|Thursday 12th of March 2020
[Annals from the Frontline] 'Healthcare on brink of collapsing': Doctors share stories from inside the Italy #coronavirus quarantine @itvnews #COVID19
Law & Politics
"A lot of patients need help with breathing but there are not enough
"They've told us that starting from now we'll have to choose who to
intubate - priority will go to the young or those without
"At Niguarda, the other big hospital in Milan, they are not intubating
anyone over 60, which is really, really young."
"We've had no critical cases among children but with children, viruses
are much less aggressive - think chickenpox or measles.
"But the very young are crazy carriers.
"A child with no symptoms will go to visit its grandparents, and
basically kill them. So it’s essential to avoid contact between them".
"All the resuscitation bays are full. They’re having to triage,
deciding who to intubate and who to let die."
He added: "You have no idea how many young people are here, I mean
even 20-year-olds with no underlying conditions, in need of assisted
breathing because of horrible pneumonia.
"There aren’t the resources to screen doctors for Covid-19 anymore -
they’re just telling them 'stay home if you have symptoms, otherwise
come to work'."
The World Health Organisation ranks Italy second in the world for
health care provision, with only France rated higher. The UK is 18th.
Is the planet under spell of a range of Black Swans - a Wall Street meltdown caused by an alleged oil war plus the uncontrolled spread of Covid19 - leading to an all-out "cross-asset pandemonium" @Nomura @Consortiumnews
Law & Politics
Is the planet under the spell of a range of Black Swans – a Wall
Street meltdown caused by an alleged oil war between Russia and the
House of Saud, plus the uncontrolled spread of Covid-19 – leading to
an all-out “cross-asset pandemonium,” as billed by Nomura, the
Japanese holding company?
Or, as German analyst Peter Spengler suggests, whatever “the averted
climax in the Strait of Hormuz had not brought about so far, might now
come through ‘market forces’”?
Let’s start with what really happened after five hours of relatively
polite discussions last Friday in Vienna.
What turned into a de facto OPEC+ meltdown was quite the
game-changing, plot twist.
OPEC+ includes Russia, Kazakhstan and Azerbaijan. Essentially, after
enduring years of OPEC price-fixing – the result of relentless U.S.
pressure over Saudi Arabia – while patiently rebuilding its foreign
exchange reserves, Moscow saw the perfect window of opportunity to
strike, targeting the U.S. shale industry.
Shares of some of these U.S. producers plunged as much as 50 percent
on “Black Monday.” They simply cannot survive with a barrel of oil in
the $30s – and that’s where this is going. After all, these companies
are drowning in debt.
A $30 barrel of oil has to be seen as a precious gift/stimulus package
for a global economy in turmoil – especially from the point of view of
oil importers and consumers. This is what Russia made possible.
And the stimulus may last for a while. Russia’s National Wealth Fund
has made it clear it has enough reserves (over $150 billion) to cover
a budget deficit from six to 10 years – even with oil at $25 a barrel.
Goldman Sachs has already gamed a possible Brent crude at $20 a
As Persian Gulf traders stress, the key to what is perceived in the
U.S. as an “oil war” between Moscow and Riyadh is mostly about
Essentially, banks won’t be able to pay those speculators who hold
derivative insurance against a steep decline in the price of oil.
Added stress comes from traders panicking with Covid-19 spreading
across nations that are visibly unprepared to deal with it.
Moscow must have gamed beforehand that Russian stocks traded in London
—such as Gazprom, Rosneft, Novatek and Gazprom Neft —would collapse.
According to Lukoil’s co-owner Leonid Fedun, Russia may lose up to
$150 million a day from now on. The question is for how long this will
Still, from the beginning Rosneft’s position was that for Russia, the
deal with OPEC+was “meaningless” and only “cleared the way” for
American shale oil.
The consensus among Russian energy giants was that the current market
setup —massive “negative oil demand,” positive “supply shock,” and no
swing producer — inevitably had to crash the price of oil.
They were watching, helplessly, as the U.S. was already selling oil
for a lower price than OPEC.
Moscow’s move against the U.S. fracking industry was payback for the
Trump administration messing with Nord Stream 2.
The inevitable, steep devaluation of the ruble was gamed — also
considering the ruble was already low anyway.
Still, what happened post-Vienna essentially has little to do with a
Russia-Saudi trade war. The Russian Energy Ministry is phlegmatic:
move on, nothing to see here.
Riyadh, significantly, has been emitting signs the OPEC+ deal may be
back in the cards in the near future.
