Major International Business Headlines Brief::: 08 April 2020

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Major International Business Headlines Brief::: 08 April 2020

 


 

 


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ü  Kenya GDP growth to drop to 3% or less in 2020 due to novel coronavirus -
finance minister

ü  South African lenders rally as central bank clarifies dividend guidance

ü  S.Africa weighing 'funding for lending' type scheme: central bank deputy
governor

ü  Coronavirus impact sees Glencore Zambian unit shut copper mines

ü  S.Africa's Standard Bank weighing central bank guidance on dividends

ü  Copper belt miners turn to Tanzania as South Africa lockdown hobbles
ports

ü  Kenyan shilling weakens amid thin activity, fewer trading hours

ü  South Africa's net foreign reserves fall to $44.7 bln in March

ü  S.Africa's rand rallies with riskier assets on signs of slower
coronavirus infection rates

ü  South Africa's central bank sees up to -4% GDP over coronavirus fallout

ü  Coronavirus: Twitter boss pledges $1bn for relief effort

ü  Job Retention Scheme to save jobs may cost up to £40bn

ü  Lufthansa makes 'permanent' cuts as travel plunges

ü  Investors warned not to rush into travel and leisure stocks

ü  Facebook releases couples-only messaging app

 

 


 <mailto:info at bulls.co.zw> 

 


Kenya GDP growth to drop to 3% or less in 2020 due to novel coronavirus -
finance minister

NAIROBI (Reuters) - Kenya’s economic growth will slow to 3% or less this
year from an earlier forecast of about 6% due to the effects of the novel
coronavirus, its finance minister said on Tuesday.

 

The finance ministry had earlier given a 6.1% growth forecast for 2020.

 

“This will drastically drop to about 3% or even less, but we are going to
give a firm figure when we will have taken on board the impact of this,
maybe in the next one month,” Ukur Yatani said in comments broadcast on
privately-owned Citizen Television.

 

 


 <mailto:info at bulls.co.zw> 

 


 

South African lenders rally as central bank clarifies dividend guidance

JOHANNESBURG (Reuters) - South African bank stocks recovered to make gains
on Tuesday after the central bank signalled that its advice not to pay
dividends did not include 2019’s and that the National Treasury was
considering a scheme to encourage lending.

 

The South African Reserve Bank’s Prudential Authority advised banks not to
pay dividends or bonuses this year on Monday, joining the Bank of England,
European Central Bank and others in asking them to skip shareholder returns.

 

The Johannesburg Stock Exchange’s banking index, which fell 4.3% at the
market open, was 9.3% higher at 1445 GMT, outperforming a 2.77% rise across
the country’s bourse.

 

Standard Bank, Absa and Investec, three of South Africa’s biggest lenders,
said they were considering the SARB’s guidance on the 2020 dividend and
would update shareholders in due course.

 

Absa said it would pay the 2019 dividend announced at its full-year results
in March.

 

Kuben Naidoo, head of the Prudential Authority, told Reuters that because
companies in South Africa have a legal obligation to pay dividends they have
already declared, that the SARB expects dividends to be distributed where
that is the case.

 

Standard Bank and Absa, as well as Nedbank and FirstRand all declared
dividends when they reported their annual or interim results in March.

 

Investec and Capitec have yet to report their annual results.

 

 

S.Africa weighing 'funding for lending' type scheme: central bank deputy
governor

JOHANNESBURG (Reuters) - South Africa is considering some kind of “funding
for lending” scheme for banks as one option in response to the coronavirus
crisis, central bank deputy governor and head of the Prudential Authority
Kuben Naidoo told Reuters on Tuesday.

 

“We’re not the primary drivers, but I know the Treasury is considering these
issues,” Naidoo said by phone, adding this would be a Treasury initiative.

 

“The central bank would be involved, our law doesn’t allow us to lend
unsecured, but as part of a broader design of a scheme we’re prepared to be
involved.”

 

South Africa’s Treasury did not immediately respond to a request for
comment.

 

 

 

Coronavirus impact sees Glencore Zambian unit shut copper mines

LUSAKA (Reuters) - Glencore’s Zambian unit Mopani Copper Mines (MCM) will
shutter its mines on Wednesday following disruption from the COVID-19
pandemic and low copper prices, it said in a statement, after the country’s
mines minister earlier criticised the closure.

