Major International Business Headlines Brief::: 21 September 2018

Fri Sep 21 09:41:43 CAT 2018

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Major International Business Headlines Brief::: 21 September 2018

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*  South African central bank holds repo rate in tight call

*  South African rand firms on rate hold, dollar weakness; stocks up

*  Kenya assembly backs halving of fuel tax amid anger at living costs

*  World Bank sees Zambia 2018 economic growth below 4 percent

*  South Africa's cabinet approves new mining charter

*  Major African central banks expected to hold rates steady

*  MTN shares rise after Nigeria says reviewing information to resolve $8.1 bln dispute

*  Ghana's Cocobod in talks with international lenders for $300 mln medium-term loan

*  Africa-focused buyout firm DPI buys irrigation company CMGP for $100 mln

*  Rocket Internet preparing IPO for African online platform Jumia -sources

*  Wells Fargo to reduce workforce by up to 10%

*  Sky bid tussle to be settled by auction

*  Canada cannabis stocks see mood swings

*  US imposes sanctions on China for buying Russian weapons

*  Italy opens probe into Ryanair hand luggage charges

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South African central bank holds repo rate in tight call

PRETORIA (Reuters) - South Africa’s central bank left its benchmark repo rate at 6.5 percent on Thursday, with the bank’s governor striking a more hawkish note than at the last rate meeting in July.

The rate decision by the South African Reserve Bank (SARB) was closely watched after its emerging-market peers Turkey and Russia raised their main lending rates.

Four members of the Monetary Policy Committee voted for no change in rates; three voted for a 25-basis-point increase.

The ruling African National Congress, which President Cyril Ramaphosa leads, criticised the decision to leave rates on hold, saying the Reserve Bank should “prioritise the plight of poor South Africans whose cost of living is skyrocketing”.

The SARB had to weigh data showing the economy went into recession in the second quarter against risks to its inflation forecasts from the rand, which has lost more than 6 percent since the bank’s last rate meeting in July.

The rand was little changed after Thursday’s decision, as all bar one of the 26 economists surveyed by Reuters had predicted that the SARB would leave the repo rate unchanged.

Governor Lesetja Kganyago said the outlook for inflation had deteriorated, mainly because of the weaker rand and higher global oil prices.

“Risks to the inflation outlook have continued to materialise,” Kganyago told a news conference in Pretoria.

A rate hike would have dealt a further blow to South Africa’s sputtering economy, which Ramaphosa is trying to revive after a decade of stagnation.

The SARB cut its growth forecast for this year to 0.7 percent from 1.2 percent in July, and Kganyago said there was little room for the bank’s monetary policy to boost that number in the short term.

“The committee continues to be of the view that current challenges facing the economy are primarily structural in nature and cannot be solved by monetary policy alone,” Kganyago said, adding there was no discussion about a rate cut.

The ANC reacted in a statement issued an hour after the rate decision by saying “the ANC believes that Monetary Policy is critical legislative instrument in driving growth, creation of jobs and reduction of the capital costs in the economy”.

However, the head of the ANC’s economic transformation committee criticised the statement, saying it was not authorised and should not have been issued.

“Appropriate action will be taken against the official,” Enoch Godongwana told Reuters. “The ANC respects the independence of the Reserve Bank.”

The central bank did not immediately respond to the comments from the ANC.

Kganyago said the SARB’s models showed the rand was undervalued at current levels around 14.45 to the dollar.

“Tighter global financial conditions and the change in investor sentiment towards emerging markets remain key external risks to the rand,” he said. “It is likely that the rand among with other emerging market currencies will remain volatile.”

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South African rand firms on rate hold, dollar weakness; stocks up

JOHANNESBURG (Reuters) - South Africa’s rand firmed to a three-week high against the dollar on Thursday after the central bank left its benchmark repo rate unchanged and the U.S. currency slipped to its lowest since July.

Equities rose for a third session in line with global markets that continued to shrug off lingering concerns over the U.S.-China trade war.

The rand was trading at 14.4275 per dollar at 1542 GMT, up 1.47 percent from Wednesday’s close and its strongest since Aug. 30.

