Major International Business Headlines Brief::: 02 August 2019

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Major International Business Headlines Brief::: 02 August 2019

 


 

 


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*  South Africa's treasury increases weekly bond issuance

*  Renationalisation unlikely to fly Kenya Airways back to profit

*  Nigerian stocks drop to lowest in more than two years

*  Woolworths sees annual profit hit, writes down Australian business

*  Nigeria oil union threatens industrial action in Chevron dispute

*  Nigeria central bank intervening to prop up naira, trader says

*  Kenyan lender Equity Group's H1 pretax profit jumps 10%

*  Trump to impose more tariffs on Chinese goods

*  US Congress reaches deal to avert budget showdown

*  Bank of England cuts UK growth forecast

*  BMW boss says PM should rule out no-deal Brexit

*  Post-Brexit plans unveiled for 10 free ports

*  Shell profits plunge on lower oil prices

 

 

 

 


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South Africa's treasury increases weekly bond issuance

JOHANNESBURG (Reuters) - South Africa’s treasury said on Thursday it would
increase the amount it raises through weekly fixed-rate and inflation-linked
bond auctions to compensate for lower tax revenues and the cost of support
for troubled state power utility Eskom.

 

The National Treasury said that the fixed-rate bond auction amount would
increase by 1.2 billion rand ($82.6 million) to 4.5 billion rand, effective
Aug. 6. The inflation-linked bond auction amount would increase by 280
million rand to 1.04 billion rand as of Aug. 16.

 

Last month Finance Minister Tito Mboweni said that South Africa would have
to increase weekly bond issuance to “levels beyond what we had planned” as
part of an increase in borrowing to make up for the lower tax revenues and
higher Eskom costs.

 

($1 = 14.5256 rand)

 

 

 

 

 

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

Renationalisation unlikely to fly Kenya Airways back to profit

NAIROBI (Reuters) - By taking back full control of Kenya Airways, lawmakers
are banking on Kenya’s ability to replicate the profitable example of
Ethiopia’s state-owned flag carrier Ethiopian Airlines.

 

The global precedents are not reassuring.

 

Government takeovers rarely transform loss-making airlines, analysts say.
And Kenya Airways faces two major hurdles: competition from regional rivals
and potential government interference.

 

Parliament voted last week to renationalise the loss-making airline, which
is labouring under a mountain of debt and has had three changes of chief
executive in the past five years as it struggles to compete with regional
rivals.

 

Kenya plans to form an aviation holding company with a healthier balance
sheet by combining the airline with a planned national aviation college and
profit-making assets such as the main international airport and airports
authority.

 

But some experts believe such a move may only compound the airline’s
problems, opening it up to political interference without a clear strategic
direction - although the government says it will allow the airline to be run
like a private company.

 

“The future risk is government micro-management of the airline, which never
works,” said airline consultant Nick Fadugba, chief executive of African
Aviation Services, an organisation that promotes development of the sector
in Africa.

 

The Kenyan carrier, which is 48.9% government-owned and 7.8% held by Air
France-KLM, was once held up as a model of successful privatisation.

 

It sank into losses in 2014 after making costly aircraft purchases, which
coincided with a slump in tourist and business travel to Kenya blamed on a
spate of attacks by Somalia-based Islamist militants.

 

“They didn’t really expand with sufficient capital; that really put them
into a bit of trouble,” said Eric Musau, head of research at Standard
Investment Bank in Nairobi.

 

LONG-TERM STRATEGY

 

Debt restructuring narrowed its pretax losses for last year to 7.59 billion
shillings from 9.44 billion, but did not pull the company back into the
black.

 

The airline’s frequent change of CEO has hobbled its ability to form a
long-term strategy. In May, current boss Sebastian Mikosz said he would
leave at the end of the year, citing personal reasons.

 

Kenyan Airways is operating in a tough market. The International Air
Transport Association projects African airlines will post a combined $100
million loss in 2019, even as the global industry generates a profit of $28
billion.

