Major International Business Headlines Brief::: 08 August 2018
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Major International Business Headlines Brief::: 08 August 2018
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* Iran sanctions: Trump warns trading partners
* South Africa's AMCU union warns of industrial action at Implats over job
cuts
* Elon Musk: Going private is the best path forward
* Saudi billionaire takes stake in Snap
* Firms face legal risk over Iran sanctions
* US sets date for additional $16bn in tariffs on China products
* Jewellery maker Pandora sees shares sink on sales downturn
* Facebook denies seeking users' bank data
* South Africa's Nedbank H1 profit rises 26 percent
* Kenya's competition watchdog says no need for action on Safaricom
* Nigeria's Diamond Bank expects to conclude sale of UK unit this year
* Safaricom CEO defends company's dominance as he returns to work
* Tight liquidity hits Kenyan government debt auctions
* Tunisia's annual inflation eases to 7.5 percent in July
<mailto:info at bulls.co.zw>
Iran sanctions: Trump warns trading partners
US President Donald Trump has issued a strong warning to anyone trading with
Iran, following his re-imposition of sanctions on the country.
"Anyone doing business with Iran will NOT be doing business with the United
States," the president tweeted.
Some re-imposed sanctions took effect overnight and tougher ones relating to
oil exports will begin in November.
Iran's president said the measures were "psychological warfare" which aimed
to "sow division among Iranians".
Iran nuclear deal: Key details
The impact of Iran sanctions - in charts
Firms face legal risk over Iran sanctions
The sanctions follow the US withdrawal from the Joint Comprehensive Plan of
Action, also known as the Iran nuclear deal, earlier this year.
The deal, negotiated during the presidency of Barack Obama, saw Iran limit
its controversial nuclear activities in exchange for sanctions relief.
Mr Trump has called the deal "one-sided", "disastrous" and the "worst I've
ever seen". He believes renewed economic pressure will force Iran to agree
to a new deal.
The European Union, which remains committed to the original agreement, has
spoken out against the sanctions, vowing to protect firms doing "legitimate
business" with Iran.
What else did Mr Trump say in his latest tweet?
He praised the "most biting sanctions ever imposed" and said they would
"ratchet up to another level" in November.
"I am asking for WORLD PEACE, nothing less!" he said.
On Monday he had said that Iran faced a choice to "either change its
threatening, destabilising behaviour and reintegrate with the global
economy, or continue down a path of economic isolation".
"I remain open to reaching a more comprehensive deal that addresses the full
range of the regime's malign activities, including its ballistic missile
programme and its support for terrorism," he said.
What are the sanctions?
Mr Trump signed an executive order that brought sanctions back into place at
00:01 EDT (04:01 GMT) on Tuesday. They target:
The purchase or acquisition of US banknotes by Iran's government
Iran's trade in gold and other precious metals
Graphite, aluminium, steel, coal and software used in industrial processes
Transactions related to the Iranian rial currency
Activities relating to Iran's issuance of sovereign debt
Iran's automotive sector
A second phase is planned to come back into effect on 5 November which will
have implications for Iran's energy and shipping sectors, petroleum trading
and transactions by foreign financial institutions with the Central Bank of
Iran.
What has the reaction been?
Iranian President Hassan Rouhani said the US government had "turned their
back on diplomacy".
Media captionWhat is the Iran nuclear deal?
"They want to launch psychological warfare against the Iranian nation." he
said. "Negotiations with sanctions doesn't make sense. We are always in
favour of diplomacy and talks... but talks need honesty."
The foreign ministers of Germany, the UK and France released a statement on
Monday that said the nuclear deal remained "crucial" to global security.
They also unveiled a "blocking statute", which is intended to protect
European firms doing business with Iran despite the new US sanctions.
Alistair Burt, the UK's minister of state for the Middle East, told the BBC:
"If a company fears legal action taken against it and enforcement action
taken against it by an entity in response to American sanctions, then that
company can be protected as far as EU legislation is concerned."
He said Iran would simply "batten down the hatches" until the next US
election.
