Major International Business Headlines Brief::: 01 July 2020

Wed Jul 1 06:32:50 CAT 2020

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Major International Business Headlines Brief::: 01 July 2020

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

ü  Fitch: Sub-Sahara African debt burdens rising faster than elsewhere

ü  South Africa's recession deepens in first quarter as mining plummets

ü  Kenya's economy expands by 4.9% in the first quarter of this year

ü  World agencies step in as pandemic poverty hits artisanal miners

ü  South Africa's trade balance swings to a surplus in May

ü  Kenya's inflation falls to 4.59% in June

ü  South Africa's Naspers posts 4.5% fall in full-year profit

ü  Botswana taps into strategic fuel reserves to ease shortages

ü  South African court sides with Eskom in clawback dispute

ü  Plane-maker Airbus to cut 15,000 jobs

ü  Facebook: Aviva and Intercontinental Hotels Group pause ads

ü  UK economy: 'We are battered, bruised, but wiser after lockdown'

ü  EasyJet plans to close bases and cut staff

ü  Huawei: Ministers signal switch in policy over 5G policy

ü  UK on track for V-shaped recovery, says Bank of England economist

 <mailto:info at bulls.co.zw> 

Fitch: Sub-Sahara African debt burdens rising faster than elsewhere

LONDON (Reuters) - Government debt burdens across sub-Saharan Africa are rising at a faster pace and to higher levels than elsewhere in emerging markets, heightening the risk of further rating downgrades and defaults, ratings agency Fitch warned on Tuesday.

Emerging markets have been battered by the fallout from the coronavirus pandemic, with a coinciding oil price rout adding to the pain for smaller and often riskier developing countries, many focussed on crude exports and having few fiscal or monetary buffers.

Fitch predicted that the median of government debt-to-GDP for the 19 sovereigns it rated in the region would rise to 71% by end-2020 from 26% in 2012, while the median debt ratio across other emerging markets is expected to climb to 57%.

Africa’s main oil exporters – Angola, the Republic of Congo, Gabon and Nigeria – have been hit particularly hard given their high reliance on oil revenues for fiscal and external financing, and the dependence of the rest of their economies on crude earnings.

Countries with a concentration on tourism, particularly Cabo Verde and the Seychelles, have also been badly affected, Fitch said.

While Mozambique and Republic of Congo already defaulted recently, ratings pointed to more stress ahead, with Zambia at ‘CC’ and Gabon, Mozambique and Republic of Congo ‘CCC’.

Another 13 sovereigns were in the single ‘B’ range, with seven sovereigns having a ‘negative’ outlook on their rating.

“The coronavirus shock compounds a marked deterioration in SSA public finances that has been running for a decade and which will be challenging to reverse,” Ed Parker, managing director sovereign ratings EMEA, wrote in a report.

“Further sovereign defaults are probable,” he added.

While emergency support from the International Monetary Fund and the G20 Debt Service Suspension Initiative (DSSI) provided useful fiscal and external financing, those programmes were “moderate in size” at around 0.9% and 1.2% of GDP respectively, Parker said.

They were not designed to address debt stocks and medium-term risks to debt sustainability, he added.

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South Africa's recession deepens in first quarter as mining plummets

PRETORIA (Reuters) - South Africa’s recession deepened in the first quarter of 2020, with official data on Tuesday showing that gross domestic product contracted 2% from the previous three months, led by declines in mining and manufacturing.

The economy was already frail before the coronavirus pandemic hit South Africa in March, with January-March being the third consecutive quarter of contraction and following a 1.4% decline in GDP in October-December.

Tuesday’s data nevertheless beat analysts’ expectations for a contraction of 3.8% in the first quarter.

“While this was nowhere near as bad as the market had feared, there is little in the data to be upbeat about,” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered.

“The year/year decline was modest, with the return of growth in agriculture providing some support. But the read-across to other sectors, and the expenditure breakdown of GDP, provides plenty of reason to be concerned.”

Statistics South Africa said mining contracted by 21.5% in January-March, while manufacturing was down 8.5%.

Compared to the same period a year ago, GDP shrank 0.1% in the first quarter after a 0.5% decline in Q4 2019.

A strict nationwide lockdown from late March has been partially eased to allow key sectors like mining, manufacturing and retail to resume operations, but the outlook remains gloomy.

The Treasury sees GDP contracting by 7.2% this year.

First-quarter spending in the economy shrank 2.3% compared with October-December, Stats SA said. Then, it had contracted 1.2% from the prior quarter.

