Major International Business Headlines Brief::: 06 September 2018

Wed Sep 5 20:49:55 CAT 2018

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Major International Business Headlines Brief::: 06 September 2018

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*  Steinhoff's former CEO says not aware of accounting irregularities

*  Oil demand to hit 100 mln bpd sooner than projected - OPEC's Barkindo

*  African gas output could make up 10 pct of global total by 2040 -official

*  MTN's Ghana unit up 4 pct on stock market debut -traders

*  Kenya 428 km power line complete, to add 310 MW to grid by December

*  Kenya private sector expansion rebounds in August -PMI

*  Rand slumps as South Africa enters recession

*  S.Africa's private sector activity falls to 2-1/2 year low in August -PMI

*  White unionised workers protest at Sasol plant over black share scheme

*  TSB boss Paul Pester to step down after IT fiasco

*  Colin Kaepernick: Nike suffers #justburnit backlash over advertising campaign

*  Pound rises on Brexit 'progress' report

*  South Africa RECESSION: Country faces economy TURMOIL as rand continues to PLUMMET

*  Sterling is so volatile thanks to Brexit that it could slump or surge higher, expert warns

 <mailto:info at bulls.co.zw> 

Steinhoff's former CEO says not aware of accounting irregularities

CAPE TOWN (Reuters) - Steinhoff’s former chief executive Markus Jooste was not aware of any accounting irregularities when he left the retailer in December, he told a South African parliamentary inquiry on Wednesday which is examining an accounting scandal that rocked the company.

Jooste, who is also under fraud investigation by South African police, resigned in December after the company uncovered accounting irregularities.

The scandal hit Steinhoff’s shares and left the company scrambling for working capital.

Jooste was instrumental in transforming Steinhoff from a small Johannesburg furniture outfit into multinational retailer with more than 40 retail brands including Conforama in France, Poundland in the UK and Mattress Firm in the United States.

In his first public testimony about the scandal, Jooste said he never lied about activities of the company and neither sold his shares in Steinhoff nor held a short position on its stock.

He told the parliamentary inquiry that he lost 3 billion rand ($193 million) due to the fall in the company’s shares after the scandal was uncovered.

“I must place on record that when I left Steinhoff on the 4th of December, I was not aware of any accounting irregularities they are referring to,” Jooste said.

“I don’t blame anybody for what happened at Steinhoff.”

Steinhoff’s battered shares rose at much as 5 percent as Jooste gave his testimony to the parliamentary committee. It traded 3.82 percent higher at 2.72 rand by 1236 GMT.

In July, creditors agreed to hold debt claims for three years, removing a imminent threat of default that would have tipped the company into bankruptcy.

Steinhoff’s chairwoman Heather Sonn a week ago told the parliamentary committee that its board would meet to discuss asset sales to boost cash flow and pay down debt, months after creditors of the South African retailer threw it a lifeline.

On Tuesday, Steinhoff said a subsidiary had agreed to sell a 50 percent stake and related properties in German furniture chain POCO to Austrian businessman Andreas Seifert for 271 million euros ($313 million).

Steinhoff last week reported a 2 percent rise in sales to 12.9 billion euros ($15 billion) for the nine months to June 30 helped by a strong showing at its listed African unit Pepkor.

Jooste said his main mistake during his tenure was agreeing to a joint venture with Seifert, adding that Steinhoff probably grew too quickly.

SWIFT ACTION

After the hearing ended, Yunus Carrim, the Chairman of the Standing Committee on Finance, the parliamentary committee hearing Jooste’s testimony, said its members felt that the former Steinhoff CEO could have been more forthcoming.

“His account to parliament reinforces our call that the regulatory bodies and other state agencies should act swiftly and more decisively,” Carrim said.

Carrim said the committee recognised the complex and global nature of corporate scandals such as Steinhoff’s and the huge amount of forensic and other investigative work needed to establish exactly what happened, but he said there should have been more progress 10 months after the Steinhoff scandal was uncovered.

“More can and needs to be done,” said Carrim.

He also said the panel wanted to see more cooperation between the relevant state agencies in South Africa and Germany, the Netherlands and elsewhere.

