Major International Business Headlines Brief::: 07 November 2019

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Major International Business Headlines Brief::: 07 November 2019

 


 

 


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*  S.Africa investment summit draws few foreign pledges

*  Australia's South32 exits South Africa thermal coal business

*  Ghana deputy energy minister says laws must change for more offshore
exploration

*  Kenyan lenders target small and medium businesses with digital loans

*  Total seeks to sell stake in major Nigerian offshore block

*  Ghana to revoke four petroleum licences for lack of development - deputy
minister

*  DR Congo Hydrocarbons Minister says change of power in country
encouraging investment

*  South African rand flat amid fears of gloomy economy

*  Uganda energy minister invites bidding on five oil blocks

*  Total to drill another offshore well in South Africa early 2020

*  Boeing whistleblower raises doubts over 787 oxygen system

*  WeWork investor Softbank: My judgment was not right

*  Chinese group 'is favourite to buy British Steel'

*  Government 'set to break its spending rules'

*  Airbnb will verify listings, 11 years after launch

*  Poor clothing sales see M&S's profits slide

 

 


 <mailto:info at bulls.co.zw> 

 


 

S.Africa investment summit draws few foreign pledges

JOHANNESBURG (Reuters) - South African President Cyril Ramaphosa secured
about 200 billion rand ($13.5 billion) of new investment pledges on
Wednesday, saying these would spur economic growth and reduce unemployment,
but foreign firms made few commitments.

 

 

Analysts said some of the pledges included ordinary operating costs and some
had come from state-owned firms.

 

They were also sceptical the commitments were of sufficient scale to
meaningfully change the bleak economic outlook.

 

Ramaphosa is trying to revive Africa’s most industrialised economy after a
decade of stagnation. He has promised sweeping reforms, but progress has
been slow due to opposition from labour unions and parts of his African
National Congress party.

 

“It is pleasing to see that investors still consider South Africa as a
country that has much to offer,” Ramaphosa said.

 

At a summit last year, Ramaphosa set a goal of attracting $100 billion of
new investments over five years and quickly secured more than half that
amount in pledges.

 

But many of those promises are yet to translate into projects that could
lower the 29% unemployment rate or lift the growth rate above last year’s
level of 0.8%.

 

On Wednesday domestic firms like telecoms company MTN and paper company
Sappi made some of the largest pledges, of 50 billion rand and 14 billion
rand respectively. Others were made by carmakers, textiles firms and insurer
Discovery.

 

State-owned freight firm Transnet promised 23 billion rand and the airports
management company 12.8 billion rand. Few overseas firms made pledges.

 

Of those that did, like Chinese electronics manufacturer Hisense, relatively
small amounts were promised.

 

Kevin Lings, chief economist at asset manager Stanlib, said the government’s
focus on deregulation and skills development was positive but severe fiscal
constraints limited its ability to drive an economic recovery, and the
private sector was still in “wait-and-see mode.”

 

“What you are seeing so far is not enough to change the macro picture. It’s
the scale that’s the problem,” Lings said.

 

Trudi Makhaya, an economic advisor to Ramaphosa, said South Africa was
encouraging investors to “come in at the bottom, find affordable assets and
develop them.”

 

In his bleak medium-term budget last week, Finance Minister Tito Mboweni
slashed this year’s growth forecast to 0.5% and showed government debt would
shoot up to more than 70% of gross domestic product by 2023.

 

Afterwards Moody’s placed South Africa’s last investment-grade credit rating
on a “negative outlook”.

 

A downgrade could trigger billions of dollars of outflows from South African
government debt.

 

($1 = 14.83 rand)

 

 

 

 

 

 

 

 

 

 


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Australia's South32 exits South Africa thermal coal business

(Reuters) - Australia’s South32 Ltd said on Wednesday it would sell its
South Africa thermal coal business to Seriti Resources and two trusts for
100 million rand ($6.78 million) upfront and deferred payments of up to 1.5
billion rand per annum.

 

Under the deal, South32 will receive 49% of the cash flow generated by
South32 SA Coal Holdings Proprietary Ltd (SAEC), with payments capped at 1.5
billion rand per year, starting from the completion of the deal to March
2024.

 

South32 does not anticipate to report a taxable profit on the deal, from
either the upfront or deferred consideration, the company said in a
statement.

