Major International Business Headlines Brief::: 03 June 2019

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Major International Business Headlines Brief::: 03 June 2019

 


 

 


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*  South African Airways CEO quits over lack of support from state

*  Kenya to retire old 1,000 shilling banknote to stem illicit flows

*  Mozambique says agrees restructuring deal with bondholders

*  CEO of Nigeria's Oando gets five-year director ban - watchdog

*  Rejection of Barrick bid is 'no brainer', top Acacia investor says

*  Morocco to sell up to 8% of Maroc Telecom

*  Production stalled at Vedanta Resources' Konkola Copper Mines

*  Vedanta seeks international arbitration to settle Zambia dispute

*  The wealthy businessman who paid just £35.20 in tax

*  Boeing 737 Max: Regulators seek co-operation over plane safety

*  BA resumes flights to Pakistan after decade-long suspension

*  US ends special trade treatment for India amid tariff dispute

*  Trump's threat of Mexico trade war sends markets lower

*  India loses place as world's fastest-growing economy

*  China's tariff hikes on US goods come into force

 

 


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South African Airways CEO quits over lack of support from state

JOHANNESBURG (Reuters) - South African Airways’ CEO Vuyani Jarana has
resigned after less than two years in the job, saying his turnaround
strategy for the loss-making airline was being undermined by a lack of state
funding and too much bureaucracy.

 

 

Jarana’s departure, announced in a letter to the chairperson of the
airline’s board dated May 29 and seen by Reuters, highlights the challenges
facing South African President Cyril Ramaphosa as he seeks to speed up
reforms at South African Airways (SAA) and other state-owned entities. They
are dependent on government bailouts and are regularly cited by ratings
agencies as one of the main threats to the country’s economic growth.

 

Jarana, a former executive at telecoms company Vodacom, was appointed in
late 2017 to implement a strategy to return the airline to profit and wean
it off government bailouts.

 

SAA, which has not made a profit since 2011, has drawn up a five-year
turnaround plan that includes slashing costs and cancelling unprofitable
routes as it grapples with cost increases that far outstrip revenue growth.

 

In a four-page resignation letter dated May 29, seen by Reuters, Jarana said
he resigned due to uncertainty about funding and the current level of
bureaucracy that his team has to go through to implement the group’s
strategy, often resulting in slow decision making.

 

“The strategy is being systematically undermined, and as the Group Chief
Executive Officer, I can no longer be able to assure the board and the
public that the LTTS (long term turnaround strategy) is achievable,” he
said.

 

In March 2018, the Treasury approved the airline’s turnaround plan, which
required funding of 21.7 billion rand ($1.5 billion), Jarana said in his
letter. Of that 9.2 billion rand was to cover old debt and 12.5 billion rand
was for working capital requirements until 2021, with the state providing
the requisite funding as per the plan, he said.

 

The government did inject 5 billion rand in the 2018/2019 financial year,
with a big chunk of that used to fund creditors up to the end of March 2018,
according to Jarana.

 

“We have not been able to obtain any further funding commitment from
government, making it very difficult to focus on the execution of the
strategy,” he added.

 

The airline has had no less than three incidents in which it was almost
unable to pay salaries due to the lack of funding, he said.

 

SAA spokesman Tlali Tlali neither confirmed nor denied the report but said
the airline board would issue a statement shortly. The Department of Public
Enterprises spokesman Adrian Lackay said the same thing.

 

Jarana said in his letter that he will step down at the end of August.

 

Ramaphosa has been at pains to stabilise ailing firms like SAA, which weigh
on confidence in Africa’s most industrialised economy, but the extent of
their financial difficulties has meant slow progress.

 

Jarana’s resignation comes more than a week after struggling state-owned
power utility Eskom said its CEO, Phakamani Hadebe, was stepping down for
health reasons after leading efforts to stabilise the highly indebted state
firm. Eskom has not yet stabilised.

 

SAA is not helped by a slowdown in the airline industry generally, which the
International Air Transport Association (IATA) highlighted in comments on
Sunday.

 

Jarana said in April that SAA had reached an agreement in principle with
lenders to roll over 9.2 billion rand of debt due at the end of March this
year.

