Major International Business Headlines Brief::: 20 September 2019

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Major International Business Headlines Brief::: 20 September 2019

 


 

 


 <http://www.nedbank.co.zw/> 

 


 

 


 

 

*  South Africa holds key rate in unanimous decision

*  Kenya cuts 2019/20 financial year spending plans by 2.1%

*  Debt-ridden Cell C worthless, biggest shareholders say

*  Somalia GDP to grow 2.9% in 2019 vs 2.8% last year: IMF

*  Mr Price warns of possible loss

*  Egyptian tuk-tuk start-up Halan to expand to Ethiopia

*  Ethiopia rejects Egypt's plan for operating giant dam on the Nile

*  South African Airways cash injection imminent but says it needs more

*  South African rand flat as central bank seen holding key rate

*  Why is the Fed pumping money into the banking system?

*  Thomas Cook told extra funds needed to seal rescue

*  Bank of England forecasts low interest rates for longer

*  Airbnb plans to list shares next year

*  Ryanair boss O'Leary's €99m pay sparks investor revolt

*  Austria blocks EU-Mercosur trade deal with South America

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

South Africa holds key rate in unanimous decision

PRETORIA (Reuters) - South Africa’s central bank left its main interest rate on hold at 6.5% on Thursday as expected, saying it would like to see inflation expectations anchored closer to the midpoint of its target range.

 

The decision by the bank’s monetary policy committee (MPC) was unanimous.

 

South Africa has seen benign inflation outcomes this year, but growth has been sluggish. That has piled pressure on President Cyril Ramaphosa, who has staked his reputation on lifting the economy out of a deep slump.

 

The South African Reserve Bank left its 2019 economic growth forecast unchanged at 0.6% but cut its forecasts for growth in 2020 and 2021 to 1.5% and 1.8%, respectively.

 

It repeated calls for structural reforms to raise potential growth rate, saying weakness in many sectors of the economy remained a cause for concern.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

Kenya cuts 2019/20 financial year spending plans by 2.1%

NAIROBI (Reuters) - Kenya’s finance ministry has cut the government’s planned spending for the 2019/20 (July-June) fiscal year by 2.1%, equivalent to 46.2 billion shillings ($445 million), a budget review document showed on Thursday.

 

The former finance minister Henry Rotich was criticised for raising spending in June and imposing additional tax measures on already squeezed taxpayers.

 

The current minister, Ukur Yatani, who was appointed to the post in an acting capacity in July, promised strict spending cuts aimed mainly at non-essential items such as foreign travel by officials.

 

The cuts to the budget for this fiscal year were mainly caused by revenue collection shortfalls, the ministry said in its budget review.

 

They were attained through “trade-offs and reallocations of the existing budgetary provisions,” it said.

 

($1 = 103.8000 Kenyan shillings)

 

 

Debt-ridden Cell C worthless, biggest shareholders say

JOHANNESBURG (Reuters) - Payments company Net1 UEPS Technologies said on Thursday it had written down to zero the value of its stake in South Africa’s third-largest mobile network, Cell C, alongside the carrier’s largest shareholder, Blue Label Telecoms.

 

Blue Label has, as the head of a group of investors including Net1, been trying to dig Cell C out from under hefty debts since it purchased its stake in the carrier for 5.5 billion rand ($375 million) in October 2016.

 

In a statement, Net1 CEO Herman Kotze said the decision of both firms to impair the value of their investments in Cell C to nil would have no impact on Cell C’s operations or the proposed transactions it is pursuing.

 

“We believe that Cell C’s long-term prospects will significantly improve once it has been recapitalised,” he said.

 

Cell C did not immediately comment.

 

Net1 recently delayed its annual results to wait for more clarity on developments relating to Cell C, in which a consortium is taking a minority stake.

 

Blue Label, which owns 45% of the carrier that has struggled to compete with bigger rivals MTN and Vodacom, has said it hopes the stake acquisition will bolster Cell C’s balance sheet.

