Major International Business Headlines Brief::: 13 September 2018

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Major International Business Headlines Brief::: 13 September 2018

 


 

 


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*  South Africa to probe whether kickback was paid for SAP contract

*  Kenyan central bank fines five banks a total of $3.89 mln

*  South Africa's business confidence index falls in August

*  Tunisia's August trade deficit up 20 pct yr/yr

*  Congo mines minister insists no compromise on new mining code

*  Gold slips amid U.S.-China trade war concerns

*  Many parts of the world not ready for super fast 5G network - MTN's CEO

*  S.Africa's rand weaker as emerging markets knocked by trade war fears

*  Quantum Foods says FY profits to triple, shares jump

*  Clover triples FY profit, impairment hurts shares

*  Apple iPhone XS unveiled alongside fall-detecting Watch

*  Bob Diamond defends risk-taking banks

*  Gordon Brown in dire warning about the next financial crisis

*  World's largest dairy exporter posts first annual loss

*  Why Asia turned to China during the global financial crisis

*  US plans crackdown on e-cigarette firms citing 'epidemic' teen use

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

                                      

South Africa to probe whether kickback was paid for SAP contract

PRETORIA (Reuters) - South Africa’s Special Investigating Unit (SIU) will
investigate whether a kickback of more than 35 million rand ($2 million) was
paid for a state contract with German software firm SAP, a spokeswoman for
the unit told Reuters.

 

South African President Cyril Ramaphosa authorised the SIU investigation
last week, after the country’s anti-graft agency started its own probe into
a 671 million rand ($45 million) deal SAP signed with the water ministry in
2016.

 

Asked for comment, SAP said it was reviewing all its public-sector contracts
in South Africa dating back to 2010.

 

SAP is one of several foreign firms to suffer reputational damage in South
Africa after becoming entangled in corruption scandals under Ramaphosa’s
predecessor, Jacob Zuma.

 

Ramaphosa has launched a corruption crackdown since replacing Zuma in
February, and several investigations into government and private companies
have moved forward.

 

Nazreen Pandor, the SIU’s spokeswoman, said the unit had received
information from a whistleblower that a company controlled by an official
had received more than 35 million rand for facilitating the deal between the
water ministry and SAP.

 

The SIU will present the findings of its probe into SAP’s work for the water
ministry within six months, Pandor added.

 

A SIU investigator, who did not wish to be named, said the unit believed it
had a “strong case” that procurement rules were broken in the SAP deal,
based on a preliminary survey of contracts between the water ministry and
SAP.

 

“We are already deep into planning for the investigation. If we find
evidence of criminal wrongdoing, we will immediately motivate for a case to
be opened,” the investigator said.

 

SAP said in a statement to Reuters: “SAP continues to cooperate with both
the South African and U.S. authorities in their ongoing investigations.”

 

The German firm said last year that the U.S. Department of Justice and U.S.
Securities and Exchange Commission had opened an investigation into the
company under the U.S. Foreign Corrupt Practices Act related to South
Africa.

 

In March, SAP admitted to paying more than $9 million to intermediary
companies controlled by the Guptas, friends of former president Zuma,
relating to deals with South African state firms Eskom and Transnet.

 

($1 = 15.0475 rand)

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

Kenyan central bank fines five banks a total of $3.89 mln

NAIROBI (Reuters) - Kenya’s central bank on Wednesday said it had fined five
commercial banks a total of 392.5 million shillings ($3.89 million) in
connection with the theft of funds at the National Youth Agency, a
government body said.

 

Dozens of senior government officials and business people were charged in
May with various charges related to the theft of nearly $100 million from
the youth agency, NYS, marking a new effort to crack down on widespread
graft.

 

The five banks are Standard Chartered Kenya, Equity, Diamond Trust,
Co-operative Bank and KCB Group, the central bank said.

 

The central bank said it had discussed its findings with all the five banks
and they had pledged to ensure compliance with all laws in the future and to
draw up plans for sealing gaps that were identified.

 

It accused them of failing to report large transactions, failing to
undertake proper due diligence on customers, approving large transactions
without proper documents and failing to report suspicious transactions.

 

All the banks had received a total of more than 3 billion shillings from the
NYS on behalf of their customers, the central bank said.

 

It said the findings of its investigations had been passed onto criminal
detectives to assess whether they would bring any charges. More banks will
also be investigated, the central bank added.

 

($1 = 100.8000 Kenyan shillings)

 

 

 

South Africa's business confidence index falls in August

JOHANNESBURG (Reuters) - South Africa’s business confidence fell in August
to 90.5 from 94.7 in July after activity was hit by a decline in merchandise
export volumes, a weaker rand and higher inflation, a survey showed on
Wednesday.

 

In its monthly business confidence index (BCI) survey, the South African
Chamber of Commerce and Industry’s (SACCI) said only three of the 13
sub-indices surveyed had improved in August compared with their July
readings. Five others were unchangebd and five were negative, it said in a
statement.

 

The BCI stood at 89.6 points last August, SACCI said.

 

“The largest negative month-on-month impacts were by merchandise export
volumes, the weaker rand exchange rate and higher inflation,” SACCI said.

 

The rand has lost around 16 percent against the dollar since January.
Inflation stands at 5.1 percent.

