Major International Business Headlines Brief::: 01 November 2019

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Major International Business Headlines Brief::: 01 November 2019

 


 

 


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*  Dented dollar on Fed outlook buoys EM currencies

*  Africa's MTN cancels $300 million stake sale in Mascom Wireless Botswana

*  Kenya's economy to grow at a faster pace next year -World Bank

*  South African Treasury: ratings firms worried about debt, growth and
wages

*  Kenyan bank shares extend gains on hopes rate cap will be lifted

*  Sibanye could resume dividends, shares hit three-year high

*  Zambia statistics agency raises 2018 GDP growth figure to 4% -final data

*  Vauxhall fears after car giants Fiat and PSA announce merger

*  Brexit deadline passes and still nothing is set in stone

*  Qantas grounds Boeing 737 plane due to 'cracking'

*  Bombardier NI operations sold to Spirit AeroSystems

*  Head of US Think Tank Warns: 'Club of Very Powerful Countries' is Moving
Away From Dollar Use

*  Billionaire Families Reshape Silicon Valley’s Venture Terrain

*  Former Fed Chair Alan Greenspan doesn't expect a recession to arrive
anytime soon — and uses one stat to argue his position

 

 

 


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Dented dollar on Fed outlook buoys EM currencies

(Reuters) - Emerging market currencies looked to post their best session in
two weeks, scaling new three months highs after the U.S. Federal Reserve’s
interest rate stance dented the dollar, while South Africa’s rand slumped
further ahead of a Moody’s review.

 

The Chinese yuan shot up to a 10-week top taking MSCI’s index of developing
world currencies up 0.2%, to resume a winning streak for a 10th session in
11. The EM stocks index scaled a three-month peak as it rose 0.4% with
Russian shares hitting an all-time high.

 

The Fed cut interest rates as expected, and Chair Jerome Powell signalled
additional trims are unlikely as the U.S. economy improved, but the lack of
an explicit signal that it is done with easing for now was perceived to be
less hawkish than expected.

 

“Powell did not rule out completely the chances of further easing... Markets
liked this statement given there aren’t any signs of price pressures
building in the foreseeable future, and that encouraged risk-taking,” said
Hussein Sayed, chief market strategist at FXTM.

 

After a steady rise in U.S. interest rates had seen significant outflows
from emerging markets last year which contributed to currency crises in
Turkey and Argentina among other, the subsequent easing cycle by major
central banks have helped inflows and supported stocks.

 

In Japan, the central bank kept its ultra-easy monetary policy in place on
Thursday as expected and changed its forward guidance to more clearly signal
future chance of a rate cut.

 

South Africa’s rand slid almost 1%, adding to last session’s 3.4% tumble
when it posted its worst day in more than a year after Finance Minister Tito
Mboweni forecast wider budget deficits and a sharp increase in debt in the
medium-term budget policy statement.

 

That fuelled concerns regarding the loss of the last remaining investment
grade rating held by Moody’s which might lead to a massive outflow of
capital as the country would drop out of global bond indices. Moody’s is set
to release its review on Friday. The currency’s monthly gains have been
capped to around 0.4%.

 

 

 

 

Turkey’s lira slipped more than 0.2% and was set to end October with an over
1% loss as U.S. sanctions and threats of more over its offensive into Syria
had knocked the currency.

 

The country’s central bank lowered its mid-point inflation forecast for
end-2019 to 12% from 13.9%, in line with analyst estimates, and Governor
Murat Uysal said a significant part of the space available for loosening
monetary policy has been used after the bank cut its key interest rate by
1,000 basis points this year.

 

One of the major factors that could influence the future path of policy
easing by central banks is developments on the U.S.-China trade front.

 

Even though the cancelled Asia Pacific summit in Chile appeared to
complicate the timing, as U.S. President Donald Trump and China’s President
Xi Jinping were due to meet there, officials said it should not derail the
signing of what they now call “Phase One” of a trade agreement.

 

 

 

 

 

 

 

 


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Africa's MTN cancels $300 million stake sale in Mascom Wireless Botswana

JOHANNESBURG (Reuters) - South African telecoms major MTN Group Ltd has
ditched a plan to sell its 53% stake in Mascom Wireless Botswana, which was
supposed to net the company $300 million.

 

Africa’s largest mobile operator by subscribers said in a quarterly update
on Thursday that certain conditions related to the transaction had not been
met, which led to the company’s decision.