 

In his letter, Jarana said a 3.5 billion rand facility secured from local
banks will be depleted in June.

 

($1 = 14.5800 rand)

 

 

 

 


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Kenya to retire old 1,000 shilling banknote to stem illicit flows

NAIROBI (Reuters) - Kenya plans to withdraw an old version of its 1,000
shilling ($9.88) banknote to tackle illicit financial flows and
counterfeiting, its central bank governor said on Saturday.

 

President Uhuru Kenyatta promised to stamp out graft when he was first
elected in 2013, but critics say he has been slow to pursue top officials
and there have been few high profile convictions since he took office.

 

Patrick Njoroge said while launching new bank notes of other denominations
that older versions of smaller denominations will remain in circulation
alongside the new ones, but after Oct. 1, the older 1,000 shilling note
would be invalid.

 

“We have assessed the grave concern that our large banknotes, particularly
the older one thousand shillings series, are being used for illicit
financial flows in Kenya and also other countries in the region,” Njoroge
said.

 

Speaking while launching the notes during a national holiday celebration,
Njoroge gave no more detail on the illicit flows.

 

The central bank’s move comes as Kenyan lawmakers push for the
implementation of amendments to banking laws that would relax the east
African country’s rigorous requirements for recording transactions above
$10,000.

 

The central bank has said these changes could undermine efforts to tackle
money laundering, financing of terrorism and proceeds from crime.

 

Dozens of Kenyan government officials and business people have appeared in
court since May 2018 on charges relating to the alleged theft of hundreds of
millions of shillings from public coffers.

 

($1 = 101.2000 Kenyan shillings)

 

 

 

Mozambique says agrees restructuring deal with bondholders

LONDON/JOHANNESBURG (Reuters) - Mozambique’s finance ministry said on Friday
that it had reached a restructuring deal in principle with holders of its
defaulted 2023 bonds and that the new arrangement would not offer creditors
instruments linked to future gas revenues.

 

It had said last year it would share future revenues from gas projects as
part of the restructuring of the $726.5 million Eurobond. But the latest
announcement said these value recovery instruments would not now be
included.

 

Instead it will issue a $900 million bond maturing in September 2031, paying
a 5% coupon rate until 2023. After that the coupon steps up to 9%, the
statement said.

 

“(Creditor committee) members have agreed to provide Mozambique with $1
billion cash flow relief through 2023, at which point the government’s
revenue is projected to increase significantly for the long term,” it added.

 

Mozambique will also make a cash payment to eligible bondholders of up to
$40 million and hopes to wrap up the restructuring by Sept. 1.

 

Mozambique said the four creditors who had agreed in principle to the
restructuring and are members of the Global Group of Mozambique Bondholders
(GGBM) - Farallon Capital Europe LLP, Greylock Capital Management, LLC,
Mangart Capital Advisors SA and Pharo Management LLC - controlled around 60
percent of the 2023 bond.

 

Support from creditors holding 75 percent of the bond will be needed to
activate the collective action clauses.

 

Having sounded out other bondholders, the GGMB was confident the agreement
was supported by the 75% needed, said Thomas Laryea, legal advisor to the
group.

 

The decision by bondholders to ditch a claim on future gas revenues through
a value recovery instrument (VRI) had been made in response to a government
proposal, though this had not changed the economics of the deal, he added.

 

Sharing future revenues from a gas windfall had been met with resistance in
Mozambique.

 

“They substituted the VRI with additional terms in the bonds, such as the
step up in coupon, the cash at the beginning, and other changes in terms,”
said Laryea. “Ultimately, the economic considerations haven’t changed.”

 

The existing bond rallied sharply following the proposal, rising more than
nine cents to 97 cents.

 

Mozambique has been battling to recover from a debt crisis after admitting
in 2016 to $1.4 billion of previously undisclosed lending, much of which was
supposed to be spent on a tuna fishing fleet.

 

The disclosure prompted the International Monetary Fund and foreign donors
to cut off support to the southern African state, triggering a currency
collapse and a default on its sovereign debt.

 

 

 

CEO of Nigeria's Oando gets five-year director ban - watchdog

LAGOS (Reuters) - Nigeria’s financial watchdog said on Friday it had barred
the CEO of oil firm Oando, Wale Tinubu, from directing public companies for
five years over financial infractions - though he dismissed the charges as
unsubstantiated.

