Major International Business Headlines Brief::: 16 September 2019

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Major International Business Headlines Brief::: 16 September 2019

 


 

 


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*  General Motors faces strike by almost 50,000 staff

*  Saudi oil attacks: Will fuel prices go up?

*  SmileDirect Club: The $8bn braces firm boosted by selfies

*  Thomas Cook 'racing to finalise rescue deal'

*  Has the US flotation bubble burst?

*  WeWork founder Adam Neumann's voting power curbed

*  Pound climbs to highest level since July

*  ‘My boss lets me set my own salary’

*  Egypt expects several share offerings by end of year - official

*  Egypt's economy to grow by 8% annually by 2022-PM

*  West African leaders pledge $1 bln to fight Islamist threat

*  UAE regulator not optimistic on Boeing 737 MAX return this year

*  South Africa's deputy mines minister dies in car accident

*  South Africa likely to miss 1.5% growth target -finance minister

*  Ethiopian Airlines' revenue jumps with rise in passenger numbers

*  World Bank lifts aid embargo, approves $450 million loan for Tanzania

*  Zambia cuts 2019 economic growth forecast after drought

 

 

 

 


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General Motors faces strike by almost 50,000 staff

Almost 50,000 General Motors workers have been called out on strike after America's biggest carmaker failed to reach a pay and conditions deal with the United Auto Workers union (UAW).

 

"We do not take this lightly. This is our last resort," UAW vice-president Terry Dittes told reporters in Detroit.

 

The sides had set a Saturday night deadline to reach agreement.

 

The strike - from midnight (04:00 GMT) on Monday - is the first major stoppage at GM since 2007.

 

In that strike, a two-day stoppage cost $300m (£240m).

 

The union's previous four-year contract with GM expired this weekend, and the two sides had been holding negotiations on wide-ranging issues, including wages, healthcare, profit sharing, and job security. Also, the union has been fighting to stop GM from closing car assembly plants in Ohio and Michigan.

 

Earlier on Sunday 850 maintenance workers at five GM facilities walked off the job on strike.

 

Mr Dittes said: "We are standing up for fair wages, we are standing up for affordable, quality health care. We are standing up for our share of the profits."

 

GM argues that its wages and benefits are among the best in the industry. The company has yet to comment publicly on the planned strike, but said on Saturday that it was "prepared to negotiate around the clock".

 

However, it remains unclear if the two sides had plans for further negotiations.

 

The strike comes at a time when the US car industry is starting to see a slowdown in sales, and rising costs associated with investment in electric vehicles and curbing emissions.--BBC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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Saudi oil attacks: Will fuel prices go up?

Saudi Arabia's state-owned company Aramco is the world's biggest oil producer, generating 10% of the world's oil, but it is also one of the world's most profitable businesses.

 

For a drone attack to have knocked half of its - and 5% of the world's - oil supply offline, speaks to the vulnerability of their plants and in turn to the vulnerability of a vital part of the global energy infrastructure.

 

The Khurais oilfield produces about 1% of the world's oil, and Abqaiq is the company's largest facility - with the capacity to process 7% of the global supply.

 

Questions being asked centre on why this attack could not have been prevented by a company with such deep pockets and whether it can happen again.

 

A barrel of crude oil cost $60 (£48) on Friday and some analysts believe that could spike up to $80 (£64) or more - a knee-jerk response from traders to the shock attacks and to the many unknowns still surrounding the scale of the damage.

 

Even if this were to happen, prices at the petrol pump wouldn't be guaranteed to rise by the same rate, however.

 

When oil trading starts in Asia later on Monday (00:00 GMT), we'll get our first indication of how markets have digested the scale of the damage and how prices have been affected. Almost three quarters of Aramco's oil goes to Asia.

 

Previous events of a similar nature in recent times, however, have not had a long-term effect on the oil price.

 

As international energy policy expert Professor Nick Butler explains, "the direct impact of the attacks could be short-lived. The market has adjusted without blinking over the last two years to the loss for political reasons of over two millions barrels a day of production from Venezuela and Iran".

 

Media captionAbqaiq is the site of Aramco's largest oil processing plant

Regional risk

The worry is, if the attacks stoke broader tensions in the region, then these price rises could be more long-term.

 

Professor Butler believes "if retaliation becomes a reality, any spike could be sustained feeding the risk of an economic recession".

