Major International Business Headlines Brief::: 21 November 2019

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Major International Business Headlines Brief::: 21 November 2019

 


 

 


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*  S.Africa investigates possible IP theft from defence firm Denel

*  Eskom needs $12 bln to comply with new emissions laws

*  South African Airways running out of cash as unions seek to expand strike

*  Boris Johnson pledges cut to National Insurance

*  Climate change: China coal surge threatens Paris targets

*  Vegan sues Burger King for cooking Impossible Whopper on meat grill

*  Kenya raises 66 bln shillings from state corporations for budget

*  Strike certificate issued at South Africa's Comair -union

*  S.African inflation slows to eight-year low, putting rates cuts back in
picture

*  Ivory Coast 2019/20 cotton output expected to hit record 510,000 T

*  Zambia raises benchmark lending rate by 125 basis points to 11.5%

*  FirstRand falls after RMH says will transfer stake to its shareholders

*  Lewis H1 earnings gain on upbeat merchandise sales growth

*  Westpac bank 'breached anti-money laundering laws'

*  How China plans to lead the computer chip industry

*  'Why economists get things wrong'

 

 


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S.Africa investigates possible IP theft from defence firm Denel

JOHANNESBURG (Reuters) - South Africa is investigating the alleged
misappropriation of intellectual property rights belonging to state defence
firm Denel, the Special Investigating Unit (SIU) confirmed on Wednesday.

 

The IP relates to air-to-air missiles, stand-off weapons, surface target
missiles, air defence and unmanned aerial vehicle systems, the SIU told
Reuters.

 

“The focus area for the investigation in question is unlawful, irregular or
unapproved measures or practices in relation to the misappropriation of
proprietary and intellectual property rights,” SIU said.

 

Denel told Reuters the claims initially surfaced last year and were looked
into.

 

“Denel did report the allegations of theft of IP to the relevant authorities
who investigated the matter and found no substantiating evidence of
impropriety,” the company said in a statement. 

 

Denel employees are alleged to have inappropriately passed information to
Saudi Arabian Military Industries (SAMI) during talks over a potential
partnership, The City Press newspaper reported.

 

Saudi Arabia’s state defence company did not respond to a Reuters request
for immediate comment sent on Wednesday.

 

South Africa’s President Cyril Ramaphosa authorised the SIU inquiry last
month, according to a proclamation published in the official government
gazette.

 

The SIU is already investigating possible corruption and mismanagement at
Denel during the administration of former South African President Jacob Zuma
under an existing, broader probe.

 

Saudi Arabia, the world’s third-largest defence spender, is seeking
partnerships to develop its own defence industry. Last year it made a $1
billion bid for a partnership with Denel.

 

Among other things SAMI would have financed research and development of
Denel Dynamics, the division of the group that produces tactical missiles
and precision guided weapons.

 

Denel Chief Executive Danie du Toit told Reuters earlier this year that his
company was open to partnerships but would not sell equity or relinquish IP
rights to SAMI.

 

As recently as July, SAMI said it was still in commercial talks with Denel.

 

Denel has not released financial statements for the 2018/19 fiscal year and
was projected to be insolvent in a presentation to parliament’s portfolio
committee on public enterprises in September.

 

A pillar of South Africa’s once-mighty defence industry, like a handful of
state-run companies Denel has needed government bailouts to stay afloat in
recent months.

 

 

 

 

 

 

 

 

 


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Eskom needs $12 bln to comply with new emissions laws

CAPE TOWN (Reuters) - South Africa’s power utility Eskom needs around 187
billion rand ($12.60 billion) to comply fully with existing legislation
curbing harmful emissions, a government presentation to parliament showed on
Wednesday.

 

Eskom, which uses mainly coal-fired power plants to generate electricity,
was one of 37 top domestic polluters, including Sasol, granted a five-year
reprieve by government until 2020 to meet air emission standards.

 

The new minimum emissions standards for air quality laws in South Africa,
which cover particulate, sulphur dioxide and nitrogen oxide emissions, came
into effect on April 1, 2015.

 

“Complete compliance with the 2010 Minimum Emission Standard would require
an estimated 187 billion rand,” the presentation by the Department of Public
Enterprises said.

 

Africa’s biggest public utility supplies over 90% of South Africa’s
electricity, relying largely on ageing, heavily polluting coal-fired power
stations but does not generate enough cash to meet its debt servicing costs.

 

Project delays and cost overruns at Medupi and Kusile, two mega-coal plants
currently being built by Eskom, largely contributed to Eskom’s debt
ballooning to 440 billion rand.

 

“Given the current financial constraints, at this stage Medupi will be
prioritised to be retrofitted with Flue-Gas Desulphurisation (FGD
technology),” the department said.

 

South Africa has said any new coal plants would need to have
emission-reducing technology, such as FGD.

