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Oil prices soar more than 10 per cent after Saudi plant attacks : The Standard

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Donald Trump has raised the possibility of a military response against Iran, which Washington blames for the attacks in Saudi Arabia.

Oil prices surged more than 10 percent Monday after attacks on two Saudi Arabian plants that slashed output in the world’s top producer by half, with Donald Trump blaming Iran and raising the possibility of a military strike on the country.

West Texas Intermediate jumped 10.68 percent to $60.71 and Brent climbed 11.77 percent to $67.31 in early Asia trading following the blasts at facilities run by state-owned giant Aramco.
The attack by Tehran-backed Huthi rebels in neighbouring Yemen, where a Saudi-led coalition is bogged down in a five-year war, effectively shut down six percent of the global oil supply.
Brent soared almost 20 percent at one point on Monday, while WTI surged around 15 percent before paring the gains.

SEE ALSO :US ‘locked and loaded’ after Saudi attacks as oil prices surge

Trump said Sunday the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news has revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.

“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.

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Oil pricesSaudi ArabiaDonald TrumpFuel prices

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Safaricom Partners With Aviat Networks for 5G Connectivity

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Wireless Transport Solution provider Aviat networks has been selected by Safaricom for its WTM 4800 multi-band radio platform for 5G backhaul. The partnership will allow Safaricom to roll out 5G networks in remote locations, where fiber and copper cable sites are not a viable option. The news comes in the backdrop of the recent Alphabet and Telkom’s loon launch, aiming to provide high-speed internet access to remote areas in Kenya.

Aviat will provide the spectrum equipment, which focuses on narrow beams that can deliver up to 10 Gbps over long distances. However, this will come with inadequate coverage. Nevertheless, Aviat Networks says that the WTM 4800 multi-band radio platform will lower microwave spectrum costs, which accounts for one of the largest total cost ownership costs (TCO).

“Microwave spectrum cost is one of the largest TCO (total cost of ownership) elements in many countries around the world, and as capacity demands grow with 5G, more spectrum is required. Aviat multi-band provides the lowest TCO for 5G backhaul, especially in countries, like Kenya, where the cost of microwave spectrum is high,” reads the statement.

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Cheaper, Reliable 5G Connectivity

The Aviat equipment combines microwave (6-42 GHz) and E-band (70-80 GHz) over the same link and antennae. This will allow Safaricom to maintain low spectrum costs, offloading traffic between the expensive microwave spectrum onto the less expensive E-band without compromising reliability.

Speaking on the partnership, Aviat Networks CEO Pete Smith said, “We are excited to continue to expand our WTM 4800 multi-band deployments internationally. The pace of 5G rollouts is increasing, and we plan to leverage our differentiated capabilities to help customers deploy the lowest TCO backhaul possible.”

Last week, Google and Telkom launched 4G internet balloons in Baringo, making Kenya the first country to have loon base stations in her skies in Africa. The loon floating base stations provide extensive coverage compared to cell towers, using AI to navigate flight paths. The service looks to boost internet connectivity in rural Kenya, inadvertently growing e-commerce.

READ ALSO: Vodacom Launches 5G Network in South Africa

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Shilling dips, NSE sheds Sh110bn after economy reopening

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Shilling dips, NSE sheds Sh110bn after economy reopening

Nairobi Securities Exchange
The Nairobi Securities Exchange trading floor. FILE PHOTO | NMG 

The shilling dipped against the dollar while the Nairobi Securities Exchange #ticker:NSE lost Sh110 billion in the week Kenya announced a phased reopening of the country from Covid-19 lockdown to stimulate the economy.

The value of all the stocks on the Nairobi bourse hit a three-month low of Sh2.02 trillion on Friday compared to Sh2.13 trillion on July 3 – ahead of the market factoring in news on the easing of the restrictions.