South Africa’s central bank left its benchmark repo rate at 6.5 percent on Thursday, with the bank’s governor striking a more hawkish note than at the last rate meeting in July.

“We think that the pressure for a rate hike that has been welling up in recent months will soon ebb,” said Capital Economics’ senior emerging markets economist John Ashbourne.

“The big falls in the rand are now probably behind us. Indeed, the currency has rebounded since reaching a low point in early September.”

South African President Cyril Ramaphosa will on Friday detail a stimulus package meant to reignite growth, with the economy having shrunk 0.7 percent in the second quarter, unexpectedly tipping the country into its first recession since 2009.

The dollar slipped to its lowest levels since July 9 on concern over the impact of the trade row between China and the United States.

In fixed income, the yield on the benchmark government bond due in 2026 was flat at 9.09 percent.

On the stock exchange, the blue-chip Top-40 index was 0.25 percent firmer at 50,397 points while the all share index was up 0.18 percent at 56,547 points.

A bounce in global stocks on relief that fresh U.S. and Chinese tariffs on reciprocal imports were less harsh than feared continued on Thursday, though investors remained wary about the next steps in the trade war.

Aspen Pharmacare ended a five-day losing streak, rising 2.3 percent after shares slumped on investor concerns about the sale of its baby food unit to France’s Lactalis and concerns over its debt levels.

“Today’s (Aspen Pharmacare) rebound is the market saying that yesterday’s sell-off was probably overdone a bit,” said Michael Treherne, portfolio manager at Vestact.

“For the short term, I don’t see the share price recovering to where it was before last week. The market is a bit more cautious because of their debt levels.”

Telecoms giant MTN closed with a 6.5 percent gain after Nigeria’s central bank said on Wednesday that it was reviewing information provided by the company and four banks about a dispute on the repatriation of dividends.

Kenya assembly backs halving of fuel tax amid anger at living costs

NAIROBI (Reuters) - Kenya’s parliament on Thursday backed the halving of a new value added tax on oil products, bowing to complaints by Kenyans squeezed by high prices, but the move drew protests from some lawmakers who want the levy scrapped altogether.

The government has faced a fuel dealers’ strike, anger among commuters and a lawsuit after transport and fuel prices jumped when the 16 percent value-added tax on all petroleum products entered into force on Sept. 1.

Some lawmakers opposed to the tax on the grounds it would push up living costs reacted to the passage of the eight percent levy by chanting “zero, zero”. But speaker Justin Muturi refused their demand for a formal vote on the measure.

Earlier parliament’s finance committee had backed the plan by President Uhuru Kenyatta to halve the 16 percent tax.

“The clause (Kenyatta’s proposal) which was under consideration at that point was carried,” Muturi said amid heated protests by lawmakers demanding the removal of the tax.

Operators of public transport minibuses, locally known as matatus, said the new tax, even at eight percent, would hurt demand for their services, and called for its total removal.

“We can’t increase bus fare too much. No one will board the vehicle,” said Maxwell Njuguna, a driver who sat in his empty vehicle at a bus terminal in downtown Nairobi.

“The customers don’t understand and they quarrel with us. We are operating at a loss.”

The tax is part of a government bid to finance key priorities prudently while narrowing a fiscal deficit that the Treasury forecasts at 5.9 percent of economic output this year.

Like other frontier economies, Kenya has found it tough to secure external funding as emerging markets from Turkey to Argentina are buffeted by turbulence and tumbling currencies.

Kenya’s challenge was compounded by last week’s expiry of an International Monetary Fund stand-by loan arrangement for balance of payments support. [L5N1W01PS]

The fiscal deficit reduction targets were set by the IMF when it granted a precautionary credit deal two years ago that expired this month. Legislators must approve the VAT proposal before Kenyatta can sign this financial year’s budget into law.

INVESTOR CONFIDENCE

Foreign investors are watching the events keenly.

“Kenya should be a country of concern for investors at the moment,” Charles Robertson, chief economist at Renaissance Capital, told a conference in Nairobi on Wednesday.

He cited the challenging external financing environment for frontier African economies and the risk that the shilling currency could weaken steeply in the near term.

The finance committee said in its report on the president’s proposals that the VAT measure is consistent with the government’s aim to avoid a huge funding gap in the budget.