 

Nigeria’s Securities and Exchange Commission (SEC) said it had found
“certain infractions of securities and other relevant laws”, during an
investigation into the company.

 

Those included: “false disclosures, market abuses, misstatements in
financial statements, internal control failures and corporate governance
lapses,” the SEC added in a statement.

 

The commission also listed “poor board oversight, irregular approval of
directors’ remuneration, unjustified disbursements to directors and
management of the company (and) related party transactions not conducted at
arm’s length.”

 

The watchdog said it had ordered a number of Oando board members to resign
and refund “improperly disbursed remuneration” to the company.

 

The company and some unnamed individuals and directors would also have to
pay financial penalties, it added, without going into further details.

 

Tinubu said he had been shocked by the statement. “Oando is of the view that
these alleged infractions and penalties are unsubstantiated (and) invalid,”
he told Reuters.

 

The company “was not given the opportunity to defend itself, see, review and
respond to the forensic audit report” that the SEC produced, he added.

 

Oando has in recent years transformed itself from a fuel retailer to an oil
producer competing with multinationals such as Shell and Exxon Mobil, with
its growth largely funded by debt.

 

 

 

 

Rejection of Barrick bid is 'no brainer', top Acacia investor says

LONDON (Reuters) - Fidelity International, one of the largest shareholders
in Acacia Mining, said on Friday Barrick Gold’s low bid to buy the Acacia
shares it does not already own showed a lack of judgment and it was a “no
brainer” to reject it.

 

The comments in an interview are the first public response from one of
Acacia’s top shareholders since Barrick’s offer earlier this month to buy
them out for $787 million.

 

Barrick Gold spun off Acacia into a separate company in 2010, but owns 63.9%
of it. Barrick has said the offer level reflects the risk of operating in
Tanzania and it has until June 18 to turn the indicative bid into a firm
offer.

 

Barrick had no further comment on Friday.

 

Fidelity International said the bid was around 50% too low.

 

“We are definitely not going to accept the offer,” Alexander Wright,
portfolio manager at Fidelity International, Acacia’s sixth biggest investor
according to Refinitiv data, told Reuters. “At this price it’s a complete no
brainer not to accept it.”

 

Fidelity International, with headquarters in Bermuda and offices in London,
owns 3.2 percent of Acacia. It would require 4 percent of Acacia’s
shareholders to block a compulsory sale and 18 percent to stop a delisting
in the case of formal offer, analysts said.

 

Barrick’s Acacia offer follows two years of wrangling over a $190 billion
Tanzanian tax bill. A proposed settlement Barrick announced in February
included a $300 million payment to resolve the tax claims.

 

Fidelity International is also a small shareholder in Barrick Gold and
Wright said he was also indignant in that capacity.

 

“I think it reflects extremely badly on Barrick,” Wright said of the
takeover bid. “The ability to operate fairly and economically in Africa is
important for the company. This shows a real lack of judgment.”

 

Wright said his most recent move into Acacia dated from 2017 when he made
the assumption an amicable resolution to the company’s dispute with the
Tanzanian government would be found.

 

In the absence of a finalised deal with Tanzania, Acacia is expecting to go
ahead with an international arbitration hearing in July, with an outcome
expected by the end of this year.

 

Acacia’s shares reached a peak above 6 pounds in 2016 and have plunged to
less than 2 pounds, although they rallied in February on the announcement of
the proposed settlement and better than expected output.

 

 

 

Morocco to sell up to 8% of Maroc Telecom

RABAT (Reuters) - Maroc Telecom, Morocco’s largest telecom operator, said on
Friday that the government would sell up to an 8% stake in the company.

 

Maroc Telecom, listed on both the Casablanca Stock Exchange and Euronext
Paris, is 53% owned by United Arab Emirates company Etisalat, with the
Moroccan state owning 30%.

 

A public offering on Casablanca stock exchange will be announced in the next
few weeks, the company said in a statement.

 

The sale is the first step in a government privatisation plan to pump 5
billion to 6 billion dirhams ($527 million-$633 million) into the state
budget by selling state assets to cut the 2019 budget deficit to 3.3 percent
of gross domestic product. The deficit stood at 3.8 percent in 2018.

