Major International Business Headlines Brief::: 09 October 2019

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Major International Business Headlines Brief::: 09 October 2019

 


 

 


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*  Nigerian president offers record 10.33 trln-naira budget for 2020

*  South Africa's rand, stocks fall as risk sentiment wanes

*  Exxon to make $500 mln initial investment in Mozambique LNG project

*  Botswana forecasts slower GDP growth, wider deficit this year

*  Rwanda launches first 'Made in Africa' smartphones

*  Sierra Leone cancels mining license of Gerald Group unit

*  Uganda Airlines receives two Bombardier passenger planes

*  South Africa's Tongaat mulls sale of assets, rights issue

*  Mozambique says US gas giant Exxon to finalise LNG investment next week

*  IMF boss Kristalina Georgieva warns of 'painful' Brexit

*  Can UK bookseller James Daunt revive Barnes & Noble?

*  Chinese TV scraps plans to show NBA exhibition games

*  Could blacklisting China's AI champions backfire?

*  Hong Kong drops £32bn bid for London Stock Exchange

*  Farmers 'betrayed' by no-deal Brexit tariff plan

*  No-deal Brexit would push UK debt to 50-year high, says think tank

 


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Nigerian president offers record 10.33 trln-naira budget for 2020

ABUJA (Reuters) - Nigerian President Muhammadu Buhari presented a record
10.33 trillion-naira ($33.8 billion) budget for 2020 to lawmakers on
Tuesday, the first spending plan since his re-election in February.

 

The plan for Africa’s top oil exporter assumes crude production of 2.18
million barrels a day and an oil price of $57 per barrel.

 

Nigeria emerged from its first recession in 25 years in 2017. Growth remains
sluggish, although higher oil prices and recent debt sales have helped the
country to accrue billions of dollars in foreign reserves.

 

Buhari told lawmakers at a joint session of the upper and lower chambers of
parliament that the “economic environment remains challenging” but he said
the budget was expected to increase the pace of growth.

 

The spending plan, which includes a value-added tax increase from 5% to
7.5%, is up from the 8.83 trillion-naira budget for 2019 and tops the
previous record budget spending plan set by the 9.12 trillion-naira budget
for 2018.

 

Buhari’s government has repeatedly rolled out record spending plans but
struggled to fund them because of lower oil production and an inability to
boost non-oil exports.

 

The budget must still be approved by parliament before being signed into law
by Buhari, a process that can take months.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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South Africa's rand, stocks fall as risk sentiment wanes

JOHANNESBURG (Reuters) - South Africa’s rand and stocks weakened on Tuesday
as concerns over the upcoming U.S.-China trade talks and escalating tensions
between London and Brussels sparked a flight to safety, denting appetite for
riskier but high-yielding assets.

 

At 1527 GMT the rand was 0.66% weaker at 15.2900 per dollar.

 

“An optimistic move by the rand to test the R15.00/$ mark was short-lived as
renewed risk-off sentiment filtered into markets yesterday, with trade
tension once again taking centre stage,” Bianca Botes, treasury partner at
Peregrine Treasury Solutions, said in a note.

 

Top-level trade discussions between the United States and China are
scheduled for Oct. 10-11, with reports that the Trump administration was
moving ahead with discussions on curbing capital flows into China keeping
investors on edge.

 

Washington also blacklisted eight Chinese tech companies, while U.S.
President Donald Trump suggested a deal to end the trade dispute may not yet
be quite in the offing.

 

Elsewhere reports that Brexit talks between Britain and Brussels were close
to breaking down added further uncertainty.

 

Investors are also awaiting the minutes from the U.S. Federal Open Market
Committee’s September meeting on Wednesday for clues on whether the central
bank will cut rates at its October session.

 

“The rand could well claw its way back to R15.00, and below, should risk
sentiment improve and expectations of a Fed rate cut towards the end of the
month prevail,” Botes said.

 

On the bourse, the benchmark Top-40 index fell 0.35% to 48,465 points, while
the All-Share index dropped 0.48% to 54,454 points.

 

“It’s a whole lot of noise-making, one big melting pot of uncertainty, and
markets don’t like that,” said Ryan Woods, a trader at Independent
Securities. “That is why you are seeing this progressive sell-off across the
board.”

 

Among the fallers on the Top-40 index, Absa slid 2.20% to 149.00 rand and
Shoprite weakened 1.81% to 124.97 rand.

 

Curbing further losses were gold shares, which rose 1.82% as global
uncertainty sparked a flight to safe-haven assets.

 

Harmony Gold rose 2.7% 48.35 rand, Gold Fields gained 1.86% to 83.84 rand
and AngloGold Ashanti closed up 1.47% at 315.55 rand.