The finance ministry had budgeted for 35 billion shillings ($347.74 million), which it expected to collect through the tax in the financial year to the end of next June, the committee said, adding the halved rate will allow the Treasury to collect 17.5 billion shillings.

Kenyatta said last week that further delaying the tax, which was passed into law in 2013 but never implemented, would compromise the government’s ability to fund planned social welfare and development programmes.

The finance committee also supported Kenyatta’s proposal to increase taxes on some financial services.

($1 = 100.6500 Kenyan shillings)

World Bank sees Zambia 2018 economic growth below 4 percent

LUSAKA (Reuters) - The World Bank expects Zambia’s economy to grow less that 4 percent this year, lower than an April projection of 4.1 percent, it said on Thursday.

“Economic growth in 2018 is projected to be below 4 percent reflecting the poor agricultural harvest, lower copper prices and fiscal debt challenges that are crowding out private sector growth,” the World Bank said in a report.

The World Bank said in April that Zambia’s economy is forecast to grow 4.1 percent in 2018 and 4.5 percent next year, lower than previous projections by the lender, because of the expected impact of poor rains.

South Africa's cabinet approves new mining charter

CAPE TOWN (Reuters) - South Africa’s cabinet approved a long-delayed mining charter that sets out requirements for black ownership levels and backed the withdrawal of a mining bill after industry opposition, a minister said on Thursday.

The mining charter - which was introduced to redress the exclusion of black people in the mining sector under apartheid - could, however, still be the subject of legal challenges if mining companies are unhappy with its contents after it is published.

Communications Minister Nomvula Mokonyane said more details about the charter would be announced on Friday by President Cyril Ramaphosa when he unveils a new economic stimulus package, to kick-start economic growth.

Policy uncertainty has stifled investment in the mining industry of Africa’s most industrialised economy, which has also faced a wave of job cuts during a downturn in commodity markets, high wage costs and a volatile labour environment.

“The mining charter was deliberated upon and indeed cabinet has approved the mining charter,” Mokonyane told reporters in a briefing on Thursday, following a cabinet meeting on Wednesday.

Mokonyane also said the cabinet backed the withdrawal of the Mineral and Petroleum Resources Development Amendment (MPRDA) bill, which would have given the state a 20 percent minority stake in new gas and oil exploration and production ventures, which the industry had said would discourage investment.

Analysts say addressing policy certainty in the mining sector could lead to billions of dollars of new investment.

“On both scores it will be beneficial to the investment climate, because until now there has been hesitation to invest in the sector because of the regulatory uncertainty,” said Lloyd Christie, a mining lawyer at ENS Africa.

The Minerals Council, which represents South African mining companies, says policy and regulatory certainty could potentially add 122 billion rand ($8 billion) in capital expenditure to the struggling mining sector over the next four years.

“We will be able to comment when we see the final document,” a spokeswoman for the Minerals Council said.

Amendments to the MPRDA bill were passed by parliament four years ago but the draft law was sent back to lawmakers by former president Jacob Zuma in 2015 due to concerns over whether they were constitutional.

The bill would have allowed the mines minister to require that a portion of extracted resources be processed domestically and not be exported in raw form.

Sean Lunn, chairman of the Offshore Petroleum Association of SA (OPASA), told Reuters the group would support a separate Act governing the upstream petroleum industry “that will encourage and unlock investment.”

OPASA members include ExxonMobil Total, Shell Anadarko, ENI and Statoil.

($1 = 14.4826 rand)

Major African central banks expected to hold rates steady

JOHANNESBURG (Reuters) - Africa’s major central banks are likely to leave interest rates unchanged in the coming days, responding to challenges at home rather than coping with an emerging-market currency crisis, Reuters polls found.

An outright majority of economists and analysts polled for Ghana, Kenya, Nigeria and South Africa said their central banks would hold rates at 17 percent, 9 percent, 14 percent and 6.50 percent respectively at their September meetings.

South Africa will announce its decision at 1300 GMT on Thursday. Ghana and Kenya are due to make rate decisions on next Monday, followed by Nigeria on Tuesday.

