Major International Business Headlines Brief::: 20 July 2018

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Major International Business Headlines Brief::: 20 July 2018

 


 

 


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

 


 

 


 

 

*  Nigeria to need up to $300 mln for new national carrier-document

*  Ethiopian Airlines says it is in talks for stake in Eritrean Airlines

*  Alphabet to deploy balloon Internet in Kenya with Telkom in 2019

*  Namibia nets $218 million loan from African Development Bank

*  Zambia to share data on austerity measures with IMF - finance minister

*  Eqypt's EFG Hermes to buy Nigerian broker in frontier market push

*  Ghana introduces higher income tax band to shore up revenue

*  Steinhoff says about 90 pct of creditors support debt lock-up

*  South African reserve bank leaves repo rate unchanged at 6.5 percent

*  As Sudan currency continues descent, inflation hits 64 percent in June

*  Comcast likely to be new owner of Sky

*  Japan's Kobe Steel indicted over quality scandal

*  Ryanair flight cancellations to hit UK and Ireland routes

*  IMF warns Ireland faces economic hit from 'no deal' Brexit

*  Trump criticises US central bank's interest rate rises

*  Burberry burns bags, clothes and perfume worth millions

*  Pound drops below $1.30 as June retail sales fall

*  US faces retaliation if car tariffs go ahead

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

Nigeria to need up to $300 mln for new national carrier-document

LAGOS (Reuters) - Nigeria’s new national airline will require initial capital of between $150 million and $300 million, and the government is seeking a strategic partner to operate the carrier, the government stated in a document seen by Reuters on Thursday.

 

The West African country’s previous national carrier, Nigeria Airways, was founded in 1958 and wholly owned by the government. It ceased to operate in 2003.

 

Hadi Sirika, minister of state for aviation, on Wednesday said the government would not own more than five percent of the new carrier, called Nigeria Air. He made the comments while providing details of the airline at the Farnborough air show in England.

 

The government plans to launch the airline in December, making good on President Muhammadu Buhari’s election campaign promise.

 

Decades of neglect and lack of investment have left Nigeria with low-quality infrastructure seen as a hurdle to prosperity. The government has said that upgrading it will require private investment.

 

“The initial capital is likely to be in the range of $US 150 to 300 million, invested in tranches over time from start up through the first years of operation,” a government document stated.

 

It said the government will provide initial capital but did not state the sum or give further details.

 

The government will “facilitate the process for opening up the capital of the airline to private sector financial investors”, the document stated.

 

A private operator, sought through a Public Private Partnership (PPP) process, will manage the airline without interference, it said.

 

Nigeria Air would serve domestic and international markets and expect to have a fleet of 30 aircrafts in five years with hubs in Lagos and Abuja, Nigeria’s two main cities.

 

British billionaire Richard Branson set up domestic and international carrier Virgin Nigeria in 2000, but pulled out in 2010 in frustration at what he said was interference by politicians and regulators.

 

The airline he created, which was later rebranded Air Nigeria, closed in 2012 after collapsing under about 35 billion naira of debt which left it unable to pay staff, a former finance director of the company told Reuters at the time.

 

Nigeria is overhauling its aviation infrastructure and handing over its airports to private managers in order to improve the business environment for the industry sector to attract investment, the document said.

 

It said current air traffic in Nigeria is around 15 million passengers which is expected to grow at five percent per annum through to 2036.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


Ethiopian Airlines says it is in talks for stake in Eritrean Airlines

ASMARA (Reuters) - Ethiopian Airlines is in talks to take a stake in Eritrean Airlines and a study will be conducted to determine the size of the acquisition, the Ethiopian carrier’s chief executive said in an interview on Thursday.

 

“We are assessing the situation of Eritrean Airlines right now,” Tewolde GebreMariam told Reuters during a visit to the Eritrean capital Asmara. “I spoke with the CEO yesterday. They have one leased airplane - a (Boeing) 737. We have started discussions.”

 

Tewolde travelled to Asmara on Wednesday with an Ethiopian delegation on the first commercial flight from Ethiopia to Eritrea in 20 years - cementing a stunning rapprochement that has ended a generation of hostility between the neighbouring Horn of Africa countries in a matter of days.

 

The two 90-minute flights put the icing on the cake of a peace push by new Ethiopian Prime Minister Abiy Ahmed. His first three months in office have turned politics in his country - Africa’s most populous after Nigeria - and the wider East African region on its head.

