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Satchu's Rich Wrap-Up
Tuesday 29th of August 2017

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Macro Thoughts

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22-MAY-2017 :: Apocalypse Trump @TheStarKenya

We are living in an unprecedented moment.

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Gold rallied to the highest level this year @business

Gold rallied to the highest level this year after North Korea fired a
ballistic missile over Japan, boosting demand for havens amid
escalating tensions between Pyongyang and the U.S. and its allies.

Bullion for immediate delivery gained as much as 0.9 percent to
$1,322.41 an ounce, the highest intraday price since Nov. 9, and
traded at $1,316.99 at 11:05 a.m in Singapore, according to Bloomberg
generic pricing.

Gold has surged 15 percent this year, rising every month apart from
June, as investors weigh the possibility of conflict in Asia, with Kim
Jong Un’s regime pushing on with missile tests and U.S. President
Donald Trump vowing a stern response. The precious metal has also
climbed as the Federal Reserve is expected to go slow on further
interest rate increases, weakening the dollar.


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18-APR-2017 :: Gold has the potential to go "nuclear"

The purest geopolitical proxy in the markets is Gold. As Ben Bernanke
once said People hold gold “As protection against what we call tail
risks: really, really bad outcomes.” Gold closed the week at a six
month high of $1,285.00 and has the potential to go ‘’nuclear’’

Home Thoughts

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"I don't fly without a camera. I am a photographer who flies. I am not a pilot who takes pictures," says Steinmetz

“I don’t fly without a camera. I am a photographer who flies. I am not
a pilot who takes pictures,” says Steinmetz, who spoke at the opening
session of the TED Global in Arusha, Tanzania. “It’s really all about
the picture.”

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Thomas Pynchon Gravity's Rainbow
Law & Politics

“But it is a curve each of them feels, unmistakably. It is the
parabola. They must have guessed, once or twice -- guessed and refused
to believe -- that everything, always, collectively, had been moving
toward that purified shape latent in the sky, that shape of no
surprise, no second chance, no return. Yet they do move forever under
it, reserved for its own black-and-white bad news certainly as if it
were the rainbow, and they its children. . . .” ― Thomas Pynchon
Gravity's Rainbow

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Assad has won says former US ambassador to Syria Robert Ford
Law & Politics

Q: Every time we have talked about Syria in the last year, the Assad
regime would be making more gains. Where do you see the war now? Has
the regime prevailed?

A: Yes. The war is winding down little by little. Assad has won and he
will stay [in power]. He may never be held accountable, and Iran will
be in Syria to stay. This is the new reality that we have to accept,
and there isn’t much we can do about it.

So you’re saying the rebels have basically lost and have no chance of
coming back?

Unless the foreign governments that in the past have backed elements
of the Free Syrian Army are prepared to send money, weapons -
including surface-to-air missiles - and provide the kind of military
advisers that the Syrian Democratic Forces are receiving against ISIL,
it would be impossible [for the rebels] to defeat Assad and his
Russian and Iranian allies. And even if those foreign governments did
that, it would be a long war that probably ends in a stalemate instead
of an Assad victory.


Correct but at what cost.

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China's Actions in Asia Risk Undermining Trust, U.S. Navy Says
Law & Politics

Gabrielson, commander of the Logistics Group Western Pacific, said
nations should not seek to undermine the “existing system” through
unilateral actions, without naming a particular country. He later said
China, which has turned reclaimed reefs in the disputed South China
Sea into military outposts, was proceeding with a “long-term plan” for
the region.

“It’s important for everyone who has an interest in the region to do
their part to understand that if the world does not come together to
protect its own interests then China will do everything it can to
protect what it sees as its interests at the cost of anyone else,”
Gabrielson said on Monday at a briefing in Singapore.

“China is not worried about what anyone else values,” he said. “It is
only worried about what China values, and from the United States
perspective, that is a problem.”