 

The transaction will “substantially reduce our capital intensity, strengthen
our balance sheet and will improve the Group’s operating margin”, South32
Chief Executive Officer Graham Kerr said.

 

Johannesburg-based Seriti and the two trusts will acquire South32’s 91.84%
stake in SAEC with the upfront cash payment, based on an enterprise value of
1.25 billion rand.

 

South32 is the latest company to get out of energy coal at a time when
investor pressure and climate change concerns are prompting businesses to
limit their exposure to fossil fuels. (reut.rs/2rdaCTq)

 

($1 = 14.7419 rand)

 

 

 

 

Ghana deputy energy minister says laws must change for more offshore
exploration

CAPE TOWN (Reuters) - Ghana’s Deputy Energy Minister Amin Adam said on
Wednesday that domestic laws must be changed to allow companies already
producing to further explore offshore areas for more oil.

 

“We’re changing our law to allow companies that are already producing in a
certain area to continue with exploration. We have in our laws provisions
that constrain investment,” he said.

 

 

Kenyan lenders target small and medium businesses with digital loans

NAIROBI (Reuters) - A group of Kenyan banks on Wednesday committed 10
billion Kenyan shillings ($97 million) in loans to small and medium
businesses under a new mobile phone-based loan service targeting a
fast-growing segment which has traditionally been under-served.

 

Mobile phone-based lending has grown in the East African nation, mainly due
to the success of telecom operator Safaricom’s M-Pesa platform, the world’s
first such service pioneered in 2007.

 

Known as Stawi, the service has garnered 100,000 customers who have already
borrowed 100 million shillings during a trial phase started in May, the
Kenya Bankers’ Association said.

 

It is now looking to lend 10 billion shillings in the next phase, it said,
without giving a timeframe.

 

Stawi is backed by KCB Group, NCBA Bank, Cooperative Bank of Kenya and
Diamond Trust Bank.

 

Businesses which sign up can borrow between 30,000 shillings and 250,000
shillings, at a 9% annual interest rate - equal to the central bank rate -
with repayment periods of one month to 12 months, the association said.

 

“It will use customer transactions to generate reliable data to assess the
creditworthiness of these enterprises,” President Uhuru Kenyatta told a
formal launch ceremony for Stawi.

 

 

KCB and NCBA already offer personal lending and savings on mobile phones
together with Safaricom using its M-Pesa platform.

 

Small and medium businesses have long complained about a lack of access to
credit, or of being charged high interest rates due to a perception by
lenders that they are too risky.

 

The situation has been compounded by a cap on commercial lending rates,
which parliament decided to remove on Tuesday.

 

At least 1 million customers were shut out of lending by banks when the
government imposed the rate cap in 2016, the bankers’ association said, as
lenders deemed them too risky.

 

Lending to small and medium-sized businesses dropped by 1.9 trillion
shillings since the cap was imposed, it added.

 

The government says small and medium enterprises account for more than 80%
of all the businesses in the country, provide about 75% of jobs, and about
30% of the annual gross domestic product.

 

 

Kenyatta warned bankers against shunning lending to the sector in favour of
relatively safer government bonds.

 

($1 = 102.8000 Kenyan shillings)

 

 

 

 

Total seeks to sell stake in major Nigerian offshore block

LONDON (Reuters) - Total is seeking to sell its 12.5% stake in a major
deepwater oilfield off the coast of Nigeria, industry and banking sources
said, in an effort to adjust the energy company’s Africa portfolio amid a
broad expansion.

 

The stake in Oil Mining Lease (OML) 118, which is located some 120
kilometres (75 miles) off the Niger Delta, is valued at up to $750 million,
according to two of the sources.

 

Investment bank Rothschild is running the sale process for Total, the
sources said.

 

A spokeswoman for Total declined to comment. Rothschild declined to comment.

 

OML 118 is operated by Royal Dutch Shell, which holds a 55% interest. Exxon
Mobil holds a 20% stake in the block, while Italy’s Eni and Total each hold
12.5%.

 

 

The sale process is part of Total’s plan to sell $5 billion of assets around
the world by 2020, the sources said.

 

The block includes the Bonga field, Nigeria’s first deepwater project which
started in 2005 and produced around 225,000 barrels of oil and 150 million
standard cubic feet of gas per day at its peak.

