Major International Business Headlines Brief::: 09 July 2020

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Major International Business Headlines Brief::: 09 July 2020

 


 

 


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ü  Alphabet's Loon launches balloon internet service in Kenya

ü  South African Airways to offer training for up to 1,000 staff

ü  Namibia to ground national carrier's license over cash hole

ü  Uganda growth to sink as low as 0.4% this year - World Bank

ü  Steinhoff agrees to sell stake in Conforama France to Mobilux

ü  South Africa's rand edges firmer in cautious early trade

ü  Parts of South Africa's Edcon set for sale to Durban-based retailer

ü  South Africa faces battle to rein in spending - Fitch

ü  South Africa's Massmart says 1,800 Game jobs at risk

ü  Ivory Coast's 2020 growth seen sliding to 0.8% due to pandemic

ü  Rosewood smuggling in The Gambia: Shipping firm halts timber exports

ü  Brooks Brothers seeks bankruptcy protection amid pandemic

ü  Chancellor gives diners 50% off on eating out

ü  Coronavirus: Budget airline AirAsia's future in ‘significant doubt’

ü  Coronavirus: Rishi Sunak unveiling 'kickstart jobs scheme' for young
people

ü  Coronavirus: How are other economies dealing with the downturn?

 

 

 

 

 

 

 

 


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Alphabet's Loon launches balloon internet service in Kenya

BARINGO, Kenya (Reuters) - Alphabet Inc began offering the world’s first
commercial high-speed internet using balloons to villagers in remote regions
of Kenya’s Rift Valley on Wednesday.

 

The service is run by Loon, a unit of Google’s parent Alphabet, and Telkom
Kenya, the East African nation’s third largest telecoms operator.

 

“Kenya is the first country... to have base stations high up in the sky. Now
we will be able to cover the whole country in a very short span of time,”
said Information Minister Joe Mucheru after launching the service.

 

The technology has been used before, but not commercially. U.S. telecom
operators used balloons to connect more than 250,000 people in Puerto Rico
after a 2017 hurricane.

 

The project aims to provide affordable fourth generation (4G) internet to
under-covered or uncovered rural communities. It has been more than a decade
in the making.

 

“We are effectively building the next layer of the mobile network around the
world. We look like a cell tower 20 km in the sky,” said Alastair Westgarth,
Loon’s chief executive.

 

The floating base stations have a much wider coverage, about a hundred times
the area of a traditional cell phone tower, Westgarth said. The large,
translucent balloons are fitted with a solar panel and battery, and float in
the upper atmosphere, high above planes and weather.

 

They are launched from facilities in California and Puerto Rico and
controlled via computers in Loon’s flight station in Silicon Valley, using
helium and pressure to steer.

 

They also have software equipped with artificial intelligence to navigate
flight paths without much human intervention.

 

E-COMMERCE

 

During the launch of the service in the vast, semi-arid county of Baringo in
the heart of the Rift Valley, Mucheru placed a video call to President Uhuru
Kenyatta.

 

“Now you will be able to sell your products on the internet. I want to see
online sales of honey,” a beaming Kenyatta told residents via the call,
referring to the region’s renowned beekeeping.

 

Locals used to travel more than 60 km (40 miles) to the nearest towns for an
internet connection.

 

Now, Dorcas Kipkeroi said she wants to sell her jars of honey to expatriate
Kenyans longing for a taste of home.

 

“It will help me reach Kenyans who live abroad because communication has
been difficult,” she said.

 

Westgarth said Loon, which has a deal to roll out the service with Vodacom
in Mozambique, has seen increased interest from operators and governments
after the coronavirus crisis forced people to rely on the internet more
heavily.

 

“It has really accelerated existing discussions,” he said.

 

Details of the commercial agreement between Loon and Telkom Kenya have not
been made public.

 

 

 

 

 


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South African Airways to offer training for up to 1,000 staff

JOHANNESBURG (Reuters) - South African Airways (SAA) will provide a year’s
training for up to 1,000 employees, revisions to its restructuring plan
show, in a concession to trade unions angered by thousands of looming job
cuts.

 

State-owned SAA’s administrators published a restructuring plan last month
after repeated delays and months of wrangling with the government and
unions.

 

Creditors are due to vote on the plan on July 14, which envisages scaling
back SAA’s operations before ramping them up gradually as disruption linked
to the coronavirus pandemic eases.

 

In proposed changes published on Wednesday, SAA’s administrators kept the
number of staff needed in the restructured SAA at 1,000, from around 4,600
currently.

 

But instead of laying off 3,600 people, they now suggest roughly 2,600 will
lose their jobs and up to 1,000 will be placed on a “training layoff scheme”
where SAA will contribute up to 4,650 rand ($270) a month in pension,
unemployment and healthcare benefits for each employee.

