Major International Business Headlines Brief::: 12 February 2019

Tue Feb 12 07:18:47 CAT 2019

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Major International Business Headlines Brief::: 12 February 2019

 <http://www.nedbank.co.zw/> 

*  Moody's says split plan does little to solve South Africa's Eskom financial woes

*  South Africa's Eskom to cut power over shortage of generating capacity

*  Tanzania's economy seen expanding by 7.3 pct this year - central bank

*  Acacia Mining swings to annual profit in 2018

*  Kenyan shilling steady; seen easing due to importer dollar demand

*  South African rand hits near 3-week low as Eskom steps up blackouts

*  Algerian unemployment unchanged at 11.7 pct in September 2018

*  Final investment decision for Mozambique gas block seen by March-April

*  Gordhan meeting Eskom executives over power crisis

*  US border security deal reached to avert new US shutdown

*  UK economic growth slowest since 2012

*  UK signs post-Brexit trade deal with Switzerland

*  Government sued over no-deal ferry contracts

 <mailto:info at bulls.co.zw> 

Moody's says split plan does little to solve South Africa's Eskom financial woes

JOHANNESBURG (Reuters) - The South African government’s plan to split struggling state power company Eskom into three entities does little to address the company’s financial difficulties, credit ratings agency Moody’s said in a research report.

“The move paves the way for a more transparent group with more clearly allocated revenue and cost between business segments,” Moody’s said, adding that Eskom remained a significant risk to the country’s fiscal strength.

“However, in and of itself it does little to address Eskom’s financial challenges,” Moody’s said.

 <mailto:info at bulls.co.zw> 

South Africa's Eskom to cut power over shortage of generating capacity

JOHANNESBURG (Reuters) - South African state power utility Eskom said on Monday that it would implement controlled power cuts for a second day in a row because of a shortage of generating capacity.

Eskom said it would cut 2,000 megawatts from the national grid from 0700 GMT, likely until 2000 GMT.

Tanzania's economy seen expanding by 7.3 pct this year - central bank

DAR ES SALAAM (Reuters) - Tanzania’s economy is forecast to grow at 7.3 percent in 2019, from an estimated 7.2 percent last year, helped by public infrastructure investments and favourable weather, a central bank report said.

“Real GDP is estimated to grow by 7.2 percent in 2018 and 7.3 percent in 2019, supported by public investment, particularly implementation of mega infrastructure projects ... and expected favourable weather conditions,” the report said.

Acacia Mining swings to annual profit in 2018

LONDON (Reuters) - Acacia Mining said on Monday it swung back to profit in 2018 as its gold production and costs beat expectations even as a longstanding tax dispute rumbled on in Tanzania.

The London-listed miner, whose shares rose 3.5 percent, said in a statement that basic earnings per share totalled 14.4 cents compared to a loss of 172.5 cents a year earlier.

In 2018, gold production was 521,980 ounces at an all-in sustaining cost of $905 per ounce. Both of those figures were lower than 2017 but ahead of expectations.

Acacia, majority owned by Barrick Gold, expects production in 2019 to be 500,000 to 550,000 ounces at a cost of $860 to $920 per ounce.

The gold miner is in a two-year long tax dispute with Tanzania’s government where it operates all of its mines and has been banned from exporting mineral concentrates which has forced it to cut output.

Acacia’s shares are up more than 50 percent since Barrick’s takeover of Randgold was announced on Sept. 24, mainly on expectations that Barrick’s new chief executive, Mark Bristow, would soon broker a deal with the government.

“We continue to provide support to Barrick in its discussions with the government of Tanzania and believe that a negotiated resolution is in the best interests of all stakeholders,” Acacia interim CEO Peter Geleta said in a statement.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was $48 million in the fourth quarter of 2018, in line with expectations.