 

Chief Financial Officer Ralph Mupita said on a call with reporters that the
bid for MTN’s stake in the business had been unsolicited, and it was for now
no longer being held for sale.

 

“In the longer term, if somebody came with a very attractive offer for the
business, we’ll apply our minds then,” he said.

 

 

 

A 15 billion rand ($1.00 billion) divestment plan is making “steady
process”, Mupita said, adding that the company was in advanced discussions
around the disposal of 49% holdings in ATC Ghana and ATC Uganda, which it
values at between 7 billion rand and 8 billion rand.

 

MTN is reviewing a raft of investments under a three-year plan that includes
shedding loss-making e-commerce assets and exiting countries where it has no
prospect of reaching the top-two spots in terms of market share.

 

It is aimed at slimming the company down and honing its focus on high-growth
markets on the continent and in the Middle East after clashes with
regulators in Nigeria, Uganda and elsewhere crimped growth.

 

It said on Thursday its service revenue for the nine-months to Sept. 30 rose
by 9.6% year-on-year, buoyed by strong performances from its Nigeria and
Ghana operations.

 

However, in its home market South Africa, where a sluggish economy, high
unemployment and rising living costs have hurt consumer finances, service
revenue over the period was flat.

 

($1 = 14.9979 rand)

 

 

 

 

Kenya's economy to grow at a faster pace next year -World Bank

NAIROBI (Reuters) - Kenya’s economy is likely to expand by 6.0% next year,
rising from projected growth of 5.8% this year, due to a favourable weather
outlook, the World Bank said on Thursday.

 

East Africa’s biggest economy has grown by an average of more than 5% in the
last five years but investors have been concerned by growing public debt,
which nominally rose to 62.3% of GDP last year, from 59.1% previously, the
World Bank said.

 

The government usually provides its debt figures in net present value terms,
meaning its figure is a bit lower.

 

“The (2020) growth outlook is predicated on normal weather conditions,” the
bank said in its biannual report on Kenya’s economy, adding that planned
fiscal deficit cuts by the government will also help.

 

The Treasury has already indicated it is reviewing its budget for the
current financial year to cut the government’s expenditure and set more
realistic revenue collection targets.

 

The central bank will embark on a monetary easing stance if the fiscal cuts
are sustained to attain a balance, Patrick Njoroge, the bank’s governor,
said last month.

 

The World Bank warned its latest growth forecasts faced risks. “Downside
risks to the outlook are significant,” it said.

 

They include potential droughts, failure by the government to cut its fiscal
deficit and a slowdown in global growth.

 

The World Bank welcomed the prospect of the removal of a cap on commercial
lending rates, saying it could boost the economy.

 

In 2016, the government capped commercial interest rates at four percentage
points above the central bank’s benchmark rate, accusing lenders of failing
to offer affordable credit.

 

 

 

President Kenyatta refused to sign this year’s budget this month, demanding
lawmakers remove the cap.. Lawmakers are due to decide on the cap next week.

 

Kenyans have questioned the quality of the current robust annual economic
growth rates, citing widespread unemployment.

 

“It’s true that you have numbers, you have GDP numbers and... you can’t eat
GDP,” Njoroge, the central banker, told a forum on the economy on Monday. “I
mean jobs, that person who is trading, actually does go and make a profit
and all those other things.”

 

 

 

 

South African Treasury: ratings firms worried about debt, growth and wages

CAPE TOWN (Reuters) - Ratings agencies are concerned about South Africa’s
debt trajectory, economic growth and public sector wages, the director
general of National Treasury, Dondo Mogajane, said on Thursday.

 

Mogajane added that he spoke to all three of the big ratings agencies about
Wednesday’s bleak mid-term budget statement, which forecast wider deficits
and soaring debt.

 

 

 

Kenyan bank shares extend gains on hopes rate cap will be lifted

NAIROBI (Reuters) - Kenyan bank shares rose in early trading on Thursday,
Refinitiv data showed, extending their gains for a second day after news
that parliament has inched closer to lifting a cap on commercial interest
rates.

 

Barclays Kenya jumped 7% to trade at 12.60 shillings ($0.1223) per share
while Equity was up 6.6% at 43.15 shillings per share, the data showed.
Other banking stocks were also up.

 

Parliament’s finance committee said in a report on Tuesday that lawmakers
should lift the cap, after President Uhuru Kenyatta refused to sign the
government’s budget for this fiscal year until the house removes the cap.