While household expenditure grew 0.7% and government expenditure was up 1.1% in the quarter, gross fixed capital formation shrunk by 20.5%.

“Tentative green shoots of consumer recovery will have been completely overridden by the COVID crisis, and rise in joblessness since then,” Khan said.

“When an economy’s starting point — even prior to the COVID lockdown — is an unemployment rate that is over 30%, it is difficult to imagine what further deterioration looks like.”

Kenya's economy expands by 4.9% in the first quarter of this year

NAIROBI (Reuters) - Kenya’s economy grew by 4.9% in the first quarter of this year, down from a rate of 5.5% in the same quarter last year, the statistics office said on Tuesday.

World agencies step in as pandemic poverty hits artisanal miners

JOHANNESBURG (Reuters) - From a $15 million World Bank fund to an experimental gold-buying project in Burkina Faso, development agencies are delivering financial aid to subsistence miners the COVID-19 pandemic has impoverished.

World market prices of gold - viewed by investors as a safe store of value in uncertain times - have surged to levels last seen in 2012, and are up 16% this year.

But millions of subsistence workers, who typically use rudimentary techniques at unregulated mines, have received none of the benefits as pandemic disruption to supply lines has shrunk their already sporadic earnings.

For an interactive graphic click here: tmsnrt.rs/2yufhV6

The World Bank is creating a dedicated emergency relief fund for the estimated 40 million artisanal and small-scale miners (ASM) worldwide, three sources told Reuters on condition of anonymity.

A World Bank spokeswoman confirmed the fund, which was yet to be officially launched. She said the fund would “provide short-term assistance to artisanal mining communities to better cope with COVID-19 impacts”. 

Donors have contributed $5 million to the fund, and the Bank aims to expand it to $15 million. That money would be disbursed to projects helping miners across geographies and minerals.

“This is very rare because usually disaster recovery funding is not specifically directed to ASM as a uniquely vulnerable livelihood group,” said one consultant, who declined to be named.

The Canada-based Artisanal Gold Council (AGC), an NGO, is trying out a project to help communities dependent on small-scale gold mining in Burkina Faso.

With 40% of the population living below the national poverty line, the country is particularly vulnerable.

The AGC has bought gold direct from miners at the pre-pandemic going rate, and is in early discussions with PAMP, a London Bullion Market Association (LBMA) certified refinery in Switzerland, about exporting it there for refining.

PAMP declined a request for an interview, and did not reply to written questions from Reuters.

The gold, sourced from five artisanal miners around the southern town of Dano, was transported to the capital, Ouagadougou, and was in the process of being certified for export by the mines ministry.

The initial export, of 800 grammes of gold (worth around $48,847), is a trial. Depending on its success, the AGC plans to source a further 20kg from Burkina Faso, and then begin sourcing from Colombia too.

Aboubakar Dabire, a miner who sold 500 grammes of gold to the AGC, said: “My community was really hard hit by COVID-19. When gold prices are low, everything is undermined.”

“People will take this [scheme] seriously as it is a well-organised system,” Dabire added. “It means they will make an effort to avoid certain buyers in the field who are ruining the market.”

Attempts to formalise artisanal mining, stamp out child labour, and sever links with illicit minerals trade face significant obstacles.

In remote artisanal gold mining communities, trade is largely informal and the rigorous documentation required by LBMA guidelines is hard to enforce.

These guidelines require gold refineries to verify where their gold is mined, show it does not fund conflict or armed groups, collect “Know Your Customer” information on the whole supply chain, and verify all legal taxes have been paid.

It took the AGC two months to complete the process.

The challenges help to explain why only a tiny share of the gold produced worldwide is "London Good Delivery" certified by the LBMA. In Africa, 1.6% of gold is. For an interactive graphic click here: tmsnrt.rs/2ABHD0j

The effort and cost required to implement these standards and bring artisanal gold into formal channels mean other NGOs do not consider direct market intervention, such as that being done by AGC, viable.

“We are very aware that [gold] prices are depressed for local miners, but we are not convinced the international market is the route to go down,” David Finlay, responsible minerals manager at the Fairtrade Foundation, said.

South Africa's trade balance swings to a surplus in May

JOHANNESBURG (Reuters) - South Africa’s trade balance swung to a surplus of 15.94 billion rand ($918.20 million) in May from a revised deficit of 35.95 billion rand in April, data from the revenue service showed on Tuesday.

