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Macro Thoughts

Home Thoughts

After 19 minutes of dueling, with four bidders on the telephone and
one in the room, Leonardo da Vinci’s “Salvator Mundi” sold on
Wednesday night for $450.3 million with fees, shattering the high for
any work of art sold at auction. It far surpassed Picasso’s “Women of
Algiers,” which fetched $179.4 million at Christie’s in May 2015. The
buyer was not immediately disclosed.

“The old man has always believed in the mutability of things; has
known that no matter how solid the ground beneath your feet may seem,
it can, at any moment, turn into quicksand and suck you down. Always
be prepared.” ― @SalmanRushdie, The Golden House

Politically, he did not even acknowledge that the end might one day
come without divine intervention. In a speech before the African Union
in 2016, indeed, he said would remain at the helm “until God says:
Come.”

Conclusions

An Old Man whose own Wife had scrambled his political antennae. she
was always untenable.

PLEASE BE ADVISED THAT THE PRESIDENT IS IN GOOD HEALTH. COMRADE R.G
MUGABE WILL RESIGN FROM THE OFFICE OF THE PRESIDENCY. THE INSTALLATION
OF HIS EXCELLENCY, EMMERSON MNANGAGWA AS INTERIM PRESIDENT OF THE
REPUBLIC OF ZIMBABWE WILL OCCUR ON FRIDAY, 17 NOVEMBER 2017. #ZIMBABWE

“This may result in the creation of a new unity government which will
involve the opposition.”

Zimbabwean President Robert Mugabe, who at age 93 is the world’s
oldest-serving leader, risks being forced from office after the
military seized control of the southern African nation. Mugabe’s
tenure as president spans 37 consecutive years, the second-longest
after Equatorial Guinea’s Teodoro Obiang Nguema Mbasogo, who took
power eight months before him.

Last night the first family was detained and are safe, both for the
constitution and the sanity of the nation this was necessary. Neither
Zimbabwe nor ZANU are owned by Mugabe and his wife. Today begins a
fresh new era and comrade Mnangagwa will help us achieve a better
Zimbabwe.

Bitcoin climbed as much as 10 percent on Zimbabwe’s Golix exchange on
Wednesday after the country’s armed forces seized power.

The price of the cryptocurrency in the Southern African nation jumped
as high as $13,499, almost double the rate at which it trades in
international markets, according to prices cited on Golix’s website.

Demand for Bitcoin in Zimbabwe has surged amid a shortage of hard
currency. Golix processed more than $1 million of transactions in the
past 30 days, compared with turnover of $100,000 for the whole of
2016, according to data on the exchange’s website. Zimbabwe doesn’t
have its own currency, with the government adopting the U.S. dollar
and South African rand, among others, as legal tender in 2009 after
hyperinflation rendered the local dollar worthless.

A jump of 390 percent year-to-date in the benchmark Zimbabwe
Industrial Index, which has a market capitalization of $14.5 billion
and excludes mining companies, looks fabulous news for frontier funds
invested in what used to be called Africa's bread-basket. It's held on
to those gains even as the military seizes power. It might be tempting
to watch for a dip as a buying opportunity. The problem is getting
your money out. After some serious hyperinflation, the country
abandoned its own currency in favor of the U.S. dollar in 2009, and it
has become increasingly more difficult to extract capital. Foreign
investors have been trapped in their holdings for most of this year,
unable to exit or cash in what look like huge profits. Stocks have
become Zimbabwe's version of Bitcoin. Meanwhile, Bitcoin's version of
Zimbabwe seems to be having a good day.

The 60% fall from 2013 to 2016 reflects concerns about the real
economy, but the recent jump reflects a panic for liquid assets

It's a similar picture for the MSCI Zimbabwe index, which has jumped
420 percent this year. The index consists of just two companies; a
drinks conglomerate called Delta Corporation Ltd. and Econet Wireless
Zimbabwe Ltd.There is a serious scarcity of cash, and bank deposits,
in Zimbabwe's broken economy. Equities are the only viable means of
exchange, but this has pushed prices through the roof.The country's
shares are trading at a 475 percent premium to cash, according to an
Exotix analysis of Old Mutual data. That difference has to collapse
for there to be any chance of Zimbabwe normalising.

Until Zimbabwe allows for the return of capital, only the very
well-informed, or the very brave, should think about diving in.