 

In fixed income, the yield on the benchmark government bond due in 2026
added 6.5 basis points to 8.28%.

 

 

 

Exxon to make $500 mln initial investment in Mozambique LNG project

MAPUTO (Reuters) - Exxon Mobil will invest more than $500 million in the
initial construction phase of its liquefied natural gas (LNG) project in
Mozambique, the U.S. energy company said on Tuesday.

 

Construction of onshore facilities has been awarded to a consortium led by
Japan’s JGC, U.K firm TechnipFMC and U.S. company Fluor Corp, Exxon head of
power and gas marketing Peter Clarke told a ceremony in the capital Maputo.

 

The $30 billion Rovuma LNG project has a capacity of 15 million tonnes a
year (mtpa) and is set pump much-needed cash into the southern African
nation’s ailing economy.

 

 

 

Botswana forecasts slower GDP growth, wider deficit this year

GABORONE (Reuters) - Botswana’s economy is expected to grow at a slower pace
this year compared to last year, the deputy secretary in the ministry of
finance said on Tuesday, with the services sector set to drive growth in the
medium term.

 

Gross domestic product growth in the diamond-producing southern African
nation is projected to slow down to 4.3% in 2019, from 4.5% last year,
deputy finance secretary Kelapile Ndobano said.

 

Economic growth is later projected to pick up to 4.6% in 2020, supported by
ongoing structural reforms aimed at diversifying the economy, he said.

 

“The medium term growth outlook remains positive,” Ndobano told a budget
conference.

 

“The non-mining sector, particularly services, will drive growth, signalling
that our economy is now more diversified as diamonds are no longer the
biggest contributor to growth.”

 

The global diamond market faces headwinds, including weak demand in major
markets, overstocking in the midstream - diamond cutters and polishers - and
lacklustre profits due to narrow margins between rough and polished prices.

 

Botswana’s diamond sales fell 16% in the second quarter of 2019, Ndobano
said. Debswana, a partnership between Anglo American’s De Beers and
Botswana, reported that production fell by 9% to 5.7 million carats in the
second quarter.

 

“Should this persist, it may pose further risks to the domestic revenue
outlook, as it would affect mining value added and other related economic
sectors,” Ndobano said.

 

Botswana’s 2019/20 fiscal deficit forecast has been revised upwards to 3.8%
of gross domestic product from 3.5%, as revenue growth slows against rising
expenditure commitments, Ndobano said.

 

The fiscal deficit is seen narrowing to 3.1% of GDP in 2020/21, Ndobano
said.

 

“The anticipated deficits will be financed through a combination of
borrowing mainly from domestic sources, as well as drawing down of
government cash balances at the central bank,” he said.

 

“This, however, compromises fiscal sustainability in the long term, as well
as the ability to meet short term obligations such as regular payments for
imports of goods and services.”

 

 

 

Rwanda launches first 'Made in Africa' smartphones

KIGALI (Reuters) - Rwanda’s Mara Group launched two smartphones on Monday,
describing them as the first “Made in Africa” models and giving a boost to
the country’s ambitions to become a regional technology hub.

 

The Mara X and Mara Z will use Google’s Android operating system and cost
175,750 Rwandan francs ($190) and 120,250 Rwandan francs ($130)
respectively.

 

They will compete with Samsung, whose cheapest smartphone costs 50,000
Rwandan francs ($54), and non-branded phones at 35,000 Rwandan francs ($37).
Mara Group CEO Ashish Thakkar said it was targetting customers willing to
pay more for quality.

 

“This is the first smartphone manufacturer in Africa,” Thakkar told Reuters
after touring the company alongside Rwanda’s President Paul Kagame.

 

Companies assemble smartphones in Egypt, Ethiopia, Algeria and South Africa,
but import the components, he said.

 

“We are actually the first who are doing manufacturing. We are making the
motherboards, we are making the sub-boards during the entire process,” he
said. “There are over 1,000 pieces per phone.”

 

Thakkar said the plant had cost $24 million and could make 1,200 phones per
day.

 

Mara Group hopes to profit from the African Continental Free Trade
Agreement, a pact aimed at forming a 55-nation trade bloc, to boost sales
across Africa, Thakkar said.

 

The agreement is due to begin trading in July next year, aiming to unite 1.3
billion people and create a $3.4 trillion economic bloc. But it is still in
the very early stages and no timelines have been agreed for abolishing
tariffs.

 

Kagame said he hoped the phone would increase Rwanda’s smartphone usage,
currently at around 15%.