However, German car and lorry maker Daimler, which announced a joint venture
in Iran last year, confirmed this week that it has now ceased activities in
the country.
How will Iran's economy be affected?
Iran has already seen unrest since last December over a poorly-performing
economy.
Rising food prices, unemployment and even poor water supplies have led to
protests in a number of cities.
Demonstrations in Tehran in June were said to be the capital's biggest since
2012.
How much they are tied to the new US sanctions policy is hard to determine,
but one definite link is the effect on Iran's currency. It lost around half
of its value after Mr Trump announced the US withdrawal from the nuclear
deal.
Iran acted by easing its foreign exchange rules on Sunday, and the rial has
strengthened by 20% since then.
Iranians have been hoarding gold as a safeguard, pushing it to a record high
in Tehran.
The sanctions may bite hardest in November, when the US blocks Iranian oil
sales.
This could halt about half of Iran's exports of some two million barrels a
day, although Iran may look to China and Russia to keep its industry afloat.
The International Monetary Fund said in March that Iran's net official
reserves could decline this year to $97.8bn, which would finance about 13
months of imports. And analysts at BMI Research say Iran's economy could
contract by 4.3% in 2019.
However, Barbara Slavin, of the Future of Iran Initiative at the Atlantic
Council, told the Wall Street Journal that when sanctions hit hard, it often
means ordinary people become "totally dependent" on their government and so
sanctions do not tend to topple regimes.
What do young Iranians think?
As the first tranche of new US sanctions kicks in, young Iranians have been
sharing their stories with BBC Persian. Many are already feeling the
effects, as the economy had slowed down in anticipation of what was to come.
"I used to work in marketing for a home appliance manufacturer," said
Peyman. "I lost my job as the company can't import the components."
Aerospace engineer Ali lost his job of 13 years because his company couldn't
import equipment.
"Now I'm working as a taxi driver to feed my family," he said. Many people
say they're no longer being paid on time and are finding it hard to make
ends meet.
A construction worker, also called Ali, said he hadn't been paid for 13
months. Omid, a doctor, was doing overtime to pay the rent and save up to
get married.
Many people said they were losing hope. Sama said falling exchange rates
meant her monthly salary was now worth half what it was six months ago.
"Buying a house or a nice car is like a dream now, she said. "Even buying a
good mobile phone soon will be impossible for people like me."--BBC
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South Africa's AMCU union warns of industrial action at Implats over job
cuts
JOHANNESBURG (Reuters) - South Africa’s AMCU union will embark on
unspecified industrial action at Impala Platinum if talks with the company
over its plans to cut a third of its workforce fail to stem the lay-offs,
the union’s president said on Tuesday.
Joseph Mathunjwa, who in the past has led crippling strikes in the platinum
sector, was speaking to journalists about Implats’ announcement last week
about a blueprint to cut over 13,000 jobs at its Rustenburg operations as it
seeks to restore profits.
“We will hit where it hurts,” Mathunjwa said.
The Association of Mineworkers and Construction Union (AMCU) was renowned in
the past for its militancy but it has mellowed in recent years and it is
unclear what appetite there would be for a strike among its rank and file.
Implats’ flagship Rustenburg mine west of Johannesburg is a
labour-intensive, conventional operation and most of those are losing money
in South Africa in the face of soaring costs and depressed prices for
platinum.
Most mechanised platinum mines are making money but that is not an option at
Rustenburg because of geological constraints.
Elon Musk: Going private is the best path forward
Tesla boss Elon Musk is considering taking the electric-car firm private, a
move he claimed was the "best path forward" for the company.
Mr Musk said de-listing from the stock exchange meant Tesla would no longer
be pressured into making short-term decisions to appease investors.
In an unusual move, Mr Musk first made the announcement on Twitter rather
than via an official regulatory disclosure.
Mr Musk said investors backed the plan which requires a shareholder vote.
He said shareholders would be offered $420 per share - around a fifth higher
than the current price.
Mr Musk claimed to have secured funding to buy out shareholders, but did not
offer any further detail.
However, he also warned that "a final decision has not been made" about the
move.