 

Output from the block is planned to grow sharply with the $10 billion
development of the Bonga Southwest field which is expected to produce up to
200,000 bpd, roughly 10% of Nigeria’s current oil production.

 

Nigeria’s vast oil resources have attracted foreign oil companies for
decades but changes to the country’s oil revenue laws as well as an
unexpected tax levy over the past year could make investments in offshore
projects less attractive.

 

Shell and its partners were expected to make an investment decision on Bonga
Southwest last year but uncertainty over its fiscal terms with the Nigerian
government have delayed the process.

 

 

Shell in February launched a tender for bids for a 225,000 bpd floating
production, storage and offloading vessel for the new development phase. It
has since pushed back the schedule for the bids.

 

The sale comes as Total prepares to expand its operations in Africa after
agreeing earlier this year to buy Anadarko’s Africa portfolio for $8.8
billion as part of its acquisition by U.S. rival Occidental Corp.

 

Total in January started production from the Egina oilfield off Nigeria’s
coast which is expected to plateau at 200,000 bpd of oil.

 

 

 

Ghana to revoke four petroleum licences for lack of development - deputy
minister

CAPE TOWN (Reuters) - Ghana will revoke four petroleum exploration licences
from companies that are not developing the assets, the country’s deputy
minister for petroleum said on Wednesday.

 

Mohammed Amin Adam told journalists in Cape Town that the country will take
aggressive action to ensure that its petroleum assets are developed.

 

The licences were identified for termination after a review of 14 licence
awards that were made in recent years.

 

“Four of them are lined up for termination,” he said.

 

The government has not yet notified the companies involved.

 

 

 

DR Congo Hydrocarbons Minister says change of power in country encouraging
investment

CAPE TOWN (Reuters) - Democratic Republic of Congo’s Hydrocarbons Minister
Rubens Muhima said on Wednesday that the country’s recent change in power at
the ballot box had encouraged oil investment, with tenders expected to be
opened when the minister returns home.

 

“We say to those who are interested in blocks, you are welcome,” said Muhima
at an oil and energy conference in Cape Town, adding that the change in
power has given them hope.

 

President Felix Tshisekedi succeeded longtime leader Joseph Kabila in
January.

 

 

 

 

South African rand flat amid fears of gloomy economy

JOHANNESBURG (Reuters) - South African rand traded flat on Wednesday,
hovering near a four-session peak, as cautious investors awaited clues on
the economy ahead of key manufacturing data.

 

The statistics agency will publish manufacturing data on Thursday, the first
set of key indicators since last week’s dismal budget speech where the
finance minister slashed the 2019 economic growth forecast to 0.5% for 2019.

 

 

At 0610 GMT, the rand was 0.02% firmer at 14.7440 per dollar, barely changed
from its overnight close of 14.7500.

 

The rand has gained nearly 3% since Friday after ratings firm Moody’s kept
the country’s credit status at investment level, while a global bout of
demand for risk assets also supported the currency.

 

 

However, economic data in the last session, with a purchasing manager’s
index remaining in contraction for a sixth month in a row and consumer
confidence slipping to its lowest since 2017 in the third quarter, may begin
to weigh.

 

Traders said dollar buyers targeting the 14.70 technical level may also chip
away at the rand’s momentum.

 

Bonds opened slightly weaker, with the yield on the benchmark paper due in
2026 adding 1 basis point to 8.405%.

 

 

 

Uganda energy minister invites bidding on five oil blocks

CAPE TOWN (Reuters) - Uganda’s Energy Minister Irene Muloni on Wednesday
invited bidding on five blocks, speaking at an African oil conference in
Cape Town.

 

Muloni added that she was keenly awaiting companies to take a final
investment decision regarding the construction of an oil export pipeline
through neighbouring Tanzania.

 

 

 

Total to drill another offshore well in South Africa early 2020

CAPE TOWN (Reuters) - French oil and gas major Total said it will drill
another exploration well in the 11B/12B block offshore South Africa in the
first quarter of next year, a senior company official said on Tuesday.

 

Earlier this year, Total opened up a new play off South Africa’s southern
coast, after making an offshore discovery that could contain 1 billion
barrels of total resources while drilling its Brulpadda prospects in the
Outeniqua Basin.