 

“The Kenyan government has sort of run out of options,” said Phil Seymour,
chief executive of IBA Group, a Surrey-based aviation consultancy. “Kenya
Airways’ fortunes have declined both on business traffic and tourists.”

 

Renationalisation, Seymour said, is a “last resort type of move”.

 

The airline faces stiff competition, not just from major players like
Emirates and Turkish Airlines. Both Uganda and Tanzania have poured cash
into their flag carriers in the past three years, joining countries such as
Rwanda and Togo which have also ramped up investment.

 

Ethiopian Airlines is the biggest regional threat. Sub-Saharan Africa’s only
major profitable state-owned airline has been snapping up stakes in smaller
carriers around the continent in a bid to become the dominant pan-African
airline.

 

It now flies to more than 120 destinations, compared with Kenya Airways’ 56.
It has grown about 25% a year since 2010 and made a net $233 million in the
2017-18 fiscal year.

 

“It’s not who owns the airline that determines the success or failure of an
African airline. It’s how they are run,” said Zemedeneh Negatu, chairman of
the U.S.-based investment firm Fairfax, which focuses on Africa.

 

The Kenyan carrier will need to decide whether to focus its strategy on
growth within Africa or on long-haul routes, analysts said.

 

Zemedeneh, whose firm has advised Uganda and Rwanda on their national
carriers, said Kenya Airways should partner with its Ethiopian rival to take
on big international carriers that control at least 80% of traffic in and
out of the continent.

 

One of Kenya’s main competitors on these routes is Dutch carrier KLM, which
is also an equity partner, Fadugba said. What that relationship will look
like in future remains to be seen.

 

“We’ll have to see what happens and what form the nationalization takes. We
don’t exactly know yet whether it will happen through a new share issue or a
more direct operation,” Air France-KLM Finance Director Frederic Gagey said.

 

“As far as Air France-KLM is concerned, we continue to consider Kenya
Airways as an important partner, particularly on those routes between the
group’s two hubs and East Africa,” Gagey added.

 

HUGE LOSSES

Renationalising a failing airline has had mixed results depending in part on
the level of government interference.

 

“Over the last 20 to 25 years, for most national airlines the move has been
to privatisation and not nationalisation,” Seymour said. “Governments are
moving away from nationalisation, as national airlines tend to be
inefficient.”

 

Before Kenyan Airways was privatised in 1996, it made huge losses and needed
annual cash injections from the government. Senior officials running late
for international flights would sometimes delay take-off by hours.

 

The government now intends to run the airline like a private business, said
Esther Koimett, principal secretary at Kenya’s transport ministry.

 

“If we can put in place a proper governance structure that ensures that it
can be managed independently and professionally, then we should be able to
make it work,” she said.

 

But some analysts are not convinced.

 

Kwame Owino, chief executive of the Institute of Economic Affairs in Kenya,
pointed to the poor track record of state-owned entities such as the Kerio
Valley Development Authority and Kenya Pipeline Co - both of whose heads are
facing corruption charges.

 

“I doubt that they will turn the airline around,” Owino said.

 

 

 

Nigerian stocks drop to lowest in more than two years

LAGOS (Reuters) - Nigerian stocks fell to their lowest level in more than
two years on Thursday after shares in the banking sector and Dangote Cement
declined.

 

The main share index fell 0.1%, down for the third session to 27,690 points,
a level last seen in May 2017.

 

 

 

Woolworths sees annual profit hit, writes down Australian business

JOHANNESBURG (Reuters) - South Africa’s Woolworths Holdings expects annual
earnings to decline and has written down the value of its David Jones
business, which is struggling to contend with subdued consumer spending in a
slowing Australian economy.

 

The food and clothing group paid a big premium to bulk up in Australia via
David Jones as part of Chief Executive Ion Moir’s ambitions to turn
Woolworths into a leading southern hemisphere retailer, but faced delays in
overhauling the business.

 

The write-down, the second since 2018, frames a bleak picture for department
store operators around the world as shoppers opt for broader product ranges
from global online players like Amazon.com Inc, or speciality fast fashion
brick-and-mortar stores like H & M Hennes & Mauritz AB.