If investors want a sign that confidence is returning to Zimbabwe
following the armed forces’ seizure of power from President Robert
Mugabe on Wednesday morning, they should look for stocks to fall.

In Zimbabwe’s dysfunctional market, the deeper the economy has sunk,
the more equities have soared. The nation’s main gauge is up 322
percent in the past year in dollars, the best performance globally,
even as a cash shortage choked businesses and forced people to sleep
in streets near banks so they could make withdrawals in the mornings.

Euro 1.1779
Dollar Index 93.91
Japan Yen 113.05
Swiss Franc 0.9896
Pound 1.3170
Aussie 0.7593
India Rupee 65.355
South Korea Won 1105.65
Brazil Real 3.3133
Egypt Pound 17.6605
South Africa Rand 14.3840

Tencent Holdings Ltd. rose in Hong Kong after posting accelerating
sales growth and topping the most optimistic of analyst estimates.

The shares rose as much as 2.7 percent to HK$393.40 in early trading,
on pace for a record close. The owner of WeChat, the social network
that is nearly ubiquitous in China, reported a 61 percent rise in
third-quarter sales on Wednesday. Fueled by advertising and hit game
Honour of Kings, the growth was the fastest since 2010, when revenue
was a mere one-fourteenth of its current level.

By getting WeChat onto almost a billion smartphones in China, Tencent
has leveraged the instant message service into an entertainment and
gaming platform that is driving advertising sales. Although the
Shenzhen-based company remains largely absent overseas, it’s built a
12 percent stake in Snapchat-owner Snap Inc. and is exploring new
sources of growth in the cloud, financial services, movies and music.

WeChat had 980 million monthly active users, up almost 16 percent from
the previous year and now sending 38 billion messages daily. But the
mobile version of QQ, Tencent’s other mainstay social network, had 2.5
percent fewer users at the end of the quarter.

The success of Honour of Kings helped expand smartphone gaming revenue
by 84 percent in the period. While the game was recently dethroned
from the top of China’s iOS store, Tencent has a full pipeline of
titles for 2018 that includes several from South Korean developers
that were held back amid political tensions with China.

Emerging Markets

Frontier Markets

The children of former Angolan President Jose Eduardo dos Santos are
facing increasing pressure to step down from key posts, two months
after the first leadership change in Africa’s second-biggest oil
producer in almost four decades.

Since replacing Dos Santos at the helm of Angola in September, Joao
Lourenco, 63, has fired the governor of the central bank, the head of
diamond company Endiama and the boards of all three state-owned media
companies. The string of dismissals has earned Lourenco the nickname
“relentless remover.”

Now, the two most prominent children of the Dos Santos clan have come
under fire for acting as barriers to reforms because of the huge sway
they hold over sub-Saharan Africa’s third-biggest economy. Dos Santos’
eldest daughter, Isabel, 44, is Africa’s richest woman and chairwoman
of state oil company Sonangol, in a country where crude accounts for
more than 90 percent of exports. Her brother, Jose Filomeno, 39, is
the head of Angola’s $5 billion sovereign wealth fund.

“They’re clearly under a lot of pressure to step down,” Gary van
Staden, an analyst at NKC African Economics in Paarl, South Africa,
said by phone. “Whether Lourenco aims to clean up the place or simply
make it cosy for himself, the Dos Santos family is always going to be
in the line of fire because of the key positions they hold in Angola.”

Yet, the 63-year-old former army general has signaled he is nobody’s
marionette. In his state of the union speech on Oct. 16, Lourenco
vowed to fight corruption and end monopolies in the cement sector.
Isabel’s husband, Sindika Dokolo, is the chairman of one of the
biggest cement factories in Angola.

Lourenco also appointed Carlos Saturnino, who was fired from Sonangol
by Dos Santos last year, as his secretary of state for oil, putting
him in charge of a 30-day review of the industry.

After expanding for 14 consecutive years, the economy posted zero
growth last year in a country where more than a third of the
population of 27 million lives on less than $2 a day, according to the
World Bank.

“The country can’t wait for better days,” Lourenco said in a speech on
Nov. 11. Recent changes at the central bank and other state-owned
companies were designed to increase control of government bodies that
may be “decisive during this difficult moment in the economy,” he
said.

