Major International Business Headlines Brief::: 09 April 2019

Tue Apr 9 07:40:46 CAT 2019

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Major International Business Headlines Brief::: 09 April 2019

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*  Sub-Saharan economic growth recovery to take longer - World Bank

*  World Bank cuts Zambia’s 2019 GDP growth forecast

*  Nigerian stocks near two-year low on weak sentiment

*  South African rand retreats from 5-week high

*  Ethiopia inflation up to 11.2 pct in year to March - stats bureau

*  Eni audits in slander case could prompt management changes - source

*  Steinhoff accounts postponed again, hitting shares

*  Woolworths partners Beyonce's makeup artist in limited edition line

*  South Africa's net foreign reserves fall to $43.3 bln in March

*  Kenyan shilling holds steady against the dollar

*  US proposes tariffs on $11bn of EU products

*  France plans tax cuts to quell yellow vest anger

*  Huawei wi-fi modules were pulled from Pakistan CCTV system

*  Debenhams rejects Mike Ashley's last ditch rescue plan

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Sub-Saharan economic growth recovery to take longer - World Bank

NAIROBI (Reuters) - The World Bank has cut its growth forecast for Sub-Saharan Africa this year to 2.8 percent from an initial 3.3 percent, it said on Monday.

The commodity price slump of 2015 cut short a decade of rapid growth for the region, and the bank said growth would take longer to recover as a decline in industrial production and a trade dispute between China and the United States take their toll.

The bank’s 2019 forecast means economic growth will lag population growth for the fourth year in a row and it will remain stuck below 3 percent, which it slipped to in 2015.

In its latest report on the regional economy, the bank also cut its 2018 growth estimate to 2.3 percent from last October’s prediction of 2.7 percent growth for last year.

“The slower-than-expected overall growth reflects ongoing global uncertainty, but increasingly comes from domestic macroeconomic instability including poorly managed debt, inflation and deficits,” the bank said.

Nigeria, South Africa and Angola, which make up about 60 percent of sub-Saharan Africa’s annual economic output, were all facing various challenges, curbing their contribution to the growth momentum, the bank said.

“This downward revision reflects slower growth in Nigeria and Angola, due to challenges in the oil sector, and subdued investment growth in South Africa, due to low business confidence,” it said.

Nigeria’s economy grew by an estimated 1.9 percent last year, up from 0.8 percent the previous year, the World Bank said, reflecting a modest pick-up in the non-oil sector.

South Africa came out of recession in the third quarter of last year but investors were still cautious due to policy uncertainty, the bank said.

In the meantime Angola, the region’s third-biggest economy, remained stuck in recession, as oil production remained weak.

High inflation and heavy debt loads discouraged investors in economies such as Zambia and Liberia, hitting their growth prospects, the World Bank said.

Rates of debt in the region are growing and the type of borrowing that countries are undertaking is exposing them to vulnerabilities, it said.

“External debt is shifting from traditional, concessional, publicly guaranteed sources to more private, market-based, and expensive sources of finance, putting countries at risk,” the bank said.

“By the end of 2018, nearly half of the countries in sub-Saharan Africa covered under the Low-Income Country Debt Sustainability Framework were at high risk of debt distress or in debt distress, more than double the number in 2013.”

Economies that do not depend on commodities such as Rwanda, Uganda, Kenya, Benin and Ivory Coast, continued to grow strongly, the bank said in the report.

Albert Zeufack, the chief economist for Africa at the bank, said the region could boost annual growth by about nearly two percentage points if it harnesses information technology more effectively.

“This is a game-changer for Africa,” he said.

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World Bank cuts Zambia’s 2019 GDP growth forecast

LUSAKA (Reuters) - The World Bank sees Zambia’s economic growth slowing in 2019, to 3.3 percent from 3.5 percent seen last year, as the southern African nation’s growing debt pile and weakening currency put pressure on government revenue, the lender said on Monday.

“Spending remains quite elevated and there is a struggle to raise revenue in order in order to be able to finance expenditure,” World Bank Senior Economist Gerard Kambou said during a video conference with journalists.