 

For Helima Croft, Global Head of Commodity Strategy at the Royal Bank of Canada, these drone attacks are "a game changer in the escalating Iranian regional stand-off".

 

Oil price hits four-year high of $81

Yemen's conflict in 400 words

Production facilities, trading routes and pipelines which thread through the region could all be vulnerable to future attacks.

 

Consumer impact

It is far too early to tell whether consumers will see any financial impact from a rising oil price.

 

In the short term, much depends on how long a spike lasts - and any rise would take weeks to feed through into petrol prices.

 

For now, investors are closely watching for more statements from Aramco and for any political reaction to events.

 

In the UK, 40% of the price of a litre of petrol is made up of oil, fuel production and profit. The rest is tax. Analysts say they do not expect to see a significant rise in prices at the pumps for drivers.

 

"There are currently savings in the wholesale price that have only just started to be passed on to drivers by retailers," says industry expert Simon Williams from automotive services company RAC Limited.

 

"Many retailers cut their prices by three pence on Friday and we believe that average prices were six pence too high before that, so the impact of these fires may not be too great."--BBC

 

 

 

SmileDirect Club: The $8bn braces firm boosted by selfies

In the age of the selfie, smiles are paramount. Now American company SmileDirectClub has set out to profit.

 

SmileDirectClub sells mail-order teeth aligners - a type of clear, plastic braces that the firm has turned into an $8bn (£6.5bn) business.

 

The company, which debuted on the Nasdaq stock exchange this week, has served more than 700,000 people since its start in 2014.

 

Last year, revenue nearly tripled to $423m from about $146m in 2017.

 

The firm, which boasts partnerships with major chains such as CVS and Well Pharmacy, remains in expansion mode.

 

It opened its first offices in the UK this summer, following launches in Canada and Australia. More are in the works.

 

"This is a very large market that we're going after," SmileDirectClub chief financial officer Kyle Wailes told the BBC. "We've got many, many countries that are on the roadmap for next year and beyond."

 

Regulatory risk

SmileDirectClub's flotation this week raised about $1.3bn (£1bn) after its shares fetched $23-a-piece - above the original target. That deal valued the firm at more than $8bn.

 

But the price sank sharply as public trading began.

 

The company has yet to be profitable, recording a $74.8m loss last year.

 

It has also come under fire from the medical community, who say the lack of in-person oversight of orthodontic treatment violates local laws and puts users at risk, since moving teeth improperly can lead to changed bites, gum loss and other problems.

 

The American Association of Orthodontists has lodged complaints with dental boards and regulatory authorities in 36 states. The American Dental Association has also filed complaints with the Federal Trade Commission and Food and Drug Administration.

 

SmileDirectClub has vigorously defended its practices and said customers' treatments are reviewed by licensed professionals. It also reserves the right to turn away people whose teeth might require more serious work.

 

But the debate about the company has spilled onto YouTube and social media sites, where scores of customers have posted positive and negative reviews.

 

Gus Burge, a 24-year-old in New York, signed up for the service this summer, and is in week three of his treatment. He said he was lured by the prospect of an affordable fix to the "snaggle teeth" that have bothered him since childhood.

 

Mr Burge said he had seen the warnings but was undeterred since he was only looking for a minor cosmetic fix.

 

"I just wanted to straighten it up a little bit," he said. "It's not like my teeth were crazy."

 

How it works

Clear plastic braces have existed for years, but SmileDirectClub bypasses traditional dentists and orthodontists in a move it says makes its services more convenient and affordable.

 

Customers can create impressions of their mouths at home and mail them to the company or visit one of more than 300 SmileDirectClub stores to have their mouth "scanned".

 

The firm then reviews the molds and sends kits with clear, plastic aligners - reviewed by a network of about 240 orthodontists and dentists - which must be worn 22 hours a day. The firm mails new aligners as the teeth shift to the desired position.

 

Adult braces: Why are more grown-ups getting their teeth straightened?

The myth of bad British teeth

The treatment costs $1,895 as a bulk sum or $80 a month if paid by instalment.

 

"The disruption is the business model and really cutting out supervised dentistry from the mix," says Chris Salierno, a dentist in New York who lectures on the industry's economics.

 

'Selfie phenomenon'

Analysts say the firm, which has recently expanded into other products, has benefited from growing demand for orthodontia, as people put a premium on securing the white, toothy smiles that play well on social media.

