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Satchu's Rich Wrap-Up
 
 
Tuesday 30th of November 2021
 



29-NOV-2021 :: Regime Change
World Of Finance


Many Years ago, I lived in Putney Hill. 

In a curious twist, my neighbours in my block of Flats were Iraqi and Insiders of the Ancien Regime. 

Mr. and Mrs Chalabi lived opposite and of course it was their nephew Dr. Ahmed Abdel Hadi Chalabi who was a close confidante of the Bush Administration and a big Promoter of American intervention in Iraq and a Math Whiz. 

Mrs. Chalabi was a seriously accomplished Chef and would occasionally knock on my door and invite me for the finest Tea, considerably outperforming anything Fortnum and Mason’s could dish up. 

We had bought the apartment from Dr. Allawi and in fact up there on Putney Hill, I later appreciated I was surrounded by Folks whom Saddam Hussein probably was not very keen on.
There were many moments after a late night out that I imagined that Saddam’s fidā'i known as the Order of Assassins, often referred to as the Hashshashin were probably en route and due to a cruel twist of fate would mistake Flat 31 for flat 32 and I would be an inexplicable foot note in the entire US Iraq Bush the elder and the younger Saddam Hussein saga. 

Regime Change came to Saddam’s Iraq and for a while regime change was de rigeur.
Muammar Gaddafi was decapitated and the domino effect only stopped when Vladimir Putin decided he was going to put a stop to it and intervened on behalf of Bashar Al-Assad in Syria.
Today, the US has exited Afghanistan and the days of a Unipolar World are self evidently behind us. 

We exist in a Tripolar World [US China and Russia] with rapidly emerging Middle Powers. 

I am not discounting Fortress Europe but one senses the Fortress is keener on a more defensive posture unlike the US [notwithstanding its withdrawal from Afghanistan], China and Russia. 

Taiwan and Ukraine are the immediate geopolitical flashpoints.

The Invisible Microbe has metastasized into Omicron and what we know is that COVID-19 far from becoming less virulent has become more virulent.
B.1.1.529 seems to have gone from 0.1% to 50% in just a couple of weeks, when it took Delta several months to achieve that. #Omicron @TWenseleers


"The greatest shortcoming of the human race is our inability to understand the exponential function."

this variant is out-competing others *far* faster than Beta and even Delta did #Omicron @jburnmurdoch

https://twitter.com/jburnmurdoch/status/1463956686075580421?s=20
South Africa was where the #Omicron Variant was first identified and cases have exploded there [admittedly from a low base]
Nation w/ fast COVID19 case/day increase past 2wks @jmlukens 

https://twitter.com/jmlukens/status/1464654513667592195?s=20
South Africa: 1124% France: 191% Spain: 134% Portugal: 115% Switzerland: 111% Ecuador: 105% Czechia: 101% Jordan: 95% Vietnam: 89% Sweden: 88%
Update #COVID19 in GAUTENG • 2,629 new cases today, 7-day avg up 331% week-on-week Case incidence doubling every 3.5 days @rid1tweets


The transmissibility of #Omicron is not in question, it clearly has a spectacular advantage.
The Open Question is whether it is more virulent. If it is less virulent then #Omicron is breaking the Trend of increasing virulence.

The arrival of #Omicron brought ‘’Regime Change’’ to the markets on Friday.
For some time I have been saying
A REGIME CHANGE IS UNDERWAY [in the markets]
There is no training – classroom or otherwise.. that can prepare for trading the last third of a move, whether it's the end of a bull market or the end of a bear market. There's typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. Paul Tudor-Jones
I have been warning
The Music has been playing for Eternity and its about to stop
https://bit.ly/2Wzp4Fg
And below captioned is my favourite musical snippet of recent times
Just played #laritournelle with @ESKAonline and some amazing musicians @southbankcentre paying tribute to the legendary #tonyallen @thenitinsawhney 

https://twitter.com/thenitinsawhney/status/1459652573812695040? s=20
And Friday saw some seriously dramatic moves
Concern about the latest Covid variant on Friday drove 10-year Treasury yields to their biggest one-day drop since the early months of the pandemic.