($1 = 0.8640 euros)

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Oil demand to hit 100 mln bpd sooner than projected - OPEC's Barkindo

CAPE TOWN (Reuters) - World oil consumption will reach 100 million barrels per day (bpd) later this year, hitting that level much sooner than previously forecast, OPEC’s secretary-general said on Wednesday.

Mohammad Barkindo also told an energy conference in South Africa’s Cape Town that a stable environment was needed to encourage oil industry investment to meet the rising demand.

“The world will attain the 100 million barrels a day mark of consumption later this year, much sooner than we all earlier projected. Therefore stabilising forces which create conditions conducive to attracting investments are essential,” he said.

“The priority ... is on ensuring stability is sustainable, spreading confidence in the industry and encouraging an environment conducive to the return of investments,” he added.

The Organization of the Petroleum Exporting Countries with Russia and other producers have implemented a deal since January 2017 on cutting 1.8 million bpd from output to prop up prices that fell below $30 a barrel in 2016 from over $100 in 2014.

On Wednesday, benchmark Brent was trading at just below $78.

Barkindo said oil industry confidence was returning and OPEC was exploring ways of institutionalising cooperation between OPEC and its non-OPEC allies on their production levels.

Barkindo also told reporters at the conference that global trade disputes could hurt energy demand in future, although he said he was hopeful the uncertainty would lift soon.

U.S. President Donald Trump’s tariff threats against China, the world’s second-biggest economic power, have caused jitters in markets across the world.

“The trade disputes that are emerging among some of the leading partners in the world will eventually hurt (global economic) growth and, by extension, demand for energy,” he said.

“But we are confident ... these parties will be able to overcome some of these challenges,” Barkindo said. “We are hopeful we will be able to overcome this cloud of uncertainty regarding trade as quickly as we can in order to mitigate the contagion.”

African gas output could make up 10 pct of global total by 2040 -official

CAPE TOWN (Reuters) - African production of natural gas could contribute as much as 10 percent of the global total by 2040, an expansion of around 530 billion cubic metres, the secretary general of the Gas-Exporting Countries Forum, Yury Sentyurin, told a conference on Wednesday.

Egypt 'taking steps' over $2 bln payment to Union Fenosa Gas - statement

CAIRO (Reuters) - Egypt said on Wednesday it was “taking all necessary steps” over $2 billion the World Bank ordered it to pay to Italian-Spanish Union Fenosa Gas (UFG) because of a lack of gas supply to an Egyptian plant in which the company has a majority stake.

A statement from Egypt’s petroleum ministry for the first time acknowledged the decision by a World Bank arbitration body, but did not elaborate on what steps it was taking.

The World Bank body ordered Egypt to pay the money to Union Fenosa Gas (UFG), a joint venture between Spain’s Gas Natural and Italy’s Eni, the Financial Times reported on Monday.

The Damietta liquefied natural gas (LNG) plant is 80 percent owned by UFG, with the remaining 20 percent split evenly between state-owned companies EGAS and EGPC.

MTN's Ghana unit up 4 pct on stock market debut -traders

ACCRA (Reuters) - The price of shares in MTN’s Ghana unit rose 4 percent to 0.78 cedis on its stock market debut on the Ghana bourse on Wednesday, traders and exchange managers said.

The Ghana unit of Africa’s largest mobile telecoms group began trading 1.5 million shares on the local exchange after an initial public offering that yielded about a third of its initial 3.47 billion Ghanaian cedi ($734 million) target.

($1 = 4.7275 Ghanian cedi)

Kenya 428 km power line complete, to add 310 MW to grid by December

LOIYANGALANI, Kenya Reuters) - A high voltage power line to carry electricity from a 310 megawatt (MW) wind power plant to central Kenya from the north is complete and supply to the national grid will stabilise by December, the energy minister said, replacing diesel generation.

The 266-mile (428km), 400-kilovolt power line is critical for the Lake Turkana Wind Power project, to carry electricity from Loiyangalani in the north to Suswa in the centre of Kenya.

Danish wind turbine maker Vestas Wind Systems, supplier of the wind farm’s 365 turbines, said last year the wind farm was ready for launch but would be idle until the government installed the transmission line.

“What is left now is the official commissioning for the power plant and the transmission line,” Energy Minister Charles Keter said on Tuesday during a site tour of the transmission station that will receive the electricity.

