Major International Business Headlines Brief::: 16 May 2018

Wed May 16 10:41:57 CAT 2018

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Major International Business Headlines Brief::: 16 May 2018

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*  S.Africa's Reserve Bank seen keeping rates at 6.50 pct next week

*  South African rand weaker before retail sales data

*  South Africa sells $2 bln of bonds in over-subscribed deal

*  Sibanye-Stillwater will close loss-making output at Lonmin -executive

*  Nigeria awards $7 bln rail project to Chinese state rail firm -Xinhua

*  World Bank sees Uganda growth at 5.5 pct in year to June

*  Sibanye's Lonmin takeover faces British antitrust scrutiny

*  ICBC targets Chinese visitors to Kenya with new credit card

*  Nigeria gives more oil purchase deals to local firms as vote looms

*  Venezuela crisis: Cereal maker Kellogg ends operations

*  Japan's economy shrinks for first time in two years

*  Paddy Power in talks to merge with Fan Duel

*  Amazon and Starbucks blast Seattle tax to fight homelessness

 <mailto:info at bulls.co.zw> 

S.Africa's Reserve Bank seen keeping rates at 6.50 pct next week

JOHANNESBURG (Reuters) - South Africa’s Reserve Bank will keep interest
rates unchanged next week as an anticipated quicker rise in consumer prices
over the coming months won’t drive inflation above target, a Reuters poll
showed Wednesday.

All 25 economists surveyed in the past week predicted the central bank will
hold rates at 6.50 percent at its May 24 meeting, which will follow last
month’s losses by the rand and renewed weakness on Tuesday.

“They will probably hold steady, with the rand showing some vulnerability,”
said Dennis Dykes, chief economist at Nedbank. “It illustrates the concerns
that they have about the global situation.” However, he expected a
reasonably neutral statement from Reserve Bank Governor Lesetja Kganyago.

The Bank cut its main interest rate to 6.50 percent in March, giving a boost
to the economy, and is now expected to enter a prolonged period of
inactivity, with no change forecast for the next 18 months at least.

“This current oil price is putting pressure on the inflation rate,
especially if you consider the value-added tax (VAT) hike, we have seen the
bottom or the best of inflation,” said Stanlib economist Kevin Lings.

In February the National Treasury announced a VAT increase for the first
time in two decades, which could hurt consumer demand, to cap ballooning
debt and close a large revenue shortfall.

“From here inflation will move higher, that obviously makes it more
difficult to justify a rate cut,” Lings added.

Still, the rate of increase in consumer prices is not expected to breach the
top-end of the Reserve Bank’s 3-6 percent target during the forecast
horizon.

Emerging market currencies, including the rand, have been under pressure in
the past month from a strong dollar bolstered by the Federal Reserve’s
decision to raise U.S. rates in March and its apparent disposition to do so
again.

In April a Reuters poll predicted the Fed would raise rates three more times
this year. [ECILT/US]

Still the rand is expected to recoup some of its April losses against the
dollar in the next 12 months - provided domestic economic growth improves.
[ZAR/POLL]

Growth forecasts for South Africa have improved to 1.8 percent from 1.3
percent at the start of the year, even though mining and manufacturing
shrank in March due to lingering policy uncertainty and lukewarm demand.

Growth for next year is expected to hit 2 percent.

 <mailto:info at bulls.co.zw> 

South African rand weaker before retail sales data

JOHANNESBURG (Reuters) - South Africa’s rand was slightly weaker early on
Wednesday as investors awaited retail sales data for clues about the health
of the economy.

At 0610 GMT, the rand traded at 12.5900 versus the dollar, down around 0.15
percent from its close on Tuesday.

Statistics South Africa is scheduled to publish March retail sales data,
which reflects the strength of consumer confidence, at around 1100 GMT.

Economists polled by Reuters expect retail sales growth to slow to 4.4
percent from 4.9 percent in February.

The rand slumped by almost 2 percent on Tuesday, hurt by a strong dollar
fuelled by rising U.S. bond yields.