Analysts expect African central banks to talk tough on “exogenous shocks” in monetary policy statements. Most of the continent’s markets are relatively insulated, but they are still exposed somewhat to wider emerging-market trouble.

Emerging markets have been roiled by economic crises in Turkey and Argentina, but a separate poll earlier this month predicted the rand will bounce back at least partly against the dollar in a year.

Ghana is in its final year of a $918 million credit deal with the International Monetary Fund in 2015 and must meet benchmarks, including trimming its public debt, to successfully exit in December.

Analysts say it would not be appropriate to raise what is one of the highest rates in the continent. The poll suggests rates will be cut 50 basis points to 16.50 percent in November and finish next year at 14.75 percent.

“The cedi depreciation is top-of-mind in Ghana right now, causing a rise in fuel prices and cost of living in general,” said Rafiq Raji, chief economist at Macroafricaintel in Lagos.

Meanwhile, Kenya secured a six-month extension in March to its nearly $1 billion IMF stand-by loan. The Fund set conditions for a further extension, including the repeal of a cap on commercial lending interest rates that was imposed in 2016.

Finance Minister Henry Rotich tried to repeal the cap in his June budget, but parliament voted to keep the upper limit while getting rid of a minimum deposit rate.

Rates in Kenya are expected to be on hold until late next year.

In Nigeria and South Africa, Africa’s biggest economies, inflation remains sticky. Both central banks would prefer to cut interest rates to boost lacklustre economic growth, but analysts say a hold is both accommodative and cautionary.

Bismarck Rewane, head of Lagos-based consultancy Financial Derivatives, said even though there is pressure to raise rates in Nigeria, with three monetary policy meetings before elections in February the Bank will opt to hold steady.

Nigeria is expected to cut rates by 25 basis points in May to 13.75 percent and finish 2019 at 13 percent.

STING OF EMERGING MARKETS

South Africa’s rand is not insulated to global shocks and is one of the most globally traded. Macroafricaintel’s Raji said he was a little surprised some analysts expected a rate increase in at September’s South African central bank meeting.

Only one of 26 economists in a Reuters poll published last week said the South Africa Reserve Bank would raise rates in September, but several more pencilled one in for November. The median forecast was for a rate increase of 25 basis points to 6.75 percent in either January or March.

Turkey’s central bank raised rates by 6.25 percentage points last week in an effort to tame double-digit inflation and put a floor under the lira.

Turkey also raised rates dramatically at the beginning of 2014, triggering a vicious cycle of selling in emerging markets and forcing other central banks to adjust.

A Reuters poll taken a few days before the Turkey move had suggested South Africa would hold interest rates, but as emerging market currencies went into a tailspin the central bank raised rates by 50 basis points, citing inflation fears.

“Point is, the Reserve Bank would be wasting ammunition if it chooses to hike rates just because of these events. It needs to wait a little bit more before doing something,” Raji said.

MTN shares rise after Nigeria says reviewing information to resolve $8.1 bln dispute

JOHANNESBURG (Reuters) - Shares in South Africa’s MTN rose 5 percent on Thursday, after Nigeria’s central bank said on Wednesday that it was reviewing information provided by the telecoms firm and four banks over a dispute on the repatriation of dividends.

“The statement suggests there are some talks going on and the market welcomed the less harsh tone by the Nigerian central bank,” said Ruhan Du Plessis, telecoms analyst at Avior Capital Markets.

“It is looking more likely that MTN will not have to pay back the for amount after all as the market feared. The market has welcomed the progress.”

The central bank on Aug. 29 said it had ordered MTN and the four banks to bring $8.1 billion back into Nigeria that it alleged the telecoms firm sent abroad in breach of foreign exchange regulations.

Ghana's Cocobod in talks with international lenders for $300 mln medium-term loan

ACCRA (Reuters) - Ghana’s industry regulator Cocobod is in talks with international lenders for a $300 million medium-term loan on top of a $1.3 billion syndicated facility signed on Thursday, Chief Executive Joseph Boahen Aidoo said.

Cumulative cocoa output of the world’s second largest producer has topped 900,000 tonnes compared with Cocobod’s pre-season forecast of 850,000 tonnes, Aidoo said.