 

In September, Eskom said it might have to shut some plants if it fails to
reduce emissions, raising the prospect of further power cuts in the county
and also putting more pressure on the government which has had to bail out
the debt-ridden company to keep it afloat.

 

Eskom has applied to the Department of Environmental Affairs for rolling
postponements of its obligations under the legislation to meet the emissions
and air standards.

 

Ageing plants and poor maintenance has triggered several power cuts
throughout the year, putting pressure on key economic industries, such as
mining, as the country skirts a recession.

 

The latest bout of nationwide blackouts come after repeated power cuts in
February and March, which hit the economy and pushed the government to grant
Eskom a $4 billion bailout on top of a $16 billion bailout spread over the
next 10 years.

 

($1 = 14.8354 rand)

 

 

 

South African Airways running out of cash as unions seek to expand strike

JOHANNESBURG (Reuters) - South African Airways (SAA) is running out of cash
and could be liquidated if the government doesn’t give it additional
guarantees soon, a board member said on Wednesday, as trade unions
threatened to escalate a crippling strike.

 

State-owned SAA has racked up losses of more than 28 billion rand ($1.9
billion) over the past 13 years and wants to cut jobs as part of a
turnaround plan.

 

The National Union of Metalworkers of South Africa (NUMSA) and South African
Cabin Crew Association (SACCA) called a strike at SAA last week after wage
talks turned acrimonious and the airline said it planned to cut almost 20%
of its staff.

 

On Wednesday the unions threatened to follow through with a plan to shut
down South Africa’s entire aviation sector via a secondary strike.

 

SAA board member Martin Kingston told Reuters the strike was costing the
airline around 50 million rand a day and that banks weren’t willing to lend
the company more money without the government approving more state
guarantees.

 

“We may not have enough cash to pay salaries at the end of the month, we are
still investigating how we can do that,” he said. “This is a real-time
discussion we are having with National Treasury and the Department of Public
Enterprises. We need help imminently.”

 

The financial crisis at SAA is a key test of President Cyril Ramaphosa’s
pledge to fix bloated state firms. He needs to balance the need for
cost-cutting and job cuts with deep-seated anger at the country’s 29%
unemployment rate and the weak state of the economy.

 

A broad cross-section of society also vocally opposes any moves that could
weaken the role of state firms.

 

SAA’s last permanent Chief Executive Vuyani Jarana resigned in June after
less than two years in the job, saying his turnaround strategy was being
undermined by a lack of state funding and too much bureaucracy.

 

The striking unions held talks with the government and SAA on Tuesday, which
ended without any agreement.

 

NUMSA spokeswoman Phakamile Hlubi-Majola said there would be “no surrender”.
The union had issued aviation catering firm Air Chefs with a letter of
intent for a secondary strike and had secured a strike certificate for a
separate issue at British Airways franchise partner Comair, she said.

 

Public Enterprises Minister Pravin Gordhan said in a statement on Tuesday he
was committed to saving SAA but the government was not able to offer more
financial help.

 

Over the last three years, the government has given more than 20 billion
rand of bailouts to SAA to keep it afloat.

 

Ramaphosa needs to halt a steep run-up in government debt if he is to
preserve the country’s last investment-grade credit rating from Moody’s,
which has a negative outlook.

 

($1 = 14.8143 rand)

 

 

 

Boris Johnson pledges cut to National Insurance

Boris Johnson aims to change National Insurance rules so workers will not
have to pay it until they earn £12,500.

 

The Tory leader earlier said his party would put up the threshold to ensure
"low tax for working people" if it wins the general election.

 

But he later confirmed to the BBC it would be raised to £9,500 in the first
budget of a Tory government, with no timetable for the additional £3,000.

 

Labour said the reduced revenue would harm public services.

 

The current threshold sees workers paying National Insurance contributions
once they earn £8,628 a year.

 

Mr Johnson had promised to raise the threshold to £12,500 during the Tory
leadership contest.

 

He told the BBC this was now an "ambition" of his government and a timeframe
would be announcement at their first budget if they are elected.

 

But the PM said bringing in the £9,500 threshold sooner would "help with the
cost of living" and "put £500 in the pocket of everybody" - although a later
press release claimed the saving would be around £100 per person.

 

Both figures are still higher than the estimate of the Institute for Fiscal
Studies, who said the threshold would save workers about £85 per year and
cost the government £2bn.

 

An earlier estimate by the independent economic think tank said a rise to
£12,500 - which would match the threshold where workers start paying income
tax - would save workers up to £465 a year, and cost the government £11bn.

 

But Xiaowei Xu, a research economist with the IFS, said without knowing the
proposed timescale of the increase "we do not know how big a policy this
is".

 

What is Labour's four-day working week plan?

On a visit to an engineering plant in Teesside, Mr Johnson was asked by one
of the workers whether his pledges for low tax were "for people like you...
or people like us".

 

The PM said: "I mean low tax for people... working people.