 

“Rwandans are already using smartphones but we want to enable many more. The
introduction of Mara phones will put smartphones ownership within reach of
more Rwandans,” Kagame said.

 

($1 = 924.3110 Rwandan francs)

 

 

 

Sierra Leone cancels mining license of Gerald Group unit

FREETOWN (Reuters) - Sierra Leone’s government cancelled the mining license
of a subsidiary of Gerald Group, the mines minister told Reuters on Tuesday,
amid a dispute over royalty payments.

 

SL Mining, which extracts iron ore, said it would suspend operations in the
West African country last month after filing for arbitration over the matter
in an international court.

 

 

 

Uganda Airlines receives two Bombardier passenger planes

KAMPALA (Reuters) - Uganda’s national carrier Uganda Airlines received two
passenger planes on Monday, doubling the size of the fledgling airline’s
fleet.

 

The airline received two CRJ900 planes from Canadian manufacturer
Bombardier, the airline said on its Twitter handle. Each plane can seat 72
passengers.

 

The airline is considering expanding its destinations to include Kinshasa,
Zanzibar, Lusaka, Asmara, Hargeisa, Djibouti and Addis Ababa, it said.

 

Uganda Airlines was relaunched in August, with the country eager to take a
slice of the region’s growing aviation business that is currently dominated
by Ethiopian Airlines.

 

Uganda Airlines expects to receive two Airbus A330 Neo planes soon. The
first will arrive by the end of the year, and the second a few months later.

 

The state carrier was founded in 1976 by former dictator Idi Amin but
liquidated in 2001 during a broader push to sell off struggling state-owned
firms.

 

The airline started flying again last month, banking on passengers from the
Uganda’s emerging oil industry and the traditional tourism sector.

 

 

 

South Africa's Tongaat mulls sale of assets, rights issue

JOHANNESBURG (Reuters) - South African sugar producer Tongaat Hulett said on
Monday it is considering the possible sale of assets, a possible equity
capital raise or a combination thereof in order to reduce the group’s debt.

 

Tongaat, which said in April it would restate financial information after a
formal review revealed certain accounting practices that needed to be
re-examined, also said debt restructuring talks with South African and
Mozambican debt providers are progressing well.

 

 

 

Mozambique says US gas giant Exxon to finalise LNG investment next week

MAPUTO (Reuters) - U.S. energy giant Exxon Mobil will finalise its
investment in Mozambique’s lucrative liquefied natural gas fields in a
signing ceremony on Tuesday, the African country’s government said via state
television.

 

Exxon’s Rovuma LNG project, jointly operated with Italian firm Eni, will
produce, liquefy and sell natural gas from three reservoirs located in the
Area 4 block offshore Mozambique’s northern coast.

 

Exxon estimates the fields, which are due to come on line in 2024, will cost
$30 billion to develop.

 

State television news channel TVM on Sunday said the Ministry of Mineral
Resources and Energy would host a signing ceremony with Exxon and other
firms in the capital Maputo on Tuesday.

 

Exxon has said it expects 17,000 tons of liquefied petroleum gas (LPG) per
year during the production phase, with the signing of an initial investment
decision paving the way for the massive infrastructure project to begin.

 

The gas fields are located off the coast of the northern Cabo Delgado
province, which for the last two years has seen intensifying attacks on
surrounding communities and government buildings by an extreme Islamist
militant group.

 

In February Texas-based petroleum firm Anadarko said one worker was killed
and several others injured in two related attacks in the Cabo Delgado area
where it is building a 17,000-acre liquefaction complex.

 

 

 

IMF boss Kristalina Georgieva warns of 'painful' Brexit

The new head of the International Monetary Fund has warned that Brexit in
whatever form will be "painful", adding to the effects of a global slowdown.

 

Kristalina Georgieva said the split will hurt not only the UK and European
Union, but also low income countries with economic ties to them.

 

IMF data show that growth has already slowed in almost 90% of the world.

 

"It is very obvious that this [Brexit] is going to be painful," she told the
BBC.

 

Ms Georgieva said UK politicians will have to figure out how to shield
people hurt by Brexit - but the options available to fund those measures are
limited.

 

"The choices are not that many - you either borrow or you look at the [tax]
increase," she said.

 

Ms Georgieva, who spoke to the BBC ahead of the IMF's annual meeting in
Washington next week, said the IMF is also concerned about the effect of
Brexit outside of the UK.

 

"I particularly worry about low-income countries that are in a significant
way dependent on the European Union and the UK," she said.

 

"Unfortunately this is not great news," she said of Brexit. "And it comes at
a time of compounded other factors that slow down growth."

 

Trade war

The US and China are locked in a trade war over state subsidies and
technology theft that has led the two sides to impose tariffs on billions of
dollars worth of each other's goods.

