Major International Business Headlines Brief::: 04 December 2019

[Bulls n' Bears]

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Major International Business Headlines Brief::: 04 December 2019

 


 

 


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*  South African economy contracts 0.6% in third quarter

*  Kenya forcing importers to use costly new Chinese railway, businessmen say

*  South African Airways lost over $700 mln in past 2 years - documents

*  World Bank says Tanzania's GDP to grow faster in 2020

*  South African regulator tells Vodacom, MTN to cut data prices

*  Kenyan shilling under pressure on elevated demand by importers

*  Google co-founders Larry Page and Sergey Brin step down from parent firm

*  Another Deliveroo TV ad banned for being misleading

*  Trump warns of another year of trade tension

*  US threatens tax on champagne and French cheese

*  FaceApp may pose 'counterintelligence threat' says FBI

*  Iceland puts well-being ahead of GDP in budget

*  TikTok sent US user data to China, lawsuit claims

*  Volkswagen: UK drivers fight for 'dieselgate' compensation

 

 


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South African economy contracts 0.6% in third quarter

PRETORIA (Reuters) - South Africa’s economy shrank for second time in three quarters this year, data showed on Tuesday, as productive sectors fell across the board and companies slashed inventories, amplifying the chances of ratings downgrades to junk.

 

Africa’s most advanced economy has struggled to emerge from a deep slump in the nearly two years since President Cyril Ramaphosa took the helm with promises to reform and is now on the cusp of losing its last investment grade rating from Moody’s, and billions of rands of investment with it.

 

Gross domestic product contracted 0.6% in the third quarter against a 3.2% expansion in the second quarter, Statistics South Africa said.

 

In the first quarter, GDP contracted by 3.1% following nationwide electricity blackouts by state power firm Eskom, and while the cash-strapped utility resumed blackouts in September third quarter activity was hit hard by lower production in mining, manufacturing and agriculture that analysts said was linked to lower investment by firms and smaller exports.

 

Inventories, a measure of investment by firms, fell 9.5 billion rand in the quarter, with exports subdued at q/q growth of 3.5%. The stats agency said some companies had indicated cutting stocks in the previous quarter in anticipation of lower demand.

 

“If there’s no production in mining and manufacturing, and those are the type of products we are exporting, then inventories will fall. And if we’re not producing goods, you don’t have anything left to export,” said Joe de Beer, senior economist at Stats SA.

 

Sharp dips in mining, manufacturing and agriculture were the largest contributors to the negative growth in the third quarter, with agriculture affected by a severe drought which has forced government to ration water supplies nationwide.

 

Mining production fell 6.1% in the quarter, manufacturing was down 3.9% while agriculture contracted by 3.6%. The three taken together represent about a quarter of domestic product and a large chunk of taxes revenues and employment.

 

The latest data piles the pressure on Ramaphosa, particularly from ratings agencies which have flagged weak growth as a major risk, and investors weary of increasing state debt as revenues slide. [nL8N27F5LX]

 

“Growth in the Moody’s criteria is a highly sensitive measure. They already expect sub-1% long run average growth and this will impact the fiscus and imply that our debt and deficit metrics have worsened,” said economist at Nedbank Reezwana Sumad.

 

 

Moody’s is the last of the top three agencies to rate the country’s debt at investment level, and it is set to review the rating in March after downgrading the outlook to negative in November. [nL8N27H62H]

 

“These numbers certainly do support the notion of a downgrade by Moody’s in 2020,” Nedbank economist Sumad said.

 

“In a political environment where it is difficult to cut government wages you could see treasury forced to raise wealth and personal taxes, and that’s something it doesn’t want to do.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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Kenya forcing importers to use costly new Chinese railway, businessmen say

MOMBASA, Kenya (Reuters) - Kenya’s new Chinese-built railway should have been a boon for business. The $3.3 billion line sliced hours off the journey from the port city of Mombasa to the capital, Nairobi.

 

But some importers said their transport costs shot up by nearly 50% when they used the rail due to extra fees, more time spent clearing goods at the congested Nairobi train depot and the need to send a truck to collect the goods from there.

 

These importers used to truck their goods in from the coast. But port authorities now say businesses based in Nairobi and upcountry must use the new line because the Mombasa port is contracted to supply it with a minimum amount of cargo.

 

“KPA has an obligation to feed the railway ... we were the guarantors of the rail,” said Daniel Manduku, head of the state-run Kenya Ports Authority.

 

The railway’s problems are a cautionary tale, both for developing nations loading themselves with Chinese debt, and for China as it seeks to expand global trade links and project soft power through its massive Belt and Road initiative.

 

“The vast majority of its (China’s) overseas spending has no detectable effect on economic growth,” said Bradley Sparks, executive director of AidData, a research facility that tracks development finance at William and Mary university in Virginia.

 

China has sought to allay fears that its infrastructure projects overload some countries with debt. [nL3N22909E]

 

Last year, it agreed to restructure more than $12 billion in repayments owed by Ethiopia, whose Chinese-funded railway is also struggling. [nL5N22Y26W]

 

Now some Kenyan politicians are asking whether their railway was worth the cost.