The South African currency has been pulled this way and that in recent
weeks, taking its cue from global market moves. It is down around 1 percent
against the U.S. currency since the end of last month.

Government bonds were also weaker in early deals, with the yield on the
benchmark instrument due in 2026 up 1.5 basis points to 8.505 percent.

South Africa sells $2 bln of bonds in over-subscribed deal

JOHANNESBURG (Reuters) - South Africa sold $2 billion of bonds maturing in
2030 and 2048 on international capital markets in a deal to finance the
government’s foreign-currency commitments, the finance ministry said on
Wednesday.

The National Treasury said the bond sale was more than 1.7 times
oversubscribed and described it as an expression of investor confidence.
South Africa’s 2018 budget review envisaged $9 billion of international
borrowing.

Sibanye-Stillwater will close loss-making output at Lonmin -executive

LONDON (Reuters) - Sibanye-Stillwater plans to shut loss-making production
at Lonmin when it takes over the platinum miner, the chief financial officer
of Sibanye’s U.S region said.

“We will not cross-subsidise loss-making production across the portfolio,”
Justin Froneman said at the Bloomberg Intelligence Precious Metals Forum in
London.

“If we’ve got ounces that aren’t covering their costs they will be taken
out... we have to do that. We can’t let our shareholders absorb those kind
of expenses.”

Nigeria awards $7 bln rail project to Chinese state rail firm -Xinhua

SHANGHAI (Reuters) - Nigeria has awarded a $6.68 billion contract to the
China Civil Engineering Construction Corporation (CCECC) for work on a major
segment of a railway linking the country’s commercial hub Lagos, in the
southwest, and Kano in the north, Xinhua reported.

“The signing of the ... segment contract agreement today (Tuesday) concludes
all outstanding segments of the Lagos-Kano rail line,” the Chinese state
news agency quoted Nigeria’s transport ministry as saying. The work is
expected to take two or three years.

CCECC, a subsidiary of Chinese state rail builder China Railway Construction
Corporation, has been involved in other parts of the Lagos-Kano rail
project, which started in 2006 and was broken into segments for
implementation.

In 2016, Nigeria awarded it work on a segment between the northern states of
Kano and Kaduna with a contract sum of $1.685 billion.

The railway line is also receiving funding from China. In April, China Exim
bank approved a $1.231 billion loan for the network’s modernisation
programme.

World Bank sees Uganda growth at 5.5 pct in year to June

KAMPALA (Reuters) - Uganda’s economy is expected to grow around 5.5 percent
in the fiscal year ending in June and the pace of expansion could accelerate
to 6 percent in the next 12 months boosted by good weather, the World Bank
said on Tuesday.

In a report, the Washington-based multilateral body said risks to the East
African country’s growth prospects in the coming years could come from
greater regional instability and slow implementation of public
infrastructure projects.

Uganda’s central bank has said the country needs growth rates of at least 7
percent and above to be able to pay back its rapidly growing public debt
load.

According to the World Bank report Uganda’s “real output is expected to grow
at close to 5.5 percent and could reach 6 percent in FY 2018/19, assuming
improved execution of capital spending, favourable weather conditions, and
barring other external shocks.”

Development of several public infrastructure projects is underway, including
roads, power plants, a crude oil pipeline and airports as the country
prepares to start oil production in 2020.

Crude reserves discovered in the Albertine rift basin in western Uganda in
2006 are estimated at 6.5 billion barrels.

“In the short term, weather-related shocks...and delays in public investment
execution may constrain real GDP growth,” said.

An escalation of conflicts in neighbouring South Sudan and eastern
Democratic Republic of Congo could compound such risks as insecurity crimps
Uganda’s exports to those areas.

Uganda ships mostly food items and light manufactured products like
construction materials, beverages, plastics and others.

Sibanye's Lonmin takeover faces British antitrust scrutiny

LONDON (Reuters) - Britain’s Competition and Markets Authority said it will
examine whether a takeover of Lonmin by South Africa’s Sibanye-Stillwater
would reduce competition, knocking shares in both mining firms.

