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Macro Thoughts

After 831 days, Alibaba Group Holding Ltd. regained the title of the
world’s biggest e-commerce company, albeit briefly. The Chinese
retailer surpassed Amazon.com Inc. Tuesday on an intraday basis as the
U.S. retail giant’s stock continued to stall after second-quarter
earnings missed estimates and the merchant forecast a possible
operating loss for the third quarter. Alibaba -- whose stock is up
over 109 percent this year -- held the top spot for the first 9 and a
half months after its initial public offering in 2014.

Home Thoughts

“For lovers, touch is metamorphosis. All the parts of their bodies
seem to change, and they seem to become something different and
better.” ― John Cheever

“Then it is dark; it is a night where kings in golden suits ride
elephants over the mountains.” ― John Cheever

“The world that was not mine yesterday now lies spread out at my feet,
a splendor. I seem, in the middle of the night, to have returned to
the world of apples, the orchards of Heaven. Perhaps I should take my
problems to a shrink, or perhaps I should enjoy the apples that I
have, streaked with color like the evening sky.” ― John Cheever

New York Magazine contributing editor Gabriel Sherman on Tuesday
reported on a remarkable conversation he had with a senior Republican
official, who described conversations Donald Trump’s chief of staff
Gen. John Kelly and defense secretary James Mattis have had about
“physically [restraining] the president” in the event he “[lunges] for
the nuclear football.”

Sherman was discussing the growing concern in the West Wing over
Trump’s temperament, particularly as the president continues to
escalate feuds with prominent Republicans like Secretary of State Rex
Tillerson and Sen. Bob Corker (R-TN) while simultaneously setting the
United States “on the path to World War III.”

But Russia’s weaponisation of Facebook to influence last year’s US
election has raised grave questions about whether Mark Zuckerberg’s
product is spinning out of control.

Facebook’s newspaper ads listed nine “immediate” actions it is taking
to fight any attempt to interfere with elections by using its site. It
also vowed to protect “its community”.

But the measures have done little to ease the political pressure on
the company. The revelations over Russia’s purchase of 3,000 political
ads threaten to shake the business to its core.

Members of Congress who used to fawn over Facebook are realising the
limitations of existing regulation. Its self-service platform lets
anyone with a credit card buy ads without the need for direct contact
with a Facebook employee. A complex algorithm creates filter bubbles
that mean no single user has a full view of all the campaigns. Only in
the past few weeks have lawmakers realised the potential for misuse.

The Russian-bought Facebook ads cost $100,000 and reached 10m
Americans, targeting swing states with propaganda on everything from
race to guns to gay rights. And the threat has not gone away: last
month Russian internet trolls sought to stir up passions in a debate
over American football players kneeling in protest during the national
anthem, according to James Lankford, a senator from Oklahoma.

Gravity’s Rainbow is a 1973 novel by Thomas Pynchon which is about the
design, production and dispatch of V-2 rockets by the German military.
In particular, it features the quest undertaken by several characters
to uncover the secret of a mysterious device named the “Schwarzgerät”
(black device), slated to be installed in a rocket with the serial
number “00000”. As the world watches PyongYang, I cannot help
wondering if Kim Jong-Un has read Pynchon which speaks of “A screaming
comes across the sky” and North Korea.

“But it is a curve each of them feels, unmistakably. It is the
parabola.  ey 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.’’

Unlike in August, when a U.S. Navy destroyer came within 12 nautical
miles of an artificial island built up by China in the South China
Sea, officials said the destroyer on Tuesday sailed close to but not
within that range of the islands.

Twelve nautical miles mark internationally recognized territorial
limits. Sailing within that range is meant to show the United States
does not recognize territorial claims.

Apart from a few half-hearted and timid FONOPs [freedom of navigation
operations], China has established control over the South China Sea.
It has created artificial Islands and then militarised those
artificial islands across the South China Sea. It is a mind-boggling
geopolitical advance any which way you care to cut it.

The actress Angelina Jolie offered to act as a honeytrap to capture
one of Africa’s most notorious war criminals, according to documents
leaked from within the International Criminal Court (ICC).

The offer was made during discussions with Luis Moreno Ocampo, the ICC
chief prosecutor at the time, who wanted to deploy the Hollywood star
in the Central African Republic to help hunt down the Ugandan warlord
Joseph Kony. In one leaked email sent by Moreno Ocampo, he claims that
Jolie “has the idea to invite Kony to dinner and then arrest him”.

Euro 1.1819
Dollar Index 93.21
Japan Yen 112.36
Swiss Franc 0.9748
Pound 1.3195
Aussie 0.7785
India Rupee 65.285
South Korea Won 1135.63
Brazil Real 3.1794
Egypt Pound 17.5955
South Africa Rand 13.6720

The lowest since 1942.