 

Hundreds of people - residents, business owners and local leaders - hold weekly demonstrations in Mombasa against the mandatory movement of cargo by rail.

 

“This is a revolution,” lawmaker Mohammed Ali said earlier this month as demonstrators carried a mock coffin branded “RIP China Colonisation” in blood-red letters.

 

BUSINESSES UNDER PRESSURE

The contract between China’s Exim Bank, the Kenya Ports Authority (KPA) and Kenya Railways requires KPA to provide 1 million tonnes of cargo to the railway per year, rising to 6 million by 2024.

 

KPA says rail cargo is expected to hit 5 million tonnes this year, after more than 4 million last year.

 

Mombasa is projected to handle 34 million tonnes of cargo this year; most does not go by rail. Cargo destined for Mombasa, or countries other than Kenya, can still go by road.

 

But Kenyan importers in and around Nairobi say they have been forced to use the line since October last year. The port confirmed the policy in August, but rescinded the order in October after protests. Businesses say little has changed and they are still required to use the more expensive railway.

 

Port authorities are diverting shipments to the new railway, said a Nairobi-based customs clearance agent. “You are made to pay for it whether you like it or not.”

 

Moving a 40-foot container to Nairobi by rail costs 80,000 shillings ($800) - roughly the same as a truck, said Mercy Ireri, chief operations officer for the Kenya Transporters Association.

 

 

But importers must also pay at least 25,000 shillings for a truck to collect the goods from the Nairobi depot and 15,000 shillings in depot fees, said three businessmen who asked not to be named.

 

LOAN REPAYMENTS

Manduku, also a board member of Kenya Railways, said the higher charges are necessary to meet loan repayments.

 

Kenya owes Exim Bank of China 660 billion shillings for the railway and other projects, about a tenth of its total national debt. The bank did not immedately respond to a request for comment.

 

Kenya Railways did not respond to requests for comment. The China Road and Bridge Corporation, which built the railway and now runs it through its Kenya subsidiary Africa Star Operations, said it did not set policy on cargo.

 

The exact terms of the agreement are not public.

 

The new line opened in 2017. Running alongside a dilapidated track British colonialists built a century ago, it cut the Nairobi-Mombasa journey to four hours from 12 for passengers and to eight hours from 24 for cargo.

 

China supported the directive requiring importers to use the railway, said Wu Peng, Beijing’s ambassador in Nairobi.

 

“That is a responsible and smart move by the Kenyan government,” Wu told Reuters.

 

After the directive was lifted, the embassy said the line “has revolutionized cargo and passenger movement”.

 

 

Parliament summoned the transport minister to answer questions about the cargo policy in November but he did not appear. Esther Koimett, principal secretary at the department of transport, told Reuters the government was no longer making importers use rail.

 

But Daniel Nzeki, chairman of the Container Freight Stations Association of Kenya, and Ireri of the Kenya Transporters Association, said port security in Mombasa was still preventing trucks from picking up some cargo.

 

“It is a circus,” Nzeki said.

 

 

 

South African Airways lost over $700 mln in past 2 years - documents

JOHANNESBURG (Reuters) - Struggling state-owned airline South African Airways (SAA) lost more than 10.4 billion rand ($700 million) in the past two financial years, documents sent to lawmakers and seen by Reuters showed.

 

SAA, which has not made a profit since 2011 and is dependent on government bailouts to remain solvent, suffered a crippling strike last month which pushed it to the brink of collapse.

 

The airline has not publicly published its financial reports for the 2017/18 and 2018/19 financial years and has suffered concerns about whether it will be able to continue operations for at least 12 months.

 

 

But a copy of an SAA financial report for the year ending in March 2018 showed a 5.4 billion rand loss, with the company’s liabilities exceeding its assets by around 13 billion rand.

 

A separate presentation showed that SAA had made a loss of more than 5 billion rand in the year ending March 2019. Both documents were sent to lawmakers on parliament’s Standing Committee on Public Accounts.

 

An SAA spokesman asked for questions to be submitted by email but did not immediately provide responses.

 

 

 

Government officials have been holding urgent talks on SAA’s future in recent days.

 

The public enterprises ministry, which oversees SAA, said on Sunday that the airline needed “radical restructuring” to ensure its financial and operational sustainability.

 

($1 = 14.7075 rand)

 

 

 

World Bank says Tanzania's GDP to grow faster in 2020

NAIROBI (Reuters) - Tanzania’s economy will grow 5.8% in 2020 compared with an estimated 5.6% this year, and growth will rise to 6.1% in 2021, the World Bank said on Tuesday.

 

A general picture shows the skyline of Tanzania's port cty of Dar es Salaam, file. REUTERS/Andrew Emmanuel

The World Bank’s 2019 forecast is lower than the government estimate of 7.1%, the second time this year its estimates have differed sharply from the government’s.