 

And though it might seem like Americans are particularly obsessed with their teeth, it's unlikely they're the only ones.

 

"We think a lot of it is driven by the selfie phenomenon," says Justin Ishbia, managing partner at Shore Capital Partners, a Chicago-based private equity firm that specialises in health care investments. "This is a trend that is not going away."

 

SmileDirectClub's Mr Wailes dismissed the criticism as gripes by a status quo under threat, saying the firm's massive, growing customer base "speaks for itself".

 

He said investors should be optimistic about the firm's long-term prospects: "At the end of day people care about their smile, right?"--BBC

 

 

 

Thomas Cook 'racing to finalise rescue deal'

Thomas Cook has said it is "focused on completing" a rescue deal amid reports that some lenders could vote against the terms of the agreement.

 

The troubled travel firm is understood to be in last minute negotiations with bondholders to approve a takeover by Chinese firm Fosun Tourism.

 

The deal needs the backing of three quarters of bondholders to succeed.

 

Thomas Cook wants to delay a meeting with them to give it more time to negotiate, the Financial Times said.

 

"We announced on 28 August that we have reached substantial agreement with Fosun and our creditors regarding key commercial terms of the recapitalisation of Thomas Cook.

 

"We remain focused on completing the transaction," the travel firm said in a statement.

 

The aviation watchdog, the Civil Aviation Authority (CAA) refused to comment directly on Thomas Cook.

 

"We are in regular contact with all large ATOL holders and constantly monitor company performance. We do not comment on the financial situation of the individual businesses we regulate," it said in a statement.

 

Profit problems

Thomas Cook first announced in June that it had received a takeover approach for its tour business from its largest shareholder Fosun. Last month, it said the deal had been agreed with Fosun and a majority of its bondholders.

 

The offer came amid fears over its financial strength. In May, the firm reported a £1.5bn loss for the first half of the year. It has also issued three profit warnings over the past year and is struggling to reduce its debts.

 

It has blamed a series of problems for its profit warnings, including political unrest in holiday destinations such as Turkey, last summer's prolonged heatwave and customers delaying booking holidays due to Brexit. But it has also suffered from competition from online travel agents and low-cost airlines.

 

Thomas Cook is an ATOL-protected business.

 

Protection under the ATOL - or Air Travel Organiser's Licence - scheme means UK travellers on an air package holidays do not lose their money or become stranded abroad if a travel agent collapses.

 

It also covers many charter flights and means that, if the operator collapses while people are away, they can finish their holiday and be flown home at no extra cost.

 

If the business collapses before they go away, the scheme will provide a replacement holiday of equal value, or a refund.

 

When flights are booked on their own, or when people book flights and accommodation separately, the ATOL scheme does not usually come into effect. However, the ATOL scheme does now cover more custom-built holidays than it used to.

 

If a holiday is ATOL-protected it will be clearly marked with a certificate on holiday documents. The scheme is run by the UK Civil Aviation Authority and is backed by the UK government.--BBC

 

 

 

Has the US flotation bubble burst?

One of the most hotly anticipated stock market listings of the year - the flotation of office property rental firm WeWork - is now in doubt.

 

The uncertainty comes after the firm was reported to be facing pressure from its biggest external investor, Japanese firm SoftBank, to drop its flotation plans amid concerns about its plunging valuation.

 

The company was valued at $47bn (£38bn) last year, but reports have suggested it is now considering a price tag of less than $20bn.

 

Other high-profile and heavily loss-making companies - such as ride-hailing apps Lyft and Uber and messaging app Slack - have struggled to maintain their initial valuations.

 

The firms were part of a pack of much-touted "unicorns" - privately held start-ups valued at more than $1bn.

 

The trio launched their Initial Public Offerings (IPOs) this year in a blaze of glory. But while Slack is still trading near to the price it listed on the stock market, both Uber and Lyft are trading much lower.

 

Backed by venture capital firms and allowed to grow while enduring big losses, the firms have faced more scepticism since listing their shares.

 

So is the flotation bubble about to burst?

 

There are worries over prospects for global economic growth, given factors such as the US-China trade war and the uncertainty surrounding Brexit.

 

Some argue that in tighter economic circumstances, companies and consumers are likely to cut back their spending on things such as cab rides and workplace apps - not to mention spending on desk space hire.