 

Business confidence raced to a 2-1/2 year high in January after Cyril
Ramaphosa’s election as leader of the ruling African National Congress (ANC)
in December, with the private sector anticipating business-friendly policy
changes following years of uncertainty under former president Jacob Zuma.

 

Investor sentiment has since waned, and data released last week showed the
economy had entered a recession for the first time since 2009, undermining
Ramaphosa’s efforts to revive the economy after nearly a decade of
stagnation under Zuma.

 

“The positive mood that prevailed at the beginning of 2018 has been
overtaken by uncertainty and events that weigh on the economic prospects for
South Africa,” SACCI said.

 

South Africa’s credentials as an investment destination had been tainted,
SACCI said.

 

Ramaphosa announced in July that the ANC plans to change the constitution to
allow the expropriation of land without compensation, as whites still own
most of South Africa’s territory, unnerving investors and weakening the
rand.

 

 

Tunisia's August trade deficit up 20 pct yr/yr

TUNIS (Reuters) - Tunisia’s trade deficit widened by about 20 percent year
on year in the first eight months of 2018 to 12.2 billion dinars ($4.39
billion), a record level, official data showed on Wednesday.

 

The deficit was 10.1 billion dinars in the same period last year.

 

It widened after imports rose by 20.4 percent, the State Statistics
Institute said.

 

Last year, the central bank ordered local lenders to stop financing imports
of about 220 products - from fish to perfume - as the country tries to curb
its trade deficit.

 

Unemployment is high, especially among the young, and some inland regions
remain impoverished.

 

International lenders have demanded reforms to cut the deficit and reduce
spending on a bloated public sector.

 

($1 = 2.7767 Tunisian dinars)

 

 

 

Congo mines minister insists no compromise on new mining code

KOLWEZI, Democratic Republic of Congo (Reuters) - Democratic Republic of
Congo’s mines minister said on Wednesday that a new mining code signed into
law in March cannot be called into question.

 

Addressing a mining conference in the copper and cobalt-mining city of
Kolwezi, Martin Kabwelulu called on industry leaders to work to implement
the code as it was signed into law by President Joseph Kabila.

 

Major mining companies including Glencore and Randgold bitterly opposed the
code, which axes tax exemptions and hikes royalties and profit taxes. They
have been holding out hope it might be watered down in further negotiations.

 

“It is not the place of any participating party, whether civil society,
mining companies or even the government to try to call into question the
text governing the mining sector,” Kabwelulu said.

 

The companies say the tax hikes and cancelling of 10-year exemptions for
existing projects against changes to the previous fiscal and customs regimes
breach previous agreements with the government.

 

Congo is Africa’s top copper producer and the world’s leading miner of
cobalt, a mineral which has seen a surge in demand to manufacture electric
car batteries.

 

 

 

Gold slips amid U.S.-China trade war concerns

LONDON (Reuters) - Gold fell on Wednesday, but remained stuck in a narrow
trading range as investors worry about a simmering trade war between the
United States and China.

 

Spot gold was down 0.3 percent to $1,193.61 an ounce at 1200 GMT, after
hitting its lowest since Aug. 24 at $1,187.21 on Tuesday. U.S. gold futures
eased 0.3 percent to $1,198.40 an ounce.

 

The trade conflict between Washington and Beijing has prompted investors to
buy the U.S. dollar in the belief that the United States has less to lose
from the dispute.

 

“It looks like gold will remain in a sideways trend until something forces
it either way,” said Commerzbank analyst Daniel Briesemann, adding that
given the uncertainty in the world “gold will go much higher before the year
is out.”

 

Gold has been stuck in a $20 price range over the past two weeks, with
investors looking for technical breakouts for clues on further movements.

 

Gold has lost out to the dollar in a battle for safe-haven flows. A firmer
dollar makes gold more expensive for holders of other currencies but on
Wednesday the dollar was marginally lower against a basket of currencies.

 

It touched a three week high of 95.74 last week.

 

In addition, a sell-off in the Chinese yuan made the metal more expensive
for buyers from the world’s top consumer of the metal.

 

“Gold is moving without a clear direction and it seems locked between $1,190
and $1,200,” said ActivTrades chief analyst Carlo Alberto De Casa.

 

“Investors are awaiting new moves to see if bullion can prolong the weak
recovery seen in the second half of August, even if the main trend still
appears bearish.”

 

The U.S. central bank is widely expected to raise benchmark interest rates
at its September meeting and expectations are growing for one more hike in
December on positive economic data.

 

Higher rates increase bond yields, making non-yielding bullion less
attractive, and tend to boost the dollar.

 

Central bank meetings in Turkey and Russia this week are also on investors’
radar, with particular market focus on whether Ankara will step in to fight
inflation and a depreciating currency, Commerzbank’s Briesemann said.

 

Gold has fallen over 12 percent from a peak in April, pressured by rising
U.S. interest rates amid intensifying global trade tensions.

 

Spot silver was down 0.2 percent at $14.06 per ounce, having touched $13.90
in the previous session, its lowest since January 2016.

 

Platinum was down 0.5 percent to $783.98 per ounce, while palladium lost 0.2
percent to $972 an ounce.