 

“It is beyond opening routes. This one is different because politically, economically and socially, the flight we flew yesterday is going to make radical changes between the peoples of Ethiopia and Eritrea. It is a game changer,” Tewolde said.

 

The CEO said that based on the demand and bookings he had seen, starting in a couple of weeks Ethiopian Airlines would fly twice daily to Asmara.

 

“We plan (also) to fly to Massawa and Assab. We have not assessed the market (in the two towns), so we will send market research people,” he said.

 

“The demand is heavy not only because of Eritrea and Ethiopia but also demand from Eritreans living in Europe, America and so on who are eager to visit friends and relatives in Asmara,” he added.

 

“Connections were (previously) not smooth for them to come back home. They have (had) to go through Dubai or Istanbul and it is not convenient. Now they will have direct flights from the U.S., Canada and Europe.”

 

As the country prepares to open up its state-owned enterprises for private investment, Ethiopian Airlines is ahead of the curve on that front and will evaluate whether it needs capital or not in its next stage of growth.

 

“For the time being, we have business units ready for private investors. The hotel business, aerospace manufacturing (arm), and logistics,” Tewolde said. “As we go forward, we will see other areas requiring investors.”

 

The airline has been buying shares in other African airlines, a strategy aimed at gaining a competitive advantage against rivals such as those in the Gulf. [L8N1SD0PZ]

 

Tewolde said that if African carriers are interested in cross-exchange of equity, the airline, the continent’s largest by revenue and profit, according to the International Air Transport Association, would evaluate the proposition.

 

The CEO said they would prefer joint ventures. “We are open to investment and actively recruiting investors,” he said.

 

 

 

Alphabet to deploy balloon Internet in Kenya with Telkom in 2019

NAIROBI (Reuters) - Alphabet Inc’s Loon said on Thursday it would deploy its system of balloons to beam high-speed Internet access with Telkom Kenya from next year to cover rural and suburban populations, marking its first commercial deal in Africa.

 

Known as Project Loon, the technology was developed by Alphabet’s X, the company’s innovation lab. It has since become Loon, a subsidiary of Alphabet, which is the parent company of Google.

 

The technology was used by U.S. telecom operators to provide connectivity to more than 250,000 people in Puerto Rico after a hurricane last year. Kenya hopes the technology can help achieve full Internet coverage of its population.

 

“Loon’s mission is to connect people everywhere by inventing and integrating audacious technologies,” said Alastair Westgarth, the chief executive of Loon.

 

Telkom Kenya is the third biggest operator in the country behind market leader Safaricom and Bharti Airtel’s Kenyan unit.

 

“We will work very hard with Loon, to deliver the first commercial mobile service, as quickly as possible, using Loon’s balloon-powered Internet in Africa,” said Aldo Mareuse, the chief executive of Telkom.

 

The terms of the deal were not disclosed.

 

The Loon service uses balloons, which are powered by an on-board solar panel, to provide fourth generation (4G) coverage to areas with lower population densities.

 

They float at 60,000 feet above the sea level, well above air traffic, wildlife, and weather events, Loon said.

 

With more than 45 million people, Kenya’s major cities and towns are covered by operator networks, but vast swathes of rural Kenya are not covered.

 

A Microsoft-backed Kenyan start-up has been using under-utilised television frequencies to connect some of those rural communities.

 

 

 

Namibia nets $218 million loan from African Development Bank

WINDHOEK (Reuters) - Namibia secured a $218 million loan from the African Development Bank, the second tranche of a quarter billion dollar facility from the development lender to help the country finance its budget deficit, the finance ministry said on Thursday.

 

The southern African nation’s economy contracted in the final two quarters of 2017, and by 0.1 percent in the first quarter OF 2018. Its credit rating was cut to subinvestment late last year by Fitch over concerns of a deteriorating fiscal position.

 

 

Zambia to share data on austerity measures with IMF - finance minister

LUSAKA (Reuters) - Zambia will share data on its planned austerity measures with the International Monetary Fund (IMF) to get the lender’s feedback on their appropriateness for macroeconomic sustainability, its minister of finance said on Thursday.

 

In February the fund rejected Zambia’s borrowing plans, saying they risked making it harder for the southern African country to sustain its debt load. An IMF team is expected in Zambia next week.

