Major International Business Headlines Brief::: 04 May 2018

Fri May 4 11:56:44 CAT 2018

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Major International Business Headlines Brief::: 04 May 2018

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*  Kenya private sector activity jumps in April - Markit

*  Pace of Uganda's private sector activity weaker on lower orders, output

*  Growing store base lifts South African pharmacy group Dis-Chem's FY profit

*  Vivo Energy, Vitol's Africa venture, floats with 2 billion pound valuation

*  Kenya's Java House aims to spread wings under Abraaj

*  Ethiopia inflation falls to 13.7 percent in April -Stats Office

*  South Africa Libstar raises $119 million in IPO

*  South Africa's Transnet chairwoman resigns

*  South Africa's rand retreats ahead of U.S. jobs data

*  South Africa miners reach $400 mln silicosis settlement with mining companies

*  Norwegian snubs bid from British Airways owner

*  Kuala Lumpur-Singapore named busiest international air route

*  Argentina raises rates twice in a week

*  HSBC reports surprise pre-tax profit fall

*  Twitter tells 330 million users to change their passwords

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Kenya private sector activity jumps in April - Markit

NAIROBI, May 4 (Reuters) - Kenya’s private sector activity jumped in April, continuing its recovery after months of slowdown last year due to a prolonged and volatile election period, a survey showed on Friday.

The Markit Stanbic Bank Kenya Purchasing Managers’ Index(PMI) for manufacturing and services rose to 56.4 in April from 55.7 in March. Anything above 50 denotes growth; anything below,

contraction.

“The strength of the recovery in private sector activity continued last month. This shows that the underlying demand conditions in the economy are consistent with a solid recovery

in economic activity,” Jibran Qureishi, regional economist for East Africa at Stanbic Bank said.

Output is up for the fourth month in a row as new orders rolled in from both local and foreign markets.

However, the survey cautioned on the prospect of inflation rising in coming months.

“The combination of rising demand, both domestic and external, with rising input costs and rising employment have the potential to exert meaningful and durable upward pressures on inflation,” Qureishi said.

Kenyan inflation eased to 3.73 percent in April year-on-year from 4.18 percent last month, the latest data from the statistics office showed. The rate is at its lowest level since January 2013.

In October, the PMI dropped to 34.4, its lowest level since the series began in January 2014, after the opposition boycotted a repeat presidential election ordered by the Supreme Court.

President Uhuru Kenyatta was declared the winner and he was sworn into office for a second term at the end of November.

In late January, opposition leader Raila Odinga conducted a symbolic “swearing in” which the government has said was illegal.

Kenyatta and Odinga have since reconciled and promised to unite the country after the elections in which around 100 people were killed mainly in clashes between opposition supporters and

security forces.

The Finance Ministry forecasts economic growth will rebound to 5.8 percent growth in 2018, from 4.9 percent last year.

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Pace of Uganda's private sector activity weaker on lower orders, output

KAMPALA, May 4 (Reuters) - Economic activity in Uganda’s private sector slowed in April from the previous month, undermined by lower output and fewer new orders in the industry, services and retail segments, a survey showed on Friday.

The Markit Stanbic Bank Uganda Purchasing Managers’ Index (PMI) declined to 51.8 last month, down from March’s 53.2. A reading above 50 indicates expansion; anything below, a contraction.

Markit’s survey noted “business activity contracting across the industry, services and wholesale and retail categories,” and cited particularly lower output and orders.

The three categories are among the five the survey monitors, which also include agriculture and construction.

During April, Markit said, there was healthy growth in output, new orders and employment across agriculture and construction which helped to partly absorb the impact from the

weak performance in other sectors.

Jibran Qureishi, Stanbic Bank’s economist for East Africa, said overall the business activity in private sector was experiencing an expansion but that the expansion was uneven and

that the “non-uniform nature of the economic expansion could be a reason for the absence of consumer inflation pressures.”

Uganda’s year-on-year inflation edged down to 1.8 percent in April from 2.0 percent in March on the back of a drop in food prices.