 

“In addition to the impacts of a rapid decline in the copper price, Mopani’s
situation has been further impacted by the critical disruptions to
international mobility, transportation and supply chains arising from
COVID-19,” the company said.

 

Zambia’s mines minister earlier said MCM had declared “force majeure”, a
clause in contracts that allows contractual obligations to be ignored
because of unavoidable circumstances.

 

He questioned, however, whether there were legitimate grounds and said the
government would block the mine shutdown, which he said would put 11,000
jobs at risk.

 

The MCM statement did not mention “force majeure” and a Glencore spokesman
declined to comment.

 

“The government of the Republic of Zambia rejects this attempt by Mopani to
put the mines in Kitwe and Mufulira on care and maintenance because it does
not conform with the law,” Musukwa said in a written statement.

 

“This situation does not amount to force majeure,” Musukwa added, saying he
was unaware of any events beyond MCM’s control that made mining impossible.

 

‘FISHING FOR REASONS’

Musukwa also said Glencore did not provide the Zambian government with the
required 24-hours’ notice of the closure and he accused the company of
seizing an opportunity to lay off staff.

 

“We are a pro-poor government who were elected to ensure that Zambian
workers are protected and where there is justification we will allow the
laying off of people but not in this situation where we clearly have MCM
fishing for reasons to lay people off,” Musukwa said.

 

In its statement, MCM said it was engaging with Zambia’s government and
unions about continuing its commitments to the workforce during care and
maintenance, an industry term for a halt to mining operations during which
only essential repairs are done.

 

The miner said it expected permanent Zambian employees, excluding
management, to be sent home on their base salary while unionised contractors
will receive an “ex gratia” payment.

 

It said employees and their dependents would receive healthcare and the
company would remain committed to its corporate social responsibility
projects.

 

MCM on March 20 announced a review of its business to reduce spending in
response to lower copper prices and uncertainty caused by the pandemic.

 

Benchmark prices for copper have fallen around 17% so far this year as the
novel coronavirus leads to demand destruction worldwide.

 

MCM, which produced 119,000 tonnes of copper in 2018, is 73.1% owned by
Glencore, 16.9% by First Quantum Minerals and 10% by Zambia’s mining
investment arm ZCCM-IH.

 

 

 

 

S.Africa's Standard Bank weighing central bank guidance on dividends

JOHANNESBURG (Reuters) - Africa’s biggest lender by assets Standard Bank
said on Tuesday it would consider guidance from South Africa’s central bank
asking lenders not to pay dividends in 2020 as the coronavirus outbreak
disrupts economies around the world.

 

The South African Reserve Bank’s Prudential Authority advised lenders on
Monday not to pay dividends or bonuses due to the crisis, joining the Bank
of England, European Central Bank and others in asking banks to skip
shareholder returns.

 

Standard Bank, which last week told investors it had not had any guidance
from the central bank that such a move was imminent, said it would consider
the request and advise shareholders in due course.

 

“The board fully recognises the importance of dividends to the group’s
owners,” the bank said in a statement. “However, it also recognises the need
to support households and businesses amid the COVID-19 pandemic and the
importance of ensuring the stability of the group in the short, medium and
long term.”

 

The bank added that it remained well capitalised and liquid.

 

Banks pay dividends to reward shareholders and dispose of excess profits but
can opt to retain these to bolster capital.

 

Scrapping dividends means banks can use this capital to lend to consumers
and businesses instead.

 

 

 

Copper belt miners turn to Tanzania as South Africa lockdown hobbles ports

JOHANNESBURG (Reuters) - South Africa’s strict coronavirus lockdown has
caused miners to divert copper from the country’s ports to others in Africa,
with Dar es Salaam the clear winner, sources told Reuters.

 

Authorities in South Africa initially said ports would only process
essential goods during a three-week nationwide lockdown that began on March
27. On Friday, the Department of Transport said ports remain open to all
types of cargo.

 

But miners in the copper belt - an area spanning northern Zambia and
southern Democratic Republic of Congo - did not wait for that clarification
before acting.

 

Trucks from the copper belt were turned round midway through journeys to
Durban and redirected to Tanzania’s Dar es Salaam port, officials at two
regional logistics companies said.

 

“The moment the lockdown happened, all the trucks on their way to South
Africa were basically stopped and offloaded at a warehouse in Zambia,” said
an official in Tanzania’s capital, speaking on condition of anonymity.

 

“Then all the documentation was changed and they started the journey to
Dar,” the official added. “Everybody is now looking at Dar as the reliable
solution, because in South Africa it’s not clear.”

