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Macro Thoughts

Home Thoughts

"Empty space stoppered our eyes and mouths; we cared for nothing. We
remembered our living days wrong."

“Seeing a partial eclipse bears the same relation to seeing a total
eclipse as kissing a man does to marrying him.”

I turned back to the sun. It was going. The sun was going, and the
world was wrong. The grasses were wrong; they were platinum. Their
every detail of stem, head, and blade shone lightless and artificially
distinct as an art photographer’s platinum print. This color has never
been seen on Earth. The hues were metallic; their finish was matte.
The hillside was a 19th-century tinted photograph from which the tints
had faded. All the people you see in the photograph, distinct and
detailed as their faces look, are now dead. The sky was navy blue. My
hands were silver. All the distant hills’ grasses were finespun metal
which the wind laid down. I was watching a faded color print of a
movie filmed in the Middle Ages; I was standing in it, by some
mistake. I was standing in a movie of hillside grasses filmed in the
Middle Ages. I missed my own century, the people I knew, and the real
light of day.

In June 1911, Bowers, Cherry-Garrard and Wilson started a hellish
journey to collect eggs from an emperor penguin colony at Cape
Crozier, more than 100 kilometres away.

A Victorian theory proposed that by studying the embryo of an
organism, it was possible to learn about the evolutionary history of
that species. Wilson believed penguin embryos could shed light on the
evolutionary link between birds and reptiles. But emperor penguins
breed in the middle of the Antarctic winter, when it is unimaginably
cold and completely dark, and this would be the first substantial
sledging journey ever made in these torturous conditions.

For five weeks, the three men battled ferocious winds and an average
temperature of -40˚C. They travelled in darkness with only scant
twilight at midday and occasional moonlight. They came very close to
death when their only tent blew away in a violent blizzard and it was
pure luck that they found it again.

When they finally reached the penguin colony, they collected five eggs
with great difficulty. Only three survived the journey back.

Back in Britain, the study of the embryos was delayed by the First
World War and the death of the embryologist who was assigned to
analyse them. Meanwhile, science had moved on and the theory of a link
between embryos and evolutionary history was largely rejected.

Despite this, the eggs and their embryos have scientific significance.
They remain part of the Natural History Museum’s collections and, as
some of the earliest examples of emperor penguin embryos, have
important potential for future scientific research.

"The horror of the nineteen days it took us to travel from Cape Evans
to Cape Crozier would have to be re-experienced to be appreciated: and
any one would be a fool who went again." - Apsley Cherry-Garrard, The
Worst Journey in the World

The most relevant book to read is Baburnama, the Autobiography of Emperor Babur

An official chronicle and a highly personal memoir, the Baburnmma
presents a vivid and extraordinarily detailed picture of life in
Central Asia and India during the late fifteenth and early sixteenth
centuries. It is also the text most often quoted by historians and
scholars of Mughal India. The prose of Zahiruddin Muhammad Babur, the
first Mughal emperor, is described by its new translator Wheeler
Thackston as frank, intimate, truthful, and unbiased. It is all the
more astonishing, therefore, that the Baburnama is also the first real
autobiography in Islamic literature. Babur had no historical precedent
for his narrative, yet even today it is a remarkably engrossing volume
to read. The interests that Babur expressed so eloquently in the
memoirs - his profound curiosity about the natural world and human
personalities, for example - defined also the directions that artists
were to take. Dr. Thackston's translation provides many new insights
into a particularly stimulating period in the world's history.

Like us many have spoken over this spring, but they were gone in the
twinkling of an eye.  We conquered the world with bravery and might,
but we did not take it with us to the grave. Babur

In all Fergana no fort is so strong as Akhsi. Its suburbs extend some
two miles further than the walled town. People say of Akhsi, "Where is
the village? Where are the trees?" Its melons are excellent; one
variety of them is known as Mir Timuri and may have no equal in the
world. The melons of Bukhara are famous. When I took Samarkand, I had
some brought from there and some from Akhsi. They were cut up at an
entertainment and those from Bukhara could not compare with those from
Akhsi. The fowling and hunting of Akhsi are very good indeed; white
deer abound in the waste on the Akhsi side of the Syr-Darya; in the
jungle on the Andijan side, abundant and well-fed bucks and does,
pheasant and hare are had.

