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Macro Thoughts

Home Thoughts

The above Photograph was surely taken in the Amboseli

The Maasai herdsmen with their cattle and a herd of elephant arrive at
a common watering hole

“Of all African animals, the elephant is the most difficult for man to
live with, yet its passing - if this must come - seems the most tragic
of all. I can watch elephants (and elephants alone) for hours at a
time, for sooner or later the elephant will do something very strange
such as mow grass with its toenails or draw the tusks from the rotted
carcass of another elephant and carry them off into the bush. There is
mystery behind that masked gray visage, and ancient life force,
delicate and mighty, awesome and enchanted, commanding the silence
ordinarily reserved for mountain peaks, great fires, and the sea.”
― Peter Matthiessen, The Tree Where Man Was Born

Saudi Arabia's powerful crown prince accused Iran on Tuesday of
"direct military aggression" through Yemen's Huthi rebels, ratcheting
up regional tensions as the kingdom reels from a sweeping royal purge.

Sunni-ruled Saudi Arabia and predominantly Shiite Iran have been
trading fierce accusations over their involvement in the conflict in
Yemen, in which they back opposing sides.

In the latest flare-up, Saudi Arabia on Saturday intercepted and
destroyed a ballistic missile near Riyadh international airport,
reportedly fired from Yemen by Iran-backed Huthi rebels, provoking a
bitter war of words.

Saudi Arabia accused Iran of supplying missiles to the rebels. Tehran
vehemently denied the charge and in turn accused Riyadh of war crimes
in Yemen.

"The involvement of Iran in supplying missiles to the Huthis is a
direct military aggression by the Iranian regime," the Saudi Press
Agency quoted Crown Prince Mohammed bin Salman as saying during a
telephone conversation with British Foreign Secretary Boris Johnson.

This "could be considered an act of war," he said.

Conclusions

The explosive classified Israeli cable reveals the following:

On Sunday, just after Lebanese PM Hariri’s shocking resignation,
Israel sent a cable to all of its embassies with the request that its
diplomats do everything possible to ramp up diplomatic pressure
against Hezbollah and Iran.
The cable urged support for Saudi Arabia’s war against Iran-backed
Houthis in Yemen.
The cable stressed that Iran was engaged in “regional subversion”.
Israeli diplomats were urged to appeal to the “highest officials”
within their host countries to attempt to expel Hezbollah from
Lebanese government and politics.

EVEN by standards of recent palace intrigues, it was a dizzying
Saturday in Saudi Arabia. On November 4th the kingdom announced that
scores of people had been held in a massive anti-corruption sweep. The
best-known figure was Prince Alwaleed bin Talal, a billionaire
businessman and investor who owns big chunks of American firms such as
Citigroup and News Corporation. But the detainees also include ten
other princes; dozens of current and former ministers; the chairman of
the Saudi Binladin Group, a construction conglomerate; and the owner
of MBC, the largest satellite network in the Middle East. Some are
reportedly being held in Riyadh’s opulent Ritz-Carlton, which told
paying guests to leave and stopped accepting new bookings. Private
jets were grounded in a bid to stop wealthy businessmen from leaving
the kingdom.

Even more significant is the separate move to sack several ministers,
notably Prince Mutaib bin Abdullah, the commander of the National
Guard, consolidating the power of the young crown prince, Muhammad bin
Salman (often known as MBS), the hugely ambitious son of King Salman.

Still, the arrests send a message to other would-be critics. MBS, more
than any other leader in decades, has fashioned himself the sole face
of Saudi policy. If his ambitious plans falter, Saudis will know whom
to blame.

It is authority that provokes revolution....This occurs when a feeling
of impunity takes root among the elite: We are allowed anything, we
can do anything. This is a delusion, but it rests on a certain
rational foundation. For a while it does indeed look as if they can do
whatever they want. Scandal after scandal and illegality after
illegality go unpunished. The people remain silent...They are afraid
and do not yet feel their own strength. At the same time, they keep a
detailed account of the wrongs, which at one particular moment are to
be added up. The choice of that moment is the greatest riddle of
history. Shah of Shahs, Vintage International edition, p. 106

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.  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.’’

Euro 1.1596
Dollar Index 94.83
Japan Yen 113.82
Swiss Franc 0.9986
Pound 1.3165
Aussie 0.7653
India Rupee 65.095
South Korea Won 1113.65
Brazil Real 3.2714
Egypt Pound 17.6485
South Africa Rand 14.2156

Brent futures LCOc1, the international benchmark for oil prices, were
at $63.61 per barrel at 0243 GMT, down 8 cents, or 0.1 percent, but
still close to a near two-and-a-half year high of $64.65 a barrel
reached earlier this week.

