Major International Business Headlines Brief::: 04 June 2020

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Major International Business Headlines Brief::: 04 June 2020

 


 

 


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ü  S.African airlines look to restart operations, see slow recovery

ü  Anglo American Platinum shuts unit at processing plant

ü  Nigeria expects to have marginal oilfields information within 10 weeks

ü  South Africa's factory activity contracts further under lockdown -PMI

ü  Nigeria's president backs embattled African Development Bank chief

ü  Zambia denies power firm CEC claims of expropriation

ü  Nigerian Senate approves president's request for $5.5 bln in external
borrowing

ü  S.African watchdog expands rand-rigging case, adds new banks

ü  US to ban passenger flights from China

ü  HSBC and StanChart back China security laws for HK

ü  China's cinemas could face widespread closures

ü  Social media firms fail to act on Covid-19 fake news

ü  Ex-chancellors warn of severe unemployment ahead

ü  Bank boss tells lenders to be ready for no-deal Brexit risk

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


S.African airlines look to restart operations, see slow recovery

JOHANNESBURG (Reuters) - Two of South Africa’s biggest private airlines will
start flying between local airports this month after the government eased
lockdown restrictions aimed at containing the coronavirus, but they said a
recovery could take at least three years.

 

Airlink has started taking bookings on its website for flights from June 8,
while Safair is taking bookings for flights resuming on June 15.

 

Low-cost state airline Mango, part of the South African Airways (SAA) Group,
plans to resume flights on June 15, but it is yet to get final approval from
the Department of Public Enterprises, a company spokesman said.

 

Amid a halt on operations for around two months due to the coronavirus
lockdown, airlines have seen their revenues fall to close to zero while
continuing to spend money on aircraft maintenance, salaries and
debt-service.

 

Comair, another private airline, is under bankruptcy protection and only
plans to restart operations around November. SAA, the national flag carrier,
is also under bankruptcy protection and has not yet said when it plans to
restart domestic flights.

 

“We expect that demand will be quite thin,” said Kirby Gordon, spokesman for
Safair, which will start operations across four airports - OR Tambo and
Lanseria in Johannesburg, King Shaka in Durban and Cape Town International.

 

Gordon said that Safair planned to fly around 25% of its usual schedule,
adding it expected its share of the market to be greater than normal given
the temporary absence of other players. Financial models showed it could
take three to five years for the airline industry to recover, he said.

 

Airlink is starting to operate from three airports - OR Tambo, King Shaka
and Cape Town International.

 

Airlink expects it will take more than four years for air travel to revert
to pre-coronavirus levels, said Rodger Foster, its chief executive.

 

South Africans are only allowed to fly for business purposes under “level 3”
of the country’s coronavirus lockdown, which entered force on June 1.
Leisure travel by air is still banned.

 

 

 


 <mailto:info at bulls.co.zw> 

 


Anglo American Platinum shuts unit at processing plant

JOHANNESBURG (Reuters) - Anglo American Platinum (Amplats) said on Wednesday
that it had closed the Phase B unit of its Anglo Converter Plant (ACP) after
detecting a water leak in the high-pressure cooling section.

 

The Johannesburg-listed miner last month completed repairs to the unit in
Rustenburg, North West Province, and lifted the force majeure to suppliers
of concentrate after a blast shut processing facilities.

 

The damage to the processing facilities forced Amplats, one of the world’s
largest platinum producers, to declare force majeure and cut its production
outlook in March.

 

“This latest action is separate from the repair work that was recently
completed at the ACP Phase B unit and there is no damage to the prior
repairs or to the furnace,” Amplats said.

 

Amplats said it temporarily closed the unit to protect employees and the
integrity of the plant.

 

The company said there was no damage to the prior repairs or to the furnace
and the repair of Phase A unit was unaffected by the current work at the
Phase B unit.

 

Further updates would be given as soon as more information was available,
which it expects would be early next week, Amplats said.

 

 

 

 

Nigeria expects to have marginal oilfields information within 10 weeks

LAGOS (Reuters) - Nigeria expects to have all information on bids for
marginal oilfields within 10 weeks, the Department of Petroleum Resources
(DPR) said on Wednesday.

 

Nigeria on Monday launched its first licensing round for marginal oilfields
since 2002, which the country hopes will boost oil output and bring in much
needed revenues. Marginal fields are smaller oil blocks that are typically
developed by indigenous companies.

 

 

 

South Africa's factory activity contracts further under lockdown -PMI

JOHANNESBURG (Reuters) - South African private sector activity contracted
again in May, reaching a record low, as output and new sales collapsed
during the nationwide coronavirus lockdown that began in March, a survey
showed on Wednesday.

 

Markit’s Purchasing Managers’ Index (PMI) fell to 32.5 in May from 35.1 in
April, its lowest level since the survey began in 2011. The figure was below
the 50 level that separates expansion from contraction for the 13th month in
a row.