Nigerian stocks near two-year low on weak sentiment

LAGOS (Reuters) - Nigerian stocks fell to a near-two-year low on Monday as low economic growth weighed on sentiment, analysts said.

The all-share index was down 1.43 percent in late trading, having recovered slightly after dipping to its biggest intra-day decline in seven months.

Investors have been waiting for policy signals that could lift growth in the economy, seven weeks after President Muhammadu Buhari won re-election.

“The general market sentiment around equities is weak and not encouraging,” said Tajudeen Ibrahim, head of research at investment firm Chapel Hill Denham.

“Investors are looking beyond corporate actions that have been announced so far. They are looking for a broader catalyst like government policy or macro announcement that suggest growth for the economy is becoming better.”

Vahaj Ahmed, head of industrials equity research at Exotix Capital said: “There’s no catalyst for the Nigerian stock market weakness. The day started with sell orders in Zenith Bank from the local retail investors, followed by profit taking in other banks and liquid names.”

The World Bank on Monday cut its growth forecast for sub-Saharan Africa this year, adding that Nigeria, South Africa and Angola, which make up about 60 percent of region’s annual economic output, were all facing challenges. [nL8N21Q24C]

Buhari, who starts a new term in May, has pledged to revive the economy, which has been stuck in low gear since emerging from recession in 2017.

Analysts have pointed to negative credit growth as one of the constraints on the economy as policy makers squeeze liquidity to prop up the currency and curb inflation.

Heavyweight Dangote Cement , which reported strong earnings and accounts for around a third of stock market capitalisation, shed 7.41 percent on Monday. The most liquid banking sector stocks dropped 2.11 percent.

South African rand retreats from 5-week high

JOHANNESBURG (Reuters) - South Africa’s rand weakened in early trade on Monday, retreating from a five-week best hit in the previous session, as currency traders looked for direction from U.S.-China trade talks and updates on Brexit.

At 0640 GMT, the rand traded at 14.1300 per dollar, 0.28 percent weaker than its New York close on Friday.

The currency rallied as far as 14.0200 on Friday, its highest since Feb. 28, as slow wage growth in the United States helped maintain demand for emerging currencies.

“Rand marks time while waiting for direction,” Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, said in a morning note. “Currency markets continue to focus on the China-US trade talks and Brexit developments.”

On the domestic front, local focus this week is on February mining and manufacturing output data due out on Thursday.

Ethiopia inflation up to 11.2 pct in year to March - stats bureau

ADDIS ABABA (Reuters) - Ethiopian inflation rose to 11.2 percent in the year to March, the statistics bureau said on Saturday.

Year-on-year inflation was 10.9 percent in February.

The rise was mainly due to an increase in the price of cereals in the food basket, and non-food items such as house rent, fuel such as charcoal and wood, and transport, the bureau said.

Eni audits in slander case could prompt management changes - source

MILAN (Reuters) - Italy’s Eni has carried out internal audits in a slander case relating in part to a Nigeria corruption scandal, and a source with knowledge of the matter said the review could prompt some management changes at the oil major.

Eni and its Anglo-Dutch peer Royal Dutch Shell are on trial for allegedly paying $1.1 billion in bribes to buy Nigeria’s OPL 245 offshore oilfield in 2011, one of the oil industry’s biggest graft cases.

Both companies deny any wrongdoing.

Milan prosecutors opened in 2018 a separate case involving allegations that certain Eni managers had a role in exploiting false statements to discredit and slander witnesses involved in the main case.

The source said Eni had conducted at least two audits on the case concerning alleged false statements and sought legal opinions from outside lawyers.

“The audits could lead to a reshuffle of management at the group,” the source said.

In comments sent to Reuters, Eni confirmed it had launched audits on internal company processes linked to the matter, adding they had been wrapped up and steps for improvement identified.

Eni also denies any wrongdoing in the case opened by Milan prosecutors on the alleged making of false statements.

“If there should be changes to the (management) structure these will be announced, as always, in the correct way,” it said.

The company said it was awaiting the outcome of judicial investigations before deciding whether to take further steps.

