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Satchu's Rich Wrap-Up
 
 
Tuesday 28th of June 2022
 
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Africa

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What’s behind the sharp drop in Bitcoin’s value? $BTC #Bitcoin @AJInsideStory
World Currencies

What’s behind the sharp drop in Bitcoin’s value? $BTC #Bitcoin @AJInsideStory 
Presenter: Sami Zeidan
Guests
Aly-Khan Satchu – Investor and CEO at Rich Management
Naeem Aslam – Chief market analyst at AvaTrade
Brian Lucey – Professor of international finance and commodities at Trinity Business School

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A REGIME CHANGE IS UNDERWAY [in the markets]
World Of Finance


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


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The Music has been playing for Eternity and its about to stop
World Of Finance


Love Fellini. So brave, with that whiff of insanity. @DiAmatoStyle Federico Fellini's 8 1/2 @tcm


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I can guarantee you that the economy cannot cope with Taylor-rule like policy rate levels @AndreasSteno
World Of Finance

I can guarantee you that the economy cannot cope with Taylor-rule like policy rate levels @AndreasSteno

Conclusions

Then Welcome to Weimar Economics 

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Actually the default is utterly irrelevant @AndreasSteno
World Of Finance


I love how people in here can construct a narrative that defaulting on foreign bonds is a sign of strength 

Russia's access to foreign bond markets is dead and burried for many years now.. 
Unless you think the West will implode, that is a really bad thing for Russia. Period.

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We live between oblivion and memory; Octavio Paz @_ui1422
Misc.

We live between oblivion and memory; Octavio Paz @_ui1422
We live between oblivion and memory;
This moment is a island ..
       .. weathered by incessant time.

                         Octavio Paz

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Who Killed Palomino Molero? by Mario Vargas Llosa (1986)
Misc.

Who Killed Palomino Molero? by Mario Vargas Llosa (1986) 

The town was a livid metallic stain below them, stretched along a motionless lead-green sea. In the intense glare they could barely make out the outlines of houses and telephone poles.

Amotape is thirty miles south of Talara, surrounded by sun-parched rocks and scorching sand dunes. There are dry bushes, carob thickets, and here and there a eucalyptus tree—pale green patches that brighten the otherwise monotonous gray of the arid landscape. 

The trees bend over, stretch out and twist around to absorb whatever moisture might be in the air; in the distance they look like dancing witches
It still wasn’t dark. The sun was a ball of fire among the eucalyptus and carob trees; the tin roofs of some houses reflected the blazing sunset

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Sunday, April 10, 2022 Apocalypse Now The consequences for global stability are now unfathomable.
Law & Politics


Sunday, April 10, 2022 Apocalypse Now

The moment we find ourselves is in is one of extreme stress and complexity. The Geopolitical fault line is most visible in Ukraine and therefore at the European periphery, however, fault lines are emerging all over the global landscape and exhibiting multiple feedback loops, which feedback loops all have viral and exponential characteristics.

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The Fantasy of Fanaticism @Consortiumnews
Law & Politics


The Fantasy of Fanaticism @Consortiumnews

Despite what some “defense analysts” may be telling Western media, the longer the war continues, the more Ukrainians will die and the weaker NATO will become.

In a stunning admission, Oleksandr Danylyuk, a former senior adviser to the Ukrainian Ministry of Defense and Intelligence Services, noted that the optimism that existed in Ukraine following Russia’s decision to terminate “Phase One” of the SMO (a major military feint toward Kiev), and begin “Phase Two” (the liberation of the Donbass), was no longer warranted. 

“The strategies and tactics of the Russians are completely different right now,” Danylyuk noted. 

“They are being much more successful. They have more resources than us and they are not in a rush.”

“There’s much less space for optimism right now,” Danylyuk concluded.
In short, Russia was winning.