 

“We wish to state that as this work is proceeding, we will refrain from making public statements on this matter until we have a firm position with the IMF,” Finance Minister Margaret Mwanakatwe said in a statement.

 

Mwanakatwe said the nation’s reserve position as of the end of June 2018 was $1.82 billion and external debt at the end of March was $9.37 billion.

 

Zambia’s central bank said in May the nation financed its current account deficit of $139.2 million in the first quarter of 2018 through a drawdown on international reserves.

 

The GDP growth target of above 4 percent in 2018 for Africa’s second-biggest copper producer remains feasible and growth in the medium term is expected to be between 4 percent and 5 percent, Mwanakatwe said.

 

 

Eqypt's EFG Hermes to buy Nigerian broker in frontier market push

LAGOS (Reuters) - Egyptian investment bank EFG Hermes said on Thursday it will acquire Nigerian broker Primera Africa as it pushes to expand its capital market business across frontier markets.

 

EFG Hermes said it entered Nigeria because it was one of the largest frontier markets globally with long-term growth opportunity after undergoing a series of reforms including currency devaluation.

 

It did not disclose how much it was paying for the 100 percent stake in Lagos-based Primera Africa, which offers brokerage and research services to local and foreign investors. Primera will operate under the EFG Hermes brand name after the deal closes at the end of August 2018.

 

“We are entering a market that has a compelling story to tell investors,” EFG Hermes said in a statement.

 

The announcement comes a month after Absa said it planned to join Nigeria’s bourse as a broker in July after the South African firm bought a securities license.

 

Nigeria’s stock market was among the best performing in the world last year after the central bank liberalised the naira for investors. However, the market is down 4 percent this year as rate hikes in United States trigger capital flight.

 

Mohamed Ebeid, co-CEO of EFG Hermes said Nigeria accounted for the largest share of its brokerage executions and revenue among all frontier markets in which it had indirect execution in 2017.

 

EFG Hermes, one of the largest investment banks in the Middle East, has entered Pakistan, Kenya and Bangladesh over the past 12 months. Prior to that it operated in Egypt, Saudi Arabia, United Arab Emirates, Kuwait, Jordan, Lebanon, Oman and the United States.

 

It recently won a license to operate in Britain.

 

The company said it would utilize its Nigerian presence to serve as a hub for expansion into West Africa, much like what it has done in East Africa with a hub in Kenya.

 

Nigeria’s stock exchange, the third largest in Africa, has in the last few years said it was reviewing applications from leading global investment banks to join its trading floor to increase foreign investment in one of the world’s least tapped emerging markets.

 

 

Ghana introduces higher income tax band to shore up revenue

ACCRA (Reuters) - Ghana is introducing an additional tax band for high personal income earners as part of measures by the West African country to shore up government revenue, Finance Minister Ken Ofori-Atta said on Thursday.

 

Personal earnings of 10,000 cedis ($2,100) and above will attract up to 35 percent income tax, Ofori-Atta told parliament. There will also be additional levies on non-commercial luxury cars of 3.0 litres, he told parliament in a budget review.

 

Ghana, which exports cocoa, gold and oil, recorded a shortfall in revenue amounting to 1.4 billion cedis ($300 mln) in the government’s budget for the first five months, Ofori-Atta said.

 

 

Steinhoff says about 90 pct of creditors support debt lock-up

JOHANNESBURG (Reuters) - Steinhoff said on Thursday that around 90 percent of creditors for several subsidiaries supported an agreement to hold off debt claims for three years, an important step in restructuring the scandal-hit South African retailer.

 

Steinhoff is fighting for survival after revealing multi-billion euro holes in its balance sheet that wiped more than 90 percent off its market value and forced it to sell assets to fund working capital.

 

Steinhoff said investors holding 89 percent of the debt of Steinhoff Europe AG (SEAG) and 89 percent of the debt of Stripes U.S. Holding Incorporated had given initial consent to a so-called “lock-up agreement”, which is still being finalised.

 

Between 92 and 99 percent of investors holding bonds issued by Steinhoff Finance Holding GmbH had also given their support to the lock-up, the company said in a statement.

 

Steinhoff’s Johannesburg-listed shares jumped more than 12 percent on Thursday’s announcement, which followed the expiry of an “early bird fee” deadline on Wednesday for creditors to get preferential terms in the lock-up agreement.

 

The agreement would give the firm’s subsidiaries three years breathing space without debt repayments, paving the way for the company to restructure 9.4 billion euros of debt.