 

"We are going to be cutting national insurance up to £12,000 [and] we are
going to be making sure that we cut business rates for small businesses. We
are cutting tax for working people."

 

BBC political correspondent Nick Eardley said it sounded like Mr Johnson had
accidentally revealed his big election tax pledge.

 

He later had to correct the figures in an interview with the BBC, revising
it to a £9,500 threshold next year, with an eventual goal of £12,500.

 

Mr Johnson said: "We want to operate in a prudent way, but we do want to
help now with the cost of living while simultaneously having the funds we
need to invest into the NHS, police officers and education as well."

 

Labour's Shadow Chancellor John McDonnell criticised the cost to tax payers,
quoting the IFS' £11bn figure.

 

"Even after 10 years of cruel cuts and despite creaking public services, the
Tories still think the answer to the challenges of our time is a tax cut of
£1.64 a week, with those on Universal Credit getting about 60p," he said.

 

"Meanwhile independent experts have said this will cost up to £11bn, so
everyone who relies on public services and social security will be wondering
whether they will be paying the price."

 

The SNP's Drew Hendry also attacked the policy, saying if the Conservatives
"really wanted to help people on low incomes" then they would "fix and stop
the rollout" of Universal Credit.

 

He said raising the threshold would benefit the "better-off first, and even
more than those people on low incomes".

 

The IFS also said that a rise in the threshold was "an extremely blunt
instrument" if the intention was to help lower paid workers.

 

"Less than 10% of the total gains from raising [National Insurance
contributions] thresholds accrue to the poorest fifth of working
households," they said.

 

"The government could target low-earning families much more effectively by
raising in-work benefits, which would deliver far higher benefits to the
lowest-paid for a fraction of the cost".

 

What is National Insurance?

National Insurance is a tax paid by workers and the self-employed who are
over 16, with the amount varying depending on how much you earn.

 

Employers do make some contributions on behalf of their workers, but it
again depends on how much they are paid.

 

For employees, it is taken straight out of your salary before you receive
it, while self-employed people need to pay as part of their self-assessment.

 

By paying the tax, you are entitled to a number of benefits, such as a state
pension, Jobseeker's Allowance and maternity pay.

 

The contributions cover these benefits, with some also going towards the
NHS.

 

Where do the other parties stand on National Insurance?

The Liberal Democrats announced in their manifesto earlier that they plan to
review the tax and National Insurance status of employees, dependent
contractors and freelancers "to ensure fair and comparable treatment" and to
"modernise rights to make them fit for the age of the gig economy".

 

The Green Party also pledged in their manifesto - launched earlier this week
- that they wanted to merge employees' National Insurance, capital gains
tax, inheritance tax, dividend tax and income tax into a single consolidated
income tax, claiming it would "close loopholes" and bring in an additional
£20bn to the public purse.

 

Labour has yet to publish its manifesto, but in an announcement about its
plans for the "Living Wage" earlier this month, the party pledged not to
raise income tax or National Insurance contributions for the bottom 95% of
earners.

 

The SNP says on its website it would oppose any increases in National
Insurance.

 

Plaid Cymru are calling for an increase to National Insurance contributions
for higher rate and additional rate taxpayers, while offering special
exemptions for employers in rural and industrial areas with high
unemployment.

 

What are the parties promising you?

Here's a concise guide to where the parties stand on key issues like Brexit,
education and the NHS.--BBC

 

 

 

Climate change: China coal surge threatens Paris targets

While the rest of the world has cut coal-based electricity over the past 18
months, China has added enough to power 31 million homes.

 

That's according to a study that says China is now in the process of
building or reviving coal equivalent to the EU's entire generating capacity.

 

China is also financing around a quarter of all proposed coal plants outside
its borders.

 

Researchers say the surge is a major threat to the Paris climate targets.

 

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Is China behind global coal power surge?

China's reliance on coal as a key step in developing the economy led to the
fabled "one coal plant a week" building programme between 2006 and 2015.

 

But the push had many negative consequences, choking the air with pollution
in many Chinese cities and leading to huge overcapacity. Many of these
plants were only able to run 50% of the time.

 

In 2015, in an attempt to curb the growth, the national government tried to
clamp down on new-build coal. However, it continued to allow provincial
governments the freedom to issue permits for new coal plants. That move
misfired badly.

 

Local authorities subsequently permitted up to five times more plants than
in any comparable period.

 

According to Ted Nace, from coal researchers Global Energy Monitor, it was
like a "snake swallowing a goat".

 

"This goat that the snake swallowed is still moving through the snake, and
it's coming out in the form of another 20% in the Chinese coal fleet on top
of a fleet that was already over-built," Mr Nace added.

 

The researchers say that through 2018 and up to June 2019, countries outside
of China cut their coal power capacity by 8.1 gigawatts (GW). In the same
period, China added 43GW, enough to power around 31 million homes.

