Major International Business Headlines Brief::: 06 June 2019

Thu Jun 6 04:19:14 CAT 2019

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Major International Business Headlines Brief::: 06 June 2019

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*  South Africa finance minister denies plan to change central bank mandate but ANC stands by it

*  South African rand volatility gauge touches near 2-month high

*  Guinea iron ore prospectors set sights on ArcelorMittal rail

*  South African business confidence marginally lower in May- SACCI

*  Namibia's economy expected to contract again in 2019 - IMF

*  Sibanye-Stillwater reduces job cut estimate to 3,450 in gold shake-up

*  Mozambique's top court says state-guaranteed Eurobond illegal

*  S.Africa's private sector contracts in May as firms await reforms -PMI

*  Kenya private sector activity rebounds in May: PMI

*  Fiat Chrysler withdraws bid for Renault

*  Italy risks disciplinary action for violating EU debt rules

*  Trump unimpressed with US-Mexico trade talks

*  Jaguar Land Rover and BMW join forces on electric cars

*  Job loss fears in India after Trump tariff shock

*  Tiffany hit by lower-spending tourists

 <mailto:info at bulls.co.zw> 

South Africa finance minister denies plan to change central bank mandate but ANC stands by it

JOHANNESBURG (Reuters) - South Africa’s governing party refused to back down on Wednesday from a call to mandate the central bank to boost employment, despite the finance minister denying such plans and saying talk of them would “destabilise the market”.

The African National Congress announced a call on Tuesday for a change to the mandate of the South African Reserve Bank to promote growth and jobs. With investors nervous about any moves towards populist policymaking, that caused the rand currency to fall and measures of its volatility to spike.

Finance Minister Tito Mboweni told reporters in Johannesburg there were no plans to change the bank’s mandate.

“Nobody is talking about changing the mandate of the Reserve Bank,” he said. “I don’t understand why the obsession about the central bank. ... Why are we saying things we know are going to destabilise the market?”

Central bank governor Lesetja Kganyago said: “The constitution outlines the primary mandate of the Reserve Bank, being to protect the value of the currency in the interests of balanced and sustainable growth.”

But ANC spokesman Pule Mabe said that the governing party was sticking to the statement read out on Tuesday by its Secretary General Ace Magashule.

Magashule had announced that the party’s executive had agreed to broaden the bank’s mandate “beyond price stability to include growth and employment”.

Mabe told television channel eNCA: “The ANC has only issued one statement. The statement ... which was read out by the ANC secretary general is the statement of the African National Congress.”

The ANC would bring together senior economic officials for a meeting at its headquarters to make sure they were “reading from the same script”, Mabe added.

Magashule’s comments had been contradicted on Tuesday by a senior ANC economic official, Enoch Godongwana, who said they were inaccurate.

The debate over how the central bank should conduct its monetary policy has resurfaced as data showed on Tuesday that economy suffered its sharpest contraction in a decade in the first quarter.

President Cyril Ramaphosa has failed to re-ignite economic growth as he pledged when campaigning for ANC leader, making him vulnerable to attacks from rivals within his party who want to see him pursue a more radical approach.

The South African Communist Party (SACP), a key ANC ally, said on Wednesday that it agreed with Magashule that the central bank’s mandate should be expanded.

It said in a statement: “The mandate of the South African Reserve Bank must explicitly include employment growth targeting – with a consequential amendment to the Reserve Bank Act.”

 <mailto:info at bulls.co.zw> 

South African rand volatility gauge touches near 2-month high

LONDON (Reuters) - A South African rand volatility gauge touched a near two-month high on Wednesday, as the currency remained under pressure from dire economic data and a fierce debate over the central bank’s mandate.

One-month implied volatility hit 14.65 vols, the highest level since April 10, before easing back to stand at 1-month high of 14.5 vols.

Data out on Tuesday showed the continent’s most industrialised economy had suffered it worst quarterly contraction in a decade at the start of the year.

The rand is also reeling from news that South Africa’s ruling party is arguing over whether to change the central bank’s mandate to include employment and growth as well as inflation. [nL8N23B29A] Investors are wary of any changes that could curb the prized independence of the bank.