A feasible scenario is that this sort of shock therapy will go on
until 2022, and then Russia and OPEC will be back to the table to work
out a new deal.
There are no definitive numbers, but the oil market accounts for less
than 10 percent of Russia’s GDP (it used to be 16 percent in 2012).
Iran’s oil exports in 2019 plunged by a whopping 70 percent, and still
Tehran was able to adapt.
Yet oil accounts for over 50 percent of Saudi GDP. Riyadh needs oil at
no less than $85 a barrel to pay its bills. The 2020 budget, with
crude priced at $62-63 a barrel, still has a $50 billion deficit.
Aramco says they will be offering no less than 300,000 barrels of oil
a day more than their “maximum sustained capacity” starting April 1.
They say they will be able to produce a whopping 12.3 million barrels a day.
Persian Gulf traders say openly this is unsustainable. It is. But the
House of Saud, in desperation, will be digging into their strategic
reserves to dump as much crude as possible as soon as possible — and
keep the price war full tilt.
The (oily) irony is that the top price war victims are an industry
belonging to the American protector.
Saudi-occupied Arabia is a mess. The Wall Street Journal reported
Friday that one of the king’s brothers, Prince Ahmed bin Abdulaziz al
Saud, and a nephew, Prince Mohammed bin Nayef, two powerful Saudis,
were arrested and charged with treason for allegedly plotting against
King Salman and his son, Crown Prince Mohammed bin Salman (MbS).
Every grain of sand in the Nefud desert knows Jared of Arabia
Kushner’s whatsapp pal MbS has been de facto ruler for the past five
years, but the timing of his new purge in Riyadh speaks volumes.
The CIA is fuming: Nayef was and remains Langley’s top asset. The fact
that Saudi regime spin denounced “Americans” as partners in a possible
coup against MBS should be read as “CIA.”
It’s just a matter of time before the U.S. Deep State, in conjunction
with disgruntled National Guard elements, comes for MbS’s head — even
as he articulates taking over total power before the G-20 summit in
Riyadh next November.
Black Hawk Down?
So what happens next? Amid a tsunami of scenarios, from New York to
all points Asia, the most optimistic rule is that China is about to
win the “people’s war” against Covid-19, and the latest figures
In this case global oil demand may increase by at least 480,000 barrels a day.
Well, that’s way more complicated.
The game now points to a confluence of Wall Street in panic; Covid-19
mass hysteria; lingering, myriad aftershocks of President Donald
Trump’s global trade mess; the U.S. election circus; and political
instability in Europe.
These interlocked crises do spell Perfect Storm. Yet the market angle
is easily explained as perhaps the beginning of the end of the Fed
pumping tens of trillions of U.S. dollars into the economy through QEs
and repos since 2008. Call it the calling of the central bankers’
A case can be made that the current financial panic will only
subsidize when the ultimate Black Swan – Covid-19 – is contained.
Borrowing from the famous Hollywood adage — “no one knows anything” —
all bets are off.
Amid thick fog, and discounting the usual amount of disinformation, a
Rabobank analyst, among others, came up with plausible four Covid-19
He now reckons it’s getting “ugly” and the fourth scenario — the
“unthinkable” — is not far-fetched anymore.
This implies a global economic crisis of, yes, unthinkable magnitude.
To a great extent it will all depend on how fast China – the
inescapable crucial link in the global just-in-time supply chain —
gets back to a new normal, offsetting interminable weeks of serial
Despised, discriminated, demonized 24/7 by the “system leader,” China
has gone full Nietzsche – about to prove that “whatever does not kill
you makes you stronger” when it comes to a “people’s war” against
On the U.S. front, there’s scant hope that the gleaming Black
“helicopter money” Hawk will crash down for good. The ultimate Black
Swan will have the last word.
Update: Wuhan Doctors Say Colleagues Died in Vain Amid Official Cover-Up @caixin h/t @hofrench
Law & Politics
The hospital where coronavirus whistleblower Li Wenliang worked and
died has been hit harder than any other by Covid-19 due in part to
throttling of information by officials, a Caixin investigation has
The Central Hospital of Wuhan, where Li died, has seen over 230 of its
4,000 medical staff diagnosed with Covid-19, the highest rate of
infection at any hospital in Wuhan, the epicenter of the outbreak,
according to data Caixin has obtained.
On Monday, ophthalmologist Zhu Heping was the fourth doctor at the
hospital to succumb to the disease, following the deaths of doctors Li
Wenliang, Jiang Xueqing and Mei Zhongming on Feb. 7, Mar. 1 and Mar.