 

In response to the changing trends, David Jones beefed up its online
offering, cut costs and store space and refurbished its Elizabeth Street
flagship store in Sydney that will introduce exclusive brands in clothing,
footwear and lingerie.

 

But even with all these changes, it has suffered as Australia’s economy hit
a soft patch in the past year pressured by a property market slump, weak
consumer spending and slackening global demand.

 

Woolworths said it would book an impairment of 437.4 million Australian
dollars ($299.27 million) against David Jones, reducing the valuation of the
upmarket department chain to about 965 million Australian dollars ($661.51
million). The South African retailer paid about $1.5 billion for it in 2014.

 

“This write-down reflects sustained and unprecedented economic pressures and
structural changes in the Australian market,” a Woolworths spokeswoman said.

 

“The retail sector in Australia is currently in recession and the Australian
economy has slowed to its weakest level since the global financial crisis in
2009.”

 

The retailer added that a strategic review of the David Jones store
portfolio also identified stores with onerous leases resulting in an
additional provision of 22.4 million Australian dollars.

 

ELIZABETH STREET

Shares in Woolworths, which also has operations in 10 African countries,
fell 3.2% at the open before paring losses to trade 0.9% weaker at 0953 GMT.

 

In 2018, Woolworths booked a non-cash impairment charge of 712.5 million
Australian dollars against the value of David Jones due to the same reasons.

 

It said that it expected a loss per share for the 53 weeks ended June of
between 92.4 cents and 129.3 cents, compared to a loss of 369.5 cents in the
same period last year.

 

Headline earnings per share, which exclude the write-down, are expected to
either decline by 3.5% or rise by 1.5% from 346.3 cents.

 

HEPS is the main profit gauge in South Africa and strips out certain one-off
items.

 

The Elizabeth Street store refurbishment was on track with women’s wear
floors opening this month, Woolworths said.

 

“Operationally, our strategic initiatives position David Jones for the
retail environment of the future,” Woolworths spokeswoman said.

 

($1 = 1.4616 Australian dollars)

 

($1 = 14.4116 rand)

 

 

 

 

Nigeria oil union threatens industrial action in Chevron dispute

ABUJA (Reuters) - One of Nigeria’s main oil and gas trade unions on Thursday
threatened to take industrial action over a staffing dispute with Chevron.

 

Nigeria, an OPEC member, is Africa’s largest oil producer and crude sales
make up around 90% of foreign exchange in Africa’s largest economy. The
dilapidated state of its refineries means the country imports most of its
refined fuel.

 

The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has accused
U.S. oil major Chevron of sacking hundreds of Nigerian workers and altering
contracts, both of which it said were in violation of an agreement.

 

The union, in a statement issued on Thursday, made a number of demands which
included the return to work of all “NUPENG executives”. It said 500 of its
members had been removed from their posts, although it was not clear if they
were all executives.

 

“Should Chevron Nigeria Limited and its contractors fail to honour or comply
with our demands within the next seven days, we would also not hesitate to
take all necessary legal options available to us; including industrial
actions,” NUPENG’s national president said in the statement.

 

A Chevron spokesman said he was unable to provide immediate comment.

 

 

 

Nigeria central bank intervening to prop up naira, trader says

LAGOS (Reuters) - The Nigerian central bank has been intervening in the
currency market over the past two weeks to keep the naira stable as foreign
investors took profits after yields fell on the local debt market, a trader
told Reuters.

 

The naira was quoted at 362.80 to the dollar on the currency market for
investors, weaker than the level around 361 level where it has traded for
much of this year, said the dealer, who trades currency for the local unit
of an international bank.

 

Pressure has been building on the currency amid a dwindling supply of
dollars. It now takes more than a week to fill customer orders.

 

Nigeria operates a multiple exchange rate regime. It maintains an official
exchange rate of 306 naira to the dollar, supported by central bank. The
traded rate of 362.80 is the one widely quoted by foreign investors and
exporters.