Musk declares Tesla 'a real car company'
Tesla to slash thousands of jobs
Tesla shares ended the day 11% higher at almost $380 per share - close to
their all-time high.
The firm subsequently shared a message from Mr Musk to employees that
explained the thinking behind his announcement.
Mr Musk, who owns almost 20% of the company, said he hoped the move would
shield the firm from distracting swings in the share price and the pressure
to meet quarterly financial targets.
He also said he wanted to end "negative propaganda" from short sellers,
investors who bet on the shares of a firm going down.
"Basically, I'm trying to accomplish an outcome where Tesla can operate at
its best, free from as much distraction and short-term thinking as
possible," he wrote.
Mr Musk has discussed the drawbacks of being a public company before. But
his tweets stirred confusion initially, given his history of informal use of
the social media service.
For example, on April Fool's Day, he joked on Twitter about Tesla going
bankrupt.
Largest deal ever?
If Tesla were taken private at $420 per share, it would be one of the
largest such transactions in history - a deal worth more than $80bn,
including the firm's debt.
Mr Musk's plan would allow investors to choose to retain their holdings. He
planned to hold onto his shares and hoped to continue as chief executive, he
added.
Gene Munster, an analyst at Loup Ventures, said Mr Musk had a "one-in-three
chance" of managing to succeed with his plan.
"The 16% premium to the current share price may not be high enough to
incentivise existing shareholders to support the sale," he added.
Elon Musk has had a difficult relationship with stock market investors - and
been particularly angered by so-called short sellers, who have made record
bets on the ultimate collapse of Tesla.
On Tuesday, those same short sellers were threatened with big losses after
he tweeted that he was considering taking the electric car maker off the
market and back into private ownership.
The messages sent the share price surging. But it bears noting that Mr Musk
is known both for his erratic outbursts and for his quirky sense of humour.
Both have been frequently on display as Tesla has struggled to hit
production targets. That's briefly left some wondering if this is all just
another way of turning attention away from the fact that Tesla has yet to
turn a profit.
Mr Musk's disclosure stirred further speculation about Tesla's future.
The firm is spending heavily as it ramps up production of its latest car,
the Model 3.
It reported a record loss in its most recent quarter, and some analysts say
it will need to raise money in order to survive.
However, Mr Musk has said he has no plans to do so and promised that the
firm will be profitable in the second half of the year, barring any
unforeseen events.
The tweets came after a separate report in the Financial Times that Saudi
Arabia's sovereign wealth fund had taken a 3%-5% stake in Tesla, a holding
worth at least $1.9bn.
The article said the state fund, overseen by the powerful crown prince
Mohammed bin Salman, had been interested in buying newly issued shares.--BBC
Saudi billionaire takes stake in Snap
Saudi billionaire Prince Alwaleed Bin Talal has taken a 2.3% stake in Snap,
buying $250m (£194m) worth of shares in the social media company.
The investment came as the company struggles to build investor confidence in
its Snapchat messaging service.
The number of daily active users fell 2% in the most recent quarter to 188
million, from 191 million at the end of March.
The firm also faces competition for digital ads from giants like Facebook.
Despite the fall in the number of users, the firm said revenues were up and
its losses had declined in its second quarter.
The firm earned revenue of $262m in the quarter, up 44% from the same period
in 2017. Losses were $353m, down 20% year-on-year.
The number of daily active users was about 8% higher than in the same period
in 2017.
In announcing his investment, Prince Alwaleed called Snapchat "one of the
most innovative social media platforms in the world".
"We believe it has only just begun to scratch the surface of its true
potential and we are blessed to be part of it," he said.
The deal, in which he purchased shares for an average price of $11 each, was
finalised in May, he said.
The prince has also invested in other tech companies, including Lyft,
Twitter and JD.com.--BBC
Firms face legal risk over Iran sanctions
European banks that deny companies access to dollar-based bank accounts
because of US sanctions against Iran could find themselves being sued by
their own customers.
This potentially puts international banks between a big rock and a very hard
place.
Fearful on the one hand of the heavy fines and restricted access to the US
that flouting Donald Trump's sanctions could incur. Vulnerable to lawsuits
from its own customers for flouting EU law if it abides by the President's
new rules.
