Major International Business Headlines Brief::: 13 December 2018

Thu Dec 13 04:57:54 CAT 2018

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Major International Business Headlines Brief::: 13 December 2018

 <http://www.nedbank.co.zw/> 

*  Nigeria budget minister expects economy to grow by 3 pct in 2019

*  Tanzania to sign deal this week for $3 bln power plant: president

*  Ivory Coast inflation rises to 1.8 pct year-on-year in November

*  Egypt stock market halts trading of el Sewedy Electric pending details on Tanzania dam deal

*  Steinhoff shares jump after Pepkor Europe's trading update

*  Gold production resumes at Randgold's Loulo mine in Mali

*  Nigerian court adjourns MTN, central bank case until Jan. 22

*  South African rand's volatility grows as economic risks gather

*  China's Tencent Music jumps on US launch

*  Google hearing sees 'idiot' trending

*  Is there really a Canada Goose boycott in China?

*  Superdry warns worse to come as profits plunge

 <mailto:info at bulls.co.zw> 

Nigeria budget minister expects economy to grow by 3 pct in 2019

ABUJA (Reuters) - Nigeria’s economy is expected to grow by 2 percent this year and by 3 percent in 2019, the country’s Minister of Budget Udoma Udo Udoma said on Wednesday.

The World Bank expects growth at slightly less than 2 percent in 2018, while and Nigeria’s central bank predicts the economy will grow 1.75 percent this year.

“Our projection for the economic growth this year is 2 percent, we believe it will be achieved, and that of next (year), which is projected at 3 percent, will also be achieved,” Udoma told reporters in Abuja.

“Our plans are working,” he said, pointing to growth in the non-oil sector.

Nigeria’s statistics office on Monday said the economy grew by 1.81 percent in the third quarter, after 1.95 percent and 1.50 percent in the first and second quarters.

A sluggish recovery since Nigeria emerged from recession in 2017 could bode poorly for President Muhammadu Buhari, who is seeking a second term in February 2019 elections and for whom economic rejuvenation has been a key pillar of policy.

 <mailto:info at bulls.co.zw> 

Tanzania to sign deal this week for $3 bln power plant: president

DAR ES SALAAM (Reuters) - Tanzania will sign a deal this week for the construction of a $3 billion hydroelectric power plant, the president said in remarks broadcast on state television on Tuesday.

President John Magufuli did not name the company awarded the contract for the power plant and dam to be built in the Selous Game Reserve, a U.N.-designated world heritage site in southern Tanzania. Government sources told Reuters the contract would be signed with Egypt’s Arab Contractors.

Magufuli said the East African country was moving ahead with the project due to improved revenue collection by the government, without giving details.

The 2,100 MW project would more than double the country’s power generation capacity. But the project’s location is in a World Heritage site and has faced opposition from conservationists. They have said the construction of a dam on a major river that runs through the Selous Game Reserve could affect wildlife and their habitats downstream.

The government invited bids in August last year for the project at Stiegler’s Gorge which is in the Selous Game Reserve.

Egypt’s El Sewedy Electric Co has said it will also participate in the construction of the dam. Arab Contractors will have a 55 percent stake in the project and El Sewedy 45 percent, Ahmed Hassouna, El Sewedy’s head of marketing, said on Tuesday.

Covering 50,000 square km, the Selous Game Reserve is one of the largest protected areas in Africa, according to UNESCO. It is known for its elephants, black rhinos and giraffes, among many other species.

The World Wildlife Fund conservation group said in a report in July last year the proposed large-scale hydropower dam “puts protected areas of global importance, as well as the livelihoods of over 200,000 people who depend upon the environment, at risk.”

“The impact on Tanzania’s largest river would affect many ecosystem services it provides. It would affect tourism in Selous downstream in some of the most abundant wildlife areas in the game reserve,” it said.