Guinea iron ore prospectors set sights on ArcelorMittal rail

LONDON/CONAKRY (Reuters) - The race to mine Guinea’s iron ore has started although the focus is not on its giant Simandou deposits but on smaller finds whose output could be transported via Liberia if ArcelorMittal shares its railway, banking and industry sources said.

Guinea’s aspirations to develop Simandou, the world’s largest known untapped iron ore deposit, have foundered because of the cost of infrastructure and protracted legal disputes.

Guinea says it is still trying to reach a deal with China to build the roughly 650 km (406 miles) of railway needed to transport the iron ore through Guinea.

In the interim, the government has signed economic cooperation deals with Liberia, which would allow iron ore to be transported from Guinea’s smaller Zogota project along a railway through the neighbouring West African nation.

Zogota is being developed by former Xstrata boss Mick Davis, who wants to relaunch his mining career and says he has clinched an outline government accord on Liberian shipment.

Davis, also chief executive of Britain’s ruling Conservative Party, said the aim was to complete a feasibility study within six months and bring the project rapidly into production.

Elsewhere, BHP, together with Newmont, holds Guinea’s Mount Nimba deposit. However, BHP says the Nimba deposit does not fit with its focus on assets in stable, developed countries.

HPX, a privately-owned U.S. corporation, led by mining billionaire Robert Friedland, had been interested in acquiring a stake, industry and banking sources said, but a deal has yet to be signed.

A BHP spokesman said he could not comment. A spokesman for Friedland also declined to comment. Newmont was not immediately available for comment and neither was Davis’ firm Niron.

Both Nimba and Zogota would need to reach agreement with ArcelorMittal, the sole rail concession holder in Liberia, to convince it to allow them to use its infrastructure.

Investment in road and port improvements could also be required.

ArcelorMittal said in an emailed statement that its mining agreement allowed third parties access to its railway if that did not “unreasonably interfere with ArcelorMittal’s operation and thereby revenue flow for the people of Liberia”.

But it said its main aim was to boost its Liberian production.

In a text message, Guinean Mining Minister Abdoulaye Mgassouba said the country’s aim was that “all the projects to exploit iron ore are developed in a way to give Guinea a presence on the market and to get the full benefit of its potential”.

South African business confidence marginally lower in May- SACCI

JOHANNESBURG (Reuters) - South Africa’s business confidence inched lower in May, falling to 93 from 93.7 in April, the South African Chamber of Commerce and Industry (SACCI) said on Wednesday.

Namibia's economy expected to contract again in 2019 - IMF

WINDHOEK (Reuters) - Namibia’s economy will mildly contract again in 2019 due to poor rains and reduced diamond production but economic growth will return in 2020, the International Monetary Fund said on Wednesday.

Namibia’s central bank had said in April economic growth would be about 0.3% in 2019 after contractions in 2018 and 2017.

The IMF did not give precise figures in its statement.

“Downside risks to this outlook include lower than expected Southern African Customs Union revenue and fiscal slippages that would undermine the government’s efforts to stabilize public debt dynamics,” Geremia Palomba, the IMF mission chief for Namibia, said in the statement.

Namibia’s growth was expected to gradually converge to a long-term rate of about 3%, held back by low productivity and declining competitiveness, he added.

Sibanye-Stillwater reduces job cut estimate to 3,450 in gold shake-up

JOHANNESBURG (Reuters) - Sibanye-Stillwater said on Wednesday around 3,450 jobs will be affected by the proposed restructuring of the company’s gold mining operations following losses at some of its mines last year.

The number of job losses is lower than a February forecast for around 5,870 employees and 800 contractors to be affected.

The precious metal miner said it had concluded talks with stakeholders on restructuring its gold operations following financial losses at the Beatrix 1 and Driefontein 2,6,7,8 shafts during 2018, with only 3,450 jobs now affected.

Mozambique's top court says state-guaranteed Eurobond illegal

MAPUTO (Reuters) - Mozambique’s top court has ruled that a government-guaranteed $850 million Eurobond issued by state-run tuna-fishing company Ematum in 2013 was illegal, court documents showed.