The US announced in May it would re-impose sanctions against Iran that were
previously lifted under an international deal brokered by Barak Obama in
2015.
Not only do the sanctions bar any company which does business in Iran from
doing business in the US - under far reaching secondary sanctions - it also
forbids any company that does business in the US from doing business with
any company that does any business with Iran.
New EU laws that come into effect today are designed to limit the potential
damage to European companies conducting legitimate business with Iran
directly or indirectly.
Firms shelving investment
The so-called "blocking" laws would make it illegal for banks to withdraw
services to companies doing business with Iran or even with other companies
that do business with Iran.
The evidence so far seems to suggest the blocking legislation has not
provided sufficient reassurance for most European companies with interests
in Iran.
French oil and gas giant Total has already indicated it intends to shelve a
multi-billion dollar investment in Iran.
While German carmaker Daimler said within hours of the sanctions coming into
force that it was halting its business activities in Iran.
The real force of these extra-territorial powers is to be found in the
international banking system.
Most of the world's crucial commodities are priced and traded in US dollars.
Oil and gas companies in particular need access to them for the very basics
of business. The US government has been clear that access to the
dollar-based financial system will be denied to anyone who flouts their
sanctions.
One oil and gas company executive who spoke to the BBC on condition of
anonymity said the banking issue was "absolutely crucial".
He added that he was sceptical that the EU's attempts to nullify the force
of the sanctions would convince nervous bankers to defy the US.
Not for the first time, the EU and US find themselves in a high stakes stand
off.--BBC
US sets date for additional $16bn in tariffs on China products
The US has said it will impose further tariffs on Chinese goods starting 23
August, as a trade war between the world's two biggest economies continues.
The top US trade body said the 25% import taxes would apply to about $16bn
(£12b.3bn) of annual imports.
The duties are part of a broader round of US tariffs on $50bn worth of goods
announced in March.
The US says the tariffs are to penalise China for "unfair" trade practices.
Such practices include rules compelling companies in certain sectors to take
on local partners if they want to do business in China.
The early victims of Trump's trade war
Six ways China could retaliate in a trade war
A first tranche of tariffs, on $34bn worth of goods, went into effect in
July.
The additional list of 279 product lines to be hit later this month was
announced by the United States Trade Representative (USTR) on Tuesday.
The products include semiconductors, chemicals and machinery parts.
Talks between China and the US have failed to produce an agreement on the
issue, prompting China to retaliate with tariffs of its own and US President
Donald Trump to escalate his threats.
The US is now considering tariffs on another $200bn in goods, including
consumer products that were spared in the initial round.
Mr Trump has said he would be willing to hit all of China's imports with
duties.
US industries hit back at Trump
Several industry bodies in the US representing agribusiness, retail and
technology have said the Trump administration's tariffs are hurting them and
will cause long-term damage to farmers, manufacturers and consumers.
The US Seminconductor Industry Association (SIA), which represents
manufacturers and designers like Intel, Qualcomm and Texas Instruments, said
on Tuesday it was "disappointed and puzzled" their products were on the
final list of 279 product lines.
Farmers for Free Trade says the trade spat is costing billions of dollars to
an already-stressed food and agricultural sector in the US
It said a combined total of $6.3bn worth of semiconductors and related
products would now be hit by tariffs.
"We have made the case to the [Trump] administration, in the strongest
possible terms, that tariffs imposed on semiconductors imported from China
will hurt America's chipmakers, not China's, and will do nothing to stop
China's problematic and discriminatory trade practices," SIA's chief
executive John Neuffer said.
"We will continue to make this case and remain hopeful a sensible solution
can be achieved that protects the interests of American businesses and
consumers."
Charting the US-China trade battle
How a US-China trade war could hurt us all
Trade row: What has happened so far?
Farmers for Free Trade in the US (FFF) has said American farmers are already
seeing market disruption, and that the trade disputes "could cost billions
of dollars to the already-stressed food and agricultural sector in the US".