Ivory Coast inflation rises to 1.8 pct year-on-year in November

ABIDJAN (Reuters) - Consumer price inflation in Ivory Coast rose to 1.8 percent year-on-year in November, up from 0.8 percent in October, data from the National Statistics Institute showed on Wednesday.

Food and soft drink prices in the world’s top cocoa producer added 2.1 percent year-on-year, while housing and utilities prices jumped 6.9 percent. Transport costs rose 1.7 percent.

Ivory Coast’s economy accounts for around 40 percent of the eight-nation West African CFA franc currency zone.

Egypt stock market halts trading of el Sewedy Electric pending details on Tanzania dam deal

CAIRO (Reuters) - The Egyptian stock market on Wednesday halted trading of el Sewedy Electric pending details on reports of a deal it had signed to participate in the construction of a $3 billion dam in Tanzania, the company said in a statement.

It said the stock market had requested the explanation following reports that had appeared online stating that “El Sewedy Electric signs a partnership with Arab Contractor Company to build a dam in Tanzania amounting $3 billion”.

Steinhoff shares jump after Pepkor Europe's trading update

JOHANNESBURG (Reuters) - Shares in Steinhoff rose more than 20 percent on Wednesday, on track for their biggest daily gain in nearly a month, after the company’s Pepkor Europe business reported a jump in annual revenue growth.

Pepkor, which owns discount retailers Poundland and Dealz as well as clothing and accessories chain PEPCO, said revenue rose 10.6 percent to just above 3 billion euros ($3 billion) in the year to the end of September. In the final quarter revenue grew strongly by 12.9 percent to 781 million euros.

Progress was helped by Poundland’s return to like-for-like growth and strong like-for-like growth in PEPCO, one of the largest non-food retail chains in central and eastern Europe.

At 1415 GMT, shares in Steinhoff were up 17.65 percent to 1.80 rand.

Steinhoff, whose brands also include France’s Conforama, admitted last December to “accounting irregularities”, sending its shares plunging and leaving it fighting for survival.

Shares in the company remain volatile. They had lost a fifth of their value last week when the company said a probe into the accounting issues and the release of restated results have been delayed.

($1 = 0.8804 euros)

Gold production resumes at Randgold's Loulo mine in Mali

BAMAKO (Reuters) - Production at Randgold’s Loulo gold mine in Mali resumed on Wednesday after a week-long outage over a pay dispute, the head of the union said, warning of possible further industrial action.

The head of the industry and mines union SECNAMI, Bani Sacko, told Reuters workers had returned to work after mediation talks on Tuesday night.

“A notice for a new strike on Dec. 26 has already been given. Negotiations will continue until then,” Sacko said.

Loulo-Gounkoto mining complex’s director Tahirou Ballo confirmed work had resumed at Loulo, but didn’t comment further.

The complex is located in Mali’s gold-rich south and produced more than 20 tonnes of gold last year. Mali is Africa’s third-largest gold producer, behind South Africa and Ghana.

Nigerian court adjourns MTN, central bank case until Jan. 22

LAGOS (Reuters) - A Nigerian judge adjourned on Wednesday a hearing over an $8.1 billion dispute between South African telecoms giant MTN and the central bank until Jan. 22.

The dispute is over the transfer of $8.1 billion of funds which Nigeria’s central bank said the company had sent abroad in breach of foreign-exchange regulations. MTN has denied any wrongdoing.

Nigeria is MTN’s biggest market, accounting for a third of the South African company’s annual core profit. The mobile phone network serves 56 million people in Nigeria.

The adjournment came at the request of the central bank and MTN lawyers.

“We are still making moves towards an out of court settlement,” a central bank lawyer told the court.

An MTN lawyer said discussions were ongoing.

South African rand's volatility grows as economic risks gather

JOHANNESBURG (Reuters) - Implied volatility on South Africa’s rand rose by its most since the last finance minister reshuffling in October, amid worries over the country’s sovereign credit ratings, power supply interruptions and next year’s elections.

