Major International Business Headlines Brief::: 05 October 2018

Fri Oct 5 08:42:07 CAT 2018

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Major International Business Headlines Brief::: 05 October 2018

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

*  Zimbabwe's budget deficit soars after pre-election splurge

*  Mining firms say Zambia's tax hike plan would ruin economy

*  Sudan forms body of bankers and exchange bureaus to set daily exchange
rate -cbank governor

*  South Africa's rand weakens after World Bank cuts growth forecast

*  Togo forecasts 5.1 pct GDP growth in 2019

*  Kenya's earnings from tourism to climb 15 pct this year, minister says

*  South Africa's rand to steady from sell-off, hold firm

*  Unilever scraps Dutch relocation plan

*  Elon Musk: Tesla boss mocks US regulator days after settlement

*  Samsung sees record third quarter profit on chip demand

*  Fast fashion is harming the planet, MPs say

 <mailto:info at bulls.co.zw> 

Zimbabwe's budget deficit soars after pre-election splurge

HARARE (Reuters) - Zimbabwe’s budget deficit swelled to $1.3 billion in the
first half of 2018, nearly five times the initial target after government
spending spiraled ahead of an election in July, a Treasury document showed
on Thursday.

Before a tight election on July 31, President Emmerson Mnangagwa’s
government distributed free seed and fertilizer to rural voters, upgraded
roads and dams, and injected fresh capital into struggling government-owned
companies.

Treasury’s quarterly report to June showed the government overshot its
budget deficit of $266 million after spending $616 million on farm inputs
for the rural poor and grain imports.

The government resorted to issuing Treasury Bills to plug the deficit and
cover massive public wage spending, which accounts for more than 70 percent
of the budget.

New Finance Minister Mthuli Ncube said on Monday government borrowing via
Treasury Bills and an overdraft with the central bank were feeding a growing
fiscal deficit that could overwhelm the financial system.

Mnangagwa’s government is under pressure to quickly deliver on promises to
revive an economy that was brought to its knees by former leader Robert
Mugabe, who ruled for nearly four decades before being removed after a coup
last November.

Treasury said the economy was now expected to grow by as much as 6.3 percent
this year against an initial target of 4.5 percent due a better performance
in agriculture and mining.

 <mailto:info at bulls.co.zw> 

Mining firms say Zambia's tax hike plan would ruin economy

LUSAKA (Reuters) - Zambia’s proposed mining tax increases would hobble
Africa’s second biggest copper industry, companies said on Thursday, a
further warning to investors already concerned about the country’s mounting
debt.

Several mines would become unprofitable if the tax plans were implemented
with overall copper production likely to fall, Zambia Chamber of Mines
President Nathan Chishimba said.

“More tax regime instability, massive increases, and novel taxes not seen
anywhere else in the world, will hurt the mining industry and all those who
rely on its success,” Chishimba said in a statement.

“As industry production shrinks through the impact, there will be less jobs,
less taxes and as a result there will be less in the government’s bank
account for many years to come.”

Some companies have already scrapped expansion plans since Zambia on Friday
announced new mining duties and an increase in royalties to help bring down
mounting debt, Chishimba said.

Zambia argues that its mainstay copper industry unfairly benefits foreign
companies like First Quantum, Glencore and Vedanta Resources, while millions
of its citizens suffer without basic services.

Chishimba said attracting investment was the only way to boost growth and
increase government revenue. Mining accounts for more than 70 percent of
Zambia’s foreign exchange earnings.

Concerns about Zambia’s rising debt, alongside accusations of additional
hidden borrowing and government corruption, have spooked investors and
Western donors in recent months.

The International Monetary Fund has put on hold talk about an aid package
due to Zambia’s debts that it describes as unsustainable.

Sudan forms body of bankers and exchange bureaus to set daily exchange rate
-cbank governor

KHARTOUM (Reuters) - Sudan will begin on Sunday using a body comprised of
bankers and exchange bureaus to set its daily currency exchange rate, the
central bank governor said.

The Sudanese pound is likely to lose value against the dollar initially, and
later stabilise, Governor Mohamed Kheir al-Zubeir said.

The new exchange body will also set purchase price of gold to counter
smuggling, Zubeir said.

South Africa's rand weakens after World Bank cuts growth forecast

JOHANNESBURG (Reuters) - South Africa’s rand retreated early on Thursday
after the World Bank cut its economic growth forecast and took a dim view of
President Cyril Ramaphosa’s stimulus plan.

The rand was 0.29 percent weaker at 14.6875 per dollar at 0650 GMT, having
closed in New York at 14.6450.

The currency is expected to trade between 14.4500 and 14.8500 to the dollar
on Thursday, NKC African Economics wrote in a note.

The World Bank on Wednesday cut South Africa’s economic growth forecast for
2018 to 1 percent from an earlier forecast of 1.4 percent.

Investors remain skittish on the rand following the announcement on Sept. 21
of a stimulus programme that will see a reallocation of the budget but does
not involve an injection of new cash.

In fixed income, the yield on the benchmark government bond due in 2026 flat
at 9.090 percent.