 

The authors say that right now the amount of coal power under construction
or under suspension and likely to be revived is about 147.7GW, an amount
that is almost the same as the entire coal generating capacity of the
European Union (150GW).

 

Compared to the rest of the world, China is building about 50% more coal
plants than are under construction in all other countries combined.

 

 

The country is on track to top 1,100GW of coal by 2020.

 

The Chinese government has signalled that it wants to rely less on coal for
the country's energy production and is making some headway cutting coal's
share of total energy from 68% in 2012 to 59% in 2018.

 

However, despite the share going down, absolute coal consumption has gone up
in line with overall energy demand.

 

What concerns the researchers is that within China, coal and electricity
industry groups are pushing for an even bigger increase in the country's
overall coal power capacity.

 

"The thing we are super worried about is that industry has actually
organised to keep the whole thing going," said Ted Nace.

 

"There are three different powerful trade groups, proposing to increase the
coal fleet by 40%. This is sheer madness at this point."

 

China is also busy financing coal development outside the country, funding
over a quarter of all the coal plants outside its borders in countries like
South Africa, Pakistan and Bangladesh.

 

Observers outside of China say they are concerned that by building or
permitting these plants, the authorities are locking in a form of power
generation that just doesn't make sense economically.

 

"The economics will not be borne out," said Mark Lewis, head of climate
change investment research at BNP Paribas Asset Management.

 

"I would argue that almost all this new capacity that's being added will
never make the economic return on which they have been premised. Those
assets that are coming online now will have to be written down; they will be
stranded assets essentially."

 

The bigger question is how this new coal will affect the ability of the
world to meet the targets set out in the Paris climate agreement.

 

The researchers say that by 2030, China needs to reduce its coal power
capacity by over 40% from current levels in order to meet the reductions
required to hold global warming well below 2C.

 

"China's proposed coal expansion is so far out of alignment with the Paris
Agreement that it would put the necessary reductions in coal power out of
reach, even if every other country were to completely eliminate its coal
fleet," said co-author Christine Shearer of Global Energy Monitor.

 

"Instead of expanding further, China needs to make significant reductions to
its coal fleet over the coming decade."

 

Global Energy Monitor was originally known as Coal Swarm and has received
funding from environmental groups, including the ClimateWorks Foundation,
the Rockefeller Family fund, the US National Resources Defence Council, the
European Climate Foundation, among others.--BBC

 

 

 

Vegan sues Burger King for cooking Impossible Whopper on meat grill

Burger King advertises the plant-based burger as "100% Whopper, 0% Beef".

A vegan customer is suing Burger King for cooking its plant-based patties on
the same grills it uses for meat.

 

In a proposed class action filed in the US, Philip Williams said the way the
Impossible Whopper is grilled leaves it "coated in meat by-products".

 

He said the burger's tagline - "100% Whopper, 0% Beef" - was misleading.

 

Burger King did not comment, but the small print on its website says people
wanting a meat-free option can request "a non-broiler method of
preparation".

 

A spokeswoman for the supplier, Impossible Foods, also told Reuters news
agency that vegetarians and vegans "are welcome to ask" for their Impossible
Whopper to be cooked in a microwave.

 

In the lawsuit filed in a Miami federal court, Mr Williams says that the
burger chain does not clearly advertise that the plant-based burgers are
cooked with meat.

 

He said he visited a drive-through restaurant in Atlanta, Georgia, and
ordered the Impossible Whopper without mayonnaise.

 

At no point was he told the Whopper was cooked on the same grill as the meat
burgers, he said - adding that, had he known, he would not have ordered it.

 

Mr Williams said he wanted damages for everyone in the US who bought the
Impossible Whopper, as well as an injunction requiring Burger King to
"plainly disclose" that the vegan burgers and meat burgers are cooked on the
same grills.

 

Burger King started selling the Impossible Whopper in Sweden in May, before
rolling it out to US stores in August. It started selling the meatless
burger in 25 other European countries earlier this month.

 

According to Burger King's suggested pricing, the plant-based burger costs
US customers about a dollar more than the beef version.--BBC

 

 

 

 

Kenya raises 66 bln shillings from state corporations for budget

NAIROBI (Reuters) - Kenya’s Treasury has raised 66 billion shillings
($650.89 million) out of a target of 78 billion in dividends and retained
earnings from state corporations, the acting finance minister said on
Wednesday.

 

Ukur Yatani said state companies had not been remitting their dividends at
the end of every financial year as required by law, denying domestic reports
that the move to take the cash would starve the banking sector of liquidity.

 

“These are just surplus funds. Their operational accounts and all other
matters have not been touched,” he told Reuters, adding that the extra cash
would be spent on development projects.

 

($1 = 101.4000 Kenyan shillings)

 

 

 

Strike certificate issued at South Africa's Comair -union

JOHANNESBURG (Reuters) - A strike certificate has been issued at South
African airline Comair as part of a secondary strike against South African
Airways, a spokeswoman for the National Union of Metalworkers South Africa
said on Wednesday.