Kenyan shilling steady; seen easing due to importer dollar demand

NAIROBI (Reuters) - The Kenyan shilling weakened on Monday and was forecast to ease further due to dollar demand from manufacturers and oil importers exceeding inflows from diaspora remittances, traders said.

At 0725 GMT, commercial banks quoted the shilling at 100.40/60 per dollar, compared with 100.30/50 at Friday’s close.

South African rand hits near 3-week low as Eskom steps up blackouts

JOHANNESBURG (Reuters) - South Africa’s rand fell to its weakest in almost three weeks on Monday as state electricity firm Eskom stepped up controlled power cuts because of a shortage of generating capacity.

At 1456 PM, the rand was 1.12 percent weaker at 13.7675 per dollar, its softest level since Jan. 24, after Friday’s close of 13.6150.

“Load-shedding is never good, especially from a growth perspective. The weakness you’re seeing now is certainly linked to the power cuts. It will be interesting to see what the finance minister says next week about bailing out (state firms),” Unum Capital trader Michael Porter said.

Cash-strapped Eskom, which supplies 90 percent of the country’s electricity, resumed blackouts on Sunday. The previous ones had been in early December.

It said on Monday it would increase the power cuts from the national grid to 4,000 megawatts from 2,000 megawatts after six of its generating units unexpectedly went off line, and that outages would probably last until 2000 GMT.

President Cyril Ramaphosa said on Thursday he planned to split Eskom into three separate entities in a move to avert a financial crisis that ratings firms have warned poses a major risk to the country’s sovereign rating.

Investors, however, seemed unconvinced and by Friday had upped bearish bets on the currency, with the premium on options to sell the rand jumping to around one-month highs.

“We see potential for the rand’s further depreciation in the next few sessions,” Juri Kren, an analyst at Continuum Economics, said in a note.

Bonds also suffered on Monday, with the yield on the benchmark paper due in 2026 adding 12.5 basis points to 8.780 percent, its highest since Jan. 30.

In the equities market, stocks followed emerging markets after a move higher in major Asian markets as they returned from the Lunar New Year holiday propped up emerging-market shares on Monday. [EMRG/FRX]

The Johannesburg All-Share index rose 0.69 percent to 53,608 points, while its top-40 index climbed 0.47 percent to 47,225 points.

Market heavyweight Naspers closed 1.34 percent higher to 3,030 rand, while mobile telecoms providers Vodacom and rose 1 percent and 0.51 percent respectively.

Bucking the upward trend, clothing and food retailer Woolworths closed 3.29 percent weaker after the sudden resignations of its two non-executive directors.

Algerian unemployment unchanged at 11.7 pct in September 2018

ALGIERS (Reuters) - Algeria’s unemployment rate stood at 11.7 percent in September 2018, unchanged from the same month in 2017, the government said on Monday.

But joblessness was up 0.6 percent compared with the 11.1 percent recorded in April 2018, according to dada released by the National Statistics Bureau.

Unemployment among people aged 16 to 24 years rose to 29.1 percent from 26.4 percent in April 2018 and 28.3 percent in September 2017.

Construction employs 16.1 percent of the total workforce, followed by public administration at 15.8 percent and healthcare at 14.4 percent, the statistics bureau said.

Lack of investment and delays in implementing promised reforms has kept Algeria, which relies heavily on oil and gas, from diversifying is economy.

Final investment decision for Mozambique gas block seen by March-April

NEW DELHI (Reuters) - A final investment decision, commonly called FID, for a massive offshore natural gas block in Mozambique is expected to be ready by March or April, the chairman of Mozambique’s national oil company ENH said in New Delhi on Sunday.

This is the first time any of the seven partners in the block has given a specific timeline regarding an investment plan for the block, located east of Mozambique’s Rovuma basin and called Area 1.

An FID for the block could unlock value in one of the world’s biggest recent gas discoveries, estimated at 75 trillion cubic feet.

FID is essentially a stage in funding based on which banks can agree to extend lines of credit for a particular project.