The hospital’s deputy chief cardiothoracic surgeon and deputy chief
urologist remain in critical condition, the head nurse said.
A Central Hospital department head blamed authorities for endangering
lives by spreading false information.
“The false information released by the relevant departments — claiming
the disease was controllable and would not spread from human-to-human
— left hundreds of doctors and nurses in the dark, doing all they
could to treat patients without knowing about the epidemic,” the
department head told Caixin.
“And even when they fell ill, they could not report it. They could not
alert their colleagues and the public in time despite their sacrifice.
This is the most painful loss and lesson.”
Doctors at the hospital discussed a handful of key factors behind
their plight in a series of interviews with Caixin. First, as one of
the closest hospitals to the South China Seafood Market believed to be
a major source of infections, Central Hospital treated the most
patients in the early stage of the outbreak, the doctors said.
First-generation virus infections can be more deadly, they said, and
Li and Mei could have been infected by the same patient.
Second, the hospital was overwhelmed by fever patients in early
January. At that time, another hospital was designated to take in
patients with coronavirus symptoms, but it only accepted those with
contact history from the seafood market.
The overflow went to other departments at the Central Hospital, where
staff were not contagious disease specialists and could be easily
infected, according to the doctors.
The doctors also blamed incompetent management. For years, the head of
the hospital has only worked pushing papers, they said, far removed
from frontline medical work.
The hospital’s Communist Party chief, who was originally head of human
resources at the city’s health authority, did not sufficiently
understand infectious disease and even banned doctors from spreading
critical public health information, the doctors said.
Finally, a Central Hospital internal document obtained by Caixin
revealed interference from Wuhan’s municipal health authority made it
difficult for the hospital to report cases.
That interference was especially severe from Jan. 12 to Jan. 17, when
the province held its annual “Two Sessions” legislative meetings.
Multiple doctors have confirmed the authenticity of the document,
titled “Explanation of the Novel Coronavirus Treatment Situation,”
while the hospital’s public relations and public health units declined
According to a 2007 policy published by the Ministry of Health, when
medical staff cannot identify the cause of a pneumonia case, they must
report it to their medical institution and “medical institutions
should arrange an expert consultation within 12 hours.”
If the expert cannot make a clear diagnosis, the case should be
immediately reported as an “unknown pneumonia” by filing an infectious
disease report to a national online system.
“It’s fairly easy to fill out the disease reporting form,” one doctor
at the Central Hospital said.
“When we get cases of hepatitis B or other severe infectious diseases,
we can make a diagnosis directly on the computer, fill in the
infectious disease report in a pop-up window and just click OK.”
But the doctor noted that “to do that, a diagnosis must be made.”
The Central Hospital of Wuhan document and Caixin investigation of
other hospitals in the city show they were not able to diagnose their
patients and file such reports as required.
According to the Central Hospital document, a law enforcement official
surnamed Xu came to inspect the hospital on Jan. 12 and ordered that
infection disease forms could only be filled out and reported after
consultations from city- and provincial-level experts, complicating
and delaying the time-sensitive process.
On Jan. 13, Wang Wenyong, head of infectious disease control at
Wuhan’s Jianghan district disease control center, called Wuhan Central
hospital and asked it to change suspected coronavirus reports filed
Jan. 10 to say the patients had other illnesses.
In response, the hospital called the district health authority to come
collect samples and provide consultation, but was told it had to wait.
That wait lasted three days. On Jan. 16, as the “Two Sessions” was
about to wrap up, the Wuhan city disease control center finally came
to collect samples.
By then, the hospital had 48 suspected cases. On Jan. 17, the Hubei
provincial disease control center arrived to do the same.
From Jan. 12 to Jan. 17, Wuhan’s health authority maintained that the
city had no new infections. Only on the morning of Jan. 18 did the
Wuhan health authority announce the city had four new cases of
First voices silenced
Caixin previously reported that on Dec. 27, the Central Hospital of
Wuhan sent swabs from a 41-year-old pneumonia patient who had no
history of contact with the South China Seafood Market to a
Beijing-based lab, CapitalBio Medlab Co. Ltd., for analysis.
CapitalBio’s test resulted in a false positive for SARS. It was a
“small mistake,” a gene sequencing expert told Caixin, due perhaps to
a limited gene database or a lack of retesting.
But it was this mistake that triggered concern by those who saw the
report, recalling painful memories of the SARS cover-up 17 years
On Dec. 30, Ai Fen, head of the emergency department at the Central
Hospital, shared the test report on WeChat with friends from medical
school and medical staff at the hospital, warning them to beware.