BRENT front-month futures closed down -11.3% on Friday, a percentage price change almost 5 standard deviations away from the mean. It was the 9th largest one-day decline since 1990 @JKempEnergy

The Oil Markets are no doubt looking over their shoulder and remembering the negative prices we witnessed last year.
Mirrors on the ceiling, The Pink champagne on ice
https://bit.ly/3Bk45Gj
Last thing I remember, I was Running for the door

The Stock Market has a long way to fall
Just to put things into perspective: S&P 500 trades at a higher multiple than before the pandemic crash in Mar2020 @Schuldensuehner


Bitcoin tumbles 20% from record highs earlier this month, entering a bear market #BTC @crypto

If after this morning you still think that #BTC is a hedge against world events, or represents "diversification", you must stay out of finance, & take up some other hobby s.a. stamp collecting, bird watching or something less harmful to yourself & others. @nntaleb

They can never beat you if you buy the dips. @nayibbukele

The ‘’Bukeleists’’ are going to be tested
"Money Suppy increases", if they went somewhere, they went to ... Bitcoin. @nntaleb
I’m really concerned about @bankofengland printing money out of thin air. @nayibbukele

And we are back at the bottom of the channel. @Remi_Tetot
https://twitter.com/Remi_Tetot/status/1464234830372249602?s=20

The Signal in the Noise is the Dollar

The Dollar has been on a roll and simply crushing other G10 currencies and creaming EM
EM looks like Trevor Berbick did when he was crushed by Mike Tyson
The Turkish Lira has been leading the downside charge of course
The emerging markets sovereign CDS index has just taken out the year's wide; got to a peak of 470 bps in the initial Covid lockdown in March 2020 (and over 800 bps in the GFC). @bondvigilantes


For a while this Portfolio did not look too clever
23-AUG-2021 :: ZigZag Therefore, I am clearing the decks and just holding
https://bit.ly/2Wzp4Fg
$TNX 20%
Ultras (#UB_F) 50% $NFLX 10%
Short ZAR 10% Cash 10%
The newest iteration is as follows
$TNX 20% reducing to 10% at 1.15-% to 1.25% yield levels
Ultras (#UB_F) 50% scale reduction to 20% at above 203.00 on a price basis
$NFLX 10%
Short ZAR 10%
Cash 10%
Increasing allocation to
Coffee
Natural Gas
Wheat

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Their intention is to slowly exhaust, to let you know that we have this power, Defence Minister Chiu Kuo-cheng told reporters @Reuters
Law & Politics





Taiwan, which Beijing claims as its own and has not ruled out taking by force, calls China's activities "grey zone" warfare.

The latest Chinese mission included 18 fighters jets plus five nuclear-capable H-6 bombers, as well as, unusually, a Y-20 aerial refuelling aircraft, Taiwan's Defence Ministry said.

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The Open Question is whether it is more virulent. If it is less virulent then #Omicron is breaking the Trend of increasing virulence.
Misc.


Ridiculous The speed of Omicron is from its sera escape Huge advantage @fitterhappierAJ


People come to me saying my assessment is too early while Omicron is spreading at a FANTASTIC rate

And claiming that the variant is mild... something that is determined far after the transmissibility...

Ridiculous The speed of Omicron is from its sera escape Huge advantage

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@WHO Weekly epidemiological update on COVID-19 - 23 November 2021
Misc.

Globally, the numbers of weekly COVID-19 cases and deaths have increased for more than a month

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1337
Dollar Index 95.939
Japan Yen 113.11
Swiss Franc 0.9201
Pound 1.3334
Aussie 0.7121
India Rupee 75.1168
South Korea Won 1190.27 
Brazil Real 5.6022
Egypt Pound 15.7171
South Africa Rand 16.1145

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Africa is currently reporting a million new infections about every 93 days @ReutersGraphics
Africa

All countries are currently below the peak of their infection curve.

