Major International Business Headlines Brief::: 16 July 2020

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Major International Business Headlines Brief::: 16 July 2020

 


 

 


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ü  South Africa's failure to lower debt could trigger downgrade - Fitch

ü  South Africa's Eskom cannot say how long latest power cuts will last

ü  Zambia's economy to shrink 4.2% in 2020 -finance minister

ü  South Africa consumer inflation falls to 15-year low

ü  S&P downgrades Kenya's outlook to 'negative' on coronavirus pressures

ü  Truworths says negotiating funding for UK footwear retailer Office

ü  Kenyan shilling weakens a touch as importer demand surges

ü  Botswana central bank seeks law to preserve shrinking sovereign wealth fund

ü  Apple has €13bn Irish tax bill overturned

ü  Jobless figures 'not showing full extent of crisis'

ü  Huawei: China attacks UK's 'groundless' ban of 5G kit

ü  Clothing and games push up UK shop prices

ü  Nissan takes on Tesla in China's electric car market

ü  Should US firms be worried about Hong Kong sanctions?

ü  KFC, Nando's and Pret lower prices after VAT cut

 

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


South Africa's failure to lower debt could trigger downgrade - Fitch

JOHANNESBURG (Reuters) - A failure by South Africa to lower public debt risks triggering credit downgrades deeper into subinvestment, Fitch said on Wednesday.

 

Debt in Africa’s most industrialized economy is set to breach 80% of gross domestic product next year as the government borrows more to bring the coronavirus pandemic under control.

 

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.

 

“A continued rise in government debt/GDP and failure to formulate a clear and credible path towards stabilising the government debt/GDP ratio could lead to a further downgrade in South Africa’s ‘BB’ rating, which is on Negative Outlook,” said Jan Friederich, Fitch’s head of Africa sovereign ratings.

 

Finance Minister Tito Mboweni said in an emergency budget in June the Treasury would stick to its promise of some 230 billion rand ($13.5 billion) of spending cuts in the short term, a target set in February before the COVID-19 pandemic.

 

“Social and political factors, including exceptionally high inequality, powerful trade unions, and deep divisions within the governing African National Congress, present significant hurdles to fiscal consolidation,” Friederich said in a research report.

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

South Africa's Eskom cannot say how long latest power cuts will last

JOHANNESBURG (Reuters) - South Africa’s state utility Eskom cannot say how long a new round of power cuts that began on Friday will last, its spokesman Sikonathi Mantshantsha told Reuters.

 

Eskom implemented planned power outages for the first time since March on July 10, ending a period of unusually stable power supply thanks to reduced demand during a coronavirus lockdown.

 

The company generates more than 90% of South Africa’s power but has battled to meet demand for years because of faults at its coal-fired power stations, which have interrupted power supplies, hampered economic growth and deterred investment.

 

He said Eskom was sending a team led by one of its senior engineers to try to improve the performance of problem power stations. Morning peak power demand on Wednesday was at its highest this year because of extreme cold weather, compounding the generation shortfall, Mantshantsha added.

 

Eskom said on Wednesday that it would step up load-shedding to “stage 2” from “stage 1” from 1200 GMT, requiring more supply interruptions.

 

Stage 1 allows for up to 1,000 megawatts of the national load to be shed, and stage 2 up to 2,000 megawatts.

 

Despite assurances from the government that it would expedite procurement of new generation capacity late last year, when Eskom implemented some of the worst power cuts on record, additional capacity has not yet been procured.

 

 

 

Zambia's economy to shrink 4.2% in 2020 -finance minister

LUSAKA (Reuters) - Zambia expects its gross domestic product to shrink by around 4.2% in 2020, more than the 2.6% contraction forecast by the central bank in May, finance minister Bwalya Ng’andu said on Wednesday.

 

Sectors including mining, energy, construction, manufacturing, tourism, trade and transport were all expected to record poor performances due to COVID-19, Ng’andu said.

 

Before the outbreak of the coronavirus pandemic, Zambia had estimated a growth of at least 3% this year, Ng’andu said.

 

A decline in revenues and the increase in expenditures would create a financing gap of 26.9 billion kwacha ($1.48 billion) and expenditure cuts will have to be introduced, Ng’andu said.