In recognition of this reality, NATO Secretary General Jen Stoltenberg announced that Ukraine will more than likely have to make territorial concessions to Russia as part of any potential peace agreement, asking,
“what price are you willing to pay for peace? How much territory, how much independence, how much sovereignty…are you willing to sacrifice for peace?”
Stoltenberg, speaking in Finland, noted that similar territorial concessions made by Finland to the Soviet Union at the end of the Second World War was “one of the reasons Finland was able to come out of the Second World War as an independent sovereign nation.”
To recap — the secretary general of the trans-Atlantic alliance responsible for pushing Ukraine into its current conflict with Russia is now proposing that Ukraine be willing to accept the permanent loss of sovereign territory because NATO miscalculated and Russia —instead of being humiliated on the field of battle and crushed economically — is winning on both fronts.
Decisively.
That the secretary general of NATO would make such an announcement is telling for several reasons.

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1Main square of Severodonetsk, Ukraine, February 2018. (Visem, CC BY-SA 4.0, Wikimedia Commons)
Law & Politics


The Charge of the Light Brigade


“Forward, the Light Brigade!” 

Was there a man dismayed? 

Not though the soldier knew
Someone had blundered. 

Theirs not to make reply, 

Theirs not to reason why, Theirs but to do and die. 

Into the valley of Death Rode the six hundred.

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Analysis: Tide turns in the Ukraine war as Russia makes progress in the east CNN
Law & Politics


Analysis: Tide turns in the Ukraine war as Russia makes progress in the east CNN

Russian forces are arguably having their best spell since the invasion of Ukraine began four months ago.

They have eliminated most Ukrainian defenses in the Luhansk region, consolidated control of a belt of territory in the south, improved their logistics and command structure and blunted the effectiveness of Ukrainian attack drones.

It's perhaps no accident that the first reported visit of Russian Defense Minister Sergei Shoigu and senior commanders to forces involved in the "special military operation" came as the tide seemed to flow in Russia's favor.

The great unknown is whether Russian success in rolling up Ukrainian defenses in Donetsk might encourage a further expansion of its war aims beyond the special military operation -- perhaps an effort to sustain the momentum as far as the Dnipro river, which essentially divides Ukraine into two.

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May 29 I continue to expect Russia to reach Odesa landlocking the Ukraine before completing this operation.
Law & Politics


May 29 I continue to expect Russia to reach Odesa landlocking the Ukraine before completing this operation. 

The Ukrainian Military is being extinguished, the idea that there will be an insurgency that will bleed Russia a pipe dream. 

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.057595
Dollar Index 103.791
Japan Yen 135.3825
Swiss Franc 0.956480
Pound 1.22688
Aussie 0.692890
India Rupee 78.6272
South Korea Won 1286.435
Brazil Real 5.2390000
Egypt Pound 18.738299
South Africa Rand 15.823920 

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At G7, UK PM Johnson will call for urgent action to help get vital grain supplies out of Ukraine. @vtchakarova
Law & Politics


At G7, UK PM Johnson will call for urgent action to help get vital grain supplies out of Ukraine. @vtchakarova

Ukraine supplied 10% of the world’s wheat, up to 17% of the world’s maize & half of world’s sunflower oil. 25 million tonnes of corn & wheat are at risk of rotting in Ukrainian silos

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Frontier-Debt Buyers Look Past Default Risk in Hunger for Yield @markets @TheTerminal @business @RonoMaz @karllesteryap H/T @SriniSivabalan
Frontier Markets


Frontier-Debt Buyers Look Past Default Risk in Hunger for Yield @markets  @TheTerminal @business @RonoMaz @karllesteryap H/T @SriniSivabalan

Signs of distress flashing in bond markets suggest the world’s poorest nations are set to see a wave of debt restructurings. 

But a growing cohort of investors say that’s a buying opportunity.
Panic selling in the aftermath of Sri Lanka’s economic collapse has sent the average yield in junk-rated emerging economies to almost 900 basis points above US Treasuries, the highest risk premium in 13 years except for the Covid-related rout in 2020, according to JPMorgan Chase & Co. data. Yet, initial fears about a widespread default Armageddon across emerging markets is easing, and money managers are looking beyond the handful of countries that may reschedule their debt.