 

($1 = 103.0600 Kenyan shillings)

 

 

 

 

Sibanye could resume dividends, shares hit three-year high

JOHANNESBURG (Reuters) - Gold and platinum miner Sibanye-Stillwater said on
Thursday it could “potentially” resume dividend payments in the second half
of 2020, helping send its shares to a three-year high.

 

The commitment came despite the company saying gold production from its
South African operations this year would be around 771,617 ounces, at the
low end of guidance, while costs would likely creep higher.

 

Sibanye also cut its 2019 production forecast for its platinum group metals
(PGM) operations in the United States to between 590,000 and 610,000 ounces
of palladium and platinum, blaming “challenging ground conditions” at its
Blitz project in Montana.

 

The previously forecast range was 625,000 to 640,000 ounces.

 

Shares in Sibanye, which have been boosted by rising gold and platinum
prices this year, hit their highest level since October 2016 and were up
2.1% in early trade on the Johannesburg stock exchange.

 

 

 

 

The company said operational constraints after a production build-up at its
Driefontein and Kloof operations in South Africa was behind weaker gold
production there.

 

Sibanye also said platinum wage negotiations are ongoing for its Rustenburg
and Marikana operations.

 

South Africa’s main platinum union AMCU referred the negotiations to the
Commission for Conciliation, Mediation and Arbitration (CCMA), a government
body charged with dispute resolution, at the start of this month.

 

 

 

 

Zambia statistics agency raises 2018 GDP growth figure to 4% -final data

LUSAKA (Reuters) - Zambia’s gross domestic product grew 4% in 2018, the
country’s statistics agency said on Thursday, in a final reading that
exceeded an initial figure of 3.7%.

 

“This is mainly on account of revisions in source data for the
transportation and storage, water supply and construction industries and
more comprehensive source data for taxes less subsidies,” it said.

 

 

 

 

Vauxhall fears after car giants Fiat and PSA announce merger

Fiat Chrysler is to merge with Vauxhall's owner PSA to create the world's
fourth largest car company.

 

The two sides say they have yet to finalise all the details, but the 50-50
merger is expected to provide significant cost savings.

 

That has raised concerns at Vauxhall, which employs 3,000 people in the UK,
as it could be vulnerable to any restructuring.

 

Unions called for talks with France's PSA, which owns Peugeot and Citroen.

 

Fiat Chrysler, the Italian-US business behind Jeep, Alfa Romeo, and
Maserati, has been looking for a big tie-up for years, believing that
consolidation in the global industry is needed to cuts costs and
overcapacity, and fund investment in electric vehicles.

 

It has tried previously to form alliances with General Motors and Renault.

 

A combined Fiat Chrysler-PSA will have a market value of about $50bn
(£39.9bn) with annual sales of 8.7 million vehicles. The companies said
there are no plans to shut factories, but UK unions are uneasy about the
impact on Vauxhall.

 

"Merger talks combined with Brexit uncertainty is deeply unsettling for
Vauxhall's UK workforce which is one of the most efficient in Europe," said
Unite national officer Des Quinn.

 

"The fact remains, merger or not, if PSA wants to use a great British brand
like Vauxhall to sell cars and vans in the UK, then it has to make them here
in the UK."

 

Prof David Bailey, from the Birmingham Business School, told the BBC he was
concerned about the prospects for Vauxhall's Ellesmere Port factory.

 

Major cost cutting "isn't going to be achievable without plant closures and
significant job cuts".

 

Although Ellesmere Port is considered an efficient car plant, he believes
the Italian government will be keen to keep Fiat's factories, and the French
government is part-owner of PSA and so has an interest in protecting its own
factories.

 

He said: "I have a real fear that if this merger goes ahead the likes of
Ellesmere Port, which is a very efficient plant, could be sacrificed to get
the sort of savings the company is looking for, especially in all the
uncertainty over Brexit."

 

French Finance Minister Bruno Le Maire suggested his government would
protect French interests. He welcomed the deal, saying it would give the two
groups the critical mass needed to invest in cleaner technologies.

 

And he added: "The government will be particularly vigilant over preserving
(the group's) industrial footprint in France."

 

The combined group, which will have its headquarters in the Netherlands,
will have an 11-person board. This will include six members from Peugeot,
including chief executive Carlos Tavares, and five from FCA, including
chairman and billionaire John Elkann, a member of Italy's Agnelli family.