 

The number of coronavirus cases in Zambia, with a population of more than 18 million, stood at 1,895 including 42 deaths as on July 7, when the government gave its last official update.

 

($1 = 18.1700 Zambian kwachas)

 

 

 

South Africa consumer inflation falls to 15-year low

JOHANNESBURG (Reuters) - Growth in South Africa’s consumer prices fell to its lowest in more than 15 years as the cost of fuel declined and spending slowed amid the coronavirus lockdown.

 

At 2.1% year-on-year in May, according to national statistics agency figures published on Wednesday, inflation is also below the lower end of the central bank’s target range, 3% to 6%.

 

Analysts were divided on whether the declining inflation rate was likely to prompt the central bank to cut interest rates further.

 

In May, the South Africa Reserve Bank (SARB) cut rates to a record low 3.75%, to support an economy strangled by a lockdown now its in fourth month. The bank did strike a cautious tone, warning monetary policy alone could not spur economic growth.

 

Month-on-month, the consumer price index was at -0.6%. Lower fuel prices linked to a global glut of crude oil sawe transport costs fall 8.4% on an annual basis. Other consumer items prices dropped expect for food prices, which increased 4.4%.

 

Capital Economics analyst Virág Fórizs expects a 50-basis- point reduction in interest rates at the SARB’s July 23 meeting.

 

 

S&P downgrades Kenya's outlook to 'negative' on coronavirus pressures

(Reuters) - S&P Global Ratings on Tuesday revised Kenya’s outlook to ‘negative’ from ‘stable’, citing that the coronavirus pandemic will slow the country’s GDP growth significantly in 2020 and weigh on its already weak public finances.

 

"Although external financial support, including from the International Monetary Fund (IMF), will help fund Kenya's twin fiscal and external deficits in 2020, external debt will rise sharply in 2020 and remain high in 2020-2023," the ratings agency said in a statement here

 

S&P affirmed Kenya’s ratings at ‘B+/B’.

 

 

 

Truworths says negotiating funding for UK footwear retailer Office

JOHANNESBURG (Reuters) - Truworths International Limited is negotiating further funding for Office, its British footwear business, as well as implementing various restructuring steps, the South African retailer said on Wednesday.

 

Those steps include a staff redundancy process and store lease negotiations in order to secure the long-term viability of Office, it said in a statement.

 

 

 

Kenyan shilling weakens a touch as importer demand surges

NAIROBI (Reuters) - The Kenyan shilling was under slight pressure on Wednesday as a surge in demand from oil and merchandise importers weighed against scarce hard currency inflows, traders said.

 

At 0728 GMT, commercial banks quoted the shilling at 107.15/35 per dollar, compared with 107.10/30 at Tuesday’s close.

 

 

 

Botswana central bank seeks law to preserve shrinking sovereign wealth fund

Gaborone, BOTSWANA (Reuters) - The Bank of Botswana will seek legislation to limit access to its sovereign wealth fund, a central bank official said on Tuesday, as it seeks to stem a steady fall in the fund’s reserves often tapped to meet budget deficits.

 

“At the moment the fund doesn’t work strictly like a sovereign wealth fund as it does not have rules that guide withdrawals and replenishments,” Caster Moseki, acting director of financial markets at the bank, said of the Pula Fund.

 

He did not disclose details on when the bank would approach the government for the requested legislation.

 

Plans to limit a regular dip into the Pula Fund, which has reserves equivalent to 7% of GDP, comes at a time when Botswana’s diamond revenues - the main source of the fund - are likely to fall sharply due to the impact of the coronavirus.

 

De Beers, controlled by Anglo American Plc, which sells the bulk of Botswana’s diamond production, has been unable to hold sales since March due to the pandemic.

 

Declining diamond revenues are expected to widen Botswana’s balance of payments deficit that stood at 12 billion Pula ($1.03 billion) in 2019, raising fears of further withdrawals from the sovereign wealth fund this year.

 

Instead of drawing down on savings, Moseki said the government could look to fund expenditures from the domestic capital market which is awash with cash.