Precious metals miner Sibanye-Stillwater made an all-share offer for
London-listed Lonmin in December, but the planned 285 million pound ($386
million) deal to create the world’s No.2 platinum producer faces several
other hurdles.

These include Lonmin’s shrinking cash balance, a stronger rand and
competition approval in South Africa.

Shares in cash-strapped Lonmin, the world’s third-largest platinum producer,
had slipped 4 percent in London by 1554 GMT, while Sibanye, the
fourth-largest, saw its stock close down 5.3 percent in Johannesburg.

“The longer the delay, the greater the potential for transaction failure,
since the likelier it would be that Lonmin would be in net debt,” Shore
Capital analyst Yuen Low said.

“Even supposing the CMA approved the transaction, there could be delays to
the transaction,” Low said of the deal which is scheduled to close in the
second half of the year.

If the deal is blocked it would trigger Lonmin’s debt covenants and require
the platinum miner to pay $150 million in 20 days after credit waivers were
granted by Lonmin’s lenders in January, preventing it from defaulting.

Lonmin and Sibanye predict 12,600 Lonmin jobs will be cut in the next three
years as expensive production is wound down and layoffs are a central issue
for competition approval in South Africa, where unemployment runs at about
28 percent.

However, if the merger were delayed or blocked it could place all Lonmin’s
33,000 jobs at risk, Lonmin Chief Executive Ben Magara said on Monday after
its results.

($1 = 0.7385 pounds)

ICBC targets Chinese visitors to Kenya with new credit card

NAIROBI (Reuters) - The Industrial and Commercial Bank of China (ICBC) has
launched a credit card in partnership with Kenya’s Stanbic Bank to tap a
growing pool of Chinese tourists visiting the East African nation.

Some 53,485 Chinese visitors came to Kenya last year and ICBC, which owns a
stake in Stanbic Kenya’s parent, South Africa’s Standard Bank, expects the
number to rise to 60,0000 this year, doubling from 2015 levels.

Gang Sun, deputy chief executive of ICBC Africa, said users of the card will
be able to pay for hotels and other services while visiting Kenya.

He said the adoption of Chinese payment options such asUnion pay and WeChat
by Kenyan tour operators could also help increase the flow of tourists.

“More and more Chinese choose to travel abroad for their vacations... with
average consumption of $1,250 per person,” Sun said while launching the card
in Nairobi.

ICBC’s number of credit card customers increased to 88.59 million last year,
making it China’s largest domestic credit card issuing bank, it said in
March.

Nigeria gives more oil purchase deals to local firms as vote looms

LONDON (Reuters) - State oil firm NNPC has awarded 50 companies with
contracts to buy Nigerian crude and more than half of them are local firms,
foreign and Nigerian trading sources said.

Of the total, 32 were local companies, doubling the number of awards to
Nigerian firms compared to 2017.

NNPC also awarded contracts to supply crude to 12 governments, although it
was not clear how many of the deals would be handled by the companies
already on the list of awards.

NNPC awards the oil purchase contracts annually, but sources said the deals
this year were for two years not one year.

Contract awards were announced in January last year. Sources said the
government may have delayed an announcement this time by several months as
it sought to line up more local firms for awards, so it could drum up
support for next year’s election.

The sources said a partial list of firms awarded deals emerged on Monday,
with a final list coming out on Tuesday.

This year’s overall total of 50 foreign and local firms was more than the 39
listed in 2017. The list last year also included three bilateral government
deals.

NNPC did not respond to calls and emailed requests for comment.

Nigeria’s oil ministry said it produced more than 2 million barrels per day
of crude and condensate in April. Exports were expected to average 1.8
million bpd in the first half of 2018, up from to 1.6 million bpd in 2017,
loading programmes showed.

Venezuela crisis: Cereal maker Kellogg ends operations

US-based cereal maker Kellogg says it is pulling out of Venezuela because of
the economic deterioration in the country.