 

 

 

Boeing whistleblower raises doubts over 787 oxygen system

A Boeing whistleblower has claimed that passengers on its 787 Dreamliner
could be left without oxygen if the cabin were to suffer a sudden
decompression.

 

John Barnett says tests suggest up to a quarter of the oxygen systems could
be faulty and might not work when needed.

 

He also claimed faulty parts were deliberately fitted to planes on the
production line at one Boeing factory.

 

Boeing denies his accusations and says all its aircraft are built to the
highest levels of safety and quality.

 

The firm has come under intense scrutiny in the wake of two catastrophic
accidents involving another one of its planes, the 737 Max - the Ethiopian
Airlines crash in March and Lion Air disaster in Indonesia last year.

 

Mr Barnett, a former quality control engineer, worked for Boeing for 32
years, until his retirement on health grounds in March 2017.

 

>From 2010 he was employed as a quality manager at Boeing's factory in North
Charleston, South Carolina.

 

 

This plant is one of two that are involved in building the 787 Dreamliner, a
state-of-the-art modern airliner used widely on long-haul routes around the
world. Despite early teething problems following its entry into service the
aircraft has proved a hit with airlines, and a useful source of profits for
the company.

 

But according to Mr Barnett, 57, the rush to get new aircraft off the
production line meant that the assembly process was rushed and safety was
compromised. The company denies this and insists that "safety, quality and
integrity are at the core of Boeing's values".

 

In 2016, he tells the BBC, he uncovered problems with emergency oxygen
systems. These are supposed to keep passengers and crew alive if the cabin
pressurisation fails for any reason at altitude. Breathing masks are meant
to drop down from the ceiling, which then supply oxygen from a gas cylinder.

 

Without such systems, the occupants of a plane would rapidly be
incapacitated. At 35,000ft, (10,600m) they would be unconscious in less than
a minute. At 40,000ft, it could happen within 20 seconds. Brain damage and
even death could follow.

 

Although sudden decompression events are rare, they do happen. In April
2018, for example, a window blew out of a Southwest Airlines aircraft, after
being hit by debris from a damaged engine. One passenger sitting beside the
window suffered serious injuries and later died as a result - but others
were able to draw on the emergency oxygen supplies and survived unharmed.

 

 

Mr Barnett says that when he was decommissioning systems which had suffered
minor cosmetic damage, he found that some of the oxygen bottles were not
discharging when they were meant to. He subsequently arranged for a
controlled test to be carried out by Boeing's own research and development
unit.

 

This test, which used oxygen systems that were "straight out of stock" and
undamaged, was designed to mimic the way in which they would be deployed
aboard an aircraft, using exactly the same electric current as a trigger. He
says 300 systems were tested - and 75 of them did not deploy properly, a
failure rate of 25%.

 

Mr Barnett says his attempts to have the matter looked at further were
stonewalled by Boeing managers. In 2017, he complained to the US regulator,
the FAA, that no action had been taken to address the problem. The FAA,
however, said it could not substantiate that claim, because Boeing had
indicated it was working on the issue at the time.

 

Boeing itself rejects Mr Barnett's assertions.

 

It does concede that in 2017 it "identified some oxygen bottles received
from the supplier that were not deploying properly. We removed those bottles
from production so that no defective bottles were placed on airplanes, and
we addressed the matter with our supplier".

 

 

But it also states that "every passenger oxygen system installed on our
airplanes is tested multiple times before delivery to ensure it is
functioning properly, and must pass those tests to remain on the airplane."

 

"The system is also tested at regular intervals once the airplane enters
service," it says.

 

This is not the only allegation levelled at Boeing regarding the South
Carolina plant, however. Mr Barnett also says that Boeing failed to follow
its own procedures, intended to track parts through the assembly process,
allowing a number of defective items to be "lost".

 

He claims that under-pressure workers even fitted sub-standard parts from
scrap bins to aircraft on the production line, in at least one case with the
knowledge of a senior manager. He says this was done to save time, because
"Boeing South Carolina is strictly driven by schedule and cost".

 

On the matter of parts being lost, in early 2017 a review by the Federal
Aviation Administration upheld Mr Barnett's concerns, establishing that the
location of at least 53 "non-conforming" parts was unknown, and that they
were considered lost. Boeing was ordered to take remedial action.