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28-AUG-2017 :: China Rising @TheStarKenya
Law & Politics

China's parabolic rise has been simply breath-taking

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.2044
Dollar Index 91.58
Japan Yen 108.57
Swiss Franc 0.9495
Pound 1.2961
Aussie 0.7943
India Rupee 64.025
South Korea Won 1126.90
Brazil Real 3.1676
Egypt Pound 17.6580
South Africa Rand 13.0702

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Amazon's Opening Salvo in Grocery Price War Hits Credit Markets
International Trade

The moves underscore both Amazon’s massive influence on retail markets
and the fragility of a sector known for razor-thin profit margins. The
company said it will begin cutting prices on a broad cross section of
Whole Foods groceries Monday -- the same day the $13.7 billion deal is
set to close.

Here are some of the bonds that were worst hit by the news:

The Fresh Market Inc.’s $800 million of bonds due 2023 slumped 3.13
cents on the dollar last week to a record low of 77.89 cents
The yield on Albertsons Cos. Inc.’s $1.2 billion of bonds due in 2025
jumped 28 basis points to 7.32 percent
The yield on B&G Foods Inc.’s $500 million of bonds due in 2025
climbed 4 basis points to 4.7 percent

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Gold via @TheStalwart 1323.05 [This is a Major move]

Bullish scenario in $cl_f #oil as scribbled on my phone. 1 hr
chart. @triple_leverage 46.77


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How to Pick the Best Chocolate Bar Your Money Can Buy @luxury

A craft chocolate bar means the maker “absolutely starts with whole
beans and turns them into chocolate themselves,” no remelting of
couverture allowed, Giller said in an interview.

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Angola's two main opposition parties reject election results

The southern African nation’s second-biggest opposition party, the
Broad Consensus for Angola Salvation - Electoral Coalition, known as
Casa-Ce, said in an emailed statement that the vote count lacked
transparency and wasn’t based on reliable information. Its refusal to
accept the outcome came after the biggest opposition party, the
National Union for the Total Independence of Angola, or Unita, said
Aug. 26 that it didn’t consider the provisional results valid.

The ruling MPLA won 61 percent of the ballots counted last week,
paving the way for its candidate Joao Lourenco to become president,
according to the electoral commission. The commission said Unita
obtained 27 percent of the vote, while Casa-Ce got 9.5 percent.

Seven members of the electoral commission that were appointed by
opposition parties distanced themselves from the provisional results
because they haven’t seen the voting minutes sent from polling
stations, Unita said in statement on its website.

About 2 percent of the votes have yet to be counted. If the electoral
commission maintains the results, the MPLA will take 150 seats in the
220-member parliament, down from 175 seats. The number of Unita
lawmakers will increase to 51 from 32, while Casa-Ce will get 16

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Angola Starts Talks With Banks for $2 Billion Eurobond Sale

Angola is in talks with banks to raise $2 billion via a Eurobond in
what would be the OPEC member’s biggest debt sale on global capital

The government has yet to choose banks to lead the deal and media
reports that Russia’s VTB Bank PJSC has the mandate are false, the
Finance Ministry said in an emailed statement. The Eurobond issuance
was approved by a presidential order on Aug. 4 and will help Angola
lengthen its maturities, as well as make it easier for other borrowers
from the country tap the market, according to the statement.

Angola’s economic growth fell to zero last year after averaging almost
9 percent in the previous 15 years. The kwanza has sunk 42 percent
against the U.S. currency since the crash in crude prices in 2014, but
is still overvalued and may be weakened another 20 percent by the end
of 2018, which would make foreign debts more expensive, analysts at
BMI Research said Aug. 25.

Angola last sold Eurobonds in 2015, when it raised $1.5 billion of
10-year securities. Their yield rose one basis point to 8.35 percent
as of 2:18 p.m. in Luanda, the capital. They’ve handed investors a 17
percent return this year, more than double the 8.2 percent average for
emerging-market dollar bonds.

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Chinese return from Africa as migrant population peaks

From 1m in 2013, the number of Chinese in the continent is in decline,
analysts say

The volume of Chinese returnees — 150,000 are estimated to have left
oil-rich Angola in the past four years alone — means that the Chinese
population in Africa is now in decline from a peak of 1m in 2013,
according to analysts.