 

Two unions that called a crippling strike at SAA said on Sunday they would
pursue a secondary strike to ensure their demands are met, that they warned
could shut down the entire aviation sector.

 

After a strike certificate is issued, unions have to notify employers within
48 hours of any strike action.

 

 

 

S.African inflation slows to eight-year low, putting rates cuts back in
picture

JOHANNESBURG (Reuters) - South African consumer inflation dropped in October
to its lowest level since February 2011 as fuel prices fell sharply, raising
the chances of an interest rate cut by the central bank on Thursday.

 

Headline consumer inflation slowed to 3.7% year-on-year in October from 4.1%
in September while monthly price growth was flat at 0%, Statistics South
Africa said on Wednesday, adding that a 4.9% decrease in petrol prices was
the main factor in the slowdown. Most other product prices also fell.

 

The South African Reserve Bank’s policy committee meets for the last time in
2019 on Thursday, and is largely seen keeping benchmark lending rates on
hold again at 6.5%, with a weak growth outlook trumping inflation well
within the bank’s target of 4.5%.

 

Twenty-one of the 28 economists polled by Reuters last week said the repo
rate would remain on hold while the remaining seven said the monetary policy
committee (MPC) would cut rates by 25 basis points.

 

“Does the lower-than-expected inflation reading increase chances of a rate
cut tomorrow, perhaps. But the SARB’s fundamental premise is to maintain a
healthy real-rate buffer given the increased fiscal risk premium,” Jeffrey
Schultz, an economist at BNP Paribas.

 

“In short, we need tighter fiscal policy to get looser monetary policy,”
Schultz said.

 

The real rate of interest, or yield, offered by South Africa’s bonds and
currency is higher than most emerging markets, and more attractive than the
negative rates on offer in many developed markets, but the weak economy
threatens to diminish that.

 

In October, the Treasury slashed its 2019 growth forecast to 0.5% from 1.5%
and said public debt would climb to more than 70% of GDP soon.

 

The rand pared back some losses after the inflation release, trading at
14.8400 per dollar form 14.8640 just before.

 

 

 

 

Ivory Coast 2019/20 cotton output expected to hit record 510,000 T

ABIDJAN (Reuters) - Ivory Coast’s cotton output for the 2019/2020 season is
forecast to hit a record 510,000 tonnes, up from about 468,000 tonnes in the
previous season, the cotton ginners’ association said on Wednesday.

 

“The rains were good during sowing and the farmers received the inputs they
needed,” Christophe N’Dri, executive secretary of the association, told
Reuters.

 

Ivory Coast, the world’s top cocoa producer, was also one of Africa’s major
cotton exporters with an annual output of about 400,000 tonnes before a
2002-2003 civil war split the country in two and halved production.

 

The cotton season in the West African country runs from May to April, with
sowing from April to June and harvesting from October to January. Ginning
and marketing take place from November to April.

 

The government has said it aims to achieve 600,000 tonnes of production by
2020.

 

 

 

Zambia raises benchmark lending rate by 125 basis points to 11.5%

LUSAKA (Reuters) - Zambia’s central bank raised the country’s benchmark
lending rate by 125 basis points to 11.5% on Wednesday, citing rising
consumer price inflation and the need to restore macroeconomic stability.

 

“If we don’t take any action, inflation will remain outside the target
range,” governor Denny Kalyalya said at a briefing in Lusaka.

 

Zambia’s CPI rose to 10.7% year-on-year in October from 10.5% in September.

 

 

 

 

FirstRand falls after RMH says will transfer stake to its shareholders

JOHANNESBURG (Reuters) - Shares in South African lender FirstRand fell over
4% on Wednesday after its largest shareholder said it would distribute its
stake in the group, worth around 130 billion rand ($8.80 billion), among its
shareholders.

 

The market open on Wednesday was the first opportunity for investors to
trade in FirstRand shares, after RMB Holdings (RMH), an investment firm that
gave birth to FirstRand, announced its plans late on Tuesday.

 

Shares in RMH, meanwhile, rose over 4%.-

 

 

 

Lewis H1 earnings gain on upbeat merchandise sales growth

JOHANNESBURG (Reuters) - South African retailer Lewis Group Ltd reported a
6.1% rise in its half-year revenue on Wednesday, driven by strong sales
growth in the first quarter.

 

The furniture and appliance provider, which caters to middle- and low-income
consumers, said its headline earnings per share (HEPS) for the six months
ended September came in at 215 cents, up 18.9% from 180.8 cents last year.

 

HEPS is the main profit gauge in South Africa that strips out certain
one-off items.

 

“The group’s strategy of diversification across target markets and sales
channels is expected to continue offering resilience in the constrained
consumer spending climate,” the group said in a statement.