 

The public enterprises ministry said those on the training scheme would
remain SAA employees but not receive salaries.

 

If SAA does not need them after the training they will lose their jobs.

 

The administrators have also delayed by one week until July 22 a deadline
for conditions to be met for the restructuring plan to work, including a
commitment from the government on funding.

 

The government has not yet said where it will find the more than 10 billion
rand of new funds needed for the plan.

 

It has alluded to interest from potential partners but has given few
details. The finance minister allocated no new money for SAA in an emergency
budget.

 

The government says most unions are ready to accept severance terms if
creditors approve the plan.

 

($1 = 17.1111 rand)

 

 

 

Namibia to ground national carrier's license over cash hole

WINDHOEK (Reuters) - Cash-strapped Air Namibia will have its planes grounded
at midnight on Wednesday after it failed to secure enough funding to remain
solvent, voiding its air licence, the transport authority said.

 

The airline, which operates 10 aircraft on continental and one international
route, with a staff of close to 800, requires around 8 billion Namibian
dollars ($469 million) to stay afloat, but only received a tenth of that in
last month’s budget.

 

“This is scarcely 12% of the amount stated as needed by the management of
the airline,” the head of the Transport Commission, Eldorette Harmse, said
in a statement.

 

The withdrawal of its air licence means it is prohibited from operating
commercial flights. It will however be permitted to undertake humanitarian
evacuation and repatriation flights under its non-scheduled air services
licence, which is valid for the duration of the State of Emergency due to
the coronavirus.

 

The firm’s financial woes pre-date the COVID-19 pandemic which has ravaged
air travel around the world due to the stand-still in tourism. It has failed
to produce financial statements in recent years, a requirement of Namibia’s
Air Services Act.[nL8N2E95IM]

 

In January it faced serious allegations around safety, operations, and its
finances, contained in an audit report published by German airline
Lufthansa. It has yet to resolve those issues.

 

Air Namibia also owes its main creditor, the now-defunct Belgian company
ChallengeAir SA, 12.3 million euros ($13.88 million). The European firm has
applied to the Namibian High Court to have the carrier liquidated.

 

In addition to its Windhoek-Frankfurt offering, the carrier operates busy
regional routes to Cape Town, Luanda and Harare, attracting buying interest
from bigger carriers like Ethopian Airlines, Lufthansa and South African
Airways, according to local media reports.

 

$1 = 17 Namibian dollars)

 

 

 

Uganda growth to sink as low as 0.4% this year - World Bank

KAMPALA (Reuters) - Ugandan economic growth is set to plunge to as low as
0.4% in 2020 from 5.6% last year as the coronavirus crisis batters the east
African economy ahead of presidential elections set for 2021, the World Bank
found.

 

The pandemic is expected to hit tourism, exports, and remittances, a report
released on Wednesday said. It is also likely to damage investments in the
country where long-awaited oil production could commence by 2022.

 

The fiscal deficit would rise to between 7% to 8.9% of GDP next year from
pre COVID-19 levels of 5.8%, fuelled by a steep drop in tax revenues, the
report found.

 

COVID-19, the report said, was resulting in “lower exports, tourism,
remittances, as well as a sizable deceleration in Foreign Direct Investment
(FDI) inflows and government project financing”.

 

Ugandan President Yoweri Museveni in early March announced strict lockdown
measures to contain the spread of the novel coronavirus, including shutting
borders, schools and nearly all businesses and banning the use of private
and public transportation.

 

In early May, authorities started to relax some of the measures.

 

Uganda is due to hold a general election between Jan. 10 and Feb. 8 2021.
Museveni is widely expected to seek re-election although he has not
explicitly stated he will stand again.

 

The heightened uncertainty around the 2021 elections added to the pressure
on the economy, the World Bank said, as do crop-damaging invasions of
locusts and army worms.

 

 

 

Steinhoff agrees to sell stake in Conforama France to Mobilux

JOHANNESBURG (Reuters) - Scandal-hit Steinhoff International agreed to sell
its shares in furniture retailer Conforama France to Mobilux Sàrl, the
parent company of retailer BUT, for a nominal amount, the company said on
Wednesday.

 

“The disposal will secure the future of Conforama France, release the Group
from its liabilities in respect of that business and generate cash to reduce
of the current debt held by Conforama France,” the company said in a
statement.

 

 

 

South Africa's rand edges firmer in cautious early trade

JOHANNESBURG (Reuters) - South Africa’s rand edged firmer in tentative early
trade on Wednesday, as investors weighed a surge in coronavirus infections
in key global centres and more signs of a creaking local economy.

 

At 0700 GMT the rand was 0.23% firmer at 17.1400, retracing a fraction of
the previous session’s sharp losses that dragged the unit to a 1-week low as
investors attention turned to climbing COVID-19 infections around the world.