 

Steinhoff has agreed the main terms of a restructuring deal, under which all its debt would be restated at par and be given a common maturity date of three years from the completion of the restructuring agreement.

 

The company needs at least 75 percent of creditors of its subsidiaries to sign up to the lock-up agreement by a final deadline on Friday.

 

Once enough creditors are locked in, Steinhoff will begin restructuring its debt within three months.

 

 

 

South African reserve bank leaves repo rate unchanged at 6.5 percent

PRETORIA (Reuters) - South Africa’s central bank kept its benchmark repo rate unchanged at 6.5 percent in a unanimous decision by members of the Monetary Policy Committee on Thursday, saying risks to inflation cited at previous meetings had begun to materialise.

 

All 25 economists surveyed by Reuters had predicted the repo rate would stay on hold.

 

“While headline inflation is comfortably within the inflation target band, indications are that we have passed the low point of the current cycle,” Governor Lesetja Kganyago told a news conference, citing the tariff war between the United States and China as well as higher global oil prices as the main dangers to inflation.

 

On Wednesday data showed headline consumer inflation quickened to 4.6 percent year-on-year in June, further away from March’s 7-year low but well within the central bank’s target of between 3 and 6 percent.

 

All 25 economists surveyed by Reuters had predicted the repo rate would stay on hold.

 

The bank said the weakening currency as global financial conditions tightened, as the Federal Reserve raised lending rates and lowered it’s global bond buying program.

 

The bank also cut its growth forecast for 2018 to 1.2 percent from 1.7 percent, saying conditions were challenging and would be constrained in the near term by weak consumer spending linked to the recent increase to value added tax and unemployment which is near record levels.

 

“The domestic economic growth outlook for this year is weaker than we expected in May, Kganyago said.

 

The continent’s most industrialised economy suffered its worst quarterly contraction in nine years in the first quarter, and consequent data has been mixed, cooling investors enthusiasm over President Cyril Ramaphosa’s ability to deliver long term growth.

 

 

As Sudan currency continues descent, inflation hits 64 percent in June

KHARTOUM (Reuters) - Sudan’s inflation rose to 63.87 percent year-on-year in June, from 60.93 percent in May, the state statistics agency said on Thursday, as the dollar-starved country grapples with an economic crisis.

 

Sudan has been reeling from an acute shortage of foreign currency and an increasingly expensive black market for dollars that has sapped its ability to import and made prices soar, kindling unrest earlier this year in some parts of the country.

 

The import-dependent country’s price rises have been the third fastest in the world in recent months, behind only war-torn South Sudan and hyperinflation-stricken Venezuela, according to IMF data from April.

 

The statistics agency said June inflation was driven by rising food and beverage prices.

 

The severe downturn comes despite the United States lifting 20-year old sanctions last year, a move that was expected to be a boon for the long isolated economy.

 

But new investment has been slow to emerge and economic fortunes have only soured since the sanctions decision, with the Sudanese pound down about 125 percent on black market trading since relief was announced last October.

 

The Sudanese pound weakened to 46 pounds to the dollar on the black market on Thursday compared to about 41 pounds earlier in the week, a level traders called a record low.

 

That compares to an official rate of about 29.3 Sudanese pounds to the dollar traded in banks, but businesses struggling to import say hard currency in the banking system is largely unavailable.

 

“We expect the dollar price to rise in the coming days as there is a lot of demand on the dollar and a shortage of it being offered in the market,” one black market dealer told Reuters.

 

The Sudanese government rejected an IMF suggestion that it float its pound currency late last year. It instead made two steep devaluations and imposed restrictions on dollar deposits in an attempt to curb black market activity.

 

 

Comcast likely to be new owner of Sky

Comcast is likely to be the new owner of Sky, BBC Business Editor Simon Jack has learned.

 

It means that Rupert Murdoch's 21st Century Fox has failed in its bid to take full control of Sky.

 

Instead, Disney will buy assets from Fox including its movie studio, and content like Avatar and X-Men.

 

It is not yet clear what will happen to Mr Murdoch's 39% stake in Sky, but it is thought that could also be sold to Comcast.

 

If that sale were to happen, it would mean that Mr Murdoch's long association with Sky News would end.

 

But Sky News would continue as Comcast has guaranteed to fund the channel at its current level for 10 years.

 

Buying Sky would make Comcast the world's biggest pay TV network and would reduce its dependence on the US market.