 

It has had to defend its investment to shareholders concerned about the cost of keeping the carrier going, helping prompt a roughly 80% fall in Blue Label’s share price since the start of last year.

 

Its shares rose 6% on Thursday, however, following a trading statement in which it said its profits would fall by more than 20%, with Cell C’s trading losses and impairment of its property, plant and equipment contributing to the decline.

 

These were expected to drag its headline earnings per share - the main profit measure in South Africa - downwards by over 287 cents, it said. Underlying profits, which exclude this and other negative factors weighing on results, would rise, it said.

 

Net1 bought into Cell C in 2017, when it paid 2 billion rand for a 15% stake in the carrier.

 

($1 = 14.6648 rand)

 

 

 

 

Somalia GDP to grow 2.9% in 2019 vs 2.8% last year: IMF

NAIROBI (Reuters) - Somalia’s economy is forecast to grow 2.9% this year from 2.8% last year, but security risks and vulnerability to climate shocks could cloud the outlook, the International Monetary Fund said.

 

The Horn of Africa country has experienced conflict since 1991, when clan warlords overthrew President Siad Barre and then turned on each other. Over the past decade it has been hit by famine and sporadic terror attacks by al Qaeda-linked militant group al Shabaab.

 

“Economic growth is projected to remain broadly stable at 2.9% in 2019. Inflation is projected to increase temporarily to 4.0% in 2019, due to higher food prices as a result of poor rainfall earlier in the year,” the IMF said.

 

“Key risks to the outlook continue to reflect the difficult security situation and vulnerability to climate shocks,” it added in a statement late on Wednesday.

 

In May, the fund had put Somalia’s economic growth forecast at 3%, and inflation projections at 3 to 3.2%.

 

The International Monetary Fund has been pushing for better management of public finances, while the government is implementing reforms under an agreed staff-monitored programme.

 

 

 

Mr Price warns of possible loss

JOHANNESBURG (Reuters) - Mr Price Group Ltd faces a potential hit of up to 20 million rand ($1.37 million), the South African clothing retailer said on Thursday, following an internal investigation into allegations of non-compliance with its own code of conduct.

 

Mr Price, which also sells furniture and home decor, said the potential exposure ranges from 10 million to 20 million rand, without providing further detail.

 

“Should this materialise, the group will seek to enforce its contractual rights against the supplier,” the company said in a statement.

 

The company last week suspended two members of senior management as a precaution following allegations of non-compliance with the firm’s code of conduct relating to a single supplier. It did not name the managers or the supplier.

 

($1 = 14.6506 rand)

 

 

 

Egyptian tuk-tuk start-up Halan to expand to Ethiopia

CAIRO (Reuters) - Halan, an Egyptian technology start-up that uses two- and three-wheeled vehicles to transport passengers and goods, will begin operating in Ethiopia before the end of 2019, its chief executive told Reuters.

 

The company, which targets underserved communities, is also expanding to more cities in the Egyptian governorates of Sharqeya, Daqahleya, Damietta, Qena and Gharbeya this year, said CEO and founder Mounir Nakhla.

 

Halan’s app allows customers to request motorbike or tuk-tuk rides, or order food or goods for delivery via motorbikes or cargo tricycles. Founded in November 2017, it already operates in around 20 to 25 cities in Egypt and Sudan.

 

“Halan completes a few million rides per month, almost half a million of which are in food deliveries,” Nakhla said, adding ride-hailing trips had increased 55% and food deliveries more than quadrupled in the year to date.

 

Nakhla, who has a background in microfinance, hopes Halan will become “pan-African” and said he saw tremendous opportunity for growth on the continent.

 

“Adama is a very small place in Ethiopia, about 150 km away from Addis Ababa, and it has a lot of two-wheelers and three-wheelers,” Nakhla said.

 

“It’s a great place to test our product in Ethiopia. We’ve already done tens of rides there in the form of testing, and we’ve got a team on board.”

 

The city has less than 1,000 vehicles whose drivers Halan will try to recruit to its platform “before launching countrywide,” Nakhla said.