Stocks are due open weaker at 0700 GMT, with the JSE securities exchange’s
Top-40 futures index down 1.26 percent.

Togo forecasts 5.1 pct GDP growth in 2019

LOME (Reuters) - Togo’s economic growth is expected to rise to 5.1 percent
in 2019 from 4.9 percent this year, the government said on Thursday.

In a statement, the government also said it had proposed to parliament a
budget for next year of 1.461 billion CFA franc ($2.60 million), an 11.5
percent rise over the 2018 budget.

The tiny West African country has few natural resources besides phosphates,
a major source of foreign exchange, but is trying to turn itself into a
shipping and transportation hub.

The capital Lome is home to the headquarters of regional airline ASKY, a
partner of Ethiopian Airlines, and pan-African lender Ecobank.

($1 = 562.9800 CFA francs)

Kenya's earnings from tourism to climb 15 pct this year, minister says

NAIROBI (Reuters) - Kenya is likely to earn 15 percent more this year from
tourism as the number of visitors grows by 17 to 18 percent, the country’s
tourism minister said.

The East African nation, which relies on tourism as a source of hard
currency and jobs, had 1.47 million tourists last year and earned 120
billion shillings ($1.19 billion) from their visits.

The forecast was based on a growing local market and new daily, direct
flights to New York by Kenya Airways, which will attract more American
tourists, Najib Balala said late on Wednesday, on the sidelines of the
Africa Hotel Investment Forum, an industry event.

But he said Africa’s share of the annual global market, at about 3 percent
of the total, was not impressive. Officials on the continent want to
increase its annual share of tourists to 150 million by 2030, from the
current 62 million.

Along with agricultural exports and cash sent home by Kenyans living abroad,
tourism is one of the top foreign exchange earners.

($1 = 100.9000 Kenyan shillings)

South Africa's rand to steady from sell-off, hold firm

JOHANNESBURG (Reuters) - South Africa’s rand is expected to tread a
resilient and steady path over the next year in the face of global
uncertainties and local budget and economic growth challenges, a Reuters
poll of foreign exchange strategists found on Thursday.

A Moody’s review of South Africa’s sovereign debt rating next week, the
medium-term budget review at the end of this month and an economy struggling
to get out of recession are all near-term hurdles for Africa’s most
industrialized economy.

The latest Reuters survey, taken this week, showed the rand is expected to
be stable in 12 months, firming about 1 percent to 14.25 per dollar from the
current 14.40 rate.

The rand - an actively traded and volatile currency - sold off around a
tenth of its value in August alone, caught up in an emerging market meltdown
triggered by Turkey and Argentina’s domestic politics and macroeconomic
fundamentals.

“We expect the overshoot of the rand to fade further, but it will likely
remain undervalued in the near-term to reflect lingering uncertainties and
risks,” said Elna Moolman, economist at Standard Bank.

The South African Reserve Bank’s deputy governor on Tuesday said it will
only intervene to protect the currency if “excess volatility or abrupt and
disorderly adjustments” threaten the functioning of the market.

Still, the central bank has not been seen actively intervening in the
currency market in recent years. Instead it has mainly stuck to using its
repo rate according to its mandate of keeping consumer inflation in its 3-6
percent band.

The repo rate is currently at 6.50 percent, while annual inflation slowed to
4.9 percent in August.

Last month, the Reuters FX poll showed many emerging market currencies,
which have had a torrid few months, will bounce back at least partially
against the dollar in a year as weakening growth momentum takes the shine
off the greenback.

The rand recovered somewhat at the end of last month from this year’s
weakest levels in August, which escalated to 15.69 early in September. It is
still down almost 16 percent in 2018.

The United States and China are locked in a spiralling trade war where each
has levelled increasingly severe rounds of tariffs on each other’s imports,
in turn putting pressure on emerging market currencies.

Unilever scraps Dutch relocation plan

Unilever has scrapped its plan to move its headquarters to the Netherlands,
after growing investor concern about the plan.

Aviva Investors had said the move could force UK shareholders to sell their
shares and offered "no upside".

Unilever, which makes Marmite and Dove soap, had been relocating to simplify
its corporate structure.

But it said it recognised "the proposal has not received support from a
significant group of shareholders".

However, chairman Marijn Dekkers said that the board continued to believe
that simplifying Unilever's structure was in the firm's best interests.

"The board will now consider its next steps and will continue to engage with
our shareholders," the firm said in a statement.

Unilever is to keep its listing on the London Stock Exchange, a spokeswoman
said.--BBC

Elon Musk: Tesla boss mocks US regulator days after settlement

Elon Musk has mocked a US financial regulator just days after reaching an
agreement with it over fraud charges.

The Tesla boss tweeted the "Shortseller Enrichment Commission", as he dubbed
the Securities and Exchange Commission (SEC), was doing "incredible work".

Last weekend Mr Musk agreed to step down as Tesla Chairman and pay a $20m
(£15m) fine over tweets that he had funding to take Tesla private.