U.S. West Texas Intermediate (WTI) crude CLc1 was at $57.06 per
barrel, down 14 cents, or 0.2 percent, from their last settlement, but
also still not far off the $57.69 a barrel reached earlier this week,
the highest since July 2015.

Frontier Markets

Former president of the United Nations general assembly creates an
offshore trust that gets a lucrative airport contract in Uganda,
benefitting both him and his daughter. An opposition figure in Zambia
is listed as director in an overseas company that has interests in
mining and nickel exploration. And the brother of Ghana’s former
president is the head of a company that does consulting for the west
African nation’s oil and gas development.
These are some of the revelations from Africa documented in the
Paradise Papers, a global investigation into the offshore transactions
of some of the world’s biggest corporations and wealthiest people. The
cache of secret records was leaked from Appleby, a Bermuda-based law
firm that provides legal advice to business elites. Together, the 13.4
million documents shed light on the top end of the world of offshore
finance, and how the politically powerful take advantage of the
system, deal in corruption and bribery, and avoid paying taxes.
The leaked documents also show how multinationals, who are often
accused of plundering national resources, continue to gain access in
Africa. For instance, at the Democratic Republic of Congo, the
Paradise Papers show that the mining multinational Glencore gave the
Israeli billionaire Dan Gertler a $45 million loan if he secured a
mining contract from the government. Gertler was previously mentioned
in a UN report for giving money to the DRC government to buy weapons
and finance its war in exchange for a monopoly on the country’s
diamonds. In Burkina Faso, Glencore protested after officials sought
$29 million in unpaid taxes and penalties, eventually paying only $1.5
million.

The long-term way to get more dentists and mosquito nets in Africa is
not Western aid or charity, it’s freedom and growth. Those who want
Africa and Africans to have better lives need to encourage African
countries to move toward the rule of law, free trade, property rights,
and open markets.

Zimbabwean President Robert Mugabe fired a vice president who his wife
Grace accused of plotting against her husband for the second time in
three years, highlighting the first lady’s rise to the pinnacle of
power in the southern African nation.

The dramatic dismissal of Emmerson Mnangagwa on Monday came a day
after Grace Mugabe publicly accused the former spy chief of plotting
against the president. In 2014, similar allegations led to the ouster
of Mugabe’s then deputy, Joice Mujuru, who like Mnangagwa fought in
the liberation war against the white-minority regime of Rhodesia.

“It’s clear that Grace Mugabe is calling the shots,” said Alex
Magaisa, a Zimbabwean law lecturer who is based in the U.K. and helped
design Zimbabwe’s 2013 constitution. “No other person has wielded as
much public power as Grace has, apart from her husband. She is
certainly the most powerful person in Zimbabwe at the moment after
Mugabe.”

Mnangagwa, who enjoys support in the military and among war veterans,
will have to decide whether to go quietly or seek to reverse his
downfall, either by challenging Grace Mugabe in the party or forging
links with the opposition.

“As things stand, the Zanu-PF old guard is gone and the Mugabe’s have
opened another opposition front as they have to contend with the
Mnangagwa’s supporters,” Rashweat Mukundu, an analyst with the
Harare-based Zimbabwe Democracy Institute, said by phone. “Zimbabwe is
in uncharted waters.”

Conclusions

This promotion of Grace will not last a moment longer than her husband's life.

Dollar versus Rand 6 Month Chart INO 14.2156


Nigeria All Share Bloomberg +37.73% 2017


Ghana Stock Exchange Composite Index Bloomberg +41.22% 2017

Par Value:                  5/-
Closing Price:           24.00
Total Shares Issued:          90000000.00
Market Capitalization:        2,160,000,000
EPS:             -16.35
PE:

A key provider of Cement and Cement products in Kenya for over 70 years.

East African Portland Cement Company FY 2017 results through 30th June
2017 vs. 30th June 2016
FY Revenue 6.928307b vs. 8.871456b -21.903%
FY Cost of sales [6.165496b] vs. [7.283948b] -15.355%
FY Gross profit 762.811m vs. 1.587508b -51.949%
FY Other operating income 21.527m vs. 78.768m -72.670%
FY Provisions written back 183.277m vs. –
FY Administration and selling expenses [2.283898b] vs. [3.250847b] -29.745%
FY [Loss] from operating activities [1.316283b] vs. [1.584571b] -16.931%
FY FX [Losses]/ gains 134.018m vs. [305.706m] +143.839%
FY Fair value gain on investment properties 84.243m vs. 6.238797b -98.650%
FY Finance costs [617.017m] vs. [618.125m] -0.179%
FY [Loss]/ Profit before tax [1.712903b] vs. 3.734752b -145.864%
FY [Loss]/ Profit after tax [1.471361b] vs. 4.145755b -135.491%
EPS [16.35] vs. 46.06 -135.497%
FY Total Assets 27.357388b vs. 27.842120b -1.741%
FY Total Equity 16.890983b vs. 17.946760b -5.883%
FY Cash and cash equivalents as at 30th June [1.879276b] vs.
[1.440899b] -30.424%
No dividend