 

Since then, the company says, it has "fully resolved the FAA's findings with
regard to part traceability, and implemented corrective actions to prevent
recurrence". It has made no further comment about the possibility of
non-conforming parts making it on to completed aircraft - although insiders
at the North Charleston plant insist it could not happen.

 

 

Mr Barnett is currently taking legal action against Boeing, which he accuses
of denigrating his character and hampering his career because of the issues
he pointed out, ultimately leading to his retirement. The company's response
is that he had long-standing plans to retire, and did so voluntarily. It
says "Boeing has in no way negatively impacted Mr Barnett's ability to
continue in whatever chosen profession he so wishes".

 

The company says it offers its employees a number of channels for raising
concerns and complaints, and has rigorous processes in place to protect them
and make sure the issues they draw attention to are considered. It says: "We
encourage and expect our employees to raise concerns and when they do, we
thoroughly investigate and fully resolve them."

 

But Mr Barnett is not the only Boeing employee to have raised concerns about
Boeing's manufacturing processes. Earlier this year, for example, it emerged
that following the Ethiopian Airlines 737 Max crash, four current or former
employees contacted an FAA hotline to report potential issues.

 

Mr Barnett believes that the concerns he has highlighted reflect a corporate
culture that is "all about speed, cost-cutting and bean count (jobs sold)".
He claims managers are "not concerned about safety, just meeting schedule".

 

That's a view which has support from another former engineer, Adam Dickson,
who was involved with the development of the 737 Max at Boeing's Renton
factory in Washington state.

 

He tells the BBC there was "a drive to keep the aeroplanes moving through
the factory. There were often pressures to keep production levels up.

 

"My team constantly fought the factory on processes and quality. And our
senior managers were no help."

 

 

In congressional hearings in October, Democratic congressman Albio Sires
quoted from an email sent by a senior manager on the 737 Max production
line.

 

In it, the manager complained about workers being "exhausted" from having to
work at a very high pace for an extended period.

 

He said that schedule pressure was "creating a culture where employees are
either deliberately or unconsciously circumventing established processes",
adversely affecting quality.

 

For the first time in his life, the email's author said, he was hesitant
about allowing his family aboard a Boeing aircraft.

 

Boeing says that together with the FAA, it implements a "rigorous inspection
process" to ensure its aircraft are safe, and that all of them go through
"multiple safety and test flights" as well as extensive inspections before
they are allowed to leave the factory.

 

Boeing recently commissioned an independent review of its safety processes,
which it says "found rigorous enforcement of, and compliance with, both the
FAA's aircraft certification standards and Boeing's aircraft design and
engineering requirements." It said that the review had "established that the
design and development of the [737] Max was done in line with the procedures
and processes that have consistently produced safe airplanes."

 

 

Nevertheless, as a result of that review, in late September the company
announced a number of changes to its safety structures. They include the
creation of a new "product and services safety organization".

 

It will be charged with reviewing all aspects of product safety "including
investigating cases of undue pressure and anonymous product and safety
concerns raised by employees".

 

Mr Barnett, meanwhile, remains deeply concerned about the safety of the
aircraft he helped to build.

 

"Based on my years of experience and past history of plane accidents, I
believe it's just a matter of time before something big happens with a 787,"
he says.

 

"I pray that I am wrong."--BBC

 

 

 

WeWork investor Softbank: My judgment was not right

The boss of Softbank has admitted poor judgement in relation to its
investment in WeWork after reporting its first quarterly loss in 14 years.

 

Japan's technology giant wrote down the value of its investments in the
US-managed office firm as well as Uber.

 

Softbank recently agreed to rescue WeWork in a $10bn deal.

 

But after revealing the loss, chief executive Masayoshi Son said: "My
judgement around WeWork was not right in many ways."

 

Softbank reported a loss of 704bn yen (£5bn) in the second quarter to 30
September, most of which was due to writing down the value of its
investments in WeWork and Uber, which floated this year.

 

Analysts had expected Softbank to report a loss of 48bn yen.

 

Softbank was an early investor in WeWork through its Vision Fund, sinking
$13bn into the US company.

 

The managed office firm was valued at nearly $50bn at the start of the year,
but it was forced to pull its flotation in September, following a lack of
interest from investors and concerns over WeWork's corporate governance.

