Major International Business Headlines Brief::: 08 July 2019

[Bulls n' Bears]

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Major International Business Headlines Brief::: 08 July 2019

 


 

 


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*  Economic "game changer"? African leaders launch free-trade zone

*  Nigeria orders banks to lend or face sanctions

*  Delayed Airtel Africa's $4.4 bln Nigeria listing to go ahead on Monday

*  South Africa's Denel asks for cash injection, rebuffs Saudi bid

*  Morocco’s finance hub to change tax regime after EU criticism

*  Ethiopia to issue two telecom licences, minority stake in monopoly -official

*  Rand rattled by stronger U.S payrolls data, South African stocks slip

*  Old Mutual threatens legal action against former chief Moyo

*  Emerging market currencies likely have seen the best of 2019

*  South African drugmaker Aspen terminates talks with potential European partner

*  Deutsche Bank confirms plan to cut 18,000 jobs

*  Boeing loses big order for 737 Max aircraft

*  Turbulence and trade-offs: why economics matters

*  Amazon at 25: The story of a giant

*  Greek debt crisis: 'I wasn't paid for two years'

*  US labour market booms in June

 

 


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Economic "game changer"? African leaders launch free-trade zone

(Reuters) - African leaders met on Sunday to launch a continental free-trade zone that if successful would unite 1.3 billion people, create a $3.4 trillion economic bloc and usher in a new era of development.

 

After four years of talks, an agreement to form a 55-nation trade bloc was reached in March, paving the way for Sunday’s African Union summit in Niger where attendees will unveil which nation will host the trade zone’s headquarters, when trading will start and discuss how exactly it will work.

 

It is hoped that the African Continental Free Trade Area (AfCFTA) - the largest since the creation of the World Trade Organization in 1994 - will help unlock Africa’s long-stymied economic potential by boosting intra-regional trade, strengthening supply chains and spreading expertise.

 

“The eyes of the world are turned to Africa,” Egyptian President and African Union Chairman Abdel Fattah al-Sisi said at the summit’s opening ceremony.

 

AfCFTA “will reinforce our negotiating position on the international stage. It will represent an important step.”

 

Africa has much catching up to do: its intra-regional trade accounted for just 17% of exports in 2017 versus 59% in Asia and 69% in Europe, and Africa has missed out on the economic booms that other trade blocs have experienced in recent decades.

 

    Economists say significant challenges remain, including poor road and rail links, large areas of unrest, excessive border bureaucracy and petty corruption that have held back growth and integration.

 

    Members have committed to eliminate tariffs on most goods, which will increase trade in the region by 15-25% in the medium term, but this would double if these other issues were dealt with, according to International Monetary Fund (IMF) estimates.

 

    The IMF in a May report described a free-trade zone as a potential “economic game changer” of the kind that has boosted growth in Europe and North America, but it added a note of caution.

 

    “Reducing tariffs alone is not sufficient,” it said.

 

    DIVERGENT INTERESTS

    Africa already has an alphabet soup of competing and overlapping trade zones - ECOWAS in the west, EAC in the east, SADC in the south and COMESA in the east and south.

 

    But only the EAC, driven mainly by Kenya, has made significant progress towards a common market in goods and services.

 

These regional economic communities (REC) will continue to trade among themselves as they do now. The role of AfCFTA is to liberalise trade among those member states that are not currently in the same REC, said Trudi Hartzenberg, director at Tralac, a South Africa-based trade law organisation.

 

    The zone’s potential clout received a boost on Tuesday when Nigeria, the largest economy in Africa, agreed to sign the agreement at the summit. Benin has also since agreed to join. Fifty-four of the continent’s 55 states have signed up, but only 25 have ratified.

 

    One obstacle in negotiations will be the countries’ conflicting motives.

 

    For undiversified but relatively developed economies like Nigeria, which relies heavily on oil exports, the benefits of membership will likely be smaller than others, said John Ashbourne, senior emerging markets economist at Capital Economics.

 

    Nigerian officials have expressed concern that the country could be flooded with low-priced goods, confounding efforts to encourage moribund local manufacturing and expand farming.

 

    In contrast, South Africa’s manufacturers, which are among the most developed in Africa, could quickly expand outside their usual export markets and into West and North Africa, giving them an advantage over manufacturers from other countries, Ashbourne said.

 

    The presidents of both countries are attending the summit.

 

The vast difference in countries’ economic heft is another complicating factor in negotiations. Nigeria, Egypt and South Africa account for over 50% of Africa’s cumulative GDP, while its six sovereign island nations represent about 1%.

 

    “It will be important to address those disparities to ensure that special and differential treatments for the least developed countries are adopted and successfully implemented,” said Landry Signe, a fellow at the Brookings Institution’s Africa Growth Initiative.

 

Regulations governing rules of origin, removal of non-tariff barriers and the development of a payments and settlements system are expected to be unveiled at the summit.

 

 

 

 

 

 

 


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Nigeria orders banks to lend or face sanctions

LAGOS (Reuters) - Nigeria’s central bank will try to force banks to lend more or face higher cash reserve requirements, part of a series of measures aimed at reviving an economy stuck with low growth.

 

The bank in a circular dated July 3 said lenders who fall short of a target minimum loan-to-deposit ratio of 60% by September would have to maintain higher cash reserves.

 

The bank is seeking to boost credit to businesses and consumers after a recent recession in Africa’s biggest economy muted lending.