The same evening, several doctors in Wuhan, including the late Li
Wenliang, privately shared CapitalBio’s results — probably from Ai
Fen’s messages — as a warning to friends and colleagues to take
Those messages then circulated widely online, sparking public uproar
and demands for more information.
Several people, including Li and two other doctors at the hospital who
sent the messages that night, were later punished by authorities for
Ai Fen was summoned by hospital supervisors on Jan. 2, and chastised
for intensifying public panic and affecting the overall development of
The next day, Central Hospital asked every department to keep an eye
on its staff and require them not to disclose “confidential
information” to the public, according to a recording of the meeting
obtained by Caixin.
Workers at the hospital were told not to talk about the novel
coronavirus, nor send text messages, photos or anything else that
might leave a paper trail.
Why does the #coronavirus spread so easily between people? @nature
Law & Politics
As the number of coronavirus infections approaches 100,000 people
worldwide, researchers are racing to understand what makes it spread
A handful of genetic and structural analyses have identified a key
feature of the virus — a protein on its surface — that might explain
why it infects human cells so readily.
Other groups are investigating the doorway through which the new
coronavirus enters human tissues — a receptor on cell membranes.
Both the cell receptor and the virus protein offer potential targets
for drugs to block the pathogen, but researchers say it is too early
to be sure.
“Understanding transmission of the virus is key to its containment and
future prevention,” says David Veesler, a structural virologist at the
University of Washington in Seattle, who posted his team’s findings
about the virus protein on the biomedical preprint server bioRxiv on
The new virus spreads much more readily than the one that caused
severe acute respiratory syndrome, or SARS (also a coronavirus), and
has infected more than ten times the number of people who contracted
To infect a cell, coronaviruses use a ‘spike’ protein that binds to
the cell membrane, a process that's activated by specific cell
Genomic analyses of the new coronavirus have revealed that its spike
protein differs from those of close relatives, and suggest that the
protein has a site on it which is activated by a host-cell enzyme
This is significant because furin is found in lots of human tissues,
including the lungs, liver and small intestines, which means that the
virus has the potential to attack multiple organs, says Li Hua, a
structural biologist at Huazhong University of Science and Technology
in Wuhan, China, where the outbreak began.
The finding could explain some of the symptoms observed in people with
the coronavirus, such as liver failure, says Li, who co-authored a
genetic analysis of the virus that was posted on the ChinaXiv preprint
server on 23 February2.
SARS and other coronaviruses in the same genus as the new virus don't
have furin activation sites, he says.
The furin activation site “sets the virus up very differently to SARS
in terms of its entry into cells, and possibly affects virus stability
and hence transmission”, says Gary Whittaker, a virologist at Cornell
University in Ithaca, New York.
His team published another structural analysis of the coronavirus’s
spike protein on bioRxiv on 18 February3.
Several other groups have also identified the activation site as
possibly enabling the virus to spread efficiently between humans4.
They note that these sites are also found in other viruses that spread
easily between people, including severe strains of the influenza
On these viruses, the activation site is found on a protein called
haemagglutinin, not on the spike protein.
And the flu virus that caused the deadliest recorded pandemic, the
1918 Spanish flu pandemic, doesn’t even have a furin activation site,
says Lijun Rong, a virologist at the University of Illinois in
Whittaker says studies in cell or animal models are needed to test the
activation site’s function. “Coronaviruses are unpredictable, and good
hypotheses often turn out to be wrong,” he says. His team is currently
testing how removing or modifying the site affects the spike protein’s
McLellan’s group in Texas has identified another feature that could
explain why the new coronavirus infects human cells so successfully.
Their experiments have shown that the spike protein binds to a
receptor on human cells — known as angiotensin-converting enzyme 2
(ACE2) — at least ten times more tightly than does the spike protein
in the SARS virus.
Veesler’s team also found that the spike protein binds with high
affinity to the ACE2 receptor, which suggests that the receptor is
another potential target for vaccines or therapies.
For example, a drug that blocks the receptor might make it harder for
coronavirus to enter cells.
#COVID19 case alert: Doctors detected #coronavirus in cerebrospinal fluid of a Japanese man in his 20s, which propelled Japanese doctors to speculate the virus may also invade human brain @globaltimesnews
Law & Politics
A Chinese doctor has warned the novel coronavirus can attack a
person's central nervous system as gene sequencing at Beijing Ditan
Hospital has found coronavirus in the cerebrospinal fluid of a
56-year-old confirmed COVID-19 patient with encephalitis, which
provides evidence that COVID-19 can invade patients' nervous systems,
just like SARS and MERS.