Samarkand has good districts and subdistricts. Its largest district,
and one that is its equal, is Bukhara, 162 miles to the west. Bukhara
in its turn, has several subdistricts; it is a fine town. Its fruits
are many and good, its melons excellent, none in Mawara'u'n-nahr
matching them for quality and quantity. Although the Mir Timuri- melon
of Akhsi is sweeter and more delicate than any Bukhara melon, still in
Bukhara many kinds of melon are good and plentiful. The Bukhara plum
is famous; no other equals it. They skin it, dry it and export it from
land to land with other rarities; it is an excellent laxative. Fowls
and geese are bred in abundance in Bukhara. Bukhara wine is the
strongest made in Mawara'u'n-nahr; that was what I drank while in
Samarkand.

One of those on the south is Andijan, which has a central position and
is the capital of the Fergana country. It produces much grain, fruits
in abundance, excellent grapes and melons. In the melon season, it is
not customary to sell them out at the fields. There are no pears
better than those of Andijan. After Samarkand and Kesh, the fort of
Andijan is the largest in Mawara'u'n-nahr (Transoxiana). It has three
gates. Its citadel (ark) is on its south side. Water flows into it by
nine channels, but, oddly, flows out by none. Round the outer edge of
the ditch runs a gravelled highway; the width of this highway divides
the fort from the suburbs surrounding it.

President Donald Trump announced an open-ended commitment to
Afghanistan that will put as many as 4,000 more U.S. troops into the
nation’s longest-lasting conflict and keep American forces there as
long as it takes to deny terrorists a haven and bring about a
political settlement with the Taliban.

“Our nation must seek an honorable and enduring outcome worthy of the
tremendous sacrifices that have been made,” Trump said Monday in a
nationally televised address from the Fort Myer Army base in Virginia.
“The consequences of a rapid exit are both predictable and
unacceptable.”

“We can no longer be silent about Pakistan’s safe havens for terrorist
organizations, the Taliban, and other groups that pose a threat to the
region and beyond,” Trump said. “Pakistan has much to gain from
partnering with our effort in Afghanistan. It has much to lose by
continuing to harbor terrorists.”

“My original instinct was to pull out, and historically I like
following my instincts, but all of my life I heard that decisions are
much different when you sit behind the desk in the Oval Office,” he
told his audience at the base, which is adjacent to Arlington National
Cemetery just outside the nation’s capital.

Trump said he will give more authority to military commanders and lift
restrictions that he said were hindering the ability of troops in the
field to target terrorist and criminal networks throughout
Afghanistan.

“But we will no longer use American military might to construct
democracies in far away lands, or try to rebuild other countries in
our own image,” he said, “those days are now over.”

Conclusions

Afganistan to the US is like Yemen is to KSA - These are Wars that
cannot be won.

The very first time I visited Kenya, several months before I started
covering politics in Africa, I was introduced to a young, eloquent and
interesting lawyer with a project to try to fix Kenyan politics. The
problem, he explained, was that it is so difficult to persuade people
to vote rationally. In Kenya, he explained, most people tend to vote
according to their tribe. As a result, he argued, politics produces
far too many scoundrels. In a Kenyan election, a politician who does
not steal tends to get less votes than somebody who does – but
redistributes it to his kin, and promises to stand up for them.

At the time, I was covering American politics, and even then, before
Brexit and Donald Trump, I thought this man overly generous towards
Western politics. In America, and in Britain too, I pointed out,
voters are also tribal. Since, watching the fallout as dozens of
neo-Nazis marched in Virginia, and Trump refused to denounce them, I
have wondered if I was more right than I realised.

In the West, our tribes may be less clear cut. People in Washington,
DC, do still tend to speak the same language as people in Alabama. But
nonetheless, it would be a stretch to say that a lot of voters base
their decision on a close look at the policies and records of
politicians. No, they vote according to their sense of who they feel
closest too. That is to say, they vote based on tribal interest.

The past few weeks, reporting on Kenya’s election, has given me a
clearer insight into what tribalism means. Before polling day,
politicians revved up their tribal bases to get out the vote. Going
around slums in Nairobi, it was much clearer than usual what people’s
tribal identities were.