Exports jumped 96.1% on a month-on-month basis to 101.85 billion rand, while imports were down 2.2% to 85.91 billion rand, the South African Revenue Service said.

A strict coronavirus lockdown from late March has been partially eased to allow key sectors like mining to resume operations.

($1 = 17.3601 rand)

Kenya's inflation falls to 4.59% in June

NAIROBI (Reuters) - Kenya’s inflation fell to 4.59% year-on-year in June from a revised 5.33% a month earlier, the statistics office said on Tuesday.

On a monthly basis, inflation was -0.31% from 0.63% a month earlier, the Kenya National Bureau of Statistics said in a statement.

South Africa's Naspers posts 4.5% fall in full-year profit

JOHANNESBURG (Reuters) - South African media and e-commerce group Naspers on Monday reported a 4.5% drop in profit for the year to March 31, mainly as a result of investments to drive growth in its food delivery business.

Core headline earnings per share (HEPS) - the main profit measure in South Africa - fell to $6.57 from $6.87 a year earlier, it said on Monday. The company had estimated that HEPS would drop by 10-16%.

The results were announced after the stock market closed with the technology giant’s shares up 0.3%.

The South Africa-based media powerhouse, with businesses spread across Brazil, China, India, Russia and Europe, said its revenues for the full year jumped 17% to $22.1 billion, driven mainly by its food delivery and classifieds segments.

Its food delivery orders rose 102% and revenues by 99%, while the classifieds business grew by almost half, the company said in a statement.

“Group businesses are likely to benefit from a further acceleration of the underlying trend toward online (due to COVID-19),” Group Chief Executive Officer Bob van Dijk said in a statement.

He said on a media call the food delivery business had reached a point from which it can be significantly ramped up.

Group Chief Financial Officer Basil Sgourdos said the pandemic had not yet caused the company to shed any jobs globally, but added: “We have to see how it plays out”.

The company, which owns almost a third of Chinese internet giant Tencent Holdings Ltd, offloaded some of its more valuable e-commerce businesses into a separate entity - Prosus <NV PRX.AS> last year and listed it on Euronext in Amsterdam.

It holds 72.49% of Prosus.

Botswana taps into strategic fuel reserves to ease shortages

GABORONE (Reuters) - Botswana has tapped into its strategic fuel reserves to alleviate shortages caused by import delays during the coronavirus crisis and also what the government has called panic-buying.

The southern African country has lifted a lockdown to contain the coronavirus but its borders remain closed, with only essential imports allowed and truckers tested for the virus and quarantined before they enter.

It has recorded a relatively low number of COVID-19 infections, with only 16 active cases and one death.

Many fuel stations in the capital Gaborone ran out of fuel in the past few days and there were long queues at those that still had supplies.

The fuel shortages have disrupted businesses and could exacerbate an economic contraction this year, when the government has said real gross domestic product could fall 13%.

Botswana consumes 3 million litres of fuel per day, and government officials say they normally keep 12 days of supply in the strategic reserves.

South African court sides with Eskom in clawback dispute

JOHANNESBURG (Reuters) - South Africa’s High Court on Monday sided with Eskom in a dispute over the amounts energy regulator Nersa allowed the state utility to claw back from customers for electricity supplied in the 2014/15, 2015/16 and 2016/17 financial years.

Nersa’s 2018 decisions to allow Eskom to recoup 32.69 billion rand ($1.9 billion) via a mechanism known as the regulatory clearing account (RCA) for those three years have been set aside, and it must now come up with new decisions.

Monday’s ruling could lead to higher power tariffs, as the court said it appeared Nersa had disallowed Eskom money for lower-than-forecast revenue based on a “fundamental factual error”. It said disallowing some coal costs was not rational.

Higher tariffs would pile pressure on cash-strapped households and business buckling under the impact of the COVID-19 pandemic, but they would be a relief for Eskom, which is mired in financial crisis and has long said the regulator has treated it unfairly.

The RCA mechanism is designed to account for differences between Eskom’s forecast revenue and costs when it applies to Nersa for power tariffs and the actual revenue and costs it subsequently reports.

Eskom had sought 66.6 billion rand in RCA balances for 2014/15, 2015/16 and 2016/17 and said in court papers that Nersa had disallowed it amounts for lower-than-forecast revenue, coal costs, independent power producer costs and capital expenditure when it should not have.

Nersa had said it would oppose Eskom’s application but did not file an answering affidavit and later advised via its lawyers that it was withdrawing its opposition.