 

In particular, investors raised questions about WeWork's co-founder and
former chief executive, Adam Neumann.

 

WeWork is now valued at $8bn.

 

As part of the deal in September, Softbank handed Mr Neumann a package worth
$1.7bn to cede control of the business, including a $185m consulting fee.

 

Mr Son said on Wednesday: "I overestimated Adam Neumann's good side. I
should have known better.

 

"I turned a blind eye to Adam Neumann's bad side on things like corporate
governance. I have learned a harsh lesson from my experience with Adam
Neumann."

 

Mr Neumann retains a stake in WeWork and will stay on at the company as "an
observer".

 

Mr Son said that although Softbank was in "the rough sea", WeWork was "not a
sinking boat".--BBC

 

 

 

Chinese group 'is favourite to buy British Steel'

China's Jingye Group has emerged as the frontrunner to buy British Steel out
of insolvency, according to reports.

 

A possible deal has emerged after a preliminary offer from Turkish company
Ataer faltered in late October, leaving the company in limbo.

 

Since May, British Steel has been kept running by the government as it seeks
a buyer for the business.

 

The Official Receiver, which is handling the insolvency process, declined to
comment.

 

Some 5,000 jobs hang in the balance at British Steel's Scunthorpe plant, and
another 20,000 in the supply chain.

 

Fresh doubts about British Steel as bid hopes fade

British Steel: 'We fear for our town's future'

Jingye Group, which also makes steel, is reportedly looking to reach an
agreement in principle by next Monday.

 

Its chairman, Li Ganpo, visited British Steel sites last week and met with
Scunthorpe MP Nic Dakin and Andrew Percy, representative for the Brigg and
Goole constituency.

 

Mr Percy said he had been assured that if Jingye succeeds in buying British
Steel, it would protect the company.

 

"They have assured us that if they do progress with this acquisition, they
have every intention of investing to expand production to serve the UK and
European market," he told the Grimsby Telegraph.

 

"That's really important and what they wanted from us was assurance from the
government and the council about support we could give and we said we are
committed to work together for that."

 

British Steel was put into compulsory liquidation in May after rescue talks
with the government broke down.

 

Ataer - which is a subsidiary of Turkey's state military retirement scheme
Oyak and owns 50% of the country' biggest steel producer - signed a
preliminary agreement to buy British Steel in August.

 

But hopes faded in October when the Official Receiver said the parties had
failed to agree terms.

 

'Cutting costs'

There is no guarantee an agreement will be struck with Jingye, which has
returned to the bidding process after having previously pulled out.

 

If an offer is formally tabled it would also take weeks of legal work and
administration to finalise.

 

According to the Financial Times, the Chinese firm would aim to increase
production at Scunthorpe from 2.5 million tonnes each year to more than 3
million.

 

It also wants to upgrade the plant and improve efficiency, although it
reportedly views cutting costs as crucial as well.

 

Jingye was founded in 1994 and has 23,500 employees. Along with steel it
also owns interests in hotels, chemicals and real estate.It is not the only
bidder left in the race for British Steel. UK-based industrial metals
conglomerate Liberty House is considered to be an outside contender.

 

Talks with Ataer are also continuing, the Official Receiver said in late
October.

 

The BBC has contacted Jingye for comment.--BBC

 

 

 

Government 'set to break its spending rules'

High borrowing means the government is set to bust its rules on spending,
the Institute for Fiscal Studies (IFS) has said.

 

The gap between what the government spends and what it receives was now set
to be much higher than expected, the think tank warned.

 

Higher public spending, slower growth and changes to the way student loans
are counted have pushed up borrowing.

 

Years of rising debt risked burdening "future generations", the IFS said.

 

IFS director Paul Johnson said it left little room for election giveaways if
the parties wanted to keep within the current spending rules.

 

UK borrowing up by a fifth over past six months

"At some point it becomes unsustainable, you've got to stop it going up at
some point especially when you know big spending pressures are coming down
the road," he added.

 

Currently the rules state that borrowing should remain below 2% of national
income.

 

Chancellor Sajid Javid has already suggested he is prepared to borrow more
to take advantage of current record-low borrowing costs, and has previously
said he plans to review the borrowing rules.