“This a very major project, 300 MW. Within the next one month, we will feel the difference once the line has run very well. For me, everything being constant, we are seeing by December we will be comfortable in terms of our generation, and in terms of evacuation (transmission). We will see the cost of power coming down,” he said.

Construction of the power line started in November 2015 and had been due to be completed by December last year, but the timeline once more shifted to September. [nL8N1P329N]

Kenya, which has more than 6.5 million customers connected to the power grid, has installed generation capacity of 2,351 megawatts (MW) with peak demand of 1,802 MW, it said in June.

Kenya private sector expansion rebounds in August -PMI

NAIROBI, Sept 5 (Reuters) - Kenya’s private sector activity expanded at a faster pace in August after dropping to a six-month low in the previous month as output and new orders for firms recovered, a survey showed on Wednesday.

The Markit Stanbic Bank Kenya Purchasing Managers’ Index(PMI) for manufacturing and services rose to 54.6 last month from 53.6 in July. A reading above 50 denotes growth.

Firms that took part in the survey said they had boosted production during the month after receiving more customer orders.

“The recovery in output and new orders helped counterbalance cost pressures that have re-emerged over the past couple of months,” said Jibran Qureishi, economist for East Africa at Stanbic Bank.

He warned however that a series of new consumption taxes including on petroleum products, imposed by the government as it seeks to boost its revenues, could negatively impact the economy. [nL8N1VP2KG]

“If the VAT on fuel products stays in place, there will probably be a notable second-round impact in the economy,” Qureishi said.

Kenyan economic activity has picked up after political unrest and drought cut growth last year to its lowest level in more than five years, and the economy is forecast to expand by 5.8 percent this year from 4.9 percent in 2017.

- Detailed PMI data are only available under licence from IHS Markit and customers need to apply for a licence.

Rand slumps as South Africa enters recession

JOHANNESBURG (Reuters) - South Africa’s rand fell further against the dollar on Wednesday, extending a steep fall from the previous session, as the economy entered recession.

At 0710 GMT, the rand traded at 15.5400 versus the dollar, 1.2 percent weaker than its close on Tuesday.

Statistics South Africa said on Tuesday that gross domestic product declined 0.7 percent in the second quarter, after a 2.6 percent contraction in the first three months of the year.

The unexpected GDP weakness in the latest quarter came as a blow to President Cyril Ramaphosa, who is trying to revive the economy and woo foreign investors.

Tuesday’s GDP figures led many economists to cut their full-year growth forecasts for South Africa.

The rand has also been pressured by a risk-off mood that has swept through global markets in the wake of financial turmoil in Turkey and Argentina.

Emerging market currency peers like the rouble also dropped against the dollar on Wednesday.

On the stock market, the Top-40 index fell 0.9 percent in early trade, while the broader all-share index was down 0.8 percent.

Government bonds also slipped, with the yield on the benchmark instrument due in 2026 up 13 basis points at 9.340 percent.

S.Africa's private sector activity falls to 2-1/2 year low in August -PMI

JOHANNESBURG, Sept 5 (Reuters) - South African private sector activity contracted in August to its lowest in over two years as output and new orders plunged amid rising policy and political uncertainty, a survey showed on Wednesday.

The Standard Bank Purchasing Managers’ Index (PMI), compiled by Markit, tumbled to 47.2 in August from 49.3 in July, its lowest in 29 months.

Africa’s most industrialised economy entered recession in the second quarter for the first time since 2009, data showed on Tuesday, another blow to President Cyril Ramaphosa’s efforts to revive it after a decade of stagnation.

Participants in the survey cited political as well as economic issues, affordability constraints, inflationary pressures and worker strikes as factors for the depressed activity.

Pretoria plans to expropriate land without compensation to redress racial disparities in ownership, but investors are concerned about wider threats to property rights. This nervousness was partly reflected by the rand currency’s recent sensitivity to the mooted reforms.

The rand had already been battered by a massive emerging market selloff, falling more than 15 percent since the beginning of August as financial crises in Turkey and Argentina soured risk sentiment across the board.

“The poorly performing PMI reflects economic policy uncertainty, increased cost pressures from elevated oil prices, rand weakness and labour strikes,” Standard Bank economist Thanda Sithole said.

- Detailed PMI data are only available under licence from IHS Markit and customers need to apply for a licence.