 

Domestically on Tuesday, a survey showed consumer confidence plunged to a
35-year low in the second quarter, while ratings firm Fitch warned about the
country’s ability to execute plans to slash spending, also hurting the rand.

 

But flows back into the rand overnight were helped by data from China
showing a solid recovery for industrial production in the world’s no.2
economy, demand from which accounts for a big slice of South Africa’s export
revenue.

 

A continuing jump in COVID-19 cases in the United States, however, paired
with a warning from its central bank that its economy would struggle to
shake-off the impact of the pandemic boosted safe-haven demand for the U.S.
currency. [FRX/]

 

In Australia lockdown measures were reimposed in the country’s second
biggest city Melbourne, feeding investor concerns about the likelihood quick
bounce in global economic activity.

 

“South Africa’s economic fragilities have rendered the ZAR vulnerable to
external shocks, meaning the currency will remain at the mercy of broader
sentiment dynamics,” said market economists at ETM Analytics in a note.

 

“(But) with nothing in the way of noteworthy data on the cards today to
shift the spotlight back to global economic recovery prospects, the market’s
focus may remain fixated on the coronavirus pandemic.”

 

Bonds were weaker in early bids, with the yield on the benchmark government
issue due in 2030 up 3 basis points to 9.715%.

 

 

 

Parts of South Africa's Edcon set for sale to Durban-based retailer

JOHANNESBURG (Reuters) - Parts of South African retail chain Edcon are
likely to be sold to private equity-backed Retailability Ltd, administrators
in charge of its restructuring said.

 

Best known as owner of the 91-year-old department store chain Edgars and
budget clothing retailer Jet, Edcon is one of South Africa’s oldest retail
groups but applied for a form of bankruptcy protection in April.

 

“Retailability plans to utilise Edgars’ unique value proposition, and large
attractive target market, to ensure the growth and continuity,” Edcon’s
administrators said in the statement, which was issued on Monday.

 

Edcon entered a process called business rescue in South Africa after it
failed to generate enough revenues as a coronavirus lockdown shut its stores
across the country.

 

Its administrators said a transaction with Retailability would save a
“significant” number of jobs.

 

Piers Marsden and Lance Schapiro of Matuson Associates, administrators of
the process, said last month that they had identified 15 parties interested
in picking up all or parts of debt-laden Edcon.

 

The statement did not say what Retailability would pay and which parts of
Edcon the Durban-based retail chain, which bought Edcon’s young women’s
fashion division, Legit, in 2016 for 637 million rand ($37.29 million),
would buy.

 

Matuson Associates and Retailability did not immediately respond to an email
seeking comment.

 

Retailability, which runs two other clothing outlets, Beaver Canoe for men’s
fashion and Style for families, has 440 stores and some 2,000 employees in
South Africa and neighbouring countries.

 

These are mainly located outside of big cities where the core if its low to
middle income target market exists.

 

The administrators said they are in advanced stages to sell other parts of
Edcon, adding the deals will close by September.

 

($1 = 17.0802 rand)

 

 

 

South Africa faces battle to rein in spending - Fitch

JOHANNESBURG (Reuters) - South Africa’s plans to rein in government spending
will be hard to implement due to low economic growth, ratings agency Fitch
said on Tuesday, adding the country had a poor track record of delivering
debt and spending cuts.

 

Finance Minister Tito Mboweni said in an emergency budget in June that the
government deficit would widen to 14.6% of gross domestic product in the
2020/21 fiscal year, while debt would jump to 81.8% of GDP.

 

However, the Treasury stuck with its promise of around 230 billion rand
($13.5 billion) of spending cuts in the short term, a target set in February
before the COVID-19 pandemic.

 

This has been criticised by unions and some economists, who believe the
government should ramp up spending to drag the economy out of recession.

 

“They have had previous plans to achieve a primary balance, which would have
required smaller adjustments, and those have been abandoned. So the track
record of following up on such plans isn’t really there,” said Fitch’s head
of Africa sovereign ratings Jan Friederich during a webinar.

 

Fitch downgraded South Africa’s credit rating deeper into “junk” territory
in April, citing the lack of a clear path towards debt stabilisation and
higher economic growth. The other top ratings firms, Moody’s and S&P, also
rate the country at sub-investment grades.

 

Africa’s most advanced economy contracted for the fourth time in five
quarters in the three months to March, before the pandemic. The Treasury
estimates GDP will shrink 7.2% this year.

 

($1 = 17.0698 rand)

 

 

 

South Africa's Massmart says 1,800 Game jobs at risk

JOHANNESBURG (Reuters) - South Africa retailer Massmart Holdings Ltd has
started talks with unions to cut up to 1,800 jobs at the company’s
struggling Game stores as constrained spending and the new coronavirus weigh
on performance, the company said on Tuesday.