 

Without privatisation the budget deficit would hit 3.7 percent of GDP in
2019, government officials said.

 

The government also plans to sell the five-star La Mamounia hotel in
Marrakech and the Tahaddart power plant in the north of the country.

 

 

 

Production stalled at Vedanta Resources' Konkola Copper Mines

LUSAKA (Reuters) - Zambia’s Konkola Copper Mines (KCM) is not producing
copper, the chief executive of the mining firm’s owner Vedanta Resources
said on Friday.

 

Vedanta is fighting Zambia’s decision this month to name a provisional
liquidator to run Vedanta Resources’ 90,000 tonnes KCM business and said in
a statement that it was seeking international arbitration.

 

Legal proceedings in Zambia have been adjourned to June 4.

 

Zambia’s Chamber of Mines said last week that Africa’s second largest copper
producer was at risk of a drastic fall in copper output because of recent
tax changes.

 

“From what we understand, there is not any production coming out of the
mine,” Vedanta Resources CEO Srinivaan Vekatakrishnan said on a conference
call on Friday.

 

A mining industry source with knowledge of KCM’s operations said it had not
been in production for several weeks.

 

“They owe a lot of money and with no mining taking place for several weeks,
even concentrate suppliers want first to be paid outstanding amounts and
upfront payments for fresh supplies,” the source told Reuters on condition
of anonymity.

 

KCM miners were paid this week after a delay of around three days.

 

 

 

Vedanta seeks international arbitration to settle Zambia dispute

NEW DELHI/BENGALURU (Reuters) - Global mining conglomerate Vedanta Resources
said on Friday it was seeking international arbitration over Zambia’s
appointment of a provisional liquidator to run the company’s Konkola Copper
Mines (KCM) business.

 

Vedanta said on Friday its executives were unable to visit its KCM operation
and engage with local management, in a setback to efforts to ease tensions
amid a legal battle with Africa’s second-biggest copper producer.

 

The Zambian government has accused KCM of breaching its operating licence.
Legal proceedings have been adjourned until June 4. [nL5N2301RK]

 

Shares of Vedanta’s India-listed arm Vedanta Ltd ended 2.1% lower on Friday.

 

The tussle is the latest legal challenge confronting Vedanta, which has been
facing opposition from authorities and locals over alleged violations across
continents - from Thoothukudi, located near India’s southern tip, to
Chingola in Zambia’s copper belt.

 

Police shot dead 12 anti-Vedanta demonstrators protesting alleged pollution
in the southern state of Tamil Nadu in May 2018. Less than a year later, a
protester and a policeman died in clashes in March over inadequate jobs to
locals in Vedanta’s alumina refinery in the eastern Indian state of Odisha.

 

Vedanta denies any allegation of malpractice.

 

Demonstrators marched in Chingola earlier this month to welcome the state’s
efforts to bring in another investor.

 

Many natural resource-rich African countries are trying to secure greater
benefits from natural resources being managed by foreign companies.

 

Vedanta Resources’ Chairman Anil Agarwal said on Thursday the company was
working to comply with Zambia’s laws and tax requirements.

 

The miner, which says it had been reassured by the government that it has
not entered into any sale agreements with other parties, said it had
notified ZCCM-IH, the Zambian minority shareholder in KCM, of a dispute on
Thursday.

 

The shareholders’ agreement provides for disputes to be submitted to
international arbitration in Johannesburg, said Vedanta, which holds a
majority stake in KCM.

 

Zambian state-run ZCCM-IH, which holds around a 20 percent stake, declined
to comment.

 

Zambia said on Thursday its decision to punish Vedanta’s local operation for
what it said were breaches of environmental and financial regulations was a
signal to other firms to follow the country’s laws. [nL8N2364YT]

 

The country has riled miners with tax changes they say will force them to
withhold the investment Zambia needs.

 

KCM, one of Zambia’s largest employers, said it would raise output to
400,000 tonnes per year, but instead production has fallen because of
technical issues as infrastructure has aged, as well as problems such as
power outages.

 

 

 

The wealthy businessman who paid just £35.20 in tax

A wealthy businessman who lived a life of luxury paid just £35.20 income
tax, a BBC investigation has discovered.