Steinhoff accounts postponed again, hitting shares

JOHANNESBURG (Reuters) - South African retailer Steinhoff has again delayed release of its 2017 and 2018 financial statements, saying that complexities in the process were slowing the work of external auditor Deloitte, sending its shares down more than 4 percent.

The retailer said it had made “significant efforts” but its 2017 group financial statements would not be released until May 7 and its 2018 statements would be delayed until June 18. Both had been expected in mid-April.

“We sincerely regret this further delay,” Chief Financial Officer Philip Dieperink said in a statement to the stock exchange, adding that the company and Deloitte believe that the new timeline is achievable.

Steinhoff has repeatedly delayed publication of its accounts after a $7.4 billion accounting fraud that stunned investors in the multinational retailer that had been at the vanguard of the European discount furniture retail industry.

While a summary of an investigation by auditor PwC released last month has shed some light on what happened, shareholders are still hungry for more information on the scandal and an indication of how much Steinhoff’s remaining assets are worth.

Steinhoff added that said the revised timetable would be likely to affect the timing of its 2019 interim results, currently scheduled for late June, and that a new date would be given in due course.

The 2017 and 2018 results for its wholly owned subsidiary, Steinhoff Investment Holdings, will be released on June 28, the company said.

Woolworths partners Beyonce's makeup artist in limited edition line

JOHANNESBURG (Reuters) - Woolworths Holdings has launched a limited edition makeup line in collaboration with Beyonce’s makeup artist Sir John on Thursday, seeking to strengthen its private label brand in its first international collaboration.

The South African department chain has invested heavily, like its peers, in its beauty business by partnering luxury international brands such as House of Chanel, Estée Lauder and Jo Malone, while strengthening its private label business.

Titled Volume 1, the makeup line is branded as cruelty-free and vegan friendly, a way to tap into the growing demand for more naturally-sourced products that is upending industries.

Head of Beauty at Woolworths, Vivienne Joseph said the partnership with Sir John advances the group’s vision of bringing its customers locally produced products that can live alongside the Chanels of the beauty industry.

“We were very clear that this little piece of red carpet global luxury can show that we can live alongside Chanel, alongside Tom Ford, alongside Jo Malone and still have exactly the same quality of innovation,” Joseph told Reuters.

The partnership with Sir John, known for beautifying the faces of Beyonce, Priyanka Chopra and Kim Kardashian-West, started in 2017, when together they delivered a series of makeup masterclasses across the country.

The makeup range, which includes an eye-shadow palette, highlighter and lipstick, will hit the shelves on Saturday.

South Africa's net foreign reserves fall to $43.3 bln in March

JOHANNESBURG (Reuters) - South Africa’s net foreign reserves fell to $43.266 billion in March from $43.659 billion in February, the Reserve Bank said on Friday.

Gross reserves also dropped, to $49.679 billion at the end of March from $50.836 billion previously, central bank data showed.

The forward position, which represents the central bank’s unsettled or swap transactions, was at $2.047 billion in March from $1.369 billion in the previous month.

Kenyan shilling holds steady against the dollar

NAIROBI (Reuters) - The Kenyan shilling held steady against the dollar on Friday propped up by diaspora remittances and reduced dollar demand from oil and merchandise importers, traders said.

At 0800 GMT, commercial banks quoted the shilling at 100.60/80 per dollar, compared with 100.65/85 at Thursday’s close.

US proposes tariffs on $11bn of EU products

The US is considering imposing tariffs on about $11bn (£8.4bn) worth of goods from the European Union in response to subsidies that support Airbus.

The World Trade Organisation (WTO) has found that the subsidies have an adverse impact on the US.

Aircraft and cheese are among the products that could be hit by tariffs, the US Trade Representative (USTR) said.

The Trump administration has been fighting trade battles on many fronts.

The move would mark an escalation in trade tensions between the US and the EU.

The USTR said the value of goods that will be targeted with tariffs is subject to an arbitration at the WTO, the result of which is expected in a few months.

A preliminary list of goods has been issued for public consultation. It covers a wide range of items, from helicopters to wine.