An Eskom spokesman confirmed three years of RCA decisions had been set aside. A Nersa spokesman could not immediately comment. It was not immediately clear when Nersa would review the RCA amounts and make new decisions.

($1 = 17.3231 rand)

Plane-maker Airbus to cut 15,000 jobs

Aerospace giant Airbus says it plans to cut 15,000 jobs as it deals with the effects of the coronavirus crisis.

It will cut 1,700 jobs in the UK, along with thousands more in Germany, Spain and elsewhere.

The move is subject to talks with unions which have opposed compulsory redundancies.

The Unite union said the Airbus announcement was "another act of industrial vandalism" against the UK aerospace sector.

Some 134,000 people work for Airbus worldwide, with around a tenth of them in the UK.

The firm said the UK cuts would fall only on the commercial aircraft division at its two sites at Broughton in Flintshire and Filton, Bristol.

More details of the job losses and how they will break down between the two giant factories will come at the end of the week after talks with unions.

However, Unite said it expected 1,116 manufacturing jobs and 611 office-based jobs to go, shrinking Airbus's UK workforce by 15%.

These cuts were inevitable. The only question was just how severe the pain would be.

The Covid-19 pandemic has been little short of catastrophic for the airline industry. At one point in April, global air traffic was down by more than 90%.

When planes aren't flying, they aren't earning money. Yet they still need to be maintained and leasing costs or loans still need to be paid.

The result? Airlines are struggling to survive and simply can't afford to take on new planes right now. And that, of course, means Airbus has had to curb production.

Airbus has delayed these cuts and has made full use of support from governments. But ultimately it had little choice.

And the pain being felt in places such as Broughton, Toulouse and Hamburg will echo through the entire supply chain.

The firm expects to make the cuts by summer 2021, but hopes the majority of redundancies will be voluntary or through early retirement of staff.

The company warned in April that it was "bleeding cash at an unprecedented speed" as it struggled with the impact of the coronavirus crisis.

'Gravest crisis'

It said on Tuesday that production had dropped by 40% in recent months, and that it did not expect air traffic to get back to pre-pandemic levels until 2023 at the earliest.

"Airbus is facing the gravest crisis this industry has ever experienced," said chief executive Guillaume Faury. "The measures we have taken so far have enabled us to absorb the initial shock of this global pandemic.

"Now, we must ensure that we can sustain our enterprise and emerge from the crisis as a healthy, global aerospace leader, adjusting to the overwhelming challenges of our customers."

News of the cuts comes as the international aviation industry reels from the impact of the pandemic. On Tuesday, EasyJet said it would close three UK bases and cut about 2,000 staff.

And Reuters reported that Air France/KLM was targeting more than 6,500 job cuts over the next two years.

Jim McMahon, Labour's shadow transport secretary, called for more government support in the UK.

"Labour has consistently called for an extension to the furlough in the most impacted industries, and a sectoral deal that supports the whole aviation industry including securing jobs and protecting the supply chain, while continuing to press for higher environmental standards."

A government spokesman said: "We understand this will be a difficult time for Airbus's employees and their families, and we stand ready to support anyone affected in any way we can.

"We will continue to work closely with the sector to ensure firms are able to rebuild as the civil aviation market recovers."--BBC

Facebook: Aviva and Intercontinental Hotels Group pause ads

Two leading UK firms - the insurer Aviva and the Intercontinental Hotels Group (IHG) - have become the latest to "pause" advertising on Facebook.

They join Ford, Adidas, HP, Coca Cola, Unilever and Starbucks, which have all acted in response to how the social network deals with hate speech.

The Stop Hate for Profit campaign claims that Facebook is not doing enough to remove hateful content.

Facebook has said it wants to be a force for good.

Ahead of the latest developments, the tech firm's UK director Steve Hatch told the BBC that "there was no profit in content that is hateful".

In a statement to the BBC, Aviva said: "We regularly review which social media platforms we use and have taken this moment to pause and reassess Aviva's use of Facebook for advertising in the UK."

IHG added it had recently taken the decision to suspend advertising "through Facebook globally" but did not provide additional context. The Buckinghamshire-based firm operates under the Holiday Inn, Crowne Plaza and Kimpton brands, among others.

Meanwhile in the US, the retailer Target and chocolate-maker Mars were the latest big names to announce they were acting likewise.

Mars's temporary halt will extend to Instagram, Twitter and Snapchat.

"Mars has a responsibility and an opportunity to make a meaningful and measurable difference in the fight against racism, hate, violence and discrimination - we expect all of the social media platform partners we work with to do the same," it said.