The deal followed the SEC's decision to sue him for alleged securities
fraud.

The SEC declined to comment on Mr Musk's latest tweet.

The SEC's allegation of fraud against Mr Musk related to tweets he posted in
August in which he said he was considering taking electronic car maker Tesla
off the stock market and into private ownership.

He wrote he had "funding secured" for the proposal, which would value Tesla
at $420 per share. Shares in the company briefly rose after his
announcement, but later fell again.

The SEC said those claims were "false and misleading".

At the time, short-sellers, who make a profit by borrowing shares, selling
them and then buying them back at an expected lower price, claimed to have
lost millions thanks to Mr Musk's comments.

The Tesla boss dislike of short-sellers is well-known: He once called them
"jerks who want us to die".

Under the deal reached between the SEC and Mr Musk last weekend, Mr Musk
will remain as Tesla CEO but has to step down as chairman for three years.

The BBC's North America technology reporter Dave Lee said many people had
expected Mr Musk would "rein in his Twitter habit".

Shares in Tesla closed down 4.4%, and fell further in after hours trading
following Mr Musk's tweet.

Also on Thursday, District Judge Alison Nathan in Manhattan gave Mr Musk and
the SEC until 11 October to explain why the deal they had struck was fair
and reasonable and would not hurt the public interest.--BBC

Samsung sees record third quarter profit on chip demand

Samsung Electronics expects to post record operating profit in the third
quarter, helped by strong demand for its memory chips.

The South Korean electronics giant is forecasting operating profits of
around 17.5 trillion won ($15.5bn; £11.9 bn), up 20.4% from a year ago.

The guidance is above analyst estimates for the period, boosted by its
thriving chip business.

Samsung overtook Intel to become the biggest chipmaker last year.

The firm expects consolidated sales will reach around 65 trillion won in the
three months to September, up 4.8% on last year. Shares were steady
following the guidance update.

The South Korean firm has seen earnings surge in recent years largely due to
demand for memory chips in mobile devices, but falling prices for some
electronic components could hit further earnings growth.

Chips account for nearly 80% of its operating profit, according to Reuters.

It has also confronted some challenges in its mobile unit and in July,
Samsung posted lower-than-expected sales of its flagship Galaxy 9
smartphones.

The firm is facing fierce competition from Apple and Chinese rivals,
including device maker Huawei, which recently became the second biggest
smartphone seller in the world.

A worldwide recall of its Galaxy Note 7 devices over exploding batteries in
2016 cost the company billions of dollars.

Samsung is due to publish a detailed third quarter earnings later this
month.--BBC

Fast fashion is harming the planet, MPs say

Young people's love of fast fashion is coming under the scrutiny of
Britain's law-makers.

MPs say the fashion industry is a major source of the greenhouse gases that
are overheating the planet.

Discarded clothes are also piling up in landfill sites. and fibre fragments
are flowing into the sea when clothes are washed.

The retailers admit more needs to be done, but say they are already working
to reduce the impact of their products.

What do MPs say?

The House of Commons Environmental Audit Committee says there is a basic
problem with an industry that relies on persuading people to throw away good
clothes because they are "last year's colour".

It quotes evidence that:

*         British shoppers buy far more new clothes than any nation in
Europe

*         People are buying twice as many items of clothing as they did a
decade ago

*         Fish in the seas are eating synthetic fibres dislodged in the wash

The MPs have written to the UK's top fashion bosses asking how they can
maintain the £28bn benefit their industry brings to the UK economy, while
reducing the environmental harm.

They believe swift action is essential, because if current clothes
consumption continues "...they will account for more than a quarter of our
total impact on climate change by 2050", chairwoman Mary Creagh told BBC
News.

"Three in five garments end in landfill or incinerators within a year -
that's expensive fuel! Half a million tonnes of microfibres a year enter the
ocean. Doing nothing is not an option."

Shouldn't more clothing be re-used?

What are the solutions?

The committee's report to government could include a call for the fashion
industry to create less pollution, a demand for longer life for garments and
a ban on dumping clothes in landfill.

The MPs also have concerns about social impacts. They believe fast fashion
is fuelling quick turnarounds among suppliers, which may lead to poor
working conditions.

Among their questions to retailers are:

*         Do you pay the living wage and how do you ensure child labour is
not used in factories?

*         Do you use recycled materials?

*         How long do you keep clothes, and how do you encourage recycling?

*         Do you incinerate unsold or returned stock?

*         How are you reducing the flow of microfibres into the sea?

*         What do retailers say?

Peter Andrews, head of sustainability at the British Retail Consortium, told
BBC News that population growth and increased demand have led to an increase
in the overall volume and environmental impact of clothing.

But, he said his members are now designing products that are made to last,
and they are encouraging customers to return unwanted clothes for reuse.

"We know more needs to be done, but the best answers will be achieved with
collaborative global actions."

The companies approached by the MPs are: M&S, Primark, Next, Arcadia, Asda,
TK Maxx and HomeSense, Tesco, JD Sports Fashion, Debenhams, Sports Direct
International.--BBC

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

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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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