It is the first case that proves the novel coronavirus can damage
people's central nervous system, media reported Wednesday.
Liu Jingyuan, dean of the ICU department of the Beijing Ditan Hospital
and attending doctor of the 56-year-old patient, warned that doctors
should check cerebrospinal fluid if patients suddenly slip in and out
of consciousness, in order to lower the fatality rate of critical
The patient recovered and was discharged from hospital on February 25.
He was hospitalized one month earlier for respiratory failure.
Doctors conducted gene sequencing on his cerebrospinal fluid as he
showed symptoms of neurological disorder like twitching on the face
after days of treatment while a CT scan and biochemical test results
could identify the causes.
One week before the case was revealed, Chinese researchers issued a
preliminary paper warning that the COVID-19 could possibly affect a
patient's nervous system, according to media reports.
The paper is authored by a team led by Hu Bo, a doctor from Union
Hospital under the Huazhong University of Science and Technology and
has not been peer-reviewed.
It said that 30 percent of the 214 patients the team studied showed
symptoms in their nervous systems and the rate is even higher in
critical patients at 45.5 percent.
The authors warned that doctors should pay attention to nervous system
expressions and conduct virus tests when seeing symptoms appear to
avoid misdiagnosis or delayed diagnosis, which would also help prevent
the spread of the virus.
China issued the seventh treatment guide for COVID-19 on Tuesday that
includes results of autopsies, which clarifies that the novel
coronavirus could damage various organs including brain tissue.
Viral Outbreak Shuts Debt Markets for African Borrowers @markets
Countries in sub-Saharan Africa will have to shelve plans for Eurobond
issuance as yields rise and the spread of the coronavirus limits
travel, according to investors including Capitulum Asset Management
GmbH and Gemcorp Capital LLC.
After rising 40 basis point in February, average sovereign dollar-bond
yields in the region have climbed 100 basis points in March to the
highest in more than a year, according to JPMorgan Chase & Co.’s
That compares with an increase of 60 basis points for emerging markets
“Sub-Saharan eurobond issuers will probably have to wait for the next
window, given the strong drop in commodity prices that has led to the
region underperforming emerging-market peers in the past week,” Simon
Quijano-Evans, the London-based chief economist at Gemcorp, said by
“There’s the likelihood that roadshows will be very difficult given
the coronavirus and the current preference for safe-haven
South Africa, Nigeria, Ivory Coast and Benin are among countries that
have penciled in Eurobond sales this year.
So far this year, Angola, Gabon and Ghana have tapped the market, with
the latter attracting $15 billion of orders for a $3 billion deal last
At the time, investors including Aberdeen Asset Management Plc warned
that market conditions would worsen for issuers as the coronavirus
curbs commodity prices.
Brent crude oil has slumped 27% this month, while cocoa futures are
down 3.5%. Cross-border travel bans by some governments, as well as
travel restrictions imposed by companies on their employees, means
organizing investor meetings in the circumstances would be difficult.
Right now “the mood is so bad that nobody will look at” Eurobond
offerings from sub-Saharan Africa, said Lutz Roehmeyer, the
Berlin-based chief investment officer at Capitulum.
“When even regular issuers and standard names do not come to market,
then irregular, first-time issuers or exotic names from Africa will
have a hard time to place bonds.”
While the Eurobond window is effectively closed for now, sub-Saharan
African sovereigns could consider borrowing from the International
Monetary Fund and the World Bank to meet financing needs, Gemcorp’s
The IMF has made available $50 billion to provide assistance to
low-income and emerging markets that are facing disruptions from the
“That option always has to be kept open,” Quijano-Evans said. “If that
sort of demand should arise I think the IMF will step in immediately
to support any country.”
Debt, virus and locusts create a perfect storm for Africa. @TheAfricaReport
The year began with promise for sub-Saharan Africa.
All the major institutions tracking African growth said so:
The African Development Bank pronounced in its Economic Outlook that
Africa’s economic outlook continues to brighten. Its real GDP growth,
estimated at 3.4% for 2019, is projected to accelerate to 3.9% in 2020
and to 4.1% in 2021.
The IMF said in its World Economic Outlook sub-Saharan Africa growth
is expected to strengthen to 3.5% in 2020–21 (from 3.3% in 2019).