White unionised workers protest at Sasol plant over black share scheme

SASOLBURG, South Africa (Reuters) - About a hundred workers from South Africa’s mainly white Solidarity union staged a brief protest outside Sasol’s chemicals plant in Sasolburg on Wednesday over a share scheme offered exclusively to black staff.

Solidarity union leaders, who say the scheme is discriminatory because it excludes white workers, handed over a memorandum criticising the plan to Sasol’s managers at Sasolburg, cheered on by workers.

The energy company, known for pioneering the conversion of coal to fuel, manufactures chemicals at the Sasolburg plant located 100 km (62 miles) south of Johannesburg.

The workers wore orange caps and some of them waved placards with slogans such as “Shame on you Sasol” and in the Afrikaans language, “Swart en Wit is Waardig”, which means “Black and White are worthy”.

Some barbecued meat for their colleagues during the lunch time protest, which lasted for about an hour.

“What this scheme does, is to divide workers simply on the basis of race,” Dirk Hermann, chief executive of the Solidarity trade union, told the workers. “We want a future of inclusion and not a future of exclusion.”

The union’s 6,300 members began a go-slow at the company on Monday and plan to hold a full strike on Thursday.

Sasol, which employs around 26,000 people in South Africa, said it had made contingency plans.

Company spokesman Alex Anderson said the Sasolburg plant is undergoing a scheduled maintenance shutdown.

“There were no interruptions. Operations continued as normal,” Anderson said.

Sasol has said that it implemented the share scheme in line with South African laws which require companies to meet quotas on black ownership, employment and procurement as part of a drive to reverse decades of exclusion under apartheid.

Meeting the rules makes a company more likely to qualify for government tenders.

Sasol said in addition to meeting black economic empowerment rules, the plan was backed by shareholders.

But Solidarity said the scheme was discriminatory and that it would file a complaint to U.S. regulators. Sasol also operates in the United States.

Solidarity’s Herman has said he hopes Solidarity can put pressure on Sasol to include other workers.

He said the union cannot take Sasol to court over the scheme because the Commission for Conciliation, Mediation and Arbitration, South Africa’s main authority for mediating labour disputes, ruled that Solidarity did not have a legal right to challenge Sasol’s scheme in court and could only push its cause through industrial action.

TSB boss Paul Pester to step down after IT fiasco

TSB chief Paul Pester is to step down after seven years in charge, in the wake of a major IT failure at the bank.

In April this year, customers were left without access to online banking services for several weeks when an attempt to move data to a new computer system went wrong.

The bank is still struggling to get its IT systems to work properly.

On Monday, it apologised to customers who faced disruption to their online and mobile banking over the weekend.

Following Mr Pester's departure, TSB chairman Richard Meddings will take on the role of executive chairman until a new chief executive is appointed.

Mr Meddings said: "Although there is more to do to achieve full stability for customers, the bank's IT systems and services are much improved since the IT migration. Paul and the Board have therefore agreed that this is the right time to appoint a new CEO for TSB."

Nicky Morgan, chair of the Treasury Committee, said she felt Mr Pester's decision was the correct one.

"Since the IT problems at TSB began, Paul Pester set the tone for TSB's complacent and misleading public communications," she said.

"In this light, it is right that he is stepping down, but the committee remains concerned about the continuing problems at TSB, including unacceptable delays in compensating customers who have been badly let down."

Mr Pester walks away with a payout worth nearly £1.7m, made up of £1.2m severance pay and a "historical" bonus of around £480,000 from before TSB's takeover by Sabadell in 2015. All other performance-related pay - including a bonus linked to the customer migration - was frozen amid investigations into the IT fiasco.

After April's IT meltdown at TSB, many people thought Paul Pester was a dead man walking.

Although he toughed it out after that - he'd used all of his nine lives.

Problems flared up briefly in August and more problems over the last 24 hours drove the final nail into the coffin.

Some will feel that he was a victim of circumstances beyond his control. The new system was built, designed and tested on the watch of Sabadell, TSB's Spanish owners who were convinced the system was ready.

However, IBM - who were drafted in to help with the crisis - said in a report that the system had not been tested sufficiently, and Mr Pester himself came across as complacent to many MPs.