For the first time, Ghana and Ivory Coast will simultaneously announce farmers’ producer prices on Oct. 1, as part of plans to harmonise their operations, he told reporters in Accra.

Africa-focused buyout firm DPI buys irrigation company CMGP for $100 mln

LONDON (Reuters) - Africa-focused private equity firm DPI has bought a majority stake in Moroccan irrigation company Compagnie Marocaine de Goutte à goutte et de Pompage (CMGP) for around $100 million, it said in a statement.

More than two-thirds of Morocco is agricultural land but irrigation is practiced on only 16 percent of the cultivated territory, according to the World Bank.

“There is considerable potential for expansion in irrigation across the African continent and we look forward to working with the company on a number of strategic initiatives to address this,” DPI Partner Sofiane Lahmar said.

The transaction is the biggest private equity deal in Morocco so far in 2018, according to data from the Emerging Markets Private Equity Association.

DPI bought the stake from the Moamah family, who established the company in 1995, and private equity firm Amethis.

DPI is a $1.1 billion Africa-focused private equity firm that invests in companies benefiting from the fast-growing emerging middle class in Africa. In Morocco, DPI is also invested in university UPM.

After years of preparation, Morocco is undergoing a gradual liberalisation to make the economy more resilient. The success of the reform is key to Morocco’s ambition of becoming a financial hub in Africa.

While the dirham has been stable, the economic outlook has been hit by rising oil prices and a consumer boycott campaign against three of the biggest brands in the country, among them French dairy maker Danone.

Naciri & Associés Allen & Overy and PwC advised DPI on the transaction.

Rocket Internet preparing IPO for African online platform Jumia -sources

FRANKFURT (Reuters) - German start-up investor Rocket Internet is preparing its African online shopping platform Jumia for a possible New York listing in the first quarter of 2019 which could value the firm at about $1 billion, three sources close to the matter told Reuters.

Citi, Morgan Stanley and Berenberg are coordinating the IPO, the sources said.

Shares worth up to $250 million may be sold, one of the sources said, adding that no final decision about the timing or metrics of the deal had yet been taken.

Wells Fargo to reduce workforce by up to 10%

The troubled US bank Wells Fargo is planning a steep reduction of staff that could affect more than 26,000 people.

The firm said it expects headcount to decline by 5% to 10% over the next three years, through a combination of cuts and regular attrition.

The move is part of an effort to make the bank more efficient, as the sector moves online, boss Tim Sloan said.

The firm is also trying to recover from a series of damaging scandals.

The California-based bank attracted public outrage in 2016 after it emerged that sales associates had opened millions of accounts without customer permission.

Wells Fargo hit by record $1bn penalty

Wells Fargo reveals more fake accounts

This spring, US regulators fined the company $1bn to settle claims of misconduct related to mortgage and auto loans.

And in February, the US Federal Reserve, citing "widespread consumer abuses and other compliance breakdowns", issued an unprecedented order that restricted the firm's growth pending governance improvements.

None of this has helped the firm's financial position.

The bank, which has seen a 10% year-on-year decline in profit in the first six months of the year, has said it plans to cut overall expenses by $3bn by 2020.

And in August, it announced layoffs of hundreds of workers in its home loan unit.

Mr Sloan said: "We are addressing past issues, enhancing our focus on customers, strengthening risk management and controls, simplifying our organisation, and improving the team member experience."

He said the firm would provide affected employees with support, and noted that the bank will remain one of the largest employers in the US even after the reduction.

Wells Fargo, which once enjoyed a sterling reputation and ranked as the third largest bank in the US as of March, had about 264,500 employees at the end of June.--BBC

Sky bid tussle to be settled by auction

The takeover of broadcaster Sky will be settled by an auction, the UK's Takeover Panel has announced.

The broadcaster has been subject to rival bids from Rupert Murdoch's Fox and US conglomerate Comcast.

The Takeover Panel said that the auction would start at 17:00 London time on Friday and end on Saturday evening.

It said all parties had agreed to the process, which will have a maximum of three rounds.

Fox had looked set to take over the 61% of Sky it does not already own until Comcast topped Fox's bid.

Fox raised its offer to £24.5bn, but this was soon trumped by a £26bn bid from Comcast.