This shift in perception means at least some smaller developing nations, called frontier markets, have been unduly punished in the recent selloff and now offer highly attractive yields.

 Even in the event of debt restructuring, their bonds will offer greater recovery values than current bond prices, investors including Barclays Plc and Bluebay Asset Management say. 

“The beating in the frontier space has been much more severe than the broader emerging-market space,” said Lars Jakob Krabbe, a money manager for frontier-market fixed income at Coeli Frontier Markets AB. 

“We are getting closer to where we see a bottom. That has to do with you having a high coupon coming to you all the time, unless credits default in a larger sense, which I doubt.”

The selloff in frontier-market debt started last year, well before the Sri Lankan crisis grabbed the world’s attention, as investors trimmed the riskiest portions of their portfolios in preparation for the Federal Reserve’s monetary tightening. 

The Asian island nation’s default this year sparked further losses, especially among countries seen as having similar problems to Sri Lanka -- high debt, a food-and-fuel price crisis, low foreign-exchange reserves and political discontent.

As a result, the number of countries whose dollar bonds trade at least 1,000 basis points above Treasury yields -- a widely accepted measure of distress -- has more than doubled since the start of the year to 19.

 Ecuador, Kenya, Nigeria and Egypt are the latest members of this unfortunate club that also includes Pakistan, Belarus, Tajikistan and the war-torn Ukraine. 

“The risk premium embedded in the market is quite substantial,” said Anupam Damani, the head of international and emerging-market debt at Nuveen.

 “In some cases, these credits have been pricing in way below recovery levels. I’m not saying all of these credits will survive but some surely will. Being selective in that space clearly offers value.”

Money managers see multiple avenues through which they can profit from the idea that actual defaults will be lower than what the market pricing suggests currently. 

For some, the renewed strength of the dollar makes eurobonds, which typically move in tandem with the greenback, a tempting investment. 

For others, their high coupon rates mean attractive total returns even if bond prices prove volatile.

“In the higher-beta segment, total-return prospects justify overweights in select distressed frontier credits including Ghana, El Salvador and Zambia and in oil exporters Oman, Ecuador and Nigeria,” Barclays analysts led by Christian Keller wrote in a note.

Investors may also be overcoming their initial angst about the war in Ukraine and its impact on frontier markets through food-price shocks. 

“A lot of the distressed frontier stories were well known, and already traded with decent yields to provide ample compensation,” said Tim Ash, a senior strategist at Bluebay Asset Management. 

“I’m not sure the Ukraine crisis is really pushing that many new frontier credits over the edge. Most had their underlying problems already.”

Selective Bets

The most attractive frontier-market bets are located in Africa. Ghana, which was cited by money managers as most likely to run into a debt-repayment problem after Sri Lanka, is now their top pick. 

Barclays, Coeli and Tellimer recommend Ghanaian bonds after its 2026 security fell below 70 cents on the dollar in June, the lowest price in six years. The bond rose to 72.2 cents on Monday.

“The selloff has created buying opportunities in Pakistan and Ghana, where bonds are now trading roughly in line with our estimated recovery values, and in Egypt and Kenya, where the rise in yields has outstripped fundamentals,” said Patrick Curran, a senior economist at Tellimer.

In Latin America, El Salvador and Ecuador are the most favored. The latter is among a clutch of oil exporters recommended by Barclays, while investors keen on El Salvador are watching the moves in Bitcoin after the country lost about half of the $100 million it spent on the cryptocurrency.

Every money manager is keen to emphasize that they aren’t making a bullish call on frontier markets at this point but only a tactical adjustment taking advantage of the market’s overblown fears of default that aren’t coming true. 

“It’s generally quite a gloomy outlook for frontiers,” said Richard Segal, a research analyst at Ambrosia Capital in London. “There will be many debt reschedulings, but we don’t expect more defaults in the near-term.” 