The IT debacle cost TSB £176m and 26,000 customers closed their accounts (although 20,000 new accounts were opened offsetting some of the damage). The bank and Mr Pester's reputation took a heavy knock.

Ultimately the buck stops with the chief executive and on Tuesday morning he paid the perhaps inevitable personal price.

Read more from Simon

What went wrong?

Paul Pester joined Lloyds Banking Group in 2010 and was appointed to lead the launch of TSB and its separation from Lloyds in 2011.

TSB was launched in 2013 and was floated off in 2014 before being bought by Spanish bank Sabadell in 2015. Part of the transfer involved migrating customer records from the Lloyds Banking Group platform to the Sabadell Proteo platform which started on 20 April 2018.

That proved a disaster with many customers being locked out of their accounts and some customers being given access to the confidential records of others. The problems continued for many weeks and TSB came under fierce criticism for the IT failings.

MPs on the Treasury Committee called on Mr Pester to resign. But he remained in his post, and said: "I'm focused 100% on putting things right for our customers."

In June, the Financial Conduct Authority launched a formal investigation into the meltdown. Its chief executive, Andrew Bailey, took the unusual step of making the probe public, "given the level of public interest".

In July, TSB said the IT meltdown had cost £176.4m and pushed it to a half-year loss.

Being unable to get access to their TSB account at the height of the computer crisis earlier this year left many customers with big problems.

Lorna McHale's marriage to Ben Connolly in May was hit as the couple had their wedding savings in a TSB account they couldn't access.

She said she had to "ring to grovel" with suppliers for their wedding, including the DJ, the wedding car provider, and those doing her hair and make-up, all of which were small businesses.

Their case was raised by MPs grilling TSB chiefs during a Treasury Committee hearing.

The good news is that the wedding day went well despite the financial stress beforehand. In fact TSB called her the day before the big event to apologise and offer her £100 compensation for all the distress the bank had caused.

Lorna accepted the offer despite feeling it was a little low. She said: "They told me they'd read my story on the BBC and so knew it was the day before my wedding. I felt they took advantage of my stressed situation to offer low compensation."

She said she's now planning to switch banks.--BBC

Colin Kaepernick: Nike suffers #justburnit backlash over advertising campaign

Nike's new advertising campaign, which features Colin Kaepernick, celebrates the 30th anniversary of its 'Just Do It' slogan

Critics have burned Nike trainers and clothing in protest at Colin Kaepernick's appointment as the face of the brand's new advertising campaign.

The American football quarterback, 30, protested against racial injustice and police brutality by kneeling during the US national anthem.

In announcing the deal, Nike said he was "one of the most inspirational athletes of this generation".

But opponents took to social media, promising to destroy Nike products.

On Twitter, they hit out at the deal using the hashtag #JustBurnIt - a play on Nike's slogan "Just Do It" - which trended on Twitter alongside #BoycottNike.

In an interview with the Daily Caller, President Donald Trump, who has been strongly critical of the protest movement Kaepernick sparked, said: "I think as far as sending a message, I think it's a terrible message and a message that shouldn't be sent."

The NFL said it "embraces the role and responsibility of everyone involved with this game to promote meaningful, positive change in our communities".

A statement added: "The social justice issues that Colin and other professional athletes have raised deserve our attention and action."

Colin Kaepernick: From one man kneeling to a movement dividing a country

Meanwhile, Andrew H Scott, the mayor of Kentucky city Coal Run, said he was "officially done" with Nike and the NFL and asked Nike to cancel an order, while several videos showed Nike trainers being burned.

Country singer John Rich tweeted a photo of a pair of Nike socks with the brand's swoosh logo cut off.

However, another Twitter user Teri Shockey countered: "To everyone who is planning to #JustBurnIt, might I suggest you donate your @Nike merch instead? Plenty of people in need, including vets and families of active duty military, would be more than grateful to wear it. #JustDoIt"

John Rich tweet in which he shows a picture of a pair of destroyed Nike socks

Country singer John Rich was among the protestors threatening to boycott Nike

However, there has been an outpouring of support for ostracised former San Francisco 49ers player Kaepernick, who first protested by sitting during the national anthem in August 2016, later opting to kneel.

Other players followed suit, leading to criticism from President Donald Trump.