Growing store base lifts South African pharmacy group Dis-Chem's FY profit

JOHANNESBURG (Reuters) - South African drugstore chain Dis-Chem Pharmacies reported on Friday a 13.7 percent increase in full-year adjusted earnings and 13.3 percent jump in turnover, supported by a growing store base and tight cost controls.

The firm said adjusted headline earnings per share (HEPS) for the year ended Feb. 28 increased to 78.7 cents per share from 69.2 cents per share in the prior year.

HEPS strips out certain one-off items and is the main profit measure in South Africa.

Group turnover increased to 19.6 billion rand ($1.56 billion) from 17.3 billion rand in the prior year.

The group declared a gross final dividend of 12.73 cents per share, compared with 7.3 cents in the prior year.

($1 = 12.5860 rand)

Vivo Energy, Vitol's Africa venture, floats with 2 billion pound valuation

(Reuters) - Vivo Energy launched on the London Stock Exchange on Friday with a valuation of nearly 2 billion pounds ($2.7 billion), the largest London IPO of the year.

The initial offer price for the just under 30 percent of the company floated was set at 165 pence per share and the shares advanced to 169.50 pence in conditional trading.

The company is the downstream fuels joint venture of energy trading house Vitol and Helios Investment Partners. It sells Shell-branded fuels and lubricants at nearly 2,000 filling stations in 15 African countries.

“It’s a success,” said Vivo Chief Executive Christian Chammas. “The offer was seriously oversubscribed.”

The IPO is the most significant Africa-focused listing in London since Seplat raised $500 million in a 2014 IPO with a market capitalization of $1.9 billion.

Chammas said the listing would allow the company to join the benchmark FTSE 250 index.

($1 = 0.7375 pounds)

Kenya's Java House aims to spread wings under Abraaj

NAIROBI (Reuters) - Kenyan casual dining and coffee chain Java House Africa, bought last year by private equity firm Abraaj, plans to more than triple outlet numbers in its domestic market over the next two years before expanding in East Africa and beyond.

The company plans to open 25 new restaurants in Uganda and a dozen in Rwanda over the next five years, Chief Executive Paul Smith said in an interview with Reuters on Thursday.

Java is also considering entering Nigeria, either as a wholly foreign owned enterprise or in a joint venture, and is looking at franchise opportunities in South Africa, said former Costa Coffee executive Smith

Java, which was opened by an American as a single Nairobi coffee shop in 1999, has grown into a 65-outlet chain employing 2,200 people, including in Rwanda and Uganda.

Its sale last year by Emerging Capital Partners (ECP) drew attention to strong private equity interest in East Africa’s consumer sector. ECP reportedly received more than 10 bids. Abraaj declined to say how much it paid.

A city of more than four million people, Nairobi is home to a growing middle class and large expatriate population. It is the Africa headquarters of U.S. multinationals from Coca-Cola to General Electric.

Java competes with global brands including KFC and Subway, as well as smaller foreign-owned local chains such as Artcaffe.

Nine months since the takeover, Java is performing beyond expectations and the aim to grow by several multiples within five years is on track, said Abraaj’s East Africa managing director Ashish Patel.

“For us Java House is not an East African story. It is an international story. I’m pretty certain we’ll get there in the next couple of years,” he said.

Ethiopia inflation falls to 13.7 percent in April -Stats Office

ADDIS ABABA (Reuters) - Ethiopia’s year-on-year inflation rate fell to 13.7 percent in April from 15.2 percent the previous month, its statistics agency said on Thursday.

The Central Statistics Agency said food inflation fell to 16.1 percent from 19.9 percent. Non-food inflation rose to 10.8 percent from 10.0 percent.

South Africa Libstar raises $119 million in IPO

JOHANNESBURG (Reuters) - South African consumer food maker Libstar Holdings raised 1.5 billion rand ($119 million)in a share sale ahead of a stock market listing, it said on Friday.

The initial public offering, which also raised another 1.5 billion for existing shareholders, was priced at 12.50 rand per share, at the bottom-end of the previously announced price range.

($1 = 12.6153 rand)

South Africa's Transnet chairwoman resigns

JOHANNESBURG (Reuters) - The chairwoman of South Africa’s state-owned logistics utility Transnet has resigned along with two other board members, the public enterprises ministry said on Thursday.