 

Botswana, a southern African country of 2.2 million, has over the years channelled excess diamond revenues into the Pula Fund, managed by the central bank. But recurring budget deficits in recent years has forced the government to tap into the fund to support its spending.

 

The soverign wealth fund, most of it invested overseas, has declined from 20% of GDP in 2011 to around 7% of GDP in May 2020, or around 15 billion pula.

 

($1 = 11.6279 pulas)

 

 

 

Apple has €13bn Irish tax bill overturned

Apple has been told it will not have to pay Ireland €13bn (£11.6bn) in back taxes after winning an appeal at the European Union's second-highest court.

 

It overturns a 2016 ruling which found the tech giant had been given illegal tax breaks by Dublin.

 

The EU's General Court said it had annulled that decision because there was not enough evidence to show Apple broke EU competition rules.

 

It is a blow for the European Commission, which brought the case.

 

However, it has 14 days to appeal against the decision at the EU's supreme court, the European Court of Justice.

 

What has the reaction been?

"This case was not about how much tax we pay, but where we are required to pay it," Apple said in a statement. "We're proud to be the largest taxpayer in the world, as we know the important role tax payments play in society."

 

The Irish government - which had also appealed against the ruling - said it had "always been clear" Apple received no special treatment.

 

"The correct amount of Irish tax was charged... in line with normal Irish taxation rules."

 

EU Competition Commissioner Margrethe Vestager, who brought the case, said she would "study the judgment and reflect on possible next steps".

 

Dutch MEP Paul Tang called the ruling "deeply unfair".

 

"I suspect that many people in Ireland think... 'Why is there a company that pays 0.05% in taxes?' I pay more taxes than Apple, for that matter. Many people pay more taxes."

 

What was Apple accused of?

The European Commission brought the action after claiming Ireland had allowed Apple to attribute nearly all its EU earnings to an Irish head office that existed only on paper, thereby avoiding paying tax on EU revenues.

 

The commission said this constituted illegal aid given to Apple by the Irish state.

 

Irish EU court appeal on Apple tax ruling

But the Irish government argued that Apple should not have to repay the back taxes, deeming that its loss was worth it to make the country an attractive home for large companies.

 

Ireland - which has one of the lowest corporate tax rates in the EU - is Apple's base for Europe, the Middle East and Africa.

 

In Wednesday's ruling, the Luxembourg-based General Court sided with that position, saying there was not enough evidence to show Apple had received illegal state aid or minimised its tax bill.

 

What does this mean for Ireland?

One rather curious feature of this case is that if the ruling had gone the other way, and Ireland had been on the losing side, its "punishment" for breaching EU law would have been to receive a large amount of money: taxes the Commission said were owed by Apple.

 

That did not happen, so the ruling - subject to any appeal - means Apple doesn't in law owe the money, so Ireland won't get it.

 

In some quarters of Ireland, there will be relief that an agreement that helped encourage Apple to invest has not been overturned after the event.

 

But the sentiment is far from universal. A Sinn Féin spokesman called it a bad day for the Irish taxpayer that would draw negative attention to the country's international tax reputation.

 

What about other big tax avoidance cases?

There is growing criticism of so-called sweetheart tax deals across the European Union and the bloc has been trying to clamp down.

 

The ruling will therefore be a blow to Ms Vestager, who has taken aim at a host of big corporations over their allegedly anti-competitive practices.

 

Amazon v EU: Has the online giant met its match?

Last year, she lost a case against Starbucks, which was accused of owing €30m in back taxes to the Netherlands. Rulings on Ikea and Nike's tax arrangements in that country are due soon.

 

Jason Collins, partner and head of tax at law firm Pinsent Masons, said: "Apple's victory shows that European courts are unwilling to call beneficial tax regimes state aid, even when designed to attract foreign investment - provided they apply the rules consistently.

 

"This will be a very welcome outcome for other multinationals who have been watching this case closely."

 

However, he said Brussels was likely to appeal and EU efforts to tackle tax avoidance would continue.

 

"We expect the EU to continue applying pressure in this area," he said.--BBC

 

 

 

 

Jobless figures 'not showing full extent of crisis'

The way the UK reports unemployment may not reflect the "true scale of joblessness", says a think tank.