Analysts linked the NSE dip to foreign investors’ reduced interest in blue-chip stocks, arguing that most traders were fretting over the performance of market movers like Safaricom #ticker:SCOM and the big banks.

The high-net worth traders believe the effects of coronavirus will dim the earnings power of Safaricom’s M-Pesa and banks, says Sarah Wanga, head of research at AIB Capital, arguing that the investors are less optimistic of a quick turnaround with the reopening.

But merchandise importers and multinational companies stepped up purchase of dollars to meet obligations following the phased reopening amid the reduced inflows of hard currency, currency traders said.

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This saw the shilling close the week at Sh107.10 to the dollar, compared with Sh106.61 on July 3 — moving above Sh107 for the first time since May 28.

Local traders expect the easing of travel restrictions and resumption of flights announced on July 6 to increase demand for products, triggering the need to import finished goods like cars and clothing and raw materials for businesses that have, since April, faced reduced cash flow.

President Uhuru Kenyatta on July 6 ended the cessation of movement in and out of Nairobi, Mombasa and Mandera.

He also allowed domestic commercial and passenger flights to resume operations on July 15 while international travel returns on August 1 in efforts expected to ease the pain of Covid-19 on the economy.

The pandemic has battered the economy and delivered mass jobs cuts with the Treasury projecting growth to slow to 2.5 percent this year from 5.4 percent last year.

But foreign investors who drive the NSE are less optimistic on the reopening of the economy, changing the fortunes of blue-chip firms like Safaricom, Equity Group #ticker:EQTY, KCB Group #ticker:KCB, Cooperative Bank #ticker:COOP and East Africa Breweries Limited #ticker:EABL.

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The five counters influence the Nairobi bourse and account for nearly 80 percent of the value of all stocks on the NSE.

“Foreigners increased their net selling in the week. There is concern over performance of the market in general factoring in issues such as how companies will perform in the current environment,” said Ms Wanga.

“It may take a while for investors to start buying into the partial reopening of the economy given firms such as banks are still likely to see a continued rise in loan defaults and credit restructuring.”

Banks had restructured loans worth Sh679.6 billion or 23.4 percent of the total loan book by end of May due to the coronavirus economic hardships that have hurt the borrowers’ ability to repay.

The Central Bank of Kenya (CBK) and bankers are yet to comment on the potential impact of the loan restructuring on the lenders earnings this year.

Safaricom , KCB , Cooperative, Equity and EABL accounted for about 91 percent of the paper wealth erosion or Sh100.4 billion loss over the past week, underlining their dominance of the NSE.

The blue-chip stocks are a favourite of foreign investors who in recent weeks have sold their equity holdings.

Safaricom’s share price declined 7.2 percent to Sh27.50 in the week to Friday. This saw the company shed Sh86.1 billion of its market value.

Co-op Bank shed Sh3.81 billion while KCB lost Sh3.77 billion), EABL (Sh3.55 billion) and Equity (Sh3.21 billion).

“Foreign investors seem to be concerned about the M-Pesa revenue given the extended fee waiver on transactions of up to Sh1,000. First half numbers for M-Pesa may not be very impressive,” said Ms Wanga.

Safaricom looks set to forego revenues estimated at losses of up to Sh16.2 billion in the nine months to December after the CBK extended the waiver on mobile money transaction fees under Sh1,000 to the end of the year.

The Sh16.2 billion is equivalent to about a fifth or 19.1 percent of M-Pesa’s annual sales, underlining the impact of the pandemic on Safaricom’s earnings.

The free service aimed at cutting down on the handling of cash and the attendant risk of Covid-19 being transmitted from person to person.

The order also affected commercial banks, which had on March 16, removed charges for customers moving money between their mobile wallets and bank accounts.

The lenders are also set to lose billions of shillings with Equity Bank saying it is losing Sh120 million monthly due to the free service.

Ms Wanga reckons that Covid-19 data will continue to influence the performance of the NSE, especially if the cases spike with the reopening.