The firm has been accused of irregularities in the awarding of contracts and is conducting an investigation into in the procurement of 1,064 diesel and electric locomotives worth around 54 billion rand ($4.5 billion).

Public Enterprises Minister Pravin Gordhan, whose department also oversees state-owned power utility Eskom, gave no reason for chairwoman Linda Mabaso’s resignation. He added new appointments would be announced soon.

Today’s moves are the latest in a string of resignations by Transnet leaders after chief financial officer Garry Pita resigned due to ill-health last month.

The government insisted that his departure did not absolve him from responsibility for irregularities at the company that needed to be addressed.

South Africa's rand retreats ahead of U.S. jobs data

JOHANNESBURG (Reuters) - South Africa’s rand weakened early on Friday as the dollar continued to put pressure on emerging currencies globally ahead of closely watched U.S. employment data.

At 0640 GMT the rand was 0.6 percent weaker at 12.6625 per dollar compared to a close of 12.5875 overnight in New York.

The rand was amongst the worst performing emerging market currencies in April and remains on the back foot in May with the greenback lifted by rising bond yields and a promising economic outlook as its central bank eyes higher lending rates.

Friday’s employment report for April will be evaluated for further indications of the strength of the U.S. labour market and inflation pressures.

With the rand recording losses of around 5 percent in the last month, and little in the political arena to jumpstart sentiment, some traders opted to lock tks in positions around the 12.50 mark, triggering some selling of short-dated contracts.

“Fundamentally, we need to ask ourselves whether the renewed strength of the greenback is just a clearing out of stale short positions or whether it is a fundamental shift in the trajectory of the U.S. dollar,” said analyst at Rand Merchant Bank Michelle Wohlberg.

Bonds were also weaker, with the yield on the benchmark paper due in 2026 up 2 basis points to 8.35 percent.

Stocks were set to open firmer when trade commences at 0700 GMT, with the Top-40 futures index up 0.53 percent.

South Africa miners reach $400 mln silicosis settlement with mining companies

JOHANNESBURG (Reuters) - South African gold producers agreed a 5 billion rand ($400 million) class action settlement on Thursday with law firms representing thousands of miners who contracted the fatal lung diseases silicosis and tuberculosis, officials said on Thursday.

The most far-reaching class action settlement ever reached in South Africa follows a long legal battle by miners to win compensation for illnesses they say they contracted over decades because of negligence in health and safety.

The companies had already set aside the settlement amount in provisions in previous financial statements and it should not affect future earnings.

The class action suit was launched six years ago on behalf of miners suffering from silicosis, an incurable disease caused by inhaling silica dust from gold-bearing rocks.

It causes shortness of breath, a persistent cough and chest pains, and also makes people highly susceptible to tuberculosis.

Almost all the claimants are black miners from South Africa and neighbouring countries such as Lesotho, whom critics say were not provided with adequate protection during and after apartheid rule ended in 1994.

In addition to the settlement payout, there is also close to 4 billion rand in a compensation fund which companies have been contributing to for years, which will go to affected miners or the families of those who died from the diseases.

The companies involved are Harmony Gold, Gold Fields, African Rainbow Minerals, Sibanye-Stillwater, AngloGold Ashanti and Anglo American. The latter no longer has gold assets but historically was a bullion producer.

The companies said it was the first class-action settlement in South Africa involving so many companies and claimants.

“The settlement is the product of commercial negotiation and compromise, but we believe this is a beneficial settlement,” said Carina du Toit, a lawyer with the Legal Resources Centre, one of the law groups representing the workers.

Abrahams Kiewitz Inc and Richard Spoor Attorneys also represented the mine workers.

“This is an historic settlement, resulting from three years of extensive negotiations,” a statement by the working group on Occupational Lung Disease (OLD), a group put together by the six companies involved, said.

The parties said the compromise settlement was preferable for all concerned rather than a lengthy and expensive litigation process, and would enable the claimants to receive compensation and relief for their conditions more quickly.

The settlement still needs approval by the Johannesburg High Court before being implemented.