 

Unemployment rose by 34,000 in April to reach 1.3 million, according to the Office for National Statistics (ONS).

 

But the Resolution Foundation argues that the 23% drop in average hours worked between early March and late April is a better indicator of unemployment.

 

The ONS said it publishes a large selection of analysis on employment.

 

Official numbers on how many people are out of work and claiming unemployment benefits will be published on Thursday.

 

Resolution Foundation chief economist Mike Brewer said: "Britain is in the midst of an unprecedented economic shock that is profoundly affecting millions of people's jobs.

 

"Unemployment is forecast to hit 4 million for the first time ever. And yet our official data is failing to show the true extent of this jobs crisis."

 

On Tuesday, the government's budgetary watchdog, the Office for Budgetary Responsibility (OBR), projected that unemployment could reach 4 million people, if the UK's economic recovery is poor, up from 1.3 million in 2019 in its latest analysis.

 

Meanwhile, data for people claiming unemployment benefits soared to 2.3 million for April.

 

But these figures could include some people who are eligible to claim support while still employed. The ONS said: "Enhancements to Universal Credit, as part of the UK government's response to the coronavirus, mean that an increasing number of people became eligible for unemployment-related benefit support, although still employed."

 

The Resolution Foundation says this data is not a good reflection of the true picture either because it includes furloughed workers who initially made a claim when the crisis first struck.

 

The think tank says it estimates that "fewer than half (700,000) of the 1.6 million increase in the claimant count between March and May is related to people who are newly out-of-work, and not receiving furlough pay or self-employed grants from the government".

 

It urges the ONS to make more of its ability to count the number of workers who are employed and not temporarily without work, alongside the headline employment rate, as this would provide "a far more accurate picture of labour market activity".

 

The ONS said it agreed that data on hours worked was an important component in understanding the unemployment picture in the UK.

 

"However, our detailed Labour Force Survey estimates are based on interviews with tens of thousands of people and provide vital detail not available from any other source," it said in a statement.

 

"It is difficult to interpret claimant count figures, as we know these include some people in work."

 

Separately, a survey of companies' recruitment intentions run by the British Chambers of Commerce (BCC) saw 28% of firms reporting that they had already shrunk their workforce since the pandemic began.

 

Among the 7,400 firms which took part in the survey, 29% said they expected to decrease the size of their workforce in the next three months.

 

The figure compares to last year, when only 7% expected to do so.--BBC

 

 

 

Huawei: China attacks UK's 'groundless' ban of 5G kit

The Chinese government has said it is "strongly opposed" to the UK's "groundless" ban of Huawei's 5G kit.

 

Foreign Ministry spokeswoman Hua Chunying added Beijing would "take measures to safeguard" the "legitimate interests" of Chinese companies.

 

The US, however, has welcomed the move and announced new restrictions against the firm.

 

Secretary of State Mike Pompeo said the US would curb travel access for some of Huawei's workers.

 

"The State Department will impose visa restrictions on certain employees of Chinese technology companies like Huawei that provide material support to regimes engaging in human rights violations and abuses globally," he told a news conference.

 

Mr Pompeo also passed comment on the fact the UK had given mobile networks until 2027 to remove Huawei's 5G equipment, saying: "Faster is always better."

 

Earlier, President Trump had seemingly taken personal credit for the UK's action.

 

"We convinced many countries, many countries - and I did this myself for the most part - not to use Huawei because we think it's an unsafe security risk," the US leader said.

 

Mr Trump made the comments as he attempted to increase pressure on Beijing by announcing an executive order ending preferential treatment for Hong Kong in response to a new security law brought in by China.

 

Huawei has repeatedly said it would not cause harm to any country.

 

'Groundless risks'

The UK's digital secretary announced on Tuesday the country's telecoms networks would not be allowed to buy new Huawei 5G kit from 31 December and all such equipment should be stripped out of mobile networks by 2027.

 

In addition, it wants BT's Openreach and other broadband infrastructure providers to stop using Huawei's gear in the rollout of full-fibre broadband within the next couple of years.

 

China's ambassador to the UK said the decision was "not only disappointing, it's disheartening".