 

Exor, the Agnelli family investment company, will have the largest stake in
the merged group. Other large shareholders are the Peugeot family, China's
Dongfeng Motor and the French state.

 

Fiat Chrysler, having flirted heavily with Renault, is now getting serious
with another French company. And on the face of it, this merger would make
perfect sense.

 

The two companies could pool their resources, at a time when the industry as
a whole is facing huge challenges due to the development of electric cars,
automated driving, connected technologies, and shared use models. Fiat
Chrysler really needs access to an electric car platform.

 

It would also combine PSA Group's strength in Europe with Fiat Chrysler's
scale in North America.

 

But there's a catch. Look how many different interests are involved. PSA
Group's leading shareholders include a Chinese state-owned company and the
French government - which has already undermined those earlier attempts to
bring FCA and Renault together. So things could get political very quickly.

 

Then there are the Agnelli and Peugeot dynasties - fully onside at the
moment, but faced with diluted influence. Could they cause problems down the
line?

 

And regulators will have to give the plan the green light as well. So a
merger might make sense, but it's far from being a done deal just yet.--BBC

 

 

 

 

Brexit deadline passes and still nothing is set in stone

Once again a Brexit deadline has come and gone, leaving business nursing
stockpiles of essential product and equipment.

 

Fifty feet under the surface of Dorset, Portland stone miner Michael
Poultney described what his business has been been through.

 

"We had to stockpile in March because we were concerned about no-deal. We
then obviously had to roll that forward to April.

 

"We felt like they couldn't possibly go for a no-deal in October again, but
as it got closer to the date, we got frightened, I got really concerned.

 

Image caption

Michael Poultney says the prospect of a no-deal Brexit caused concern and
expense

Both times the firm had to bring in spare parts for its mining machinery,
guessing at which parts might fail. Each time they had to shell out around
£150,000 to cover the stockpiling.

 

On top of that Michael's sales have dropped 20% this year. Those Brexit
deadlines weighed heavily on his customers' confidence as orders were
delayed or cancelled.

 

'Overwhelming'

Meanwhile in Ludlow, workers at bicycle-maker Isla bikes can barely move for
the boxes of parts crammed into their factory. They have ordered double the
amount they usually would at this time of year. Unlike Brexit, the crucial
Christmas period is an "immovable deadline".

 

It's not just cash and space that have been devoured. Founder, Isla
Rowntree, said the moving Brexit goal posts have been a drain on management
time and energy.

 

"We're business people. We're not international economists.

 

"We're experts on bicycles and we're trying to diligently stay up-to-date
with everything that's happening to inform our decision-making here.

 

"That's just overwhelming, trying to keep listening to the news to work out
what's going on and what it means for us. To have been doing that for well
over three years now. It's just exhausting."

 

No guarantee

It is hard to imagine a time in living memory when business has been so
completely at the mercy of politics.

 

A new source of uncertainty has been added to this painful drawn-out
process. The resolution of Brexit is now very dependent on the outcome of a
general election.

 

There is also no guarantee that an election will break the deadlock - it's
possible the narrow parliamentary majority Boris Johnson secured last week
in a preliminary vote for his withdrawal agreement could evaporate when
parliament is reset.

 

Business owners, including Michael and Isla, are largely grateful that we
are not heading over the cliff of no deal tomorrow. But they are deeply
frustrated that while the political ground may move in December, business is
stuck for now where it has been for more than three years.--BBC

 

 

 

Qantas grounds Boeing 737 plane due to 'cracking'

Australian airline Qantas has grounded one of its Boeing 737 NG planes after
discovering "cracking" in one section.

 

The carrier said several airlines were inspecting their 737 NG fleets after
Boeing revealed an area near the wing may be prone to cracking.

 

News agency AFP reported up to 50 planes globally had been grounded due to
the issue.

 

Qantas said: "Even when a crack is present, it does not immediately
compromise the safety of the aircraft.

 

"We would never operate an aircraft unless it was completely safe to do so."

 

Boeing said cracks had been found in the "pickle fork" - a section of the
plane which helps attach the wing.

 

Last month, US regulators ordered checks of all 737 NG planes which had
undertaken more than 30,000 flights.

 

Qantas said none of its 737 NG fleet had been flown more than 30,000 times.
It added the plane with a crack had made fewer than 27,000 journeys.