At 31 million boxes, that’s the level for Florida’s orange crop
following damage from Hurricane Irma, a state citrus group said
Tuesday.

Irma ripped through in September, causing an estimated $2.5 billion in
damage to the state’s agriculture, the Florida Department of
Agriculture and Consumer Services said on Oct. 4. Preliminary
estimates showed $760.8 million in damage to the citrus industry.

Orange juice for November delivery rose 1.6 percent to $1.60 a pound
at 10:53 a.m. on ICE Futures U.S. in New York. The price has climbed
20 percent since the end of August. A box weighs 90 pounds, or 41
kilograms.

“It needs one big negative thing for all of it to fall like a house of
cards,” said Guillaume Tresca, a senior strategist at Credit Agricole
in Paris. “And that’s an aggressive Fed or macro data from China, but
so far, we don’t see any such risk. Investors continue to play the
game.”

And why not? A gauge of emerging-market currencies has jumped 15
percent and stocks have gained in 15 of the past 20 months, while bond
spreads relative U.S. Treasuries sit at the lowest levels in a decade.
The bullishness persisted in the face of an attempted coup in Turkey,
an impeachment in South Korea and a power struggle in South Africa.
The U.K.’s vote to leave the European Union and the election of U.S.
President Donald Trump caused short-lived ripples.

Frontier Markets

Election officials in Liberia started counting ballots after polling
stations closed in presidential and parliamentary elections that
regional observers said were conducted peacefully.

The economy expanded at an average rate of 7.5 percent a year between
2006 and 2013 until the nation was hit by the worst-ever Ebola
epidemic that killed thousands of people. That, combined with a sharp
drop in output of iron ore, Liberia’s main source of foreign currency,
meant there was zero growth between 2014 and 2016.

In Sub-Saharan Africa, the outlook remains challenging. Growth is
projected to rise in 2017 and 2018, but will barely return to positive
territory in per capita terms this year for the region as a whole—and
would remain negative for about a third of the countries in the
region. The slight upward revision to 2017 growth relative to the
April 2017 WEO forecast reflects a modest upgrading of growth
prospects for South Africa, which is experiencing a bumper crop due to
better rainfall and an increase in mining output prompted by a
moderate rebound in commodity prices. However, the outlook for South
Africa remains difficult, with elevated political uncertainty and weak
consumer and business confidence, and the country’s growth forecast
was consequently marked down for 2018.

Sub-Saharan Africa      2015 3.4% 2016 1.3% 2017 2.7% 2018 3.5%

But Africa’s skeptics have overlooked a number of important factors.
For starters, when one sets the three largest economies aside,
Sub-Saharan Africa’s aggregate-growth rate for this year rises from
2.5% to almost 4%. That is faster than the 3.5% rate at which the
global economy is currently growing. In fact, five of the ten
fastest-growing economies in the world are in Africa. And over the
next five years, around half of all Sub-Saharan economies will expand
at an average rate similar to or higher than that which prevailed
during the “Africa rising” heyday.

“Congo is losing every day, every minute, every second Mr. Kabila is
in office. His mandate is finished.”

I flicked the channels and came across a report from the Congo, where
opposition presidential hopeful Moise Katumbi had been leading the
street against a third term for Kabila. ‘’Birthday-Boy’’ President
Joseph Kabila is constitutionally barred from running for a third
term, and Katumbi has set out his stall now and is a formidable
adversary. In fact, the numbers were building and Katumbi must have
been thinking this might just turn into a Tsunami. President Kabila,
however, outwitted Katumbi by removing him from the street and the
Congo entirely.  is might well prove a cleverly administered technical
knock-out.

Birr devalued by 15pc and interest rate on deposits is up by two
percentage point to seven percent.

“Growth is projected to remain subdued ... despite more favourable
commodity export prices and strong agricultural production, as
heightened political uncertainty saps consumer and business
confidence,” the global lender said.

South African growth should tick up to 1.1 percent next year, slightly
lower than an earlier forecast of 1.2 percent, the IMF added in its
October world economic outlook.

Naspers has piggybacked on Tencent to become Africa’s biggest company
by market value and one of the world’s largest investors in e-commerce
ventures from Mail.Ru Group Ltd. in Russia to iFood in Brazil. Its 33
percent stake in Shenzhen-based WeChat creator Tencent, bought for $32
million in 2001, is now worth $142 billion, while Naspers itself is
valued at about $102 billion. Naspers is also Africa’s largest pay-TV
provider.