 

“World Bank staff estimates ... suggest that real GDP growth in 2019 will be 5.6%, up from 5.4% in 2018,” the World Bank said in its Economic Update on Tanzania.

 

President John Magufuli’s government has invested billions of dollars in an ambitious industrialisation drive that includes construction of a new rail line, revival of the national airline and a hydro-power plant.

 

But state intervention in sectors such as mining and agriculture has led to a drop in foreign investment in East Africa’s third-largest economy.

 

“Despite the recent recovery in exports, inflows are still lower than historical averages,” the World Bank said, adding that foreign direct investment had dropped by one-third, to $1.0 billion from $1.5 billion, between 2015 and 2018.

 

 

 

 

The government says the economy expanded by 6.9% in the first half of 2019 compared with 6.8% the previous year, driven by high public investment and exports, the bank said.

 

Finance Minister Philip Mpango told lawmakers in June that the economy would grow by 7.1% in 2019, up from 7.0% in 2018. [nL8N23K24G]

 

In July, the World Bank put Tanzania’s 2018 growth at 5.2%. [nL8N24H4PI]

 

The International Monetary Fund has also reported lower economic growth figures than the Tanzanian government this year.

 

In April, the IMF said “unpredictable and interventionist” policies were undermining growth, according to a leaked report seen by Reuters. [nL5N2253AU]

 

The World Bank warned on Tuesday that spending pressures expected as a result of next year’s elections mean the country needs to strengthen its fiscal management.

 

 

 

 

“Revenue forecasting is weak, undermining budget credibility and resulting in accumulation of arrears and commercial domestic debt,” the bank said in its report.

 

The fiscal deficit has widened to 3.2% in 2018/19 from 1.9% of GDP in 2017/18, it added.

 

“The ambitious revenue target of 17.1 percent of GDP (in the previous fiscal year 14.0 percent was actually collected) and the higher budgeted spending may make it difficult to achieve the fiscal deficit goal of 2.3 percent of GDP in 2019/20,” the bank said.

 

 

 

South African regulator tells Vodacom, MTN to cut data prices

PRETORIA (Reuters) - South Africa’s Vodacom and MTN could face prosecution if they do not agree to cut data prices in the next two months, the country’s competition watchdog said on Monday.

 

Shares in Vodacom closed down 5% at 115.07 rand, a three-month low, while MTN was 6.4% lower at 90.40 rand, its weakest in nearly nine months. Smaller mobile rival Telkom’s shares dropped 4.2% to 44.93 rand.

 

Competition commissioner Tembinkosi Bonakele told reporters that a data services inquiry launched in August 2017 had shown prices charged by Vodacom and MTN were higher in South Africa than in other African markets in which they were operating.

 

The same was true when comparing local data costs with those outside Africa, Bonakele said.

 

Vodacom and MTN have argued that such comparisons are uninformative because cost and quality differences across countries, including spectrum allocations, may account for the differences in pricing, the watchdog’s report read.

 

The inquiry was launched in response to a request from the minister of economic development, and after complaints from consumers about high data costs.

 

Four main companies dominate South Africa’s wireless broadband market, including MTN and Vodacom, which control about 70% of the market.

 

The commission found that the two companies’ dominance had hindered price-based competition, with the challenger networks of Cell C and Telkom Mobile unable to effectively constrain the larger players.

 

In a response to emailed questions, Telkom said it was pleased that the inquiry “has affirmed the view that the South African market is a duopoly with no effective competition.”

 

‘SUBSTANTIAL REDUCTIONS’

In its final report, the commission recommended that Vodacom and MTN must independently reach agreement on “substantial reductions” on tariff levels, especially prepaid monthly bundles. It said the preliminary evidence suggested there was scope for price reductions in the region of 30% to 50%. The mobile operators must also agree terms to stop strategies that may facilitate greater exploitation of market power and anti-poor pricing, it said.

 

If the companies fail to reach agreement with the competition watchdog over the recommendations within the specified timeframe, they could face prosecution under competition legislation.

 

Other regulatory interventions included a proposal that mobile operators be forced to give prepaid subscribers a “lifeline package” of daily free data, and requirements for Vodacom and MTN to agree appropriate pricing of roaming deals.

 

MTN said it was wrong to lay the blame for the country’s data costs with operators because the greatest hurdle to data pricing reduction remained spectrum allocation, for which the government is responsible.

 

Vodacom gave a similar view, with spokesman Byron Kennedy adding that Vodacom had reduced its effective data price by about half since March 2016.

 

South Africa’s President Cyril Ramaphosa told an investment conference early in November that his government had started the process of releasing high-demand broadband spectrum and that a policy framework had been published.

 

 

 

Kenyan shilling under pressure on elevated demand by importers

NAIROBI (Reuters) - The Kenyan shilling was under pressure on Tuesday from merchandise importers buying dollars to ship in higher volumes of goods ahead of the holiday season, traders said.

 

At 0714 GMT, commercial banks quoted the shilling at 102.60/70 per dollar, compared with 102.50/60 at Monday’s close.