 

Nigeria’s economy has since recovered from that contraction, but lending has not returned as growth is slow and banks prefer to pack cash in risk-free government securities rather than lend to businesses and consumers.

 

“Failure to meet the above minimum (loan-to-deposit ratio) ... shall result in a levy of additional cash reserve requirement equal to 50% of the lending shortfall,” the bank said.

 

The new loan ratio will be subject to quarterly review, the bank said.

 

Several Nigerian banks had set ambitious expansion targets before an oil price collapse mid-2014. Some have decided to conserve their capital at the expense of higher profits through lending.

 

“There is no way we would not see a pick-up in problematic loans going forward with this circular,” one analyst said. “There is a possibility of repricing of loans ... which would have an impact on margins.”

 

POLICY FROM THE PAST?

The bad loan ratio has dropped to around 9% from double digits at the peak of a recession but still above a central bank target of 5%.

 

Lenders have failed to expand borrowing in Nigeria, blaming a weak economy after the oil price crash triggered a recession and a currency crisis made loans go sour.

 

Last week, the central bank said it would pursue a recapitalisation of the banking sector over the next five years after a series of currency devaluations weakened bank capital.

 

One banking analyst said the new lending rule risked taking Nigeria back to the days when the central bank determined credit allocation, such as in 1984 when President Muhammadu Buhari was military leader.

 

Buhari won re-election in February and has pledged to get the economy growing again. But he has failed to set up a cabinet four months after winning a second term.

 

The regulator has also kept cash ratios high to maintain tight liquidity to curb inflation, attract foreign investors into bonds and support the currency. A policy has encouraged banks to lend more to government. Private sector credit growth has been negative for several years.

 

Some doubted the new policy would boost lending as banks would have to ramp up loans to meet the target or cut deposits.

 

Lenders with smaller deposit bases such as Fidelity Bank and FCMB are already compliant, analysts say while Access Bank which bought Diamond Bank this year, may not much room to grow loans.

 

Top tier lenders may need to issue new loans of almost one trillion naira, analysts say, with FBN Holding and UBA most affected, analysts say.

 

 

 

Delayed Airtel Africa's $4.4 bln Nigeria listing to go ahead on Monday

LAGOS (Reuters) - Airtel Africa aims to list on the Nigerian bourse on Monday, one of the financial advisors arranging the issue said, after the exchange postponed the listing which had been scheduled for Friday.

 

The Nigerian Stock Exchange on Friday said the secondary listing of Airtel Africa shares planned for July 5 had been postponed to ensure the telecoms company meets its listing requirements.

 

A source at the arranger told Reuters the delay was due to a manual allotment process of transferring the shares to new investors.

 

India’s Bharti Airtel last week offered shares in its African unit via a London IPO and it would dual list in Nigeria, its biggest market in Africa.

 

Nigeria’s bourse said it postponed the cross-border listing of 3.76 billion shares of Airtel Africa, but allowed Airtel to go ahead with an investor presentation. It said that it would inform the market on when the conditions had been met.

 

Airtel set its Nigerian listing price at 363 naira per share, the bourse said, via a book building process which valued the company at 1.364 trillion naira ($4.44 billion).

 

In May, Africa’s biggest telecoms firm MTN listed its Nigerian unit in Lagos in a $6.5 billion float that made it the second-largest stock on the bourse by market value.

 

Nigerian stocks have been crimped over low growth in Africa’s biggest economy which has been further stymied with the president’s failure to appoint a cabinet four months after winning a second term. Local stocks have fallen 6.8% this year and shed 17.8% last year.

 

The local bourse said Airtel shares registered in Britain may be moved from the London market to Nigeria subject to approval by the custodians in London and currency regulation in Nigeria. But Airtel shares registered in Nigeria cannot be moved to London, it said.

 

 

 

South Africa's Denel asks for cash injection, rebuffs Saudi bid

PRETORIA (Reuters) - South Africa’s state defence company has asked the government for a 2.8 billion rand ($200 million) cash injection to help it emerge from a financial crisis and secure lucrative export deals, its chief executive said.

 

Denel, a cornerstone of the country’s once-mighty defence industry, is one of several state firms whose finances were damaged by years of mismanagement during former President Jacob Zuma’s tenure.

 

Under current President Cyril Ramaphosa, public finances are stretched by the need to rescue other ailing state firms such as loss-making power company Eskom and South African Airways, which have both already received cash injections.

 

CEO Danie du Toit, appointed late last year to turn Denel around, said recovery efforts were progressing well and the company could win 30 billion rand in contracts over the next two years if it received help to overcome acute liquidity constraints.

 

“We have an excellent return on investment potential on recapitalisation,” he said in an interview at Denel’s offices outside Pretoria.

 

“Our products are still wanted, the brand is still respected, though of course there is still some nervousness about the financial state and sustainability.”

 

He said he hoped the cash injection would be announced this month with the first funds arriving in September or October.

 

Under its turnaround plan, Denel will exit some loss-making businesses and forge partnerships to bolster others.

 

Its first divestment could come in the next three to six months, and joint venture opportunities worth more than 2 billion rand over the next two to three years have been identified, du Toit said.

 

However, he said Denel will not sell equity in any of its divisions to Saudi Arabia’s state defence firm SAMI, which made a $1 billion bid last year for a broad partnership.