 

"The way you treat Huawei will be followed very closely by other Chinese businesses," Liu Xiaoming added.

 

But the foreign ministry arguably used even stronger language.

 

"The UK side has used groundless risks as an excuse to co-operate with the United States... violating the relevant commitments made by the UK," Ms Hua said.

 

'Negative implications'

"Any decisions and actions must come at a cost," she added, without being more specific.

 

Mr Huiyao Wang - an adviser to the Chinese government - told BBC Radio 4's Today programme Beijing still hoped the 2027 ban might be reversed before it came into effect.

 

But, as things stood, it could have an impact on other Chinese investment in Britain.

 

"It goes against the UK tradition as the open liberal leader in free trade," the founder of the Centre for China and Globalisation think tank said.

 

"This is going to probably have very negative implications."

 

Chip supplies

The UK government said it had based its decision on the advice of security chiefs who had judged they could no longer mitigate the risks of using Huawei's equipment in light of new US sanctions.

 

The sanctions are designed to prevent the company having its own chips manufactured, making it buy in supplies from elsewhere.

 

And GCHQ's National Cyber Security Centre said this meant Huawei's equipment was likely to face more "security and reliability problems" as a consequence.

 

 

Huawei's UK director of communications, Ed Brewster, says the UK's decision is about trade

Robert Hannigan, the former director of GCHQ, told BBC News the sanctions had indeed made "a critical difference".

 

"[It] really pushes all the production and design and testing into China and makes it extremely difficult for anyone to see what is going on," he said.

 

But he did not believe any Chinese retaliation would come in the form of a hack attack.

 

"No doubt China will want to express its displeasure," Mr Hannigan said.

 

"But there's no particular reason to think that will be in cyber-space.

 

"There will be a lot of a lot of sound and fury.

 

"It may not amount to that much in the end."

 

The UK accounts for a only small fraction of Huawei's revenue, which grew 13% in the first half of the year despite earlier efforts by Washington to disrupt its business.

 

However, its concern is Westminster's move will motivate other countries to take similar measures.

 

What does the ban entail?

Announcing the ban to the House of Commons on Tuesday, Digital Secretary Oliver Dowden said it had not been an easy decision but was the right one for UK telecoms networks, national security and the UK economy.

 

He said the cumulative cost, when coupled with earlier restrictions announced against Huawei, would be up to £2bn, and the total delay to 5G's rollout would be two to three years .

 

5G technology promises faster internet speeds and the capacity to support more wireless devices, which should be a boon to everything from mobile gaming to higher-quality video streams. 5G connections are already available in dozens of UK cities and towns, but coverage can be sparse.

 

The UK last reviewed Huawei's role in its telecoms infrastructure in January, when it was decided to let the company remain a supplier but introduced a cap on its market share.

 

But in May the US introduced new sanctions designed to disrupt Huawei's ability to get its own chips manufactured.

 

The Trump administration claims that Huawei provides a gateway for China to spy on and potentially attack countries that use its equipment, suggestions the company strongly rejects.

 

The US has called for members of the Five Eyes alliance - which also includes the UK, Canada, Australia and New Zealand - to avoid Huawei kit.--BBC

 

 

 

 

Clothing and games push up UK shop prices

The UK's inflation rate rose to 0.6% in June as the coronavirus lockdown began to ease.

 

The Consumer Prices Index (CPI) picked up slightly from May's four-year low of 0.5%, the Office for National Statistics (ONS) said.

 

Food and alcohol prices fell, but prices for clothing and games rose, the ONS said.

 

Despite the slight increase in the rate, inflation remains below the Bank of England's 2% target.

 

Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: "The inflation rate has increased for the first time this year, but remains low by historical standards.

 

"Due to the impact of the coronavirus, clothing prices have not followed the usual seasonal pattern this year, with the normal falls due to the start of the summer sales failing to materialise.

 

"Prices for computer games and consoles have risen, but food prices, particularly vegetables, have fallen."

 

Inflation has fallen sharply during the coronavirus crisis as consumer demand has slumped.

 

In June, men's clothing in particular rose in price, with increases coming "across almost the full range", the ONS said.