 

Boeing under pressure

The issue comes after Boeing was forced to ground its newer 737 Max model in
March, following two fatal crashes.

 

Those tragedies - in Indonesia last October, and in Ethiopia in March -
killed a total of 346 people.

 

US lawmakers accuse Boeing of building 'flying coffins'

On Wednesday, Boeing chief executive Dennis Muilenburg told US lawmakers the
firm had made mistakes in relation to the 737 Max fleet. Legislators had
accused Boeing of rushing the approval process.

 

 

The 737 NG is a precursor to the 737 Max.

 

Qantas said it would inspect 33 planes in its fleet for the same issue by
Friday. It did not respond to a report that a crack had been found in a
second plane.

 

The Australian Licensed Aircraft Engineers Association, an aviation union,
called for Qantas to ground its entire 737 NG fleet - a call rejected by the
airline as "alarmist".

 

US carrier Southwest Airlines recently discovered a crack in one of its 737
NG planes.--BBC

 

 

 

Bombardier NI operations sold to Spirit AeroSystems

Bombardier's Northern Ireland operations have been sold to the US firm
Spirit AeroSystems in a deal worth nearly £1bn.

 

The Canadian firm put the factories up for sale in May as part of a
reorganisation of its business.

 

The aerospace manufacturer employs about 3,600 people in Northern Ireland.

 

Spirit, which is based in Kansas, is a major supplier to Airbus and Boeing.
Earlier this year the company said it wanted to do more work for Airbus.

 

Buying Bombardier's Northern Ireland operation is part of that strategy.

 

The wings for the Airbus A220 are made at Bombardier Belfast's plant and it
also supplies other Airbus parts, particularly engine covers.

 

Spirit is also buying a Bombardier factory is Morocco and a repair facility
in the US.

 

 

The Bombardier workforce in Northern Ireland has suffered years of cuts and
uncertainty.

 

At one point the Canadian firm was on the brink of insolvency.

 

A new owner for the Belfast operations should bring some stability for the
workforce and a long-term focus for the business.

 

This is a strategic purchase for Spirit - it sees Belfast as a key part of
its plan to do more work with Airbus.

 

The trade unions are happy that the business has gone to a trade buyer
rather than a private equity fund.

 

The deal - in which Spirit is paying $500m and taking on $700m of
liabilities, including pension commitments - is expected to close in the
first half 2020.

 

Michael Ryan, Bombardier's chief operating officer of aerostructures, said
employees would be updated about how it impacts them in due course.

 

He added: "We are delighted that Spirit, a global, tier-one aerostructure
manufacturer and supplier, has recognised our unique offering and growth
potential."

 

ADS, the UK trade organisation representing the aerospace industry, said:
"With the future of the operations assured, the exceptional workforce at the
Belfast facility will now be able to continue to use their world-class
expertise and skills as an integral part of the aerospace industry

 

"We look forward to working closely with Spirit as they continue to grow
their UK footprint."

 

The deal would be strategic for Spirit, an aerospace components maker, as it
diversifies its customer base away from Boeing, analysts say.

 

Chief executive Tom Gentile said the Belfast operation brings "world-class
engineering expertise to Spirit".

 

How important is Bombardier to NI?

"Belfast has developed an impressive position in business jet fuselage
production, in addition to the world-acclaimed fully integrated A220
composite wing," he said.

 

"This acquisition is in line with our growth strategy of increasing Airbus
content, developing low-cost country footprint, and growing our aftermarket
business."

 

What is Spirit AeroSystems?

One of the world's largest tier-one manufacturers and suppliers of
aerostructures

Founded in 2005, as a spin-out of aerospace company Boeing

Employs more than 15,000 people worldwide, with operations in the UK,
Malaysia, France and the US

About 12,000 of its workers are based at the company's headquarters in
Wichita, Kansas

The move is part of Bombardier's plan to shed its commercial aviation
business to focus on its higher-margin business jets and rail divisions.

 

The Belfast factory will remain a major supplier to Bombardier's business
jet programmes.

 

The company said: "Spirit will continue to supply structural aircraft
components and spare parts to support the production and in-service fleet of
Bombardier Aviation's Learjet, Challenger and Global families of aircraft."

 

The deal has been broadly welcomed by politicians and those in the business
community.