"This case has been in litigation for 14 years, and the time has come for action. The Administration is preparing to respond immediately when the WTO issues its finding on the value of US countermeasures," said US Trade Representative Robert Lighthizer.

"Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted."

The proposed US tariffs would be imposed in addition to existing levies on European products.

Last year, the US started charging levies on the imports of steel and aluminium from key allies including the EU.

The EU imposed retaliatory tariffs on €2.8bn worth of US goods in June on products such as bourbon whiskey, motorcycles and orange juice.

US President Donald Trump meanwhile threatened last month to impose tariffs on automobiles imported from the EU, if both sides cannot reach a trade deal.

The US is currently negotiating a trade deal with China, but tit-for-tat tariffs imposed by the two countries have already weighed on the global economy this year.--BBC

France plans tax cuts to quell yellow vest anger

The French prime minister says cutting taxes must be a priority, in response to a national debate that focused on the yellow vest protesters' grievances.

Edouard Philippe said "the debate clearly shows us in which direction we need to go: we need to lower taxes and lower them faster".

The "great debate" involved 10,000 meetings in French community halls and about two million online contributions.

France has the highest taxation rate among developed countries.

Data from the OECD economic think-tank for 2017 shows France top, with taxes equivalent to 46.2% of national output (GDP), with Denmark second (46%) and Sweden third (44%).

But France also has the highest level of social spending, according to the Organisation for Economic Co-operation and Development.

That spending was 31.2% of GDP in France in 2018; in second place was Belgium (28.9%) and third was Finland (28.7%). The UK figure was 20.6%.

Town-country divide

Tax cuts have been a key demand of the yellow vest ("gilets jaunes") movement that has taken to the streets in France every weekend since mid-November.

Initially the protesters demanded lower fuel taxes, but the movement quickly morphed into a general rejection of President Emmanuel Macron's economic policies.

Mr Philippe said the three-month national debate had highlighted "immense frustration over taxes".

One of Mr Macron's least popular measures, early in his presidency, was to scrap a special tax for the wealthy.

Yellow vest protesters accuse Mr Macron of protecting the Parisian elite, especially the wealthy, while neglecting the hardship of citizens in the provinces.

Mr Philippe said another lesson from the debate was that "the balance must be restored between the cities and the regions". That would include improving transport links between urban and rural areas.

There was also public demand for more participatory democracy and more action to tackle climate change, he said.--BBC

Huawei wi-fi modules were pulled from Pakistan CCTV system

Huawei removed wi-fi transmitting cards from a Pakistan-based surveillance system's CCTV cabinets after they were discovered by the project's staff.

Punjab Safe City Authority (PSCA) told BBC Panorama it had told the firm to remove the modules in 2017 "due to [a] potential of misuse".

The authority said that the Chinese firm had previously made mention of the cards in its bidding documents.

But a source involved in the project suggested the reference was obscure.

A spokesman for Huawei said there had been a "misunderstanding". He added that the cards had been installed to provide diagnostic information, but said he was unable to discuss the matter further.

The PSCA confirmed that the explanation it had been given was that wi-fi connectivity could have made it easier for engineers to troubleshoot problems when they stood close to the cabinets, without having to open them up.

Two people involved in Lahore's project helped bring the matter to the BBC's attention and have asked to remain anonymous. One said that Huawei had never provided an app to make use of the wi-fi link, and added that the cabinets could already be managed remotely via the surveillance system's main network.

A UK-based cyber-security expert said that it was not uncommon for equipment sellers to install extra gear to let them offer additional services at a later date.

But he added that the affair highlighted the benefit of oversight because if the authority had remained unaware of the cards' existence, it could not have taken steps to manage any potential risk they posed.

"As soon as you give someone another method of remote connectivity you give them a method to attack it," commented Alan Woodward.

"If you put a wi-fi card in then you're potentially giving someone some other form of remote access to it. You might say it's done for one purpose, but as soon as you do that it's got the potential to be misused."