 

Tech analyst Richard Kramer, founder of Arete Research, said: "They are obviously very different businesses, but the connecting thread is that they are losing money, burning cash and rely on sustaining very high growth rates over time.

 

"If there is anything that changed in the mood music, it is that multiple segments of the market are increasingly pricing in a recession.

 

"At the same time, these new IPOs [Initial Public Offerings] are reliant on continuous sales growth just to turn a first profit."

 

He said Uber and Lyft were used on average some 30 times a year per person, which was not enough for the firms to make a profit.

 

"These companies are losing money right now," Mr Kramer said.

 

"Getting to scale - meaning 50 to 100 rides per active user per year - requires a far larger share of what are discretionary consumer purchases. Uber and Lyft need customers to use them more and more, but in a tighter economy, this growth may be harder to come by."

 

He added that the question that markets were now asking was: are these companies "recession-proof"?

 

Led by the charismatic Adam Neumann, WeWork offers serviced office space, often to small, start-up ventures. Critics say it must fulfil long-term contracts with landlords while using short-term contracts with its customers, making it vulnerable to downturns, should its custom dry up.

 

The company has lost more than $4bn since 2016, burning through capital even as its revenues have doubled each year. WeWork said in its IPO filing that it could slow its expansion dramatically if it needed to become profitable.

 

In 2018, WeWork lost $1.9bn on revenue of $1.8bn. It lost an additional $904m on revenues of $1.54bn in the first half of 2019.

 

So far, it has not made a profit, but since starting in 2010 it has grown rapidly, spreading to 528 locations in 111 cities in 29 countries.

 

'Longer path to profitability'

Turning to Slack, he said the workplace communication app was in the unenviable position of competing with an offer from Microsoft.

 

"If you are buying Microsoft software for your business, you are already getting Teams built in," Mr Kramer said.

 

Microsoft Teams is a unified communications platform combining workplace chat, video meetings, file storage and application integration.

 

Teams may not yet have all the features that Slack offers, but "buying Slack becomes an optional extra purchase", he added.

 

Slack is also appealing more to "start-ups that want to use new tools".

 

Mr Kramer concluded: "If you look at the forecasts for all these early-stage growth companies that IPO, they assume continuous growth, but the market is now pricing in a lower likelihood of uninterrupted growth, and therefore a much longer path to profitability than hopeful backers originally envisaged."--BBC

 

 

WeWork founder Adam Neumann's voting power curbed

Office space company WeWork says it is changing its corporate structure in a bid to allay investor fears that have put its stock market debut in doubt.

 

Its parent firm, the We Company, said it was reducing the voting power of founder and chief executive Adam Neumann, among other changes.

 

The move comes amid signs of weak demand from outside investors.

 

WeWork had been seeking a valuation of about $47bn (£36bn), but reports say this could fall to as low as $15bn.

 

SoftBank, the Japanese investment firm that owns about 30% of WeWork, has reportedly urged the property company to drop its flotation plans.

 

A lower valuation would be a blow to SoftBank, forcing it to write down its investment.

 

WeWork stock market debut in doubt

Is WeWork really worth nearly $50bn?

We Company said Mr Neumann would retain majority control, but his superior voting shares would now only be worth 10 votes each instead of 20.

 

He will also be prohibited from selling more than 10% of his shares in the second and third years after the flotation.

 

No member of Mr Neumann's family will be on the firm's board, while any successor will be chosen by the board.

 

This chiefly affects Mr Neumann's wife Rebekah, who co-founded the firm.

 

SoftBank chief Masayoshi Son has praised WeWork, arguing that its profitability will surge after a period of loss-making expansion.

 

But critics say WeWork's model could leave it vulnerable during an economic downturn.

 

Trademark issues

The company rents office space for the long term, sub-letting that space to firms and individuals on more flexible lease terms. That could leave it liable for lease payments if it is unable to find tenants.

 

WeWork had also faced questions about its complicated financial ties to Mr Neumann.

 

Last week, Mr Neumann returned $5.9m worth of stock to the firm, which he had controversially received in exchange for his trademark of "We".

 

Since WeWork's start in New York in 2010, it has expanded to more than 500 locations in 111 cities across 29 countries.

 

The growth has been costly. WeWork lost about $1.6bn last year, despite revenue nearly doubling.--BBC

 

 

 

Pound climbs to highest level since July

The pound has hit its highest level against the dollar since July amid hopes a no-deal Brexit can be avoided.