 

Denel produces military equipment from ammunition and armoured vehicles to missiles and attack helicopters. While it is a supplier to the South African armed forces, the bulk of its business comes from exports.

 

Du Toit said Denel was on the verge of signing its largest export contract in its history, without disclosing the client.

 

SUCCESS WITHOUT THE SAUDIS

Saudi Arabia and its allies account for almost half of South Africa’s recent arms exports and a significant portion of future orders, so some industry insiders said a deal with SAMI made commercial sense.

 

The Saudi approach caused a stir, however, because it came as the Gulf kingdom was drawing criticism for the murder of journalist Jamal Khashoggi.

 

SAMI signed a collaboration agreement with Paramount Group on Wednesday, another South African defence firm.

 

But Du Toit said that while Denel was open to partnering with SAMI on specific projects, it could not enter equity deals that would require relinquishing intellectual property rights.

 

“The SAMI situation is simple: they come with offers of all sorts of investments, but they want to have control over things,” he said. “We will succeed without the SAMI investment.”

 

Denel said earlier this year it would wind down production of parts for Airbus’ A400M military transport aircraft, Europe’s largest defence project.

 

Du Toit said Denel had agreed the terms of exiting the loss-making contract but it still needed government approval. The Denel division which makes parts for the A400M would not be economically viable without the Airbus orders, so the group could look to exit the business, du Toit said.

 

One venture that has paid off for Denel is a South Africa-based joint venture with Germany’s Rheinmetall: Rheinmetall Denel Munition.

 

“We have a good history with Rheinmetall, good results,” Du Toit said, adding he was open to expanding cooperation with the company.

 

($1 = 14.0450 rand)

 

 

 

Morocco’s finance hub to change tax regime after EU criticism

CASABLANCA (Reuters) - Morocco’s finance and business hub Casablanca Finance City (CFC) will from 2020 tax companies’ export activities the same as their local ones after pressure from the European Union to adjust its tax incentives, its CEO said.

 

The EU, which wants Morocco to reform tax incentives to the CFC and other free trade zones, kept the North African country on a so-called grey list of non-cooperative tax jurisdictions in March after Morocco scrapped tax exemptions for offshore banks and holdings. The EU could have downgraded it to its blacklist.

 

The CFC tax regime will be adjusted to make no difference between activities undertaken locally and those aimed at exports, CFC CEO Said Ibrahimi told Reuters, downplaying the impact on the hub’s competitiveness.

 

A flat-rate tax based on functioning expenses will be reviewed as well, he said.

 

Morocco’s government began developing CFC in 2010 as a banking centre for Africa. The hub, which unseated Johannesburg as Africa’s most attractive financial centre in the 2019 Global Financial Centres Index ranking, aspires to become a financial hub catering for companies that want to do business in Africa.

 

EU pressure for Morocco to align its preferential tax regimes with EU standards comes amid fierce competition over the African market with other centres in Europe, he said.

 

The 180 companies that have acquired CFC status so far are not in Morocco because of tax incentives but rather due to the

 

Country’s political stability, infrastructure, regulatory framework and connectivity to Africa, Ibrahimi said.

 

“Investors can access 32 cities in Africa from Casablanca through direct flights,” he said.

 

 

 

Ethiopia to issue two telecom licences, minority stake in monopoly -official

NAIROBI (Reuters) - Ethiopia will award two telecoms licences to multinational mobile companies, a senior official said on Friday, in the first detailed announcement of the government’s plans for opening one of the world’s last major closed telecom markets.

 

The government will also offer a minority stake in Ethio Telecom, the monopoly operator, and foreign firms will be invited to bid.

 

“We have announced the market structure as ‘two plus one’,” State Minister of Finance Eyob Tekalign Tolina told Reuters by telephone, referring to the two new licences and a 49 percent stake in Ethio Telecom, the monopoly operator.

 

Ethiopia’s telecoms industry is considered the big prize in a push to liberalise the country’s economy launched last year by Prime Minister Abiy Ahmed because of its huge protected market serving a population of around 100 million.

 

Abiy took office last year and announced a raft of major economic and political reforms. Of all the pledged steps to open up the economy to private investment, Abiy’s government is moving the fastest on the telecoms sector. Officials have told Reuters that this is because the government believes that the sector will spur growth in other parts of the economy.

 

Ethiopia is also one of the final frontiers globally for multinational telecoms companies. They have been eagerly awaiting the government’s announcement on the market structure since parliament passed a bill last month outlining the scope of a regulator for the sector.

 

“SENSIBLE APPROACH”

A senior executive at one of the companies interested in entering Ethiopia told Reuters that the market structure announced on Friday is “as expected and very sensible approach”.

 

The structure is the same as the one Myanmar adopted when it privatised its market in 2013. The government there received more than 20 bids for its two licences.

 

Vodafone, South African operator MTN, France’s Orange and Etisalat of the United Arab Emirates are likely to be among the leading contenders vying for entry into the Ethiopian market.

 

Reuters reported last month that the government had decided to issue two new licenses in part because preparing Ethio Telecom for a partial sale is proving a lengthy process. [L8N23J39U] Like most state-owned enterprises, the company is struggling with debt.

 

Partially privatising the state-owned operator and allowing two foreign operators to enter the market to compete with the incumbent will improve network quality and speed, the finance ministry said in a statement released on Friday. Improved digital infrastructure will also enable job creation for Ethiopia’s youth, the statement read.