"The White House is escalating the trade war while telling farmers to be
patient as their prices plummet and their markets are overtaken by foreign
competitors," said FFF's executive director Brian Kueh in a written response
to the USTR's Tuesday announcement.
"Members of Congress from both parties are hearing from Americans that are
angry about tariffs while they are back in their states and districts," he
said.
"It's time to end the trade war before tariffs cause any more economic pain
for America's heartland."--BBC
Jewellery maker Pandora sees shares sink on sales downturn
Danish jewellery maker Pandora is to cut almost 400 jobs, after warning that
full-year sales will be lower than expected.
Shares were trading down by almost 20% in Copenhagen at 11:45 BST, the
lowest level since May 2014.
Pandora has suffered as fewer people visit shopping centres, especially in
its key US market.
Known for its charm bracelets, Pandora is the world's largest jeweller by
production volume.
Pandora owns nearly 2,600 stores worldwide, but sales have dipped in its
600-plus stores in the UK and the US.
A statement said the company intends to cut 397 of its 27,000 employees, as
it expects sales will increase by between 4-7% this year, compared with the
7-10% it previously projected.
Over half of the cuts will be made to its Thai workforce, with 218 staff
members to leave the team.
Pandora manufactures its jewellery across two factories in Bangkok and
Lamphun, near Chiang Mai, where it employs roughly 13,000 people.
It was founded in 1989 by Per Enevoldsen and his then wife Winnie.
Profit warning
Søren Hansen, senior analyst at Danish bank Sydbank, said this was a "large"
profit warning, suggesting that - with various factors accounted for -
"underlying sales are actually declining".
"Consumer behaviour is changing and retailers need to strike the right
balance between physical and online stores," Mr Hansen added.
The company also cited "a headwind from currencies", suggesting it has also
lost out due to a weaker exchange rate for the Danish kroner.
Meanwhile, the firm is ramping up plans for new concept store openings in
2018 to 250 - 50 more than expected.
It said that 50% of the shops will be opened in Europe, the Middle East and
Africa with the remainder split between the Americas and Asia Pacific.
Pandora is due to publish its full second quarter results on Thursday.--BBC
Facebook denies seeking users' bank data
Facebook has denied reports that it is actively asking banks for details of
users' financial transactions.
The statement follows a story in the Wall Street Journal that said the
social media giant had asked US banks for such data.
Facebook said some users opted in to accessing some financial information in
its Messenger app.
Any data that was accessed by the company for such purposes was not used for
advertising, it added.
The Wall Street Journal had reported that Facebook approached JPMorgan
Chase, Wells Fargo, Citigroup, and US Bancorp to ask for information about
users' account balances and card transactions.
However, Facebook said that users must opt in to linking the Messenger chat
app to their bank accounts.
'Completely opt in'
"Like many online companies with commerce businesses, we partner with banks
and credit card companies to offer services like customer chat or account
management," Facebook said.
"The idea is that messaging with a bank can be better than waiting on hold
over the phone - and it's completely opt in."
Some account linking is in place on a relatively small scale at the moment -
for example, Facebook users in Singapore who bank with Citi can check
balances and view recent transactions.
More widely, Facebook users can connect their PayPal accounts to Messenger
to track transactions and shipping updates.
The ability to make payments via Messenger was rolled out to UK Facebook
users last year.--BBC
South Africa's Nedbank H1 profit rises 26 percent
JOHANNESBURG (Reuters) - South African lender Nedbank reported a 26 percent
jump in half-year profit on Tuesday, helped by a recovery in its west
African associate, Ecobank.
Nedbank owns about 16 percent of Ecobank Transnational Incorporated (ETI),
which is a recovering from weak investment and consumer spending in the
commodity-rich west African region.
Diluted headline EPS, the primary measure of profit in South Africa that
excludes certain one-off items, came in at 1,387 cents in the six months
through the end of June compared with 1,098 cents a year earlier.
“While risks remain, it is expected that the actions taken to improve ETI’s
financial position and governance, along with an improving macroeconomic
environment, will continue to drive an improved financial performance in
2018,” Nedbank said in a results filing.