Kenya had confirmed 10,105 cases of the coronavirus with 185 total deaths by Sunday.

Mr Kenyatta said the State will review the cases after 21 days and threatened to return to lockdown if the cases rise sharply.

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Ndegwa brothers reveal Sh3.2 billion NCBA ownership

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Ndegwa brothers reveal Sh3.2 billion NCBA ownership

NCBA Group chairman James Ndegwa (left) and his
NCBA Group chairman James Ndegwa (left) and his brother Andrew Ndegwa each own a 4.16 percent personal stake in the bank with a market value of Sh1.6 billion apiece. FILE PHOTOS | NMG 

NCBA Group #ticker:NCBA chairman James Ndegwa and his brother Andrew Ndegwa each own a 4.16 percent personal stake in the bank with a market value of Sh1.6 billion apiece.

The Nairobi Securities Exchange-listed firm has made the disclosure through its first annual report based on the requirement that directors of publicly-traded firms reveal their ownership.

The two are non-executive directors of NCBA, the product of the merger of the NIC Group and CBA Group in September last year.

The brothers held shares in the two banks and the merger has consolidated their ownership in NCBA, which is now ranked third in the country by assets.

James previously held 52.5 million shares of NIC and 3.1 million shares of CBA. Andrew held 52.5 million shares of NIC and 3.4 million shares of CBA.

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The CBA shares were subsequently multiplied 2.7 times and transferred to the merged bank.

The merger was done through a share swap, with former CBA shareholders ending up with a combined 53 percent equity in the merged entity while former NIC investors were allotted a 47 percent stake.

On completion of the transaction, James’ holdings had consolidated into 61.3 million shares equivalent to a 4.09 percent stake in NCBA while Andrew’s stood at 62.2 million shares (4.16 percent).

The larger Ndegwa family has an estimated 11.6 percent stake in NCBA with a market value of Sh4.6 billion based on the lender’s share price of Sh26.4 on Friday.

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The brothers are among a group of top investors with banking stakes valued at more than Sh1 billion each. Others include Equity Group’s #ticker:EQTY chief executive James Mwangi who holds a 4.38 percent stake in the lender worth Sh5.4 billion.

Co-operative Bank #ticker:COOP chief executive Gideon Muriuki has a two percent stake in the lender valued at Sh1.4 billion.

It is not clear when the Ndegwa brothers acquired shares in the former CBA but the disclosures ahead of the merger shows that Kenyans became shareholders in the lender after buying out Bank of America between 1984 and 1992.

The Ndegwa family, through their investment vehicle, First Chartered Securities, also acquired their initial 12 percent stake in NIC between 1993 and 1996 by buying shares from the lender’s previous owner, Barclays Bank of Kenya.

The family, one of wealthiest in Kenya, later acquired more shares in NIC to reach a 25 percent stake by the time the lender merged with CBA.

The brothers are the sons of late Philip Ndegwa, a former CBK governor, who died in 1996.

The two lenders merged to benefit from economies of scale in a competitive industry where big banks take most of the profits from diversified operations including retail and corporate banking.

NCBA is now ranked third with assets of Sh509.5 billion in the first quarter ended March, trailing Equity (Sh693.2 billion) and KCB #ticker:KCB (Sh947 billion).

Co-op Bank, which is now ranked fourth after the rise of NCBA, had Sh470.4 billion in assets. Co-op Bank, however, retains its rank as the third most profitable lender with net earnings of Sh3.5 billion or more than twice NCBA’s Sh1.6 billion in the review period.

“In the next year we will concentrate a lot of our efforts in consolidating our business, ensuring the best of our twin heritage is rolled out smoothly across the region and even internally,” James Ndegwa wrote in the NCBA report.

“We anticipate receiving the remaining regulatory approvals in Uganda and Tanzania to operate as NCBA soon and these will allow us to consolidate our business in the region.”

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