 

Analysts said the market structure showed that the government had done what officials had publicly said they would do: review the experiences of other countries in opening up their telecoms sectors to determine what had worked and what had failed.

 

“They got the balance right,” said Andrew Kitson, a telecoms analyst at Fitch Solutions in London. “They have decided that two new players plus a state-owned incumbent is sufficient to create a level playing field, a competitive market.”

 

Other countries on the continent such as Uganda and Ghana have more than five telecoms operators, which analysts said ultimately hurts the consumer as network quality falls over time.

 

The state minister did not provide a timeline for the bidding process, but he told Reuters last month that the government hoped to open bidding in September. [L8N23J39U]

 

The government will expect the winning companies to start operations next year, initially using Ethio Telecom’s infrastructure to run their networks, the sources said.

 

Ethiopia’s population is youthful and growing rapidly. The economy has averaged near-double digit growth annually for more than a decade. Just a third of Ethiopians have mobile phones, according to a 2018 World Bank study.

 

 

 

 

Rand rattled by stronger U.S payrolls data, South African stocks slip

JOHANNESBURG (Reuters) - The rand slumped on Friday as data showing U.S. job growth rebounded strongly in June sent the dollar sharply higher, while the resources sector led South African stocks lower.

 

The South African currency was on course for a fall of around 0.8% for the week after dropping 1% against the U.S. dollar to 14.1900.

 

In fixed income, the yield on the benchmark government bond due in 2026 added 9.5 basis points to 8.170%.

 

On the bourse, the benchmark JSE Top-40 Index fell 0.4% to 51,539 points, while the broader All-Share Index dropped 0.4% to 57,590 points.

 

Bullion shares fell 1.72%, with Gold Fields down 2.27% to 71.93 rand and AngloGold Ashanti dropped 2.08% to 378.80 rand.

 

Iron Ore supplier Kumba Iron Ore, was among the biggest fallers, down 7.34% to 471.68 rand.

 

“General commodity prices have come lower mainly due to concerns within the iron ore space that is why we saw single commodity counters like Kumba taking a big knock today,” said Paul Chakaduka, a trader at Johannesburg-based Global Trader.

 

Drugmaker Aspen Pharmacare, was among the fallers, down 4.89% to 99.64 rand after it said it had terminated talks with a potential partner in Europe.

 

 

 

Old Mutual threatens legal action against former chief Moyo

(Reuters) - Old Mutual said on Friday it intends to file court papers in response to former Chief Executive Peter Moyo’s plans to drag the South African insurer to court after he was fired following a row over an alleged conflict of interest.

 

Old Mutual said it would deliver a full response to Moyo’s allegations in court on July 16, adding that, business was not affected by the former CEO’s claims.

 

The company said in June it had terminated his employment following unsuccessful attempts to engage with him.

 

The dispute between Moyo and the company relates to dividend payments made by NMT Capital, an investment firm Moyo founded, where he was a non-executive director and in which an Old Mutual subsidiary is the only institutional investor.

 

 

 

Emerging market currencies likely have seen the best of 2019

JOHANNESBURG (Reuters) - Most emerging market currencies have probably seen the best of a lukewarm year against the dollar as U.S. President Donald Trump is expected to back-pedal on his conciliatory tone from the recent G20 summit, a Reuters poll showed on Friday.

 

Emerging market currencies have had a relatively resilient year despite a long list of risks, such as elections in South Africa and fractured relations between the United States with trading partners from China to Turkey.

 

The poll, taken in the past week, suggested emerging market currencies will lose the gains held since the year began.

 

South Africa’s rand is expected to lose almost 4% to 14.50/$, Russia’s rouble about 2.5% to 65.00/$, and India’s rupee about 2% to 70.00/$.

 

These currencies staged a mild recovery after the Group of 20 summit in Japan, where Trump offered some concessions in the trade spat with China. But analysts are not convinced that will last.

 

“We think that the recovery will come to an end, as Trump inevitably relapses into protectionist talk and downside risks to Chinese and U.S. growth materialise,” said Francesca Beausang, senior economist at Continuum Economics.

 

“The (current) recovery for emerging market currencies is driven by a resurgence of risk-on sentiment given the more conciliatory tone struck by U.S. President Trump at the G20, especially vis-à-vis China,” added Beausang.

 

Representatives from the United States and China are organising a resumption of talks for next week to try to resolve the year-long trade war between the world’s two largest economies, Trump administration officials said on Wednesday.

 

LIMITS TO GAINS

The Federal Reserve has signalled interest rate cuts could come soon, partly due to uncertainty caused by the trade war and several emerging markets’ central banks have either embarked on easing or are on the road to do so.

 

Still, interest rates in some of these economies will still be high enough to attract capital inflows. In South Africa on Thursday the rand broke through the psychological 14/$ level, its strongest in two-and-a-half months.

 

Annabel Bishop, chief economist at Investec, noted that while the rand is likely to continue to gain from perceptions - and occurrence - of global monetary easing, third quarter trading always tends to show risk-off sentiment.

 

“In particular, fears of slowing global economic growth have impacted markets, and could limit emerging market currencies’ gain in the third quarter,” she said.

 

Domestic politics could also become a bigger risk factor as the second half of 2019 progresses, especially in Latin America.