News agency Reuters reported that Facebook had hosted a conference call with advertisers to discuss an audit of how it deals with hate in its latest effort to tackle the backlash.

'Hate in the world'

Hundreds of brands around the world have hit pause on their Facebook advertising in response to Stop Hate for Profit's call for a boycott. Some have also suspended ads on other social media platforms.

Speaking on BBC Radio 4's Today programme, Mr Hatch defended Facebook's record on hate speech.

"Our systems now remove 90% of and detect 90% of that hate speech automatically. And now that's not perfect, but we do know that it's up from 23% two years ago," he said.

"As much as we do our very best, and there's always more that we can do and that we will do - when there's hate in the world, there will also be hate on Facebook.

"The way that our systems work are to provide people with the content that is most often in millions and millions of cases both enjoyable and safe, and also to enable people to have a discussion."

Facebook has come under increasing fire since it decided not to remove a post by US President Donald Trump, written in response to the protests across the US over the death of George Floyd.

A comment made by the president - "when the looting starts, the shooting starts" - was deemed to glorify violence and labelled as such by rival Twitter but remained on Facebook.

Mr Hatch said: "The debates that we see around these topics are extremely challenging and can be very, very wide-ranging."

But Facebook's inaction left many angry, and kick-started the Stop Hate for Profit campaign, which wants big brands to boycott the social network during July.

Some advertisers have paused social media spending on Facebook for just that month, while others are planning longer periods.

On Friday, Facebook's share price dropped by 8%. In response it has said it will start to label potentially harmful posts.

A survey from the World Federation of Advertisers suggests that others are likely to follow suit, and that other platforms such as Twitter and Snapchat may also be included.

Its chief executive told the Financial Times that it felt like "a turning point".

By far the most notable British company to have joined the boycott so far has been Unilever. But Unilever has a huge US presence - it owns Ben and Jerry's for example.

Aviva doesn't. This is a very British boycott, it only affects the UK.

Facebook has been worried about the spread of this boycott to the rest of the world.

On Monday Stop Hate for Profit - the organisation that has spearheaded the campaign in the US - announced it wanted to take the campaign global.

And this is an example of just that, a British company pausing its use of Facebook in Britain.

How much will this worry Facebook? Well each company that joins the boycott incrementally chips away at the company's ad revenue.

However, it's not thought Facebook or Instagram makes up a large proportion of Aviva's ad spend, with TV and print larger.--BBC

UK economy: 'We are battered, bruised, but wiser after lockdown'

Businessman Nick Garthwaite sums up trading during the last few months thus: "We took an absolute pasting. May was the bottom, the pits."

It's a view that must be felt at the thousands of firms surveyed for the latest British Chamber of Commerce's Quarterly Economic Survey, published on Wednesday.

Eleven of the 14 key indicators for the service sector fell to their lowest level in the survey's 31-year history. In manufacturing, nine of the 14 indicators dropped to the lowest point.

Mr Garthwaite is managing director of Bradford-based Christeyns UK, a chemicals business that straddles many of the sectors directly affected by the economic slowdown - hospitality, construction, food, manufacturing.

Greggs and Muller are major customers for Christeyns' food hygiene chemicals arm, and the commercial cleaning operation works with hotels and the NHS.

The BCC's survey of 7,700 firms, representing 580,000 employees across the UK, found that economic conditions in the April-June quarter "deteriorated at an unprecedented rate".

And that was certainly Mr Garthwaite's experience following the lockdown on 23 March. "We had to work quickly when it was clear things were slowing. We set up home-working and furloughing. There was no panic, just a pragmatic approach that we had to act quickly."

UK economy hit by worst contraction in 41 years

This is the moment to be ambitious – PM

Christeyns' chemicals facility in Bradford, which supplies the construction sector, was the worst hit. "This part of the business went off the edge of the cliff," he said. The commercial laundry arm also suffered badly. Mr Braithwaite reckons the two operations lost about 70% of trade in May.

But another part of the company, which sells cleaning chemicals and sanitisers, did brisk business as demand soared. The business has been running at full capacity, he said.

The BCC's survey, the largest independent barometer of UK business sentiment, found that sales, orders and cashflow hit rock bottom for many firms.

And business confidence dropped to its lowest level on record among services firms, and fell to its lowest level since early 2009 for manufacturers, the BCC said.

Nevertheless, Mr Garthwaite said he is positive now that lockdown is being eased. Most of his 300 staff have been been brought back from furlough, with only those facing underlying health issues staying away.