 

Sterling jumped more than 1% on Friday to over $1.24 against the dollar, its highest level in seven weeks.

 

The pound was boosted after a report in the Times said the DUP, Northern Ireland's largest political party, was prepared to abide by some European rules after Brexit.

 

However, the DUP swiftly denied the claim.

 

Despite this, sterling held on to its gains, and against the euro it was up 0.7% at over €1.12.

 

Pound v dollar

 

"It's short term relief because it looks likely that the Brexit deadline could be extended for a short period of time", said Lee Hardman, currency economist at Japanese bank MUFG.

 

The pound has now risen more than 4% over the past eight days, moving higher after parliament passed legislation that would force the government to seek an Article 50 extension and avoid a no-deal Brexit at the end of October.

 

Mr Hardman said sterling had also been boosted by figures released earlier in the week which showed that the UK grew faster than expected in July, easing recession fears.

 

"The Bank of England cutting interest rates now looks very unlikely. They are more likely to keep rates on hold for the the rest of year," he said.--BBC

 

 

 

‘My boss lets me set my own salary’

Where 25-year-old Cecilia Manduca works there is a "pay self-assessment process". Put simply, the workers there decide how much they are worth and should be paid.

 

Recently she awarded herself a £7,000 pay rise, taking her annual salary to £37,000.

 

"I felt a lot of doubts asking for that raise," she told BBC Radio 5 Live's Wake Up To Money.

 

"It took a lot of talks with other people. I was aware that my job had changed. I was aware I was going way beyond my targets.

 

"I knew that from a rational point of view I deserved that higher rate. But I had a lot of self-doubt and I felt sort of greedy because there's always a stigma - a sense you should feel happy with what you have.

 

"When I spoke with my colleagues internally and asked for advice, the advice they gave me was that yes I did deserve it and I was worth it."

 

Her employer, GrantTree, helps UK business get government funding and all of its 45 staff set their own salary, which they can review as often as they like.

 

Self-set pay is the latest innovation among companies that are competing for the top talent and want to show they offer the most attractive employment terms.

 

'No-one says no'

The exact process varies from company to company.

 

At GrantTree staff first gather information about what others are paid elsewhere for roles similar to their own, Cecilia told BBC Radio 5 Live's Wake Up To Money, in other words how much the firm would have to spend to replace them.

 

Then they look at how much the company can afford to pay them, and think about how much they have grown as individuals since they first started.

 

"Based on this data you make a proposal that is reviewed by colleagues," says Cecilia.

 

"This is quite important, because colleagues are not there to say yes or no, or to approve it. They are there to ask questions and give you some feedback.

 

After that feedback the employee decides on a figure.

 

"The key point is that nobody has to prove it; once you make a decision that pay now happens," she says.

 

What goes up

Cecilia says that two members of staff at GrantTree actually chose to voluntarily reduce their pay after their responsibilities changed.

 

Most companies operating pick-your-own pay schemes have some sort of check, whether that's scrutiny from colleagues or an upper limit on the total salaries paid out.

 

The human resources professionals organisation, the CIPD, told the BBC that this way of working can increase pay transparency.

 

However, it warned the strategy could also backfire without careful implementation, just as unlimited holiday meant some staff actually took less time off than before.

 

For Charles Towers-Clark, the boss of software firm Pod Group, the system seems to work smoothly.

 

His 45 employees have chosen their own pay for two years now, leading to a 10% increase in total salaries paid and a huge increase in staff retention.

 

'Are you worth it?'

If someone at Pod Group wants to increase their salary, they tell the HR director who appoints six staff to provide feedback.

 

Occasionally staff have asked for far more than the market rate, he admits.

 

"It's not people being greedy, it's a lack of understanding," he says.

 

"A fairly junior person didn't comprehend that the salary increase she was asking for was too much, she was asking for a 50% increase on her salary, which was far more than the role was worth.

 

"It was her decision but I told her: 'you can take it but if you become uneconomical or your value is not justified then that will only end one way'.

 

"She reduced what she was asking for after that."

 

Within budget

Tom Hardman is chief operating officer for Smarkets, where 120 staff set their own salaries. Like Pod Group, they share data and company information with staff to ensure their salary requests are informed and reasonable.

 

"A very important part of the salary process is making sure employees understand budgets need to be adhered to," he explains.

 

"So as part of any salary process we have a discussion about what resources are available, what cash we have in the bank and how much we can afford to spend on salaries.