 

The central bank does not disclose how many dollars it injects into the
currency market.

 

“We are currently seeing more outflow than inflow ... but the central bank
has been intervening,” the trader said. “The moment the central bank doesn’t
provide support, people may start to panic.”

 

Nigeria’s central bank has cut back on open market auctions to attract
foreign investors in its bonds, a policy shift aimed at stimulating lending
to boost an economy stuck with low growth after a recent recession.

 

The bank auctioned a one-year open-market bill last month at around 12%,
down from as high as 18% a year ago.

 

The trader said some offshore clients were taking profits and that summer
holidays in Europe could also account for the low volumes.

 

“If local rates were much higher, I don’t think we would have seen much
outflows.”

 

 

Kenyan lender Equity Group's H1 pretax profit jumps 10%

NAIROBI (Reuters) - Kenyan lender Equity Group’s pretax profit rose 10% to
17 billion shillings ($164.81 million) in the first half of this year,
helped by higher interest and commissions income, it said on Thursday.

 

The lender, which also operates in Uganda, Tanzania, South Sudan, Democratic
Republic of Congo and Rwanda, said interest income grew by 9% to 27.7
billion shillings, while income from commissions — fees charged on
transactions and forex trading —was up 13% to 14.9 billion shillings.

 

Net loans to customers rose 17% to 320.9 billion shillings, CEO James Mwangi
told investors, surpassing the group’s target of 10 to 15% expansion.

 

He attributed the growth to new distribution channels including mobile phone
lending apps.

 

Equity Group’s banking business in Kenya, where it is the biggest lender by
customers, provides the bulk of profits but subsidiaries outside Kenya are
growing in importance.

 

Regional businesses contributed 18% for the period, unchanged from the first
half of last year.

 

The net interest margin dipped to 8.0% in the first half from 8.2% in the
year earlier period, while the bad debt ratio rose slightly to 8.6% from
8.4%, but stayed well below the Kenyan industry average of 12.7%, Equity
said.

 

It said customer deposits jumped to 458.6 billion shillings from 393.69
billion shillings, while total assets rose to 638.7 billion shillings from
542.02 billion shillings.

 

In April, Equity said it was in talks with London-listed financial services
firm Atlas Mara Limited about acquiring stakes in banks in Rwanda, Zambia,
Mozambique and Tanzania.

 

It said it was entering transaction agreements to acquire, via a share swap,
62 percent of the share capital of Rwanda’s Banque Populaire du Rwanda and
100 percent of African Banking Corporation of Zambia, African Banking
Corporation Tanzania and African Banking Corporation Mozambique.

 

“We are at the tail end of negotiations. We are still committed,” Mwangi
said.

 

($1 = 103.1500 Kenyan shillings)

 

 

 

Trump to impose more tariffs on Chinese goods

US President Donald Trump has announced fresh tariffs of 10% on another
$300bn of Chinese products from 1 September.

 

The move is the latest salvo in an escalating trade war between the two
countries.

 

It came after the latest round of bilateral talks showed little sign of a
breakthrough.

 

Investors reacted to the news with dismay. On Wall Street, the Dow Jones
share index fell sharply, tumbling about 1%.

 

Mr Trump tweeted that the tariffs applied to "the remaining 300 Billion
Dollars of goods and products coming from China into our Country".

 

US-China trade war in 300 words

The US-China trade war in charts

US-China trade war: Caught in the crossfire

He also criticised China for not honouring promises to buy more US
agricultural products and attacked Chinese President Xi Jinping for failing
to do more to stem sales of the synthetic opioid fentanyl.

 

In later remarks, the president told reporters the 10% tariff was a
short-term measure and that tariffs could be lifted further in stages to
more than 25%.

 

"Somebody should have done this with China a long time ago," he added.

 

The new levy is likely to affect a wide range of goods, from smartphones to
children's clothing.

 

 

At the end of June, Mr Trump said the US wasn't about to add any new tariffs
on Chinese goods

The latest round of tariffs comes amid mounting concern that Mr Trump's
strategy is proving counter-productive and harming the US more than China.