 

Majority-owned by Walmart and operator of supermarkets and wholesalers such
as Makro and Game, Massmart said talks began after it assessed the
efficiency of the stores.

 

Massmart said it was implementing a new operating model at Game after its
“indifferent performance in the 2019 financial year” and the negative impact
of trading restrictions because of the pandemic on sales.

 

The company said it would not close any of its Game stores, however.

 

Game, a general merchandise chain, has been a drag on group profit as
financially-constrained customers prioritise spending on non-durables, such
as food, over spending on goods such as appliances.

 

Massmart earlier in the year said it would cut costs and restructure into
wholesale and retail units, but the impact of the virus has accelerated some
of the turnaround strategies.

 

The group lost 4.6 billion rand ($268 million) in sales during a strict
nine-week lockdown.

 

The potential job cuts would represent around 3% of Massmart’s total
workforce.

 

Job cuts are a politically-sensitive issue in South Africa, where
unemployment stands at around 30%.

 

Game joins some of the country’s big firms such as steel producer
ArcelorMittal South Africa Ltd, food producer Tiger Brands and third-biggest
telecom operator Cell C, which have already announcing plans to cut jobs.

 

 

 

Ivory Coast's 2020 growth seen sliding to 0.8% due to pandemic

ABIDJAN (Reuters) - Ivory Coast’s gross domestic product growth is expected
to slow to 0.8% in 2020 compared to a previous forecast of 7.2% if the
coronavirus pandemic continues to the end the year, Finance Minister Adama
Coulibaly has said.

 

“The initial GDP growth expected at 7.2% in 2020 could tumble to 0.8% if the
crisis continues until the end of the year,” Coulibaly told a closed-door
business meeting on Monday.

 

He said the budget deficit in the world’s top cocoa grower was expected to
widen due to the crisis, which has made it difficult for the government to
respect its target of 3% of GDP.

 

 

 

Rosewood smuggling in The Gambia: Shipping firm halts timber exports

One of the world's largest shipping lines has announced a moratorium on the
transport of any wood from The Gambia.

 

A BBC Africa Eye investigation revealed in March that vast quantities of
protected West African Rosewood was being trafficked through the country.

 

Most of it ends up in China, the Environmental Investigation Agency (EIA)
found.

 

Gambian authorities have previously denied any involvement in the smuggling.

 

Rosewood is a family of tropical tree species widely used for furniture in
Asia and in particular China. By value and by volume, rosewood is the most
trafficked wildlife product in the world.

 

In June, the EIA published a report saying shipping companies were
transporting contraband timber from The Gambia to China.

 

Three months previously, Africa Eye published an investigation into the
million-dollar trade in trafficked rosewood.

 

Shipping company Compagnie Maritime d'Affrètement Compagnie Générale
Maritime (CMA CGM), the world's fourth largest, said that it had done its
own investigations as a result of the evidence uncovered by the BBC and EIA.

 

"There was probably some protected rosewood inside their shipments from The
Gambia to China," said Guilhem Isaac Georges, Director of Sustainability for
CMA CGM.

 

The company has therefore "decided to halt its timber exports from the
country until further notice," he told the BBC.

 

The shipping company also announced that it would create a global blacklist
of shippers involved in the illegal trade of protected and endangered
species.

 

The EIA said that it believed this was the first time a shipping line had
banned transportation of an entire classification of goods.

 

What's so special about rosewood?

Rosewood is a family of tropical tree species widely used for furniture in
Asia and in particular China.

 

Also called Hongmu or "red wood" this rare and valuable wood is prized for
its colour and durability.

 

It is used primarily for antique-style furniture.

 

How does the smuggling work?

Figures obtained by BBC Africa Eye showed that China has imported more than
300,000 tonnes of West African rosewood (Pterocarpus erinaceus) from The
Gambia since President Adama Barrow came to power in 2017.

 

That is the equivalent of about half a million trees and worth more than
$100m (£80m).

 

The Gambia is consistently among the five largest global exporters of
rosewood, despite declaring its own stocks close to extinction almost a
decade ago.

 

During a year-long investigation in both Senegal and The Gambia, multiple
sources confirmed to the BBC that the rosewood being shipped out of The
Gambia to China comes from the Casamance region of southern Senegal.

 

Along a 170km (105 miles)-long stretch of the border between the two
countries, the BBC found at least 12 depots containing rosewood and other
timber. They were all within Gambian territory.

 

The BBC investigations revealed that Senegal's forests are being plundered
at an alarming rate to support this trade.

 

In Senegal it is illegal to fell or export a rosewood tree and yet we saw
evidence of this happening in broad daylight.

 

"It's The Gambia that has to stop the export of rosewood. They make good
speeches, good promises, they say: 'We are going to stop', but in reality it
is not true," said Haidar el Ali, a former Senegalese minister of
environment, told the BBC.