Christenys' factories at Warrington and Whaley Bridge are "almost back up to full strength", he said. Trading across the business picked up in June, and he anticipates that July will be "slightly better".

But Mr Garthwaite added: "Getting back to 2019 levels of profit figures may not happen until next year, or even the year after. But I do feel we have turned a corner. It's been difficult - but then it's been difficult for millions of people.

"We are battered, bruised, but wiser after the event," he said.

·         BCC economic outlook lays bare the collapse in business activity

·         63% of businesses reported a fall in export sales (8% reported an increase, 29% said they remained constant)

·         73% saw a fall in domestic sales (10% increase, 17% remained constant)

·         64% reported a worsening of cashflow (11% saw an improvement, 25% reported no change)

·         Investment intentions for services and manufacturing fell to the lowest since BCC records began

·         58% expect their turnover to fall over the next 12 months (25% expect a rise, 17% think it will stay the same)

·         In the previous quarter - January to March - 56% of firms were expecting an increase in turnover.

·         Like Mr Garthwaite, Suren Thiru, head of economics at the BCC, believes the last few weeks are likely to have been the nadir for most businesses.

Mr Thiru said: "With lockdown restrictions steadily easing, the second quarter is likely to prove to be the low point for the UK economy.

"However, the collapse in forward looking indicators of activity suggests that unless action is taken, the prospect of a swift and sustained recovery may prove too optimistic."

On Tuesday, Prime Minister Boris Johnson set out plans to "build, build, build" with promised investments in infrastructure and schools. But the BCC is more focused on Chancellor Rishi Sunak, who is due to make a keynote economic statement later this month. Ahead of this, the BCC called on Wednesday for a series of targeted measures, including:

·         A reduction in Employer National Insurance Contributions

·         Wider business rate reliefs and extended loan and grant schemes

·         A temporary VAT cut

·         Support for young people through wage subsidies for apprenticeships and work experience.

·         For Mr Garthwaite, the last of these is particularly important. "I am old enough to have lived through past recessions, and we ended up doing very little for young people. Apprenticeships can be so beneficial for the young. We need to be forward-thinking and create something for them that is fit for purpose."

And he made a special plea for the government to make good on its promise to invest in the north of England. "We want to see money for the Northern Powerhouse. Just re-organising the deckchairs is not going to be enough."

The sentiments were echoed by Dr Adam Marshall, the BCC's director general, who said the survey results showed that the whole of the UK needed "swift and substantial action".

He said: "The government has one chance to jump-start the economy and business confidence over the coming weeks - and they must take it.

"The only way to re-kindle business and consumer confidence is to demonstrate an absolute and unshakeable focus on boosting the economy over the coming months."--BBC

EasyJet plans to close bases and cut staff

EasyJet says it has begun consultations on plans to close bases at Stansted, Southend and Newcastle.

It follows an announcement by the airline that it may need to reduce staff numbers by up to a third because of the coronavirus pandemic.

The Unite union said nearly 1,300 UK crew members faced losing their jobs.

Pilots' union Balpa said it had been told by EasyJet that 727 of its UK-based pilots were also at risk of redundancy.

That is equivalent to one in three of its pilots, Balpa said.

EasyJet chief executive Johan Lundgren said: "The lower demand environment means we need fewer aircraft and have less opportunity for work for our people.

"We are committed to working constructively with our employee representatives across the network with the aim of minimising job losses as far as possible."

EasyJet plans up to 4,500 job cuts

However, Balpa general secretary Brian Stratton said the job cuts were "an excessive over-reaction".

"EasyJet won't find a supply of pilots waiting to come back when the recovery takes place over the next two years."

And Unite said the plan to make 1,290 cabin crew redundant was a "massive blow" for a "battered industry".

"There is no need for this announcement at this time, especially since Easyjet has taken a multi-million pound government loan which it ought to be putting to use defending UK jobs," said national officer for civil aviation Oliver Richardson.

Easyjet currently has 11 bases in the UK, with 163 aircraft, serving 546 routes.

Even though it is looking at closing the Stansted, Southend and Newcastle bases, it said the airports would remain part of its route network.

That means it will continue to fly in and out but will not have aircraft and crew based permanently at the airports.

'Saddened'

Easyjet has seven aircraft based at Stansted, with 335 crew. At Southend, there are 183 crew and four aircraft. And there are three aircraft based in Newcastle, with 157 crew.

The job cut proposals are not limited to the bases that may close, a Unite spokesman said.