Apart from her job at Sonangol, Isabel dos Santos also controls
Unitel, Angola’s largest mobile-phone company. She owns Candando, a
supermarket chain, has stakes in Angolan lenders Banco BIC and BFA and
several companies in Portugal. Her brother, Jose Filomeno, has also
come under fire for the way he has managed Angola’s sovereign wealth
fund.

Swiss newspaper Le Matin Dimanche reported on Nov. 5 that the wealth
fund’s asset manager, Jean Claude Bastos de Morais, was a friend of
Jose Filomeno and has been convicted in Switzerland for
misappropriation of funds.

The report, based on the so-called Paradise Papers, also said most of
the fund’s money was transferred to offshore accounts in Mauritius and
some of it was used to pay companies controlled by Bastos de Morais
for projects in Angola. The wealth fund, known as FSDEA, denied the
allegations in an emailed statement and said all of its operations are
legitimate.

The state-owned Jornal de Angola newspaper ran a story on the report
and Radio Nacional de Angola, the government broadcaster, provided
details about the article and the denial of any wrongdoing. Angola’s
main opposition party on Nov. 10 called for a parliamentary inquiry
into the management of the fund.

“In the past, a story like this would only appear in the social
media,” said Precioso Domingos, a professor of economics at the
Catholic University in the capital, Luanda. “But pressure to put an
end to some of the interests of the Dos Santos family is so great that
these stories are now being picked up by the state media.”

Conclusions

Angolan President has dismissed Isabel dos Santos as Sonangol
Chairperson - huge move - dos Santos family control of political
economy of #Angola under threat @thomas_m_wilson

Conclusions

He has moved with despatch and has bared his fangs.

Dollar versus Rand Chart INO 14.3875


Nigeria’s 2032 dollar bonds yields 6.86% and has dropped more than
100 basis points since issue in February. @business


Nigeria All Share Bloomberg +36.25% 2017


Ghana Stock Exchange Composite Index Bloomberg +47.71% 2017

The airline’s top shareholder, the Kenyan government, and 11 local
lenders converted the bulk of their debts into shares, helping to
relieve cash flow pressure.

“This has been a $2 billion restructuring,” Mbuvi Ngunze, the former
Kenya Airways CEO who has been advising on the transaction since June,
told Reuters.

As part of its assistance to the company’s revival efforts, the
government also offered contingent guarantees for $750 million of the
airline’s debt for 10 years.

“We will pay less now to allow us a bit of time to reshape the
business to pay a bit more on the tail end,” Ngunze said, referring to
the debt restructuring.

Kenya Airways, which is part owned by Air France KLM, posted the
country’s biggest ever annual corporate loss of 26 billion shillings
($251 million) in its 2016 financial year, hit by a slump in travel
and high financing costs after buying new Boeing planes.

The losses pushed the company into negative equity of 45 billion
shillings in its financial year to the end of March.

Ngunze said he expects that to move into positive territory next year
after the restructuring.

The financial restructuring diluted all existing shareholders by 95 percent.

Kenya Airways is set to brief investors on the first half of its
financial year on Friday.

Par Value:                  5/-
Closing Price:           227.00
Total Shares Issued:          343510571.00
Market Capitalization:        77,976,899,617
EPS:             25.85
PE:                 8.781

Q3 Kenya Government securities 113.546868b vs. 88.839299b +27.812%
Q3 Loans and advances to customers (net) 114.241248b vs. 120.761020b -5.399%
Q3 Total assets 310.504845b vs. 264.258028b +17.501%
Q3 Customer deposits 238.496384b vs. 199.634468b +19.467%
Q3 Total shareholders’ equity 44.798150b vs. 43.932422b +1.971%
Q3 Total interest income 19.413979b vs. 19.699031b -1.447%
Q3 Total interest expenses [5.645158b] vs. [4.740451b] -19.085%
Q3 Net interest income/ [Loss] 13.768821b vs. 14.958580b -7.954%
Q3 FX Trading income 1.891805b vs. 2.237471b -15.449%
Q3 Total non-interest income 6.413620b vs. 6.624879b -3.189%
Q3 Total operating income 20.182441b vs. 21.583459b -6.491%
Q3 Loan loss provision [3.725844b] vs. [1.822143b] -104.476%
Q3 Staff costs [5.177384b] vs. [4.708008b] -9.970%
Q3 Other operating expenses [3.251647b] vs. [2.740307b] -18.660%
Q3 Total other operating expenses [13.317036b] vs. [10.473649b] -27.148%
Q3 Profit before tax and exceptional items 6.865405b vs. 11.109810b -38.204%
Q3 Profit/ [Loss] after tax and exceptional items 4.709355b vs.
7.730202b -39.079%
Q3 Basic and diluted EPS 13.47 vs. 22.26 -39.488%
Q3 Net NPL 4.371278b vs. 5.586941b -21.759%
Liquidity ratio 69.91% vs. 61.51% +8.400%