Workers said they were prevented from entering the plant in the central city
of Maracay on Tuesday.

The announcement comes ahead of Sunday's presidential elections.

President Nicolas Maduro, who is standing for re-election, told a rally that
he would hand control of the factory over to the workers.

"We've begun judicial proceedings against the business leaders of Kellogg's
because their exit is unconstitutional," Mr Maduro told cheering supporters
in the central state of Carabobo.

"I've taken the decision to deliver the company to the workers in order that
they can continue producing for the people."

Venezuela's debt problem: To default or to pay

Farmers struggle as people go hungry

Venezuela's battered economy has been hit by falling oil revenue and the
plummeting value of its currency, the bolivar.

It has one of the highest rates of inflation in the world. In the year to
the end of February 2018, prices rose by more than 6,000%, according to the
opposition-dominated National Assembly.

Kellogg is the latest multinational to close or scale back operations in
Venezuela, citing strict currency controls, a lack of raw materials and
soaring inflation.

It said it hoped to return to Venezuela in the future and warned against
sales of its brands "without the expressed authorisation of the Kellogg
Company".

In 2016, Venezuela's government took over a plant belonging to US-based
hygiene products manufacturer Kimberly-Clark after it announced it was
stopping operations because it could not obtain raw materials.

The Texas-based firm recently requested the start of arbitration proceedings
against Venezuela at the World Bank.

President Maduro, who has been in office since 2013, blames Venezuela's
problems on an "economic war" being waged by foreign governments and
businesses. His critics say government mismanagement is the chief cause.

Japan's economy shrinks for first time in two years

Japan's economy shrank in the first quarter of 2018 for the first time in
two years, ending the longest stretch of economic growth since the 1980s.

The world's third biggest economy contracted at an annualised rate of 0.6%,
official data showed.

Expectations were for an annualised contraction of 0.2%.

Private consumption and capital expenditure slowed during the January to
March quarter, which analysts said dragged down the economy.

Annualised growth rates refer to the growth rate for one year, calculated
using the rate for one quarter.

On a quarter-on-quarter basis, the economy shrank 0.2% compared with growth
of 0.1% at the end of 2017.

Behind the numbers

Private consumption accounts for about 60% of Japan's economic activity, but
the country also relies on its exports of electronics, among other products,
to fuel its economy.

Some economists said that a global slowdown in demand for electronics,
together with bad weather across the quarter, had contributed to the decline
in the first quarter growth, and that they expected to see a recovery in the
current quarter of 2018.

"Globally, IT-related items have been in an adjustment phase, which weighed
down Japan's exports and factory output," said SMBC Nikko Securities
economist Yoshimasa Maruyama.

"The economy is unlikely to continue to contract further. The global economy
is performing well and a yen is trading beyond 110 yen against the dollar,
so once exports start to grow again, the economy will return to a moderate
growth path," he said.

Why a US-China trade war could hurt Asia

US-China trade war impact 'severe'

Reality Check: Are we on the brink of a trade war?

Other economists said that the ongoing trade tit-for-tat between the US and
China had affected business sentiment globally - leading Japanese
corporations to pare back their capital expenditure - and that there may not
be a recovery in immediate sight.

"The biggest worry that we have is the capital expenditure slow down [in
Japan] as corporations are backing off not only because of the strong yen,
but particularly because of the possible protectionism that is emerging from
the United States to the rest of the world," the University of Shizuoka's
economics professor Seijiro Takeshita told the BBC.

"There is a very big possibility that there will be a small contraction
again," he said. "I wouldn't be surprised if that is the case."

But Mr Takeshita said the Bank of Japan was unlikely to make any further
moves to help boost the economy.

"They are unlikely to make any further moves because the ball is in the
court of Japanese corporations to continue with their investments,
particularly in Japan."--BBC

Paddy Power in talks to merge with Fan Duel

Gambling firm Paddy Power Betfair has said it is in talks over a merger in
the US with fantasy sports site Fan Duel.