 

The complicated takeover situation between Disney, Fox and Comcast became clearer earlier, when Comcast abandoned its pursuit of 21st Century Fox's film and television assets.

 

That left Disney in pole position as the sole bidder.

 

Comcast chief executive Brian Roberts said the company would now "focus on our recommended offer for Sky".

 

Commenting on the expected tie-up between Disney and Fox, he congratulated Disney chief executive Bob Iger and his team and commended the "Murdoch family and Fox for creating such a desirable and respected company".

 

Comcast scraps Fox bid to focus on Sky

 

A source at Sky told the BBC's Simon Jack: "It looks like there's been a bit of horse trading going on and the markets are telling us that the battle for Sky may be over".

 

In London shares in Sky closed nearly 1.5% lower.--BBC

 

 

Japan's Kobe Steel indicted over quality scandal

Kobe Steel has been indicted for allegedly violating Japan's competition law after the firm admitted it had fabricated strength and quality data of products sold to hundreds of clients.

 

Kobe Steel, which is Japan's third-largest steelmaker, first admitted to the wrongdoing last year.

 

The firm said on Thursday it was deeply sorry "for the enormous amount of worry and trouble" it had caused its clients.

 

Kobe Steel supplies makers of cars, planes and trains around the world.

 

Manufacturing giants including Boeing, Toyota and General Motors have been investigating whether they used any of the sub-standard materials; however, no safety issues have yet been reported.

 

"We once again deeply apologise for the considerable trouble we have caused to our customers, suppliers, shareholders and many others concerning the misconduct at Kobe Steel Ltd and its group companies," the firm said in relation to the indictment by the Tokyo District Prosecutors Office.

 

A report that Kobe Steel released in March said there had been a total of 688 cases of "misconduct" - 525 announced when the problem was first revealed in October last year, and 163 fresh cases.

 

It confirmed that staff had changed or made up data on the quality of some of its products before they were shipped.

 

Kobe Steel had "deep-seated issues" around corporate culture and compliance, the report admitted.

 

The scandal has already led to a shake-up of the company's senior management, including the resignation of its chief executive Hiroya Kawasaki, among other changes.

 

The firm is also facing legal action in the US and Canada over the wrongdoing.--BBC

 

 

Ryanair flight cancellations to hit UK and Ireland routes

Ryanair pilots will strike on Friday, resulting in the cancellation of 24 flights between the Republic of Ireland and the UK.

 

It is the second of three 24-hour strikes involving Ireland-based pilots directly employed by Ryanair.

 

The pilots' union said that talks on Wednesday between the two sides did not lead to any "material change".

 

Ryanair said if a strike planned for next week was not called off it would cancel 16 flights to and from Ireland.

 

The Irish Airline Pilots' Association - which is part of the Fórsa trade union - is in dispute with Ryanair over pay and conditions.

 

The pilots' concerns are centred on Ryanair's proposals on seniority, as well as procedures for the allocation of base transfers, promotions and annual leave.

 

Late on Thursday, Ryanair tweeted a copy of a letter from its chief people officer Eddie Wilson to the national secretary of Fórsa.

 

In it Mr Wilson said that following Wednesday's meeting between the airline and the union "nothing has progressed".

 

"It is unacceptable that 24 hours later we have had no response from Fórsa, and find ourselves with a threatened third day of strike action next Tuesday."

 

He added that if Ryanair did not hear back from the union by 19:00 BST on Thursday calling off "this unnecessary strike", which he said was supported by by "just 25% of our Irish pilots", then the airline would cancel 16 flights out of more than 290 to and from Ireland next Tuesday.

 

"We can readily re-accommodate this small number of customers on other flights," added Mr Wilson.

 

Ninety-nine percent of the airline's directly-employed Republic of Ireland-based pilots voted in favour of action, but Ryanair said that they make up just 25% of its Irish flight crew.

 

Most pilots flying for Ryanair are self-employed, which is why the airline is able to continue most flights.

 

'Unjustified'

Separately, Ryanair cabin crew are also due to go on strike on 25 and 26 July.

 

The airline has cancelled up to 600 flights over what it calls the cabin crew's "unjustified" action.