 

US President Donald Trump has also picked fights with allies such as Europe
and Canada over cars, steel and aluminium.

 

The disputes have brought trade growth to a "near standstill" and hurt
manufacturing and business investment, Ms Georgieva said.

 

In 2020, the IMF predicts that they will knock almost 1% off of global
growth in 2020 - or roughly $700bn.

 

"What is most significant is that it is not the direct impacts of tariffs
that are most harmful. Most harmful is the loss of confidence," Ms Georgieva
said.

 

'Bigger loser'

The White House has said the tariffs are meant to force China to change its
policies and dismissed concerns about growth, arguing that any harm to the
US pales in comparison to the damage on China.

 

"That is not a good excuse if you can say, you know what, I'm a loser, but
you're a bigger loser than me," Ms Georgieva said.

 

"I don't think that this is what people expect from leadership."--BBC

 

 

 

Can UK bookseller James Daunt revive Barnes & Noble?

James Daunt, credited with a turnaround at Britain's biggest book chain,
Waterstones, is plotting a similar strategy to address the troubles at
America's Barnes & Noble.

 

In the 1990s, the company was king of America's bookshops, a fast-expanding
corporate behemoth that revolutionised the industry and crushed local
competitors.

 

Its success seemed so complete it inspired the 1998 romantic comedy You've
Got Mail, in which Meg Ryan falls for Tom Hanks, even as his FoxBooks forces
her family's shop out of business.

 

Today, however, Barnes & Noble stores seem giant, tired remnants of a
vanished retail era.

 

Sales in the company's retail business have declined for almost a decade, as
the firm faced economic recession, e-books and the steady desertion of
shopping malls.

 

It has cycled rapidly through chief executives, and spent millions of
dollars creating the Nook e-reader, which failed to gain traction.

 

Efforts to win back customers by adding different non-book items and full
service restaurants have shown little sign of success, despite evidence of
revival at independent bookstores.

 

In June, long-time chair Leonard Riggio announced the sale of the business
to hedge fund Elliott Advisors, which installed the Waterstones boss at the
helm.

 

On a recent visit to one of the company's flagship locations in New York
City, Mr Daunt was unsparing about the problems he sees.

 

The book display at the entrance? "There's absolutely no rhyme or reason to
it." The shelves upstairs stocked with toys? "A lot of plastic." The
website? "We have to definitely change and invest."

 

And yet, despite the challenges - even an escalator appeared broken - Mr
Daunt says he is confident he can change the story.

 

The 55-year-old, tall, slim and soft-spoken, has almost 30 years of
bookselling in the UK behind him, first at Daunt Books, the small chain of
upmarket shops he founded in Marylebone in 1990 and then at Waterstones,
which he took over as chief executive in 2011 as it risked sinking into
administration.

 

Waterstones turned profitable in 2016. Mr Daunt credits the recovery to his
decision to make the chain act more like an independent bookshop, with local
managers empowered to stock the titles they think will suit their particular
markets.

 

He's plotting a similar strategy now. "It is relatively simple. Fill
bookshops with the books their customers want," he says.

 

'Different market'

Where Mr Daunt sees similarities between Waterstones and Barnes & Noble,
analysts warn of differences.

 

Despite its diminished state, Barnes & Noble remains a massive operation,
with 627 stores, some 27,000 full and part-time employees and $3.5bn
(£2.8bn) in sales in the 12 months to 27 April.

 

By comparison, Waterstones had just 278 stores, about 3,100 staff and sales
of £385.7m when Elliott took over in 2018.

 

America's size makes the mechanics of some parts of book selling, such as
distribution, more challenging, while the threat from Amazon includes not
only its online sales but a small, but growing number of dedicated book
shops.

 

Barnes & Noble shops are often found in suburban malls, where they occupy
huge, 26,000-square-foot spaces - a challenge for any retailer these days,
let alone a bookshop.

 

"You have to drive there, you have to get out of your car, park - all this
stuff. It's not like walking down the street and saying, 'Oh those book
choices look interesting. Let's pop in," says John Tinker, an analyst at
Gabelli & Co, who has followed Barnes & Noble for years.

 

"He's following the same playbook as in England and to the extent it worked
in England, that increases the odds that it works over here . But there's a
lot of execution questions. Waterstones was sort of simpler," he says.

 

Authenticity

Oren Teicher, chief executive of the American Booksellers Association, says
the US has relatively few bookstores compared to Europe and the UK,
suggesting there is room for Barnes & Noble to succeed - especially given
the growth local shops have seen in recent years.

