ...upgrade program. given the seasonal nature of the tourism industry in East Africa, the results for H1 2017 are not a basis for forecasting a FY result Notwithstanding the challenging business environment, Management looks at H2 with much optimism and with our tested and highly successful business model No interim Dividend
Conclusions
Mombasa is soft, Nairobi is being refurbished [they are spending some cash] and they are looking at a good election. On a NAV basis its worth much more than the market Cap of $49m Its a Buy, in fact
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The Serena The Star Kenyan Economy |
MY memories of the Serena start in Mombasa years back when the managing director Mahmoud Jan Mohamed was the manager. I was then a teenager and remember losing my heart to a girl, who would beat me at table tennis, in a bikini. That table tennis Table is still there. The Serena brand has always been sprinkled with a fairy dust and reminds me of happy joyful carefree halcyon days of youth. That brand equity was appreciated last Thursday at the Grosvenor House where The Serena Hotels won the Best Hospitality, Travel and Tourism in Africa award at the African Business Awards.
And now, Serena is clearly staking out a much more forward and offensive position across the region and as you know by now, I sense the Eastern sea board of Africa is at a tipping Point [The oil and gas refers but just as important is the late cycle arrival of the information century which is the entry ticket for Africa to join in the c21st That Arrival of the Information Century is very grass roots because anyone with an Internet enabled mobile phone has an entry ticket and therefore, I see the expansion of the brand as timely and riding a rising tide. The brand is established. Its got breadth, its not a mom and pop operation. Sure, lots of folks are coming for Serena lunch but their longevity, their ability to navigate has been proven and their DNA make them a formidable competitor.
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N.S.E Today |
The Dollar which has cratered this year predominantly undercut by the antics of President Trump who has metasized into a lightning rod for elevated geopolitical uncertainty might be readying itself for a rebound. The Shilling was last trading at 103.35 versus the Dollar and as improved off lows of 104.00 traded just ahead of the Elections. I expect strong Portfolio Inflows post the Election which will support the Shilling to a 102.00 handle. The decision by the Opposition to take their challenge to the Courts was uniquely positive wit respect to Political risk and The Shilling is reacting to that. An index of base metals has climbed to a more-than two-year high, Zinc surged above $3,000 a metric ton for the first time in almost a decade while aluminum approached a three-year high. The Nairobi All Share corrected lower for the 3rd consecutive session to close -0.42% lower at 166.08. The All Share is +24.555% in 2017 and this is a gentle correction in the context of a rampant bull Market which kicked off in May this Year. The Nairobi NSE20 Index closed 23.45 points lower at 4045.89. The NSE20 Index is +26.98% through 2017. After meeting with their Trustees, a lot of Local institutional Investors are going to have to enter this market otherwise their performance will be so woeful it will be embarrassing, Equity Turnover was 563.287m.
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N.S.E Equities - Commercial & Services |
TPS Serena Hotels reported First Half Earnings pre-market opening where H1 Sales declined -1.295% to 2.621823b, H1 Profit before exchange loss, interest, depreciation and taxation clocked 80.251m -55.658%, they reported a sharply higher H1 Exchange loss on foreign currency loans of [45.703m] -332.425%, H1 Loss after taxation was [188.796m] -227.617% and H1 Earnings Per Share was [1.09] versus [0.43]. There were a number of extenuating circumstances, the flag ship ''Nairobi Serena has been operating only with 46% of its room inventory'' and the Coast was characterised as follows ''Kenya coastal region continues to record low materialisation from the foreign leisure market segment as a result of lack of charters and international scheduled flights into Mombasa from source markets.'' Serena described the Mara and Laikipia Safari circuits as looking much healthier. Serena added ''given the seasonal nature of the tourism industry in East Africa, the results for H1 2017 are not a basis for forecasting a FY result'' and struck an optimistic closing note ''Management looks at H2 with much optimism and with our tested and highly successful business model'' We knew Mombasa was soft, that Nairobi is being refurbished [they are spending some cash] but consider that the recently concluded election is now going to turn into a tail-wind and therefore, i think Serena is a Buy at these levels on an H2 Earnings rebound. TPS Serena firmed +1.85% to close at a 2017 high of 27.50. TPS Serena is +34.14% in 2017 and has more scope to the upside as it is emerging from a long entrenched price dislocation.
Safaricom closed unchanged at 24.25 and traded 1.528m shares only which is signalling Supply is close to being extinguished at this price point which is bullish for the Price.
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N.S.E Equities - Finance & Investment |
COOP Bank Kenya reported H1 2017 Earnings where H1 Loans and advances to customers (net) expanded +14.155% to clock 252.612566b, H1 Profit/ [Loss] after tax and exceptional items declined -10.427% to 6.637412b. COOP Bank in their commentary spoke of ''a commendable performance against the backdrop of a tight operating environment especially with the capping of interest rates, general economic slowdown in an election year, currency devaluation and hyperinflation in South Sudan'' COOP Bank's Cost to income ratio was at 47.9% in H1 2017 versus 52.1% in FY 2016 They spoke of having 6.53m account-Holders, 8,000 Banking Agents 580 ATMs and 3.33m customers on their all-telco Mco-op Cash Mobile Wallet Platform. These were better than respectable Earnings in a challenging environment and they have a largely captive Customer Base which is a significant source of operational leverage and advantage. COOP Bank eased -0.56% to close at 17.45 and traded 2.939m shares. COOP Bank is +64.69% in 2017 on a Total Return Basis, when you factor in the bonus share that Shareholders received for every 5 held.
Standard Chartered firmed +0.43% to close at 234.00 and was trading at session highs of 240.00 +3.00%. Supply is real thin. StanChart is +31.21% on a Total Return Basis in 2017 and as scope to test the upside towards 250.00-260.00. Equity Bank ticked -1.14% lower to close at 43.25 and on good volume action of 5.106m shares worth 220.838m. KCB eased -1.68% to close at 44.00 and traded 1.394m shares.
Liberty Kenya closed unchanged at 14.00 [a 2017 closing high] and traded 5.801m shares [1.082% of its issued shares] worth 81.22m. Liberty Kenya is +6.46% in 2017 and trades on a Trading PE Multiple of 11.966.
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N.S.E Equities - Industrial & Allied |
KenGen closed unchanged at 9.20 and traded 702,600 shares. PIC SA extinguished the surplus supply and to very good effect. KenGen is +58.62% in 2017.
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