 

Halan has delivery partnerships with fast food chains like McDonald’s, KFC and Pizza Hut in Egypt. It is now targeting smaller restaurants in the underserved areas it focuses on.

 

The app has around 10,000 active drivers per month in total, Nakhla said. He added that Egypt has around 700,000 tuk-tuks on its streets. Uber has 90,000 monthly active drivers in Egypt.

 

Halan is in the midst of a so-called Series B funding round, Nakhla said, declining to disclose a timeline or targeted amount.

 

The start-up has raised “slightly less than $20 million” to date, Nakhla said. It employs more than 100 people.

 

Gojek, an Indonesian ride-hailing and e-payments company, inspired Nakhla to found Halan after he met Gojek founder and CEO Nadiem Makarim in Indonesia in 2017.

 

When asked if Halan would eventually go public, Nakhla said: “Our current main focus is to grow the company exponentially in a sustainable manner, while adding value to the community.”

 

 

 

Ethiopia rejects Egypt's plan for operating giant dam on the Nile

ADDIS ABABA (Reuters) - Ethiopia on Wednesday rejected a proposal by Egypt to operate a $4 billion hydropower dam the Horn of Africa country is constructing on the Nile, further deepening a dispute between the two nations over the project.

 

In a press conference in Ethiopia’s capital Addis Ababa, Sileshi Bekele, minister for water, irrigation and energy described Egypt’s plan including the volume of water it wants the dam to release annually as “inappropriate.”

 

“The proposal from Egypt was unilaterally decided...(it) didn’t consider our previous agreements,” he said.

 

“We can’t agree with this...we will prepare our counter proposal.”

 

The Grand Ethiopian Renaissance Dam (GERD), announced in 2011, is designed to be the centrepiece of Ethiopia’s bid to become Africa’s biggest power exporter, generating more than 6,000 megawatts.

 

The two nations disagree over the annual flow of water that should be guaranteed to Egypt and how to manage flows during droughts.

 

Egypt relies on the Nile for 90% of its fresh water and it wants the GERD’s reservoir to release a higher volume of water than Ethiopia is willing to guarantee, among other disagreements.

 

“An Egyptian expert can’t control our dam,” Sileshi said and described the Egyptian plan as a potential violation of Ethiopia’s sovereignty.

 

Sileshi did not say how much water Ethiopia wants to release, but Egypt wants the dam to release a minimum of 40 billion cubic metres of water from the GERD annually.

 

Following construction delays, Ethiopia has said GERD will start power production by the end of 2020 and be fully operational by 2022.

 

 

 

South African Airways cash injection imminent but says it needs more

CAPE TOWN (Reuters) - South Africa’s cash-strapped national airline SAA says a government cash injection of 5.5 billion rand ($376 million)approved for the 2019/20 financial year is expected at the end of the month but it still needs more money, a presentation to lawmakers showed on Wednesday.

 

South African Airways (SAA) has debt of about 12.7 billion rand, consisting of 9.2 billion rand of legacy debt and a 3.5 billion rand working capital facility provided by banks.

 

The airline requires 2 billion rand by December to fund working capital for its 2019/20 financial year, the presentation said.

 

SAA, the turnaround strategy of which has been stymied by mismanagement and inability to service its debt in an increasingly competitive aviation environment, also received a 5 billion rand government bailout in its 2018/19 financial year.

 

The state-owned flag carrier’s long-term strategy is based on an equity injection of nearly 22 billion rand. The government, meanwhile, wants further cost reductions before committing more money during a time of weak domestic growth and is also considering how it might find a commercial partner for the airline.

 

In the presentation, SAA said it is in negotiations with lenders to make 2 billion rand available for working capital, adding that it would have to meet certain conditions to obtain the funding.

 

“Lenders have the following conditions,” it said. “Repayment of short-term funding of 3.5 billion rand by September 2019, which is already provided for, and a debt reduction and payment plan for the legacy debt of 9.2 billion rand.”

 

($1 = 14.6272 rand)

 

 

 

South African rand flat as central bank seen holding key rate

JOHANNESBURG (Reuters) - South Africa’s rand was little changed on Thursday, ahead of the central bank’s monetary policy decision later in the day where economists expect it to keep the key rate unchanged.