 

 

Many parts of the world not ready for super fast 5G network - MTN's CEO

DURBAN, South Africa (Reuters) - Many parts of the world are not ready for
next-generation 5G network but would likely be ready to embrace the
super-fast technology in the next few years from now, MTN’s chief executive
of said on Tuesday.

 

5G networks, now in the final testing stage, will rely on denser arrays of
small antennas and the cloud to offer data speeds up to 50 or 100 times
faster than current 4G networks and serve as critical infrastructure for a
range of industries.

 

“This is the technology that would be used for very specific cases. It would
not be a technology for everybody because most people don’t need it, your
phone works fine on just 3G,” Rob Shuter told Reuters at a telecoms
conference in Durban.

 

“You also need the equipment itself. So right now there’s no 5G handsets and
even the routers that can receive 5G network are very few and very
expensive.”

 

Many of MTN’s users in emerging markets across Africa and the Middle East
are still awaiting 4G and are likely to have to get by with 3G connections
for years more.

 

“What we are doing now is to learn from the technology and get our network
ready for it but I think 3G is much more relevant in most of our markets,”
he said.

 

Shuter declined to comment on his company’s multibillion dollar dispute with
Nigeria — which account for a third of its annual core profit — because the
matter is before a court in the west African country. [nL5N1VW3NC]

 

MTN operates in more than 20 frontier markets including war-ravaged Syria
and Afghanistan.

 

 

 

S.Africa's rand weaker as emerging markets knocked by trade war fears

JOHANNESBURG (Reuters) - South Africa’s rand weakened on Tuesday as emerging
market currencies lost ground with further deterioration in United States
and China trade relations subduing demand for risk assets.

 

At 0650 GMT the rand was 0.32 percent softer at 15.1050 per dollar compared
to a close of 15.0575 in New York.

 

The threat of Washington imposing heavier trade sanctions on Beijing
intensified after U.S. President Donald Trump said on Tuesday he would take
a tougher stance with China on trade.

 

China on Wednesday slashed its forecast for 2018/19 soybean imports as
farmers reduce their use of the bean in animal feed because of the Sino-U.S.
trade conflict, which will threaten Washington’s supplies of the oilseed to
China.

 

The local market awaits the release of retail sales data at 1100 GMT for
July, with the market expecting a 1.3 percent increase year on year from a
0.7 percent rise in June.

 

Government bonds were weaker, with the yield on the benchmark paper due in
2026 rising 3 basis points to 9.180 percent.

 

 

 

Quantum Foods says FY profits to triple, shares jump

JOHANNESBURG (Reuters) - South Africa’s Quantum Foods said on Wednesday it
expects annual profits to triple on steady earnings from its eggs business
and compensation for losses incurred from an Avian flu outbreak, sending its
shares up seven percent.

 

The animal feed and poultry company said headline earnings per share would
increase by 219 percent to 156.3 cents per share for the year ending June
2018, compared with 49 cents per share in the corresponding period of the
previous year.

 

Headline earnings - South Africa’s most widely watched profit gauge - strip
out certain one-off items.

 

 

 

Clover triples FY profit, impairment hurts shares

JOHANNESBURG (Reuters) - Clover Industries’ normalised annual profit more
than tripled, the South African dairy company said on Wednesday, boosted by
its exit from the milk business and a recovery from drought the previous
year.

 

Clover, which processes products including yoghurt, beverages, cheese and
olive oil, has focused on developing higher margin, value-added branded food
and beverages as part of its strategy to move away from lower-margin
commoditised dairy products.

 

Normalised headline earnings per share (HEPS) rose to 206.9 cents for the
year to June 30 from 63.9 cents.

 

Headline earnings - South Africa’s most widely watched profit gauge - strips
out certain one-off items.

 

Clover’s HEPS strips out a 439 million rand ($29 million) impairment
relating to a revolving credit loan given to the Dairy Farmers of South
Africa (DFSA).

 

Clover, which holds a 26 percent voting right in DFSA, would swing into a
full-year loss with a diluted headline loss of 22.9 cents per share for the
period compared with 63.9 cents in the year-ago period if the impairment was
included.

 

By 1128 GMT shares in Clover fell 3.96 percent to 14.30 rand after rising
more than 2 percent in early trade, with traders saying the impairment had
dented sentiment on the stock.

 

“This is the one thing that is worrying the market. But from a normalised
point of view management have delivered and are moving in the right
direction,” said portfolio manager at Cratos Wealth Ron Klipin.

 

The previous financial year profits were affected by a severe drought.

 

“Clover reported an exceptional turnaround from a drought-stricken prior
year to deliver its best financial performance since listing,” said the
firm, which listed in 2010.

 

Clover said it had lost 6.5 million rand a month in fees after processed
meats were recalled by health authorities after South Africa suffered the
world’s biggest outbreak of listeria last year that killed more than 200
people..

 

“The listeria outbreak resulted in losses in principal fee income which
could not be replaced during the reporting period,” Clover said. However,
Clover added that it recovered some of the losses through fees earned on
services such as production, sales and merchandising and distribution for a
competitor.

 

Clover declared a final dividend of 48 cents, bringing its total dividend to
75 cents for its financial year compared with 26 cents in the prior year.

 

($1 = 15.0855 rand)

 

 

 

Apple iPhone XS unveiled alongside fall-detecting Watch

Apple has updated its iPhone X handset with three more powerful models, two
of which are larger than before.