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South Africa All Share Bloomberg +11.65% 2017

Dollar versus Rand 6 Month Chart INO 13.0702


Egypt Pound versus The Dollar 3 Month Chart INO 17.6580


Nigeria All Share Bloomberg +35.14% 2017


Ghana Stock Exchange Composite Index Bloomberg +38.81% 2017


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Kenya Opposition Says Electoral Body Denies Access to Servers
Kenyan Economy

Kenya’s main opposition party said the electoral authority failed to
heed a court order allowing scrutiny of the body’s computer servers as
it seeks to prove this month’s presidential election was rigged.

Members of the National Super Alliance waited at the Independent
Electoral & Boundaries Commission’s offices until at least 3:30 a.m.
on Tuesday morning to access the servers, coalition spokesman Dennis
Onyango said by text message. The authority has provided “less than 1
percent” of what the court ordered the authority to allow the
opposition to access, he said.

The alliance alleges that members of Kenya’s ruling Jubilee Party
hacked the IEBC’s system to ensure President Uhuru Kenyatta won a
second term in elections on Aug. 8. The coalition wants access to the
IEBC’s servers to scrutinize whether ballot tallies issued by polling
stations differ from results disseminated by the electoral authority.

The Supreme Court ordered on Monday that the alliance submit a report
on its scrutiny of the servers by 5 p.m. on Tuesday. IEBC spokesman
Andrew Limo didn’t answer his mobile phone when Bloomberg called him
seeking comment.


Its a Fishing Expedition. There is no smoking Gun.

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(CBK) says in its annual supervisory report that 12 of the 43 lenders violated the Banking Act and CBK Prudential Guidelines,
Kenyan Economy

(CBK) says in its annual supervisory report that 12 of the 43 lenders
violated the Banking Act and CBK Prudential Guidelines, a sharp rise
from just four in 2015.
The CBK does not name the lenders usually handed a fine or a warning
depending on the nature of the violation.
“The increase in the number of banks in violation was mainly in
respect to non-compliance with liquidity ratio after Chase Bank Ltd
was placed into receivership due to deposit movement (mostly affecting
small and medium banks). However, the situation normalised later in
the year,” the CBK says.
Seven banks failed to maintain a liquidity ratio of 20 per cent
because of panic run on deposits after Chase Bank was placed in
receivership on April 7, the CBK says, contravening section 19(1) of
the Banking Act and CBK Prudential Guideline (CBK/PG/05) on liquidity
Chase fell following massive panicky withdrawals of deposits by
customers after external auditor, Deloitte East Africa, issued a
qualified opinion on its books due to failure by the management to
adequately furnish them with information on insider loans.
The CBK was on April 11, 2016 forced to open a special window for
distressed smaller lenders following a bank run that had spread to
other banks. The regulator also castigated three banks for lending
more than 25 per cent of their core capital to a single borrower,
violating section 10(1) of the Banking Act.
Two banks were not adequately capitalised under Section 18 of the
Banking Act and CBK Prudential Guidelines, which require lenders to
maintain a minimum core capital of 10.5 per cent and total capital of
14.5 of their total risk-weighted assets.

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Jubilee Holdings reports H1 EPS 2017 +23.168% Earnings
Kenyan Economy

Par Value:                  5/-
Closing Price:           464.00
Total Shares Issued:          65,884,500
Market Capitalisation:        30,570,408,000
EPS:             50
PE:                 9.280

H1 Earnings through through 30th June 2017 vs. 30th June 2016
H1 Gross earned premium 15.600726b vs. 13.624931b +14.501%
H1 Reinsurance [5.408010b] vs. [5.269488b] +2.629%
H1 Net earned premium 10.192716b vs. 8.355443b +21.989%
H1 Claims and policyholder’s benefits payable [10.381180b] vs.
[7.484883b] +38.695%
H1 Commission paid [1.736179b] vs. [1.670716b] +3.918%
H1 Management expenses [2.076358b] vs. [1.911607b] +8.618%
H1 Net fair value gain through profit or loss 1.297633b vs. [364.908m] +455.606%
H1 Investment income 3.396164b vs. 3.451855b -1.613%
H1 Operating profit 1.761183b vs. 1.371007b +28.459%
H1 Group profit before income tax 2.339955b vs. 1.972774b +18.612%
H1 Net profit 1.876158b vs. 1.578735b +18.839%
H1 Profit attributable to shareholders 1.716095b vs. 1.393283b +23.169%
EPS 26.05 vs. 21.15 +23.168%
Total Equity 23.969051b vs. 21.228070b +12.912%
Quoted equity investments at fair value through profit or loss
5.950869b vs. 6.060304b -1.806%
Government securities at amortized costs 43.236596b vs. 33.481145b +29.137%
Total assets 101.108412b vs. 87.567452b +15.463%
Insurance contract liabilities 23.396742b vs. 18.715702b +25.011%
Cash and cash equivalents at the end of the period 9.872579b vs.
9.554014b +3.334%
Interim dividend 1.00 vs. 1.00 –