The World Bank predicted ”Regional growth is expected to pick up to
2.9% in 2020”
Interestingly the World Bank added a caveat which was prescient:
A sharper-than-expected deceleration in major trading partners such as
China, the Euro Area, or the United States, would substantially lower
export revenues and investment.
A faster-than-expected slowdown in China would cause a sharp fall in
commodity prices and, given Sub-Saharan Africa’s heavy reliance on
extractive sectors for export and fiscal revenues, weigh heavily on
Those forecasts are now defunct and it’s only March.
The Coronavirus has to date barely made landfall on the African
continent with only 5 countries reporting infections but a Virus is in
its essence non-linear, exponential and multiplicative and it would be
a Shakespeare-level moment of hubris if policy makers were to pat
themselves on the back.
Diagnostic kits were only recently availed and if South Korea had
tested the same number of People as the entire African Continent, they
too would be reporting single digit cases.
We all know now ”what exponential disease propagation looks like in
the real world. Real world exponential growth looks like nothing,
nothing, nothing … then cluster, cluster, cluster … then BOOM!” and
therefore we will know soon whether we really have dodged the
#Coronavirus Infection Bullet.
The issue at hand now is around the violence of the blowback from the
China #Coronavirus feedback loop phenomenon.
The virus is not correlated to endogenous market dynamics but is an an
exogenous uncertainty that remains unresolved and therefore, it is a
Fantasy predictions of a V shaped recovery in China have been dashed.
In fact China cannot just crank up the ‘Factory’ because that will
risk a second round effect of infections.
Therefore, I expect negative GDP Growth through H1 2020 in China as my
Standard Bank’s Chief Economist has calculated that a one percentage
point decrease in China’s domestic investment growth is associated
with an average 0.6 percentage point decrease in Africa’s exports.
Those countries heavily dependent on China being the main taker of
their commodities are at the bleeding edge of this now negative
feedback loop phenomenon. Commodity prices [Crude Oil, Copper, Coal]
have crashed more than 20% since the start of the year.
You don’t have to be a rocket scientist or an Economist to calculate
which countries in are directly in the line of fire. Angola, Congo
Brazzavile, DRC, Equatorial Guinea, Zambia, Nigeria and South Africa
spring immediately to mind.
Notwithstanding comments by the always upbeat and bright-eyed
President Adesina of the African Development Bank that Africa is not
facing a debt crisis.
He told Bloomberg, “Debt is not a problem, it’s very bad debt that’s a
The point is this.
SSA Countries with no exception that I can think off have gorged on
borrowing and balance sheets are maxed out.
Africa’s sovereign issuance in the Eurobond markets totaled $53bn in
2018 and 2019 and total outstanding debt topped $100bn last year.
Debt burdens have increased and affordability has weakened across most
of Sub-Saharan Africa, while a shift in debt structures has left some
countries more exposed to a financial shock, said Moodys in November
Very few of the investments made are within spitting distance of
providing an ROI [Return on Investment].
Rising debt service ratios are best exemplified by Nigeria where the
Government is spending more than half of its revenue servicing its
More than 50% of SSA GDP is produced by South Africa, Nigeria and Angola.
South Africa reported that GDP in Q4 2019 shrank by a massive 1.4%.
Annual growth at 0.2% is the lowest yearly growth since 2009 and the
tape is back at GFC times.
The rand which has been in free fall has a lot further to fall in 2020.
And this is before the viral infection.
Nigeria’s oil revenue is cratering and there is $16bn of ”hot money”
parked in short term certificates which is all headed for the Exit as
we speak. A Currency Devaluation is now predicted and predictable.
South Africa, Nigeria and Angola are poised to dive into deep recession.
East Africa which was a bright spot is facing down a locust invasion
which according to the FAO could turn 500x by June.
It is practically biblical.
“If I shut up heaven that there be no rain, or if I command the
locusts to devour the land, or if I send pestilence among my people;”
– 2 Chronicles 7:13-14
This is a perfect storm. Buckle up, and let’s stop popping the Quaaludes.
'Panic' Selling on Oil Plunge Drives Nigerian Bond Yields Higher @markets
Nigeria’s Eurobonds due 2047 dropped for the sixth straight day on
Wednesday as investors dumped the notes over fears of a naira
devaluation after global oil prices plunged this week.
Yields on the dollar securities jumped 28 basis points to 10.4% with
currency speculators now betting that the central bank of Africa’s top
oil producer will be forced to allow the naira to weaken.
Monetary authorities will protect the economy from the negative fall
out of the sudden drop in oil prices, central bank Governor Godwin
Emefiele said at a conference in the capital, Abuja, on Wednesday.