 

* The rand was trading at 14.6900 versus the U.S. dollar at 0625 GMT, less than 0.1% stronger than its previous close.

 

* The South African Reserve Bank (SARB) was seen keeping the repo rate at 6.5% in a decision expected around 1300 GMT, according to the majority of analysts polled by Reuters this month.

 

* South Africa’s inflation outlook has been relatively benign, with price rises well within the SARB’s 3%-6% target range. But economic growth this year has been sluggish.

 

* Future rate cuts could hinge on an important credit rating review in November, a Reuters poll found.

 

* Government bonds dipped slightly in early trade, with the yield on the 2026 bond up 4 basis points to 8.25%.

 

 

 

Why is the Fed pumping money into the banking system?

The US central bank has pumped more than $200bn (£160bn) into the financial system this week - the first time there's been such an intervention since 2008.

 

The Federal Reserve's aim was to stabilise what is usually a calm part of the market.

 

Interest rates in the so-called "repo market" had shot up to 10% in some cases - although the cost of borrowing in that market more typically hovers around the benchmark rate set by the Fed - around 2%.

 

So what happened and should we worry?

 

First things first: what's the repo market?

Banks, hedge funds and other players borrow money regularly on a short-term basis to ensure their books are in order, no matter what their daily activities.

 

The borrowers typically offer government bonds or other high quality assets as collateral, which they repurchase, plus interest, when they repay the loan - often the next day.

 

Those repurchase agreements give the repo market its name.

 

What happened this week?

This is a huge market, with some $3tn changing hands each day, according to the US Office of Financial Research.

 

Under normal conditions, interest rates in the repo market are low, since the loans are considered safe and there's plenty of cash on hand.

 

But this week the cost of borrowing shot up - toward 10% in some cases. And the rate at which banks lend to each other - the Fed's benchmark - exceeded 2.25%, the top of its desired range.

 

The rise prompted the Fed to take action. Four times this week, it injected money into the market, offering to buy up to $75bn in treasuries or other assets from banks in a bid to boost bank reserves and keep them lending.

 

Why did the rates suddenly spike?

Strains in the repo market were among the first signals of trouble ahead of the 2008 financial crisis. Back then banks had suddenly become wary of lending, worried there were unforeseen risks associated with assets that had previously been considered safe.

 

This time, analysts think what's happening is caused by an issue with money supply.

 

Money has been sucked out of the market by two events that happen to have coincided. The first is a tax deadline which means firms need cash to pay what they owe the taxman. The second is the due date for payments on a recent offering of government bonds.

 

On top of that the Fed has also been steadily reducing the overall supply of money in the market, aiming to get conditions closer to how they were before the financial crisis.

 

Is that the mystery solved then?

A lot of people still don't think those explanations are enough to explain the scale of the interest rate rise.

 

"The thing that's really confounding is just how much rates moved in a short time," says Zachary Griffiths, rate strategist at Wells Fargo.

 

"Everyone's kind of trying to get a firmer grasp... on all the different nuances that could have led to such a big move."

 

There could be other one-off factors triggering this spike, such as an oil bet that went bad after the attack on Saudi Arabia, says Priya Misra, head of global rates strategy at TD Securities.

 

But she notes that the repo market also showed signs of stress in April and December, suggesting an underling structural issue - namely that the Fed has gone too far in reducing reserves.

 

"We are in uncharted waters," she says. "The Fed is trying to figure out the appropriate level of excess reserves."

 

Should we be worried?

On Wednesday, Federal Reserve Chair Jerome Powell conceded that the Fed had not anticipated such a large spike in interest rates, despite warnings of a possible crunch.

 

Mr Powell was also quick to talk down concerns that the issue signals a bigger problem or that the bank had lost its grip on its policy.

 

US Fed cuts rates for second time since 2008

Why the Fed's interest rate move matters

"We don't see this as having any implications for the broader economy, or for the economic outlook, nor for our ability to control rates," he said.