 

Still, the company remains awkwardly wedged between Amazon and the "indies".
In the UK, Waterstones has opened unbranded shops which look like small
independent bookshops - so-called "stealth" outlets that drew outcry.

 

"It's hard to take a 30,000-square-foot superstore out in a strip mall and
convert that into a neighbourhood store," Mr Teicher says. "There's got to
be authenticity."

 

Investment ahead

Mr Daunt, who will remain in charge of Waterstones and run it separately,
has some room to experiment.

 

More than 200 Barnes & Noble leases are up for renewal in the next two years
- offering an opportunity to push for lower rents, shrink square footage -
or move to other locations entirely.

 

Analysts expect him to press publishers for better terms, while Elliott's
backing provides - at least for a few years - a shield from short-term
financial pressure and the resources to invest.

 

Mr Daunt estimates he will need some $100-$200m to upgrade everything from
store furniture and fixtures to IT.

 

"Good bookstores are fabulous things and the problem with this one is it's
just not a very good bookstore," he says of his visit to one of the New York
City outlets.

 

"It's got all the makings of a good bookstore. It once was a good bookstore.
So in theory it's not too tricky to turn it around."--BBC

 

 

 

 

Chinese TV scraps plans to show NBA exhibition games

China's state broadcaster has scrapped plans to show two US NBA basketball
pre-season exhibition games, as the row over a team executive's tweet in
support of Hong Kong protesters grows.

 

Houston Rockets boss Daryl Morey apologised after his tweet, from which the
club and NBA distanced themselves.

 

In response, Chinese broadcasters said they would stop showing Rockets
games.

 

But now China Central Television says it will "immediately suspend" plans to
show the LA Lakers-Brooklyn Nets games.

 

"We believe that any comments that challenge national sovereignty and social
stability are not within the scope of freedom of speech," the station said
on its social media account.

 

It added that as well not showing the pre-season matches it would
"immediately investigate all co-operation and communication involving the
NBA".

 

 

The matches are due to take place in Shanghai on Thursday and Shenzhen on
Saturday.

 

Meanwhile, a publicity event at a Shanghai primary school, at which Nets
players and executives were set to appear on Tuesday afternoon, was
cancelled two hours before its scheduled start. No explanation was given for
the cancellation.

 

Daryl Morey backtracks after Hong Kong tweet causes Chinese backlash

Stephon Marbury: The NBA player who embraced China

In a statement on Monday, the NBA described Mr Morey's comments as
"regrettable" and acknowledged he had "deeply offended many of our friends
and fans in China".

 

It added: "We have great respect for the history and culture of China and
hope that sports and the NBA can be used as a unifying force."

 

However, on Tuesday NBA commissioner Adam Silver appeared to back the
Houston coach. He told a Chinese news agency that his organisation wanted to
make it clear that "Daryl Morey is supported in terms of his ability to
exercise his freedom of expression".

 

Mr Silver added: "I accept that it is also Chinese government's and Chinese
businesses' right to react to those words and, at least from my long-time
experience in the NBA, it will take some time to heal some of these issues."

 

In response to criticism of the NBA's initial response to the incident, Mr
Silver added in a statement: "I recognise our initial statement left people
angered, confused or unclear on who we are or what the NBA stands for.

 

"Over the last three decades, the NBA has developed a great affinity for the
people of China. We have seen how basketball can be an important form of
people-to-people exchange that deepens ties between the United States and
China.

 

 

"It is inevitable that people around the world - including from America and
China - will have different viewpoints over different issues. It is not the
role of the NBA to adjudicate those differences.

 

"However, the NBA will not put itself in a position of regulating what
players, employees and team owners say or will not say on these issues. We
simply could not operate that way."

 

NBA games draw huge numbers of viewers in China, with millions watching
games primarily through streaming platforms. In May this year, the NBA
opened its largest store outside North America in Beijing.

 

The new NBA season starts on 22 October.--BBC

 

 

Could blacklisting China's AI champions backfire?

Just over two years ago, China announced an audacious plan to overtake the
US and lead the "world in AI [artificial intelligence] technology and
applications by 2030".

 

It is already widely regarded to have overtaken the EU in many aspects.

 

But now its plans may be knocked off course by the US restricting certain
Chinese companies from buying technologies developed or manufactured in the
States.

 

Washington's justification is that the organisations involved have made
products used to commit human rights abuses against China's Muslim ethnic
minorities.