 

The US Chamber of Commerce, which represents more than three million US
companies, said the latest tariffs on China "will only inflict greater pain
on American businesses, farmers, workers and consumers, and undermine an
otherwise strong US economy". It urged the two sides to remove all tariffs.

 

On Thursday, Mr Trump's former chief economic adviser, Gary Cohn, said in a
BBC interview that the tariff battle was having a "dramatic impact" on US
manufacturing and capital investment.

 

 

The resulting tensions have also influenced the US central bank, the Federal
Reserve, which cut interest rates on Wednesday for the first time in a
decade.

 

Fed chair Jerome Powell said it was not the Fed's job to criticise US trade
policy, but added that trade tensions had "nearly boiled over" during May
and June.

 

US and Chinese negotiators ended their latest two-day meeting in Shanghai on
Wednesday with little sign of progress, although both countries described
the talks as constructive.

 

Another round of negotiations has been scheduled for September.

 

Mr Trump's latest move brought the US-China trade war to the fore again,
overshadowing news that a two-year deal to raise the US budget had cleared
its final hurdle in Congress.

 

The deal sets government spending at $1.37 trillion (£1.12tn) for the next
financial year, beginning in October.--BBC

 

 

 

US Congress reaches deal to avert budget showdown

The US Senate has approved a two-year federal budget deal that includes big
spending increases.

 

The bill, which has already been passed by the House of Representatives,
will suspend government borrowing limits until the end of July 2021.

 

It has yet to be signed by President Donald Trump, who campaigned for it
despite opposition from conservatives.

 

Lawmakers said it would avert a budget crisis in the run-up to next year's
presidential election.

 

However, it looks certain to add to already high levels of US government
debt, which already stands at $22.5tn.

 

The agreement sets government spending at $1.37 trillion (£1.12tn) for the
next financial year, beginning in October.

 

President Trump has described the deal as "phenomenal" and encouraged
sceptical Republicans to "go for it".

 

"There is always plenty of time to CUT!" Mr Trump tweeted ahead of the vote.

 

Before the vote was held, the outcome appeared to be in the balance -
Republican Senate Majority Leader Mitch McConnell refused to confirm what
numbers would vote in its favour.

 

"It's going to pass," he told CNN, without going into detail about how each
senator in his caucus planned to vote.

 

After it passed, Mr McConnell said the legislation "ensures our federal
government will not approach any kind of debt crisis in the coming weeks or
months".

 

It passed by 67 votes to 28 with cross-party support, despite some
opposition from conservative Republicans who were concerned at the high
levels of spending.

 

The final vote from Republicans was 30 in favour, and 23 opposed. Five
Democrats also voted against it.

 

Old habits die hard. Despite the vigorous urging of Donald Trump and
Republican congressional leadership, rank and file members of the party
offered only tepid support for the bipartisan budget deal that increased the
US national debt ceiling and paved the way for higher government spending.

 

For most of the Obama administration, such a thing would be anathema to the
entire party. Now, the president - despite campaigning on eliminating the
budget deficit in 10 years - seems at peace with growing the annual
shortfall to record levels.

 

It turns out many in his party aren't on board - at least, when it comes to
issuing a "no" vote when a "yes" outcome is certain.

 

Over the past three years, congressional Republicans have been reluctant to
cross their president, lest they draw his ire - and the political
consequences that follow. The budget, it appears, is one line they seem
willing to cross.

 

At least for the moment, the costs of appearing hypocritical on the nation's
finances are higher than the prospect of a Trumpian condemnation that may
never come.

 

One Republican senator, Rand Paul, who voted against the bill, told
Breitbart News: "This may well be the most fiscally irresponsible thing
we've done in the history of the United States."

 

"What is irresponsible is a Congress that believes they are Santa Claus and
they can be everything to everyone and everything is free," he continued.

 

Under the bill, defence spending will go up from $716bn this year to $738bn
next year, while non-defence spending will rise from $605bn to $632bn.