 

The iPhone XS Max has a 6.5in (16.5cm) display. The iPhone XS has the same
5.8in-sized component as the original. The iPhone XR's screen is 6.1in but
is lower quality.

 

A new smartwatch was also launched with an added fall-detection function.

 

There had been concerns that the relatively high £999 entry price of iPhone
X would limit its appeal.

 

But Apple said it had consistently proven more popular than either of the
lower-priced iPhone 8 models. Market research firms suggest it also outsold
rival companies' flagship devices.

 

 

That helped propel Apple to become the world's first company with a market
capitalisation above $1tn (£768bn).

 

However, China's Huawei still managed to overtake it in terms of overall
smartphone market share in the April-to-June quarter, putting Apple into
third place.

 

"Huawei was able to overtake it because Apple is not playing in the mid and
low ends of the market," commented Francisco Jeronimo from IDC.

 

"But Apple is very well positioned in the premium segment, and we don't
expect that to change over the next 18 months."

 

The XS Max will become the most expensive handset Apple has sold to date,
with its price ranging from £1,099 to £1,449 depending on its amount of
storage.

 

The XS will match the original X's £999-£1,349 cost, while the XR will be
£749-£899.

 

Apple has not, however, included a headphone dongle this time round, so
owners of wired headphones will need to factor in an additional £9 charge to
add one.

 

Bigger screen

Apple highlighted that the iPhone XS Max's display was significantly larger
than the 5.5in display of the old iPhone 8 Plus despite the two handsets
being similar in size.

 

"Even if the screen on the iPhone X last year was larger some people who
were on the Plus models missed the feel of a larger device which is exactly
what the Max is addressing," said Carolina Milanesi, an analyst at the
consultancy Creative Strategies.

 

The iPhone XR also has a bigger screen but uses LCD (liquid crystal display)
rather than the OLED (organic light-emitting diode) technology found in the
more expensive models. This will mean black appears less deep and its
colours appear to have less contrast.

 

In addition, its chassis is made from aluminium rather than steel, which
means it is likely to be less damage-resistant. However, unlike the more
expensive models it comes in six different colours.

 

Analysts suggest the wider range may help encourage iPhone owners who did
not upgrade last year to do so this generation.

 

"Retention has become very high for both Android and iOS - switching is
largely a thing of the past," suggested analysts at UBS.

 

"Put simply, the replacement for iPhone is iPhone, the only question is when
- and the when is driven in large part by form factor, namely the screen."

 

Apple launch: Bigger! Faster! Pricier! Innovative?

Apple removes apps that harvested data

Apple self-driving car in minor crash

The latest phones feature a fresh processor - the A12 Bionic. It is the
firm's first to feature seven nanometre transistor technology, which should
aid energy efficiency and computation speeds.

 

Its inclusion means the iPhone XS will last about 30 minutes longer on a
battery charge than the X, Apple suggested.

 

The firm also said that its Face ID system would now work faster than before
and it demoed several apps, showing off its augmented reality prowess.

 

Huawei recently announced it had developed a rival 7nm mobile chip of its
own.

 

Despite rumours that at least one of the new iPhones would feature three
rear cameras - like Huawei's P20 Pro - Apple stuck with two 12 megapixel
lenses for the XS and XS Max. The XR only has one rear camera.

 

However, Apple did unveil a new feature that will allow users to alter the
depth-of-field of their photos after they have been taken - effectively
changing the degree to which the background is blurred.

 

iPhone owners will be able to change the depth-of-field of their images
after a photo has been taken

The XS and XS Max also introduce support for two mobile contracts - in most
countries this will be via a physical Sim card in addition to an electronic
eSim, which can be activated via a QR code among other means.

 

The version sold to Chinese consumers, however, will require two physical
Sim cards to achieve this.

 

Benefits to owners include:

 

being able to sign up to a temporary service while travelling overseas while
still being able to accept calls on their normal number

having a work and personal account installed on the same phone

being able to take advantage of cheap data deals while still retaining the
same contact number

 

"Apple will face some inevitable criticism that these products offer only
small improvements on prior successes," said Ben Wood from the consultancy
CCS Insight.

 

"However, the fact that Apple has sold almost two billion iOS devices to
date is testament to the success of the iPhone recipe since 2007."

 

Heath-conscious Watch

 

Earlier at its California event, Apple unveiled a new smartwatch with a
display that extends further towards its edges than earlier models.

 

The firm said the Watch Series 4's usable screen was more than 30% larger
despite the device itself having similar dimensions to its predecessor.

 

This allows more information and shortcuts to be shown at once.

 

 

It can also display electrocardiogram heart waveforms for the first time.
This works via new sensors in its back and crown to allow owners to check if
their heart has an irregular rhythm.

 

In addition, the timepiece will automatically warn its user if it detects
their heart is beating abnormally fast or slow during everyday use.

 

Apple said the app that provides these functions had been given "De Novo"
clearance by the Food and Drug Administration - meaning that it is
recognised as being an entirely new category of product that can legally be
marketed in the US as being capable of providing health readings safely and
efficiently.

 

However, the paperwork makes clear it should not be used as a replacement
for traditional diagnostic equipment.