 

But it is notable that those on its blacklist include many of China's
official "national AI champions", among them:

 

Megvii - an image recognition software developer sometimes referred to as
being the world's most valuable AI start-up

iFlytek - a voice recognition specialist

Hikvision - one of the world's biggest CCTV systems manufacturers

SenseTime - a start-up that makes AI services for use in smart city,
transport and education applications

Yitu - a developer of machine vision and voice recognition tools

Like the telecoms firm Huawei before them, they now face major disruption as
a consequence of the Trump administration's intervention.

 

That is, in part, because they are reliant on US-based know-how.

 

SenseTime, for example, formed an alliance with the Massachusetts Institute
of Technology (MIT) last year to jointly fund research projects. And Yitu
recently worked with researchers at the University of California San Diego
to develop algorithms to diagnose illnesses in children.

 

The move also threatens to jeopardise the companies' ability to attract
foreign investment. The Bloomberg news agency has already suggested that a
planned $1bn flotation by Megvii could be derailed as a consequence.

 

But perhaps most crucially, the blacklisting threatens to cut off the supply
of computer chips and other components that Hikvision requires to build its
surveillance cameras, and the others need to train their algorithms.

 

Chinese chips

The US is the undisputed leader in semiconductors.

 

Whether its CPUs (central processing unit) and GPUs (graphics processing
units) from tech giants including Intel and Nvdia, or chips that specialise
in AI-related tasks from lesser-known firms such as Ambarella and ON
Semiconductor - American firms provide the tech that underpins the Chinese
tech firms' progress.

 

This dependence has not gone unnoticed.

 

At present only 16% of the semiconductors used within China are made in the
country, and only half of those by local companies - according to a report
by the Center for Strategic and International Studies.

 

 

But the study notes that Beijing aims to boost that figure to 40% by the end
of next year, and raise it to 70% by 2025.

 

"For decades, building indigenous Chinese chips has been an aspiration of
the government," Matt Sheehan, author of The Transpacific Experiment - a
book about China and the US's tech ties - told the BBC.

 

"Moves like the entity lists have turned that aspiration into an imperative
for the government, but also potentially a matter of life or death for
private Chinese companies.

 

"That doesn't mean they'll succeed at it any time soon. This is one of the
most complex engineering tasks out there, one that often requires decades of
accumulated in-house knowledge and experience.

 

"But it does seem that China's own AI chip start-ups will not be short of
cash or new orders any time soon."

 

AI chip designers

Number of firms (June 2019)

 

Source: Center for Data Innovation

Over recent weeks, first Huawei and then Alibaba have unveiled computer
server chips specially designed to carry out machine learning tasks at high
speed.

 

Xiaomi has also said it is working on a similar product.

 

Meanwhile, smaller start-ups have secured hundreds of millions of dollars
worth of funds for other types of AI processors, such as chips for
self-driving cars or processors for "intelligent robots".

 

American firms are not standing still, but one Washington-based think tank
warns the US should not consider its lead to be unassailable.

 

"US firms are also developing specialised AI chips," the Center for Data
Innovation said in a report.

 

"Nonetheless, China's development of well-funded AI chip start-ups and
advancements in chip design indicate it may be able to close at least some
of the gap."

 

It added that the EU was a "laggard" in this field by comparison.

 

National security

All this matters because AI-driven technologies have the potential to make
companies more productive, citizens better-educated and healthier - and also
armies better equipped to wage wars.

 

"China's success in commercial AI and semiconductor markets has direct
relevance to China's geopolitical power," noted Gregory Allen for the Center
for a New American Security.

 

"It reduces the ability of the United States government to put diplomatic
and economic pressure on China and... it increases the technological
capabilities available to China's military and intelligence community.

 

"Regarding the latter, essentially all major technology firms in China
co-operate extensively with China's military and state security services and
are legally required to do so."

 

Putting the brakes on China's AI champions may serve the US's own national
security and foreign policy interest in the short term.

 

But ultimately, it could spur on the Chinese Communist Party's determination
to make its tech industry less dependent on foreign partners, with all the
financial and geopolitical consequences that entails.--BBC

 

 

 

Hong Kong drops £32bn bid for London Stock Exchange

Hong Kong's stock exchange has dropped its multibillion-dollar bid for the
prized London Stock Exchange (LSE).

 

The bid was worth £32bn ($40bn) and was dependent on the axing of the London
exchange's planned purchase of US financial data provider Refinitiv.

 

But the LSE had rejected the offer, saying it fell "substantially short" of
an appropriate valuation.

 

Hong Kong Exchanges and Clearing (HKEX) said it was now in the interest of
shareholders to drop the bid.

 

In a statement, the board said it still believed a tie-up was "strategically
compelling" and "would create a world-leading market infrastructure group".

 

UK to launch 'groundbreaking' China stock link

HKEX had until Wednesday to follow up its initial takeover proposal with a
firm bid.