 

Brazil’s controversial pension reform plan goes to crunch time this month, while Argentina moves towards October’s general election in an increasingly bitter campaign over economic matters such as the future of its stand-by credit line with the International Monetary Fund.

 

Last month, a similar survey suggested investors will be more cautious and selective in making risky bets against a strong dollar in coming months as fears over the United States’ aggressive trade policy rattles markets.

 

 

 

South African drugmaker Aspen terminates talks with potential European partner

JOHANNESBURG (Reuters) - South African drugmaker Aspen Pharmacare said on Friday it had terminated talks with a potential partner in Europe, after announcing in March a strategic review of its European and domestic commercial pharmaceuticals businesses.

 

“Shareholders are advised that Aspen is now in a position to explore options with other potential partners in order to optimise its European Commercial Pharmaceuticals business,” Aspen said in a statement.

 

Without giving details, in March, Aspen said under the first phase of the review it would split its South African commercial pharmaceuticals business into two divisions to sharpen its focus.

 

Over the past five years Aspen has transitioned from a generics-focused pharmaceutical business operating in a few select countries into a multi-national firm with strong regional brands and diversifying into specialised therapies such as thrombosis and anaesthetics.

 

 

 

Deutsche Bank confirms plan to cut 18,000 jobs

Deutsche Bank will cut 18,000 jobs over three years as part of a radical reorganisation of the German bank.

 

It will also report a second quarter loss of €2.8bn to partly pay for the shake-up, which will significantly shrink its investment banking business.

 

Deutsche Bank is yet to specify exactly where jobs will be lost.

 

But it said it intends to completely exit activities related to the buying and selling of shares, much of which is conducted in London and New York.

 

With almost 8,000 staff, London is the home to its biggest trading operation.

 

Deutsche Bank said it will cut its global workforce to 74,000 by 2022 and that the restructure will cost €7.4bn over the next three years.

 

"Today we have announced the most fundamental transformation of Deutsche Bank in decades," chief executive Christian Sewing said.

 

"This is a restart for Deutsche Bank... In refocusing the bank around our clients, we are returning to our roots and to what once made us one of the leading banks in the world," he said.

 

German banking giants abandon merger talks

Deutsche Bank raided over money laundering

The reorganisation of the business follows the failure of merger talks with rival Commerzbank in April.

 

The German government had supported the tie-up, hoping it would create a national champion in the banking industry.

 

However, both banks concluded that the deal was too risky, fearing the costs of combining might have outweighed the benefits.

 

What's bad for Deutsche Bank could be good for Barclays.

 

The once-mighty German firm's retreat from international investment banking leaves Barclays as the last European bank standing in a sector dominated by US giants like Goldman Sachs, JP Morgan Chase and Morgan Stanley.

 

As one Barclays insider told the BBC: "Deutsche is where Barclays was five to 10 years ago. The difference is that we had a successful retail business (loans, mortgages, credit cards) to help us endure the most difficult times. Deutsche Bank hasn't got that."

 

The structure of the German banking sector is very different from the UK with lots of smaller regional banks grabbing most retail customers.

 

Barclays has been picking up market share from Deutsche and other European banks for over a year now and will see this as a further opportunity to expand into the space vacated by the German retreat.

 

While Barclays may pick up business, the real victors from Deutsche's demise are the US banks who have prevailed after many unsuccessful attempts (RBS, UBS, DB and others) to muscle into the so-called "bulge bracket" of international investment banks.

 

Wall Street is arguably more powerful than ever.

 

Deutsche Bank has been struggling for years with the decline of its investment bank and has made several attempts to revamp its business.

 

The latest plan will be the most ambitious so far and it has already prompted the resignation of one top executive.

 

On Friday, the bank announced that its head of investment banking, Garth Ritchie, was leaving.

 

Under the plan, the bank wants to make cost savings of €17bn by 2022.

 

It is also creating a new unit to manage assets that belong to businesses it no longer wants.

 

It estimates those assets to be worth €74bn.--BBC

 

 

 

Boeing loses big order for 737 Max aircraft

Flyadeal, the low-cost Saudi Arabian airline, has cancelled an order for 30 Boeing 737 Max aircraft.

 

The decision follows the crashes of two 737 Max jets, the first in Indonesia in October followed by one in Ethiopia in March, which killed 346 people.

 

Since then the aircraft has been grounded and Boeing has been working on a fix that will satisfy regulators.

 

Boeing said that flyadeal had decided not to go ahead with the provisional order because of "schedule requirements".

 

The deal, which included an additional option to purchase 20 more 737 Max aircraft, was worth $5.9bn at list prices, but the airline would have been offered a discount on that price tag.

 

Instead flyadeal, which is controlled by state-owned Saudi Arabian Airlines, will operate a fleet of Airbus A320 planes.

 

The loss of Ethiopian Airlines' flight ET302 in March was the second fatal accident involving a 737 Max in the space of five months.

 

A near identical aircraft, owned by the Indonesian carrier Lion Air, went down in the sea off Jakarta in October 2018.

 

Crash investigators have concentrated their efforts on the aircraft's control system and Boeing has been working with regulators to roll out a software upgrade.

 

There is no date when the aircraft might be cleared to fly again.

 

Last week Boeing announced that it would give $100m to help families affected by the two crashes.

 

The payment, stretching over several years, is independent of lawsuits filed in the wake of the disasters, which together killed 346 people.

 

Lawyers for victims' families dismissed the move.