 

Women's clothing showed "a more mixed picture across the different products", but with the overall effect still upward.

 

Games, toys and hobbies, particularly computer games and computer games consoles, made the biggest contribution to the inflation rise, the ONS said.

 

"It is possible that prices have been influenced by the coronavirus (Covid-19) lockdown changing the timing of demand and the availability of some items, particularly consoles," the ONS added.

 

What is inflation?

Inflation is the rate at which the prices for goods and services increase.

 

It's one of the key measures of financial wellbeing because it affects what consumers can buy for their money. If there is inflation, money doesn't go as far.

 

It's expressed as a percentage increase or decrease in prices over time. For example, if the inflation rate for the cost of a litre of petrol is 2% a year, motorists need to spend 2% more at the pump than 12 months earlier.

 

And if wages don't keep up with inflation, purchasing power and the standard of living falls.

 

What is the inflation rate?

Since many areas of the economy were completely shut down in June, the ONS said it had to estimate or "impute" some of the data.

 

Jeremy Thomson-Cook, chief economist at financial services firm Equals, said the slight increase in the inflation rate was "a positive sign", but added that the outlook remained "messy".

 

"Food prices are falling from lockdown levels, clothing demand is out of kilter with typical seasonal patterns, demand for entertainment during lockdown provided a pronounced bump in prices, and the ONS has only been able to log 84% of the normal price quotes due to unavailability," he said.

 

"For now, however, inflation remains low, and both consumers and the Bank of England will be happy with that."

 

Paul Dales, chief UK economist at Capital Economics, said the small rise in inflation was unlikely to be sustained and that deflation was "around the corner".

 

"In fact, by July or August, CPI inflation may have fallen below zero," he said.

 

Discounting from retailers and the impact of Chancellor Rishi Sunak's "eat out to help out" scheme would push inflation down, he said.

 

Mr Dales said any bout of deflation would last just a few months, but added: "It will be a few years before the economy is strong enough to raise inflation to the 2% target."--BBC

 

 

Nissan takes on Tesla in China's electric car market

Nissan has unveiled the first of its new electric vehicles as part of a turnaround strategy for the loss-making company.

 

The Japanese carmaker is hoping its new all-electric sports utility vehicle (SUV) Ariya will sell well in China.

 

But it faces tough competition from Tesla which has a strong presence in the world's largest car market.

 

Electric cars are a cornerstone of Nissan's four-year plan to get it back to profitability.

 

The Ariya was launched online on Wednesday from the company's headquarters in Yokohama, Japan. Nissan chief executive Makoto Uchida referred to the all-electric SUV as the "flagship of the new Nissan".

 

By 2023 Nissan plans to launch more than eight new electric models, and sees China as a core market. The Chinese government offers generous incentives for buyers of electric cars below a certain price.

 

In 2019, just over 20 million cars were sold in China, compared to 17 million in the US.

 

Nissan was regarded as one of the early front-runners in electric vehicles (EV) but experts say it has lost momentum since it launched its all-electric Leaf back in 2010.

 

"The Ariya will be a brand builder for Nissan which has historically been an EV leader," said Nobuhito Massimiliano Abe, a principal at management consultant Kearney's Automotive Practice.

 

But its newly-launched model could face tough competition from Tesla which became the best-selling new energy vehicle in China in May.

 

Elon Musk's firm is currently expanding Teslas's "Gigafactory" in Shanghai to build more Model Ys - its own all-electric SUV.

 

"Clearly out in front is Tesla at the moment. It's got the EV cachet," said Calum MacRae, head of automotive R&A at GlobalData. "But given the sheer size of the Chinese market and technological lead that market could yet spawn a global competitor to Tesla."

 

In May, Nissan reported an operating loss of 40.5bn yen ($380m; £303m) for the year ending 31 March. It was the company's worst performance since 2009 - the height of the global financial crisis.

 

The brand has also been damaged by the controversial departure of former chairman Carlos Ghosn who fled Japan after being detained on financial misconduct charges last year.

 

Nissan has announced its Barcelona factory will close at the end of this year as part of its restructuring, but its UK factory will remain open.--BBC

 

 

Should US firms be worried about Hong Kong sanctions?