 

"Getting FDA classification for health features on the new Watch underlines
Apple's leadership in wrist-worn tech," commented Mr Wood.

 

"It's an arduous process that no other consumer wearable company has
successfully navigated."

 

A new fall-detection facility also debuts thanks to the introduction of
"next-generation" gyroscope and accelerometer sensors, which Apple said
sampled data eight times faster than before.

 

If the associated software believes the user has suffered a hard fall and
remained immobile for a minute or more, it will send the emergency services
an alert including the user's location, as well as contacting chosen friends
or family if set to do so.

 

Apple overtook Xiaomi and Fitbit to become the world's bestselling wearable
tech company in the second half of 2017 thanks to strong demand for the last
generation of its smartwatch. It has held on to the top spot ever since,
according to IDC.

 

"The reason it performed so well is that many network operators are only
willing to focus on smartwatches with their own [built-in cellular]
connectivity," said Mr Jeronimo.

 

"That's why they are shipping about as many watches as the whole Swiss
watch-making industry."

 

The cellular 40mm version of the Watch Series 4 begins at £499 and the 44mm
at £529.

 

That marks an increase on the 38mm and 42mm Series 3 equivalents, which
respectively cost £359 and £429.

 

Apple also confirmed that the next version of its mobile operating system -
iOS 12 - will be released for existing devices on 17 September.

 

Apple has never told us how many Apple Watches it has sold since the first
device was released in 2015, other than to say it's the top-selling device
in its category.

 

Analysts, though, think sales are in the region of 50 million. Minuscule
compared to the iPhone, but this is a device that's clearly on the up.

 

It began life as a fitness device, but this update will, and this isn't
marketing puff, help people stay alive.

 

Fall detection, and the ability to conduct an ECG to measure heart health,
are both major new features that the healthcare industry is tremendously
excited about.

 

I haven't had a chance to try it yet, and one concern for me would be false
positives - it thinking I've fallen over when I'm perfectly fine. And, if
this is going to be marketed at elderly consumers, Apple's boast of packing
the interface with more "complications" will make it, well, more
complicated.

 

But make no mistake. With US regulator approval - the first device of its
kind to be given that clearance - insurance companies will be ordering these
by the bucketload.

 

The world is aging, and access to health is getting more expensive.

 

It's not often a Silicon Valley company creates a product with the over-60s
firmly in mind.

 

Apple making a big leap into this market will make the Apple Watch, not the
iPhone, the talking point of Apple's year.

 

IBM Simon: The first mobile phone to offer a touchscreen user-interface -
but its battery only lasted an hour.

 

Siemens S10: The first handset with a colour display - although only red,
green, blue and white could be shown.

 

LG Prada: The handset debuted a capacitive touchscreen - detecting finger
taps by changes in the display's electrical field rather than pressure.

 

iPhone: Apple made use of "multi-touch", detecting several points of contact
- allowing pinch-to-zoom and other interactions.

 

Nokia N85: First phone with an OLED (organic light-emitting diode) display,
letting it show deeper blacks and better contrast.

 

Samsung Galaxy Note: Although not the first "phablet", the handset proved
there was demand for a 5+ inch display, despite claims it was "comically
huge".

 

LG G Flex: The curved design was derided as being a gimmick, but points the
way to the true "bendy" phones of the future.

 

Sharp Aquos Crystal: The phone's "edgeless" look foreshadowed today's trend
to keep bezels to a minimum.

 

Samsung Galaxy Note Edge: Samsung's first handset to wrap its screen over
one its sides used the extra space for notifications and app shortcuts.

 

Sony Xperia Z5 Premium: The smartphone premiered a 4K display before it was
easy to obtain such ultra-high definition mobile content.

 

Essential Phone: The start-up beat Apple to featuring a camera notch in its
display, which allowed the rest of the screen to extend upwards.

 

Vivo X21: The Chinese firm beat rivals to offering a fingerprint reader
beneath its screen.-- BBC

 

 

 

Bob Diamond defends risk-taking banks

Former Barclays boss Bob Diamond has said he fears banks have become too
cautious about taking risks.

 

Mr Diamond told me the risk-averse culture means they can't support the
economy and generate jobs and growth.

 

Ten years on from the collapse of Lehman Brothers he believes the appetite
for risk taking within banking may have swung too far the other way.

 

"If they are totally without risk, they are not helping create jobs and
economic growth," he said.

 

"The culture of banking now is that if anyone makes a mistake they get fined
- or the bank is in trouble.

 

Once dubbed the unacceptable face of banking, Mr Diamond mounted a spirited
defence of the culture and behaviour of crisis-era Barclays.

 

He told me that critics of the banking industry's behaviour in the run up to
the financial crisis should distinguish between those that ultimately needed
government bailouts and those that didn't.

 

Defending a culture

Barclays raised money from Middle East investors to stay afloat while RBS
needed a £45bn taxpayer bailout.

 

"I think HSBC and Barclays deserve credit for raising capital privately,"
said Mr Diamond. "People should be angry with RBS for failing in the way it
did - ten years later people still haven't got their money back. Private
investors who put money into Barclays have seen very good returns."

 

He also defended the culture that prevailed at Barclays during the time he
ran the investment bank and subsequently took over as chief executive in
2011. In these years, Barclays employees - along with those of other banks -
were found to have rigged markets including interest rate benchmarks,
precious metals, foreign exchange and energy prices.