 

Frank Timis rented a £14,000-a-month penthouse and spent thousands dining in
London's finest restaurants.

 

But his personal tax return for 2017 shows he paid just £35.20 in tax, after
claiming that he had hardly any income from his worldwide business empire.

 

Mr Timis's lawyers say he has fully complied with all of his tax
obligations.

 

Documents leaked to BBC Panorama and Africa Eye also reveal how Mr Timis
managed to do this.

 

They show that in 2017, Mr Timis received payments totalling £670,000 from
his offshore trust.

 

These were mainly payments called distributions, which should have been
taxable. But shortly before he submitted his tax return, Mr Timis allegedly
asked the trust to turn the distributions into untaxable loans.

 

A backdated loan agreement was created making the loans look legitimate.

 

John Christiansen, from the Tax Justice Network, said it looked like Mr
Timis was dodging tax: "It all points to this being a manoeuvre to cheat the
tax man. And, if that is the case, because it's been done retrospectively,
there seems to be prima facie evidence that this is tax fraud and it should
be investigated."

 

Leaked documents

The BBC investigation has also spoken to the man who ran the trust that
helped Mr Timis with the apparent tax dodge.

 

Philip Caldwell is named as chairman at the meeting in Switzerland that
agreed to backdate the suspicious loans.

 

His signature is on the minutes, but he says the meeting never happened and
that the minutes of the meeting are fake: "It has my signature on it but
what I can say is that no such meeting ever took place. I wasn't there. I
wasn't in Switzerland at the time."

 

The leaked documents also suggest that Mr Timis didn't pay a single penny in
UK income tax in 2016.

 

Mr Timis's lawyers say the allegations are denied in the strongest possible
terms: "Mr Timis has fully complied with all of his tax obligations and at
all stages has taken professional advice to ensure that he has done so."

 

The Romanian businessman is no stranger to controversy. He has two
convictions for supplying heroin in the 1990s and has been involved in a
series of failed mining ventures in Africa.

 

Frank Timis has floated two mining companies on the junior stock exchange in
London.

 

One of them - Regal Petroleum - was hit with the exchange's biggest ever
fine in 2009 after misleading investors about an oil discovery.

 

Regal Petroleum told investors it expected to find oil in Greece, even
though it knew the well in question was dry.

 

Mr Timis's lawyers said he only held a minority stake in Regal and was not
on the board at the time the company received the fine.

 

They said: "Mr Timis was personally investigated and cleared by the FCA in
relation to his role in Regal Petroleum."—BBC

 

 

 

 

Boeing 737 Max: Regulators seek co-operation over plane safety

EU transport officials say they will work with other regulators on approving
new software for the Boeing 737 Max.

 

But they say they reserve the right to take their own decision on when to
return the jet to service.

 

It was grounded globally in March after two crashes led to concerns over its
new anti-stall MCAS sotfware.

 

Global airlines are worried that splits between regulators over the plane's
safety could further damage the industry and hit passenger confidence.

 

Boeing admits it 'fell short' on safety alert for 737

 

Boeing 737 Max could be grounded for months, says Iata

 

No fixed timetable for Max 737 grounding to be lifted

 

'Restore order'

The decision by the European Union, China, and others to ground the Max -
before the US did so - created an unusual split in the global regulatory
system.

 

EU Transport Commissioner Violeta Bulc said the European Aviation Safety
Agency would take a very close look at Boeing's proposed design changes.

 

"We always work together with other regulators and we certainly will take
joint moves, but EASA will reserve the right to take an individual look at
the results and then of course engage with the rest of the regulators," she
told Reuters media agency.

 

There is currently no agreed time frame on the plane's return to service,
with Iata saying it was unlikely to take to the skies before August.

 

Asked how long it would take to resolve the Boeing crisis, Violeta Bulc
said: "I hope as soon as possible because we do need to restore order and
trust and move on."

 

In late May Canadian regulators suggested they may look to work more closely
with European regulators, rather than the US Federal Aviation Administration
(FAA), on the issue of the 737 Max's safety.

 

'Trust damaged'

The two crashes - in Indonesia in October 2018 and Ethiopia in March 2019 -
killed a total of 346 people.