Mozambique has been battling to restructure its finances after the emergence in 2016 of about $1.4 billion of undisclosed borrowing that prompted the International Monetary Fund and foreign donors to cut financial support, triggering a currency crisis and a sovereign debt default.

“The Constitutional Council declares the nullity of the acts inherent to the loan contracted by Ematum SA, and the respective sovereign guarantee granted by the government in 2013, with all legal consequences,” the Constitutional Council said in a ruling dated Monday.

It said that “no expenditure can be assumed, ordered or carried out without being duly registered in the budget of the approved state ... which was not the case.”

Government officials were not immediately available to comment on the ruling. Civil society advocates and creditors were at odds if the ruling would have any impact on the government’s current efforts to restructure its debts.

The $850 million Eurobond was dubbed the “tuna bond” as it was supposed to finance a tuna fishing fleet and had been presented to investors as funding for “fishing infrastructure”.

But much of the cash was later designated for maritime security and reallocated to the defence budget.

In 2016, Mozambican officials agreed to swap the tuna bond’s outstanding $697 million for a sovereign Eurobond.

But the emergence of hidden lending, including a loan to Mozambique Asset Management (MAM) and a facility for maritime security projects at Proindicus, undermined the relationship between Mozambique and its lenders.

The case was launched by a civil society coalition called Budget Monitoring Forum, which is leading a campaign against the undisclosed loans.

The Forum’s Denise Namburete said the ruling was “a huge victory”.

“The Constitutional Court has the final decision. The government of Mozambique cannot appeal, therefore we are all curious to learn how and what the government of Mozambique will tell the creditors,” Namburete said.

“It means that as a result and consequently all previous acts associated with this loan and its bonds must be considered illegal and therefore null and void,” she said.

“It also means that the agreement of principles drawn up by the Minister of Finance with the creditors should be considered void as well as all the guarantees granted by the government,” Namburete added.

The Finance Ministry said on Friday it had reached a restructuring deal in principle with holders of the bond issued in 2016.

Reacting to the ruling, Thomas Laryea, legal adviser to the Global Group of Mozambique Bondholders (GGBM) - a group of investors in the 2016 bond - said he did not expect any impact on the restructuring process currently under way.

“The Eurobonds constitute new legal obligations from the Mozambique government - a different debtor from Ematum - with substantially different creditors,” Laryea told Reuters, adding the bonds had been approved by the country’s parliament in line with the constitution and within the limits of the budget law.

“They were issued in public markets, based on legally approved documentation in accordance with English law. Given that the Mozambique court ruling has no legal bearing on the Eurobonds, we expect that the restructuring of the Eurobonds will proceed as agreed.”

The GGBM is made up of four creditors - Farallon Capital Europe LLP, Greylock Capital Management LLC, Mangart Capital Advisors SA and Pharo Management LLC - who control around 60 percent of the 2023 bond.

The issue indicated around 1 cent lower at 98 cents on the dollar.

S.Africa's private sector contracts in May as firms await reforms -PMI

JOHANNESBURG, June 5 (Reuters) - South African private sector activity returned to contraction in May as new orders fell and exports retreated for a fourth month, a survey showed on Wednesday, another sign of weak demand in a troubled economy.

IHS Markit’s Purchasing Managers’ Index (PMI) slipped to 49.3 in May from 50.3 in April, with three out of the five main sub-indices showing a contraction.

Output, new orders and supplier delivery times all came in below the 50-point mark separating expansion from contraction.

“Demand was partly affected by the election, although panel members also reported difficult economic conditions across the private sector,” said IHS Markit economist David Owen.

Data on Tuesday showed South Africa’s economy contracted 3.2% in the first three months of 2019, much more than was forecast, as agriculture, mining, manufacturing and retail all shrank amid nationwide power cuts by state utility Eskom.

The stuttering economy is set to again struggle to reach 1% annual expansion in 2019 despite President Cyril Ramaphosa’s promises to woo investment, create jobs and root out corruption. Such pledges by Ramaphosa, whose African National Congress party won an election in May with the smallest majority of its 25 years in power, have helped Pretoria cling onto its last investment-grade credit rating.