 

 

 

Google co-founders Larry Page and Sergey Brin step down from parent firm

Larry Page and Sergey Brin, co-founders of Google, have announced they are stepping down from running the online giant's parent company.

 

The pair will leave their respective roles as Alphabet's CEO and president but will remain on the company's board.

 

Google's CEO Sundar Pichai will become Alphabet's CEO too, a statement said.

 

Alphabet was created in 2015 as part of a corporate restructuring of Google, which Mr Page and Mr Brin famously founded in a California garage in 1998.

 

The parent company was intended to make the tech giant's activities "cleaner and more accountable" as it expanded from internet search into other areas like self-driving cars.

 

The pair moved from Google to Alphabet when it was formed - saying they were making the jump to focus on starting new initiatives.

 

What else does Google's Alphabet do?

How Google became so big

Fired employees claim Google is punishing them

But in a blog post on Tuesday, the pair, both aged 46, announced their departure from Alphabet.

 

A joint letter said they would remain "actively involved as board members, shareholders and co-founders" but said it was the "natural time to simplify our management structure".

 

"We've never been ones to hold on to management roles when we think there's a better way to run the company. And Alphabet and Google no longer need two CEOs and a President," their letter said.

 

They also declared it was time to "assume the role of proud parents - offering advice and love, but not daily nagging" and insisted there was "no better person" to lead the company into the future than Mr Pichai.

 

The 47-year-old was born in India, where he studied engineering. He went on to study in the US at Stanford University and the University of Pennsylvania before joining Google in 2004.

 

In a statement, he said he was "excited" about the transition and paid tribute to Mr Page and Mr Brin.

 

"The founders have given all of us an incredible chance to have an impact on the world," Mr Pichai said. "Thanks to them, we have a timeless mission, enduring values, and a culture of collaboration and exploration that makes it exciting to come to work every day.

 

Google's new boss from humble roots

"It's a strong foundation on which we will continue to build. Can't wait to see where we go next and look forward to continuing the journey with all of you."

 

'Proud parents' who aren't giving up ultimate power

This move represents the most significant shake-up of leadership at Google since its inception - the first time the dynamic duo of Brin and Page, a legendary Silicon Valley partnership, won't hold important management roles in the company they founded.

 

In reality, though, that's been the case for some time - the public face of the firm has been Mr Pichai and, to a lesser extent, YouTube chief executive Susan Wojcicki. But Tuesday's announcement makes it absolutely clear - Mr Page and Mr Brin aren't running the company.

 

Yet while the pair are apparently relinquishing management duties, it won't mean giving up ultimate power. Between them, they control 51% of voting rights on Alphabet's board. This won't change. They likened their new role to being "proud parents" to the company, looking on with close interest and care.

 

But should they feel the need, they can override any decision Mr Pichai makes - with little more than a parental "because we said so".

 

Mr Page and Brin are ranked the 10th and 14th richest individuals in the world by Forbes, with each of them estimated to be worth about $50bn (£38bn).

 

The American business magazine ranks Alphabet as the 17th largest public company in the world, with an estimated market value of $863bn.--BBC

 

 

 

Another Deliveroo TV ad banned for being misleading

An advert featuring a woman diving into a Deliveroo delivery bag to retrieve multiple food orders has been banned.

 

The Advertising Standards Authority said it might mislead viewers to think they "could order food from different restaurants to be delivered together".

 

The ASA received 300 complaints, the third highest of the year so far. Deliveroo said the advert was about emphasising "choice".

 

It is the second time this year that the ASA has banned a Deliveroo advert.

 

In September, the ASA banned a Deliveroo TV advert for wrongly implying that the firm's delivery "was unrestricted throughout the UK".

 

Wrong impression

The latest ban involves an advert showing a woman taking a delivery from a Deliveroo driver at her front door and then distributing meals from various restaurants around the house from a single bag. At the end, she dives head first into the bag to retrieve the remaining items.

 

During the distribution of the meals the woman calls out restaurant names and type of food: KFC, Wagamama, Pizza Express, Burger King, and others.

 

But complainants said the advert did not specify that each restaurant would need a separate order and incur a delivery fee, with each meal then delivered separately.

 

Deliveroo TV ad banned for being misleading

Online fashion twice as ‘racy’ as High Street

Although the ASA noted that there was on-screen text to clarify the nature of Deliveroo's service, the regulator concluded: "The overall impression [was] that customers could order food from different restaurants to be delivered together.

 

"Because that was not the case, and because the ad did not state that a delivery charge would be applied to each order from a different restaurant, we concluded it was likely to mislead."

 

Deliveroo said the advert clearly stated on screen that "separate orders must be made for each restaurant" and had offered to make this clearer.

 

A Deliveroo spokeswoman said: "This advert underlined the huge choice of great restaurants available on Deliveroo. This is growing each day. For the record, you can't actually dive into your Deliveroo bag, however hungry you are."

 

Only two other adverts have received more complaints to the ASA this year, one for the comparison website GoCompare and another for a fireworks display.