Strong H1 Earnings - lifted by an Uplift in Kenyan Asset Prices [which
has gotten more traction since these Results were announced]

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SANLAM Kenya reports H1 EPS 2017 +169.663% Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           29.75
Total Shares Issued:          144000000.00
Market Capitalization:        4,284,000,000
EPS:             0.63
PE:                 47.222

H1 Gross premium income 3.362551b vs. 2.639297b +27.403%
H1 Outward reinsurance premium [637.757m] vs. [200.884m] +217.475%
H1 Net written premium 2.724794b vs. 2.438413b +11.745%
H1 Investment income 1.205769b vs. 1.250684b -3.591%
H1 Fair value gains 199.042m vs. [151.010m] +231.807%
H1 Fees and commissions earned 163.794m vs. 38.703m +323.208%
H1 Total income 4.295909b vs. 3.616845b +18.775%
H1 Gross benefits and claims paid [2.285688b] vs. [1.883908b] +21.327%
H1 Net change in contract liabilities [511.736m] vs. [765.969m] -33.191%
H1 Net claims and policyholder benefits [2.751422b] vs. [2.620053b] +5.014%
H1 Operating and other expenses [979.552m] vs. [735.246m] +33.228%
H1 Total expenses [4.143385b] vs. [3.761571b] +10.150%
H1 Profit before tax 152.524m vs. [144.726m] +205.388%
H1 Profit after tax 90.528m vs. [128.369m] +170.522%
Basic and diluted EPS 0.62 vs. [0.89] +169.663%
Total capital and reserves 4.022722b vs. 3.673678b +9.501%
Held to maturity financial assets 9.406658b vs. 8.366283b +12.435%
Fair value through profit or loss financial assets 10.136447b vs.
10.392802b -2.467%
Total assets 29.811254b vs. 27.994884b +6.488%
Insurance contract liabilities 13.234952b vs. 12.106609b +9.320%
Cash resources at the end of the year 3.044899b vs. 3.533967b -13.839%

Company Commentary

Key Features
Profit before Tax 153m versus [2016:-145m]
Total Assets +5% 29.8b
Group embedded Value increased to 5.2b [2016:4.7b] +10.3% over 6 months
The main regulatory development in the insurance sector was the
gazettement of The Statute Law Act 2017 postponing the effective date
of complying with the new capital requirements to June 2020
Life insurance
Gross written premiums increased by 1% to 2.3b
Investment portfolio earnings increased by 20% to 1.4b in 2017 driven
by higher revaluation gains from mark-to-market investments
Life insurance business' operating profit of 259m versus 106m in 2016
General Insurance
Gross written premiums grew by 225% to 1.3b
The loss ratio in H1 2017 was within expectations but slightly above
the comparable period due to a higher claims experience in the medical
line of business
Operating expenses were negatively affected by an increase in bad debt
The integration of SEM asset management businesses in the region has
commenced reference Pinebridge


making progress, remains rich on a classic PE Ratio basis.