 

The Unite union said the sale offered hope for a positive future for
Bombardier workers in Northern Ireland, while the GMB union said it would be
seeking talks with Spirit's management "to get assurances on jobs, terms and
conditions and pensions".

 

Bombardier, which is based in Montreal, has more than 68,000 employees in 28
countries and the Belfast factory is the largest hi-tech manufacturer in
Northern Ireland.

 

Last year, it reported a lower quarterly profit as it stepped up the
production of its Global 7500 business. Spirit posted a 22% drop in
quarterly profit, mainly due to charge related to the 787 Dreamliner
aircraft.--BBC

 

 

 

Head of US Think Tank Warns: 'Club of Very Powerful Countries' is Moving
Away From Dollar Use

Over the last two years, several countries around the world have declared
their intent to reduce or even to permanently exclude the use of the US
Dollar in international trade, replacing it with the national currency. One
of the reasons for this shift is the expansion of the US economic sanctions
regime.

 

There is a continually growing "club of very powerful countries" in the
world, which have a strong "motivation to de-dollarize" their trade,
co-director at the Institute for the Analysis of Global Security, Anne Korin
warned in her interview with CNBC channel. She added that among the members
of this "club" are "major movers" such as China, Russia and the European
Union.

 

The pundit explained that the shift was caused by certain practices, adopted
by the US government in recent years. Namely, Washington started to actively
use extraterritorial jurisdiction, prosecuting and sanctioning countries and
companies that have "nothing to do with the US" under American laws. This
happened due to the US extending its laws to entities, which either transfer
their money through US banks or use its greenbacks.

 

"Nobody wants to be picked up at an airport for doing business with
countries that the US isn't happy that they're doing business with", she
explained.

"Canary in a Coalmine"

Korin further argued that the emergence of such instruments as Petroyuan, a
Chinese currency for trading oil, is the "canary in the coal mine", which
indicates the shift in mindset around the world. She explained that around
90% of global crude trade is conducted using dollars, and the Petroyuan is a
"nudge" in the direction of de-dollarisation.

 

She elaborated that the emergence of such currency, albeit necessary, is not
yet significant enough for the world to turn down the greenback for good. 

 

 

For the last two years, several countries have announced their intention to
reduce US dollar use in their trade with partners, in part due to Washington
threatening sanctions on those, who trade with Iran and Venezuela. Among
them are Russia and other BRICS states, Turkey and Iran, which was slapped
with hefty US sanctions in November 2018. 

 

Russian President Vladimir Putin earlier argued during the St. Petersburg
International Economic Forum in 2019 that an era of global "dollar
dominance" might come to an end soon. He opined that this could happen due
to Washington "abusing" the status of its currency to punish those that the
US doesn't like.

 

 

 

Billionaire Families Reshape Silicon Valley’s Venture Terrain

If you’re a startup, tech entrepreneur or venture capitalist there’s a good
chance you do business with Silicon Valley Bank. The lender’s clients
include half of all venture capital-backed technology and life-sciences
companies in the U.S. and 67% of companies that went public last year with
VC support.

 

The Santa Clara-based bank isn’t just courting tech whizzes. It’s
increasingly focusing on the mega-wealthy family offices that are reshaping
the landscape of venture investing. More than 1,500 direct venture deals
were done by such outfits over the past five years, according to data
provider Fintrx. Prominent examples in recent months include Tony James of
Blackstone Group Inc. investing in fintech startup Alto and India’s Azim
Premji leading a $115 million funding round in enterprise software maker
Icertis.

 

Jacqueline vonReichbauer, a former JPMorgan Chase & Co. private banker who
led a single family office before joining SVB in 2018, heads the lender’s
family office practice. VonReichbauer, 37, discussed the increasing appetite
for early-stage investing among families, Silicon Valley’s global appeal and
the recent travails of the IPO market this month with Bloomberg. Her
comments have been edited and condensed.

 

Why are families upping their venture investments?

First, there’s so much capital available at the later stage for private
companies that returns broadly are relocating from public to private
markets. Companies can now stay private significantly longer than they used
to. So if you’re a family that wants to participate in some of the returns
that are being generated by these companies, you have to participate.

 

The second reason is that we’ve also seen a massive uptick in innovation in
old-guard industries. So the traditional definition of tech has completely
eroded. Look at a company like Sweetgreen raising $150 million on a $1.6
billion valuation. That’s not traditional tech as we saw it a decade ago.
Now you’re looking at food and agriculture and beauty and construction. All
of these older-guard industries are facing disruption from venture-backed
companies.