 

"I don't think the reprehensible behaviour of a few people out of 160,000
employees is representative of the culture we had at Barclays - I think we
had a very strong culture".

 

Really? I asked.

 

"Yes Really", he replied tartly.

 

Not for the first time since the financial crisis, Mr Diamond seemed in no
mood for insincere apologies. This is the man who transformed Barclays from
a sleepy but profitable retail bank into a trading and investment powerhouse
- becoming the poster child of buccaneering, risk taking, highly paid
bankers in the process.

 

More risk

Was there never a point when he privately thought the bank was taking too
much risk?

 

"After every earnings report up to 2007 I would have investors and
shareholders saying - can't you take more risk, get higher returns and there
was no regulatory pressure. But with 20/20 hindsight any banker working at
that time will now say we didn't have enough capital."

 

As well as being called the "unacceptable face of banking" by Peter (now
Lord) Mandelson, Mr Diamond was branded a casino banker by Liberal Democrat
leader Vince Cable and eventually lost the confidence of the governor of the
Bank of England in the wake of the Libor scandal - forcing him to resign in
2012.

 

How does he look back on the barrage of personal criticism that came his
way.

 

"I called Lord Mandelson after that. We'd never met and his response was
telling. He said - it certainly worked for me politically."

 

Pejorative labels

As for the charge that he was engaged in casino banking he is, once again,
not having any of it.

 

"Labels like casino banking are very pejorative and very unhelpful and don't
describe the reality. Vince Cable was wrong. We have asset managers managing
pension funds who need access to liquidity. We have companies hedging their
foreign exchange exposure. Sit on a trading floor and you'll see the real
value this brings to the economy."

 

In 2011, Mr Diamond was pilloried for saying he thought "the time for banker
remorse was over". He insists that comment was misunderstood.

 

 

"What I meant then - as I've been saying now - was that we have to let banks
be banks - and that means taking risks. The mantle of risk now has to pass
to the private sector."

 

There are many who will scream it's no wonder the bankers are happy to take
the risks and pocket the rewards ten years after they helped blow up the
world.

 

They will add that Barclays may not have been bailed out directly by UK
taxpayers but they benefited from the life support provided by government
and central banks around the world to the system as a whole.

 

They will point out that Bob Diamond was lucky disgraced RBS chief Fred
Goodwin outbid him for the Dutch bank ABN Amro just as the crisis hit.

 

If Barclays had bought it - it's very unlikely Qatari investors could have
plugged the bigger hole in its finances that Barclays would have been faced
with, and would have had to join the queue for taxpayer help.

 

 

But what's clear is that Bob Diamond certainly doesn't feel any special
personal responsibility for what economic wise heads at central banks and
regulators around the world failed to see coming or prevent - or the conduct
of Barclays employees.

 

He's unlikely to succeed in revising the collective memory of what happened
during the worst financial crisis in a generation.

 

But for what it's worth to him - and anyone else - his detractor in chief -
Peter Mandelson - has had a change of heart. 'I went to Barclays one
morning," he said. "I pretty quickly realised that what I had said was
pretty dumb. He is an impressive fellow.'--BBC

 

 

 

Gordon Brown in dire warning about the next financial crisis

The world is not ready to deal with another financial crisis, former Prime
Minister Gordon Brown has told the BBC.

 

A breakdown in international co-operation means nations would be unable to
act in a concerted way to tackle future threats - which are many.

 

"I feel we're sleepwalking into the next crisis", said Mr Brown, speaking on
the 10th anniversary of the start of the previous crisis.

 

He added that some of the bankers involved should have gone to jail.

 

Mr Brown, speaking from his living room, said: "This is a leaderless world
and I think when the next crisis comes, and there will be a future crisis,
we'll find that we neither have the fiscal or monetary room for manoeuvre or
the willingness to take that action.

 

"But perhaps most worrying of all, we will not have the international
co-operation necessary to get us out of a worldwide crisis."

 

In the immediate aftermath of the collapse of Wall Street banking giant
Lehman Brothers, the UK government was one of the first to press the case
for using public money to recapitalise failing banks and did exactly that -
pumping taxpayer funds into Lloyds, HBOS and RBS.

 

Mr Brown, UK prime minister as the crisis unfolded, said that it was
possible to counteract the evaporation of trust in the markets by
co-ordinated action between governments and regulators that trusted
eachother.

 

"But now with the trade wars, the disagreements over climate change, the
nuclear deals that have fallen apart there is no spirit of co-operation -
there is division and protectionism and I fear a new crisis would see
nations trying to shift the blame to each other."

 

Hammond: Financial crisis 'shock' continues

Carney warns against complacency

He acknowledged that the use of public money to bail out high earning
bankers was a difficult pill for the public to swallow and although he
insists it was necessary, he says that he is frustrated that harsher
penalties weren't dished out to some of the bankers involved.

 

"I'll be honest with you. Some of these bankers should have gone to jail and
until we have proper laws that can find the guilty and show there are clear
penalties, then people will think the bankers have got away with it and will
go back to doing the same thing again."

 

What blame does he bear himself? Former governor of the Bank of England,
Mervyn (Lord) King has been critical of the way his government designed the
regulatory regime - moving bank supervision away from the central bank to
the Financial Services Authority.