“We can buy Naspers cheaper than we can buy Tencent,” Mobius said. “If
you buy Naspers, you get an Africa satellite TV business for free and
you are buying this big internet company Tencent at a discount. If you
have a choice to buy Tencent or Naspers, you better buy Naspers.”

Egypt Pound versus The Dollar 3 Month Chart INO 17.5955
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Egypt EGX30 Bloomberg
http://www.bloomberg.com/quote/CASE:IND

Nigeria All Share Bloomberg +36.85% 2017
http://www.bloomberg.com/quote/NGSEINDX:IND

Ghana Stock Exchange Composite Index Bloomberg +35.37% 2017
http://www.bloomberg.com/quote/GGSECI:IND

What is clear is that the advantage of incumbency in fact accelerates
in this Round 2 of the Election. Therefore, I expect the Opposition to
boycott the Election entirely. And that the strategy of tension will
be maintained via degrading and denigrating the entire process. Market
Participants need to model this scenario because this is the direction
of travel.

''Essentially Kenya faces a very uncertain 21 days'' @DaMina_Advisors.

“In the interest of the people of Kenya, the region and world at
large, we believe that all will be best served by (opposition
grouping) NASA vacating the presidential candidature of elections
slated for 26th of October, 2017,” Odinga told a news conference.

Conclusions

The Nairobi Securities Exchange All Share Index has fallen the most in
Africa and is the fifth-worst performer in the world since Sept. 1,
when the vote was declared void by the Supreme Court. The government’s
international bonds due in 2024 have also dropped since then, with
yields climbing 33 basis points to 6.35 percent.

--

Clearly the Equity Market is wrestling with this fluid and volatile
Political scenario.
In my article on Monday, I predicted a Raila Odinga boycott.
The Market is looking for ''political'' closure.
For now, i expect an election on the 26th and that will prove a
Political Guillotine.
The Opposition will of course seek to respond asymmetrically and in an
insurgent manner and will be looking to the Street to maintain
pressure.
Kenya’s dollar-denominated 2024 sovereign bond fell as much as 1.2
cents on Wednesday, according to Reuters data.
The Nairobi Securities Exchange All Share Index has fallen the most in
Africa and is the fifth-worst performer in the world since Sept. 1,
when the vote was declared void by the Supreme Court.
The Nairobi All Share retreated -0.66% to close at 159.78
The Nairobi NSE20 Index slumped -51.97 points to close at 3644.80.
Equity Turnover picked up speed and clocked 809.208m

Williamson Tea was sold off a meaningful -8.53% on easy volume action
of 152,600 shares [0.87% of the issued shares] worth 22.946m.
Williamson Tea reported a FY Loss of [261.593m] vs. 482.747m the
previous year.

Safaricom closed unchanged at 25.00 and was swimming against the
prevailing tide trading 25.25 +1.00% at the finish line. Safaricom
traded 10.732m shares worth 268.52m and Buyers [unperturbed by the
political narrative] outpaced Sellers by a Factor of 2 to 1.

TPS Serena Hotels firmed +2.8571% to close at 27.00.

Equity Bank retreated -2.054% to close at a 4 month low of 35.75 and
was trading at session lows of 35.25 -3.42% at the closing bell.
Equity traded 2.010m shares.
Standard Chartered [which exhibits the highest alpha of the Tier 1
Banks] traded 200,000 shares all at 227.00. StanChart is +33.00% on a
Total Return Basis through 2017.
KCB was marked down -3.025% to close at 37.75 a 3 and 1/2 month
closing low. KCB traded 377,200 shares.

BAT rallied +1.125% to close at 809.00 and traded 230,900 shares worth
187.024m.

EABL eased -0.41% to close at 245.00 and traded 461,100 shares worth
112.987m. EABL is +2.66% in 2017 on a Total Return Basis and as
underperformed the Indices by a wide margin in 2017.

KenGen will report FY Earnings as early as next week and edged -1.65%
lower to close at 8.90 and traded 235,600 shares.

ARM Cement PLC hereby wishes to notify its shareholders and the
general public as follows:
ARM has agreed to sell all its non-cement businesses as has already
been announced and this transaction is now proceeding such that all
relevant approvals are being applied for and conditions precedent
being satisfied.
ARM is currently in discussions with its key shareholders and secured
lenders in respect of its medium term plans. The key shareholders are
in advanced discussions to offer temporary short term financial
assistance to ARM to improve the financing of its working capital.
ARM engaged advisors to identify equity and/or strategic investors to
further invest in ARM during the last quarter and the 1st round of
investor engagement is ongoing.
Mr Pradeep Paunrana will focus on the identification of a strategic
investor who will invest in ARM to improve its balance sheet.
ARM which was -48.03% in 2017 through this morning retreated -1.89% on
robust volume action of 3.032m shares traded.