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As other African countries ban donkey slaughter, Kenya doubles down to meet Chinese demand Quartz Africa
Kenyan Economy

Twice a month, Julius Yebei, 45, embarks on a three-day journey by
foot with a herd of donkeys from a livestock market in Bomet County to
Goldox, a donkey slaughterhouse located in the semi-arid Kenyan county
of Baringo.
The $6 million Chinese-owned donkey export slaughterhouse is one of
three to open in Kenya in the last 18 months. Since the opening of the
abattoirs, which process hundreds of donkeys a day, the price of an
adult donkey in the country has soared to between $90 and $130 from
$40 in less than two years.
Yebei’s twice-monthly trek, herding fifteen donkeys at a time, is a
ritual he’s become accustomed to since the abattoir opened last year.
It’s also become his primary source of income.
“Before this facility was opened, I used to deal in cattle, goats,
sheep, and chicken,” he says. “But, it has now given us a good market
for donkeys.”
In the space of only a few years, the export of donkey skins and meat
to China has ramped up in Africa, presenting both a major opportunity
and threat to local farmers. The animals are used in ejiao, a
traditional Chinese remedy, and in some areas, as a delicious,
nutritious food source. The Donkey Sanctuary, a UK-based charity, puts
the annual demand for donkeys at 10 million, a quarter of the
estimated global population. China had about 11 million donkeys about
two decades ago, they now number about six million. It has turned to
Africa in recent years to make up the shortfall.

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Kenya Shilling versus The Dollar Live ForexPros 103.20
Kenyan Economy

Nairobi All Share Bloomberg +30.10% 2017 [a 29 month closing High]


173.47 +1.16 +0.67%

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@Safaricomltd closed at a Fresh Record high of 26.75 +44.75% Total Return in 2017 share data
Kenyan Economy

Par Value:                  0.05/-
Closing Price:           26.75
Total Shares Issued:          40065428000.00
Market Capitalization:        1,071,750,199,000
EPS:             1.21
PE:                 22.107

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@StanChartKE closed at a 2017 high +37.03% Total Return in 2017 share data
Kenyan Economy

Par Value:                  5/-
Closing Price:           239.00
Total Shares Issued:          343510571.00
Market Capitalization:        82,099,026,469
EPS:             25.85
PE:                 9.246

read more

KenGen matches a 2017 closing high +70.68% in 2017 share data
Kenyan Economy

Par Value:                  2.50/-
Closing Price:           9.90
Total Shares Issued:          6243873667.00
Market Capitalization:        61,814,349,303
EPS:             1.08
PE:                 9.167

read more

East African Cables reports H1 EPS 2017 [-0.76] Earnings here
Kenyan Economy

Par Value:                  0.50/-
Closing Price:           6.70
Total Shares Issued:          253125000.00
Market Capitalization:        1,695,937,500
EPS:             -1.8
PE:                 -3.722

Leading Kenyan cable manufacturer.

H1 Turnover 1.470026b vs. 2.102282b -30.075%
H1 [Loss]/ profit from operating activities [221.046m] vs. 7.699m -2,971.100%
H1 Interest expense [97.223m] vs. [87.768m] +10.773%
H1 Foreign  exchange [losses]/ gains [13.357m] vs. 33.871m -139.435%
H1 [Loss]/ profit before tax [331.806m] vs. [46.198m] -618.226%
H1 [Loss]/ profit for the period [232.447m] vs. [31.465m] -638.748%
H1 [Loss]/ profit from operations attributable to equity holders of
parent company [191.223m] vs. 2.951m -6,579.939%
Basic and diluted EPS [0.76] vs. 0.01 -7,700.000%
Total assets 7.290308b vs. 8.011425b -9.001%
Total equity 2.319471b vs. 3.102100b -25.229%
Cash and cash equivalents at 30th June 65.886m vs. [26.487m] +348.748%
No interim dividend

Company Commentary

The resignation of the CEO Peter Arina has been accepted
EA Cables contracted business grew 11% buoyed by regional
electrification projects and the Group's strategic focus to utilise
installed capacity in our aluminium plant.
however, the non-contracted business segment experienced a 30% drop in
revenues hampered greatly by continued constraint in accessing working
capital lines.
The Company continues to pursue innovative financing structures in
line with a comprehensive capital restructure program tat is underway
to address the working capital gaps


very soft First Half.