 

Treasury Secretary Steven Mnuchin had warned that if the bill failed to
pass, the government could run out of money during the summer Congressional
recess, triggering another government shutdown.

 

The last time that happened, in January, it cost the US economy an estimated
$3bn.--BBC

 

 

 

Bank of England cuts UK growth forecast

The Bank of England has cut its forecasts for UK growth over the next two
years.

 

It also warned that a no-deal Brexit would hit the economy and trigger a
further drop in the value of the pound.

 

The Bank left interest rates unchanged at 0.75% against a backdrop of weaker
global growth and ongoing trade tensions between the US and China.

 

It said the UK economy was expected to grow by 1.3% this year, down from a
previous projection of 1.5% in May.

 

The Bank also cut its outlook for growth in 2020 to 1.3%, from a previous
projection of 1.6%.

 

The forecasts are based on the assumption that the UK leaves the EU with a
Brexit deal - however it suggested growth could be much slower in the event
of no deal.

 

Faisal Islam: Bank struggling to see through the Brexit fog

Business Live: Sterling slides again

Brexit: £2.1bn extra for no-deal planning

Why has the Bank cut its forecasts?

The Bank's Monetary Policy Committee (MPC) that sets interest rates said the
UK was likely to have stagnated in the three months to June.

 

Its quarterly Inflation Report predicted only modest growth in the coming
months due to ongoing uncertainty over the UK's future relationship with the
European Union.

 

It said there was a one-in-three chance that the economy will shrink at the
start of next year, with global trade tensions also weighing on the UK
outlook.

 

And it said there had been a "material and broad-based slowdown" in world
growth since the end of 2017.

 

There is a weather vane at the top of the Bank of England's centuries old HQ
that used to provide some early indication of when the winds were
appropriate for the arrival of trading ships on the Thames in the need of
its funds.

 

So thick is the Brexit fog in their attempts to assess the path for the
economy, that the vane may well offer more clarity.

 

The Bank's boffins have had to continue to assume that there will be a
smooth Brexit, as that, officially, is the government's policy.

 

The Bank did not choose to outline the detailed implications of a no-deal
Brexit.

 

Predicting the path of the economy through the political machinations of a
possible no deal Brexit is akin to driving with an iced up windscreen and a
broken sat-nav.

 

For now, the Bank has pulled up in a lay-by, got out of the car, and is
awaiting a clearer indication of factors it cannot control.

 

Read more from Faisal

 

The Bank said the jobs market remained strong, although it also noted there
were signs that the unemployment rate was likely to stay around the current
rate of 3.8%.

 

What is the outlook for interest rates?

The MPC's forecasts for steady growth, inflation and employment are all
based on the assumption of a smooth Brexit, in which the UK leaves with a
deal.

 

It said that in this scenario it "would be appropriate" to raise interest
rates to stop the economy from overheating.

 

However, it also spelled out the implications of a no-deal Brexit for the
first time, stating that it would probably lead to slower growth, higher
prices and a weaker pound.

 

The Bank has previously stated that it may not automatically cut interest
rates in this scenario.

 

Policymakers have also warned that there are limits to the extent to which
the MPC can stimulate the economy if the UK leaves the EU without a deal.

 

What did Mark Carney say about no-deal?

The Bank's governor Mark Carney said the UK would be smaller, weaker and
poorer in the event of a no-deal Brexit.

 

"In the event of a no-deal, no transition Brexit, sterling would likely
fall, the risk premiums on UK assets would rise and volatility would spike
higher," he said.

 

Betting markets believe there is more than a one-in-three chance the UK will
leave the EU without an agreement.

 

Mr Carney said uncertainty over the future relationship was weighing on
economic growth and financial markets.

 

He also described comments by President Trump's former economic adviser that
leaving the EU without a deal was better than the current impasse as
"wrong".

 

Gary Cohn told the BBC on Wednesday that a no-deal Brexit would be better
than a period of prolonged uncertainty.