 

Almost 50,000 customers flying from airports in Belgium, Portugal and Spain were affected, but earlier the airline tweeted that more than 85% of them had been "re-accommodated" on alternative flights or had applied for full refunds.--BBC

 

 

IMF warns Ireland faces economic hit from 'no deal' Brexit

Ireland's economy could suffer a 4% hit if the UK and the EU fail to reach a deal following Brexit, the International Monetary Fund has said.

 

The IMF said that because of the highly integrated nature of the Irish and UK economies, Ireland could face economic consequences as sharp as the UK's.

 

Across the whole of the EU, the consequences of a "no deal" could be up to 1.5% of economic growth, it says.

 

Its report looks at possible fall-out from a "cliff-edge" break with the EU.

 

The IMF also says the Netherlands, Denmark and Belgium would face harsher negative economic effects compared with countries such as Finland and Italy, which are less close economically to the UK.

 

The Fund's report said a "soft Brexit" scenario - with the UK out of the customs union but retaining access to the single market and agreeing to abide by EU rules - "would imply almost zero cost for the EU as a whole".

 

A "standard" free trade deal of the type agreed between Canada and the EU could cause a hit of around 0.8%.

 

Irish PM steps up Brexit preparations

At-a-glance: The UK's four Brexit options

The warning is the latest in a number of reports that suggest a "no deal", where Britain and the EU trade on World Trade Organization terms which include import tariffs, would carry significant economic costs.

 

The IMF's 4% figure is substantially lower than claims by Dr Liam Fox, the international trade secretary, who said yesterday that Ireland's economy could suffer by up to 8% if the EU did not agree a deal with Britain.

 

"The ball is now in their [the EU's] court," Dr Fox said.

 

Losses 'inevitable'

Both Britain and the EU have said that they want a comprehensive free-trade deal and a close relationship after the UK leaves the EU in March next year.

 

But political arguments in the UK on the detail of the "deal" Theresa May wants to offer Brussels has meant preparations for a "no deal" are still continuing.

 

Today the EU published a paper on what businesses should do to prepare for a "no deal" situation , with some commentators believing the chances of that have increased because of the large distance still between the negotiating sides, particularly over the issue of how to retain no customs checks on the border between Northern Ireland and the Republic.

 

"The integration of the EU27 countries and the United Kingdom has strengthened over time, reflecting shared gains from the EU's single market," the IMF said.

 

"Conversely the departure of the UK from the EU will inevitably represent a loss for both sides."

 

Cross-border flows

The IMF says that disruption to complicated supply chains, the increase in import tariffs and what are called "non-tariff barriers" - for example, different regulatory standards - would have a negative impact on economies across Europe.

 

"The UK is among the top three main trading partners of the euro area," the IMF said.

 

"Cross-border capital flows between the UK and the euro area are large [and] migration flows are considerable.

 

"Higher barriers to trade, capital flows and people movements following Brexit could disrupt these links, reducing trade, investment and labour mobility."--BBC

 

 

Trump criticises US central bank's interest rate rises

President Donald Trump has said he is "not happy" about the fact that the US Federal Reserve is raising interest rates.

 

The comments raised eyebrows in the US, where presidents are expected to avoid criticism of the central bank in deference to its independence.

 

Mr Trump argued that higher rates put the US at a disadvantage and impede faster growth.

 

However, he added that he is "letting them do what they think is best".

 

The Fed has raised interest rates twice already this year.

 

US Federal Reserve Chair Jerome "Jay" Powell, who was appointed by Mr Trump earlier this year, said this week that policymakers remain committed to further, gradual increases.

 

The Fed is responding to a recent uptick in inflation that economists attribute in part to a mix of increased government spending, tax cuts and new tariffs.

 

The rate rises, which make borrowing more expensive, are intended to head off uncontrolled price rises as the US economy expands.

 

If the Fed moves too aggressively, however, it could curb economic activity so severely that it helps to provoke a recession.

 

'Not thrilled'

Mr Trump said increased rates had resulted in a stronger dollar which put the US at a disadvantage compared with places where central banks are holding interest rates steady.

 

"I'm not thrilled," he said in the interview with US business network CNBC. "Because we go up and every time you go up, they want to raise rates again. I don't really - I am not happy about it. But at the same time I'm letting them do what they feel is best."

 

The dollar index, which measures the dollar against a basket of currencies, fell about 0.1% after the remarks became public. It later regained much of that ground.

 

Mr Trump has said before that he favours low interest rates, and dismissed concerns about his interference.