There is no evidence that the cards created a vulnerability, and one of the sources involved confirmed that there had not been an opportunity to test if they could be exploited before the kit was removed.

'Prompt response'

Lahore's Safe City scheme was first announced in 2016 following a series of terrorist bombings.

It provides a vast surveillance network of cameras and other sensors, and a brand new communications system for the city's emergency services

As part of the system, Huawei installed 1,800 CCTV cabinets, within which it placed the wi-fi modules behind other equipment.

The PSCA's chief operating officer told the BBC that Huawei had been "prompt" in its response to a request to remove them and had fully "complied with our directions".

"It is always [the] choice of the parties in a contract to finalise the technical details and modules as per their requirements and local conditions," added Akbar Nasir Khan.

"PSCA denies that there are any threats to the security of the project [and the] system was continuously checked by our consultants, including reputed firms from [the] UK."

Local concerns have been raised over the Safe City scheme after reports that images had been leaked and circulated via social media earlier this year showing couples travelling together in vehicles.

But there is no suggestion that this was related to Huawei's involvement, and in any case the wi-fi modules would have been removed by this point. The PSCA has also denied anyone from its office had been involved.

Panorama: Can We Trust Huawei? is available in the UK on iPlayer.--BBC

Debenhams rejects Mike Ashley's last ditch rescue plan

Sports Direct says Debenhams has rejected its offer to inject £150m into the troubled department store chain.

Retail tycoon Mike Ashley tabled the rescue bid on the condition that he be made chief executive of Debenhams.

He has been locked in an acrimonious battle with Debenhams' board for control of the business and has accused its executives of "a sustained programme of falsehoods and denials".

Debenhams' rejection means it is likely to go into administration this week.

The firm is set to go through a pre-pack administration, which would mean current shareholders - including Mr Ashley who owns nearly 30% of the chain - would be wiped out.

While the shops would continue trading for now, Debenhams has proposed closing around 50 branches from next year and renegotiating rents with landlords to tackle the its funding problems.

Takeover offer

In a statement, Sports Direct said it was "disappointed" with the response to its proposal to raise £150m by issuing new shares, which would also have seen lenders write off £148m of the chain's debt.

But the retailer said it was still giving "active consideration" to a separate offer, first proposed in March, to take over Debenhams by purchasing existing shares.

It's been an extraordinary tussle for control of Debenhams.

Barring a last minute twist, Mike Ashley has found himself on the losing side. His latest 11th hour proposal has been rejected by lenders.

The retailer doesn't have much choice.

It has £560m of debt and its creditors are now effectively calling the shots. Despite nearly three billion pounds of sales last year, the business is now worth less than £30m as its share price has crashed to less than 2p.

The board believes the best option is to be rescued by its lenders. This is set to take the form of a pre-pack administration. An announcement could come as early as Tuesday.

It will be business as usual for its shops and staff. But store closures down the line are inevitable. Debenhams has already said it needed to shut 50 stores in the coming years. That plan will now be accelerated, with up to 20 expected to go in early 2020 through a restructuring process with landlords.

Lie detector

On Sunday, in its latest swipe at Debenhams management, Sports Direct called for an investigation and for the firm's shares to be suspended.

A strongly-worded statement accused Debenhams' board members of misrepresenting what had happened in a meeting between the two firms and urged them to undergo lie detector tests.

The struggling department store, which has 165 stores and employs about 25,000 people, reported a record pre-tax loss of £491.5m last year.

If Mr Ashley does gain control of Debenhams, he would control yet another High Street name.

As well as Sports Direct, Mr Ashley runs House of Fraser, Evans Cycles and Flannels.

In January, Mr Ashley joined investor Landmark Group to vote the retailer's chairman and chief executive off the board.

High Street retailers have been under increasing pressure as more people choose to shop online and visit stores less.--BBC

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

Zimbabwe 

Independence Day

Zimbabwe

18 Apr 2019 

Good Friday

19 Apr 2019

Easter Saturday

20 Apr 2019

Easter Sunday

21 Apr 2019

Easter Monday

22 Apr 2019

Workers Day

01 May  2019

Africa Day

25 May 2019

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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