 

The retailer has been diversifying across market segments and retail
channels in order to access higher-income consumers and attract online
shoppers.

 

The group’s merchandise sales grew 6.4% with credit sales up 8.1% and cash
sales advanced 4.1%.

 

United Furniture Outlets (UFO), a luxury furniture retailer owned by the
group, posted an 8.8% increase in its sales and an operating profit of 22.6
million rand ($1.53 million).

 

The group’s traditional retail brands Lewis, Best Home and Electric, and
Beares saw a jump of 3.7% in sales and reported an operating profit of 201.6
million rand.

 

INspire, the omni-channel home shopping retailer, was the only segment to
report a loss of 13.2 million rand. The retailer is not expected to
break-even by the end of the 2019-20 financial year.

 

In 2017, Lewis acquired UFO to diversify its target market and access
higher-income customers, while increasing the cash-to-credit sales mix.

 

The retail group dealt with a weak macroeconomic environment in South
Africa, which witnessed an economic slowdown in the second quarter.

 

The group operates 787 stores in total, with 121 stores in neighbouring
countries Namibia, Botswana, Eswatini, and Lesotho.

 

($1 = 14.7674 rand)

 

 

 

Westpac bank 'breached anti-money laundering laws'

Australia's financial crime watchdog has accused Westpac bank of 23 million
breaches of anti-money laundering and counter-terrorism financing laws.

 

The Australian Transaction Reports and Analysis Centre (Austrac) said each
breach carries a maximum a penalty of A$21m ($7.5m; £11m).

 

Westpac, the country's second largest bank, said the issues "should never
have occurred".

 

It is the second top Australian bank to face huge fines for breaching the
laws.

 

Most of the breaches concern a failure to report international transfers to
Austrac in a timely manner.

 

Westpac allegedly failed to properly report more than 19.5 million
international funds transfers between 2013 and 2018.

 

Austrac Chief Executive Nicole Rose said Westpac's failure to properly
report the transfers undermined "the integrity of Australia's financial
system" and "hindered its ability to track down the origins of financial
transactions, when required to support police investigations".

 

The unreported transactions amounted to more than A$11bn over a period of up
to six years, Austrac said.

 

The bank also allegedly failed to retain records and perform certain due
diligence functions with potentially high-risk overseas banks.

 

Those banks all disclosed relationships with high-risk or sanctioned
countries, including Iraq, Ukraine and Zimbabwe.

 

"The risk posed to Westpac was that these high risk or sanctioned countries
may have been able to access the Australian payment system through these
nested arrangements, unbeknownst to Westpac," Austrac said in its statement.

 

Australian bank misconduct 'driven by greed'

The Australian bank customers who lost everything

The agency also said there were a small number of transactions on accounts
that were potentially linked to "child exploitation risks".

 

It argued Westpac failed to implement the necessary automated detection
procedures on these transactions.

 

Westpac's shares sank 3.3% in Sydney trading.

 

Banks under pressure

Chief Executive Brian Hartzer said the issues "should have been identified
and rectified sooner".

 

"It is disappointing that we have not met our own standards as well as
regulatory expectations and requirements," he said in a statement.

 

The bank said it had self-reported the potential breaches to Austrac, and
had previously disclosed the investigation to shareholders in its annual
results.

 

Westpac's competitor Commonwealth Bank paid an A$700m fine for similar
breaches last year.

 

The country's banking sector has also been the subject of a royal commission
- Australia's highest form of public inquiry - that earlier this year
exposed widespread wrongdoing in the industry.--BBC

 

 

 

 

How China plans to lead the computer chip industry

On a university campus on the outskirts of Hong Kong a group of engineers
are designing computer chips they hope will be used in the next generation
of Chinese made smart phones.

 

Patrick Yue leans back in his chair in a coffee shop on the campus, sporting
a Stanford University t-shirt. He is the lead engineer and professor
overseeing the project.

 

His research team designs optical communication chips, which use light
rather than electrical signals to transfer information, and are needed in 5G
mobile phones and other internet-connected devices.

 

He tells me about the challenges China faces in developing a world-beating
computer chip industry.

 

"I actually think the actual designers will be as big a bottle neck as the
manufacturing. We don't have nearly as many research institutes and industry
bases to train the designers," he says.

 

His department is part-funded by Huawei, the Chinese communications and
telecom giant at the centre of an international political storm.

 

In May the US added Huawei to a list of companies that US firms cannot trade
with unless they have a licence, blaming security concerns.

 

Rivals is a season of in-depth coverage on BBC News about the contest for
supremacy between the US and China across trade, tech, defence and soft
power.

 

Many industry observers fear that the US-Chinese trade war, risks
unravelling the global technology supply chain.

 

In particular, China relies on overseas companies for computer chips (or
semiconductors), the tiny devices used in everything from consumer
electronics to military hardware.

 

"Politically everything can be used as a bargaining power," says Mr Yue.