 

The Gambia's current government has also banned the export of pterocarpus
erinaceus.

 

Under the country's Forestry Act of 2018, importation from another country
is only legal if it goes through an official port of entry. But all the
depots we discovered have been active since Mr Barrow's government has been
in power.

 

The BBC also obtained footage showing truckloads of rosewood logs driving
towards The Gambian capital Banjul earlier this year.

 

The government, however, denied the allegations contained in the BBC Africa
Eye investigation.

 

Is there a legal trade in it?

In 2017 the West African rosewood tree was given international protection.
It was listed under Appendix II of the Convention on International Trade in
Endangered Species of Wild Fauna and Flora - known as Cites. It is a
multilateral treaty to protect the living environment.

 

The Gambian government, like Senegal, signed up to the international Cites
convention. It permits a carefully regulated trade in rosewood so long as it
is legal and sustainable.

 

Mr Isaac Georges said that in the current context in The Gambia, it was
impossible to be certain that the country was abiding by the Cites
regulations.

 

So CMA CGM decided "to go further than the local regulations to protect the
environment".

 

He added that: "The group acknowledged that 'this highly sought-after wood
is felled illegally in the region and then exported under various different
guises."

 

The timber sector in The Gambia is "plagued by opacity and corruption, it
provides the perfect ecosystem for criminal networks to thrive," Lisa Handy,
Director of the Forest Campaigns at EIA, told the BBC.

 

CMA CGM said it hoped it was "demonstrating its leadership within the
shipping industry in the protection of the environment."

 

"It is a notable move and a very auspicious start... other shipping lines
must also act," Ms Handy said.--BBC

 

 

 

Brooks Brothers seeks bankruptcy protection amid pandemic

Brooks Brothers, one of America's oldest clothing brands, has become the
latest US retailer to file for bankruptcy protection.

 

The menswear company, which is more than 200 years old, sought court
protection from creditors on Wednesday while it looks for a buyer.

 

It had already shut some stores and prepared to close its US factories.

 

Known for its suits, it joins J Crew, JC Penney and Neiman Marcus as a
business casualty of the pandemic.

 

The company dates back to 1818 and its clothes have been worn by dozens of
US presidents, including John F Kennedy and Barack Obama.

 

It operates about 500 stores globally, roughly half of which are in the US,
and employs more than 4,000 people.

 

Since 2001, it has been owned by Italian businessman Claudio Del Vecchio,
whose family founded Luxottica. It was owned by Marks & Spencer between 1988
and 2001.

 

The firm, which has suffered as more causal office attire has become the
norm and online competition increased, had been exploring a sale before the
pandemic struck. It said it expected to complete the process in the next few
months.

 

Classic style

"Industry headwinds were only intensified by the pandemic," Mr Del Vecchio
said. "Seeking protection to facilitate an efficient sale of the business is
the best next step for the company to achieve its goals, over any other
alternative."

 

Brooks Brothers styles itself as a classic American brand. It claims credit
for popularising "preppy" men's staples in the US, including madras prints,
seersucker suits, argyle socks and the ever-present button-down shirt.

 

In a court filing, the company stated that it had both assets and
liabilities between $500m and $1bn.

 

In an interview with the New York Times last month discussing the three US
factory closures, Mr Del Vecchio said the firm was taking steps to ensure
its survival. It employed nearly 700 people at the plants in New York,
Massachusetts and North Carolina.

 

In addition, the company had already said it would close 51 stores in the
US.

 

"At this moment, all resources need to be maintained and saved to make sure
we can come out on the other side of the crisis," he said.--BBC

 

 

 

Chancellor gives diners 50% off on eating out

Diners will get a 50% discount off their restaurant bill during August under
government plans to bolster the embattled hospitality sector.

 

Chancellor Rishi Sunak unveiled the "eat out to help out" discount as part
of a series of measures to restart the economy amid the coronavirus
pandemic.

 

The deal means people can get up to £10 off per head if they eat out from
Monday to Wednesday.

 

Mr Sunak also said VAT on hospitality and tourism would drop to 5%.

 

The reduction, from 20%, will be in place for the next six months.

 

As he announced the discount, the chancellor said the UK was facing a
"unique moment" because of Covid-19, adding: "We need to be creative."

 

What the summer economic plan means for your money

Pubs and restaurants reopened on Saturday after more than three months in
lockdown, with safety measures in place to prevent the spread of the
coronavirus.

 

Mr Sunak sought to reassure the public that it was safe to dine out. "I know
people are cautious about going out. But we wouldn't have lifted the
restrictions if we didn't think we could do so, safely," he said.

 

The discount will not apply to alcohol, but to food and soft drinks up to
£10 per person.

 

The Treasury said the 50% discount can be used unlimited times during August
and applies to participating restaurants, cafés, and pubs across the UK.