 

But Mr Carney said: "No deal as a crystallisation of a bad economic outcome
is not preferable to the possibility of a better economic outcome.

 

"Whatever outcome the country chooses it is always preferable to have a
transition to it. That is consistent with the preferences, the aims of this
government, and consistent certainly with the aims of businesses up and down
the country."

 

He added that "vital" preparations by business for no deal would not
"eliminate the fundamental economic adjustments to a new trading arrangement
that a no-deal Brexit would entail".

 

How is Brexit affecting business?

The Bank said UK economic growth was "likely to remain subdued over the
coming year, with Brexit-related uncertainties weighing on spending to a
greater extent than in May".

 

Its latest survey of businesses showed that 90% of them had implemented
contingency plans ahead of a previous March Brexit deadline.

 

Three quarters of respondents said they were also "as ready as they can be"
for a no-deal scenario.

 

However, the Bank warned that "material risks of economic disruption
remain".

 

It noted that 240,000 businesses that currently trade solely with the EU
were not ready for sudden EU border inspections in the event of no deal.

 

Many others did not have the right documents to keep selling to the EU if
the UK left the bloc without a deal.--BBC

 

 

 

BMW boss says PM should rule out no-deal Brexit

The chairman of BMW has warned Boris Johnson no-one would win from a no-deal
Brexit and urged the new Prime Minister to listen to business.

 

Harald Krueger said leaving the EU without a deal would be "lose-lose" for
the UK and industry.

 

Mr Krueger advised Mr Johnson: "Listen to the economy and listen to the
people. He needs to be in a dialogue with business.

 

"I would visit Johnson to tell him this," he added.

 

BMW warned earlier this year that if the UK leaves the EU without a deal it
would threaten production of the Mini which is produced at its Cowley plant,
near Oxford, where it employs 4,500 people.

 

BMW is one of a number of car companies that have expressed concern about
leaving the EU without a trade deal.

 

This week, Vauxhall-owner PSA said it could move all production from its
Ellesmere Port site, where it builds the Astra, if Brexit makes it
unprofitable.

 

Such a move would put 1,000 jobs at risk.

 

Car industry investment plummets in UK

Nissan chooses Japan over UK to build new X-Trail car

Boris Johnson challenged over Brexit business 'expletive'

BMW closed its Cowley plant for a month in April after planning for the
original Brexit deadline of 29 March.

 

However, last month it committed to begin building its new electric Mini at
the site in November.

 

In his previous role as foreign secretary, Mr Johnson last year allegedly
used an expletive when discussing business concerns about a hard Brexit at
an event for EU diplomats.

 

When pressed about using the word, Mr Johnson refused to deny the claim and
said he may have "expressed scepticism about some of the views of those who
profess to speak up for business".

 

Mr Johnson has said the UK will leave the EU by 31 October, with or without
a deal.

 

Recent figures reveal investment in the UK car industry has fallen sharply
to £90m in the first six months of this year compared to £347m in the first
half of 2018.

 

The Society for Motor Manufacturers and Traders said, however, that
companies' spending on contingency plans for a possible no-deal Brexit had
now reached £330m.

 

Mr Krueger made his comments after BMW reported a 28% drop in pre-tax
profits for the second quarter of the year.

 

The firm attributed this to investing heavily in electric car production and
said it still expected to hit its financial targets for 2019.--BBC

 

 

 

Post-Brexit plans unveiled for 10 free ports

The government is planning to create up to 10 free ports across the UK after
Brexit.

 

They allow firms to import goods and then re-export them outside of normal
tax and customs rules.

 

The UK last had such zones in 2012 and Prime Minister Boris Johnson believes
they could create jobs in "left-behind areas".

 

Labour said the move involved no new investment and could attract money
launderers and tax dodgers.

 

Seaports and airports will be able to apply for free port status, to be set
up after the UK is due to leave the EU on 31 October.

 

Such zones are allowed under EU law, although backers argue the benefits
would be greater after Brexit if the UK is allowed to diverge from EU rules.

 

Brexit: Is the EU stopping the UK having free ports?