 

How deep-pocketed are some of these family offices?

 

We’re coming across families that are putting hundreds of millions of
dollars into individual companies. Families that are independently taking
billion-dollar-plus companies private; families that are really morphing in
both form and function into what looks like more of a venture fund than a
traditional family office. We have families that are participating at such
late stages and putting such large dollar values to work that they’re even
expressing frustration over the competition they’re seeing from the
SoftBanks of the world.

 

It’s hard to express how significant and powerful some of these families are
becoming in this ecosystem. They’re building massive venture portfolios in
some cases. A family I was with a week and a half ago are putting $1.5
billion to work in venture alone.

 

What’s their appetite for venture?

At the very high end we’re seeing families where the vast majority of their
balance sheet is in venture. So call it 60%-, 70%-plus. Those extremes are
often particularly true for families that have a background in technology
that generated their wealth through the world of startups.

 

 

 

They’re independently institutionalizing. They’re building
multibillion-dollar allocations on their own. There are families that are
building incubators and accelerators and even in one case funding innovation
from the ground up in an Edison lab-like campus. It’s pretty wild some of
the extremes that we’re seeing.

 

How does this play out globally?

There’s a slightly riskier posture that U.S. based families take. Broadly
speaking, North American families have more of a growth posture on their
balance sheet. That being said, the percentage of billionaire families that
are investing in venture is greatest in Asia. So over 70% of billionaire
families in Asia are investing in venture, which is higher than what we’re
seeing in the U.S. and Europe, where that number is kind of sub-60%.

 

You help these families network?

We can step in and provide a place for families to connect and engage where
they do have this shared commitment to venture. Families syndicate with one
another, they’re sharing opportunities and deals and perspectives on
managers. There’s a lot of that information flow happening because these
families trust one another and they share the same type of differentiation
as a pool of capital. So if there are opportunities for them to work
together, they want to.

 

Is the weakness of the IPO market an issue?

 

There’s a lot of conversation around the WeWorks of the world, Peloton going
out down 11%. But if you look at these companies -- Peloton, Datadog,
CloudFlare, CrowdStrike, Pinterest, Zoom, Beyond Meat -- regardless of some
of the public market performance, there’s an incredible story about great
gains and return generation for those that did invest when the company was
private.

 

I’m not hearing negative feedback from families who are too concerned about
the public market activity. For those participating early, hiccups when
companies hit the public markets aren’t a reason to pull back. If anything,
it’s more reason to invest in venture.-bloomberg

 

 

 

Former Fed Chair Alan Greenspan doesn't expect a recession to arrive anytime
soon — and uses one stat to argue his position

Former Federal Reserve Chairman Alan Greenspan told Bloomberg that it's too
soon to start worrying about a US recession.

 

Greenspan cited the ratio of capital spending to cash flow, arguing that
companies are still confident enough in the economy to continue spending on
long-term investing and avoid borrowing.

 

"No recession in the last half century, at least, began from a period of
deleveraging," the former Fed official said.

Visit the Business Insider homepage for more stories.

 

Former Federal Reserve Chairman Alan Greenspan told Bloomberg Thursday that,
despite slowing GDP growth, it's too soon to worry about a US recession.

Greenspan pointed to the ratio of capital investment to cash flow as the key
indicator for his argument. Companies have broadly been reducing debt, and
borrowing hasn't picked up since the Great Recession, he said.

 

"The economy has been weakening, but we're still in a period of
deleveraging. No recession in the last half century, at least, began from a
period of deleveraging," the former Fed official said. 

 

The statistic reveals firms continue to make long-term investments despite
several recession warnings and consistent trade tensions. The ratio hasn't
moved above 1 since the end of 2007 when it preceded the financial crisis.

 

 

Greenspan noted his worry around slowing economic growth. The US posted 1.9%
GDP growth Wednesday, higher than analysts' 1.6% consensus estimate. Yet the
growth was slower than in the past two quarters, and arrived hours before
the Fed issued its third interest rate cut of the year to maintain economic
expansion.

 

"I'm cautious about the long-term outlook, and we're currently running under
a 2% real GDP annual growth rate, but we nonetheless dont appear to be
sinking into recession despite the fact that economic growth has slowed
significantly," Greenspan told Bloomberg.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


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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