I sat in a room in a tin shack listening to a smartly-dressed Kikuyu
lady (the tribe of Uhuru Kenyatta, the president) explain her “problem
with Luos” (the tribe of Raila Odinga, the main opposition candidate).
Luos, she asserted, are violent, they don’t pay their rent, they never
save or invest, and that’s why they hate Kikuyus. No doubt such views
are always there, but you would rarely hear them articulated so
readily outside of elections. This distrust, ultimately, is why
elections in Kenya are such fraught affairs. They are fights over
identity, not policy.

Yet the fights in America over Confederate statues shows much the same
dynamic. The refusal of the president to condemn a minority of his
tribe is what an essentially tribal politician does: stay loyal. And
that loyalty is rewarded. How else does someone as obviously unfit for
office get elected? He didn’t promise the people who voted for him a
menu of policies designed to make their lives better. Instead, he
promised an idea: that they would get “their” America back. The same
is true of Brexit. “Taking back our country” was an obvious appeal to
English tribalism.

America is still much less tribal than Kenya, where politicians
routinely win 90 per cent or more in their home districts. Even in
West Virginia, the most Republican state in 2016, 26 per cent of
people still voted for Hillary Clinton. But the direction of travel is
the wrong way. In 1960, 75 per cent of states were “swing states”; by
2012, it was just 30 per cent.

Most importantly we are losing ideology and class as the dividing line
in politics. Instead, the big questions are about identity. Are we
European or British? Is America a multicultural, liberal nation, or a
traditional Christian one? Neo-Nazis marching on Charlottesville feel
so emboldened by Mr Trump’s victory, precisely because he campaigned
on a platform of racial – indeed, tribal – resentment. They want to
continue being able to see the Confederacy a noble Lost Cause, instead
of a failed act of treason. They certainly don’t want to have to think
about how American history has contributed to America’s stark
inequality. And as any Kenyan can tell you, history is what underpins
tribal grievances and fear too.

Ultimately what brings about an end to tribalism is nation-building.
In Europe, building nations took generations of war and forceful
integration. America went through a brutal civil war and its southern
states created a strange history afterwards to paper over their sense
of grievance at their loss. But as nations change, the community needs
constant reimagining. Nowadays, it seems as if in America and Britain,
we are losing that ability. Our political future then, might be a
little more African.

All in all, therefore, the big question is not whether but when US
commanders decide to call it a day in Syria. That point is still not
within sight. But Assad has made it clear that although Syria will be
open to negotiating diversified external relationships, in this
conflict the winner will take all.

Euro 1.1800
Dollar Index 93.18
Japan Yen 109.28
Swiss Franc 0.9633
Pound 1.2877
Aussie 0.7936
India Rupee 64.085
South Korea Won 1134.72
Brazil Real 3.1643
Egypt Pound 17.7355
South Africa Rand 13.1604

U.S. crude #oil futures settle at $47.53/bbl. ⬇$1.13. -2.32%. #CME
#NYMEX @Lee_Saks 47.73

Industrial metals extended their longest weekly rally in three years,
with nickel pacing gains and zinc reaching the highest in almost a
decade as investors grew more optimistic about the outlook for supply
and demand.

An index of the six main metals traded on the London Metal Exchange
advanced 1.2 percent, after climbing for a sixth straight week on
Friday, the longest such rally since April 2014. Nickel jumped as much
as 3.4 percent in London as Japan’s top refiner said it expects a
larger global shortage, while trading volume ballooned on the Shanghai
Futures Exchange. Most of the main contracts on the LME rose, with
copper touching the highest since 2014.

Nickel rose 3.1 percent to settle at $11,315 a metric ton at 5:51 p.m.
on the LME, after touching the highest since Dec. 16.

Copper climbed as much as 2.1 percent to $6,623 a ton.

A surge in the price of vanilla pods after a cyclone this year hit
Madagascar, the world’s top producer, has left ice cream makers
scrambling to secure supplies of the flavouring extract.

Used in chocolate, cakes and drinks, as well as ice cream, vanilla is
one of the world’s most popular flavours.

This year’s surge, which propelled the price to a record high of more
than $600 a kilogramme, has forced one high-end London gelato chain to
pull vanilla ice cream off the menu, and some bigger companies to
raise prices.

Large food companies have also felt the impact. Nestlé, which says it
manages volatility in its ingredient costs through “adapted
procurement strategies, cost savings, innovation and, as a last
option, price increases”, raised prices of its Mövenpick ice creams in
Switzerland by 2.5 per cent this year.