 

But the Budget - due to be on 6 November - was postponed due to the
withdrawal of the government's Brexit bill and the election being called.

 

But the IFS said Mr Javid would have faced a far more challenging "fiscal
backdrop" if his budget had gone ahead.

 

It said that back in March, the Office for Budgetary Responsibility (OBR) -
whose independent forecasts inform government spending decisions - had
predicted that borrowing would "continue to fall".

 

However, the IFS said, since then "the outlook for borrowing has risen".

 

Based on its own sums, it said it now expected the deficit - the difference
between what the government spends and what it receives - to be higher in
each of the next five years, exceeding £55bn this year and £50bn next.

 

This was due to already announced public spending increases from the recent
Spending Review; downgrades to growth; and changes to the way student loans
are calculated, which have pushed up borrowing.

 

While the existing OBR forecasts from March show borrowing low and falling
close to zero, the IFS points to a scenario showing the deficit much higher
in every year and remaining in a range around £45-50bn for five years.

 

This reflects an important accounting change to student loans, essentially
scoring write-offs of billions in loans likely not to be repaid now rather
than decades into the future. The Spending Review boost to police and
schools is also taken into account, and so is a forecast for a weaker
economy than thought back in March.

 

This breaks existing borrowing constraints on day-to-day borrowing. And in
the world of the last three general elections, we would have seen pressure
to cut spending or raise taxes.

 

It is not clear that any of the major parties will follow that logic during
this campaign. In fact, the mood music so far is that further tax cuts or
spending rises are coming. The parties are competing, not on prudence, but
on how and what to spend it.

 

Expect a particular emphasis on government spending for the future: on
infrastructure, on building up the nation's assets - investment spending,
whether it's on hospitals or on trying to solve climate change. This has
often been exempted from government borrowing rules.

 

At the moment, the target that national debt should be falling as a
proportion of the economy would prove a constraint on such spending. The
latest IFS figures show the national debt stabilised, but barely falling.

 

Both main parties appear to be contemplating significantly more investment
spending, to take advantage of low market lending rates to governments
around the world. It was a policy that was the talk of the recent IMF
conference. And this too would be likely to mean the end of the existing
rule on national debts.

 

The other development, postponed because of the cancellation of Wednesday's
Budget, was the publication of new fiscal rules. We haven't yet had them
from the government, we also await the same from Labour.

 

But this new election campaign means new rules, too, on tax and spend.

 

The IFS added that instead of the deficit halving over five years, as per
the OBR's March forecast, it would more likely remain stuck at around £50bn.

 

This would see the government breach its own 2% ceiling on borrowing in
2020-21, and end "the era of deficit reduction".

 

"With interest rates very low then we may be in a position to cope with
higher debt if it is accumulated as a result of effective investments which
result in higher growth," the IFS said.

 

"However, debt cannot go on rising forever, and debt incurred simply to pay
for current spending is not going to offer a return to future generations to
cover the increased burden on them."

 

"Moreover, demographic pressures will increase debt further in the medium
term unless taxes are increased or spending is cut to accommodate those
pressures."

 

A report this week from the Resolution Foundation said both main parties
were "gearing up to turn the spending taps back on".

 

However, it said this was likely to send government spending back towards
1970s levels over the next parliament - whichever party wins in December.

 

The think tank, which aims to promote higher living standards for people on
low and middle incomes, said both parties faced "huge questions" about how
they would fund their plans.

 

For example, it said that Labour had specified £49bn of tax rises, which
were unlikely to be enough to cover its likely spending.

 

Meanwhile, it said the Conservatives had placed more of an emphasis on tax
cuts - leaving an "even bigger funding question" over their economic
plans.--BBC

 

 

 

Airbnb will verify listings, 11 years after launch

Airbnb says it will verify every single property on its platform after a
news website found a series of scams.

 

In October, Vice News uncovered a pattern of false or misleading property
listings posted on the rentals site.

 

Airbnb said it would review every property by December 2020, and also
promised to refund customers if they were misled by inaccurate listings.

 

It is the first time Airbnb, which launched in 2008, has pledged to verify
every home promoted on its platform.

 

During its investigation, Vice News spoke to several people who had booked
accommodation on Airbnb and been scammed.