 

Under UK rules, it is not allowed to make another approach for the LSE for
six months.

 

"The board of HKEX is disappointed that it has been unable to engage with
the management of LSEG in realising this vision," it said in a statement.

 

Shares in LSE dropped 6% in reaction to the news.

 

 

The LSE's board rejected the bid unanimously last month and said it saw "no
merit in further engagement".

 

In a published letter sent to HKEX, the LSE said the bid was "inherently
uncertain" because it was mostly in shares, and also because of Hong Kong's
questionable future as a strategic gateway.

 

Neil Wilson, chief market analyst at Markets.com, said investors had "balked
at the anti-trust, regulatory and deliverability issues that the tie up
implied".

 

However, he added: "We're slightly surprised HKEX didn't try again - the
fact they didn't suggests their charms... were completely lost on the big
shareholders.

 

"[LSE] shares slipped... on the open, but what remains unclear is whether
one of the large US exchanges comes in."--BBC

 

 

 

Farmers 'betrayed' by no-deal Brexit tariff plan

Farmers will feel "betrayed" by a government plan not to impose tariffs on
the majority of goods entering the UK in the event of a no-deal Brexit, the
National Farmers Union has said.

 

The government has announced it will not tax 88% of imports into the UK.

 

The NFU said without a Brexit deal its members face tariffs on exports while
overseas rivals will not be taxed.

 

"The prime minister has missed a real opportunity to back British farmers,"
said NFU chief Minette Batters.

 

The government published its updated proposed tariff regime ahead of the
UK's scheduled departure from the European Union on 31 October.

 

The regime, which will apply for the first year after the UK leaves the EU,
contained three amendments including adjusting tariffs on bioethanol
imports.

 

Also some clothing shipped into the UK will be taxed at between 8% and 12%.

 

Both revisions are aimed at protecting domestic bioethanol and clothing
producers from cheaper imports.

 

Earlier this year, the government said it would introduce tariffs on some
meat and dairy products shipped into the UK following a no-deal Brexit.

 

However, its latest plans indicate 88% of UK imports will be tariff-free if
the country leaves the EU without a deal, up from 87% announced in March.

 

Ms Batters said: "We will see, from day one, farm businesses facing new,
high tariffs on much of the 60% of our exports that go into the EU, while
tariffs on goods coming into the UK will be set far, far lower and in many
cases won't be applied at all."

 

She added: "Farmers are going to feel betrayed by this government's failure
to act now in making sure that all that can be done is being done to help
mitigate the damaging effects of a no-deal Brexit."

 

'Best prices'

Dairy UK, the trade body, said it had told the government earlier this year
that "this major liberalisation did not offer the level playing field this
industry needs to survive".

 

"Our preference is a deal," said Dairy UK's chief executive Judith Bryans.
"One which allows us to have open frictionless trade with our largest export
customer, the EU.

 

"If that doesn't happen, the government needs to impose reciprocal tariffs
to level the playing field and put in place a package of mitigation
measures, before businesses are pushed to the wall."

 

Trade Policy Minister Conor Burns, said: "Our temporary tariff regime will
support the UK economy as a whole, helping British businesses to trade and
opening up opportunities for business to import the best goods from around
the world at the best prices for British consumers."

 

Free market think tank the Adam Smith Institute said: "British farmers can
compete with the rest of the world on price and quality, they shouldn't be
crying betrayal at the prospect of ministers no longer taxing British
consumers for daring to buy things from abroad.

 

"Freer trade was a key benefit of Brexit, and we should celebrate the
removal of tariff barriers across the economy."

 

The Department for International Trade also announced on Tuesday that a
proposed 22% tariff on lorries sold into the UK would fall to 10%.

 

Lorries sold to the UK are currently not subject to a tariff, something the
Road Haulage Association said should continue in the event of a no-deal
Brexit.

 

RHA chief executive Richard Burnett said: "The original proposal of a 22%
tariff on HGVs coming in from the EU was unbelievable.

 

"A 10% tariff will still be crippling and will severely damage the lives and
livelihoods of those responsible for operating the very industry that keeps
the UK fit to live in."

 

Commenting on the change to lorry import taxes, Meredith Crowley, an
economist specialising in international trade from the University of
Cambridge, said the UK's heavy goods vehicle sector was facing "some
difficulty with Brexit".

 

She said: "They were trying to have the same high tariffs on imports from
the European Union but that could also raise prices for purchasers of heavy
goods vehicles."

 

"These vehicles are really expensive, so £85,000 to £100,000."

 

Meanwhile, a government paper on Monday found UK and EU firms would be faced
with a "a significant new and ongoing administrative burden" in the event of
a no-deal Brexit.