 

Mr Sunak said the plan was aimed at getting "customers back into
restaurants, cafes and pubs" and protecting "the 1.8 million people who work
in them".

 

However, the scheme prompted criticism from some who questioned subsidising
meals out while British people continue to die from the coronavirus and many
people are struggling financially.

 

Businesses that want to take part in the scheme will have to register
through a website that opens on Monday 13 July.

 

Mr Sunak said: "Each week in August, businesses can then claim the money
back, with the funds in their bank account within five working days."

 

He added that the cut in VAT, from 20% to 5%, would apply to "eat-in or hot
takeaway food from restaurants, cafes and pubs; accommodation in hotels,
B&Bs, campsites and caravan sites [and] attractions like cinemas, theme
parks and zoos".

 

The lower tax rate will be implemented next Wednesday, 15 July, and will
remain in place until 12 January 2021.

 

Caroline Roylance, owner of The George pub at Fordingbridge, Hampshire, said
she would be applying for the "eat out to help out" scheme.

 

The pub reopened on Wednesday after being closed since 23 March, when the
coronavirus lockdown was implemented.

 

She said the discount and the VAT cut "will help us make it through the next
few months, because trade is unlikely to return to pre-Covid levels for some
time".

 

"Saying that, it's been surprisingly busy today, which is encouraging, but
it's still not July busy," said Mrs Roylance. "It's a start though."

 

'Challenges ahead'

UK Hospitality, the trade body which represents the industry, "warmly"
welcomed the moves, as well as Mr Sunak's plans to stem unemployment through
schemes such as creating thousands of job placements for young people.

 

However, UK Hospitality's chief executive, Kate Nicholls, said: "This
doesn't mean we are out of the woods and there are still significant
challenges ahead.

 

Chancellor Rishi Sunak said the UK is facing a "unique moment"

"The biggest of these is the spectre of rent liabilities, which many
businesses are still facing from their closure period. We are going to need
government support on this before too long."

 

Meanwhile, the exclusion of alcohol from the "eat out to help out" discount
hit some pub groups' share prices.

 

Mitchells & Butler's share price jumped by 7.3% to 175p towards the end of
Mr Sunak's statement, when he revealed the VAT cut for the hospitality and
leisure industries, as well as the dining out discount.

 

But once it became clear it did not include alcohol, Mitchell & Butler's
share price fell "just as quickly as it spiked up", said Michael Hewson,
chief market analyst at CMC Markets UK.

 

Marston's share price also dropped 6.1% to 48.98p. JD Wetherspoon's share
price fell 2% to 986p.--BBC

 

 

 

Coronavirus: Budget airline AirAsia's future in ‘significant doubt’

The future of Asia's biggest budget airline, AirAsia, is in “significant
doubt”, auditor Ernst & Young has said.

 

Shares in the Malaysian-based airline fell by more than 17% on Wednesday
after being halted earlier in the day.

 

The airline’s founder and chief executive is tycoon Tony Fernandes, who also
co-owns Queens Park Rangers (QPR) football club in the UK.

 

The world's airlines have been hit hard by the sharp fall in passengers due
to strict coronavirus travel restrictions.

 

Ernst & Young highlighted the airline’s huge debts in a statement to the
Kuala Lumpur stock exchange late on Tuesday.

 

It said AirAsia’s current liabilities already exceeded its current assets by
1.84bn ringgit ($430m; £340m) at the end of 2019, before the start of the
pandemic.

 

The Asian carrier’s financial performance and cash flow have been further
hit by the grounding of its planes amid tight travel curbs and lockdowns.

 

This slump and AirAsia's financial performance "indicate existence of
material uncertainties that may cast significant doubt on the Group's and
the Company's ability to continue as a going concern," Ernst & Young said in
its unqualified audit opinion statement.

 

On Monday, AirAsia reported a record quarterly loss of 803.8m ringgit. The
budget airline started suspending flights in late March.

 

"This is by far the biggest challenge we have faced since we began in 2001,”
Mr Fernandes said in a statement.

 

“Every crisis is an obstacle to overcome, and we have restructured the group
into a leaner and tighter ship."

 

"We are positive in the strides we have made in bringing cash expenses down
by at least 50% this year, and this will make us even stronger as the
leading low-cost carrier in the region,” he added.

 

AirAsia said it was in talks over joint ventures and collaborations that may
result in additional investment. It has also applied for bank loans and is
weighing proposals to raise additional capital.--BBC

 

 

 

Coronavirus: Rishi Sunak unveiling 'kickstart jobs scheme' for young people

Chancellor Rishi Sunak is announcing a £2bn "kickstart scheme" to create
more jobs for young people, in a statement to MPs.

 

It is part of an emergency package to prevent mass unemployment as
coronavirus hits the UK economy.