Indian companies - state-owned explorer Oil and Natural Gas Corp Ltd through its overseas arm ONGC Videsh Ltd, Oil India Ltd and Bharat Petroleum Corp Ltd together hold the highest share in the block with a 30 percent stake.

National oil company of Mozambique Empresa Nacional de Hydrocarbonetos (ENH) holds 15 percent and Anadarko Mozambique Area, a subsidiary of U.S.-based explorer Anadarko Petroleum, holds 26.5 percent and is operator of the block. “One of the Indian companies has already signed a share and purchase agreement for the gas ... The first molecules will come to India by 2024,” ENH chairman Omar Mitha said.

Gordhan meeting Eskom executives over power crisis

JOHANNESBURG (Reuters) - South Africa’s Public Enterprises Minister Pravin Gordhan is meeting executives from state power firm Eskom on Monday to find solutions to the country’s electricity crisis, Eskom spokesman Khulu Phasiwe told Reuters.

Eskom said on Monday it would cut 4,000 megawatts from the national grid from 1100 GMT after six additional generating units went offline unexpectedly.

US border security deal reached to avert new US shutdown

Democrats and Republicans have reached an agreement in principle over border security to fund the US government and avert another partial shutdown.

Lawmakers said the deal had been struck in a closed-door meeting in Washington.

No details have been released. Talks had stalled on the detention of undocumented migrants and funding for President Donald Trump's border wall.

Speaking late on Monday, he did not say whether he would back the deal. "We're building the wall anyway," he stressed.

He told supporters in El Paso, Texas, that he had had no time to study the agreement, but stressed that he would "never sign a bill that forces the mass release of violent criminals".

A bill must be approved by Friday when funding runs out for some federal agencies. The previous shutdown - the longest in US history - lasted 35 days.

What is a government shutdown?

How the last US shutdown hurt

Trump's wall: How tech fills the gaps

The shutdown's cost to the US economy was estimated at $11bn (£8.5bn).

What is known about the deal?

It was clinched on Monday evening - after several hours of talks between Democratic and Republican negotiators.

Emerging from the talks, Rep Senator Richard Shelby said all outstanding issues had been resolved.

"We got an agreement on all of it," he said. He added that staff members would work out the details later in the week.

Reports say the deal includes $1.375bn (£1.07bn) in funding for physical barriers - far short of the $5.7bn President Trump has been demanding.

Democrats were also demanding to limit the number of undocumented migrants already in the US who can be detained by Immigration and Customs Enforcement (ICE).

It was agreed to bring down that number to 40,250 from the current 49,057, reports say.

Why is there the risk of another shutdown?

On 25 January, President Trump agreed to a three-week spending deal to end the shutdown and allow Congress to reach an agreement.

That funding ends at midnight on Friday.

Mr Trump made building a wall on the border with Mexico one of his key promises in the 2016 campaign.

The effects of an immigration raid on one tiny town

Trump's border wall in seven charts

The president has backed away from calls to make Mexico pay for a concrete wall but during his State of the Union speech last Tuesday - delayed because of the previous shutdown - he insisted on a "smart, strategic, see-through steel barrier".

He has previously threatened to declare a national emergency and fund the wall without Congress. But this idea is disliked even by some fellow Republicans, and Democrats are likely to challenge it in the courts.--bbc

UK economic growth slowest since 2012

The UK economy expanded at its slowest annual rate in six years in 2018 after a sharp contraction in December.

Growth in the year was 1.4%, down from 1.8% in 2017 and the slowest rate since 2012, the Office for National Statistics (ONS) said.

The ONS blamed falls in factory output and car production for the slowdown, among other factors.

It follows forecasts of slower growth in 2019 due to Brexit uncertainty and a weaker global economy.

According to the ONS, quarterly growth also slowed, falling to 0.2% in the three months to December - down from 0.6% in the three months to September.