 

Exports of copper cathodes and copper concentrate through Dar have increased
by between 20% and 25%, he estimated.

 

Mozambique’s Beira port, 1,200 km (746 miles) north of the capital, Maputo,
and Namibia’s Walvis Bay are also seeing more copper and cobalt export
volumes than average, said a logistics company official in Zambia, who also
asked not to be identified.

 

Transnet, which manages South Africa’s railways and ports, did not respond
to questions about the hit to its revenue from the lockdown. Transnet Port
Terminals made 3.7 billion Rand ($200 million) in revenue in 2019 from dry
bulk, which includes copper, coal and grains.

 

CAPACITY HURT

Although South Africa’s ports are open again to non-essential cargo,
capacity has been hurt by the lockdown, logistics firm Grindrod said,
predicting revenue at the company’s port and terminals businesses would fall
in April. Some port personnel who were initially sent home have not yet
returned to work.

 

First Quantum is now exporting all the copper from its two mines in Zambia
through Dar es Salaam and Walvis Bay, whereas the majority previously went
via Durban, a source close to the miner said in London.

 

It is sending around 12,000 tonnes of copper through Dar this month - more
than twice the usual average of 5,000 tonnes, according to the Zambia
logistics source. The amount exported through Walvis Bay has increased by a
third.

 

A First Quantum spokesman did not respond to a request for comment on
Monday.

 

Barrick is exporting copper concentrate from its Lumwana mine in Zambia
through Dar es Salaam and Walvis Bay, as local refineries where it would
usually send concentrate are shut, Chief Executive Mark Bristow told
Reuters.

 

China Nonferrous Metal Mining Group Co (CNMC), which runs the Deziwa mine in
Congo and Chambishi in Zambia, is also exporting copper through Walvis Bay,
the Zambia logistics source said.

 

A CNMC manager familiar with the company’s African operations said it might
look for a port in Namibia if logistics issues continue at South African
ports.

 

QUEUE OF TRUCKS

Increased checks at the Zambia-Congo border crossing are also creating
delays, with a 35km (22 mile) queue of trucks south of the border, according
to another logistics company official in Zambia.

 

This is slowing the supply of key reagents mines need for copper processing,
he said. Congo miner Chemaf shut one of its processing plants on Sunday,
saying it could not source oxide ore.

 

While South Africa’s lockdown is benefiting ports like Dar, Beira and Walvis
Bay, it is hurting Mozambique’s Maputo port, which depends on South African
mine production.

 

Maputo exported around half of South Africa’s total chrome production last
year, according to Osorio Lucas, chief executive of the Maputo Port
Development Co.

 

It normally receives 500 trucks of chrome a day, but those trucks
disappeared as soon as the border closed in response to COVID-19, he said.
With most chrome mines in South Africa shut, Maputo is exporting stockpiles
from South Africa with no replenishments in sight.

 

“The main concern is that we have to have certainty,” said Lucas. “We need
to understand what is the plan for after - is the lockdown going to be
extended?”

 

Even for a port such as Dar, which is getting more business, the boost could
be short-lived, given the drop in copper prices. Benchmark prices for copper
have slumped around 17% this year as the pandemic dents demand.

 

“I believe I will have a very good year here in Dar,” said the Dar logistics
source. “But the challenge is if copper prices go down too much, and the
mines go into care and maintenance.”

 

 

 

Kenyan shilling weakens amid thin activity, fewer trading hours

NAIROBI (Reuters) - The Kenyan shilling weakened on Tuesday amid thin market
activity and shorter trading hours, a consequence of measures taken to curb
the spread of the novel coronavirus in the east African country, traders
said.

 

At 1046 GMT commercial banks quoted the shilling at 106.75/107.25, compared
with 106.40/60 at Tuesday’s close.

 

 

 

South Africa's net foreign reserves fall to $44.7 bln in March

JOHANNESBURG (Reuters) - South Africa’s net foreign reserves fell to $44.774
billion in March from $45.358 billion in February, Reserve Bank data showed
on Tuesday.

 

Gross reserves also fell, to $52.458 billion from $54.710 billion. The
forward position, representing the central bank’s unsettled or swap
transactions, decreased to a balance of $631 million in March after a
positive balance of $642 million previously.