Kaepernick, who has received Amnesty International's highest honour, has been without a team since he opted out of his contract with the 49ers in March 2017.

"Colin Kaepernick drew our collective attention to the problem of continued racial injustice in America," said former CIA director John Brennan on Twitter.

"He did so not to disrespect our flag but to give meaning to the words of the preamble of our Constitution-'in order to form a more perfect union.' Well done, Colin, well done."

Nike is celebrating the 30th anniversary of its "Just Do It" slogan. Its new advertising campaign, also includes ads featuring tennis star Serena Williams, New York Giants wide receiver Odell Beckham Jr and Seattle Seahawks rookie linebacker Shaquem Griffin.--BBC

Pound rises on Brexit 'progress' report

The pound has gained strongly against both the dollar and the euro following reports that the UK and Germany have made progress towards a Brexit deal.

Sterling rose nearly 1% against the US currency and 0.5% against the euro after the reports on Bloomberg News.

However, the pound later gave up some of its gains after London and Berlin both denied there had been any change.

The agency said the German government was ready to accept a less detailed agreement on future UK-EU trade ties.

The UK and Germany both denied any movement, while analysts warned the EU's stance was not decided by Berlin.

"Germany does not - despite its clear dominance of the bloc economically - actually speak for the EU position," said Neil Wilson, chief market analyst at Markets.com,

"[Chief EU negotiator] Michel Barnier may well have something to say about this report. As might Theresa May," he added.

Mrs May's official spokesman later responded by saying there was no change in the UK's position that "proper" information about the future UK-EU relationship had to be available by the time Parliament voted on the withdrawal deal.

"We have always set out that when Parliament votes on this, it needs to be a meaningful vote based on proper information," he said.

"We have always been clear that Parliament needs to be able to make an informed decision, and Parliament has also been clear on that. There is no change in that position."

A German government spokesman said: "The government's position is unchanged. The federal government has full trust in the leadership of Michel Barnier."

Mr Barnier has not yet commented on the report.

In late afternoon trading, the pound was worth $1.2902, having earlier traded closer to the $1.30 mark.

Against the euro, it fell below €1.11, having earlier reached €1.1155.

"The ease with which sterling has recently spiked on slim pieces of news tells us a lot about how quickly the pound is likely to rally in the event of any type of Brexit deal," said Ranko Berich, head of market analysis at Monex Europe.

"Any deal that avoids the worst-case scenario of a no-deal exit is likely to cause significant sterling strength, even if it is no more than a can-kicking exercise in the classic Brussels style."--BBC

South Africa RECESSION: Country faces economy TURMOIL as rand continues to PLUMMET

SOUTH AFRICA has been plunged into its first recession in almost a decade, with markets taking a drastic hit in the second quarter of the year seeing the country collapsing into economic turmoil.

The country's annual GDP dropped by 0.7 percent in its second quarter, South Africa's official statistics agency revealed on Tuesday.

This comes significantly below the 0.6 percent rise predicted by analysts in a Thomson Reuters poll, as the country's economy continues to nosedive following a slow decline in agriculture, transport and trade industries.

At the beginning of the year, South Africa's economy fell at a staggering 2.6 per cent annual rate - a figure that was revised from a 2.2 percent fall.

South Africa's rand dropped at a 2 percent rate against the US dollar 0 - it's lowest level since early 2016.

The rand has fallen by 19 percent this year, with the last 18 days contributing to more than half of the decline following national debate over South Africa's land expropriation laws, causing its currency to take a drastic hit.

Bank of America Merrill Lynch told the Financial Times: “We do not think explicit land grab or damage to property rights is likely but ongoing uncertainty will continue to deter business confidence and investment.”

Bianca Botes, an analyst at Peregrine Solutions, told the Independent: “The economy remains lacklustre, partially driven by policy uncertainty.

south africa recession rand economy market crash

"Investment in manufacturing and development has been hampered by uncertainty regarding the mining charter and land redistribution."

Meanwhile Jeffrey Schultz, senior economist at BNP Paribas, said: “There is no way to sugar-coat the numbers, the growth picture in the first half of 2018 is ugly and it shows in this economy that there is broad-based weakness across the primary and tertiary sectors of the economy.”

South Africa's dwindling economy comes as a challenge to President Cyril Ramaphosa, who has vowed to bring economic reforms to the country after successfully ousting former corrupt president, Jacob Zuma.