Par Value:                  4/-
Closing Price:           191.00
Total Shares Issued:          266321115.00
Market Capitalization:        50,867,332,965
EPS:             26.94
PE:                 7.090

Diamond Trust Bank Kenya Limited Q3 2017 results through 30th
September 2017 vs. 30th September 2016

Q3 Kenya Government securities – held to maturity 84.332855b vs.
74.147648b +13.736%
Q3 Loans and advances to customers (net) 196.292862b vs. 181.552891b +8.119%
Q3 Total assets 357.204092b vs. 313.768781b +13.843%
Q3 Customer deposits 265.047790b vs. 227.422321b +16.544%
Q3 Borrowed funds 18.069948b vs. 23.333447b -22.558%
Q3 Total shareholders’ funds 46.744126b vs. 37.805650b +23.643%
Q3 Total interest income 25.691629b vs. 25.499072b +0.755%
Q3 Total interest expenses [11.210539b] vs. [10.812765b] -3.679%
Q3 Net interest income 14.481090b vs. 14.686307b -1.397%
Q3 FX Trading income 1.159700b vs. 1.283574b -9.651%
Q3 Total non-interest income 3.885411b vs. 3.710763b +4.707%
Q3 Total operating income 18.366501b vs. 18.397070b -0.166%
Q3 Loan loss provision [2.893844b] vs. [3.601159b] +19.641%
Q3 Staff costs [2.978724b] vs. [2.751081b] -8.275%
Q3 Other operating expenses [3.292809b] vs. [2.823457b] -16.623%
Q3 Total operating expenses [10.852159b] vs. [10.589662b] -2.479%
Q3 Profit before tax and exceptional items 7.514342b vs. 7.807408b -3.754%
Q3 PBT 7.525624b vs. 7.812124b -3.667%
Q3 Profit after tax and exceptional items 5.128652b vs. 5.318935b -3.577%
Q3 Basic and diluted EPS 17.42 vs. 18.45 -5.583%
Q3 Total NPL and Advances 14.089865b vs. 6.376141b +120.978%
Q3 Net NPL 7.474378b vs. 1.131605b
Liquidity ratio 51.2% vs. 48.5% +2.700%

Conclusions

resilient.

Par Value:                  5/-
Closing Price:           3.35
Total Shares Issued:          364959616.00
Market Capitalization:        1,222,614,714
EPS:             -4.61
PE:

One of the main Kenyan supermarket chains.

Uchumi Supermarkets FY 2017 results through 30th June 2017 vs. 30th June 2016

FY Net sales 2.587239b vs. 6.427143b -59.745%
FY Cost of sales [2.138082b] vs. [5.450199b] -60.771%
FY Gross profit 449.157m vs. 976.944m -54.024%
FY Administration expenses, selling expenses and other expenses
[2.112854b] vs. [3.648441b] -42.089%
FY Loss before taxation [1.663697b] vs. [2.671497b] -37.724%
FY Loss after taxation [1.680928b] vs. [2.836732b] -40.744%
FY Total assets 4.327281b vs. 5.002216b -13.493%
Cash and cash equivalents at the end of the year [518.292m] vs.
[328.276m] -57.883%

Company Commentary

Improved cost management implementation resulted in significantly
improved loss position for the year by 39% from 2.8b to 1.7b
Company recorded improved margins
Discussions are ongoing with a potential strategic investor and
government shareholder loan is imminent with expected release of 700m.
New Fund deployment plans are being established to re-stock stores,
secure locations of all our 20 branches, ERP system enhancements, and
management of the old supplier debt among other initiatives.