 

Mr Brown acknowledges that it didn't work perfectly, but argues that the
system was designed to look at isolated outbreaks of bank distress - not a
contagion which consumed the entire global financial system.

 

No national warning system, he says, was equipped to see the full picture
and no individual country could have tackled the meltdown.

 

A global problem needs global co-operation. Without that - and with most of
the tools available already used (rock bottom interest rates, trillions
pumped into the system through quantitative easing) - Mr Brown paints a grim
picture of our ability to face the next crisis.--BBC

 

 

 

World's largest dairy exporter posts first annual loss

New Zealand's Fonterra, the world's largest dairy exporter, has posted its
first annual loss as higher costs and heavy one-off charges hit earnings.

 

The firm said it would carry out a major review as a result, starting with
its investment in China's Beingmate.

 

Fonterra saw a large writedown earlier this year on the back of its stake in
the Chinese infant formula producer.

 

The company also said its forecasts were too optimistic.

 

Fonterra is a co-operative that buys dairy products from New Zealand farmers
and sells them on to foreign companies.

 

The farmer-owned collective posted a net loss after tax of NZ$196m ($128.5m;
£98.5m) for the year ending in July.

 

"There's no two ways about it, these results don't meet the standards we
need to live up to," Fonterra's interim chief executive Miles Hurrell said.

 

Fonterra suffered a writedown of more than NZ$400 million from its
investment in Beingmate.

 

It announced its intention to take a 20% stake in the Chinese firm in 2014
in a bid to boost its distribution network.

 

Chief financial officer Marc Rivers said "all options were on the table"
when asked during a media call whether the review could result in Fonterra
selling its 18.8% stake in Beingmate.

 

Fonterra has also had to pay millions of dollars worth of damages to French
dairy giant Danone over a contamination scare in 2013.--BBC

 

 

 

Why Asia turned to China during the global financial crisis

For many young people in Asia, going to the West to study and work is the
stuff dreams are made of.

 

But that dream turned into a nightmare for Declan Ee when he became an
unwitting victim of the financial crisis 10 years ago.

 

He was working for Lehman Brothers in the sub-prime mortgage division in
London as a junior banker at the time, and was on a career path to success.
Or so the young Singaporean thought.

 

"I never felt safe after the global financial crisis," he tells me. "I had
really bought into the whole culture of the industry at the time."

 

Declan was one of thousands who lost their jobs during the Lehman Brothers
collapse, an event which many mark as the start of the crisis.

 

Overnight, credit dried up. Jobs disappeared. Banks lost billions of
dollars.

 

The developed world fell into economic disarray.

 

As the chart below shows the US, UK and Japan all fell into recession. It
has taken a decade to recover from that, and many economists would argue
that we are yet to see a real recovery.

 

Asia hit too

Ultimately though, this was effectively a crisis of global confidence in the
ability of banks to survive. Asia's financial sector wasn't spared, although
it wasn't hit nearly as badly as the West.

 

Ten years ago, many of Asia's banks were facing job losses, wage freezes and
cost cutting measures.

 

DBS - South East Asia's largest bank - was also affected. The bank had to
write off millions of dollars worth of loans and investments because of its
exposure to the crisis.

 

Lehman gamble paid out for brave investors

The lost decade

How did the financial crisis affect your finances?

Terence Yong Yew Tiek was on the frontline for the bank at the time and
remembers how tough it was.

 

But he says DBS - like so many other businesses in the region - was only
momentarily affected, and recovered quickly because of the inherent strength
in Asia's economies - and China.

 

"Fundamentally, there was broad-based growth across Asia," he says. "Whether
that was in the auto sector, airlines, consumer goods, commodities, services
- all of these things were actually growing because of middle-income growth
in Asia. China was also increasingly a factor, and that drove demand across
borders within Asia."

 

Media captionWho was to blame for the financial crisis?

Don't count on just one market

The global financial crisis meant Asian companies had to change tactics too.

 

Singapore-based plastic parts maker Sunningdale Tech saw its automotive
products orders from North American clients fall to zero during the crisis.

 

The company's chief executive, Khoo Boo Hor, has vivid memories of the time.

 

The firm had to cut salaries, shorten the working week and reduce executive
pay just to survive. But the crisis taught Sunningdale a valuable lesson:
you can't count on just one market.

 

"You have to assume that if a crisis has happened in one region, it may
happen in another region," he told me. "So what we do today is we build a
model - we don't depend on one country, one region, one product or one
customer."

 

Asia in, West out

That growth in Asia and China coincided, some say, with an increasing
disdain and lack of trust among many in the region of the West's financial
practices.

 

Image caption

Sunningdale Tech's Khoo Boo Hor has learnt not to depend on just one country
or region

Investment manager Hugh Young is a bit of a crisis connoisseur - he has
lived through two of them. He says the global financial crisis changed the
way Asia viewed the West.

 

"It would be the start... of Asia looking away from the West," he told me.

 

"That's been a steady phenomenon, and if anything the global financial
crisis accelerated that. It probably also accelerated the rise of China -
which was going to happen anyhow - but now we see China playing on the
global stage as big a role - arguably a bigger role - than even the US."