 

 

 

S.Africa's rand rallies with riskier assets on signs of slower coronavirus
infection rates

JOHANNESBURG (Reuters) - South Africa’s rand firmed by more than 3% on
Tuesday, in line with a broad rally in emerging market currencies and other
riskier assets on hopes that steps to contain the coronavirus pandemic were
having an effect in some countries.

 

Stocks were also significantly higher, as yield and value hungry investors
kept on the sidelines during recent volatility took advantage of
historically low prices to re-enter the market.

 

At 1300 GMT the rand was 3% firmer at 18.0800 per dollar, its best level
since Thursday having crossed key technical levels at 18.50 and 18.20,
signalling the possibility of an extended rally with investors willing to
ride out the turbulence.

 

“At around 19.50 the rand was very oversold. It’s fair value is closer to
15.50. Every time the rand has collapsed, which happens a lot, within a year
it comes back to fair value,” said Wayne McCurrie, portfolio manager at FNB.

 

The currency extended a rally from the previous session with modest risk
appetite, spurred by an apparent slowing in the rate of new COVID-19 cases
in the United States and some European countries, attracting investors
looking to pocket the currency’s high returns, or carry yield.

 

The currency has also managed to weather a policy storm building around a
likely bailout from the International Monetary Fund (IMF).

 

“The main reason countries go to the IMF is a balance of payments crisis.
But we have very little external, foreign currency debt. So there’s no need
to go the IMF cap-in-hand. We’re a long way from that,” McCurrie said.

 

Bonds firmed, with the yield on benchmark paper down around 0.5%.

 

The equities market was also higher, with the Johannesburg Stock Exchange’s
Top-40 index up 3.5% to 44,035 points and the All-Share index rising 3.88%
to 48,033 points.

 

Focus was on banks and financial firms after the central bank late on Monday
advised banks not to distribute dividends and put bonuses for senior
executives on hold.

 

The bank index fell in early trade before soaring 10%, with some traders
seeing the cap on payouts, which would typically turn off buyers, as
opportunity to buy highly valued bank shares on the cheap.

 

Nedbank led the march higher, gaining 17% to 107.25 rand, followed by Absa
and Standard Bank, both rising around 12%.

 

The National Treasury is considering creating a scheme to encourage bank
lending to small businesses and consumers as one response to the coronavirus
outbreak, central bank deputy governor Kuben Naidoo told Reuters.

 

 

 

South Africa's central bank sees up to -4% GDP over coronavirus fallout

(Reuters) - South Africa’s central bank slashed its growth forecasts on
Monday, predicting the economy could shrink by as much as 4% in 2020 due to
the novel coronavirus, which has forced a national lockdown and triggered
two credit ratings downgrades.

 

The bank also said growth was unlikely to exceed 1% in 2021, job losses this
year could reach 370,000, and business insolvencies would likely increase by
1,600. While painting a grim outlook, it dampened expectations of the kind
of radical stimulus measures Western countries have adopted to tackle it.

 

“South Africa’s pre-existing macroeconomic vulnerabilities make it
unrealistic to implement stimulus on the scale seen in the strongest
advanced economies,” the South African Reserve Bank (SARB) said in its
bi-annual Monetary Policy Review.

 

Africa’s most advanced economy was already on the ropes when pandemic hit
local shores, recording its second recession in two years in the final
quarter of 2019, with data from 2020 already showing slack industrial and
financial activity.

 

“Updated estimates show the economy contracting by around 2% to 4% in 2020,
although these projections are tentative,” the South African Reserve Bank
(SARB) said in its bi-annual Monetary Policy Review.

 

“There is limited scope for a rebound,” the bank said, adding the were
downside risks to the dire forecasts should the lockdown be extended, or if
the global economy weakened more than expected.

 

LOCKDOWN WOES

The country has reported 1,585 coronavirus cases, the highest on continent,
with nine deaths, and is in the second week of a 21-day lockdown.

 

In a teleconference the bank said average growth in past decade was at its
weakest since at least the 1980s, due to electricity shortages and the slow
pace of structural reforms, while the rising risk premium was keeping the
bank from deeper lending cuts.

 

On Friday ratings agency Fitch cut the country’s credit rating deeper into
sub-investment territory, forecasting a 3.8% contraction to the economy in
2020. The week before, Moody’s also cut the rating to junk.

 

In response the rand hit an all-time low while bond yields spiked, fuelling
fears of a financial and fiscal crisis.

 

In March the bank launched a bond-buying programme to plug a liquidity
drought in credit markets and, before that, cut lending rates by 100 basis
points.