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Of the 74 emerging sovereign dollar bonds tracked in a Bloomberg index, more than half of the worst-performing securities in the month to date are in Africa. @OEAfrica
Africa


Of the 74 emerging sovereign dollar bonds tracked in a Bloomberg index, more than half of the worst-performing securities in the month to date are in Africa. @OEAfrica


That’s pushed the average eurobond yield on the continent to levels last seen in April 2009, during the global financial crisis.
“The ground has shifted and cheap budget funding in frontier markets is a thing of the past,” Irmgard Erasmus, a senior economist at Oxford Economics Africa, said in a research note Tuesday. 

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6 AUG 18 :: The Indian Ocean Economy and a Port Race
Africa


6 AUG 18 :: The Indian Ocean Economy and a Port Race


The Indian Ocean Economy preceded the Atlantic Ocean Economy, where the Europeans only learnt how to ‘’crack the code’’ of the Atlantic winds [and a new ‘Western’ culture arose on both sides of the ocean] long after the Indian Ocean.
Professor Felipe Fernández-Armesto explains ‘The precocity of the Indian Ocean as a zone of long-range navigation and cultural exchange is one of the glaring facts of history’, made possible by the ‘reversible escalator’ of the monsoon.’
As we scan the Blue Economy it is worth appreciating that Maritime shipping is the lifeblood of Africa, with over 90% of the continent’s imports and exports transported by sea.
Today from Massawa, Eritrea [admittedly on the Red Sea] to Djibouti, from Berbera to Mogadishu, from Lamu to Mombasa to Tanga to Bagamoyo to Dar Es Salaam, through Beira and Maputo all the way to Durban and all points in between we are witnessing a Port race of sorts as everyone seeks to get a piece of the Indian Ocean Port action.
China [The BRI initiative], the Gulf Countries [who now appear to see the Horn of Africa as their hinterland], Japan and India [to a lesser degree] are all jostling for optimal ‘’geo-economic’’ positioning.
Overlay the Geopolitics and its worth noting that the Geopolitics has become much more fluid. 

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2018 FOCAC Beijing Summit: Chinese President Xi Jinping's speech at the opening ceremony
Africa


2018 FOCAC Beijing Summit: Chinese President Xi Jinping's speech at the opening ceremony

In addition, for those of Africa’s least developed countries, heavily indebted and poor countries, landlocked developing countries and small island developing countries that have diplomatic relations with China,
the debt they have incurred in the form of interest-free Chinese government loans due to mature by the end of 2018 will be exempted.

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World’s Most Aggressive Central Bank Raises Key Rate to 200% @markets @economics @OEAfrica
Africa


World’s Most Aggressive Central Bank Raises Key Rate to 200% @markets @economics @OEAfrica

Zimbabwe’s central bank raised its benchmark interest rate to a record high, one of a series of measures announced by the government to rein in inflation and stabilize the exchange rate.
The monetary policy committee hiked the rate to 200% from 80%, Governor John Mangudya said in a statement on Monday. That brings the cumulative increase this year to 14,000 basis points -- the most globally. 
“The monetary policy committee expressed great concern on the recent rise in inflation,” Mangudya said. 

“The committee noted that the increase in inflation was undermining consumer demand and confidence and that, if not controlled, it would reverse the significant economic gains achieved over the past two years.”
Surging commodity prices stemming from throttled supply chains because of Russia’s war with Ukraine and the lingering effects of Covid-19 lockdowns have compounded pressure on the local currency and its slide has fanned the use of US dollars to pay for everything from food, fuel and medicine to school fees.
Annual inflation has been in triple digits for two straight months, quickening to 191.6% in June from 131.7% a month prior.

 The Zimbabwean dollar has slipped 69% to $352.06 against the greenback this year. 
Finance Minister Mthuli Ncube announced at a media briefing on Monday that the government would legalize the use of the US dollar for the next five years to help steady the Zimbabwean currency.
Previous attempts to stop the currency’s collapse have included a 10-day ban on bank lending, restrictions on trades on the Zimbabwe Stock Exchange, allowing companies to pay taxes in the local unit and introducing a new interbank rate at which most commerce will take place.  
Central bankers globally have been unleashing what may prove to be the most aggressive tightening of monetary policy since the 1980s to contain runaway inflation, prevent capital outflows and currency weakness as investors hunt for higher yields. 