($1 = 12.6219 rand)

Norwegian snubs bid from British Airways owner

Norwegian Air Shuttle, the fast-expanding budget airline, says it has unanimously rejected two bid offers from the owner of British Airways.

International Airlines Group (IAG), which owns 4.6% of Norwegian, is seeking to lift its market share amid competition from low-cost carriers.

But Norwegian said the proposals undervalued the firm and its prospects.

Shares in Norwegian initially fell as much as 10% on the news before recovering slightly.

By contrast, IAG was the top gainer on London's FTSE 100, up 5.6%.

News of the bids first emerged in an investor presentation by IAG, which also owns Spanish airline Iberia.

IAG was giving the presentation after it posted a big jump in operating profits for the first quarter of 2018, thanks in part to strong demand over Easter.

Underlying earnings were €280m (£247m) before exceptional items - up from €160m last year. Revenue climbed 2.1% to €5bn.

IAG said it had "had contact with the Norwegian board regarding a possible offer, without reaching agreement".

In response, Norwegian issued a statement confirming that it had received "two separate conditional proposals" from IAG offering to buy the entire company.

Norwegian Air has earned a name for its low-cost deals, such as £99 one-way flights from Edinburgh and Dublin to New York.

However, it reported a net loss in 2017 and had to raise fresh funds earlier this year to cope with its rapid expansion and higher fuel costs.

Nevertheless, its move into discount intercontinental flights has shaken up the market and forced bigger rivals such as IAG and Air France to take measures to win back customers.

IAG has already put a toe in the budget long-haul market with Level from Barcelona, while adding European airport slots from failed UK airline Monarch.

"Norwegian's finances may be stressed, but it's playing tough," said Neil Wilson, chief market analyst for Markets.com.

"We note that it received interest from other parties once the IAG stake was revealed and this may be the reason for it to squeeze as much as it can from a bidder, although 'rescuer' may be more appropriate.

"We now have the prospect of a bidding war for Norwegian, although it depends on IAG's appetite to do a deal whether it ups its offer."--BBC

Kuala Lumpur-Singapore named busiest international air route

A flight linking Singapore and the Malaysian capital Kuala Lumpur has become the busiest international route in the world, research shows.

Planes made 30,537 trips between the two airports in the year to February 2018, OAG Aviation said.

The route overtook Hong Kong-Taipei in a list dominated by Asian destinations.

Flying between Singapore and Kuala Lumpur takes about an hour, and there are plans to build a high-speed rail link between the two.

The figures mean an average of 84 flights per day plied the route.

The route is operated by a host of budget carriers such as Scoot, Jetstar, Air Asia and Malindo Air as well as the two country's flagship carriers Singapore Airlines and Malaysia Airlines.

OAG's report found that the busiest international route outside of Asia was between New York's LaGuardia airport and Toronto Pearson - a route which saw about 16,956 flights over the period.

In terms of passenger numbers the flight between Hong Kong and the Taiwanese capital remains the busiest with 6.5 million passengers on the route. The second busiest was Singapore-Jakarta (4.7 million people) and Singapore-Kuala Lumpur (4 million).

However even the busiest international routes cannot compete with the most popular domestic air journeys.

The world's busiest flight path is between the South Korean capital, Seoul, and the country's popular holiday island of Jeju. About 65,000 planes flew that route in 2017 according to OAG - the equivalent of almost 180 journeys per day.--BBC

Argentina raises rates twice in a week

Argentina's central bank has raised interest rates for the second time in a week as the country's currency, the peso, continues to fall sharply.

On Thursday, the bank hiked rates by three percentage points to 33.25%, following another three-point rise six days previously.

However, it failed to stem the fall in the peso, which has lost a quarter of its value over the past year.

Analysts say the crisis is escalating and looks set to continue.

Argentina is in the middle of a pro-market economic reform programme under President Mauricio Macri, who is seeking to reverse years of protectionism and high government spending under his Peronist predecessor, Cristina Fernandez de Kirchner.

Inflation, a perennial problem in Argentina, was at 25% in 2017, the highest rate in Latin America except for Venezuela.