 

On Monday the Governor Lesetja Kganyago said he was pleased with the impact
of the liquidity measures.

 

However, calls for the bank and the National Treasury do more to support the
economy have grown louder, especially with unemployment already at 30%.

 

Kganyago ruled out switching to monthly monetary policy meetings or tapping
the Federal Reserve for funds through its recently offered fx swap line.

 

“We have not considered moving to a monthly meeting. We will however
continue watch the data, and if the data is such that we have to meet
earlier, there’s nothing stopping us,” said Kganyago.

 

According the bank’s calculations, last month’s 100 basis point cut to
lending rates had put 32 billion rand ($1.7 billion) back into the economy.

 

($1 = 18.7933 rand)

 

 

 

Coronavirus: Twitter boss pledges $1bn for relief effort

Jack Dorsey, the founder of Twitter and payment app Square, has said he will
donate $1bn (£810m) towards efforts to tackle the coronavirus pandemic.

 

According to Mr Dorsey, the donation represented approximately 28% of his
wealth.

 

He made the announcement on Twitter, writing that the "needs are
increasingly urgent".

 

Mr Dorsey did not lay out exactly where the funds would be sent to help in
the battle against Covid-19.

 

In the US there is a shortage of ventilators and personal protective
equipment, and business and individuals are also struggling economically.

 

Mr Dorsey will use shares he owns in Square to fund the donations which will
be distributed through the Start Small Foundation.

 

The 43-year-old is the chief executive of both Twitter and Square.

 

He said he was using shares of Square and not Twitter because he owned "a
lot more" of them. The shares will be sold over time, which could impact on
their value and the overall size of the donation.

 

Once the Covid-19 pandemic has been "disarmed", the funds will go toward
girls health and education and research into universal basic income.

 

In a six-part Twitter thread, Mr Dorsey said he wanted to donate to causes
where he could see an impact in his lifetime.

 

The donations will be made through a limited liability company. It is a tool
many wealth individuals use for donations, but is often criticized for a
lack of transparency.

 

Mr Dorsey sought to get ahead of this charge by posting a link to a google
doc which will publicly track the funds donations.

 

The Twitter boss is not the only tech billionaire to pledge part of their
wealth towards coronavirus-related efforts.

 

Facebook founder Mark Zuckerberg has committed $30m, the bulk of which is
focused on efforts to create a treatment.

 

Amazon's Jeff Bezos has donated $100m to food banks in the US to help those
struggling with hunger during this period.

 

Apple's chief executive Tim Cook announced in March the company would donate
medical supplies to Italy which has been hit hard by the virus.--BBC

 

 

 

Job Retention Scheme to save jobs may cost up to £40bn

The UK's Job Retention Scheme may cost £30-40bn over three months, three
times the size of initial estimates.

 

That is according to analysis by the Resolution Foundation, using the latest
figures on take-up of the scheme from the British Chambers of Commerce
(BCC).

 

While initial Treasury estimates suggested a 10% take-up, fresh figures from
the BCC suggest that far more firms are planning to use it.

 

It found nearly a fifth of smaller firms plan to furlough all their staff.

 

And 50% of companies are putting most of their staff into the scheme.

 

Urgent funding

The Job Retention Scheme aimed at protecting jobs has been widely welcomed
by companies, which have seen their incomes plummet because of the shutdown
and which need help to stay in business and keep staff on.

 

Employees can be put on furlough - a leave of absence - and firms can keep
paying them, but 80% of their wages will be reimbursed by a grant from the
government. The Treasury has promised companies the scheme will be ready by
the end of the month.

 

The Resolution Foundation think tank calculates that if that pattern is
repeated across the economy, then at least a third of private sector
employees - somewhere between 8 million and 11 million people - will be
furloughed.

 

The cost to government on those figures would be £30-£40bn over three months
- roughly similar to the amount the government spends each year on police
and safety.

 

Mark Reynolds, chief executive of construction company Mace Group, said he
had put 800 staff on furlough,

If the shutdown continues beyond May and into the summer, the cost could be
even greater.

 

BCC director general Adam Marshall told the BBC: "So many businesses around
the country need cash quickly. If they don't receive some of the funding
urgently by the end of this month, many of them are going to have to take
drastic steps.

 

"I'm afraid that we would see an increase in the rate of business failures.
And we'd see a lot of otherwise viable companies going to the wall. That's
why it's so important that the furlough scheme and the other government
support schemes get cash out to the front line as quickly as possible."