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@CentumPLC reports H1 2021 Earnings here
N.S.E Equities - Finance & Investment


Par Value:                  0.50/-
Closing Price:           15.45
Total Shares Issued:          665441775.00
Market Capitalization:        10,281,075,424
EPS:             -0.93
PE:                 -16.613

 

Centum reports H1 2021 Earnings 6 months through 30th September 2021 versus 6 months through through 30th September 2020 
HY Trading Profit 255.330m versus [316.793m]

HY Income from Financial Services 2.570133b versus 1.871656b

HY Funding & Other Cost [2.359673b] versus [1.833909b]

HY Profit from Financial Services 210.460m versus 37.747m

HY Loss from Real Estate Investments [141.807m] [279.775m]

HY Loss from Two Rivers Development [342.371m] versus [1.010856b]

HY Investment & Other Income 771.172m versus 329.095m

HY Operating & Administrative costs [401.019m] versus [354.561m]

HY Finance Costs [326.964m] versus [453.776m]

HY Profit [Loss] from Investment operations 43.189m versus [479.242m]

HY Operating profit [Loss] before impairment provisions 24.801m versus [2.048919b]

HY Impairment Provision on assets [721.407m]

HY [loss] before Tax [696.606m] versus [2.048919b]

HY [loss] after Tax [662.107mm] [1.981725b]

HY Other comprehensive income net of Tax 418.486m versus 267.700m

HY EPS [0.89] versus [2.09]

Closing Cash and cash equivalents 3.452b versus 8.323b

Company Commentary 

Company Performance
The Company’s operating profit for the six-month period ended 30 September 2021 increased to KES 425 million from KES 95 million reported in the corresponding prior year period, driven mainly by the 38% increase in investment income. 

This increase in operating profitability is attributable to higher investment income as the company continued rebalancing its portfolio in line with its capital preservation and liquidity enhancement objectives. 

The profit after- tax declined to KES 12 million from KES 95 million driven by a non-cash impairment provision of KES 413 million following a conservative assessment of the realizable value of some of the assets on the Company’s balance sheet. 

The benefits of the strategic decision to pay down debt, has resulted in the reduction in finance costs by 24%. 

During the six-month period ended 30 September 2021, the company booked revaluation losses of KES 296 million, lower than prior period of KES 1.4 billion, in line with our conservative asset valuation policy.
Debt Reduction: During the year, the company did not take up any long-term debt, in line with its strategic objective of fully deleveraging the balance sheet at Centum level. 

Long term debt may be used to finance projects and investments at investee company level, depending on the debt capacity of the specific projects and investments undertaken by the different investee companies. 

The positive impact of deleveraging on the balance sheet is a 24% reduction in the company’s finance costs in the six-month period ended 30 September 2021, compared to the corresponding period in the prior year.

Net Asset Value Per Share
The Net Asset Value per share declined slightly from KES 62.85 to KES 62.09.
Trading businesses: 

Trading businesses recorded improved performance in the six-month period compared to last year with a profit of KES 255 million compared to a prior year loss of KES 317 million. 

This improved performance is attributable to Longhorn Publishers which recorded bottom-line growth by regional expansion and a recovery in the education sector following the re-opening of schools. 

Financial Services: 

Financial Services recorded a five-fold growth in profitability in the six-month period compared to last year with a profit of KES 210 million from a prior year profit of KES 38 million. The improvement is attributable to the strong performance by Sidian Bank
Real Estate: Centum RE, the Real Estate business, halved its six-month period loss to KES 142 million from a loss of KES 280 million recorded in the six-month period ended 30 September 2020. 
Two Rivers Development Limited: Though the bulk of the loss in the consolidated statement of comprehensive income is attributable to the performance of Two Rivers Development Limited (TRDL), the business recorded significant improvement, posting a loss of KES 342 million in the six-month period ended 30 September 2021 compared to the KES 1 billion posted in the corresponding prior-year period. 

Though Centum Investment holds a 58% equity stake in TRDL, we have recognized TRDL’s performance in our consolidated financial statements as if we own a 100%. 

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by Aly Khan Satchu (www.rich.co.ke)
 
 
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November 2021
 
 
 
 
 
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