The process has also been beset by regulatory issues amid concerns over media plurality and the degree of Mr Murdoch's influence over the UK media landscape.

Ian Whittaker, head of European media research at Liberum Capital, said it was rare for takeovers to go to an auction in this way, but it would ensure that the long-running battle for Sky came to a conclusion.

He said: "To give credit to the Takeover Panel, what they have done is to act decisively to stop this thing dragging on.

"It's a very unusual course of action, but it's the best course of action."

The battle for Sky: Why it matters

Sky is "a jewel in a crown", says media analyst Alice Enders.

The broadcaster has nearly 23 million pay-TV subscribers in Europe, with more scope for expansion there than in the US, and it has a broadband business.

In February, Sky Sports won the rights to UK Premier League TV packages, and Sky also licenses shows including Game of Thrones, as well as producing its own original content.

No matter who wins the bidding war, Sky subscribers are likely to face higher prices, Ms Enders says.

The bidding war has pushed Sky's price up to more than £24bn, and that is likely to be recouped from customers, she says.

Growing business

Also at issue is the fate of 24-hour news channel Sky News, which could end up being sold separately or ring-fenced in order to preserve its editorial integrity.

Sky has nearly 23 million pay-TV subscribers in the UK and Ireland, Italy, Austria and Germany.

It reported pre-tax profits up 7.5% over the 12 months to the end of June and added more than 500,000 customers across Europe.

The future of Sky has been hanging in the balance for more than eight years - and the nature of the game has changed in the meantime.

The process began when Mr Murdoch's original News Corp put forward a bid for full control of what was then BSkyB.

That bid was scuppered by the phone-hacking scandal that engulfed Mr Murdoch's UK tabloid newspapers and tarnished the firm's reputation.

The bid was revived in December 2016, by which time News Corp had been broken up, leaving 21st Century Fox as one of its successors.

The process has been complicated by Disney's deal to buy most of Fox's assets, which is due to be completed next year if approved by international regulators.--BBC

Canada cannabis stocks see mood swings

Canadian cannabis companies have seen turbulent trading on Wall Street as US investors seek to catch the buzz from their northern neighbours.

With recreational marijuana use due to be legalised in Canada on 17 October, producers Tilray and Canopy saw their US-listed stocks surge then sag.

Another firm, Aurora Cannabis, has said it will seek a US listing next month.

Analysts have cautioned the stocks are overvalued and gains could vanish in a puff of smoke.

In the opening minutes of Thursday trading, Nasdaq-listed medical marijuana firm Tilray, which went public in July, rose nearly 12% to $239.63.

But by lunchtime, it was down nearly 20% on the day at $172.44.

On Wednesday, it was one of the best-performing US stocks, rising 38%.

However, trading in its shares was so volatile that it had to be halted five times during Wednesday's session.

Canopy Growth also rose and fell in Thursday morning trading, but was 1.8% up by lunchtime. Its share price is still twice what it was six months ago, at around the $50 mark.

In the wake of their success, Alberta-based Aurora, whose shares were up 4% on the Toronto stock exchange on Thursday, is keen to have a presence on a major US exchange.

Cam Battley, Aurora's chief corporate officer, told Canada's Financial Post newspaper: "We're targeting the month of October to establish a US listing."

Aurora hit the headlines earlier this week when reports surfaced that it was in talks with Coca-Cola about developing marijuana-infused beverages.

Financial analysts warned, however, that the shares were essentially commodity stocks and that the gains might prove short-lived.

In the case of Tilray, its share price "is now up over 1,100% in two months since the IPO", said Briefing.com in a note to investors.

"The surge seems rather unsustainable, as momentum can reverse itself on short notice."--BBC

US imposes sanctions on China for buying Russian weapons

The US has imposed sanctions on the Chinese military over its purchasing of Russian military jets and surface-to-air missiles.

It says such purchases contravene US sanctions on Moscow introduced over Russian actions in Ukraine and alleged interference in US politics.

China recently bought 10 Russian Sukhoi Su-35 fighter jets and S-400 missiles.

Beijing has not joined in the sanctions imposed on Moscow by the US and its Western allies since 2014.