 

Until then, airline regulators worldwide generally accepted certifications
issued in the country where the aircraft had been built, which in this case
was the FAA.

 

Following the crashes however, it emerged the FAA had delegated part of the
certification process for the plane to Boeing, putting pressure on the US
regulator.

 

There is still no broad agreement among global regulators on how and when
Boeing's software fixes, which have yet to be completed, will be approved.

 

 

Airline trade body, the International Air Transport Association (Iata) is
meeting in South Korea for its biggest gathering since the two disasters.

 

"Trust in the certification system has been damaged - among regulators,
between regulators and the industry and with the flying public," said Iata
boss Alexandre de Juniac.

 

"While Boeing and the US Federal Aviation Administration are at centre
stage, the close collaboration of counterpart manufacturers and civil
aviation authorities around the world are essential," he said.--BBC

 

 

 

BA resumes flights to Pakistan after decade-long suspension

British Airways will resume flights to Pakistan on Sunday, more than 10
years after a hotel bombing led to the route being suspended.

 

BA stopped flying to the country after a bombing in the capital city of
Islamabad in 2008, which killed more than 50 people.

 

But the airline is now scheduled to fly three times a week to Islamabad from
London Heathrow on Boeing 787s.

 

It is the only western airline to serve Pakistan.

 

In September 2008, a bomb was detonated in a dumper truck outside the
Marriott Hotel in Islamabad.

 

Pakistan hotel bombing kills dozens

BA to resume flights to Pakistan

More than 250 people were injured and 54 were killed in the blast.

 

Shortly after the explosion, BA suspended all flights, declaring: "We will
not compromise on the safety of our customers, staff or planes."

 

But in December last year, the airline said it would restart flights to
Pakistan's capital.

 

A new airport was opened in Islamabad in 2018, which has eased concerns
about both security and congestion.

 

Until Sunday, Pakistan's PIA was the only airline to run direct flights from
Pakistan to the UK.

 

British High Commissioner to Pakistan, Thomas Drew, said BA was joining "an
increasing number of British companies doing business in Pakistan".--BBC

 

 

 

US ends special trade treatment for India amid tariff dispute

The US will end preferential trade status for India next week, President
Donald Trump has confirmed amid a deepening row over protectionism.

 

India had been the largest beneficiary of a scheme that allows some goods to
enter the US duty-free.

 

However that status will end on Wednesday, Mr Trump said.

 

In March he announced that it would be revoked because India had failed to
provide adequate access to its markets, but Mr Trump gave no date.

 

On Friday he said: "It is appropriate to terminate India's designation as a
beneficiary developing country."

 

Is trade spoiling the Trump-Modi bromance?

India no longer fastest-growing economy

India had said the move would have a "minimal economic impact", but it comes
at a time lower growth and record unemployment in the country.

 

 

Until now, preferential trade treatment for India under the Generalized
System of Preferences (GSP) programme allowed $5.6bn (£4.3bn) worth of
exports to enter the US duty free.

 

The move is the latest push by the Trump administration to redress what it
considers to be unfair trading relationships with other countries.

 

Last month the US ended Turkey's preferential status under the scheme.

 

Mr Trump has also imposed tariffs on steel and aluminium imports from
countries around the world. Last year, India retaliated against those tariff
hikes by raising import duties on a range of goods.

 

Separately, the US is involved in an escalating trade war with China, and
recently threatened tariffs on Mexican goods over illegal migration.--BBC

 

 

 

Trump's threat of Mexico trade war sends markets lower

US President Donald Trump's threat to open a trade war with Mexico sent Wall
Street sliding, with shares in carmakers among the worst hit.

 

Markets in Europe were already spooked by news the US would hit Mexico with
tariffs in an anti-immigration measure.

 

The main US share markets closed between 1.3% and 1.5% lower. General
Motors, which like many carmakers has operations in Mexico, fell 4.3%.

 

News of the Mexico tariff move comes amid a US trade war with China.

 

Mr Trump announced in a tweet that tariffs on all goods coming from Mexico
would be introduced until the country curbs illegal immigration into the US.

 

>From 10 June, a 5% tariff would be imposed and would slowly rise to 25%
"until the illegal immigration problem is remedied", he said.