However, Chancellor Philip Hammond said the data showed the economy remained "fundamentally strong" and that he did not foresee a recession.

Bank forecasts worst UK growth since 2009

'Austerity continues unless Hammond spends'

The pound fell by a third of a cent to below $1.29 following the news.

Head of GDP at the ONS Rob Kent-Smith said: "GDP slowed in the last three months of the year with the manufacturing of cars and steel products seeing steep falls and construction also declining.

"However, services continued to grow with the health sector, management consultants and IT all doing well."

A slowdown was expected. But the economy has hit the brakes harder than economists thought it would.

Growth over the quarter was weaker than the 0.3% anticipated. And over the month the numbers look positively worrying.

According to the ONS estimates, gross domestic product fell in December by 0.4%.

That included a drop in services activity (restaurants and retail etc), which is estimated to have fallen by 0.2% on the month.

This is the only time since 2012 that services, construction and production all fell.

While that chimes in with the gloomy picture painted by, for example, retailers' company results, it's not by any means a certain sign we are entering a new recession.

This is only the first estimate by the ONS; the figures are provisional and are often revised when the second and third, more accurate figures arrive.

You can't be sure you should worry about the state of economic growth. But then again, you can't be sure you shouldn't.

Which sectors are struggling?

The ONS said the figures reflected a slowdown across a number of industries, as Brexit-related concerns weighed on business spending decisions.

In the final quarter of last year, it found car manufacturing declined at its steepest rate in just under a decade, slipping 4.9%.

Construction fell 0.3% while business investment dropped 1.4%.

While Britain's dominant services sector continued to expand, growth slowed to 0.4% following a strong performance during the summer.

The 1.4% growth figure for 2018 was the lowest since 2012, when the economy also grew by 1.4%. The last time the economy performed worse than this was in 2009, when it contracted by 4.2%.

Is Brexit to blame?

Tej Parikh, senior economist at the Institute of Directors, said the continuing uncertainty around Brexit was the "prime suspect" behind weaker economic activity.

"There is currently a drag on growth as some businesses are forced to hold back on major investments and engage in cautionary stockpiling."

Ben Brettell, senior economist at Hargreaves Lansdown, said: "There's little doubt Brexit uncertainty is responsible for the disappointing numbers, though concerns over global trade will also have played a part."

Is a recession ahead?

Last week, the Bank of England forecast growth this year will be 1.2% - the slowest since 2009 when the economy was in recession.

It blamed Brexit concerns as well as slower-than-expected growth in the eurozone and China.

It even sees a one-in-four chance of the economy slipping into recession in the second half of this year.

But Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said an impending downturn was unlikely.

"On the face of it, the sharp fall in GDP in December looks alarming, but it isn't unprecedented... and it was driven by sectors which have historically been volatile."

Paul Dales, chief UK economist at Capital Economics, said: "There's little hope of a rebound early this year. But if there's a silver lining, it's that a lot of the activity put on hold ahead of Brexit could be released once - or if - a deal is done."

What's going on with UK trade?

Separately, the ONS published figures showing the UK's trade deficit, including goods and services, widened slightly in the last three months of the year by £900m to £10.4bn.

It blamed a rise in goods imports including cars and chemicals.

Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said it was further evidence that "slowing global growth and continued uncertainty over Brexit are making trading conditions for UK exporters more challenging".--BBC

UK signs post-Brexit trade deal with Switzerland

The UK and Switzerland have signed a deal to continue trading after Brexit as they did before it.

The "continuity agreement" - based on the EU's existing free trade deal with Switzerland - was agreed in December but ratified on Monday.

International Trade Secretary Liam Fox said the deal would "continue the preferential trade that we have".

The UK is seeking to replicate about 40 EU free trade agreements, covering more than 70 countries.

How many trade agreements has the UK done?

Call for clarity on UK-Swiss Brexit deal

EU trade deal 'easiest in human history'

Brexit risk for UK aid as Swiss cut off

Around £32bn of trade is done between the UK and Switzerland each year, with 15,000 British exporters trading with the country.