The rand is the fourth worst performing currency against the dollar in 2018 and among the most volatile, but it remains a favourite for investors chasing high yields and willing to risk short-term losses for sizeable net returns.

With the central bank raising interest rates and inflation steady, the currency seemed to have escaped the selloff sparked by financial crises in Turkey and Argentina and the departure of the fifth finance minister in three years in October.

By then, it had lost more than 20 percent of its value to the dollar. It has since regained nearly half of that.

But by Wednesday, volatility measures had surged, with investors spooked by the return of old and new risks, nudging them into more bearish and more expensive bets on the rand’s 2019 performance.

One-month implied volatility rose to 18.10 percent, its highest since Oct. 15.

The 25-delta risk reversals, a measure of the difference in volatility, and therefore price, between puts and calls also hit its highest since mid-September.

2019 RISKS

“The options market remains nervous going into 2019 amid numerous risk events,” said Mehul Daya, a strategist at Nedbank Capital, by email.

South Africa is on the cusp of a downgrade to junk that could trigger portfolio outflows upwards of 100 billion rand. The latest round of power outages and a request for a government bailout by cash-strapped Eskom is raising the downgrade threat.

“The first half of 2019 could present itself with many challenges for the rand from a local perspective (action from ratings agencies, budget, elections) and also the continuation of equity market rout, which is putting  pressure on the currency via equity outflows,” Daya said.

New Finance Minister Tito Mboweni presented a bleak mid-term budget in October and is due to release the full budget in February. The ruling African National Congress is expected to face a battle to maintain its majority in national elections next year.

A Reuters poll of 30 strategists last week forecast the rand would erase around a third of the 10 percent gains made in the in the past two months in the run-up to elections.

“Volatility in the rand has the potential to pick up as anticipation mounts ahead of the budget in February and May elections,” said analysts at FXTM Lukman Otunuga.

China's Tencent Music jumps on US launch

Shares in Tencent Music Entertainment Group, China's music streaming giant, jumped 10% on their first day of public trade in New York.

The listing raised about $1.1bn (£870m) for the firm, based on an initial share price of $13.

Shares later gained about 10%, giving the firm a market value of about $23bn - comparable to Spotify.

The launch had been clouded by the recent downturn in US financial markets and tensions between the US and China.

Tencent Music, part of the sprawling Chinese tech company Tencent Holdings, owns some of the most popular music apps in China, including QQ Music, Kugou Music as well as the karaoke service WeSing.

It claims about 800 million monthly active users, of which about 35 million were paying customers at the end of September.

Tencent executives had reportedly expected a valuation as high as $30bn when it started to pursue the New York Stock Exchange listing earlier this year.

But after weeks of delay, the firm narrowed the selling price for about 82 million shares to $13 to $15, with the offering ultimately settling at the lower end of that range.

Tencent, which is incorporated in the Cayman Islands, said it plans to use the money to expand its music catalogue, develop new services, market the company and finance potential investments.

The firm is backed by investors that include Spotify, Sony Music Entertainment and Warner Music Group and is majority-owned by Tencent Holdings.

Tencent Holdings, which includes advertising, digital payments, online games, cloud services and the WeChat messenger service, was founded in 1998 and has been listed on the Hong Kong Stock Exchange since 2004.

It created Tencent Music Entertainment Group after acquiring China Music Corporation in 2016 and merging it with its existing music business.--bbc

British pound has risen amid speculation that Prime Minister Theresa May will win

The pound has risen amid speculation that Prime Minister Theresa May will win the vote of confidence in her leadership on Wednesday evening.

The currency is trading 1.4% higher against the dollar at $1.2660 and 0.9% higher against the euro at €1.1132.

On Tuesday the pound hit 20-month lows against the dollar on reports that sufficient numbers of Conservative MPs were prepared to force a vote.

A majority of Conservative MPs said they would back the PM in the vote

Spreadex financial analyst Connor Campbell said investors were banking on Mrs May "surviving this latest challenge to her leadership, with the prime minister expected to end the day still in power".