Following South Africa's long-standing issues with unemployment, Mr Ramaphosa promised a "new dawn" for South Africa, campaigning against corruption in the government as he pledged to revamp its industries.

Vasili Girasis, market trader at BP Bernstein said: “(There is) a lot of pressure on banks and retailers, as expected with such a weak rand. 

"The emerging market sell-off continuing and the dollar going on a bit of a rampage are also having an effect on our market."--express.co.uk

Sterling is so volatile thanks to Brexit that it could slump or surge higher, expert warns

The potential implications of Brexit are extremely complex and sterling could move in a much more binary path in the next few months, Jane Foley, a foreign exchange strategist at Rabobank, told CNBC's "Street Signs" Wednesday.

"If you see the pound against the euro over the last few months then you see a deteriorating position for the pound," Foley said, adding that everybody is disappointed there hasn't been much progress over Brexit and "what we have seen in sterling is this concern that there is only few months left."

Sterling slipped to a two-and-a-half-week low against the U.S. dollar Wednesday morning on concerns over Brexit and escalating global trade tensions. The currency was trading 0.5 percent lower at midday London time, just below $1.28 levels. Against the euro, sterling edged 0.2 percent lower at 90.26 pence.

"Most commentators still have it as a view that a free trade deal will be done. If that changes, which it could do, I think that will be a real change in euro/sterling and we can see it break above 90 (pence). And I don't think that will happen," Foley added.

Former BOE chief slams Brexit

Sterling is still down by over 10 percent since the U.K. voted to leave the European Union in June 2016. The process to leave the bloc has proven long and rich in technical details. The departure date has been scheduled for March 29 next year — meaning that negotiators have about six months to conclude negotiations on aspects such as the movement of people and goods across the border between Northern Ireland and the Republic of Ireland.

The process has received criticism with the former Bank of England Governor Mervyn King slamming the preparations as "incompetent." A Brexit supporter in 2016, King told the BBC in an interview Wednesday that the government had weakened its bargaining position by not being prepared enough.

"We haven't had a credible bargaining position, because we hadn't put in place measures where we could say to our colleagues in Europe, 'Look, we'd like a free-trade deal, we think that you would probably like one too, but if we can't agree, don't be under any misapprehension, we have put in place the measures that would enable us to leave without one'," King told the BBC.

Carney to stay?

While politicians in the U.K. and the EU scramble to put a deal together, Rabobank's Foley warned that markets will react to anything.

"Clearly, whatever happens next year, there is going to be upheaval," she said.

She further added that the more uncertainty for the U.K. markets, i.e. a change to a new governor at the Bank of England, will just create even more upset.

"If we have consistency at the Bank of England, then that will help calm nerves to some extent. A different governor will open sterling to potential more vulnerability."

U.K. Prime Minister Theresa May has backed the current governor, Mark Carney, to remain in the job until 2020. This decision aims to give some stability to the U.K. economy while Brexit takes place.

Carney said Tuesday he was ready to extend his time in charge of the central bank to help Britain's economy as it leaves the bloc.--cnbc.com

INVESTORS DIARY 2018

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Telephone:      <tel:%2B263%204%202927658> +263 4 2927658

Cellphone:      <tel:%2B263%2077%20344%201674> +263 77 344 1674

Alt. Email:       <mailto:info at bulls.co.zw> info at bulls.co.zw  

Website:         <http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw&sa=D&sntz=1&usg=AFQjCNH8LYgdY55h-XKseuM8Kpr-JKdfhQ> www.bulls.co.zw 

Blog:            <http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw%2Fblog&sa=D&sntz=1&usg=AFQjCNFoIy6F9IXAiYnSoPSgWDYsr8Sqtw> www.bulls.co.zw/blog

Twitter:         @bullsbears2010

LinkedIn:       Bulls n Bears Zimbabwe

Facebook:      <http://www.google.com/url?q=http%3A%2F%2Fwww.facebook.com%2FBullsBearsZimbabwe&sa=D&sntz=1&usg=AFQjCNGhb_A5rp4biV1dGHbgiAhUxQqBXA> www.facebook.com/BullsBearsZimbabwe

Skype:         Bulls.Bears 

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