 

And the Fed used to conduct these kinds of market operations prior to the financial crisis, without prompting undue concern.

 

Did the Fed's intervention work?

Rates dropped back following the Fed's action, and so far stock markets and other parts of the system don't appear to have been affected.

 

But analysts warn that the turmoil is likely continue, saying the end-of-quarter rush to square up company balance sheets could cause more stress.

 

"Our big takeaway there is, we're going to have to keep an eye on this," says Mr Griffiths.--BBC

 

 

 

Thomas Cook told extra funds needed to seal rescue

Travel firm Thomas Cook has been hit with a last-minute demand to find £200m in extra funding in order to secure its future.

 

The troubled operator hoped to seal a rescue led by China's Fosun this week.

 

But Thomas Cook's banks are insisting the cash-strapped travel firm must come up with the new contingency funds, in case it needs extra finance to draw on during the winter months.

 

Without the rescue, the firm is likely to collapse.

 

That would leave 150,000 British holidaymakers stranded, and require the Civil Aviation Authority to repatriate them at an estimated cost of £600m, an industry insider said.

 

The firm employs 22,000 staff, 9,000 of those in the UK. It serves 19 million customers a year in 16 different countries.

 

But Thomas Cook's financial difficulties have mounted over the past year, culminating with the agreement in August of a rescue deal led by Fosun, that would see the Chinese firm back a £900m refinancing of the 179-year-old British firm.

 

A final vote on that deal was due to take place this week, but it has been delayed until next Friday in the face of the latest demand for extra stand-by funding.

 

Earlier this week Thomas Cook said it was "focused on completing" the deal and is believed to be negotiating with its banks, bondholders and Fosun in an attempt to keep the rescue on track.

 

In May, the operator 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.

 

It has also suffered from competition from online travel agents and low-cost airlines.

 

The winter months can put a strain on travel companies' finances as typically there is less revenue coming in, while suppliers need to be paid for services provided over the high summer season.

 

Thomas Cook is one of the world's largest travel companies. It was founded in 1841 to operate temperance day trips. It now has annual sales of £9bn.

 

If the rescue deal goes ahead it would be majority owned by Fosun, which is also a majority shareholder in Wolverhampton Wanderers Football Club and French resort operator Club Med.--BBC

 

 

 

Bank of England forecasts low interest rates for longer

The Bank of England has signalled that prolonged Brexit uncertainty will keep interest rates lower for longer.

 

Policymakers said the UK would avoid falling into recession this year, but warned that Brexit and trade worries were weighing on the economy.

 

The Bank kept interest rates on hold at 0.75%.

 

The Monetary Policy Committee (MPC) that sets interest rates also warned that a no-deal Brexit would hit the economy.

 

Policymakers said it would lead to weaker growth, higher inflation and a further drop in the value of the pound.

 

However, the Bank stressed that interest rates could move up or down if the UK left the European Union without a deal.

 

The minutes of the Bank's September meeting said that policymakers would have to balance raising interest rates to keep a lid on inflation against cutting them to support growth.

 

How does the Bank see the outlook?

The UK economy contracted by 0.2% in the three months to June. The Bank expects the economy to expand by 0.2% in the third quarter of this year.

 

While this is weaker than the 0.3% growth predicted last month, it means the UK is expected to avoid a technical recession, defined as two consecutive quarters of economic decline.

 

A survey by the Bank showed that consumer spending remained robust, with many families choosing to spend more time in the UK this summer rather than go abroad because of the weaker pound.

 

It said the increase in "staycations" had boosted spending on restaurants and hotel accommodation.

 

The Bank also said the government's decision to inject more money into departments in the latest Spending Review would boost UK growth by around 0.4% over the next three years.

 

What about Brexit?

The MPC said that the ongoing uncertainty over the UK's relationship with the EU risked a further period of "entrenched uncertainty".

 

They said ongoing uncertainty would lead to weaker growth and less inflationary pressure, reducing the Bank's need to raise interest rates.