The Auditors have given a qualified opinion due to the possible effect
on the comparability of corresponding and current year figures for the
consolidated and separate financial performance and cash flows as a
result of the following matters

-> Loss of control of business in the Uganda and Tanzania subsidiaries
in the financial year ended June 2016
-> Assets write off in the financial year ended 30th June 2016

Some of the key audit matters where significant judgement was
exercised by Management include impairment loss on trade and other
receivables, contingent liabilities in respect of claims and
litigations, recognition of deferred tax asset, valuation of
investment property and completeness and the existence of trade
payables.

No Dividend

Conclusions

Market Cap is $12m.
Nakumatt is a question of pronouncing the last rites
This is a Bargain basement entry for someone who wants to tackle this
Opportunity?

Par Value:                  0.05/-
Closing Price:           25.00
Total Shares Issued:          40065428000.00
Market Capitalization:        1,001,635,700,000
EPS:             1.21
PE:                 20.661

Safaricom also launched their Masoko e-commerce platform. E-commerce
has exploded. It’s made Jeff Bezos of Amazon the richest man on the
planet and Jack Ma cannot be far behind. E-commerce is going to be a
very big thing and Safaricom have all the levers with which to secure
a leadership position in this space. Their Mpesa agents can double up
as delivery points, for example.

Nairobi All Share Bloomberg +21.22% 2017


Nairobi ^NSE20 Bloomberg +17.01% 2017


Every Listed Share can be interrogated here

After 19 minutes of dueling, with four bidders on the telephone and
one in the room, Leonardo da Vinci’s “Salvator Mundi” sold on
Wednesday night for $450.3 million with fees, shattering the high for
any work of art sold at auction.
President Mugabe is in te departure Lounge but for now negotiating terms.
Bitcoin climbed as much as 10 percent on Zimbabwe’s Golix exchange on
Wednesday after the country’s armed forces seized power.
The price of the cryptocurrency in the Southern African nation jumped
as high as $13,499, almost double the rate at which it trades in
international markets, according to prices cited on Golix’s website.
Hunter S. Thompson famously said "The Edge...There is no honest way to
explain it because the only people who really know where it is are the
ones who have gone over"
Zimbabwean Financial assets have gone over the Edge as evidenced in
Bitcoin and the Stock Market.
The Zimbabwe Industrial Index is +390% Year To Date and the MSCI
Zimbabwe index has jumped 420 percent this year.
In Zimbabwe’s dysfunctional market, the deeper the economy has sunk,
the more equities have soared. The country's shares are trading at a
475 percent premium to cash, according to an Exotix analysis of Old
Mutual data
The Nairobi All Share firmed +0.86 points to close at 162.50.
The Nairobi NSE20 rallied +14.94 points to close at 3743.10.
Equity Turnover clocked 505.78m.

Safaricom followed on yesterdays +2.04% gain with a further +1.00% to
close at 25.25 and was trading at 25.50 +2.00% at the Finale.
Safaricom traded 6.387m shares and Buyers outpaced Sellers by a Factor
of 3 to 1. Safaricom is just 5.6% below a record closing high reached
at the end of the August and we will see that record taken out ahead
of year End.

Nation Media Group eased -1.72% to close at 114.00 and traded 257,200
shares. NMG is +36.02% on a Total Return basis in 2017. H1 Turnover
slid -6.40% to 5.2742b.
Standard Group closed unchanged at 37.50 and notwithstanding issuing a
Full Year Profits Warnings is +127.2% in 2017.

Uchumi probed +1.45% better to close at 3.50 and was at 3.60 +4.35% at
the finish.

LongHorn Kenya announced it will sell its entire controlling stake of
Law Africa Publishing Limited which will cease being a subsidiary of
the company. LongHorn ticked 10 cents easier to close at 5.85.

The Latent Buy Side Demand about which i spoke yesterday popped its
head above the radar today and KenGen muscled +2.39% higher to close
at 8.55 and traded 628,600 shares.

EABL closed unchanged at 240.00 and traded 237,600 shares. There is
good two way action happening at this level.

Total Kenya was up-shifted +7.78% to close at 24.50 and match a 2017
closing high. Total Kenya is +50.35% in 2017.


--

It was a pleasure catching up with the KCB Chairman Ngeny Biwott who
is a Nasa Scientist and a Futurist. KCB turned +0.62% higher to close
at 40.75 and traded 2.24m shares. KCB has rallied +55.65% in 2017 on a
Total Return Basis.
COOP Bank eased -0.3% to close at 16.05 and traded 5.103m shares.