 

Mr Sunak is also expected to announce a temporary stamp duty holiday to
stimulate the property market.

 

Labour says more action is needed to tackle the "scale of the unemployment
crisis" caused by the pandemic.

 

The chancellor says the "kickstart" plan is aimed at preventing an entire
generation being "left behind".

 

The fund will subsidise six-month work placements for people on Universal
Credit aged between 16 and 24, who are at risk of long-term unemployment.

 

Mr Sunak told Wednesday's cabinet meeting he wanted to protect as many jobs
as possible and support the further opening-up of the economy.

 

The CBI praised the scheme as "a much-needed down payment in young people's
futures" and unions said it was "a good first step".

 

Under the temporary stamp duty freeze, the first £500,000 of all property
sales would be exempt from the tax, in England and Northern Ireland.

 

A temporary VAT cut to help the hospitality sector, which has been hit hard
in the pandemic, has also been predicted

 

The chancellor has already outlined a number of other measures in the
build-up to his statement, including:

 

·         Vouchers of up to £5,000 for energy-saving home improvements as
part of a wider £3bn plan to cut emissions

·         A pledge to provide 30,000 new traineeships for young people in
England, giving firms £1,000 for each new work experience place they offer

·         A £1.6bn package of loans and grants for the arts and heritage
sector

·         The doubling of front line staff at job centres, as well as an
extra £32m for recruiting extra careers advisers and £17m for work academies
in England

·         Employers will not have to pay any tax on coronavirus swab tests
provided for their staff

·         For each "kickstarter" job, the government will cover the cost of
25 hours' work a week at the National Minimum Wage - £4.55 for under 18s,
£6.45 for 18 to 20-year-olds, and £8.20 for 21 to 24-year-olds.

 

Employers will be able to top up that payment if they wish.

 

The government said it would allow young people "the opportunity to build
their skills in the workplace, and to gain experience that will improve
their chances of going on to find long-term sustainable work".

 

The scheme will open for applications in August, with the first jobs
expected to start in the autumn, and run until December 2021 - with the
option of being extended.

 

It will cover England, Scotland and Wales, and the government said it would
provide additional funding to Northern Ireland for a similar scheme.

 

But Scotland, Wales and Northern Ireland are also calling for fiscal rules
to be relaxed to allow them to borrow more and spend unused capital funding
to address the "monumental challenges" of the economy.

 

'The focus will be on jobs, jobs, jobs'

The government is looking now to the second phase of the crisis, when the
worst stage of the health aspect has passed and they hope the economic
recovery can begin.

 

But job losses have begun, with barely a day going by without an
announcement from a household name they are shedding staff.

 

The reality is many of those who have been paid by the Treasury will find
their job doesn't return.

 

The focus of the chancellor's statement, therefore, will be "jobs, jobs,
jobs", insiders say.

 

There will certainly be a long list of proposals from the Treasury.

 

It's not a small matter to do something like cut stamp duty, cut VAT in some
sectors, accelerate infrastructure spending, or provide £2bn to subsidise
jobs for young people.

 

But they are certainly much more orthodox actions than the kind of drastic
steps the Treasury took at the start of this crisis.

 

Read more analysis from Laura Kuenssberg here.

The chancellor has previously acknowledged young people could be the
worst-affected by the crisis when it comes to employment, as they are the
age group most likely to be on the government's furlough scheme - which is
set to end in October.

 

Already, between the start of lockdown in March and May, the number of
people aged 24 and under claiming Universal Credit rose by 250,000 to almost
500,000.

 

Labour's shadow chancellor, Anneliese Dodds, said the kickstarter scheme
"should help many young people to access work" but said the government had
not yet done enough to address the threat of mass unemployment.

 

She called on it to extend the furlough and self-employed schemes, and
create "tailored support" for older people or those living in hard-hit
areas.

 

The acting Liberal Democrat leader Sir Ed Davey told BBC Radio 4's Today
programme that the chancellor was right to be helping young people but the
"scale of support is just not good enough".

 

And the SNP is calling for the job retention scheme to be extended as long
as all four nations of the UK need it.

 

'Proper training'

The director-general of the CBI, Dame Carolyn Fairbairn, said the
announcement could see the government "lessening the potential scarring
impact of the pandemic for the next generation".

 

But she said businesses and the government needed to "work to deliver the
kickstarter scheme simply and at speed", adding: "There can be no time lost
in preparing young people who are entering one of the toughest jobs markets
we've seen in decades."

 

Paul Johnson, director of the Institute for Fiscal Studies, said the scheme
would "encourage employers to take on those most at risk" during this crisis
but it could result in "creating jobs which aren't really jobs" or push
other people out of work.

 

Frances O'Grady, general secretary of the Trades Union Congress, welcomed
the support for young people but said unions would be "checking the small
print to ensure every job provides proper training and a bridge to steady
employment".