 

The GoCompare advert, featuring a male opera singer involved in a car accident, received 336 complaints, mostly arguing it trivialised crashes and was distressing. The ASA said it did not break its rules.

 

An advert for Cheltenham Fireworks involving a poster with a picture of a dog wearing ear defenders received 317 complaints, with most saying that it made light of the animal distress caused by fireworks. The advertiser withdrew the poster, and the ASA took no further action.--BBC

 

 

 

Trump warns of another year of trade tension

US President Donald Trump has set off a new bout of trade worries, firing tariff threats and hinting that a China deal may not happen for another year.

 

Speaking at a Nato summit on Tuesday, Mr Trump said he had "no deadline" for striking an agreement with Beijing.

 

The remarks suggested another round of China tariffs - due 15 December - might become reality, sending US shares to their largest losses in weeks.

 

It comes amid fresh trade disputes with France, Brazil and Argentina.

 

For more than a year the US and China have been locked in a bitter trade battle that has seen both sides impose tariffs on billions of dollars worth of each another's goods.

 

But while the uncertainty has dampened economic growth in the US and abroad, Mr Trump - a self-declared "Tariff Man" - has appeared content to let the spat roll on, despite the odd hint he might compromise.

 

"It creates chaos and instability and he thrives on that in some ways," said Jennifer Hillman, a senior fellow at the Council on Foreign Relations and a former US trade official.

 

"The question being raised is, 'are we really trying to get to a solution with China or is this really all about raising tariffs?'"

 

Trump to 'restore' tariffs on Brazil and Argentina

US threatens tax on champagne and French cheese

Investors were cheered when Mr Trump seemed to drop a plan to hit European cars and car parts with import duties earlier this month.

 

There were also hopes that the US and China might strike a limited "phase one" deal to avert the 15 December round of tariffs, which will affect a wide range of consumer goods, including Apple products, clothing and Christmas lights.

 

But on Tuesday the president said he liked the idea of "waiting until after the election" to make a pact with Beijing, adding: "We'll see whether or not there's a deal. It's got to be right."

 

The main US indices fell roughly 1% on the remarks, which were echoed by US Commerce Secretary Wilbur Ross on broadcaster CNBC.

 

"It's our job to try to get a proper deal done," Mr Ross said, though he added there is still a possibility that the president would suspend the looming tariffs.

 

Widening fight

The comments follow a series of other protectionist moves by the president this week.

 

On Monday, Mr Trump made a surprise announcement on Twitter that he would restore tariffs on Brazilian and Argentine steel and aluminium.

 

The office of the US Trade Representative on Monday also said it might increase the tariff rates on $7.5bn worth of European goods, already planned as punishment for Airbus subsidies.

 

And it announced it was readying higher import taxes on roughly $2.4bn worth of French goods, including Champagne and Roquefort cheese, in retaliation for a digital services tax.

 

Mr Trump's trade actions - some of which raise legal questions - ensure he remains the centre of attention, while diverting talk from more pressing political problems, Ms Hillman said.

 

The president is currently facing impeachment proceedings in the House of Representatives over claims he improperly sought help from Ukraine to boost his chances of re-election in 2020.

 

"I think he thinks it makes him look tough, it makes him look unconventional and it focuses all the attention on his actions," she said.

 

Looking to 2020

Whether Mr Trump's strategy will win politically remains to be seen.

 

Mr Trump's concerns about China are widely held in Washington, providing little political incentive for him to back down.

 

And while the fights have hit farmers - a key constituency for Mr Trump - polls suggest their support remains resilient.

 

Michelle Erickson-Jones is a fourth-generation wheat farmer from Montana, who is working with Farmers for Free Trade, a lobby group that opposes tariffs.

 

She said farmers are aware of the monumental changes the Trump administration is trying to achieve with China and are focused instead on trying to secure other deals, like the US-Mexico-Canada Agreement, which the three countries completed last year but has yet to pass Congress.

 

"While we don't have time or much more patience with China, it's just the reality of what we're looking at," she said.--BBC

 

 

 

US threatens tax on champagne and French cheese

The Trump administration is threatening to slap import taxes on $2.4bn worth of French goods, including cheese, champagne, make-up and handbags.

 

The planned tariffs come in response to a new French digital services tax that would affect companies including Google, Amazon and Facebook.

 

France, along with several other European countries, wants to limit the tech giants' ability to avoid taxes.

 

But trade officials in Washington say US firms are being unfairly targeted.

 

French minister Bruno Le Maire called the US threat to impose tariffs in response to the tax "unacceptable" and suggested France would be prepared to retaliate.

 

Why has France introduced the new tax?

France has long been concerned that US technology giants are avoiding taxes in the European Union. France says taxes should be based on where the digital activity - browsing the page - takes place, not where firms have their headquarters.

 

It is not the only country to raise concerns and a group of nations are drawing up new multilateral rules via the OECD. But France does not want to wait for that to bear fruit, so this summer drew up its own tax.