However, he says that for the first time in their lives, Madagascar’s
vanilla farmers are making enough money to build a home with cement,
instead of the local palm plant, and can afford to educate their
children beyond second grade.

“Vanilla farmers in Madagascar see it as the best market in recent
memory,” he adds.

Frontier Markets

“People are being told that if they vote for Unita there will be war,”
the leader of the National Union for the Total Liberation of Angola,
Isaias Samakuva, said at his party’s last campaign gathering in the
capital, Luanda, before Wednesday’s vote. “Not here. We’ve seen what
war is. Are you crazy or what?”

The move threatens to further delay the deployment of the latest 4,000
peacekeepers to be assigned to the African country, where civil war
broke out in 2013.

"It was because the forces that were brought went to the airport to
control the airport, which is not part of their mandate," President
Salva Kiir's spokesman Ateny Wek Ateny said, explaining the decision
to stop U.N. flights.

"They cannot come here to control our airport. It is our airport and
if they wanted to cooperate with us, they must refrain from (deploying
in) places they are not authorized."

Oakbay Investments, the company controlled by the Gupta family that’s
having its last bank accounts closed, agreed to sell its South African
media interests to management and an ally of the friends of President
Jacob Zuma.

Oakbay will get 300 million rand ($23 million) for Infinity Media,
which operates news channel ANN7, and 150 million rand for its
two-thirds stake in the publisher of The New Age newspaper, the
company said in a statement on Monday. The assets will be sold to
management and Lodidox through “vendor financing at acceptable terms,”
it said.

Banks had been using a currency window for investors known as Nafex
since April, but weren’t allowed to publish their trades. This month,
the FMDQ OTC Securities Exchange, a Lagos-based platform that oversees
naira transactions, asked banks to start quoting Nafex rates,
effectively merging that market with the main interbank one.

The move immediately weakened the naira’s interbank rate 14 percent to
about 365 per dollar, knocking $6.5 billion off the value of the stock
market.

David Cowan, an Africa economist at New York-based Citigroup Inc., the
world’s biggest foreign-exchange trader, called it a “devaluation by
stealth.”

For foreign investors not already using Nafex, it made naira assets a
lot cheaper. And even for those that were, it boosted transparency and
allowed them to see live quotes on their screens for the first time.

“It has clearly put investors more at ease,” said Joe Delvaux, a money
manager at Duet Asset Management in London, which oversees about $500
million of African bonds and stocks and started buying naira debt
again this month. “Foreign currency trading volumes have already
picked up and analysts are more and more inclined to recommend
local-currency debt.”

Nigeria’s local-currency bonds could do with the attention. They’re
currently the worst performers this year among 31 major emerging
markets tracked by Bloomberg, losing about 6 percent in dollar terms.

They’ve long called for Nigeria to use a single exchange rate
predominantly driven by market forces. For now, the country is keeping
several exchange rates in place, but the spread between the
black-market and interbank rate is negligible.

Still, the central bank hasn’t abandoned the official rate of 305 per
dollar, which it uses to provide cheap dollars for some government
transactions as well as fuel importers. After the changes, the gap
between this rate and the interbank market has never been wider.

Nigeria’s foreign-exchange market remains more opaque than those in
other African countries such as South Africa, Ghana, Kenya and Uganda,
according to Duet’s Delvaux. A web of other rates continue to warp the
market, keeping the naira artificially strong for pilgrims seeking
dollars to travel to Mecca, small and medium businesses, or Nigerians
who need to pay overseas school fees, to name a few.

Nigeria “is less compelling as a frontier market,” said Diana Amoa, a
co-manager of JPMorgan Asset Management’s $2.8 billion
emerging-markets local-currency debt fund in London. “Ideally, the
central bank needs to move to a unified exchange system and let the
currency levels settle at the point where there is a clearing up of
the foreign currency backlog.”

Can’t Nigeria have one exchange rate?

That would entail an official devaluation, which President Muhammadu
Buhari and central bank Governor Godwin Emefiele have long stood firm
against, saying it would only boost an inflation rate at 16 percent.
Early indications are that the government will keep the naira’s
official value unchanged for now, with the 2018 budget to be based on
an exchange rate of 305 per dollar, the Lagos-based Vanguard newspaper
reported Aug. 10.