“Firms are hopeful that the new government will bring some much-needed stability to the markets. Future sentiment rose to the highest for 13 months, showing that there is still confidence in the South African economy,” said Owen.

Kenya private sector activity rebounds in May: PMI

NAIROBI, June 5 (Reuters) - Kenya’s private sector activity grew modestly in May, rebounding from the first contraction since 2017 registered in the previous month, a survey showed on Wednesday.

The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) for manufacturing and services rose to 51.3 in May from 49.3 in April. Any reading above 50 indicates growth.

“Activity in the Kenyan private sector recovered in May after the agriculture sector slowdown witnessed over the past couple of months,” said Jibran Qureishi, regional economist for East Africa at Stanbic Bank.

Kenya, which is East Africa’s richest economy, suffered from dry weather in the first four months of this year, after the onset of a rainfall season that was delayed by more than a month to late April.

Things could get better for the private sector, Qureishi said.

“Should the government clear arrears owed to the private sector as promised on Madaraka day (a June 1 public holiday), private sector activity could benefit from a huge boost,” he said.

President Uhuru Kenyatta has directed all ministries and state agencies to settle any pending supplier bills that have not been queried by auditors by the end of this month.

Firms complain that the government takes years to settle bills for goods and services supplied to it, mainly due to widespread corruption.

During the month under review, firms suffered from high energy and transport costs, the survey found.

Fiat Chrysler withdraws bid for Renault

Fiat Chrysler has withdrawn its merger proposal for French carmaker Renault, the Italian firm has said.

The announcement followed a failed attempt by Renault board members to reach a decision on the offer.

Renault said it had been unable to reach agreement because French government representatives had requested a postponement.

The French government is the biggest shareholder in Renault, with a stake of more than 15%.

Japan's Nissan also owns 15% of Renault, while Renault owns 43.4% of Nissan's shares.

Fiat Chrysler made the offer for Renault at the end of last month, describing it as a "transformative" proposal that would create a global automotive leader.

In its statement, Fiat Chrysler said it remained "firmly convinced" of the "compelling, transformational rationale" of the tie-up.

It said the terms had been "carefully balanced to deliver substantial benefits to all parties".

It added: "However, it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully."

Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate.

The former chief executive of both Nissan and Renault, Carlos Ghosn, is awaiting trial following his fourth arrest amid allegations of financial misconduct.

The allegations have put a strain on the 20-year-old alliance, which also includes Japan's Mitsubishi Motors.--BBC

Italy risks disciplinary action for violating EU debt rules

Italy could face disciplinary action over its failure to respect European Union spending rules.

The European Commission found that Italy's public debt stood at more than 130% of GDP in 2018 - far above the 60% limit which EU rules require.

It warned that a "snowball effect" was likely to see the situation worsen in 2019 and 2020, as it recommended legal action.

But Italy's populist leaders remained defiant following the warning.

EU commissioner for the euro and social dialogue, Valdis Dombrovskis, said the Italian economy showed "the damage recent policy choices are doing."

Italy: What you need to know

EU rejects debt-hit Italy's budget

He called on the country's leaders to take action to reduce debt, saying there needed to be a "renewed reform effort, not spending more where there is no fiscal space to do so".

Without taking action, the disciplinary procedure - which has not yet been opened - could ultimately result in an unprecedented fine of more than €3bn (£2.6bn).

But Italy's government showed little immediate interest in a policy change.

"I'm sure that in Brussels they will respect our will," said Deputy Prime Minister Matteo Salvini. "The only way to cut the debt created in the past is to cut taxes."

"Cuts, sanctions and austerity have only produced more debt, poverty, precariousness and unemployment. We need to do the opposite," he added.

Fellow Deputy Prime Minister Luigi Di Maio said politicians would "go to Europe and discuss [the issue] responsibly".

But, he added: "It's tough, when you see that every day they find another reason to say bad things about Italy and this government."

The warning on Wednesday is the latest to be made by the European Commission over Italy's spending.

The country narrowly averted the same procedure at the last minute in December by lowering an initial target for the budget deficit this year.--BBC

Trump unimpressed with US-Mexico trade talks

US President Donald Trump has said "not nearly enough" progress is being made in negotiations with Mexico to avert his threatened tariffs.