British Pound against US Dollar

"And even if the vote is an unwelcome distraction from the real issues at hand, a May triumph would in theory reduce the chances of a 'no-deal' Brexit," he added.

The challenge to Mrs May has been brought by Conservative MPs who say Mrs May's deal with the EU has watered down the Brexit voters were promised in the 2016 referendum.

Her decision to cancel Tuesday's Parliamentary vote on the deal prompted them to back a confidence vote.

There needed to be 48 MPs calling for her to go, out of 315 Conservative MPs, to trigger a confidence vote and this threshold was reached on Tuesday.--bbc

Google hearing sees 'idiot' trending

The word "idiot" has been searched for more than one million times, following testimony typing it into Google Images threw up pictures of President Trump.

The link between the two was mentioned during a congressional grilling of Google chief executive Sundar Pichai.

He was asked whether this was an example of political bias in algorithms, something he denied.

According to Google Trends, "idiot" is currently the number one most searched for term in the US.

Democratic congresswoman Zoe Lofgren posed the question about why "idiot" highlighted results that included pictures of the president.

"How would that happen? How does search work so that would occur?" she asked.

Mr Pichai replied that Google search results were based on billions of keyword ranked according to more than 200 factors, including relevance and popularity.

"So it's not some little man sitting behind the curtain figuring out what we're going to show the user?" responded Ms Lofgren.

Republican members of congress continued to grill Mr Pichai, with Steve Chabot asking why, when he searched for news about his party's health care bill, only negative news appeared.

Mr Pichai replied that equally negative news was highlighted when people used the search term "Google".

Google bombing

The link between the term "idiot" and pictures of President Trump emerged earlier this year, with some linking it to the fact British protesters had pushed Green Day's song American Idiot to the top of the UK charts during a presidential visit in July.

That was followed by users of the website Reddit posting articles that contained pictures of President Trump alongside the word "idiot", in an attempt to manipulate the search engine database, in a practice known as Google bombing.

It is not the first time a US president has been linked to an unfortunate tagline.

In 2003, a search for the phrase "miserable failure" highlighted pictures of President George W Bush.

The hearing also revealed that some members of congress had only very basic knowledge of the technology industry.

Republican Steve King asking Mr Pichai to explain why his granddaughter's iPhone was acting strangely.

In response, Mr Pichai explained the phone was not made by Google.bbc

Is there really a Canada Goose boycott in China?

Luxury jacket maker Canada Goose seems to have been caught up in a political dispute between China and Canada.

On Monday, Chinese state media said local consumers had begun to boycott Canadian brands, in particular, Canada Goose.

The move was reportedly in response to Canada's detention of an executive from Chinese tech company Huawei.

But is the backlash against Canada Goose in China as dramatic as it seems?

'I cannot afford it anyway'

News of an apparent boycott emerged after Meng Wanzhou - Huawei's chief financial officer and daughter of the firm's founder - was arrested in Canada last week.

Ms Meng could be extradited to the US to face fraud charges linked to the alleged violation of sanctions on Iran. She was granted bail on Tuesday by a Canadian court.

Trump could intervene in Huawei court case

The life of Huawei's high-flying heiress

Canadian ex-diplomat 'held in China'

On Monday, the Global Times published an article stating that her detention "seem[ed] to have kicked off a boycott of Canadian goods... with Canada Goose hit first."

The brand has a substantial following in China.

Earlier this year the company announced an expansion plan for China, including establishing a regional head office in Shanghai. It also opened a retail store in Hong Kong and a pop-up store in Beijing - with a permanent store soon on its way.

It is not uncommon for Chinese consumers to boycott popular brands.

Most recently, they successfully lobbied against luxury label Dolce and Gabbana after it was accused of trivialising Chinese culture in a marketing campaign.

The backlash was huge on social media site Weibo and the brand's products were eventually pulled from e-commerce sites in China.