“Investors would love it if Nigeria moved to a single rate,” said Rick
Harrell, an analyst in Boston at Loomis Sayles & Co., which manages
$258 billion of assets and recently started investing in naira bonds
again. “But the central bank is constrained because of the need to
supply cheaper dollars to fuel importers.”

“It’s such a sensitive matter, especially with the economy still
weak,” he said. “It’s still not ideal. But by Nigeria’s standards,
this is good enough.”

Now what?

With the interbank rate at 361.95 per dollar as of Monday, its 55
percent slump since 2014 is the most among oil currencies. But even
that might not be enough. Citigroup says a drop to 400 could be what
it takes to attract enough inflows to end the country’s dollar
shortages and boost an economy that’s contracted for the last five
quarters.

The UN says 14 million. The Lagos State government thinks it’s nearer
21 million, as rural Nigerians are drawn by the hope of a better life
to one of Africa’s few mega-cities.

By 2050 Nigeria will have twice the population it has today, more than
half will live in cities, and about 60% of them will be under 25.

It was an expected outcome — a scripted one, the opposition might say.
Last Friday, Kenya’s electoral commission announced that the
incumbent, Uhuru Kenyatta, had won the country’s presidential election
with a little over 54% of the vote.

Just as expected, his rival, Raila Odinga, immediately challenged the
result and proclaimed "a fraud of monumental gravity".

A second term for Kenyatta is no doubt the scenario that the region —
and the markets — expected and hoped for. A sharp rise in equities and
a big slide in bond yields since the election have signalled where the
markets’ preferences lie.

"Kenya has built its free-market credentials over 50 years and
Kenyatta’s election keeps us firmly on that track," Kenyan business
analyst Aly-Khan Satchu says. "An Odinga administration would have
downgraded and degraded those credentials. So I feel Kenyatta now has
a unique opportunity to consolidate and accelerate economic gains."

The reaction of Odinga’s supporters in the coming weeks is less
predictable. Street demonstrations began immediately after the first
results trickled in, but clashes have been contained.

In Mathare, demonstrators clashed with police, and in Kisumu, a city
on the shores of Lake Victoria, several hundred protesters confronted
security forces, chanting "No Raila, no peace" — the slogan of 2007,
when two months of postelection street fights left more than 1,300
dead, at least 600,000 displaced and the country deeply traumatised.

According to the Kenya national commission on human rights, 24 people
have died, mostly from bullet wounds, indicating that they might have
been killed in clashes with the police.

There is little the opposition can do now to contest the result. In
the days following the election, Odinga’s opposition coalition alleged
that the electoral commission’s system had been hacked. It claimed
Odinga was the real winner based on the result obtained "from a
confidential source" within the commission, but failed to provide
proof. His party declared it would not go to the supreme court, saying
the judiciary’s independence is compromised.

Election observers say they found the elections to be free and fair.
The EU mission says it did not detect any signs of "centralised or
local manipulation" of the votes, and has called for calm. Former US
secretary of state John Kerry, now leading the Carter Center, has
demanded that Kenya’s leadership "take its responsibilities", a way to
underline that any incitement to violence could be punished.

Kenyan leaders know this perhaps better than most. In the aftermath of
the 2007 violence, the International Criminal Court charged Kenyatta,
then deputy prime minister in a coalition government, as well as
William Ruto, at the time Odinga’s right-hand man, for organising the
violence. The charges were finally dropped in the middle of the trial,
but they left their mark in the minds of Kenyan politicians.

But perception matters as much as reality, and it is true that Kenya’s
electoral commission could have managed the process better. Instead of
taking time to resolve concerns about forms that needed to be signed
by party agents, it rushed to announce the result late last Friday.
This entrenched the impression that the organisation has been sloppy.

In a rare interview, Odinga told the Financial Times that challenging
the results is "not about me .. I’m not going to be a candidate again.
We just want Kenyans to know what happened, what the whole world is
not understanding is happening."

On Sunday, he addressed supporters in Kibera, calling on them to
boycott the state by refusing to work.

The opposition has felt time and again it has been denied victory: in
2007 because of claims of election rigging, and in 2013 because of
electronic equipment that didn’t work. For it, protesting against this
election is about the accumulation of this frustration as much as the
result itself.

Odinga is, as he readily admits, facing his last defeat as a
presidential candidate. For the son of Oginga Odinga, the losing
opponent to Jomo Kenyatta, this is a story that has bitterly repeated
itself in a second generation. His ultimate defeat is the end of a
dynasty — the mourning of a political clan that never had the
opportunity to rule the country.