 

The tweet was followed up with a White House statement giving more details.

 

Jesús Seade, Mexico's top diplomat for North America, said the proposed
tariffs would be "disastrous", while analysts and investors have speculated
that the measure could be the trigger that pushes the global economy into
recession.

 

Trump to hit Mexico with tariffs to halt migrants

Commerzbank strategist Ulrich Leuchtmann said: "The US trade policy has
taken a qualitatively different turn. Using tariffs as a tool for
non-economic goals is something which brings a new quality to proceedings."

 

Shares in carmakers and supply chain companies suffered the worst. Ford fell
3.4% and Fiat Chrysler 5%.

 

Mexico is the single biggest source of parts and engines for the US vehicle
sector, importing some $128bn worth of products.

 

A research note from Deutsche Bank said the tariff measure "could cripple
the industry and cause major uncertainty".

 

The total value of US imports from Mexico is about $350bn.

 

In Europe, car shares were also down, with Renault shedding 4.5%, Volkswagen
2.6% lower, and BMW 1.6% off.

 

The Business Roundtable, a US body made of chief executives of major US
corporations, urged Mr Trump to reconsider.

 

"Imposing unilateral tariffs on Mexican imports would be a grave error," the
group said in a statement, warning that this "would create significant
economic disruption and tax US workers, farmers, consumers and businesses".

 

It also warned that the move jeopardised a new US-Mexico-Canada trade deal
to replace Nafta.

 

The US Chamber of Commerce, which represents three million businesses in the
US, also condemned the proposed tariffs.

 

"These tariffs will be paid by American families and businesses without
doing a thing to solve the very real problems at the border," said Neil
Bradley, the chief policy officer.

 

'Come back home'

Analysts said that in the highly competitive car and consumer goods sectors,
companies were unlikely to be able to pass on extra costs to consumers.

 

"Margins are so thin in the US market right now that there's no way that any
automaker is not going to pass on these tariffs to their customers," said
Janet Lewis, an analyst at Macquarie Securities.

 

"The unknown factor is the impact on suppliers, as components can move back
and forth between Mexico, the United States and Canada up to 20 times before
they make their way into assembled cars," she said.

 

But Mr Trump said the tariffs raised would help restore the US car industry,
and he urged companies to "come back home to the USA".

 

Any retaliation by Mexico could put further pressure on American farmers
already suffering from the US trade war with China, as well as flooding and
wet weather.

 

Last week, the White House announced a $16bn aid package for farmers,
following $12bn in assistance in 2018, to help compensate for Beijing's
retaliation.

 

Dave Salmonsen, a trade policy specialist for the American Farm Bureau
Federation, said farmers and consumers would both suffer.

 

"Fresh food crosses the border everyday, so the consequences on fresh fruits
and vegetables would be fairly immediate," he told the AFP news agency,
adding that a lot of beer and tequila was also imported.--BBC

 

 

 

India loses place as world's fastest-growing economy

India has lost its spot as the world's fastest-growing economy after it grew
more slowly than expected in the first three months of 2019.

 

Official data showed the economy grew 5.8%, which is slower than the 6.4%
growth registered by China, and down from 6.6% in the previous quarter.

 

It was the first set of figures since Narendra Modi secured a second
election victory this month.

 

During his first term, India became the world's fastest-growing economy.

 

But the latest figures, which show the slowest growth rate in 17 quarters,
mean India's growth rate has fallen behind China for the first time in
nearly two years.

 

Economists had been expecting the economy to grow 6.3% in the first quarter.

 

The figures will put pressure on Prime Minister Modi's government and the
central bank to provide stimulus to the economy through fiscal measures.

 

India general election 2019: What happened?

How will Modi handle India's economy?

Unlike China, India's economic growth has been driven by domestic
consumption over the last 15 years and the latest data showed weaker
consumer demand.

 

There was also a slower growth in investment, which fell to 3.6% from 10.6%
in the previous quarter.

 

Finance secretary Subhash Chandra Garg said that the next quarter - the
three months of April to June - could also be "relatively slower".

 

But, it should start to turnaround in the third quarter, he said.

 

'Jobs crisis'

The Reserve Bank of India is now expected to cut interest rates next month.