“We will not hesitate to deploy additional measures to shield the
Nigerian economy from headwinds,” Emefiele said.
Foreign-exchange operators said a decline in the price of crude has
increased demand for dollars as traders and businesses worried that a
weaker naira will erode profits.
The fall in oil markets is “a cause for panic in the foreign exchange
market,” said Ainu Gwadabe, president of Bureau de Change Operators of
Nigeria in Lagos, the nation’s commercial hub. “The situation has
created unhealthy economic behavior like hoarding and speculation.”
A plunge in the price of crude oil is putting pressure on President
Muhammadu Buhari’s government to devalue the naira as the decline in
export revenue puts pressure on external reserves, hampering the
ability of the central bank to continue to support the local currency
in the import dependent nation. The West African nation depends on
crude for 90% of its export earnings.
The naira was quoted at 367.53 per dollar as at 1.32 p.m. local time
in the inter bank market, the weakest level since at least 1994 when
Bloomberg started compiling the data.
Nigeria’s fiscal and monetary authorities said they would announce
measures in coming days to deal with the economic fallout from the
2-SEP-2019 :: the China EM Frontier Feedback Loop Phenomenon. #COVID19
China EM Frontier Feedback Loop Phenomenon. This Phenomenon was
positive for the last two decades but has now undergone a Trend
The Fall-out is being experienced as far away as Germany Inc. The ZAR
is the purest proxy for this Phenomenon.
African Countries heavily dependent on China being the main Taker are
also at the bleeding edge of this Phenomenon.
This Pressure Point will not ease soon but will continue to intensify.
@KCBGroup reports FY 2019 EPS +3.576% Earnings
Par Value: 1/-
Closing Price: 47.80
Total Shares Issued: 3087443344.00
Market Capitalization: 147,579,791,843
KCB Group PLC FY 2019 results through 31st December 2019 vs. 31st December 2018
FY Financial assets at fair value through other comprehensive income
70.614b vs. 83.805b -15.740%
FY Loans and advances to customers (net) 535.371b vs. 455.880b +17.516%
FY Total Assets 898.572b vs. 714.313b +25.795%
FY Deposits from customers 686.583b vs. 537.460b +27.746%
FY Total equity 129.741b vs. 113.661b +14.147%
FY Net interest income 56.130b vs. 48.830b +14.950%
FY Non-interest revenue 28.172b vs. 22.973b +22.631%
FY Total income 84.302b vs. 71.803b +17.407%
FY Credit impairment charges 75.413b vs. 68.859b +9.518%
FY Total operating expenses [38.680b] vs. [34.698b] +11.476%
FY Profit before tax and loss on monetary position 36.733b vs. 34.161b +7.529%
FY Gain/[loss] on monetary position 164m vs. [302m] +154.305%
FY Profit before income tax 36.897b vs. 33.859b +8.973%
FY Income tax expense [11.732b] vs. [9.864b] +18.938%
FY Profit for the year 25.165b vs. 23.995b +4.896%
Basic and diluted EPS 8.11 vs. 7.83 +3.576%
Dividend per share 3.50 vs. 3.50 –
Cash and cash equivalents at 31 December 63.202b vs. 50.629b +24.834%
Key Financial Highlights
Performance Measure 2019 vs 2018
Non-Funded Income 33.4% from 32%
Return on Equity 20.7%
NPL Coverage- (IFRS) 72.1% from 68.6%
Liquidity Ratio 37.1% from 33.3%
Cost to Income Ratio (excl. provisions) 45.7%
Cost of Funds 2.8% from 3.2%
Group CEO Review
KCB Group CEO and MD, Joshua Oigara said the business remained
resilient despite the challenging economic conditions witnessed in the
various markets and the wider global economy.
“The East African region continued to face various downside risks that
ranged from adverse weather patterns to stress from currency
fluctuations and the pressure from oil imports” he said while
releasing the results in Nairobi on Thursday.
“All business lines were strong on both funded and non-funded income
as cost control, operational efficiency and driving excellent customer
experience remained a top priority,” said Mr. Oigara.
Both the Kenya business and the international subsidiaries delivered
strong income growth. Acquisition of National Bank of Kenya (NBK)—a
transaction that was finalized in the last quarter of 2019— solidified
the Group’s base from a revenue and balance sheet position.
Total income increased 17% to KShs.84.3 billion while operating
expenses grew much slower by 10%, resulting in an improved cost to
income ratio of 45.7%, compared to 48.7% the previous year.