Trump administration officials will meet for second day of talks with Mexico's foreign minister in Washington on Thursday.

Mr Trump vowed import duties of 5% will take effect on Monday unless Mexico stems the flow of migrants to the US.

Those numbers reached their highest level in more than a decade last month.

What happened in the negotiations?

US Vice-President Mike Pence and Secretary of State Mike Pompeo held talks with Mexican Foreign Minister Marcelo Ebrard at the White House on Wednesday, but the 90-minute meeting ended without agreement.

Is there a crisis on the US-Mexico border?

Trump's border wall - in seven charts

Mr Ebrard told a news conference afterwards the negotiations had been cordial, but tariffs were not even discussed.

"The dialogue was focused on migration flows and what Mexico is doing or is proposing to the United States, our concern about the Central American situation," he said.

The US president, who is in Europe for World War Two commemorations, warned on Twitter that the tariffs would go ahead next Monday if there is no breakthrough.

Under his proposal, duties would rise by 5% every month on goods including cars, beer, tequila, fruit and vegetables, reaching 25% by October.

Mr Trump wants Mexico to stop the hundreds of thousands of mostly Central American migrants who have been seeking entry to the US this year.

The US president announced the planned Mexico tariffs last week on Twitter, catching members of his own party and financial markets unawares.

Will the tariffs actually happen?

White House trade adviser Peter Navarro had raised hopes earlier on Wednesday of a possible rapprochement.

He told CNN "we believe that these tariffs may not have to go into effect, precisely because we have the Mexicans' attention".

Mr Navarro said Mr Trump wants Mexico to commit to take all asylum seekers and to divert more resources to its own southern border with Guatemala.

Mexican President Andrés Manuel López Obrador has said he is optimistic about defusing a potential trade war that analysts have said could tip his country's economy into recession.

Some commentators have speculated that Mr Trump will not follow through, pointing out that he reversed course on a threat to close the US-Mexico border in April.

But the US president insisted in a tweet on Tuesday he was not "bluffing". The US is already locked in a tit-for-tat tariff war with China.

Does Trump have political support for Mexico tariffs?

Some members of the president's Republican party in the Senate have threatened a rare revolt.

They have raised the possibility of banding together with Democrats to form a veto-proof majority against his plan.

But other Republican senators and members of the House of Representatives are sticking by Mr Trump on his signature issue.

Many lawmakers are worried about the potential impact on cross-border trade and increased costs for US businesses and consumers on imported Mexican goods.

With the clock ticking toward next year's US elections, Democrats have accused Mr Trump of using tariffs and immigration to distract from his political problems.

And the US president has reportedly faced resistance from some of his own advisers, including US Trade Representative Robert Lighthizer, an architect of Mr Trump's China trade policy.

Mr Lighthizer is said to have expressed concern that any duties on Mexico could harm efforts to persuade Congress to approve a new North American trade deal.

What Trump has in common with Abe Lincoln and Ferris Bueller

Mexico warns tariffs will hit US hard

What's the situation on the US-Mexico border?

The stakes were raised on Wednesday as US Customs and Border Protection announced that migrant arrests had surged in May to the highest level in more than a decade.

Border Patrol apprehended 132,887 migrants attempting to enter the US from Mexico in May, marking a 33% increase from the month before.

It said 84,542 were families and 11,507 unaccompanied children.

The arrests were the highest monthly total since Mr Trump took office.

Another 11,391 migrants were deemed "inadmissible" and turned away after arriving at US ports of entry, bringing the overall figure to 144,278.

"We are in a full-blown emergency, and I cannot say this stronger, the system is broken," said acting CBP Commissioner John Sanders.

How do the numbers compare with previous years?

Official figures show illegal border crossings have been in decline since 2000.

In 2000, 1.6 million people were apprehended trying to cross the border illegally - that number was just under 400,000 in 2018.

In 2017, Mr Trump's first year in office, the figures were the lowest they had been since 1971.

The decline was in large part due to a dip in the number of people coming from Mexico.