 

Mark Reynolds, chief executive of construction company Mace Group, said he
had put 800 staff on furlough,

 

"What the furlough scheme's enabled us to do is keep the capacity and
capability within our business so that when we come through this, we can
then re-deploy our people immediately so we can go back to work," he told
the BBC.

 

Saj Devshi changed jobs after the February 28th cut-off date and doesn't
qualify to be furloughed by his new employer.

 

Torsten Bell, chief executive of the Resolution Foundation think tank, said:
"By subsidising up to 80% of workers' wages, the scheme will help millions
of workers who would otherwise face catastrophic hits to their living
standards. The cost of the scheme depends on firms' take-up and the length
of time workers need to be furloughed for.

 

"But with recent surveys implying that at least a third of the private
sector workforce could be paid through the scheme, it is likely to cost as
much as £30bn to £40bn over three months. The economic and social cost of
mass unemployment in the absence of such a scheme would be far, far
greater."

 

However, what amounts to a giant safety net still has holes large enough for
tens of thousands of people to slip through.

 

Simple fix

Saj Devshi changed jobs after the 28 February cut-off date and doesn't
qualify to be furloughed by his new employer.

 

He's calling for the Chancellor to review the scheme, which he believes is
unfair for many new starters.

 

"I'm really worried about what the impact's going to be for many people in
my position," he said.

 

"It's real simple to fix this; all they need to do is remove the cut-off
date that they've imposed, other countries are not following this model.
There are easy ways to verify people's employment.

 

"I'd also like to see former employers step up during this time of national
emergency and rehire former employees using the furlough scheme, which has
been specially designed to save peoples incomes during this period."--BBC

 

 

Lufthansa makes 'permanent' cuts as travel plunges

Lufthansa is closing its Germanwings budget airline as part of a wider
cutback driven by a decline in travel due to the coronavirus.

 

The German airline said it would de-commission more than 40 aircraft,
warning that it does not expect demand to return for "years".

 

It said it would also reduce fleets in its other businesses, which include
Austrian Airlines, Swiss and Eurowings.

 

Lufthansa's moves could be a hint of more drastic steps to come elsewhere.

 

"You can't understate the disaster that's unfolding right now in the world's
airline industry. There's no sugar coating it," said Richard Aboulafia,
aviation analyst at Teal Group.

 

Parked aircraft

While he said that travel demand has bounced back after other disasters and
recessions, until the health risks abate he expects other airlines to follow
Lufthansa's lead.

 

"For the next year," he said "to two years, there's going to be a lot of
aircraft retirements, a lot of parked aircraft and a lot of utilization
reductions."

 

Global airlines group IATA has said it expects airline passenger revenues to
drop by more than 40% this year and warned that more than 25 million jobs in
aviation and related industries are at risk.

 

Lufthansa has already idled more than 90% of its fleet since the virus
outbreak and held talks with the German government about aid. But offloading
aircraft means the "first permanent capacity reduction", it said.

 

"It will take months until the global travel restrictions are completely
lifted and years until worldwide demand for air travel returns to pre-crisis
levels," Lufthansa said. "Based on this evaluation, today the Executive
Board has decided on extensive measures to reduce the capacity of flight
operations and administration long-term."

 

The firm said it will enter talks with unions and its work council quickly
to discuss "among other things, new employment models in order to keep as
many jobs as possible".

 

"The decisions taken today will affect almost all flight operations" it
said.

 

Mr Aboulafia said in part the crisis is allowing Lufthansa to accelerate
plans to dump older, less fuel-efficient aircraft, several of which
Lufthansa said were already scheduled to be sold.

 

It is a good opportunity to "prepare for rebuilding it with better aircraft
one day when demand comes back," Mr Aboulafia said.--BBC

 

 

Investors warned not to rush into travel and leisure stocks

Investors are being warned about piling money into the travel and leisure
sectors after their recent surge.

 

Travel and leisure stocks including airlines and cinema chains have been hit
hard by the coronavirus lockdowns and travel restrictions.

 

While their valuations have plummeted across the board, some stocks have
seen their share prices rocket this week.

 

On Tuesday, cinema chain Cineworld shot up almost 50% while cruise ship
operator Carnival surged more than 20%.

 

Cineworld, the world's second biggest cinema chain, announced bosses had
waived salaries and bonuses as part of a survival plan to tackle coronavirus
lockdowns.