The appeal is based on analysis of the results forms from the almost
41,000 polling stations and 290 parliamentary constituencies, which
aggregated the polling station results.

These “ought to have been accurate, legitimate and verifiable across
the country [but] are demonstrably contradictory, defective and bear
fatal irregularities affecting 14,078 polling stations”, the
opposition petition states.

Conclusions

There is no Smoking Gun.

Par Value:                  0.50/-
Closing Price:           43.00
Total Shares Issued:          3702777020.00
Market Capitalization:        159,219,411,860
EPS:             4.38
PE:                 9.817

H1 Investment securities 115.595812b vs. 73.032331b +58.280%
H1 Loans and advances to customers (net) 265.086161b vs. 269.032284b -1.467%
H1 Total assets 504.944293b vs. 444.436850b +13.614%
H1 Customer deposits 362.788342b vs. 319.230725b +13.645%
H1 Total Shareholders’ Funds 85.893664b vs. 75.404004b +13.911%
H1 Total interest income 23.005192b vs. 26.095743b -11.843%
H1 Total interest expenses [5.062540b] vs. [4.862984b] +4.104%
H1 Net interest income 17.942652b vs. 21.232759b -15.495%
H1 Other fees and commissions income 6.286849b vs. 5.244938b +19.865%
H1 Total Non-interest income 12.976624b vs. 10.847924b +19.623%
H1 Total operating income 30.919276b vs. 32.080683b -3.620%
H1 Total operating expenses [17.627060b] vs. [17.850607b] -1.252%
H1 Profit/ [Loss] before tax and exceptional items 13.292216b vs.
14.230076b -6.591%
H1 Profit/ [Loss] after tax and exceptional items 9.361478b vs.
10.111308b -7.416%
Basic and diluted EPS 2.47 vs. 2.68 -7.836%
Gross NPL and Advances 20.363500b vs. 12.931302b +57.474%
Total NPL and Advances 17.495591b vs. 10.757755b +62.632%
Net NPL and Advances 9.694174b vs. 5.958126b +62.705%
Liquidity ratio 51.1% vs. 37.0% +14.100%

Regional Loan Growth
Kenya 222.4b vs. 207.5b -7%
DRC 19.6b vs. 15.6b +26%
Tanzania 16.6b vs. 14.6b +13%
Rwanda 11.1b vs. 7.4b +49%
Uganda 10.2b vs. 8.7b +17%
South Sudan 0.1b vs. 0.3b -65%

From @Twitter

#EquityHYResults Dr. Mwangi; investment in GoK securities increased to
115.5 billion from 73 billion @JohnGachiri
Intermediation has ceased to be the basis for our model because we
have shifted to government paper. James Mwangi - #EquityH1Results
@KeEquityBank subsidiaries in Tanzania, Congo, Rwanda & Uganda now
contributes 10% of the group's total profit up from 5%.
#EquityHYResults
The banking industry has become skewed. The Top 10 banks share 92% of
profits. The small banks share 8%. James Mwangi - #EquityH1Results

Conclusions

Strong results in the context of the Pivot to Government Securities.
very bullish about the region.

Nairobi All Share Bloomberg +24.95% 2017
http://www.BLOOMBERG.COM/quote/NSEASI:IND

166.61 +1.41 +0.85%

Par Value:                  2.50/-
Closing Price:           112.00
Total Shares Issued:          188542286.00
Market Capitalization:        21,116,736,032
EPS:             8.9
PE:                 12.584

4,007.55 +14.79 +0.37%

Par Value:                  5/-
Closing Price:           97.00
Total Shares Issued:          12868124.00
Market Capitalization:        1,248,208,028
EPS:             0.33
PE:                 293.939

H1 Revenue 32.235979m vs. 31.053103m +3.809%
H1 Cost of sales [29.029105m] vs. [27.795187m] +4.439%
H1 Administrative Expenses [0.186847m] vs. [0.553456m] -66.240%
H1 Selling and distribution expenses [1.024082m] vs. [0.496124m] +106.417%
H1 Finance costs [0.239714m] vs. [0.232017m] +3.317%
H1 Profit before tax 1.722464m vs. 1.937640m -11.105%
H1 Profit and total comprehensive income as at 30th June 1.205725m vs.
1.356348m -11.105%
Basic EPS 0.09 vs. 0.10 -10.000%
Shareholders’ funds 10.939385m vs. 7.381900m +48.192%
Cash and cash equivalents at the end of the period [1.045508m] vs.
[1.081268m] -3.307%