Talks centre around combining its US operation with Fan Duel to create a
business to "to target the prospective US sports betting market".

It comes as the American Supreme Court overturned 1992 legislation that
banned sports betting in most US states.

Fan Duel allows sports fans to gamble on fantasy sports leagues and
contests.

Merger abandoned

It offers fantasy sport gaming around NFL American Football, MLB baseball,
NBA basketball and NHL ice hockey. There are estimated to be around 30
million adult fantasy sports players in North America.

Players choose which contest they want to enter, build fantasy sports teams
that do not breach a fantasy salary cap, and engage in head-to-head or
multi-player contests.

Players pay an entry fee for each contest and compete for cash prizes.

The company, which was founded in 2009, is based in New York and has about
400 employees.

A proposal to merge with rivals Draft Kings was abandoned last year, after
being blocked by the Federal Trade Commission on the grounds that the
combined firm would control a 90% market share.

Since the Supreme Court ruling on 14 May Draft Kings has signalled its
intention to enter the sports gambling market.

Horseracing channel

Paddy Power Betfair entered the US fantasy sports market last year with the
acquisition of Draft, a US fantasy sports site, for $48m (£35m).

The Dublin-based gambling firm already has a US division, which includes the
TVG Network, a horseracing TV channel and online betting network which is
active in 35 states.

And in the state of New Jersey, the company has an online casino and a horse
racing betting exchange.

A merger with Fan Duel would give it access to millions of potential sports
betting fans.

Neil Wilson, chief analyst at markets.com, said betting firms were already
jockeying for position after the Supreme Court ruling.

"Fan Duel rival Draft Kings has already said it will enter the sports
betting market and there is some sense that local incumbents may be able to
gain significant market share before UK and European operators get a chance
to mobilise their forces," he said.--BBC

Amazon and Starbucks blast Seattle tax to fight homelessness

Amazon and Starbucks have hit out at a decision to impose a new tax on firms
based in Seattle to help fight homelessness.

Amazon, the US city's number one employer, said the levy could put future
expansion on hold in the region.

Seattle City Council voted unanimously for the tax, saying it will raise
$47m (£35m) to tackle a housing affordability crisis due to a recent
economic boom.

But local firms say it will kill jobs.

"We remain very apprehensive about the future created by the council's
hostile approach and rhetoric toward larger businesses," said Amazon's vice
president Drew Herdener following the vote.

"[It] forces us to question our growth here."

And Starbucks said: "This City continues to spend without reforming and fail
without accountability."

The tax will apply to companies with annual sales of least $20m a year,
working out at about $275 annually for each worker.

The money will be spent on building more affordable housing and support
services for the homeless.

Supporters of the tax cite data showing Seattle's median home prices have
soared to $820,000, and more than 41% of renters are classed as
"rent-burdened". That means they spend around a third of their income on
housing.

'Tax on jobs'

Seattle also has the third-largest concentration of homeless people in the
US.

The levy is expected to be imposed on about 500 companies, including
Seattle-headquartered firms such as department store chain Nordstrom and
coffee chain Starbucks.

It will also affect the California-based tech giants Apple, Google and
Facebook, which have a big presence in the city.

But Seattle's Chamber of Commerce said that "taxing jobs will not fix our
region's housing and homelessness problems".

And Amazon, which has led local business opposition to the levy, previously
warned the levy could put more than 7,000 new jobs at risk.

Following Monday's vote, the e-commerce giant said it would go ahead with
plans to build a major new office building in the city centre, despite an
earlier threat to shelve the move.

However, it said it was now evaluating whether to lease space in a second
office tower, meaning it may move some planned jobs elsewhere.

John Kelley, senior vice president for Starbucks Global Public Affairs,
said: "No one believes they will be able to make housing affordable or
address opiate addiction [through this tax]."

Seattle previously imposed a so-called "head tax" between 2006 and 2009, but
it was repealed in the midst of the recession.

The city of Denver currently has a similar levy, while Chicago had one but
repealed it.--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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