 

"If these companies and countries start to hold back on technology then
everyone will get hurt. It's not good from a technological point of view,"
Mr Yue says.

 

China has made no secret of its desire to become self-sufficient in
technology. The nation is both the world's largest importer and consumer of
semiconductors.

 

It currently produces just 16% of the semiconductors fuelling its tech boom.

 

But it has plans to produce 40% of all semiconductors it uses by 2020, and
70% by 2025, an ambitious plan spurred by the trade war with the US.

 

In May 2018 China's President Xi Jinping met with the country's leading
scientists and engineers, calling for specialists to work towards
self-reliance in the production of core technologies.

 

That meeting was just a month after the US government banned US firms from
selling components to ZTE, China's second-largest maker of telecom network
equipment.

 

The ban highlighted to China's leaders that the nation's tech boom was
dependent on foreign technology.

 

In October this year, in its latest bid to help wean the nation's tech
sector away from US technology, the Chinese government created a $29bn
(£22m) fund to support the semiconductor industry.

 

"There is no question that China has the engineers to make chips. The
question is whether they can make competitive ones," questions Piero
Scaruffi, a Silicon Valley historian, and artificial intelligence researcher
who works in Silicon Valley.

 

"Certainly, Huawei can develop its own chips and operating systems, and the
government can make sure that they will be successful in China. But Huawei
and other Chinese phone makers are successful also in foreign markets, and
that's a totally different question: Will Huawei's chips and operating
systems be as competitive as Qualcomm's and Android? Most likely not. At
best, it will take years before they are," Mr Scaruffi adds.

 

Mr Scaruffi estimates that China could be as many as 10 years behind the
leading producers of high-end computer chips. The majority of chips made for
high-end electronics are manufactured by specialist foundries like the
Taiwanese Semiconductor Manufacturing Company (TSMC). It produces more than
70% of chips designed by third party companies.

 

Just securing the best machinery needed to make high-end chips is difficult.

 

"To start out with equipment, its very high precision equipment. You need to
print very fine features. The equipment that is needed to have this kind of
technology is controlled by a few companies in the world," says Mr Yue.

 

He believes that Chinese technology is three to four generations behind
companies like TSMC. China lacks the industry experience to manufacture high
end chips, he says. But he believes that companies like Huawei are already
competitive when it comes to designing chips.

 

Where does this leave the tech giant Huawei?

 

Mr Yue argues that Huawei is trying to replicate the successful business
models of firms like Samsung, which produces its own computer chips - rather
than trying to fall into line with Beijing's industrial ambitions.

 

"You can almost view them as an integrated company with the expertise of
what Apple or Qualcomm has," says Mr Yue.

 

Li Changzhu is a lifelong employee of Huawei and president of the company's
handset business. He joined the company 23 years ago as a fresh graduate and
has watched it grow into the international tech giant. He claims that the
goal of companies like Huawei is simply to satisfy consumer needs.

 

"We are open to use other vendors chipsets. Every year we purchase a lot of
chips from Qualcomm. We are open to that. We use the best chipsets to
satisfy our customers," he says sitting on the side of a tech conference in
Macau, a semi- autonomous southern Chinese city.

 

Growth in the semiconductor industry is typically driven by disruptive new
technologies. In the late 2000s the introduction of smartphones boosted
demand for the tiny integrated circuits that control everything from memory
to Bluetooth and wifi.

 

But today China's ambition to dominate sectors such as artificial
intelligence and 5G is expected to further ramp up demand for high-end
chips.

 

Industry analysts like Mr Scaruffi question China's ability to truly
innovate. "Every Chinese city wants to build its own Silicon Valley. It
tends to be more driven from the top. Silicon Valley had a big advantage,
that it was very far away from the political power," says Mr Scaruffi.

 

He believes that China's technological success lies in the implementation of
technology rather than its creation.

 

"If your metric is how many people use smart phones to go shopping then
China wins big time. But if your metric is Nobel Prize winners, then China
is losing badly. China of course has been very successful in implementing
technology in a way that dramatically alters society," he says.--BBC

 

 

 

'Why economists get things wrong'

Economists have had a hard time in recent years, with Conservative
politician Michael Gove famously saying that people were tired of "experts"
during the Brexit campaign, branding them "distant", "unaccountable" and
"elitist".

 

Today, trust in economists is barely above that of politicians.

 

"Economists are always saying on the one hand - but then on the other hand,"
says Esther Duflo, professor of poverty alleviation and development
economics at the Massachusetts Institute of Technology (MIT). "That's why
people are always looking for a one-armed economist," she jokes, quoting
former US President Harry Truman's reputed comment.

 

But Prof Duflo, who recently won the Nobel Prize in economics alongside her
MIT colleague and husband Prof Abhijit Banerjee, and Harvard's Prof Michael
Kremer, has certainly come off the fence in a new book that hits out at some
of economists' prized myths.