Kenya's competition watchdog says no need for action on Safaricom
NAIROBI (Reuters) - Kenya’s competition watchdog expressed concern on
Tuesday about the wider economic impact of lawmakers and the country’s
telecoms regulator taking a tough line on dominant operator Safaricom,
saying no action was needed.
“Any regulation focusing on the sector should have a multi-agency approach
because its effects would cut across all the drivers of the economy,”
Wang’ombe Kariuki, the director general of the Competition Authority told
the Kenyan parliament’s communication and information committee.
Kariuki said the Competition Authority had not found any evidence of
Safaricom, which has a 67 percent market share, abusing its dominance in any
of its business sectors, meaning there was no need for action by regulators.
“Any regulatory intervention should be aimed at supporting and increasing
consumer welfare and at no time should regulatory intervention have an
object of deepening private shareholders’ gains,” he added.
Safaricom has in the past been found guilty of entering restrictive
agreements with its mobile (M-Pesa) money agents which prohibited the
selling or promotion of services by its rivals, Kariuki said.
The company was ordered to delete all the restrictive clauses in the
agreements, allowing the agents to offer mobile money services and products
from other operators, he added, revealing the regulatory action for the
first time.
A draft report of a study commissioned by Kenya’s telecoms regulator
recommended that Safaricom should offer rivals access to its transmission
sites and its vast network of mobile money outlets to increase competition
in the sector.
It also says the Communications Authority should curb Safaricom’s ability to
offer promotional tariffs to its 30 million customers that its rivals cannot
match.
Safaricom’s chief executive Bob Collymore told the committee on Monday that
his company does not hinder competition.
Collymore said he was confident authorities would not seek to punish the
success of Safaricom, which is 35 percent-owned by South African group
Vodacom with the Kenyan government and Britain’s Vodafone also holding
stakes.
The other big players in the market are Bharti Airtel’s Kenyan unit, which
has a 19.7 percent market share, and Telkom Kenya, controlled by
London-based Helios Investment, with 8.6 percent of the market.
Airtel Kenya and Telkom have called for the urgent implementation of the
report on boosting competition.
Nigeria's Diamond Bank expects to conclude sale of UK unit this year
LAGOS (Reuters) - Nigeria’s Diamond Bank expects to conclude the sale of its
British unit before the end of the year and is going through a change of
ownership, its chief executive said on Tuesday.
The mid-tier lender struck a deal with British industrialist Sanjeev Gupta
earlier this year after selling its West African subsidiaries last year.
In May, Diamond Bank posted a 2017 loss, its first time in the red in six
years after selling assets to conserve capital and to focus on its home
market.
Its half-year 2018 pretax profit declined 69 percent to 2.92 billion naira,
hurting its shares, which fell a further 1.60 percent on Tuesday.
Diamond Bank said it expected loan growth to return, growing five percent
this year after credit declined in the first half by 3.6 percent.
Weak economic growth hurt loan growth in Nigeria last year. However, as the
economy improves the bank expects loans to grow especially as the central
bank introduces liquidity to the banking sector targeting credit to
manufacturers.
“The loan growth would come from corporate banking. With the turnaround in
GDP we would begin to see opportunities in fast moving consumers good,
manufacturing,” the bank said on a call with analysts.
Safaricom CEO defends company's dominance as he returns to work
NAIROBI (Reuters) - Kenya’s dominant telecoms operator Safaricom does not
hinder competition, its chief executive Bob Collymore told lawmakers on
Monday as he returned to work after a nine-month absence for medical
treatment.
The country’s industry regulator recommended in a draft proposal in May that
Safaricom, which controls 67 percent of Kenya’s mobile market, should offer
rivals access to its transmission sites and its vast network of mobile money
outlets to increase competition in the sector.
“Thirty million customers have made a conscious decision to come onto
Safaricom’s network,” Collymore told a parliamentary committee when asked if
Safaricom was hindering competition.
The committee is looking into whether any measures should be taken to boost
competition in the market following the Communications Authority of Kenya’s
(CA) draft proposal.