 

Admitting the current situation was "extremely challenging", Cineworld said
it had scrapped a planned dividend to shareholders for the last quarter of
2019.

 

But its share price shot up 49% on the London Stock Exchange despite its
bleak outlook, with more than 780 cinemas closed across 10 countries.

 

Another travel and leisure stock, cruise ship operator Carnival, also saw a
big price rise on Tuesday, after Saudi Arabia's sovereign wealth fund took a
8.2% stake in it.

 

Carnival's share price rose 11% on the New York Stock Exchange and 22% on
the London Stock Exchange.

 

The cruise ship industry has battered during the coronavirus pandemic with a
number of outbreaks at sea raising concerns about the safety of cruise
holidays.

 

Carnival has cancelled a series of scheduled sailings for 2020 and said it
may struggle with bookings for 2021.

 

Given the dire outlook for the industry, experts are warning investors to
tread cautiously when thinking these stocks have "bottomed out" and may be
staging a recovery.

 

"Leisure and travel stocks are emerging from a deep and dark place," said
Stephen Innes, global market strategist at AxiCorp. "While people will
return to cinemas, revenues may be slow to pick up as movie goers and the
industry respects social distancing guidelines."

 

After cinemas reopen, Mr Innes says they may continue to space out
customers, which will reduce capacity and revenues. "After all, the last
thing a movie chain wants to get accused of is being the next super spreader
epicentre".

 

Grounded planes

Low-cost airline Easyjet saw it share price jump 15% on Tuesday, having
secured a £600m coronavirus loan from the government. Some airlines are
facing collapse as they are forced to ground planes while debts continue to
mount.

 

Easyjet's rescue package comes at the same airline industry trade body IATA
published research showing that some 25m jobs are at risk of disappearing
with plummeting demand for air travel during the crisis.

 

"Many questions remain as to just how eager travellers are willing to board
the confines of an airplane cabin even after the pandemic subsides," added
Mr Innes.

 

The pan-European Stoxx 600 shares index rose 1.7% on Tuesday, with travel
and leisure stocks rising 6.2%.

 

"People are trying to identify risks and opportunities now, and at last they
believe they can better identify them," said Bruce Pang, head of macro and
strategy research at China Renaissance Securities. "But the virus is still
the greatest known unknown for the markets and for financial professionals."

 

Analysts are warning it may take longer for consumption to get back on track
across all sectors, not just travel and leisure. "In short, it's still bad
for airlines, bad for international hotels and slightly positive for
domestic leisure activities. But still too early to say when the lockdown or
social distancing rules will be relaxed," said Iris Pang, chief economist
for Greater China at ING bank.

 

Even when restrictions are lifted, demand "could be slow to gain traction
due to psychological scars, defaults, bankruptcies, and job losses," added
Mr Pang.--BBC

 

 

 

Facebook releases couples-only messaging app

Facebook has released a new app for couples to private message each other.

 

The new app called Tuned allows couples to send messages, exchange music and
create a digital scrapbook.

 

Tuned was created by Facebook's New Product Experimental Team which focuses
on creating new social media from scratch.

 

The app claims to be a "private space" for couples to chat but it does not
appear to have the end-to-end encryption of services like WhatsApp.

 

Instead Tuned has the same data policy as Facebook, which allows the company
to collect communications and other behaviour to target advertising at the
user.

 

This data policy could mean users are less inclined to send personal
information or private photos via the app.

 

Facebook did not respond to the BBC request for comment about the launch of
Tuned.

 

The app is available only to iOS users in the US and Canada and does not
require a Facebook account to use it.

 

Facebook announced it was entering the dating space in 2018. It has launched
a dating service to rival Tinder and Bumble in 20 countries so far. But this
new couples messaging app is separate from that service.

 

The new product does not appear to be much different from other messaging
services.

 

Users add another person using their phone number and once they are
connected can send pictures and voice memos and the app has new custom
reactions that couples can send to one another.

 

Facebook formed the group that created Tuned - the New Product Experimental
Team (NPE) - in the summer of 2019. Its goal is to create new social media
services. It has built a meme creation tool and an app for saving and
organizing photos similar to Pinterest.

 

When Facebook launched NPE it said the team apps were meant to change
rapidly and that its services would be "shut down if we learn that they're
not useful to people."--BBC

 

 

 

 

 


 

 


 

INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


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