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Sanlam Individual Life has revealed that it paid out R8.24-billion in claims last year — almost double what was paid to clients (R3.9-billion) in 2018. Of the claims paid, the majority can be attributed to death claims. @dailymaverick
Africa


Sanlam Individual Life has revealed that it paid out R8.24-billion in claims last year — almost double what was paid to clients (R3.9-billion) in 2018.  Of the claims paid, the majority can be attributed to death claims. @dailymaverick


The business also paid 82% more in death and funeral claims in 2021 compared with the year before. 

The largest single death claim was R36.1-million, with a total of R7.2-billion paid for death claims in 2021.
Most death claim payouts were linked to “diseases of the respiratory system” for men and women. 

This includes R2.6-billion for confirmed Covid-19 claims and highlights the devastating impact of the pandemic.

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IMF Delays $238 Million Loan for Kenya as Board Yet to Meet
Kenyan Economy


IMF Delays $238 Million Loan for Kenya as Board Yet to Meet

Kenya may need to find alternative sources to finance its current budget due to a delay by the International Monetary Fund in issuing it with a 28 billion shilling loan ($238 million).
The funding is part of a $2.34 billion extended credit facility and extended fund facility that was agreed to by the IMF more than year ago for budget support. 

The loan needs board approval after a staff-level agreement with the lender was reached in April. 
The board is only expected to meet in “coming weeks” to give final approval, a spokesman for the lender said in an emailed response to questions, without explaining the reason for the delay. 
Kenya had included the loan in its net external financing requirement of 280.7 billion shillings for the fiscal year ending this month, and the delay is likely to place further pressure on the nation to find budget funding. 

Earlier this month it halted plans to sell Eurobonds in 2022 because of a surge in yields that have made issuances too expensive and said it will seek to borrow about $1 billion from banks by the end of June instead. Its $2 billion notes maturing in June 2024 are trading at distressed levels.   
Central bankers have been unleashing what may prove to be the most aggressive tightening of monetary policy since the 1980s to curb high inflation, fanned by choked supply chains, historic stimulus packages and Russia’s invasion of Ukraine. 

That’s caused a flight of capital from riskier and heavily indebted nations, increasing the cost of Eurobond issuances to fund budget shortfalls. 
“The modest delay in the timing of the anticipated IMF financing could be mitigated by securing alternative source of financing,” the IMF spokesman said. 
Treasury Secretary Ukur Yatani and Principal Secretary Julius Muia did not answer calls or respond to messages to their mobile phones for comment. 

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.@Proparco has acquired a $31.5 million stake in supermarket chain @naivas_kenya as part of a consortium that will take a combined 40 percent ownership in the retailer. @BD_Africa
Kenyan Economy


.@Proparco has acquired a $31.5 million stake in supermarket chain @naivas_kenya as part of a consortium that will take a combined 40 percent ownership in the retailer. @BD_Africa
Naivas had earlier announced that Proparco, Mauritian conglomerate IBL Group and German sovereign wealth fund DEG were taking a minority interest in the company without disclosing the details of the proposed transaction including the stake to be purchased.

They are acquiring stakes owned by a cluster of investors including World Bank’s International Finance Corporation (IFC), MCB Equity Fund, Amethis, and German sovereign wealth fund DEG, which acquired the shares in the retailed for Sh6 billion in April 2020.
The deal underlines the worth of Naivas, which remains a star attraction to private equity funds in Kenya’s retail sector where the collapse of one of the major players in recent years has left a gap.
“Proparco is pleased to announce its partnership with IBL Group, the largest conglomerate of Mauritius [and] DEG … to jointly acquire a 40 percent interest in Naivas International, which owns 100 percent of the shares of Naivas Limited,” the French fund in a statement.
Proparco said its capital contribution will be $31.5 million (Sh3.7 billion).

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by Aly Khan Satchu (www.rich.co.ke)
 
 
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June 2022
 
 
 
 
 
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