This year, the central bank has set an inflation target of 15% and has said it will continue to act to enforce it.

'Aggressive steps'

Despite the twin rate rises, the peso, which was fixed by law at parity with the US dollar before Argentina's economic meltdown in 2001-02, is now trading at about 22 to the dollar.

"This crisis looks set to continue unless the government steps in to reassure investors that it will take more aggressive steps to fix Argentina's economic vulnerabilities," said Edward Glossop, Latin America economist at Capital Economics.

"Risks to the peso have been brewing for a while - large twin budget and current account deficits, a heavy dollar debt burden, entrenched high inflation and an overvalued currency.

"The real surprise is how quickly and suddenly things seem to be escalating."

Mr Glossop said "a sizeable fiscal tightening" was planned for 2018, but it might now need to be larger and prompter.

"Unless or until that happens, the peso is likely to remain under pressure, and there remains a real risk of a messy economic adjustment."--BBC

HSBC reports surprise pre-tax profit fall

HSBC saw pre-tax profits fall 4% in the first three months of 2018, as higher costs more than eroded increased revenue.

Europe's biggest bank reported making $4.8bn (£3.5bn) compared with the $5bn posted in the the same period a year earlier - missing analysts' estimates.

But shareholders will be cheered by plans for a $2bn share buyback.

The results are the first announced since John Flint took over as chief executive from Stuart Gulliver.

Bank overhaul

Banks are generally reaping the rewards from improvement in the global economy, as central banks around the world lift borrowing costs after a decade of low rates.

"We continue to benefit from interest rate rises and economic growth, particularly in Asia," Mr Flint said.

"Our primary focus is to grow the businesses safely, and we have increased investment to deliver that aim."

The bank said it expected the planned share repurchase programme to be the only one it offered in 2018, "in light of the growth opportunities that we currently see".

HSBC is undergoing a wide-ranging overhaul which has seen it lay off tens of thousands of staff in the past couple of years.

And its pivot to Asia in recent years has been paying off, with wealth management, commercial and retail banking becoming key drivers of growth.

The lender, which has its regional headquarters in Hong Kong, has also beefed up its presence in China's heavily populated Pearl River Delta area, lending to firms in the real estate and infrastructure sectors, and increasing its staffing.

Mr Flint has set out his stall to get the bank back on track after a series of scandals including HSBC's involvement in laundering money for Mexican drug cartels.

And in January HSBC agreed to pay more than $101.1m to settle a US criminal investigation into rigged currency transactions, after admitting its traders twice misused confidential information provided to them by clients for its own profit.--BBC

Twitter tells 330 million users to change their passwords

Twitter has warned its 330 million users to change their passwords after a glitch exposed some in plain text on its internal network.

The social network said an internal investigation had found no indication passwords were stolen or misused by insiders.

However, it still urged all users to consider changing their passwords "out of an abundance of caution".

Twitter did not say how many passwords were affected.

It is understood the number was "substantial" and that they were exposed for "several months".

Twitter discovered the bug a few weeks ago and has reported it to some regulators, an insider told Reuters.

Chief executive Jack Dorsey tweeted:

We recently discovered a bug where account passwords were being written to an internal log before completing a masking/hashing process. We’ve fixed, see no indication of breach or misuse, and believe it’s important for us to be open about this internal defect. https://twitter.com/twittersupport/status/992132808192634881 …

The glitch was related to its use of "hashing", which masks passwords as users enters them by replacing them with numbers and letters, according to its blog.

A bug caused the passwords to be stored on an internal computer log before the hashing process was completed.

"We are very sorry this happened," Twitter said on its blog.

As well as changing passwords, users have been advised to turn on two-factor authentication service to help stop accounts being hacked.

Twitter's chief technology officer Parag Agrawal initially said the company did not have to reveal the information but believed it was the "right thing to do" - before correcting his "mistake".--BBC

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

Workers’ Day

01/05/2018

Africa Day

25/05/2018

Zimbabwe

Heroes’ Day

Zimbabwe

13/08/2018

Zimbabwe

Defence Forces Day

Zimbabwe

14/08/2018

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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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