In comparison to Dolce and Gabbana, the anger against Canada Goose has been relatively mild.

While some backlash against Canada Goose was evident on Weibo, the bulk of comments focused on the fact that the average Chinese consumer cannot afford the luxury parka brand to begin with.

Canada Goose jackets can cost nearly £1,400 ($1,750).

"I will boycott Canadian Goose... because I cannot afford it anyway," said one user on Weibo.

"Oh... the stocks plunged, but the prices haven't plunged... I'll keep waiting," another said.

Others pointed out that they would rather buy goods from Bosideng - a Chinese down jacket maker - and a much more affordable brand.

Canada Goose is a visible target mostly because of its name, as one commenter pointed out.

"Poor Canada Goose, it has Canada in its name... other Canadian brands have not been mentioned."

Shares take a hit

As Ms Meng's bail hearing was being held this week in Vancouver, Canada Goose shares fell sharply. The stock slumped nearly 20% over four days.

That's a big move, but it is not clear if this is tied to the apparent boycott. The company's shares were heading south before Ms Meng's detention was revealed.

In contrast, Bosideng saw its share prices surge over the past few days.

Shares typically move - up or down - on the perceived prospects of a company. So if investors feel upbeat about future growth, they will buy a stock and that will push prices higher.bbc

Superdry warns worse to come as profits plunge

Superdry, best known for its coats and hoodies, has warned of weaker than expected profits, saying shoppers have not bought extra winter layers this year.

It now expects annual profits of between £55m and £70m - analysts had been expecting around £84m.

The announcement hit Superdry's shares and they closed more than 38% lower.

The company is considering closing stores as part of a cost cutting drive to save £50m by 2022.

"Superdry had a difficult first half, impacted by unseasonably warm weather across our major markets, a consumer economy that is increasingly discount driven and the issues we are addressing in product mix and range," said Euan Sutherland, Superdry's chief executive officer.

Underlying profit before tax almost halved in the first half of the year, to £12.9m.

Superdry founder seeks return to the fold

High Street crisis: How do we spend our money?

November shopper footfall 'worst since recession'

The retailer is a third of the way through an 18-month strategy to re-energise the brand which includes introducing childrenswear and 100% organic cotton products.

Mr Sutherland said the firm's "over-reliance" on jackets and sweatshirts was partly to blame for flagging sales.

He will oversee an efficiency drive which will include reviewing the number and size of their stores, and exploring renegotiating rents between now and March 2019. 

Superdry's shares were down by as much as 30% on Wednesday. They have lost more than 70% of their value this year.

Superdry became popular with teenagers by providing high quality sweatshirts and other casual wear with a Japanese-style branding. However it has been losing ground and was dubbed recently by the Financial Times as a brand "for cool dads".

"It is a brand that hit a trend in the UK several years ago," said Maria Malone, from the Manchester Fashion Institute. "Its customers are older, thirty plus, but the website features young models, this confuses the consumer."

The problem is that Superdry's products are neither high fashion nor very functional, and its style, reminiscent of American Classic or Gap, is ubiquitous, Ms Malone said.

According to fashion retail analyst, Kate Hardcastle, the brand has saturated the market and has suffered from discount retailers producing copycat versions,

"To stay fashionable and engage with a buyer a brand has to have an air of exclusivity about it," she said.

Superdry's founder Julian Dunkerton left the board in March. Since then he has criticised the retailer's strategy.

He said the company should focus on its core jackets and hoodies and offer a far wider range of variations online: "Superdry is a series of core products - stick with them and tweak them," he said.

As part of its new strategy Superdry has launched a "fast-fashion" range aimed at a "younger, more fashion-driven" customer. The range mimics online retailers in going from design to delivery to consumers in six weeks and is being marketed via social media.--bbc

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

Unity Day

22/12/2018

Christmas Day

25/12/2018

Boxing Day

26/12/2018

New Years’ Day

01/01/2019

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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