In the last two years, however, the number of arrests has been rising again, especially in recent months.--BBC

Jaguar Land Rover and BMW join forces on electric cars

BMW and Jaguar Land Rover (JLR) are to join forces on developing electric car technologies.

The car giants said they would work together to develop electric motors, transmissions and power electronics.

Both firms have struggled to maintain profit margins amid falling car sales and higher costs as well as the need to invest in future technologies.

Car firms are being forced to make low emission vehicles to meet more stringent anti-pollution rules.

There have been a number of similar tie-ups aimed at sharing the costs of developing electric cars.

Volkswagen and Ford, for example, are working together on new vehicles. Meanwhile, rivals FiatChrysler and Renault are exploring a $35bn tie-up.

BMW board member Klaus Froehlich said: "Together, we have the opportunity to cater more effectively for customer needs by shortening development time and bringing vehicles and state-of-the-art technologies more rapidly to market."

Tie-up

BMW and Jaguar Land Rover said they will save costs through shared research, shared production planning, and by jointly buying electric car components.

Jaguar Land Rover is still run by former BMW managers, including Ralf Speth the company's chief executive who spent 20 years at BMW prior to joining JLR.

BMW has been developing an electric motor, transmission and power electronics in one housing that it calls "Gen 5" of its "eDrive" technology.

A joint team of BMW and JLR engineers in Munich will further develop this Gen 5 technology, then both companies will produce their own electric drivetrains, BMW said.

JLR will produce these drivetrains at its Wolverhampton plant, which employs 1,600 people.

Nick Rogers, Jaguar Land Rover's engineering director, said: "We've proven we can build world-beating electric cars but now we need to scale the technology to support the next generation of Jaguar and Land Rover products."

Car manufacturers are increasingly open to sharing electric car parts because the technology is expensive.

"Carmakers are much less precious about sharing electric car technology because it is much harder to create product differentiation with electric car tech. They all accelerate fast, and everybody can do quality and ride and handling," according to Carl-Peter Forster, a former chief executive of Tata Motors and a former BMW executive.

JLR is owned by Indian car giant Tata Motors.--BBC

Job loss fears in India after Trump tariff shock

If you've bought a luxury leather handbag in Milan or Manhattan recently, chances are high that it was made in Sanjay Leekha's three-storey factory in Faridabad on the outskirts of Delhi.

But on Wednesday, the 33-year-old family-owned business - along with thousands of other Indian manufacturers - will become the latest victim of the Trump administration's effort to reshape its international trading relationships.

Exporters of goods including imitation jewellery, building materials, solar cells and processed food will face a hike of up to 10% in the US tariffs imposed on their products, following the White House's revocation of India's membership of the Generalized System of Preferences, or GSP.

India no longer world's fastest-growing economy

Are trade issues spoiling the Trump-Modi bromance?

First introduced in 1976, the GSP is a preferential trading agreement between the US and more than 120 countries and territories. It's designed to help developing countries grow their economies, while bringing down the price of imported products for American consumers.

India was by far the largest beneficiary of the GSP - $6.3bn (£4.9bn) of its exports enjoyed concessionary tariffs - or no tariffs at all - in the United States last year.

Among the companies to have gained a significant competitive advantage from GSP exemptions is Mr Leekha's firm, Alpine Apparels, which produces as many as 40,000 handbags a month. But US buyers of his bespoke products are already asking the firm to absorb the cost of higher levies by reducing its prices.

If he is forced to do that, Mr Leekha says, he will eventually have no choice but to lay off some of his 1,000 employees.

Alpine Apparels employs about 1,000 people

The hope in Washington is that the blow to Alpine, and its fellow former GSP beneficiaries, will prompt a cry of anguish from Indian businesses that will lead to a rethink in Prime Minister Narendra Modi's new government.

In a statement last week, US President Donald Trump explained that India's ousting was a form of retribution - he accused the country of not having provided US companies "equitable and reasonable access" to its markets.

The background to that complaint is an ongoing dispute over permissions to sell medical devices and certain dairy products to Indian consumers.