 

Esther Duflo: 'Nobel Prize will be a megaphone'

The Nobel couple fighting poverty

In Good Economics for Hard Times, Profs Duflo and Banerjee grapple with how
to deal with some of the 21st Century's biggest challenges, and argue that
economists are more important than ever in today's polarised world.

 

What motivates us?

Conventional economic theory doesn't focus on what people actually care
about, they say. Money matters, but in reality people are more concerned
about "purpose, belonging and dignity" than in making a few extra dollars -
even when times are tough.

 

 

This is a "huge blind spot in economics", says Prof Duflo, speaking to the
BBC as economists often assume people will respond very strongly to
financial incentives.

 

Conventional economics maintains that "if you are in a job working in a
clothes factory in some small town in the US, and that job vanishes because
of competition from China, you will pack up and go miles away and take a job
selling new clothes in a shop," she says.

 

And it is not just economists. A separate study of 10,000 Americans by the
husband and wife team showed 62% of respondents think the jobless should
move to find work - even if the job on offer is 200 miles away.

 

 

Yet when asked if they themselves would move for a job, only 52% said yes.
Of those who were unemployed, only a third said they were willing to move.
In reality many people don't move even after a factory has closed down.

 

Money does play a role; moving house may be too costly, or any pay rise
might be eroded by higher living costs, says Prof Duflo. And US population
mobility is certainly decreasing. In 1985, census figures showed nearly 20%
of Americans had moved house in the previous 12 months, but by 2018, this
figure had more than halved.

 

But there are more compelling reasons not to move, she says. A New York
Federal Reserve study shows around half of Americans remain attached to
where they grew up. This "rooted" group are disproportionately white, older,
married and live in rural areas.

 

 

"When bad news arrives in the form of greater competition from outside,
instead of embracing it and moving resources to their best possible use,
there is a tendency to hunker down and hope the problem will go away on its
own," write Profs Duflo and Banerjee.

 

"Workers are laid off, retiring workers are not replaced, and wages start to
drift down. Business owners take a big hit on their profits, loans get
renegotiated, all in order to preserve as much as possible of the status
quo."

 

 

The idea that more trade is good is "deeply engrained" in many economists,
says Prof Duflo. For example, when the US imposed thousands of tariffs on
goods in the 1930s, over a thousand economists wrote to President Hoover
asking him to veto the bill. Even today, the threat of tariffs sends wobbles
through stock markets.

 

Yet Prof Duflo cites research by MIT academics Arnaud Costinot and Andrés
Rodríguez-Clare that shows that the gains to the US from trade are about
2.5% of gross domestic product (GDP).

 

"This is really not a lot," she says. "The truth is, if the US were to go
back to complete autarky [not trading with anybody] it would be poorer. But
not that much poorer."

 

 

But not everyone agrees. Douglas Irwin, a trade historian and professor of
economics at Dartmouth College, says the gains to the US from trade in
Costinot's research, range from 1.8-10.3% of GDP.

 

"Something like 10% is nothing trivial," says Prof Irwin. "I would say
historical experience has shown that trade reforms in developing countries
have improved their economic performance and resulted in significant poverty
reduction."

 

Prof Duflo says while countries like China have benefited massively from
trade - the experience of other countries has been mixed.

 

 

China has built a reputation for being able to make things cheaply, quickly,
and reliably - making it harder for smaller countries like Ethiopia or Egypt
to compete - even as Chinese living standards keep rising.

 

Higher or lower taxes?

Labour leader Jeremy Corbyn has pledged to introduce a "fairer" tax system
if he becomes the next UK prime minister. Labour has vowed to make the rich
pay more tax, and some party members have even suggested there should be no
billionaires in this country.

 

Prof Duflo says the evidence suggests that rich people don't suddenly stop
working because of higher taxes, but adds that just taxing the wealthy more
won't necessarily generate extra revenue.

 

 

"For example, if taxes on people making more than £500,000 a year are very
high then companies will not feel the need to pay them those very high wages
in the first place - because they would just go to the Treasury's coffers
anyway."

 

But slashing taxes isn't the answer either. In their book, Profs Duflo and
Banerjee cite a US example when Republican leaders in Kansas passed deep tax
cuts in 2012 in the hope these would spur the economy. The opposite
happened. The state was left without enough money to pay for public
services, and officials were forced to cut the school week to just four
days.

 

Prof Duflo says higher tax rates have to be matched by better services or
targeted help for those who need it most. "Policymakers need to look at
policies that will help the person who has lost their job in a factory
because they got replaced by robots or because the the item is now made in
China.

 

"Unless we have a successful answer to this question, then just taxing the
rich is not going to help because it's not going to make those people less
angry."

 

Listen to an extended interview with Esther Duflo on Business Daily for the
BBC World Service.--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
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been compiled from sources believed to be reliable, but no representation or
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opinions expressed and recommendations made are subject to change without
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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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