 

It is imposing a 3% tax on any digital company with revenue of more than €750m ($850m; £670m), of which at least €25m is generated in France. The tax will be back-dated to early 2019, and is expected to raise about €400m this year.

 

About 30 companies are expected to pay it, mostly US firms such as Alphabet, Apple, Facebook, Amazon and Microsoft. Amazon has already responded by raising fees for French businesses by 3%.

 

What is Washington threatening?

Robert Lighthizer, the US Trade Representative (USTR), has published a list of French products that could face tariffs, including champagne and sparkling wine, Roquefort and other cheeses, make-up, handbags, and homeware such as porcelain and bone china.

 

Some of the tariffs are as high as 100% of the import price, and are likely to push up the price of these products for US consumers.

 

However, before the tariffs are confirmed, there will now be what the US calls a period for public comment, including a hearing in Washington in January.

 

Why does the US want to impose the tariffs?

The US says the French tax unfairly targets some US multinationals. Mr Lighthizer said the threat of tariffs was intended to deter other countries from taking similar steps.

 

The trade official said the move "sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies".

 

Mr Lighthizer warned that the US intended to look into digital taxes introduced by Austria, Italy and Turkey.

 

US attacks UK plan for digital services tax on tech giants

France tech tax: What's being done to make internet giants pay more?

Is the UK planning its own digital services tax?

A digital sales tax has long been on the UK agenda too.

 

Labour Party leader Jeremy Corbyn's flagship election pledge - to give every home and business in the UK free full-fibre broadband by 2030 - was to be funded, at least in part, by a tax on "multinationals". In the party's press release about the plans last month, "Amazon, Facebook and Google" were mentioned specifically.

 

Prime Minister Boris Johnson has also backed the idea, calling out the so-called "FAANG" stocks - Facebook, Apple, Amazon, Netflix and Google - as paying "virtually nothing". The Tory manifesto pledges its own Digital Services Tax to fund improvements in broadband infrastructure, among other things.

 

Both leaders are capitalising on the growing momentum in Europe to tax tech firms based on their sales in a country - rather than profits, which are often funnelled through counties with a lower tax rate, such as Ireland.

 

But while promising a "Google tax" sounds great on the campaign trail, it only strengthens the view in Washington that American success stories are being unfairly targeted. And the move today suggests the US is ready to start fighting back.

 

Here's what might happen next: France has said it would drop its digital tax if Europe could, as a bloc, come up with an alternative that's consistent across the Union; a strength-in-numbers move that would be more difficult for the US to counteract. But the UK, post-Brexit, would be on its own - and needs to stay in Washington's good graces.

 

Could a UK digital tax cause problems for a US-UK trade deal?

The US reaction to France's digital services tax suggests it would not go down well if the UK were to follow suit.

 

Earlier this year, US firms were at pains to make it clear to the US Trade Representative that any such UK digital tax would be a big concern for them, with some even suggesting it would need to be dealt with before trade negotiations could go ahead.

 

The BBC's economics editor Faisal Islam says the issue has split the UK government, with some in the current cabinet believing the tech tax would be an obstacle to a future US trade deal.

 

While the matter has not yet been openly discussed, in the recently leaked trade documents UK negotiators clearly anticipate that the issue would emerge during later parts of the process.

 

What is the reaction beyond Paris and Washington?

The US technology sector has welcomed the Trump administration's tougher stance, although it still hopes for a negotiated settlement before the tariffs are imposed.

 

Jennifer McCloskey, vice-president for policy at the Information Technology Industry Council, whose members include the major US tech firms, said the French tax was "discriminatory" and welcomed the USTR's "strong trade response".

 

However, the US move has unnerved investors. Mr Lighthizer's comment that he sees the French tax as part of a "growing protectionism of EU member states," raised concerns that this latest spat could be part of a wider trade war with the EU that has drawn in car companies and planemaker Airbus.

 

Shares in leading French luxury-goods companies fell on Tuesday, with LVMH, Kering and Hermes down 1.4% to 1.5% in early trading.

 

Some US business lobby groups have warned against tariffs because of fears of escalating another trade fight, despite their opposition to the French law.

 

The US Chamber of Commerce, for example, had said tariffs "may elicit additional rounds of retaliatory measures that represent a substantial risk to US economic growth and job creation".--BBC

 

 

 

FaceApp may pose 'counterintelligence threat' says FBI

The FBI said FaceApp and other mobile applications developed in Russia pose a "potential counterintelligence threat".

 

The comments were made in a letter to US Senator Chuck Schumer after he called for an investigation into the app.

 

The face-editing tool went viral earlier this year but prompted privacy concerns.

 

The FBI comments come amid rising US concern that products made by foreign tech firms could pose security risks.

 

In a letter addressed to Mr Schumer, the agency said "it considers any mobile application or similar product developed in Russia, such as FaceApp, to be a potential counterintelligence threat".

 

The FBI also said it would act if it found any evidence of foreign political meddling through the application, which alters users' photos to make them look older or younger.

 

Can you trust FaceApp with your face?