 

Chinese stimulus

China was a big factor in why Asia managed to escape the global financial
crisis relatively unscathed.

 

But that's not to say China wasn't affected by the crisis. On the contrary,
as Yu Yongding, a former member of the Monetary Policy Committee of the
People's Bank of China, explains the turning point of China's growth
happened in September 2008, after the Lehman Brothers' bankruptcy.

"Banking's Black Monday" in September 2008 had ramifications around the
world

A closer look at his numbers will illustrate exactly what he means.

 

In 2007, China's GDP growth rate was 13%.

 

In 2008, after the Lehman Brothers fiasco, GDP fell to 9% in the third
quarter and 6.8% in the fourth quarter.

 

In the first quarter of 2009, China's growth rate fell further to 6.1%.

 

The Chinese government "took action swiftly" as Professor Yu says, and
introduced a massive stimulus package which didn't just help to stabilise
and revive China's economy - it became the lifeline for the rest of Asia.

 

But there are concerns that China's economy is now mired in a mountain of
debt, and as the International Monetary Fund pointed out in its outlook for
the world economy earlier this year, the large and opaque nature of the
financial system in China poses a risk to stability.

 

Another crisis?

The last 10 years have seen strong growth in Asia and China and that's
helped this region weather the storm during the global financial crisis.

 

For better or for worse, it shifted Asia away from a heavy reliance on the
West.

 

But now with Asia's biggest economy - China - slowing down, the big fear is
that another crisis could be brewing.

 

No-one's quite sure where it would start this time - and how badly we could
all be affected.--BBC

 

 

 

 

US plans crackdown on e-cigarette firms citing 'epidemic' teen use

The US Food and Drug Administration (FDA) is considering banning the sale of
flavoured e-cigarettes, citing an "epidemic" of use among teens.

 

The proposal, announced on Wednesday, is part of a broader effort to curb
teen use of the nicotine devices.

 

FDA chief Scott Gottlieb said: "The disturbing and accelerating trajectory
of use we're seeing in youth, and the resulting path to addiction, must
end."

 

The toughened approach comes after firms ignored prior concerns, he added.

 

"I've been warning the e-cigarette industry for more than a year that they
needed to do much more to stem the youth trends," he said.

 

"In my view, they treated these issues like a public relations challenge
rather than seriously considering their legal obligations, the public health
mandate, and the existential threat to these products.

 

"Well, I'm here to tell them that this prior approach is over."

 

'Hard trade-offs'

The FDA said it has sent more than 1,100 warning letters to stores for the
illegal sale of e-cigarettes to under-age vapers and issued fines to another
131 shops.

 

Five of the biggest e-cigarette manufacturers - JUUL, Vuse, MarkTen, blu
e-cigs, and Logic - must also report to the agency within 60 days with plans
to address the concerns, or face penalties, it said.

 

JUUL, which is already facing FDA investigation for its marketing practices,
said it would "work proactively with FDA in response to its request".

 

"We are committed to preventing underage use of our product, and we want to
be part of the solution in keeping e-cigarettes out of the hands of young
people," the company said in a statement.

 

The company, which sells pods with flavours such as mango, mint and creme,
also defended such products, which it said help adult customers trying to
quit traditional smoking.

 

The appeal of e-cigarettes to teens is widespread and has raised alarms in
other countries, including the UK.

 

However, there is little consensus about how to regulate the industry.

 

Last month, a parliamentary committee in the UK issued a report calling for
rules regarding e-cigarettes to be relaxed.

 

It cited estimates from Public Health England that e-cigarettes are 95% less
harmful than normal cigarettes.

 

Hard trade-offs

Dr Gottlieb acknowledged that the toughened approach would force "hard
trade-offs" when it comes to promoting e-cigarettes to adults.

 

However, he added: "The youth risk is paramount".

 

In the US, about 12% of high school students use e-cigarettes at least once
a month, the US Centers for Disease Control and Protection estimated in
2017.

 

It has warned that most such products contain nicotine, which is addictive
and can affect brain development.

 

Dr Gottlieb said the agency plans to launch a national campaign to raise
awareness of the risks to teens, as it sees signs that the number of users
is increasing.

 

It will also "re-visit" the policy it announced last year, which gave
e-cigarette companies more time to apply for regulatory approval.

 

"We must do more to stem what I see as an epidemic of use of e-cigs among
teens, and deeply disturbing trends that show no sign of abating," he
said.--BBC

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2018

 


Company

Event

Venue

Date & Time

 


Masimba Holdings

interims and analysts briefing

Boardroom, 44 Tilbury Road, Willowvale

12/09/2018 12PM

 


First Mutual Properties

interims and analysts briefing

Royal Harare Golf Club

12/09/2018 1400hrs

 


First Mutual Holdings

interims and analysts briefing

Royal Harare Golf Club

12/09/2018 1500hrs

 


Hippo

AGM

Meikles

26/09/2018 12PM

 


Bindura

AGM

Chapman Golf Club, Eastlea

27/09/2018 9AM

 


CBZH

interim dividend of 0.5c per share record date

 

28/09/2018

 


Hippo

final dividend of 2c per share record date

 

28/09/2018

 


Star Africa

AGM

45 Douglas Road, Workington

28/09/2018 11AM

 


 

 

 

 

 


 

 

 

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
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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
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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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