 

The perils of a political Federal Reserve

"Now I'm just saying the same thing that I would have said as a private citizen," he said, according to CNBC.

 

"So somebody would say, 'Oh, maybe you shouldn't say that as president.' I couldn't care less what they say, because my views haven't changed."--BBC

 

 

Burberry burns bags, clothes and perfume worth millions

Burberry, the upmarket British fashion label, destroyed unsold clothes, accessories and perfume worth £28.6m last year to protect its brand.

 

It takes the total value of goods it has destroyed over the past five years to more than £90m.

 

Fashion firms including Burberry destroy unwanted items to prevent them being stolen or sold cheaply.

 

Burberry said that the energy generated from burning its products was captured, making it environmentally friendly.

 

"Burberry has careful processes in place to minimise the amount of excess stock we produce. On the occasions when disposal of products is necessary, we do so in a responsible manner and we continue to seek ways to reduce and revalue our waste," a spokesperson for the company said.

 

The FTSE 100 company said last year was unusual as it had to destroy a large amount of perfume after signing a new deal with US firm Coty.

 

As Coty would be making new stock, Burberry had to dispose of £10m worth of old products - largely perfume.

 

Burberry plans to move further upmarket

How Bailey put Burberry back in fashion

Over the past few years, Burberry has been working hard to make its brand exclusive again after it went through a phase when counterfeiters were "sticking the Burberry check on anything they could", said Maria Malone, principal lecturer on the fashion business at Manchester Metropolitan University.

 

Destroying unwanted products is part of that process, she said.

 

"The reason they are doing this is so that the market is not flooded with discounts. They don't want Burberry products to get into the hands of anyone who can sell them at a discount and devalue the brand," Ms Malone said.

 

Burberry is not the only company having to deal with a surplus of luxury stock.

 

Richemont, which owns the Cartier and Montblanc brands, has had to buy back €480m (£430m) worth of watches over the last two years.

 

Analysts say some parts of those watches would be recycled - but much would be thrown away.

 

Environmental campaigners are angry about the waste.

 

"Despite their high prices, Burberry shows no respect for their own products and the hard work and natural resources that are used to made them," said Lu Yen Roloff of Greenpeace.

 

"The growing amount of overstock points to overproduction, and instead of slowing down their production, they incinerate perfectly good clothes and products.

 

"It's a dirty secret of the fashion industry. Burberry is just the tip of the iceberg," she said.

 

Fashion paradox

Tim Jackson, head of the British School of Fashion at the London campus of Glasgow Caledonian University, said luxury fashion firms such as Burberry faced a paradox.

 

To satisfy shareholders, they have to keep expanding even if that risks "diluting their identity and creating excess stock", he said.

 

"There's no way they are ever going to solve this problem."

 

Last November, Burberry announced a revamp intended to "re-energise" its products over several years.

 

That includes taking its brand further upmarket, closing stores that are not in "strategic" locations and creating a "centre of excellence" for luxury leather goods.

 

It has also cut costs, which has helped boost profits.

 

In Burberry's most recent financial year to 31 March, the company reported a 5% rise in profit to £413m, with sales little changed at £2.7bn.--BBC

 

 

Pound drops below $1.30 as June retail sales fall

The pound has fallen under $1.30 after a surprise fall in retail sales in June, confounding expectations of an increase.

 

The Office for National Statistics said sales fell by 0.5% last month compared with May - below forecasts of a 0.2% rise.

 

While the World Cup and hot weather helped food and drink sales, they also kept shoppers away from high streets.

 

The weak figures cast doubt on whether interest rates will rise next month.

 

Sterling is down almost 0.7% at $1.2980 against the dollar - the lowest since September last year.

 

The Bank of England had been expected to raise interest rates in August. But following the inflation figures released earlier this week, economists were divided on whether it would do so.

 

Tom Stevens at Fidelity International, said: "An August rate hike is in the balance. Whether or not one is delivered, the trajectory thereafter will be extremely shallow."

 

The ONS figures also showed that retail sales rose by 2.9% in the year to June, a slowdown from the 4.1% annual increase recorded in May and below forecasts of a 3.5%. rise.

 

However, Samuel Tombs at Pantheon Macroeconomics said the data would not "undermine the [Bank of England] Monetary Policy Committee's judgement that the economy rebounded in the second quarter".

 

In the April-to-June quarter retail sales increased by 2.1% - the biggest quarterly rise since 2015.

