January 11, 2016
The Uganda shilling closed at 3427 on the US dollar, 4983 on the British pound, 3720 on the Euro and 33.47 on the Kenyan shilling.
You can see that the shilling is weakening against the major currencies and even now Kenya which is one of Uganda’s biggest trade partners in the EAC.
What I think is happening here is the fact that WB and IMF cut backs on the growth from 5.8% down to 5% is finally starting to sink in.
EAC partners take long to realise that some of their bills might be delayed or not paid so the Kenyan shilling takes a long time to appreciate above the Ugandan shilling.
The key driver for Uganda is the Commodity prices. Which are falling and those who pay attention to what I share know that the commodity low prices will severely impact Uganda.
Arabica coffee ended up at $3.17 per kilo.
Robusta finished at $1.71 per kilo.
Gold finished at $1096 an ounce.
Ouch! Brent Crude Oil finished at $31.66 a barrel. You can see the Oil chart enclosed. This oil has crashed through any support we have seen in a very long time. This worries me a bit because we have nothing to hold back the drop. The question now becomes “How low can we go down?”.
I had previously told Ugandans that we would touch $35 then likely bounce up but I guess I did not really think about the panic selling. Hold on there, we do have the Geopolitical factors.
Do you have any idea how many Oil companies lost money in 2014 for the low price and how many face that $60 a barrel to break even? WAIT, I do not have the same calculator as what Uganda uses. Brace yourselves people. Commodity prices are going down. You can read about the commodity prices and the effect on Africa at this link from The Insider for Monday Jan, 11, 2016. http://www.theinsider.ug/africas-economic-prospects-in-2016-looking-for-silver-linings/
It was a bloody Monday on January 11, 2016 all around.
1) Shanghai Index dropped by 5.33% and closed at 3017. The symbol is $SSEC.
2) The Dow Jones Hong Kong Index dropped by 2.47% and closed at 431. The symbol is $HKDOW.
3) Tokyo fell down too and recovered a bit but still closed lower than last Friday. It finished at 17698 after a loss of 0.39%. Mind you at the start of this year that index was at 19200. The chart for this one looks encouraging; a bit. If we were to look at Tokyo, things would be turning up rosy but we have the China effect. The symbol for this one is $NIKK.
4) London UK closed at 5872 after losing 0.69%. To keep things in perspective, FTSE started the year at 6300. Given how much moves on that one, a drop of even 0.01% is very significant. The symbol for this one is $FTSE.
5) Paris finished at 4313. The chart for this one is even more lamentable. This index opened the year at 4700 and now look where we are. The drop was only 0.49% but the chart is scary. The symbol for this one is $CAC.
6) Frankfurt closed at 9825 after dropping 0.25%. To put a perspective to this one, Frankfurt opened this year at 10,800. The chart on it looks horrible too. Something in Europe must be going on. The symbol for this one is $DAX.
7) Toronto closed at 12,319. We have to be strong here. The chart is looking very bad. TSX dropped by 1.01%. Toronto had opened the year at 13,209. Do you see how small percentages mean a lot? The symbol is $TSX.
8) The Dow Jones (USA) closed at 16,399 with a drop of 0.32%. Only thing is the Dow had opened this year at 17526. The Dow is one to keep an eye on. We are only one full week into trading this year. The symbol is $INDU.
9) The Nasdaq (USA) closed at 4,638 after a fall of 0.12%. The Nasdaq opened this year at 5,025 then proceeded to follow gravity. Its chart promises a bit of recovery but nothing to write home about. The symbol is $COMPQ.
10) All the stock indices and their charts show that we are in for a bit of trouble here. I would not be buying anything. Yet I would not be shorting anything at all because this market is full of fear and either way you go if you are a short term investor, you will get burned. I will write about Margin Calls soon (some of you may have read that already as I have it on my blog). In the meantime, stay safe and know we are going to be in pain. ONE OF THE MOST POWERFUL THINGS IN LIFE IS FEAR. We are facing it now. Ugandans know this feeling.
For forex xe dot com
For indices stockcharts dot com. See the Oil Chart.
Martha Leah Nangalama