 

"As long as we bring people along on that discussion we tend to find that people are very responsible when given this power."

 

Battle over

At the moment, the trend for allowing employees to set their own pay is limited to just a handful of companies, mostly in the tech sector.

 

But if it is a success, then it could spread, helping to end the traditional workplace taboo against discussing your salary with colleagues.

 

Certainly for Cecilia, this method of setting pay has transformed her relationship with her co-workers, making it more open and less adversarial.

 

"The colleagues who give you feedback make sure you are not underselling yourself and that you are getting rewarded for as much as you are worth.

 

"That doesn't really happen in a normal company where you negotiate for your salary and you are trying to get as much as you can but the other person is trying to give you as little as possible."--BBC

 

 

 

Egypt expects several share offerings by end of year - official

CAIRO (Reuters) - Egypt expects two state companies and one private pharmaceuticals firm worth more than one billion Egyptian pounds ($61.3 million) to make share offerings by the end of the year, an official at the Financial Regulatory Authority said on Sunday.

 

One small company worth about 50 million Egyptian pounds was also expected to offer shares on the Nile Stock Exchange, which specialises in small and medium sized enterprises, said Sayed Abdel Fadeel, head of the authority’s corporate finance department. He did not name the companies.

 

Egypt promised to sell minority stakes in several state companies in late 2018 but postponed the offerings following emerging market turbulence.

 

($1 = 16.3200 Egyptian pounds)

 

 

 

 

Egypt's economy to grow by 8% annually by 2022-PM

CAIRO (Reuters) - Egypt expects its economy to grow by an annual rate of 8% by 2022 as the government improves the investment climate, Prime Minister Mostafa Madbouly said on Sunday.

 

“The Egyptian government expects growth to gradually pick up to 8 percent by 2022,” he told a meeting of Arab central bank governors.

 

In July, Madbouly said gross domestic product (GDP) grew 5.6% in the 2018/19 fiscal year.

 

Barring the oil industry, Egypt’s economy has struggled to attract foreign investors since the 2011 uprising that ended Hosni Mubarak’s 30-year rule.

 

Madbouli told the central bank governors that the government wanted to “alter the face of private investment to spur growth.”

 

This includes “continued efforts to improve the business climate, especially by simplifying and lowering the cost of -forming companies and expanding new investment zones,” he said.

 

 

 

West African leaders pledge $1 bln to fight Islamist threat

OUAGADOUGOU (Reuters) - West African leaders have pledged $1 billion to combat the spiralling threat of Islamist militancy in the region, the head of the regional ECOWAS bloc said on Saturday.

 

Groups with links to al Qaeda and Islamic State have strengthened their foothold across the arid Sahel region this year, making large swathes of territory ungovernable and stoking local ethnic violence, especially in Mali and Burkina Faso.

 

The fifteen members of the West African bloc and the presidents of Mauritania and Chad had gathered for an extraordinary summit in Burkina Faso’s capital, Ougadougou, to address the growing insecurity.

 

ECOWAS Commission President Jean-Claude Kassi Brou said the commission had decided to “contribute financially and urgently to joint efforts in the fight against terrorism” by pledging $1 billion.

 

In a speech following the closed meeting, Brou also called on the United Nations to strengthen its MINUSMA peacekeeping mission, which has been based in Mali since 2013.

 

In July, the U.N. said Islamist attacks were spreading so fast in West Africa that the region should consider bolstering its response beyond current military efforts.

 

In 2017, five countries - Burkina Faso, Niger, Chad, Mali and Mauritania - backed by France, launched the G5 Sahel task force to combat the insurgents. But the initiative has been perennially underfunded.

 

The situation in Burkina Faso has deteriorated in particular in recent weeks. An attack in late August killed 24 soldiers, one of the heaviest losses yet in the nation’s fight against Islamist militants. Last week, 29 people were killed in separate attacks in its troubled central-northern region.

 

Once a pocket of relative calm in the Sahel, Burkina has suffered a homegrown insurgency for the past three years, which has been amplified by a spillover of jihadist violence and criminality from its chaotic neighbour Mali.

 

Large swathes of Burkina’s north are now out of control, and France’s military Sahel mission began limited operations there earlier this year.