FaceApp did not immediately respond to requests for comment.

 

The app was developed by Wireless Lab, a company based in St Petersburg. The company previously said it does not permanently store images, and does not collect troves of data - only uploading specific photos selected by users for editing.

 

Senate minority leader Mr Schumer called for an investigation into FaceApp in July over concerns it could pose "national security and privacy risks for millions of US citizens".

 

It comes amid wider scrutiny of foreign technology products in the US.

 

Recently, lawmakers have taken aim at TikTok, a video-sharing platform owned by China's ByteDance.

 

The platform, thought to have about half a billion active users worldwide, has exploded in popularity in recent years.

 

That surge in popularity has caused concern in Western markets due to the nature of its Chinese ownership.

 

Should we be worried about TikTok?

TikTok apologises and reinstates banned US teen

US lawmakers, including Mr Schumer, in October requested that "the intelligence community conduct an assessment of the national security risks posed by TikTok and other China-owned content platforms in the US".--BBC

 

 

 

Iceland puts well-being ahead of GDP in budget

Iceland's prime minister has urged governments to adopt green and family-friendly priorities, instead of just focusing on economic growth figures.

 

Katrin Jakobsdottir has teamed up with Scottish First Minister Nicola Sturgeon and New Zealand's PM Jacinda Ardern to promote a "well-being" agenda.

 

Ms Jakobsdottir called for "an alternative future based on well-being and inclusive growth".

 

She said new social indicators were needed besides traditional GDP data.

 

Nobel Prize-winning economist Joseph Stiglitz is among several economists arguing that gross domestic product - measuring a country's production in goods and services - fails to capture the impact of climate change, inequality, digital services and other phenomena shaping modern societies.

 

In a Guardian article last month, Prof Stiglitz said the 2008 global financial crisis "was the ultimate illustration of the deficiencies in commonly used metrics".

 

GDP failed to reveal distortions in the bloated US housing market which triggered the crisis.

 

Ms Jakobsdottir said environmental devastation was a key factor driving Iceland to incorporate new social indicators besides GDP in its budget planning.

 

She began a speech at London's Chatham House think-tank by highlighting the disappearance of Iceland's Okjokull glacier. Scientists say the retreat of glaciers is clear evidence of global warming, which is blamed largely on CO2 pollution.

 

 

Asked if a "well-being" budget was equally appropriate for developed and developing nations, she said: "It's about how you prioritise in the public budget - you can always have an emphasis on well-being."

 

Developing countries "need to take a leap" to embrace renewable energy, she said, rather than repeat the developed world's carbon-based industrialisation.

 

GDP's focus on economic performance means it tends to undervalue quality of life and the social damage caused by inequality.

 

Ms Jakobsdottir said an Icelandic poet had joked that "having sex with your wife doesn't count in GDP, but with a prostitute it does".

 

A Left-Green politician, Ms Jakobsdottir formed a coalition government in 2017 with the conservative Independence Party and centre-right Progressive Party.

 

Tackling depression

While acknowledging Iceland's progress in family-friendly policies, she said her nation - with a population of just 350,000 - still had big challenges, such as improving public transport and tackling depression.

 

"Iceland uses more anti-depressants than neighbouring countries," she said. "We need to strengthen prevention [of depression], through sports and the arts."

 

In a TED talk in August, Scotland's Nicola Sturgeon made a similar plea for modern economies to put more resources into mental health, childcare and parental leave, and green energy.

 

Ms Jakobsdottir said Iceland's adoption of universal childcare and shared parental leave was the product of grassroots women's activism, regardless of political differences.

 

She said the "well-being" initiative promoted by herself, Ms Sturgeon and Ms Ardern should not be seen as a gender-based backlash against populism.

 

"It's very important to have all genders at the table - it affects the way you think, and then different decisions are made," she said.--BBC

 

 

 

TikTok sent US user data to China, lawsuit claims

Video-sharing app TikTok has been hit with a class action lawsuit in the US that claims it transferred "vast quantities" of user data to China.

 

The lawsuit accuses the company of "surreptitiously" taking content without user consent.

 

Owned by Beijing-based ByteDance, TikTok has built up a keen US fan base.

 

TikTok, which is thought to have about half a billion active users worldwide, has previously said it does not store US data on Chinese servers.

 

However, the platform is facing mounting pressure in North America over data collection and censorship concerns.

 

The lawsuit filed in a Californian court last week claims TikTok "clandestinely... vacuumed up and transferred to servers in China vast quantities of private and personally-identifiable user data".

 

It alleges the data could be used to identify, profile and track users in the US "now and in the future".

 

The plaintiff is named as Misty Hong, a Californian-based university student. Ms Hong claims she downloaded the app this year but did not create an account.

 

Months later she alleges the firm had created an account for her, and "surreptitiously" took draft videos she had created but never intended to publish.

 

The data was sent to two servers in China, backed by Tencent and Alibaba.

 

The lawsuit also argues TikTok unfairly profits from "secret harvesting" of private data by using that data to derive "vast targeted-advertising revenues and profits".