Newcastle Airport said it was "saddened to hear of possible job losses and the significant impact this would cause."

"This is very disappointing for the airport, airline and the North East as a whole and we sympathise with everyone affected by this announcement."

Travel restrictions

EasyJet said in May that it planned up to 4,500 job cuts as it struggled with the collapse in air travel due to the coronavirus crisis.

It has started to fly passengers again, but does not expect 2019 levels of demand to be reached again until 2023.

Airlines have been hit hard by lockdowns and travel restrictions around the world, with many announcing job cuts.

Reuters reported on Tuesday that Air France/KLM would present a plan to unions on Friday to cut more than 6,500 jobs over the next two years as the airline deals with the effects of the coronavirus crisis.

In June Lufthansa said it planned to cut 22,000 jobs, and British Airways said in April that it could cut up to 12,000 jobs from its 42,000-strong workforce.--BBC

Huawei: Ministers signal switch in policy over 5G policy

The government has signalled it is set to take a tougher line against Chinese telecoms equipment-maker Huawei.

A review is under way into how forthcoming US sanctions would affect the UK's continued use of its products.

"Given that these sanctions... are extensive, it is likely to have an impact on the viability of Huawei as a provider for the 5G network," said Digital Secretary Oliver Dowden.

He added he wanted Samsung and NEC to become 5G network kit providers.

They would help make the UK's mobile networks become less dependent on the other two suppliers: Ericsson and Nokia. Mr Dowden said the current situation represented a "market failure".

Defence Secretary Ben Wallace added that the sanctions - which are set to come into effect in September - had specifically been designed to force the UK into a rethink.

"It is a better set of sanctions than the earlier set, and it's specifically clearly designed in a smarter way to put countries that have high-risk vendors - specifically Huawei - under greater pressure."

The sanctions forbid Huawei and the third parties that manufacture its chips from using "US technology and software to design and manufacture" its products.

One consequence of this is that the company could lose access to software it relies on to design and test its processors as well as being able to put some of its most advanced chips into production.

The US cites national security concerns as the cause for its intervention. American politicians have suggested that Beijing might exploit Huawei to spy on or even sabotage communications.

And this Tuesday, the Federal Communications Commission also designated Huawei a national security risk, blocking local telecom companies from drawing on the agency's funds to buy the Chinese firm's equipment.

Skip Twitter post by @AjitPaiFCC

Huawei denies claims that it would help the Chinese government compromise its clients or otherwise deliberately harm them.

"We are investing billions to make the Prime Minister's vision of a 'connected Kingdom' a reality so that British families and businesses have access to fast, reliable mobile and broadband networks wherever they live," said the firm's UK chief Victor Zhang following the hearing.

"We have been in the UK for 20 years and remain focused on working with our customers and the government."

Feeling 'cagey'

The two cabinet ministers were giving testimony to the House of Commons Defence sub-committee.

Mr Dowden noted that it was already the government's ambition to remove Huawei from the UK network "over time".

However, under plans announced in January, current plans are limited to excluding the company from the most sensitive parts of the network - the so-called core - and capping Huawei's market share of base stations and other equipment at the "edge" to 35% by 2023.

It is unusual for two cabinet ministers to give evidence at the same committee hearing

Mr Dowden said this might now change.

"We won't hesitate in taking decisions that will impose additional costs on mobile network operators, the primary consideration is national security," he said.

But he added he was "a little cagey" about providing further detail as final "decisions haven't been made" and "any changes in policy would be exceedingly market sensitive".

The Department for Digital, Culture, Media and Sport is still studying what impact excluding Huawei altogether or other new restrictions might have.

Backbench threat

The DCMS has also asked GCHQ's National Cyber Security Centre to advise it on the security implications of the US sanctions.

NCSC has previously raised concerns about the "shoddy quality" of Huawei's hardware and the potential for vulnerabilities this creates. But it currently manages the risk by carrying out checks on the products.

One concern is that if Huawei were forced to start relying on components sourced from other vendors, NCSC would not longer believe the risks involved to be manageable.

NCSC's chief Ciaran Martin told MPs that "the bulk of the analysis" was now done, but that further discussions with DCMS were required before a recommendation could be made to the prime minister.

Committee member Labour MP Kevan Jones raised concerns that the government was being "bullied into doing what the Americans want".

But Mr Wallace responded: "The Americans can do what they like with their own IP [intellectual property]... it's not an attack on us, it's just a fact that if Huawei doesn't work any more because it can't use a certain type of chip or whatever... we'd have to get something else."