 

'Every confidence'

Last month IAG said it intended to buy 200 Boeing 737 Max aircraft.

 

While not a firm order, it was seen as a boost for Boeing.

 

The planes would be used by IAG's airlines including British Airways, Vueling and Level.

 

The letter of intent was signed at the Paris Air Show.

 

IAG chief executive Willie Walsh said at the time: "We have every confidence in Boeing and expect that the aircraft will make a successful return to service in the coming months having received approval from the regulators".--BBC

 

 

 

Turbulence and trade-offs: why economics matters

The economy is at a crossroads in the UK.

 

The indications right now are consistent with a stalling economy, perhaps a contracting one, meaning there is even a small possibility we are in recession.

 

Those signals are coming from economic data, from soft corporate results and they are raising expectations that an unwanted item could be awaiting the new Prime Minister and Chancellor - the first negative quarter for the economy for 7 years.

 

The wider European economy is not in the rudest of health either, with Germany's manufacturing juggernaut slowing down sharply and Italy's chronic fiscal problems exacerbated by its unstable government.

 

An unprecedented double-edged challenge to seamless trade comes from the erratic and unpredictable Brexit negotiations, affecting everything from the price of cheese to the flow of manufacturing parts, and the post-Brexit novelty - for some the very essence of EU withdrawal - of the UK fighting its own corner in choppy global trade seas.

 

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

Fox blames MPs over Canada deal delay

Is there a Brexit 'war chest'?

Over the next 12 months, it won't be about projections, forecasts and crystal balls - the impact of increasingly likely fundamental changes to trading arrangements with the UK's biggest single trade partner will become tangible, observable and impossible to ignore.

 

A long time coming

The seeds of this economic uncertainty were sown long ago.

 

What we are seeing right now in global politics is, at least partly, the culmination of a decade-long Roadrunner moment after the trauma of the financial crisis.

 

The next Conservative party leader and prime minister may be facing a stalling economy: Boris Johnson and Jeremy Hunt are vying for the role

That moment could and perhaps should have given rise to an immediate global round of trade protectionism, economic nationalism and turbulent diplomacy.

 

It did not then. But it was merely postponed rather than entirely prevented.

 

The consequences appear to be with us now in the form of a slow motion global trade war, with tariffs, tensions and declining co-operation.

 

It was the action of central bankers, above all, in printing money, pumping trillions of pounds, dollars, euros and yen, that stalled an immediate political reaction to the 2008 financial collapse. But the quantitative easing anaesthetic has now worn off and its unwanted side effects are also still being felt in inflated house and other asset prices, and cuts to living standards that are now starting to reverse, but workers, especially the under 50s' have barely recovered from a living standards lost decade.

 

So, no surprise at the fertile conditions created by economics for a global political backlash against, well, almost everything really.

 

But that volatile political brew is now making economics even more difficult to predict.

 

Central bankers, such as Mario Draghi and Mark Carney, commanded volatile markets in uncertain times with force of will, rhetoric, and their institutions' ballooning balance sheets.

 

It seemed like a free lunch. The bill always arrives eventually and seems likely to be the dilemma of their successors.

 

The real question is how far does this now go?

 

China and the US continue to spar over everything from soya to steel.

 

The fundamental axis of the entire world economy, since the 2001 accession of China to the World Trade Organisation, seems to be breaking before our eyes. The workshops of the world are under strain. The unofficial Sino-US compact that saw manufacturing and jobs outsourced East, and in return, dirt cheap prices, cheap dollar lending and raised living standards exported back West, unravels with unknowable consequences.

 

US-China trade war in 300 words

US and China agree to restart trade talks

Who really pays in a tariff war?

Before the crisis, the presumption in the US and Europe was that the East would become more like the West. Open economies would bring more prosperity and more open democracy, and a smaller size of the state.

 

Perhaps we are, in fact, becoming more like them.

 

The financial crisis has had an enduring political legacy. Where the state stepped in most spectacularly to bail out the banks, in the US and here in the UK, public opinion seems now more comfortable with governments at least claiming to be stepping in, not stepping back.

 

President Trump promises Rust Belt workers that he will back them by starting trade wars that are "easy to win". But it was his predecessor who won an election partly after a boast that he had kept "General Motors alive", and whose chief trade negotiator warned that Americans were not buying into the idea that cheap T-shirts were a price worth paying for lost jobs.

 

Here, a Conservative leadership campaign competes over endless public spending promises, with MPs lobbied with a message of "spend spend spend". The successful Brexit referendum message was fundamentally about a stronger British state, with more money promised to be spent on public services.

 

Beyond the big picture

So there will be a tidal wave of economic news in the coming months from a new fiscal approach, a possible return to the polls, the race for a new Bank of England Governor, Brexit, third party trade negotiations and the China-US tensions.

 

But beyond the financial big picture, other currents are altering the way economics function.

 

Data and unequal access to information, even your own information about yourself which is now in the hands of Big Tech companies is one of the big issues of our time. But this new form of inequality also raises fundamental issues about the economy and also the laws of economics itself, which mostly presume that information is shared perfectly.

 

There are fundamental economic questions which arise from attempts to deal with environmental problems. The biggest one is simply this - are people really willing to adapt their lifestyles or even livelihoods to make the changes deemed necessary for the environment?

 

And in the UK particularly, ageing should totally transform the nature of state spending. Difficult problems, even when they can be seen beyond the clouds of the Brexit process, are being parked, ignored and wished away.