Mr Fox said: "Switzerland is one of the most valuable trading partners that we are seeking continuity for. This is of huge economic importance to UK businesses.

"Not only will this help to support jobs throughout the UK but it will also be a solid foundation for us to build an even stronger trading relationship with Switzerland as we leave the EU."

Trade deal 'emergency'

In 2017, Mr Fox said that the UK could "replicate the 40 free trade agreements before we leave the EU" on 29 March so that there would be no disruption to trade.

But with 46 days until the UK is set to leave, such continuity agreements have been signed with only:

Switzerland

Chile

The Faroe Islands

Eastern and Southern Africa

Mutual recognition agreements - where a product lawfully sold in one country can be sold in another - have also been signed with Australia and New Zealand.

The director general of the Confederation of British Industry (CBI), Carolyn Fairbairn, said the lack of other trade deals being signed was an "emergency" - particularly in the case of South Korea and Japan.

She told Sky News: "The prospect is the day after Brexit, those deals will disappear."--BBC

Government sued over no-deal ferry contracts

The government is being sued for its decision to charter firms to run extra ferries, including one with no ships, in the event of a no-deal Brexit.

Channel Tunnel operator Eurotunnel, said the contracts, revealed after Christmas, were decided in a "secretive and flawed procurement process".

The move comes days after Seaborne, one of the firms chosen, had its contract axed after its funding fell through.

The government said it had carried out a "competitive procurement process".

"The Department for Transport acted transparently and competitively throughout the process of securing extra freight.

"This was done by approaching ferry operators and encouraging bids that could be fairly assessed against each other," a spokeswoman said.

No-deal Brexit ferry contract scrapped

Brexit: Could Channel Ports cope with no deal?

No-deal Brexit ferry contract queried

UK to spend £103m on no-deal ferries

At a High Court hearing in London, Eurotunnel claimed the government contracts, announced on 29 December, were awarded without any public notice.

Eurotunnel's barrister Daniel Beard QC said Eurotunnel only found out "when contract notices were published three days after Christmas".

He said it was "quite remarkable" his client had not been informed given its recent history in running cross-Channel services.

Ewan West, representing Transport Secretary Chris Grayling in court, said the government's procurement process was only for "maritime freight" services and that Eurotunnel "could never have provided that capacity" and "could not have complied" with the terms of the contracts.

Judge Peter Fraser ruled a four-day trial will begin on 1 March given the "obvious" urgency of the case and the "very important public interest matters" involved.

When the Department for Transport announced the contracts in December, in documents outlining the agreements it stated that an "unforeseeable" situation of "extreme urgency" meant there was no time for the contracts to be put out to tender - the standard practice for public procurements.

However, the BBC understands that a number of firms were considered and there was a private negotiation process.

Three suppliers were awarded a total of £102.9m in late December, aimed at easing "severe congestion" at Dover, in the case of a no-deal Brexit:

£46.6m to the French company Brittany Ferries

£42.5m (€47.3m) to Danish shipping firm DFDS

£13.8m to British firm Seaborne Freight

The decision to award a contract to Seaborne, a firm with no ships which the BBC found had never run a ferry service before, has been heavily criticised.

After Seaborne's contract collapsed Mr Grayling faced calls for his resignation, with Labour accusing him of "rewriting the textbook on incompetence.".

But Prime Minister Theresa May has said she continues to have full confidence in him.--BBC

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

Ariston

AGM

Royal Harare Golf Club

19 Feb 2019 - 2:30pm

Zimbabwe

Robert Mugabe National Youth Day

Zimbabwe

21 Feb 2019

Powerspeed

AGM

Boardroom, Gate 1, Powerspeed Complex, Graniteside

28 Feb 2019 - 11am

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

 <mailto:info at bulls.co.zw> 

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

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