The US wants American firms to be able to bypass India's strict price controls on healthcare products, imposed to keep the cost down for poorer citizens. It also wants businesses to be able to sell cheeses from animals which have been raised on feed containing bovine extracts - a proposition that the Indian government says would offend the religious and cultural sensitivities of many of its citizens. (Hindus, who make up about 80% of the Indian population, consider cows to be sacred and many do not consume beef or its by-products.)

The Coalition for GSP, a US-based campaign group, say the Trump administration's retaliatory decision will ultimately prove counterproductive, and cost American businesses over $300m in additional tariffs each year.

In their written testimonies to the US government, some of the country's largest businesses seem to agree.

Retail giant Walmart, for example, says India's membership of the GSP programme benefited its US customers "by removing millions of dollars of duty costs that act as a tax" on its products.

But Mr Leekha says the impact will largely be felt by Indian suppliers, who will have become less competitive overnight after being "singled out" by Donald Trump's team.

"The removal of GSP is only happening to India and Turkey, giving other developing economies an economic advantage," he explains.

Exporters like him, he insists, will be forced to slash their profit margins.

"This will lead to us having to say no to some business, or some business actually moving away from us to others countries which are still availing themselves of the GSP benefit, countries like Cambodia and Indonesia."

His fears may not be unfounded.

The American Apparel & Footwear Association, which represents brands including New Balance and Adidas, has warned the US government that the withdrawal of India's GSP benefits would leave companies with "no choice but to return to sourcing from China."

It added that tariffs on Chinese imports meant that "American consumers will pay far higher prices for their travel goods as a result."

Either way, this move will provide the first major foreign policy challenge to Mr Modi's new cabinet.

Thus far, the Indian government's response has been muted, suggesting the blow may be more of a diplomatic nature than an economic one.

"If you look at the broader picture, our exports to the US are around $51.2bn," says Ajay Sahai, director general of the Federation of Indian Export Organisations.

He estimates the net tariff advantage of being a GSP member at a mere $260m.

Although trading under GSP has been "a win-win situation for both countries," Mr Sahai says that "on a macro level, we can say the impact [of ending India's GSP membership] will be minimum".

Nonetheless, the US president's actions mark a political moment.

>From bear-hugs in the Rose Garden to warm words on Twitter, Mr Modi has largely been spared the worst of Mr Trump's wrath.

But the two strongmen - who have made much of economic and defence co-operation between their countries - are drifting apart on trade as they seek to protect what they see as competing interests back home.--BBC

Tiffany hit by lower-spending tourists

Jeweller Tiffany has seen worldwide sales fall by 3% to $1bn (£787m) in the first quarter, as it was hit by lower-spending tourists.

Meanwhile like-for-like sales at the New York-based firm fell by 5%.

The company also said it could be hit by tariff increases on its US exports to China, as part of a trade war.

The firm said it would now look to invest in domestic markets worldwide, with a focus on the local Chinese market.

Sales in the Americas fell 4% largely due to lower spending by foreign tourists.

Tariffs hike

"The Chinese government is pushing for local consumption and we will keep on focusing on our marketing in China because there is a very strong demand there," chief Executive Alessandro Bogliolo told Reuters.

The US has more than doubled tariffs on $200bn (£157bn) of Chinese goods, escalating a trade war between them.

US-China trade war in 300 words

Trump warm on China despite trade war

Ram-raiders hit Tiffany jewellery shop

Tiffany said it was braced for "tariffs increasing on jewellery, that the company exports from the US to China, from its current levels to a new level of 25% on average".

Meanwhile, net earnings of $125m were 12% lower than the previous year's $142m.

'Sharper declines'

Mr Bogliolo said in a conference call that external pressures had had a "significant impact on sales".

"For example, we believe that the strong dollar had a meaningful impact on first quarter retail sales accredited to foreign tourists in the Americas," he said.

"Our internal estimates indicate that those tourist sales represent a low double digit percentage of our American retail sales. Those sales were down approximately 25% from a year ago with sharper declines among Chinese tourists."

But he said he was pleased by the growth of global sales attributed to local customers and growth in mainland China.

"We are continuing our exciting development in mainland China this year and total sales continue to grow by a double-digit rate in local currency in the first quarter," he said--BBC

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

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 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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