 

Economics is not just about interest rates and sterling values and stock market crises, it is a lens on almost everything around us, from the technology you are using to read this, to the forces shifting the levers of global politics.

 

While the record of economic forecasting is rightly questioned, economics offers an invaluable and revealing way to look at the world's complicated problems. Yes, trade will loom large, but fundamentally, economics is about trade-offs. Trade-offs that many political leaders ignore or actively attempt to deny exist.

 

I am thrilled to return to report this world as BBC economics editor after five years dabbling in covering the mainly dark corners of political dysfunction.

 

It was in a prominent live interview I did that the contention that this country had "had enough of experts" became notorious. I'm not sure that is the case now. I'm back on this numbers beat because I contend that economics provides a better way to the explain how the world works, and why and when it doesn't work for some people than the goings-on in Westminster.

 

Some of these stories hide in plain sight, in your lives, and in your families and home towns.--BBC

 

 

 

Amazon at 25: The story of a giant

"There's no guarantee that Amazon.com can be a successful company. What we're trying to do is very complicated," said Jeff Bezos in 1999, just five years after launching the online firm.

 

That the firm's founder was so uncertain of its future seems surprising.

 

Today, 25 years on from when it started, Amazon is one of the most valuable public companies in the world, with Mr Bezos now the world's richest man, thanks to his invention.

 

What started as an online book retailer has become a global giant, with membership subscriptions, physical stores, groceries for sale, its own smart devices and a delivery system which can get things to customers in just an hour.

 

So how has the Amazon empire been built?

 

Amazon's innovation can be clearly seen in its financial results.

 

Last year, it became the world's second-ever public company to be valued at $1 trillion, after Apple, and it has the second-highest market valuation in the world, after Microsoft.

 

The huge success of the online giant is also evident in its revenue.

 

Sale are expected to hit a record-breaking $275.06bn by the end of this year, with forecasts suggesting revenues could pass $320bn by the end of 2020.

 

Mr Bezos's success has been driven by the firm's global expansion, but mainly by expanding into a wide variety of other sectors.

 

Video streaming services and devices, cloud services and most recently groceries (with the acquisition of Whole Foods Market) have allowed the company to compete directly with technology giants such as Facebook, Apple, Google and Netflix.

 

And it all began with selling books.

 

1995: Amazon launches with online book sales

"When we first started selling books four years ago, everybody said, 'Look, you're just computer guys and you don't know anything about selling books.' And that was true," said a young Jeff Bezos in 1999.

 

However, the huge stockpiling space that the company had at the time in the US helped Amazon become a leader in the sector and enabled them to offer a wider selection of books than its bricks-and-mortar rivals.

 

Then ebooks arrived and Amazon was smart enough to become a key player in that market too.

 

1999 - Amazon becomes the biggest online sales platform in the world

In the late 1990s, Amazon decided to start selling other goods, starting with music and DVDs.

 

Soon Mr Bezos's empire grew to include electronics, toys and kitchen utensils.

 

The growing network of US warehouses helped extend what the company could offer, dramatically increasing its popularity with customers.

 

Ten years later, Amazon had become the biggest online seller in the US and around the world.

 

2005 - Amazon launches Prime membership

Following the creation of Amazon Marketplace in 2000 - which opened the platform up to thousands of small businesses - Amazon felt the need to boost its delivery service for loyal customers.

 

Amazon Prime was launched in 2005, offering quicker shipping for selected items. This boosted sales of all sorts of goods.

 

More than 100 million paying customers are now members of subscription service Amazon Prime, which also offers video and music streaming.

 

It is the second-largest paid membership programme in the world.

 

2007- Amazon launches its first consumer product: The Kindle

Amazon never forgot its bookselling origins. When ebooks started to become popular, Mr Bezos launched the Kindle in 2007, eventually becoming the global leader in the sector.

 

The Amazon smart devices department grew exponentially, facing fierce competition from Apple and Google in the early 2010s.

 

Amazon, however, was the first company to launch a smart device: the Echo speaker, equipped with the firm's own artificial intelligence system, Alexa.

 

It is now the third-largest seller of smart devices in the US.

 

Today the future of Amazon looks a bit more complicated than just selling products on the internet.

 

The second half of 2018 was difficult for the company and its market valuation has fallen back below the $1tn mark.--BBC

 

 

 

Greek debt crisis: 'I wasn't paid for two years'

Greek entrepreneurs Dimitris Kokkinakis and Sophie Lamprou say they are unsure of the future, but will continue with their business regardless

Setting up a business in a country that is struggling to recover from a severe economic crisis is hardly the most ideal of circumstances.

 

So Greek entrepreneurs Dimitris Kokkinakis and Sophie Lamprou faced an uphill struggle when they set up their business in 2013.

 

Greece was beginning the long trek back from its debt crisis, which at one point looked like it might force the country out of the eurozone. It had imposed drastic austerity measures in response to bailouts starting in 2010.

 

Then in 2015, the government announced capital controls, meaning the amount of money people could withdraw from banks was restricted.

 

"It was a very big shock, not just for us, but for everybody in Greece," says Sophie.

 

Both entrepreneurs went without pay, while still paying their employees.

 

"For two years I wasn't paid," Dimitris says. "As soon as capital controls started, the whole economy was frozen. Everybody was saying to us, 'You need to stop', but for us it was not an option."