The future of American companies in Hong Kong has been thrown into doubt after Donald Trump signed an order to end the city's preferential treatment.

 

The US president also signed legislation to impose sanctions on Chinese officials who crack down on rights in Hong Kong.

 

The measures came in response to Beijing imposing a new security law in the former British colony last month.

 

However, analysts are advising business leaders to take a considered approach.

 

"We are telling clients to take a wait-and-see approach. We just don't have any details yet and this is very vague. This is not the time to freak out," Shanghai-based Kent Kedl, partner at consultancy firm Control Risks told the BBC.

 

"The true impact is unknown. Trump makes these statements and then rounds off the edges afterwards," he added.

 

The decision by the Trump administration to scrap Hong Kong's special status will force non-Chinese companies to re-evaluate their operations in the city.

 

On Tuesday, The New York Times says it will move some of its Hong Kong staff to Seoul.

 

And while growing tensions between the US and China are likely to make Hong Kong less attractive in many respects there are also several reasons why the city may remain popular with foreign businesses.

 

Asian hubs

Many Western companies have picked Hong Kong as the location for their regional head offices, covering China as well as countries spanning Japan, Australia, Indonesia and India.

 

More than 1,500 foreign businesses have Asian headquarters in the city.

 

Of those firms some 300 are American companies.

 

American firms

There are more than 9,000 overseas and mainland Chinese companies operating in the city, according to the 2019 Annual Survey of Companies in Hong Kong with Parent Companies Located outside Hong Kong (SCoP).

 

That number rose by almost 10% between 2017 and last year.

 

Of those firms more than 1,300 are US companies, with around 85,000 Americans living in Hong Kong.

 

Stock market

Hong Kong is one of the world's leading financial centres, with a stock market valued at HK$37.9tn ($4.9tn; £3.9tn), as of the end of June.

 

According to the city's stock exchange that figure rose by 16% over the last year.

 

The exchange saw HK$87.5bn raised by Initial Public Offerings (IPOs) in the first six months of this year, a more than 20% increase on the same same period in 2019.

 

Investment

However, Hong Kong saw investment from overseas, known as foreign direct investment (FDI), slump last year.

 

According to the the United Nation's Investment Trends Monitor, FDI into Hong Kong fell by 48% in 2019.

 

In contrast rival Asian financial centre Singapore saw FDI increase last year by 42%.

 

Mr Kedl concluded that, while company bosses shouldn't ignore Mr Trump's announcement, they should hold fire on making a decision on whether to pull out of Hong Kong.

 

"If we look at Hong Kong on a time scale with an explosion in the middle, our assessment is that we are 'left of boom'. They need to start thinking about this, but not to make a decision yet."--BBC

 

 

 

KFC, Nando's and Pret lower prices after VAT cut

A £4bn cut in VAT has come into force, allowing firms in the food, drink and hospitality sectors to slash prices.

 

Nando's, Pret A Manger and McDonald's are among firms to promise reductions after the chancellor ordered a temporary VAT cut from 20% to 5%.

 

The Treasury estimates households could save £160 a year on average, but not all firms will pass on the benefit.

 

Many companies are expected to use the windfall to shore up finances hit by the lockdown, rather than cut prices.

 

The VAT reduction will stay until 12 January next year, Chancellor Rishi Sunak announced last week. It was part of a package of measures to help firms recover and get consumers spending.

 

VAT - Value Added Tax - is paid on everyday goods and services, but the tax is usually included in the price most consumers see.

 

Several restaurants and food-to-go chains have announced price cuts:

 

·         Nando's said it would pass on "100% of the benefits" from the tax cut to its customers, reducing the price of a quarter chicken by 55p

·         Pret A Manger will cut the price of a takeaway latte by 35p to £2.40 from Wednesday, while the price of hot food will be cut from Friday

·         KFC is reducing the price of sharing buckets by £1 and slashing the cost of certain "fan favourites" by 50p

·         McDonald's is recommending that its franchisees cut prices on an array of products, including the Big Mac, Quarter Pounder and coffee

·         Pub chain Wetherspoon is to reduce prices on meals, coffee and soft drinks, and reduce prices on popular beers

·         Starbucks will pass on the full 15% discount on coffee served in company-operated stores. Other shops and venues with Starbucks licences will be left to pass on whatever reductions suit their business.