Its forces took part in giant Russian war games held earlier this month.

Sanctions: What are they and why do countries use them?

Relations between the US and Russia deteriorated rapidly after Moscow annexed Crimea from Ukraine in 2014.

Russia's alleged meddling in the 2016 American presidential election and military involvement in Syria's ongoing civil war increased tensions.

Who is affected by the sanctions?

China's Equipment Development Department (EDD) and its head, Li Shangfu, are sanctioned for completing "significant transactions" with Russia's state arms exporter, Rosoboronexport.

The EDD and Mr Li have been added to a Blocked Persons List, meaning any assets they hold in the US are frozen and Americans are "generally prohibited" from doing business with them.

Furthermore, the EDD is denied export licences and excluded from the American financial system.

Washington also blacklisted an additional 33 people and entities associated with Russian military and intelligence.

What US law governs the sanctions on China?

The Countering America's Adversaries Through Sanctions Act (Caatsa) was passed in 2017 to provide the Trump administration with the necessary means to target Russia, Iran and North Korea with economic and political sanctions.

US President Donald Trump issued an executive order on Thursday intended to allow the sanctions to be implemented.

The Trump-Russia saga in 200 words

US punishes Russians over vote meddling

"The ultimate target of these sanctions is Russia," a senior administration official told journalists.

"Caatsa sanctions in this context are not intended to undermine the defence capabilities of any particular country" but are "aimed at imposing costs on Russia in response to its malign activities".

Similar action against other countries would be considered, Washington added.

How has Russia reacted?

A politician in Moscow said the US sanctions would have no impact on the sales of its fighter jets and missiles.

"I am sure that these contracts will be executed in line with the schedule," Franz Klintsevich, a Russian member of parliament, was quoted as saying by Russia's Interfax news agency.

Russia's new military - should Nato worry?

"The possession of this of this military equipment is very important for China," he added.

Asia is the most important foreign market for Russian arms producers, reportedly accounting for 70% of their exports since 2000.

India, China and Vietnam are the principal sources of demand for Russian weapons in the region, according to a recent Chatham House report.--BBC

Italy opens probe into Ryanair hand luggage charges

Italy's competition watchdog has opened a inquiry into Ryanair's decision to charge people to take hand luggage on to the plane.

Antitrust said hand luggage was "an essential element of transport" and should be included in the ticket price.

>From November, passengers will still be able to take a small personal bag into the cabin, as long as it fits under the seat in front.

But they will have to pay €9 (£8) to take on a 10kg (22lb) bag.

Antitrust said Ryanair's new policy could amount to unfair commercial practice in that it distorts the final price of the ticket and does not allow a true comparison with other airlines' prices.

Ryanair brings in new rules on cabin bags

Ryanair boss may leave within five years

Italian consumer associations had complained to Antitrust about the Ryanair decision.

"If its unfair commercial practice on hand luggage is confirmed, Ryanair... should reimburse all its customers who suffer unfair additional costs," the association Codacons said, promising to take the matter to court if necessary.

In August, Ryanair said the policy was not aimed at making money but intended to "improve punctuality and reduce boarding gate delays".

However, research by US travel consultancy IdeaWorks suggests the airline made £1.7bn from charges for add-ons such as checked baggage and selected seats in the last 12 months.

That meant almost a third of the company's profits came from so-called "ancillary revenue".

Shareholder discontent

The Italian inquiry creates more bad publicity for the airline as it faces widespread strikes by staff across Europe.

Shareholders also delivered a blow to the airline on Thursday after many declined to vote for the re-election of the company's chairman at its general meeting.

David Bonderman was re-elected but only with 70.5% of shareholder's support - a drop from last year's meeting where he gained 89.1%.

Aberdeen Standard Investments, which owns a 0.9% stake in the airline, said it wanted to see "clear progress" on the succession of Mr Bonderman and senior independent director Kyran Mclaughlin by this time next year.

"The length of time both have been on the board suggests a lack of focus on board succession planning," ASI said.

"Excessive tenure also calls into question an individual's independence and objectivity and our engagement on governance matters suggests that the board is not listening carefully enough to shareholders' views."--BBC

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

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 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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