 

Dimitris, who is now 32, was forced to go back and live with his parents. Any money the organisation brought in was put back into the business.

 

"For young people to be independent and then have the boomerang effect... You go back to your base in survival mode," he says.

 

As voters go to the polls in Greece on Sunday for the first national election since the end of the country's international financial bailout, Dimitris and Sophie said their business is facing yet more uncertainty.

 

Greece's ruling Syriza party is facing a major challenge after a setback in the recent poll for the European Parliament.

 

Dimitris says adapting to change is something they have become used to: "We need to be stubborn, and deal with complexity.

 

"Things can change - politically they are fluid, not only in Greece, but in the EU."

 

Dimitris and Sophie's business, Impact Hub Athens, is a workspace for socially-conscious organisations in the Greek capital.

 

They set up in 2013 in an old abandoned building in Psyrri, an area which once had a bad reputation, but is now fashionable.

 

The business grew organically, and now provides workspace for organisations include Ecocity, a volunteer organisation with environmental aims, and Liminal, which specialises in theatre accessibility.

 

To deal with political and economic uncertainty the two founders have concentrated on diversifying their clients and building resilience into the business.

 

While the economic situation has stabilised since the height of the debt crisis, Greece still faces a long haul to repair the economic damage.

 

The first of three bailouts was agreed in 2010 as fears grew in financial markets that the government would default on its debts.

 

The previous year a new government had taken office and found that the deficit in the public finances - the amount by which spending exceeded taxes and other revenue - was much larger than the previous administration had said.

 

There was a deep recession and two further bailouts. Greece received loans from the eurozone and the International Monetary Fund totalling €288.7bn.

 

Debt hangover

The money came with conditions. Greece had to undertake reforms and make deep cuts in government spending.

 

It was very unpopular in Greece and many economists argued that the austerity aggravated the economic downturn.

 

The final bailout came to a formal end about a year ago - in the sense that the payments to Greece have stopped.

 

But the repayments will take decades. The final one, on the current schedule, is due in August 2060.

 

Economic activity in Greece is still only three quarters of its 2007 peak before the crisis.

 

The labour market also stands out as the EU's most troubled. Unemployment is the highest at 18% and among young people it is 40%. The percentage of the working age population who have jobs is the EU's lowest.

 

Green shoots?

But the country has started to pick itself up.

 

While unemployment is still bad, it is below its peak of close to 28%, (60% among young people) and the economy has grown 5% from its low point.

 

The annual deficit in the government finances is far down from the 2009 peak.

 

The cost of servicing the mountain of Greek debt could be a lot worse, as the interest rates on loans from governments are low.

 

Greece has now returned to the financial markets to meet its further borrowing needs, and the costs it faces there are also modest compared with those faced at the height of the debt crisis.

 

However, whoever emerges as winner from the election will have their work cut out getting Greece properly back on its feet.

 

Sophie Lamprou says work will continue on Impact Hub no matter what happens.

 

"Our business is showing positive signs," she says. "Of course, in the Greek economic and political environment, you can never be very sure about what the future will be."

 

However, she adds: "Of course we are positive. If not, we wouldn't insist on continuing in what we do, being conscious that we are in an environment that can't give guarantees."--BBC

 

 

 

US labour market booms in June

The US labour market boomed in June, creating many more jobs than expected, according to the latest report from the Bureau of Labor Statistics.

 

It showed that 224,000 jobs were created in June, many more than the 160,000 that economists had forecast.

 

The figures, a rebound from poor jobs data in May, eased concerns the economy was heading for a recession.

 

The professional and business services sector was the biggest contributor to employment, adding 51,000.

 

Large numbers of jobs were also created in healthcare, transportation and warehousing.

 

Despite the strong job creation in June, wage growth was relatively modest at 0.2%, keeping the annual rate at 3.1%.

 

US economy under Trump: Greatest in history?

US opens door to rate cut after Trump clash

The jobs data is closely watched by economists who analyse how it might affect interest rate decisions at the US Federal Reserve.

 

Some are betting that the Fed might lower interest rates following its next meeting which starts on 30 July.

 

Last month the Fed indicated that interest rates might head lower due to subdued inflation and the effects of the trade war between the US and China.

 

'Fall out of bed'

"These are good numbers, but a rate cut in July is still all but inevitable," said Luke Bartholomew, investment strategist at Aberdeen Standard Investments.

 

"Employment growth remains a bright spot amid a fairly mixed bag of US data and yet markets have come to expect a cut now so will fall out of bed if they don't get one."

 

Andrew Hunter, senior US economist, at Capital Economics also forecasts a rate cut, although not until September.

 

"Employment growth is still trending gradually lower but, with the stock market setting new records and trade talks back on (for now at least), the data support our view that Fed officials are more likely to wait until September before loosening policy," he said.

 

The US has posted some poor manufacturing data recently, prompting concerns that the economy was heading for a downturn.

 

But Doug Duncan, chief economist at Fannie Mae, said the numbers suggest "that what has been seen in the manufacturing sector doesn't appear to indicate we may be heading into a recession... the warning signs people saw in manufacturing might not be so strong".--BBC

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


Edg Edgars

AGM

Edgars Training Auditorium, 1st Floor LAPF House, 8th Avenue/Jason Moyo St, Bulawayo

11 July 2019, 9am

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


 <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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