 

Unemployment data, that has been repeatedly delayed, was also issued on
Friday and showed a rate of 6.1% in the 2017/18 fiscal year.

 

"It shows the jobs crisis is still there: there are not many new ones being
created," said NR Bhanumurthy, a professor at the National Institute of
Public Finance and Policy in New Delhi.

 

There has not been detailed official data on unemployment for several year
and chief statistician Pravin Srivastava told reporters "it would be unfair
to compare it with the past."--BBC

 

 

 

China's tariff hikes on US goods come into force

New Chinese tariffs of up to 25% have been imposed on $60bn (£46bn) worth of
US goods.

 

The tariffs, which came into force at midnight in Beijing on 1 June, are in
retaliation for the US doubling tariffs on $200bn of Chinese goods in May.

 

China had previously imposed tariffs of between 5-10% on 5,140 US products.

 

On Friday, China announced plans to blacklist some foreign firms and
individuals it deemed harmful to the country's interests.

 

China's Commerce Ministry said it had decided to create an "undesirable
entities" list to combat "unilateralism and trade protectionism".

 

China hits back in trade war with US

US-China trade war in 300 words

Why the US-China rivalry will not end with a trade deal

"At present, the world economic development is uncertain and unstable
factors are increasing," Ministry of Commerce spokesman Gao Feng told
reporters at a press conference in Beijing.

 

"Unilateralism and trade protectionism are on the rise. The multilateral
trading system is facing severe challenges, and normal international
economic and trade activities are negatively disrupted."

 

He added that China would blacklist any entities, organisations or
individuals who could cause "substantial damage" to Chinese enterprises, as
well as any entities that pose a potential threat to China's national
security.

 

What could happen next?

Beijing's tariffs on American goods aren't going to have much of an impact
on US economic growth.

 

After all, China is only able to tax around $120bn worth of America's goods
- that's how much it imported from the US last year.

 

Economists say at most, the US might see about one tenth of its gross
domestic product shaved off by Beijing's tariffs.

 

But what could hurt the US is reduced Chinese investment.

 

The US China Business Council has warned that exports to China from the US
were down about 7% last year because of the trade war.

 

Separately, a report by the US-China Investment Project found Chinese
investment into the US plummeted by 60% in 2018, partly because of the
souring political climate.

 

Beijing could go even further, as I've said before, and in recent days it
has even warned about curbing its rare earth exports to the US.

 

China is by far the largest producer of these raw materials, used in a range
of products from electronics to renewable energy - and vital for many
American industries.

 

If it does curb rare earth exports to the US, it would be challenging for
American companies to find alternative sources quickly.

 

China's move mirrors a similar one by US President Donald Trump in mid-May,
where he declared a national emergency to protect US computer networks from
"foreign adversaries".

 

The Trump administration then added Huawei to a list of companies that
American firms cannot trade with unless they have a licence.

 

Huawei has been at the epicentre of the US-China power struggle for months.

 

Led by the US, the firm faces a growing backlash from Western countries over
possible risks posed by using its products in next-generation 5G mobile
networks.

 

The US argues the Chinese government could use Huawei products for
surveillance.

 

Huawei denies such claims and says it is independent from the Chinese
government.

 

So far, the US has imposed tariffs on $250bn of Chinese goods, having
accused the country of unfair trade practices.

 

Beijing hit back with duties on $110bn of US goods, blaming the US for
starting "the largest trade war in economic history".

 

Tariffs will be raised on a total of 5,140 products. They include:

 

Meat: Fresh or cold boned sheep meat, smoked or salted beef, chopped meat

Alcohol: Sparkling wine, regular wine, other fermented beverages, gin,
tequila

Oil seeds and fruits: Sunflower seeds, other oily seeds and fruits, plants
mainly used as medicine

Frozen foods: peas, corn, legumes, spinach, fruits and nuts--BBC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Dairibord

AGM

Steward Room, Meikles

31 May 2019, 12pm

 


Lafarge

AGM

Manresa Club, Arcturus

05 June 2019 , 12pm

 


CBZ

AGM

Stewart Room, Meikles

05 June 2019 , 3pm

 


 

 

 

 

 


 

 

 

 


 

 

 

 


 <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
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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
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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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