Net interest income expanded 15% to KShs. 56.1 billion from KShs. 48.8
billion primarily due to a 17% growth in loan book, digital lending
and additional interest income from NBK. Fees and commissions surged
39% to KShs. 19.8 billion on diversified income streams.
The Digital Bank
Enhanced investments in digital channels pushed non funded income up
22.6% to KShs.28.2 billion from KShs.23.0 billion in 2018.
“Our investments in diversified channels are giving our customers a
means to access banking services conveniently, at a competitive prices
and in line with our purpose of simplifying their world to enable
their progress” said Mr Oigara.
During the year under review, the number of non-bank transactions
increased to 97% with a majority of them conducted via mobile devices.
Mobile loans advanced increased to KShs. 212 billion from KShs. 54
billion in 2018. The cumulative disbursement via mobile over the past
five years totaled to KShs. 319 billion.
Cost Management and Efficiency
At KShs. 38.5 billion, total pre-provision operating expenses were
relatively contained due to cost efficiency measures, growing from
KShs. 35.0 billion, largely driven by staff costs which went up 13.4%
in part due to the acquisition of NBK.
Balance Sheet Growth: The Ksh1 trillion Goal
KCB maintained its lending pattern in 2019, growing assets base
despite lower asset yield, observed in the key market—Kenya— due to
reduction of the benchmark lending rate.
Total assets surged 26% to KShs.899 billion from KShs. 714 billion in 2018.
The key drivers for this growth were the loan book growth of 17 % to
KShs 535.4 billion— reflecting the strong lending pipeline primarily
driven by retail and corporate banking customer segment—and the
customer deposits growth of 28% to KShs. 686.6 billion.
The main driver for this growth was acquisition of NBK.
The ratio of non-performing loans to total loan book increased to
10.9% (7.4% excl. NBK), well below the industry average of 12.0%. As a
result, provisions for impairment increased to KShs. 8.9 billion from
The key sectors driving this deterioration in asset quality were
trade, tourism and manufacturing sectors within the corporate banking
book and on the mobile loan portfolio.
The stock of NPLs increased to KShs. 63.4 billion (KShs. 38.2 billion
excluding NBK) up from KShs 32.7 billion in 2018, following
consolidation with NBK.
Overall, the business continued to generate good returns for its
shareholders averaging a return on equity of 20.7% in 2019.
Shareholders’ equity was up 14.1% from KShs113.7 billion to KShs.129.7
KCB distributed part of the profit by way of an interim dividend of
KShs 1.0 per share in the course of 2019. The KCB Group Board has
proposed a final dividend of KShs. 2.5 per share to be presented to
shareholders in the Annual General Meeting to be held in May this
KCB Group maintained healthy buffers on its capital ratios over the
minimum regulatory requirement. All banking subsidiaries met
regulatory capital requirement with the exception of NBK which was
below total capital requirement. This is expected to be addressed
within the first half of 2020 through various initiatives at NBK.
The Group’s core capital as a proportion of total risk weighted assets
closed the period at 17.2% against the Central Bank of Kenya statutory
minimum of 10.5%. Total capital to risk-weighted assets stood at 19.0%
against a regulatory minimum of 14.5%.
Last year represented a significant period with the maturity of the
Group’s 2015-2019 Strategic Plan which was anchored on customer
experience, network spread, youth agenda, digital financial services,
new businesses, robust IT platform, and strategic partnerships. This
year marks the start of our new 3-year strategic cycle.
Going forward, the business outlook for the year remains positive,
with significant gains expected following the removal of the cap on
interest rates in November 2019.
“The banking sector is seeing heightened regulatory scrutiny,
increased competition, amplified adoption of digital banking, and
shifting economic environment across the East African region. In the
face of these shifts, we have positioned ourselves and tapped into
opportunities presented as we navigate past the challenges. We are
focused on deepening our contribution towards financial deepening and
economic development,” said the KCB Group Chairman, Andrew Kairu.
Mobile loans advanced increased to KShs. 212 billion from KShs. 54
billion in 2018. The cumulative disbursement via mobile over the past
five years totaled to KShs. 319 billion. #KCB2019FYResults
@KCBGroup Total assets surged 26% to Sh899 Bn from Sh714 billion in
Highlights of performance from the KCB Group PLC subsidiaries in 2019
which saw a 7.4% growth in International business PBT.
Bulked up the balance sheet.
Obviously NBK was a Net Add.
It will be interesting to see ow aggressively they pivot post the Rate