Are free ports the future?

International Trade Secretary Liz Truss said the move would create
"thousands of jobs".

 

"Freedoms transformed London's Docklands in the 1980s, and free ports will
do the same for towns and cities across the UK", she added.

 

Mr Johnson backed the created of new free ports as a Tory leadership
candidate, suggesting there should be "about six" around the country.

 

What are free ports?

Also called free trade zones, they are designated areas where the normal tax
and tariff rules of the country in which they are based do not apply.

 

They allow goods to be imported, manufactured and re-exported without being
subject to checks, paperwork, or import taxes, known as tariffs.

 

This means raw materials can be imported, then engineered into whole
products for export.

 

Typically, companies operating in the zone pay lower taxes, such as reduced
VAT and lower rates of employment tax.

 

But critics argue they simply defer the point when import tariffs are paid,
which then still need to be paid at some stage.

 

Around 135 countries, mostly in the Far East, have free trade zones - a 2013
US Congressional report estimated there were about 3,500 worldwide.

 

The UK had seven of them at various points between 1984 and 2012, when the
legislation establishing them was not renewed.

 

They included Liverpool, Southampton, the Port of Tilbury, the Port of
Sheerness and Prestwick Airport.

 

'Right course after Brexit'

There are around 80 free ports in the EU, mostly in nations that joined the
bloc after 2004.

 

Countries must respect EU state aid rules and cannot financially support
manufacturing firms located in the areas.

 

The EU does not encourage them, arguing it creates unfair competition
between firms operating within them and those adhering to normal EU rules.

 

Supporters argue that after Brexit, their creation could bring greater
benefits to the UK if the country no longer has to follow EU rules on
subsidies.

 

Eamonn Butler, from free market think-tank the Adam Smith Institute and a
member of the new panel, said the zones would set the UK "on the right
course" after Brexit.

 

He said they "provide safe harbour for trade in turbulent times and show
that hi-tech hubs of enterprise, low taxes, deregulation and trade without
restriction can rebalance the economy".

 

'Race to the bottom'

In a report earlier this month, however, the European Commission said free
ports "pose a risk as regards to counterfeiting".

 

It said they allowed counterfeiters to import goods, tamper with them and
then re-export them without the intervention of customs officials.

 

Responding to the government announcement, shadow international trade
secretary Barry Gardiner said the planned UK zones did not constitute new
investment.

 

"It is a race to the bottom that will have money launderers and tax dodgers
rubbing their hands with glee," he said.

 

"Free ports and free enterprise zones risk companies shutting up shop in one
part of the country in order to exploit tax breaks elsewhere, and, worst of
all, lower employment rights", he said.

 

"The British people did not vote for this new administration and they
certainly did not vote to see their jobs and livelihoods threatened in
favour of gifting further tax breaks to big companies and their
bosses."--BBC

 

 

 

Shell profits plunge on lower oil prices

Oil firm Royal Dutch Shell's profits have plunged to their lowest since
2016, due to lower oil and gas prices.

 

Shell's second quarter profits dropped 25% to $3.6bn (£3bn), far below
analysts' expectations of $4.9bn.

 

The oil giant blamed "challenging macroeconomic conditions" in refining and
chemicals, as well as falling oil prices.

 

In June, the price of oil slipped to its lowest level in five months due to
a dim outlook for global demand.

 

BP, its smaller UK rival, reported quarterly profits that beat expectations
earlier in the week, holding steady at about $2.8bn, while France's Total
and Norway's Equinor said profits fell.

 

Brent crude oil futures price

 

Shell's shares dropped 3.9% in early London trading.

 

The company held its dividend for the three-month period at $0.47 per share
for a total payout of $3.8bn.

 

Separately, Shell said it had finished the first round in its plan to buy
its own shares, having spent $9.25bn over the past year. It plans to spend
$25bn by 2020.

 

Companies say they use share buybacks to return cash to shareholders, but
critics say dividends are a better way to do that and that buybacks are
merely a way of flattering a company's earnings per share.--BBC

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


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