 

ONS senior statistician Rhian Murphy said: "Retail sales grew strongly across the three months to June 2018 as the warm weather encouraged shoppers to buy food and drink for their BBQs.

 

"However, in June retail sales actually fell back slightly, with continued growth in food sales offset by declining spending in many other shops as consumers stayed away from stores and instead enjoyed the World Cup and the heatwave."

 

Ruth Gregory at Capital Economics said: "Some of the second-quarter's strength reflects temporary factors, such as a boost from the warm weather and the Royal Wedding celebrations.

 

"Crucially, though, the big constraint on spending - namely the squeeze on real wages from high inflation - has eased."

 

Economic data out earlier this week showed that while wage growth has slowed to 2.7%, it remains above inflation.

 

Ms Gregory said: "While this week's unexpectedly-weak inflation figures have made the outlook for an interest rate rise in August rather less clear-cut, the recovery in the consumer sector supports our view that a hike is still more likely than not."

 

'Good result' for food

Between May and June, non-food sales fell by 1.1%, with demand for clothing down 0.8%.

 

Mr Tombs added: "Many households [had] already brought seasonal apparel when the weather also was unusually warm in April and May."

 

Food sales rose by 0.1% in June, which he said was a "good result" following substantial increases in April and May.

 

"The World Cup might have helped to support food sales, by encouraging people to stay in rather than eat out, though note that England's three knock-out games that led to huge TV audiences didn't happen until July," Mr Tombs added.--BBC

 

 

US faces retaliation if car tariffs go ahead

The EU, Mexico and Canada have said they will retaliate against the US if the White House places new tariffs on foreign cars and vehicle parts.

 

The countries delivered the warning on Thursday to a panel examining whether to recommend the taxes on grounds of national security.

 

US President Donald Trump ordered the Commerce Department to investigate the move in May.

 

The idea has also prompted widespread opposition in the US.

 

More than 2,000 comments were submitted in response to the inquiry, with major US car-makers such as General Motors submitting responses alongside ordinary car enthusiasts worried the measures could raise the cost of parts for antique cars.

 

"This is insane," one man from Arizona said.

 

GM warns against potential car tariffs

German car shares dip on Trump tariff tweet

At Thursday's hearing on the matter, Mexican Ambassador Geronimo Gutierrez Fernandez said imports from his country did not threaten national security.

 

"We will remain vigilant for any unjustified trade restriction and will exercise our rights to ensure that the Mexican automotive industry is not adversely affected," he said.

 

The Mexican ambassador was one of more than three dozen representatives scheduled to testify, most of whom oppose the measure, which represents one of the most sweeping Mr Trump has proposed.

 

Canada and the EU also said they are preparing counter-measures, which would add to retaliation already in place in response to US tariffs on steel and aluminium.

 

Jennifer Kelly, research director for the United Auto Workers union, noted significant job losses in the US car industry over the past two decades, but said the US should consider "targeted measures".

 

"We caution that any rash actions could have unforeseen consequences, including mass layoffs for American workers, but that does not mean we should do nothing," she said.

 

'Tremendous retribution'

The US imported more than $200bn (£154bn) in foreign cars and trucks last year, almost 80% of which came from Mexico, Canada, Japan and Germany.

 

Foreign car companies like BMW and Toyota also represent some of the industry's biggest employers in the US, while more than $100bn worth in auto imports enter the country each year.

 

Car firms say the tariffs, which could be as high as 25%, would cause the price of a car imported into the US to increase by an average of almost $6,000, and a US-made one to go up by about $2,000.

 

They also say tariffs would lead to less investment in the US and job cuts.

 

The Peterson Institute for International Economics has warned the tariffs, even without retaliation, could lead to the loss of 195,000 US jobs.

 

Political opposition

Mr Trump has appeared resolute in the face of the criticism.

 

On Wednesday, he again raised the idea of auto tariffs against the EU, threatening "tremendous retribution" if trade negotiations do not go his way.

 

However, the proposed auto tariffs have drawn growing political opposition.

 

Car workers held a rally in Washington DC opposing the hearing.

 

And nearly 150 members of the House of Representatives, including members of both parties, sent a letter to the Commerce Department this week urging it to reject the plan for auto tariffs.

 

US Senator Orrin Hatch has said if the president moves forward, he will consider legislative measures to curb White House power to make trade policy.--BBC

 

 

 

 

 


 

 


 

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

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


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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