 

It found large firms importing and exporting at scale would need to fill in
forms taking one hour 45 minutes on average and cost £28 per form for each
load imported.

 

Separately, in a new 155-page "Brexit readiness report", the government said
that a new advice service to help suppliers of medical goods would be
launched.--BBC

 

 

 

No-deal Brexit would push UK debt to 50-year high, says think tank

Even a "relatively benign" no-deal Brexit would push UK debt to its highest
since the 1960s, the Institute for Fiscal Studies (IFS) has said.

 

The think tank said borrowing was likely to rise to £100bn and total debt
would soar to 90% of national income.

 

"The government is now adrift without any effective fiscal anchor," said IFS
director Paul Johnson.

 

The Treasury said any decisions would be made "with a view to the long-term
sustainability of the public finances".

 

Spending rules

The gloomy forecasts are part of the IFS Green Budget, looking at the
challenges facing Chancellor Sajid Javid as he prepares for his first
Budget.

 

The IFS's Mr Johnson said: "Given the extraordinary level of uncertainty and
risks facing the economy and public finances, it [the government] should not
be looking to offer further permanent overall tax giveaways in any
forthcoming Budget.

 

"In the case of a no-deal Brexit, though, it should be implementing
carefully targeted and temporary tax cuts and spending increases where it
can effectively support the economy."

 

The next election: What will the parties promise?

A simple guide to Brexit

Will Johnson's Brexit plan work for business?

But even before the cost of a possible no-deal Brexit is factored in, the
think tank said the government was set to break its own spending rules.

 

The IFS forecasts that annual borrowing - the difference between what the
government spends and what it receives through, for example, taxation - will
top £50bn next year.

 

That will be about 2.3% of gross domestic product (GDP), a measure of
national income. Under current spending rules the government can only borrow
up to 2% of national income.

 

The think tank said the government's current plans for day-to-day spending
next year are closer to the levels proposed by Labour's 2017 manifesto than
plans laid out by the Conservative party at the time.

 

An HM Treasury spokesperson said: "September's spending round supported the
people's priorities of health, education and the police within the existing
fiscal rules, as we said it would be.

 

"Beyond that, the chancellor has already said that we will be reviewing the
fiscal framework as we turn the page on austerity. In so doing, we will
retain a fiscal anchor to public spending so that decisions are taken with a
view to the long-term sustainability of the public finances."

 

A doubling in the annual budget deficit, leading, in relation to the size of
the economy, to the highest government debt since the 1960s.

 

These are the new forecasts of the independent Institute for Fiscal Studies
for how a no-deal Brexit is likely to drench the UK's public finances in red
ink. Only on the extraordinary scale of the fiscal collapse of the 2008
financial crisis are these numbers modest.

 

On any ordinary scale they do matter - an annual deficit heading back up
towards £100bn, and national debt closer to 90% of GDP for the first time in
half a century.

 

And all this comes at a time where the institute concludes that the
government is no longer taking its own fiscal rules seriously, borrowing
more to spend more on public services even as the Treasury approaches its
self-imposed limits.

 

Growth warning

In the case of a no-deal Brexit, the IFS said a temporary government
spending spree could help to smooth the path for growth, although it would
also add to government debt.

 

The think tank forecasts that the debt stock - the total amount of money
owed by the government - would climb to almost 90% of national income. It
currently stands at about 80%.

 

Even with "substantial" government spending, the IFS expects the UK economy
to flatline for two years following a no-deal Brexit.

 

It warned that a rise in public spending in 2020 would likely be followed by
"another bust" as the government would have to deal with "the consequences
of a smaller economy and higher debt for funding public services".

 

Mr Johnson said that it would be "crucial" that government spending
programmes were temporary.

 

"An economy that turns out smaller than expected can, in the long run,
support less public spending than expected, not more," he said.

 

 

Christian Schulz, the chief UK economist at Citi, which contributed to the
report, said: "The UK economy is already around £60bn smaller than it would
have been without a vote to leave the European Union, with the UK missing
out on a bout of global growth.

 

"Business investment is up to 20% lower than it would otherwise have been,
hurting productivity and wage growth," he said.

 

However, Mr Schulz added that a further Brexit delay would create more
uncertainty, denting investment and leaving growth at around 1% a year.

 

"From a growth perspective, a Brexit deal is a little better, leaving growth
at 1.5%, but it would leave no chance of Brexit being cancelled," he said.

 

"A no-deal Brexit - even with a substantial stimulus - could mean no growth
at all for the next two years. Remaining in the EU would be the best
scenario for economic growth in the next few years."--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
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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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