 

When the guests arrived for their holiday, they typically received a
last-minute phone call from the landlord saying the property was no longer
available, due to an emergency or double-booking.

 

They would then be moved to another property, often in a different area and
without the amenities promised in the original booking.

 

In many cases the guests felt they had no option but to stay at least one
night, after arriving late at night in a city far from home.

 

But they say Airbnb then refused to give them a full refund despite the
misleading bookings.

 

In a series of tweets, Airbnb chief executive Brian Chesky said: "Airbnb is
in the business of trust. We are making the most significant steps in
designing trust on our platform since our original design in 2008."

 

He pledged:

 

to review every home and host on Airbnb, aiming to verify every listing by
December 2020

to refund guests the entire cost of their booking if the accommodation does
not meet "accuracy standards", and if the company cannot find another
property "that is just as nice"

to launch a phone line so "anyone can call us any time, anywhere in the
world and reach a real person"

Adam French, a consumer rights expert from Which?, told the BBC: "Holiday
booking fraud is on the rise, with people losing millions every year to
fraudsters tricking them out of their money with holiday lettings that do
not actually exist.

 

"Steps from Airbnb to finally verify all of its listings are positive, but
the industry must do more to ensure people are no longer being stripped of
their money and having their holiday plans left in tatters."

 

On 2 November, Airbnb said it would ban "party houses" after a mass shooting
at a California home rented through the company left five people dead.

 

And in 2017, it changed its security policy, after a BBC investigation found
criminals were hijacking accounts and burgling homes.--BBC

 

 

 

Poor clothing sales see M&S's profits slide

Marks and Spencer profits dropped in the first half of its financial year
following a sharp fall in demand for its clothes and home goods.

 

The High Street retailer said that while its food business was
"outperforming the market", there had been issues in clothing and home.

 

Marks and Spencer is undergoing a transformation plan led by chief executive
Steve Rowe.

 

He said after a "challenging" first half, it is now seeing improvements.

 

Overall, pre-tax profits tumbled by 17% to £176.5m on total sales down 2.1%
to £4.86bn.

 

Like-for-like sales in clothing and home fell by 5.5% during the six months
to 30 September, worse than an expected 4.3% drop.

 

In Wednesday's FTSE 250 trading, the company's shares fell 0.2% to 182
pence.

 

M&S said there had been "availability challenges" as a result of "supply
chain issues and a shape of buy that remained too broad".

 

'Too slow'

The company is facing competition from fashion giants such as Primark on the
High Street and Asos on the internet.

 

It said its clothing business "has historically been too slow to market" and
had "too many slow-moving lines".

 

M&S also said it was going to ensure that they had enough product in all
sizes, and would be quicker to restock popular and fast-selling items in
stores.

 

In addition it said it would look to introduce slimmer cuts in clothing
designs, which would be increasingly aimed at a "family market".

 

M&S said it was seeing a positive response to its current winter season
clothing, which it says is a "better value product".

 

But retail expert Richard Hyman told BBC Radio Four's Today programme: "I
think Marks and Spencer customers are not interested in price, as much as
relevance. Making clothes cheaper is not the answer.

 

"When they talk about this season's offering, they are talking about a
matter of weeks. The general outlook for Christmas trading is not looking
very good across the trade."

 

In contrast, like-for-like sales in food grew by 0.9%, ahead of a forecast
0.3% rise.

 

To stem the decline in food, M&S forged a joint venture with Ocado in
February, agreeing to buy 50% of its retail business for £750m.

 

But Mr Hyman said: "I can't see the central logic of the Ocado deal. I don't
think they have to be online in food at all. Online [food retailing] in the
UK is 7% of the market, suggesting people are not clamouring to buy food
online."

 

And Neil Wilson, chief analyst at markets.com said that overall, change had
been far too slow at the company.

 

But M&S boss Mr Rowe said the firm was now starting to see the benefits of
its transformation plan. "For the first time we are beginning to see the
potential from the far reaching changes we are making," he said.

 

However, while it forecast some improvement in trading in the second half of
the year, market conditions remain challenging.

 

In September, M&S was relegated from the FTSE 100 index of Britain's biggest
listed companies.

 

It marked the first time the retailer had not been a FTSE 100 member since
the index was launched in 1984.--BBC

 

 

 


 

 


 

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
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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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