Conservative MP Mark Francois also noted that the government faces a backbench revolt over its Telecommunications Infrastructure Bill if it does not commit to a ban.

"The bill is already as dead as a dodo unless it effectively excludes Huawei," the MP said.

"Wouldn't it just save everybody a lot of time if you came to the House tomorrow and put your hand up?"

Mr Dowden responded that he was "mindful" of the threatened rebellion but added: "You just have to wait and see," as to what the government's decision would be.

Ministers made clear the ambition is to not have any "high-risk vendors" like Huawei in the UK's 5G network.

But the crucial question is whether we are about to see a firm commitment to achieve that "ambition" and within a specific time frame.

The review of the impact of US sanctions looks set to take the UK in that direction.

While there may be technical reasons for the shift, it would also prove politically convenient amid continued pressure from Washington and backbench Conservatives, as well as deteriorating relations with China.

But it still remains to be seen exactly how far and fast the government will move.--BBC

UK on track for V-shaped recovery, says Bank of England economist

The UK economy is still on track for a quick or so-called V-shaped recovery, according to Bank of England economist Andy Haldane.

In a speech on Tuesday, he said the recovery in the UK and globally had come "sooner and faster" than expected.

However, he sounded a note of caution on jobs in the wake of the pandemic.

He said either consumer spending would ease unemployment or unemployment would cut household spending. Both could create virtuous or vicious cycles.

But at this stage, he said he could not tell which one would prevail.

So far, the economy is benefiting from robust strength in consumer spending, aided by many workers working from home or drawing 80% of their salaries through the government's furlough scheme.

"As the furlough scheme tapers from August, however, there is a risk this greater number of furloughed workers are not hired back by employers, adding to the unemployment pool," he said.

But he warned that the greatest risk was "a repeat of the high and long-duration unemployment rates of the 1980s, especially among young people".

Unemployment risk

Earlier this month, the Bank said the economy was on course for a contraction in the second quarter of about 20% compared with the final three months of 2019.

This is a record, but not quite as extreme as the 27% it predicted in May.

These numbers are subject to constant revision, however, both good and bad.

Mr Haldane's speech came as new figures showed the UK economy shrank more than first thought between January and March, contracting 2.2% in the joint largest fall since 1979.

The Office for National Statistics revised down its previous estimate of a 2% contraction.

The three-month period included just nine days of coronavirus lockdown.

The Bank recently added £100bn to its bond-buying programme to help prop up the economy.

The extra monetary stimulus - known as quantitative easing (QE) - will raise the total size of the Bank's asset purchase programme to £745bn.

Mr Haldane voted against the increase. He said the recovery was happening "sooner and materially faster" than the Bank expected in May.

In his speech, Mr Haldane also pointed out just how much of the UK's financial system the Bank owns.

The new purchases "take the Bank's balance sheet to around 45% of 2019 UK GDP by the year-end, more than double its previous high-water mark", he said, outstripping the purchases made during World War Two, the South Sea bubble or the global financial crisis.

He said there was not much more that cheap borrowing could do to help mend the economy.

Global job fears

Fears of long-lasting joblessness are not confined to the UK.

A new assessment from the International Labour Organization - a United Nations agency - points to the damage the pandemic has already done to global employment.

The health crisis has led to a drop of 14% in hours worked globally, equivalent to 400 million full-time jobs. That's a substantially larger impact than the ILO found only a month ago.

The loss of hours worked is largest in the Americas, where the ILO says there are currently the most restrictions on workers and workplaces. The impact has been especially severe in South America, where working hours declined by 20%.

The report said women had been disproportionately affected. The downturn has hit service industries very hard, where many women work. They have also been more affected than men by the increased burden of unpaid care brought by the pandemic.

Looking ahead, the ILO does envisage some recovery in employment in the second half of the year.

The report looks at three scenarios which vary depending on the trajectory of the pandemic and government policy choices. Even the most optimistic of these - what the report calls an exceptionally fast recovery - is not likely to see employment return to pre-pandemic levels.--BBC

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Ariston

AGM

Boardroom, 306 Hillside Road, Msasa Woodlands

07 Jul 2020 : 1100

Dawn Properties

AGM

Ophir Room, Monomotapa Hotel, 54 Park Lane

09 Jul 2020 : 0900

Mash

AGM

Virtual, Boardroom, 19th Floor, ZB Life Towers, 77 Jason Moyo Avenue

09 Jul 2020 : 1200

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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