 

 

 

 

UAE regulator not optimistic on Boeing 737 MAX return this year

DUBAI (Reuters) - The head of the United Arab Emirates’ General Civil Aviation Authority said on Sunday he was not optimistic that the Boeing 737 MAX would return to operations this year and that the first quarter of 2020 was more likely.

 

The 737 MAX has been grounded since March while Boeing updates flight control software at the centre of two fatal crashes in Indonesia and Ethiopia that together killed 346 people within a span of five months.

 

Boeing Co is targeting regulator approval for the fixes in October, though the U.S. Federal Aviation Administration has said it does not have a firm time for the aircraft to be flying again.

 

The GCAA will conduct its own assessment to allow the MAX to return to UAE airspace, rather than follow the FAA, Director General Said Mohammed al-Suwaidi told reporters in Dubai.

 

He said the GCAA would look at the FAA decision and that the UAE regulator had so far not seen details of Boeing’s fixes.

 

The FAA has traditionally taken the lead on certifying Boeing jets, though other regulators have indicated they would conduct their own analysis.

 

UAE airline Flydubai is one of the largest MAX customers, having ordered 250 of the fast-selling narrow-body jets.

 

It has not said when it expects the aircraft to be operational again. American Airlines has cancelled flights through Dec. 3, United Airlines until Dec. 19 and Southwest Airlines Co into early January. 

 

 

 

South Africa's deputy mines minister dies in car accident

JOHANNESBURG (Reuters) - South Africa’s Deputy Minister of Mineral Resources and Energy Bavelile Hlongwa has died in a car accident, President Cyril Ramaphosa said on Saturday.

 

Hlongwa, 38, who was appointed in May, died on Friday in an accident that also claimed the lives of four other people, the presidency said.

 

Ramaphosa said in a statement that Hlongwa’s death “is a devastating, untimely loss of a talented young leader who, alongside (Mines) Minister Gwede Mantashe, was playing an important and dynamic role in an important sector of our economy.”

 

South Africa’s mining industry directly contributes more than 7% to the economy which has been struggling with anaemic growth over the last decade.

 

 

 

South Africa likely to miss 1.5% growth target -finance minister

JOHANNESBURG (Reuters) - South Africa’s economic growth is unlikely to reach the treasury’s target of 1.5% in 2019 because conditions have changed and the country is facing increasing headwinds, Finance Minister Tito Mboweni said on Friday.

 

This week ratings agency Moody’s, the last of the top three credit firms to rate South Africa’s debt at investment level, said it had lowered its growth forecast to 0.7% from 1%.

 

The central bank sees gross domestic product at 0.6% this year.

 

Both have cited slow economic reforms as the key drag on economic activity, and massive bailouts to state-owned companies, including 59 billion rand ($4.05 billion) to power firm Eskom.

 

 

This has limited the government’s scope for stimulus and raised debt while the resultant uncertainty has kept investment subdued.

 

“The assumptions underlying the forecasts have clearly changed ... the actual deficit now is probably much higher,” Mboweni told a banking conference in Johannesburg.

 

He said that increasing calls for the treasury to bail out state firms was putting pressure on growth and spending.

 

“We must re-focus our economy on agriculture …but we also have to continue to support Eskom, because without electricity there is no growth,” Mboweni said.

 

A Reuters poll of economists this week forecast South African economic growth at 0.7% this year, up from 0.6% in the previous forecast. Second quarter growth bounced back 3.1% after a revised contraction of 3.1% in the first quarter.

 

($1 = 14.5521 rand)

 

 

 

Ethiopian Airlines' revenue jumps with rise in passenger numbers

NAIROBI (Reuters) - Ethiopian Airlines saw a big rise in its operating revenue in the year to the end of June, as a surge in passenger numbers helped to offset the impact of higher fuel costs, the carrier told Reuters on Friday.

 

Africa’s biggest airline said operating revenue rose 17 percent in dollar terms while passenger numbers were up 14 percent.

 

In March, one of the airline’s Boeing planes crashed a few minutes after take-off from Bole airport in Addis Ababa en-route to Nairobi, killing all 157 people on board.

 

“In one of the most challenging years, we managed to continue our fast, profitable and sustainable growth,” the airline told Reuters, sharing its preliminary results for the period.

 

The full set of results is expected in the next two weeks, the company said.

 

It flew 12.1 million passengers during the period, helping to cushion an increase in fuel costs of about 25 percent, the airline said.

 

Planes were three quarters full on average, a key performance measure for the industry.