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Nairobi ^NSE20 Bloomberg +28.33% 2017
Kenyan Economy

4,089.00 +19.80 +0.49%

Every Listed Share can be interrogated here


read more

N.S.E Today

The overnight news that North Korean had fired a missile which flew
flew 2700km over Japan and reached an altitude of 550km represented a
serious escalation and a Finger in Donald Trump's eye. The Ballistic
overflight was a violation of Japan's airspace and sovereignty.
This news was the Catalyst for a serious Flight to Quality with Gold
[which is the purest Geopolitical Proxy and You will recall Ben
Bernanke's words People hold gold “As protection against what we call
tail risks: really, really bad outcomes.”] surging through $1,300 to
trade as high as $1,325.00.
Gold is +15% in 2017.
The Dollar got hammered with the Euro soaring through 1.2000 for the
first time in over 2 Years.
The Nairobi All Share eased -0.41% off a 29 month high to close at
172.75. The All Share has surged +8.96% since the Election and the
market called this election early. The All Share is +29.25% in 2017.
The Nairobi NSE20 Index retreated -1.14% to close at 4042.08. The
NSE20 Index is +26.86% in 2017.
Equity Turnover clocked 857.525m.

N.S.E Equities - Commercial & Services

Safaricom was the most actively traded share at the Exchange and
closed unchanged at a record high of 26.75 [+44.75% on a Total Return
Basis YTD] and traded 13.505m shares worth 363.289m. Safaricom's rally
has undergirded the rally at the Nairobi Securities Exchange this

N.S.E Equities - Finance & Investment

KCB Group eased -0.55% to close at 45.25 and traded 1.625m shares. KCB
has served up a +67.82% in 2017.
Equity Group eased back -1.12% to close at 43.75 and traded 1.008m
shares worth 44.337m. Equity is +52.5% in 2017.
COOP Bank traded 2.331m shares and firmed +0.59% to close at 17.00.

Jubilee Holdings reported a +23.168% acceleration in H1 Earnings Per
Share which clocked 26.05, H1 Gross Earned Premium increased +14.501%
to register 15.600726b,  H1 Claims and policyholder’s benefits payable
registered a +38.695% increase however to clock [10.381180b] vs.
[7.484883b] +38.695%. Jubilee conserves its cash and paid out just 1
shilling as its interim dividend which represents a Dividend Pay Out
Ratio of 3.83% of its EPS. An uplift in Kenyan Asset Prices [which has
gotten more traction since these Results were announced] supported.
This was a muscular bulked up Earnings release. Jubilee firmed +0.86%
to close at 468.00. Jubilee is -2.95% in 2017 and has room to the
upside once Investors focus on the strength of the balance sheet and
not the very mean dividend pay out policy.

SANLAM Kenya reported a sharp turnaround where  H1 EPS was 62 cents a
share versus a loss of 89cents a share last time.  H1 Gross premium
income increased +27.403% to 3.362551b vs. 2.639297b +27.403%.
However,  H1 Operating and other expenses upticked +33.228% to
[979.552m]. SANLAM said in its accompanying commentary;

The loss ratio in H1 2017 was within expectations but slightly above
the comparable period due to a higher claims experience in the medical
line of business.
Operating expenses were negatively affected by an increase in bad debt

SANLAM Kenya corrected -2.52% lower to close at 29.00 and traded 61,000 shares.

N.S.E Equities - Industrial & Allied

EABL eased -1.5% to close at 263.00 and traded 407,400 shares worth
107.15m. EABL is +10.86% in 2017 and has under-performed the benchmark
Index by a wide margin.

East African Cables reported a H1 EPS Loss of 76 cents share and
announced that the resignation of the CEO Peter Arina had been
accepted. 2017 [-0.76] Earnings here H1 Turnover tumbled -30.075% to
1.470026b and a Loss for the Period of 232.447m. The long awaited
turnaround seems still to be somewhere over the horizon. EA Cables
slumped -9.70% to close at 6.05 and traded shares as low as 5.00
-25.37% during the session. EA Cables is +1.68% in 2017.

KPLC corrected -3.86% off a 2017 high to close at 11.20 on heavy
volume action of 5.501m shares worth 61.798m. KPLC remains +43.55%
through 2017.


by Aly Khan Satchu (www.rich.co.ke)
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August 2017

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