 

TikTok did not immediately respond to requests for comment.

 

What is TikTok?

The platform has exploded in popularity in recent years, mostly with people under 20.

 

They use the app to share 15-second videos that typically involve lip-synching to songs, comedy routines and unusual editing tricks.

 

Should we be worried about TikTok?

TikTok fans 'exploited' for digital gifts

Teen's TikTok post about China camps goes viral

Alongside its rapid expansion, concerns have grown - chiefly in the US - over the potential to compromise users' privacy.

 

US lawmakers have put pressure on the company to clear up allegations that it is beholden to the Chinese state.

 

TikTok has hit back against claims of government interference, arguing it "does not remove content" based on Chinese sensitivities.

 

In October, the company said it had never been asked by the Chinese government to remove any content "and would not do so if asked".

 

TikTok operates a similar but separate version of the app in China, known as Douyin. It says all US user data is stored in the United States, with a backup in Singapore.

 

Still, the company found itself in hot water last week, apologising to a US teenager who was blocked from the service after she posted a viral clip criticising China's treatment of the Uighur Muslims.

 

The company later lifted the ban.-BBC

 

 

 

Volkswagen: UK drivers fight for 'dieselgate' compensation

Volkswagen "cheated" European emissions rules designed "to save lives" by installing unlawful "defeat devices" in diesel cars, the High Court has heard.

 

Tens of thousands of UK motorists who bought VW, Audi, Seat and Skoda diesel cars are taking legal action in the aftermath of the "dieselgate" scandal.

 

The claimants' QC Tom de la Mare said: "It is difficult to think of a more obvious cheat than the one VW used."

 

Volkswagen has said it will "defend robustly its position".

 

In 2015, VW admitted 11 million cars worldwide - including 1.2 million in the UK - had software that reduced readings of emissions in tests. However, the UK hearing, expected to last two weeks, centres on whether that software constitutes a "defeat device" under EU regulations.

 

In his opening remarks, Mr de la Mare told the court that VW engines were "optimised to minimise the amount of pollutants" in emissions tests, meaning the vehicles operated in a "completely different way in the street to how it operated in the test".

 

He added: "It is difficult to think of a more obvious cheat than the one VW used." Mr de la Mare said European emissions standards were designed "to save lives", adding that "the most up-to-date evidence" showed that pollution was "killing approximately 1,000 people a day in Europe".

 

He said internal VW documents showed that the company has "long known that the software was unlawful and indefensible", pointing to one document in which a VW employee said the vehicles would "flunk" emissions tests without the software.

 

He submitted that the documents showed a "clear acceptance that the software was the only basis on which they were meeting the emissions limits".

 

'No loss'

VW's barrister, Michael Fordham QC, argued in written submissions that the claimants had misunderstood the legal definition of a defeat device.

 

In a statement before the hearing, a VW spokeswoman said: "Volkswagen Group continues to defend robustly its position in the High Court in London.

 

"It remains Volkswagen Group's case that the claimants did not suffer any loss at all and that the affected vehicles did not contain a prohibited defeat device."

 

Volkswagen has faced a flurry of legal action worldwide, and has been forced to pay out more than €30bn (£26bn) in fines, recall costs and civil settlements. The carmaker's current and former senior employees are facing criminal charges in Germany.

 

The English litigation was filed back in 2016, but has now reached what the claimants' lawyers have called "a decisive court battle".

 

Gareth Pope, head of group litigation at Slater and Gordon, which represents more than 70,000 of almost 90,000 claimants, said before the start of the hearing: "This trial will establish once and for all whether VW installed prohibited 'defeat devices' in affected vehicles and is a significant milestone in our clients' attempts to hold VW accountable in the UK.

 

"This is a decisive point for VW. For years, the carmaker has deceived its customers, marketing cars as complying with emissions standards while all the time knowing they were emitting many times more than the allowed level of toxic pollutants, perpetrating an environmental and health scandal.

 

"VW has had plenty of opportunity to come clean, make amends and move on from this highly damaging episode.

 

"But instead it's chosen to spend millions of pounds denying the claims our clients have been forced to bring against it rather than paying that to their own customers in compensation."

 

One of the claimants, Brian Levine - who bought two affected Volkswagens - told the Press Association: "VW's tactics have been to delay and prevaricate - anything but face a day when it would have to explain what this software did. Well, that day has finally come.

 

"More than four years after the emissions scandal broke, the tens of thousands of customers will be able to hold VW to account in a British court of law and expose its efforts to cheat us."

 

Buying a car is one of the big financial decisions we make. We pay a hefty price for a brand we trust and expect the specifications to be as promised.

 

But VW argues that the drivers claiming they were fooled by a defeat device will not qualify for compensation whatever the merits of their case, because they haven't suffered a loss.

 

And VW denies having a defeat device, anyway, despite findings against the carmaker in other countries.

 

Waiting for a result from this case will feel like being trapped in the mother of all traffic jams. Lawyers involved are expecting the whole process could take two to three years.--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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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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