Collymore said he was confident authorities would not seek to punish the
success of Safaricom, which is 35 percent-owned by South African group
Vodacom with the Kenyan government and Britain’s Vodafone also holding
stakes.
“I didn’t get the sense from the committee that they are looking to cut
Safaricom down to size,” he said.
“They are really genuinely examining whether there is anything else that
needs to be done to encourage more competition in the market place.”
Collymore, who has been receiving medical treatment for an undisclosed
illness, appeared to be in good health during a three and a half hour
appearance before parliament’s communication and information committee and
told Reuters that he would actively run the company again from now on.
He has been in charge since 2010, during which time he has overseen a surge
in the company’s share price and dividends as he delivered strong results.
The other big players in the market are Bharti Airtel’s Kenyan unit, which
has a 19.7 percent market share, and Telkom Kenya, controlled by
London-based Helios Investment, with 8.6 percent of the market.
Safaricom’s share price continued to rise during Collymore’s absence. It
gained 11 percent during the past nine months, despite a wobble after the
CA’s proposal, with the company forecasting in May that profit before
interest and taxes would rise 7-12 percent in the year through April 2019.
“The team has done a fantastic job in my absence, you saw the results in the
full year,” Collymore told Reuters after the committee hearing.
“Now it is a little bit more about refocusing on the strategy in the
company, ensuring that the strategy remains relevant; it is refreshed.”
Safaricom’s shares were up 0.89 percent on Monday at 28.25 shillings
($0.2814).
($1 = 100.4000 Kenyan shillings)
Tight liquidity hits Kenyan government debt auctions
NAIROBI (Reuters) - A lack of liquidity in Kenya’s money markets has sent
the overnight interbank lending rate above the three-month Treasury bill
yield and curbed demand for government securities at the weekly auction,
traders said on Tuesday.
The weighted average interest on the interbank market for overnight lending
jumped to 8.1052 percent a week ago, well above the 91-day Treasury bill’s
yield, which stands at 7.611 percent. The overnight rate has remained above
8 percent.
Fixed income traders said the problem was caused by a glitch in the budget
cycle that meant the government is unable to quickly disburse cash to local
authorities and state agencies, at the start of the financial year in July
and August.
“Before approvals go through and cash is disbursed, those normal delays,
that now causes the market to tighten so there is no liquidity,” said a
trader with a commercial bank.
Officials at the ministry of finance did not immediately respond to a
request by Reuters for comment. Parliament is yet to debate and pass Finance
Minister Henry Rotich’s budget for the 2018/19 fiscal year presented in
June.
The liquidity squeeze has already reduced demand for the government’s debt
at the weekly auction held by the central bank.
“To have your overnight rate higher than (the) T-bill (rate) it means that
they could struggle and we have begun to see it in auctions. Now you will
see auctions underperform at least until the situation is corrected,” said
the fixed-income trader.
During last week’s Treasury bills auction, the central bank got demand for
just 60 percent of the 24 billion shillings ($239.28 million) worth of bills
on offer.
Jibran Qureishi, economist for East Africa at Stanbic Bank, said he expected
the liquidity to start easing up at the end of this month, once firms finish
paying their taxes and the government’s fiscal year gets properly underway.
“It is a very cyclical thing at the beginning of the (fiscal) year... By the
end of August, we will improve,” he said.
($1 = 100.3000 Kenyan shillings)
Tunisia's annual inflation eases to 7.5 percent in July
TUNIS (Reuters) - Tunisia’s annual inflation rate eased to 7.5 percent in
July from 7.8 percent in June, official data showed late on Monday.
In May Tunisia’s central bank raised its key interest rate by 100 basis
points to 6.75 percent, the second hike in three months, to tackle
inflation.
INVESTORS DIARY 2018
Company
Event
Venue
Date & Time
NicozDiamond
shares delist from the ZSE
06/07/2018
Zimbabwe
Heroes’ Day
Zimbabwe
13/08/2018
Zimbabwe
Defence Forces Day
Zimbabwe
14/08/2018
The Harare Agricultural Show
The Harare Agricultural Show
The Harare Agricultural Show
August 27- September 1
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