 

Ethiopian said it offered 13% more flight seats per kilometre during the reporting period.

 

 

 

World Bank lifts aid embargo, approves $450 million loan for Tanzania

DAR ES SALAAM (Reuters) - The World Bank has approved a $450 million loan to Tanzania, the bank said on Friday, signalling the release of the first tranche of funds to the East African nation that were frozen last year because of concern over government policies.

 

Those concerns included passing a law that made it illegal to question official statistics and expelling pregnant girls from public schools.

 

The government amended the statistics law in June to remove the threat of jail. But has yet to announce changes to the rules on teenage pregnancy.

 

    The financing comes from the bank’s International Development Assistance (IDA), which gives grants or low-interest loans to the world’s poorest countries. It covers a poverty- reduction programme that will help around five million Tanzanians, the bank said in a statement.

 

 

    “The World Bank has been engaging with the government of Tanzania on a range of policy issues that led to a hold-up of financing since 2018”, the World Bank said in a statement. 

 

    “Approval of this project acknowledges efforts by the government of Tanzania to address the policy issues by amending the statistics law (2018) in line with international practice, as well as the government’s commitment to facilitate all girls to complete their education.”

 

   The government has been working to unlock $1.7 billion in funding from the bank that was frozen last year. In July, Tanzania’s statistics agency said it may review its economic growth figure for 2018 after the World Bank came up with a significantly lower one. It has not released updated figures.

 

    The World Bank is Tanzania’s biggest external lender. Foreign loans and grants are a key source of foreign exchange for East Africa’s third-largest economy.

 

    “This new support will be critical to improve the lives of many more people in need and overall raise the country’s human capital index, which is still very low at 0.40,” said Bella Bird, the World Bank’s country director for Tanzania.

 

     “We will continue to work with the government and engage with citizens and other stakeholders on the complex set of development issues facing the country and its people.”

 

 

 

Zambia cuts 2019 economic growth forecast after drought

LUSAKA (Reuters) - Zambia has cut its 2019 economic growth forecast, President Edgar Lungu said on Friday, citing adverse weather conditions that have affected crop production and electricity generation at hydropower plants.

 

Zambia is also struggling with high debt levels and shrinking foreign currency reserves, and the International Monetary Fund (IMF) has said growth is likely to remain subdued over the medium term.

 

In his state of the nation address in parliament, Lungu said the Southern African nation’s economic growth for the year has been cut to around 2% from an initial projection of 4%.

 

The IMF also sees growth of 2% for this year.

 

“It is being revised downwards to about 2% on account of adverse weather conditions which have affected the energy and agricultural sectors,” Lungu said.

 

Zambia has a power deficit of about 700 megawatts (MW) and is rationing supply due to reduced electricity generation after water levels in the nation’s hydropower dams dropped due to drought.

 

Zambia’s 2019 maize production is expected to fall 16% compared to last year to about 2 million tonnes , the country’s Agriculture Minister Michael Katambo said in May.

 

AUSTERITY MEASURES

Lungu said Africa’s second-largest copper producer would strive to dismantle domestic arrears and maintain debt within sustainable levels.

 

Zambia’s external debt rose to $10.05 billion at the end of 2018, compared with $8.74 billion a year earlier, raising fears that the country is headed for a debt crisis.

 

Zambia has delayed the receipt of loans totalling $2.6 billion contracted last year in order to rein in its soaring debt.

 

The government has also said it would delay some projects and cancel others to cut down on expenditure and debt.

 

“The art of borrowing is the ability to pay back,” Lungu said. “At the heart of our austerity measures, going forward, we will implement measures to manage the debt stock and curb any further accumulation.”

 

In his address, Lungu also said that the government would go ahead with proposed constitutional amendments despite criticism from opposition parties and civil society organisation.

 

The government proposed constitutional changes in August, which include a proposal to remove lawmakers’ right to approve new government loans and the ratification of international treaties - triggering an outcry from rights and opposition groups.

 

The government has said the changes are needed to get loans and treaties through when parliament is in recess. Opposition politicians have accused Lungu of trying to crack down on dissent - a charge dismissed by the government.

 

“Support the current process of constitutional amendments. We are back to refine it. If you don’t want to refine it, we will refine it,” Lungu told lawmakers.

 

Zambia’s central bank has also opposed the proposal to remove lawmakers’ oversight over acquiring more public debt.

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 


 

 


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