 

The minutes of the meeting said: "The longer those uncertainties persisted, particularly in an environment of weaker global growth, the more likely it was that demand growth would remain below potential."

 

However, policymakers repeated that more clarity that the economy was heading towards a Brexit deal meant that increases in interest rates would be needed over the next three years.

 

Why does the Bank think rates will stay low for longer?

The Bank of England, like many of us, is on hold, and in a Brexit holding pattern too.

 

Although there is no change in the Bank of England's interest rate decision, marking out the UK from its counterparts in the US and eurozone, there are interesting Brexit developments in September's deliberations of the Monetary Policy Committee.

 

For the first time, the Bank has felt the need to signal a direction of travel for interest rates in the now plausible scenario of "political events" leading to "a further period of entrenched uncertainty" about Brexit.

 

The committee concluded that the longer that uncertainty continues, particularly against a background of a weak global economy, the more likely that growth, and also inflation will slow.

 

The implication of these minutes being that UK base rates would also remain lower for longer.

 

It has until now signalled that rates are likely to rise gradually back from its post-crisis lows only if there was a "smooth Brexit", a deal with a transition.

 

Or else under no-deal, amid exchange rate falls, inflation rises and slower economy, there could be either cuts or rises.

 

What did the MPC say about the global economy?

Policymakers said the US China trade war had intensified over the summer, which would continue to weigh on overall growth.

 

Manufacturing output continued to be weak, and while policymakers said the direct economic impact of ongoing trade tensions was likely to be "relatively small", they said the trade war was "having a material negative impact on global business investment growth".

 

They did not say how the recent attacks on Saudi Arabia's oil supply would affect inflation except to say that prices had risen sharply following the attacks.--BBC

 

 

 

Airbnb plans to list shares next year

The home rentals site Airbnb plans to list on stock exchanges next year, in what is expected to be one of the highest-profile share sales of 2020.

 

One of the earlier so-called sharing economy sites, the Californian firm is facing criticism for hollowing out communities in popular destinations.

 

City governments around the world are exploring ways to curb its use.

 

This week Airbnb said second quarter revenue reached $1bn (£800m), but did not say whether it made a profit.

 

The firm has previously said it was profitable in 2017 and 2018.

 

The sharing economy includes firms that let ordinary members of the public rent out use of their property: homes, cars, tools, parking spaces, or skills, directly with anyone happy to pay for them. The peer-to-peer commerce works via an app or a website and often undercuts traditional suppliers of goods and services such as hotels and taxi firms.

 

Two other similar firms, Lyft and Uber both floated this year, but their shares have fared poorly as investors question their prospects for making profits.

 

WeWork's owner WeCompany has postponed its initial public offering amidst weak investor interest. WeWork offers shared working spaces with communal office services.

 

Airbnb was founded in 2008 in San Francisco and says it offers seven million unique places to stay in 191 countries and regions.

 

Recently it added the ability to book activities at a travel destination alongside accommodation.--BBC

 

 

 

Ryanair boss O'Leary's €99m pay sparks investor revolt

Nearly half of Ryanair's shareholders voted against a pay deal for Michael O'Leary that could hand the chief executive €99m (£88m).

 

The Irish airline said that just 50.5% of investors voted in favour of the company's remuneration report.

 

The revolt comes at a difficult time for Ryanair which is facing more strike action from pilots and is cutting jobs.

 

Following the vote, a spokesman said it would consult with its investors.

 

He said: "Ryanair is, and will continue, to consult with its shareholders and we will report back to them over the coming year on how the board will adapt its decision-making to reflect their advice and input on all these topics."

 

Earlier this year, Mr O'Leary signed a new contract to stay on as chief executive until 2024.

 

Under the deal he stands to make €99m from stock options if he doubles Ryanair's profit or share price.

 

In the last financial year, however, the airline's profit dropped sharply and Mr O'Leary said on Thursday that he was planning to cut between 500 and 700 jobs.

 

Ryanair said Mr O'Leary's agreement to stay for another five years "gives certainty to our shareholders".