 

The national chairman of the Federation of Small Businesses, Mike Cherry,
appealed to the government to ensure smaller firms could benefit from the
scheme, adding: "Small businesses must not be left waiting in line behind
big corporates when they could get people to work now."--BBC

 

 

 

Coronavirus: How are other economies dealing with the downturn?

Chancellor Rishi Sunak is due to set out the next instalment in the
government's plans to help the British economy recover from the blows
inflicted by the pandemic.

 

Already this week the government has announced new financial assistance for
the arts sector and a package to promote green jobs.

 

Mr Sunak's new measures will build on other steps already taken, including
the Coronavirus Job Retention Scheme, some tax holidays and deferrals for
business and additional welfare benefits.

 

But how have other countries responded to what is both a public health
crisis and a sharp economic downturn?

 

Coronavirus: A visual guide to the economic impact

Details of the responses vary, although there are some common objectives.
Many countries have given businesses financial incentives not to make
workers redundant.

 

There are tax breaks and loans for firms to help them contend with a
collapse in revenue, and there are measures to help the most vulnerable
people. Many countries have also set aside extra funds to help health
systems cope with the burden imposed by the virus.

 

In the US, the core of the response is the Coronavirus Aid, Relief, and
Economic Security Act, or Cares Act.

 

The International Monetary Fund (IMF) gives a figure for its total impact of
$2.3tn (£1.8tn) or 11% of US annual income. It includes a total of more than
half a trillion dollars extra for individuals in the form of tax rebates and
unemployment benefits.

 

There were also "forgivable" loans for small businesses to enable them to
retain workers. In effect that means grants because, yes, forgivable really
does mean they don't have to be repaid in full provided conditions are met.

 

There was $25bn for a food safety net for the most vulnerable, which
included an expansion of the programme which enables low income people and
families to buy food (sometimes known as food stamps).

 

Subsequent legislation also provided $100bn for additional health related
spending, a quarter of it specifically to expand testing for the virus.

 

Germany went into the crisis with its finances having been in surplus since
2012. The crisis will bring that run to an end.

 

As with other countries it's partly the automatic impact of the downturn,
and partly policy choices by Berlin. Germany adopted a supplementary budget
which the IMF values at almost 5% of annual national income. It covers
spending on healthcare, including protective equipment and covid vaccine
research.

 

There is an expansion of the existing system of financial support to help
firms retain workers by putting them on shorter hours while covering some of
the worker's loss of income.

 

Coronavirus pushes German economy into recession

This scheme, known in German as Kurzarbeit, has often been credited with
helping limit the rise in unemployment in the wake of the financial crisis
of 2008-9.

 

There have also been grants to small business owners and self-employed
people and interest-free tax deferrals. A subsequent package in early June
added further grants for small firms; subsidies and investment in green
technology and digitalisation; and a temporary reduction in value added tax
(VAT).

 

The argument for making the latter move temporary is that it can encourage
consumers to bring spending forward, perhaps to buy a new appliance now
rather than wait.

 

France has legislated for an increase in overall spending the IMF calculates
as equivalent to 5% of annual national income. And a further increase is in
the pipeline.

 

Measures already undertaken include boosting health insurance, financial
support for small businesses and self-employed people, and extending
unemployment benefits that were due to expire.

 

Deadlines for tax and national insurance payments were postponed. There were
additional plans announced for the motor industry - with car makers being
encouraged to bring more production back to France.

 

All three of these large economies - the US, Germany and France - have
provided financial assistance to airlines, one of the first industries to be
hit by the pandemic.

 

The European Union's response is also relevant to France and Germany - in
fact their leaders are key drivers of that response, although other
countries such as Spain and Italy are likely to be the main beneficiaries.

 

The headline figure for the EU response is more than half a trillion euros.
It has elements intended to help countries that are especially hit by the
economic impact of the heath crisis as well as firms and individuals, with
support for workers and jobs.

 

There is continued political wrangling about whether EU support to member
countries will be in the form of grants or loans.

 

EU rules on government finances (normally intended to limit borrowing) and
on financial support for business (state aid rules to stop unfair
competitive advantages) are being relaxed to give member countries more
flexibility to support their national economies.

 

How do the responses compare?

Comparing the scale of official responses is not a straightforward exercise.
Other analyses produce different figures from the IMF.

 

The situation is fast moving. Some elements are straightforward spending
commitments. Some are allowing people and firms to delay making payments.
Then there are loans and loan guarantees.

 

In most cases those are likely to be temporary supports, although it is
certain that some loan guarantees will have to be paid and some loans made
by governments won't be repaid. But the ultimate financial cost of this type
of support is still less than the headline number.

 

What is clear is that by any standards, the responses have already been
large in the UK and most other developed economies.--BBC

 

 

 

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


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

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
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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
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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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