What is VAT?

Value Added Tax, or VAT, is the tax you have to pay when you buy goods or services.

 

The standard rate of VAT in the UK is 20%, with about half the items households spend money on subject to this rate.

 

There is a reduced rate of 5% which applies to some things such as children's car seats and home energy.

 

When you see a price for something in a shop, any VAT will already have been added.

 

There are also various items for which you do not have to pay any VAT, such as most supermarket food, children's clothing, newspapers and magazines.

 

Read more about VAT

 

It is clear that many businesses will not be passing on the reduction. Malcolm Bell, chief executive of Visit Britain, said the chancellor's move was to support business, not help holidaymakers.

 

He said some firms had reported tourists calling them to ask for 15% off their holiday booking. "My message to customers is this is to help the businesses, not to reduce the cost of their holiday. It is only a temporary relaxation up to January."

 

Many attractions such as museums, parks and zoos, might also not pass on the reduction.

 

Bernard Donoghue, director of the Association of Leading Visitor Attractions (Alva), said he expected the VAT cut would go towards helping venues "repair their finances as opposed to being passed on to customers".

 

Alva members were seeing a spike in demand after three months of lockdown, with attractions that offer pre-booked visits "vastly oversubscribed", he said.

 

Pub chain Wetherspoon said it would use the tax break to help fund lower prices on some of its most popular beers.

 

However, this move drew criticism from Tom Stainer, chief executive of the Campaign for Real Ale (Camra), and James Calder, chief executive of the Society for Independent Brewers (Siba).

 

"Like all pubs, Wetherspoon will not be able to benefit from a VAT reduction on beer sales and it is disappointing to see them potentially mislead customers into believing cheaper beer prices are as a direct result of the chancellor's measures," he said.

 

Wetherspoon has produced promotional posters to advertise food price cuts, including one called Sunak's Specials and another called Dishi Rishi.

 

Its chairman, Tim Martin, has campaigned for tax equality between pubs, restaurants and supermarkets for many years. He said: "Supermarkets pay no VAT on food sales and pubs pay 20%. Supermarkets pay about 2p per pint of business rates and pubs pay about 20p.

 

"A VAT reduction will help pubs and restaurants reverse this trend - creating more jobs, helping high streets and eventually generating more tax income for the government."

 

But he said that not every hospitality business would be able to reduce prices immediately.

 

"Some will need to retain the benefit of lower VAT just to stay in business. Others may need to invest in upgrading their premises.

 

"However, lower VAT and tax equality will eventually lead to lower prices, more employment, busier High Streets and more taxes for the government."--BBC

 

 

 

 


 

 


 

INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


BAT

AGM

Cresta Lodge, Msasa

16 July 2020 | 10am

 


African Sun

AGM

Virtual

16 July 2020 | 12pm

 


Masimba

AGM

Virtual

21 July 2020 | 12pm

 


Proplastics

AGM

Virtual

23 July 2020 | 10am

 


NMB

AGM

Virtual

28 July 2020 | 10am

 


FMP

AGM

Ground Floor, First Mutual Park, 100 Borrowdale Road, Borrowdale

29 July 2020 | 9:30am

 


FML

AGM

Ground Floor, First Mutual Park, 100 Borrowdale Road, Borrowdale

29 July 2020 | 11:30am

 


ZBFH

AGM

Board Room, 21 Natal Road, Avondale

30 July 2020 | 10:30am

 


OK Zimbabwe

AGM

Virtual

30 July 2020 | 3pm

 


ZHL

AGM

virtual

31 July 2020 |

 


Delta

AGM

Virtual, Head Office, Northridge Close, Borrowdale

31 July 2020 | 12:30pm

 


Zimbabwe

National Heroes Day

Zimbabwe

10  August 2020

 


Zimbabwe

Defence Forces’ Day

Zimbabwe

11  August 2020

 


CBZ

AGM

Virtual

14  August 2020 | 6pm

 


 

 

 

 

 


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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