 

It also noted that his remuneration is "considerably lower than many other European airline chief executives".

 

However, a sizeable number of the airline's shareholders voted against the company's remuneration report at its annual general meeting (AGM) on Thursday.

 

Strike action

Pilots are planning more walkouts this month in a row over pay and conditions.

 

The pilots' union Balpa said its members want the same kind of agreements that exist in other airlines on pensions, loss of licence insurance, maternity benefits allowances and pay.

 

Ryanair branded earlier strikes as "pointless" as industrial action had not resulted in any flight cancellations.

 

Under his new deal, Mr O'Leary's pay and the maximum annual bonus have both been cut in half to €500,000.

 

He was also granted 10 million share options.

 

These are shares he can acquire for €11.12 and then sell at the market price if Ryanair's profits hit €2bn in any year up to 2024 or its share price reaches €21 for a period of 28 days from April next year. He would then pocket the difference.

 

The company's shares are currently trading at €9.84.

 

Pre-tax profit dropped to €948m in the year to 31 March compared to €1.6bn in the previous 12 months.--BBC

 

 

 

Austria blocks EU-Mercosur trade deal with South America

MPs in Austria have dealt a blow to the EU's landmark trade deal with South America's economic bloc, by demanding a government veto on the deal.

 

The draft free trade agreement took 20 years to complete and the EU has described it as its biggest so far.

 

France and Ireland have already warned they will reject the deal if Brazil does not do more to curb fires in the Amazon rainforest.

 

Austrian groups say the deal must do more to tackle environment issues.

 

All but one of Austria's main parties rejected the deal in a parliamentary sub-committee, from the far right to the centre left.

 

Mercosur includes four South American economies - Brazil, Argentina, Uruguay and Paraguay. A fifth member, Venezuela, is currently suspended.

 

Without backing from every government in the EU, the Mercosur deal cannot go through.

 

Why do Austrian MPs dislike the deal?

Jörg Leichtfried of the centre-left SPÖ hailed the decision as a "great success for consumers, the environment and animal welfare as well as human rights", warning that it would have been bad for climate protection and labour rights in South America.

 

 

Austria's trade union federation ÖGB had campaigned against the deal, arguing it had not sought binding rules on workers and the environment but focused on the interests of industry rather than people.

 

What is Mercosur

Green MEP Monika Vana praised the decision as "laying down a marker in Europe".

 

Austria's federation of industry, however, has backed the Mercosur deal, warning against "populist scaremongering and free-trade myths" and insisting that the deal includes a commitment to the Paris Climate Agreement and the fight against deforestation in the Amazon.

 

The liberal Neos party was alone in rejecting a veto, calling instead for the deal to be renegotiated.

 

Austrians are currently in the grip of an election campaign ahead of a 29 September vote. The centre-right alliance with the far-right Freedom Party fell apart in May amidst a corruption scandal.

 

What is France's objection?

The deal was announced amid great fanfare in June, but weeks later Europe's leaders were shocked by the spread of fires raging in the Amazon rainforest.

 

Brazil's President, Jair Bolsonaro, was accused by France's Emmanuel Macron of lying over his stance on climate change.

 

When Mr Macron pledged millions of dollars in aid to help reforest the Amazon, Mr Bolsonaro hit back by accusing him of treating it as a "colony or a no-man's land".

 

Ireland and Luxembourg also threatened to block the deal because of the far-right Brazilian leader's environmental policy.

 

What's in the EU deal?

The EU is already Mercosur's biggest trade partner, accounting last year for 20.1% of the bloc's trade in goods such as food, drink, farm products and tobacco. EU exports account for only 2.3% of the European bloc's total and tariffs on EU products are as high as 35% for cars and clothing.

 

The agreement, which would cover 780 million people, aims to remove trade barriers and promote high standards, with a commitment to sustainable management and conservation of forests and respect for labour rights.

 

European Council President Donald Tusk said last month it was difficult to see the accord getting through while fires were continuing in the Amazon rainforest.--BBC

 

 

 

 

 

 

 

 

 

 


 

 


 

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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