Company Commentary

Sales Revenue for the year reduced by 22% driven by production
challenges and downward pressure on retail  prices due to excess
supply.
Cost of Sales reduced by 15% on account of volume reduction and
curtailment of unwarranted rebates or discounts.
drop in the gross profit margin to 11% compared to 18% last year
Administrative expenses reduced by 30% as a result of a one-off
inventory adjustment charge incurred in the prior year coupled with
cost management initiatives
current excess capacity which exceeds demand, downward pressure on
cement prices is projected to prevail in the short to medium term.
''Shareholders have come together and are agreeable to a
recapitalisation plan with one earmarked option being phased or
instant cash injection from the sale of assets including idle and
fully mined land which is subject to Government approval''

Conclusions

Poor results. Signalling further softness. However, NAV is
considerably North of the share price.

Nairobi All Share Bloomberg +21.00% 2017

Every Listed Share can be interrogated here

Brent futures LCOc1, the international benchmark for oil prices, were
last at $63.40 per barrel but still close to a near two-and-a-half
year high of $64.65 a barrel reached earlier this week.
The Oil Price has surged of late and could metasize from a situation
where Cheap Oil was a material tailwind for East African Economies
into one where the higher price becomes a Headwind.
This promotion of Grace Mugabe will not last a moment longer than her
husband's life. Zimbabwe's economy remains in disequilibrium with
expectations of an imminent
South Africa All Share is +18.81% in 2017 and at a record high.
The Shilling was last trading at 103.55.
The Nairobi All Share firmed +0.65 points to close at 161.99.
The Nairobi NSE closed -20.46 points at 3768.38.
Equity Turnover clocked 678.816m

Sasini Tea and Coffee retreated -6.31% to close at 26.00 and traded a
meaningful block of 1.022m shares. Sasini Tea is +35.41% in 2017 after
todays price correction.

Kakuzi was up-shifted +6.48% to close at 345.00. The Shift to Avocados
was a very prescient move.

Safaricom rebounded +1.02% to close at 24.75 and traded 15.326m shares
worth 381.718m. Safaricom corrected -3.92% since the NASA Resist
boycott Strategy before bouncing today which about sums up the
strategy. NASA even unleashed their hashtag Warriors yesterday whom
quite properly the market discounted to zero. Safaricom is +34% on a
Total Return basis in 2017.

Uchumi announced the Appointment of a Chief Operating Officer Andrew
Dixon [who was previously at Tesco and Nakumatt] Uchumi ticked -1.41%
easier to close at 3.50 and remains -11.39% in 2017.

Kenya Airways rebounded +2.61% to close at 5.90 and traded 373,600
shares. The imminent dilutive event risk is a Freight train that
shareholders need to have front and centre.

COOP Bank Kenya edged -0.3% lower to close at 16.35 and traded 4.053m
shares ahead of the release of its Q3 2017 Earnings, which is expected
as early as today.
Equity Group traded +0.63% better to close at 40.25 and traded 1.269m
shares. Equity Group as ramped +11.00% higher since releasing its Q3
2017 Earnings on the 31st of October.
KCB Group firmed +0.61% to close at 41.00 and traded 807,900 shares.
KCB released their Q3 2017 Earnings after the closing bell where Q3
PBT accelerated +3.1% to clock Sh.22.4 Billion.

KenolKobil eased -0.33% to close at 15.00 and traded 2.765m shares.
KenolKobil trades on a Trailing PE of 9.146, accelerated H1 Profit
before income tax +20.753% to 2.080448b and is a very well managed
franchise. KenolKobil is +5.704% in 2017 and has headroom.
Total Kenya traded just 8,900 shares all at an unchanged 24.25. Total
Kenya trades on a Trailing PE of 6.831 and accelerated H1 Profit
before tax +8.31% to 1.693750b. Total Kenya is +48.88% on a Total
Return Basis in 2017.

BOC Kenya was high-ticked by the daily maximum of 10.00% to close at
110.00 on the grand total of 100 shares.

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