The Dollar remains under pressure in the FX markets [$5.1 trillion a
day] ahead speeches from the European Central Bank President Mario
Draghi and Federal Reserve Chair Janet Yellen at Jackson Hole Wyoming.
The Euro has been on a roll higher and some folks feel Draghi might
look to temper its rise but its difficult to see a rhetorical Path
that will achieve this.
The Shilling was at a 3 month high versus the Dollar around 103.02.
The Nairobi All Share index eased 0.04 points to close at 166.57 and
remains +24.9% in 2017
The Nairobi NSE20 Index closed +6.16 points at 4013.71.
Equity Turnover was brisk at 993.024m.

Safaricom closed unchanged at 24.75 and traded 2.932m shares.
Safaricom's record closing high was 25.00, just 1% away and that
record high is about to be sliced like a hot knife through Butter.

TPS Serena Hotels rallied +6.48% to close at a 2017 high of 28.75. TPS
Serena has rebounded +40.24% in 2017 and the macro backdrop is a big
Tail-Wind.

Equity Bank released its H1 2017 Earnings pre the opening Bell at the
Securities Exchange this morning.  Equity Bank reported a -7.836%
decline in headline First Half Earnings per share. Equity ramped its
position in Government of Kenya securities +58.28% higher to 115.595b
and its Customer Loan Book shrank -1.467% to 265.086b. In a very
wide-ranging Investor briefing, Dr. James Mwangi said;

''Intermediation has ceased to be the basis for our model because we
have shifted to government paper''

Dr. Mwangi was clearly excited by the acceleration in the regional
subsidiaries, whilst Kenya declined -7.00%, DR Congo accelerated +26%,
Tanzania +13%, Rwanda +49%, Uganda +17% with South Sudan now a
statistical irrelevance.

Equity increased income from its non-lending business, such as mobile
banking commissions and trade finance. Income from that segment rose
20 percent from the same period last year, to 13 billion shillings.

"The Group continued to evolve its business model to weather the
interest capping effects by focusing on growing the non-funded
income," it said.

There was no interim dividend and Equity trades at a Price to Book of
1.9x. I thought these were muscular results in the context of the Rate
Cap and in the context of the Pivot to Government Securities, which
necessarily is a spread compression trade.  Equity Bank closed
unchanged at 43.00 and was the most actively traded counter at the
Exchange with 5.507m shares worth 236.805m. Equity is +50.00% in 2017
on a Total Return Basis.

KCB firmed +1.12% to close at 44.75 and was trading at 45.25 +2.26% at
the Finish Line, KCB traded 3.855m shares and is +66.08% on a Total
Return Basis in 2017.

The Nairobi Securities Exchange reported H1 2017 EPS declined -6.25%,
H1 Operating income expanded +5.925% to 282.603m, but H1 Admin
Expenses [outpaced Operating Income] grew +8.008% and H1 Profit After
Tax declined -5.115% to register 77.77m.  The Securities Exchange said
the following in the commentary that accompanied the results
''Total Income increased by 4% from 334.3m in the six months ended 30
June 2016 to 346.8m for 6 months to June 2017. This was driven mainly
by an 11% increase in equity turnover from 73.6b to 82b''  Its a
volume Game and volumes are trending higher. NSE released its Earnings
during the Trading session and therefore did not trade. The NSE is
+63.95% on a Total Return Basis in 2017.

EABL eased -0.37% to close at 267.00 and traded 3rd at the Exchange
with 605,700 shares worth 161.81m. EABL is +11.68% in 2017 and has
underperformed the Benchmark indices by about half and has scope to
get back to neutral on a benchmark basis.

KenGen ticked -0.54% lower to close at 9.20 and on heavy volume action
of 15.345m shares worth 141.361m. KenGen is +58.62% in 2017.
KPLC rallied +2.816% to close at 10.95 and missed closing at a 2017
high by just 0.09%. KPLC was well traded with 10.691m shares worth
117.517m. KPLC is +40.49% on a Total Return Basis in 2017.

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