 

All sub-indexes of the survey slumped to their lowest on record during May,
with sharp declines in employment and new orders in addition to crumbling
output due to the lockdown.

 

“Most notably from the latest survey results, business sentiment regarding
the 12-month outlook for activity turned negative for the first time in the
series,” said David Owen, economist at IHS Markit.

 

“As such, firms are increasingly concerned that the extended lockdown period
may hurt business activity for some time.”

 

Africa’s most industrialised economy is in its tenth week of a lockdown
aimed at limiting the spread of COVID-19, the disease caused by the novel
coronavirus, which has so far infected more than 34,000 South Africans and
caused 705 deaths.

 

The central bank expects the economy, which is already in recession, to
contract by 7% this year, but a number of analysts predict a double-digit
contraction.

 

On Monday, the government further eased lockdown restrictions — to level
three of five — allowing people out for work and shopping and permitting
mines and factories to run at full capacity. [nL8N2DC0IT][nL8N2DE112]

 

- Detailed PMI data are only available under licence from IHS Markit and
customers need to apply for a licence.

 

 

 

 

Nigeria's president backs embattled African Development Bank chief

ABUJA (Reuters) - Nigerian President Muhammadu Buhari on Tuesday gave his
backing to the head of the African Development Bank (AfDB), Akinwumi
Adesina, in his re-election bid despite allegations of improper conduct.

 

Adesina, who served as Nigeria’s agriculture minister before taking the
AfDB’s top job in 2015, has been accused of abuse of office by a
whistleblower at the bank including favouritism in hiring.

 

Adesina, who denied the allegations, was later cleared of wrongdoing in an
internal investigation.

 

But U.S. Treasury Secretary Steve Mnuchin signed a letter to the bank’s
board on May 22 rejecting the internal investigation.

 

The United States, AfDB’s second-largest shareholder after Nigeria, is
demanding a new independent investigation, saying it has reservations about
the integrity of the banks process.

 

Adesina later this year plans to pursue a second term as a the head of the
multilateral lender, which is headquartered in Ivory Coast’s commercial
capital Abidjan. He visited Buhari in Nigeria’s capital, Abuja, on Tuesday.

 

“President Muhammadu Buhari says Nigeria will stand solidly behind Dr
Akinwumi Adesina in his bid to get re-elected as President of the African
Development Bank,” a statement from Buhari’s office said.

 

It also quoted Adesina as saying the allegations levelled against him are
baseless.

 

“I was exonerated, and any other investigation would amount to bending the
rules of the bank, to arrive at a predetermined conclusion,” Adesina said.

 

Several former African heads of state and current presidents have signed a
separate statement supporting Adesina.

 

 

 

Zambia denies power firm CEC claims of expropriation

LUSAKA (Reuters) - Zambia’s government said on Wednesday it had no intention
of taking over Copperbelt Energy Corp (CEC), after the company accused the
government of expropriating its power lines by saying others must be allowed
to use them if they paid.

 

Energy Minister Matthew Nkhuwa issued a statement, known as a statutory
instrument, on Friday declaring the CEC power lines a “common carrier” and
obliging it to transmit electricity on behalf of other players on agreed
terms and conditions.

 

CEC, formerly a state-owned firm before it was privatised in the 1990s, said
the statutory instrument and other steps taken by the government amounted to
expropriation.

 

Zambia’s Energy Regulation Board (ERB) wrote to CEC on May 31 establishing a
new charging arrangement, known as a wheeling tariff, equivalent to about
30% of the current tariff for using the firm’s network, the company said.

 

CEC said the government’s actions had taken away the company’s commercial
and property rights and had prevented it from taking viable business
decisions.

 

The energy minister said the infrastructure remained CEC property but others
could use it on agreed terms and conditions.

 

“It is their property and we have got no intention of taking it over,”
Nkhuwa told Reuters. “They will charge but their charges will have to be in
line with the Southern African Power Pool and ERB regulations.”

 

CEC said on Sunday it would stop supplying power to Vedanta’s Konkola Copper
Mines (KCM) unit after talks to extend a supply agreement broke down over
debt owed to CEC.

 

However, the government intervened and said KCM would now receive its power
directly from state-owned utility Zesco, which previously sold electricity
to CEC for onward supply to KCM.

 

Nkhuwa said the bulk electricity supply agreement between Zesco and CEC,
which expired on March 31, would not be renewed.

 

 

 

Nigerian Senate approves president's request for $5.5 bln in external
borrowing

ABUJA (Reuters) - Nigeria’s upper chamber of parliament on Tuesday approved
President Muhammadu Buhari’s request for $5.51 billion in external borrowing
from international lenders.

 

The borrowing is part of a revised budget for 2020. The revisions allow for
the effects of the coronavirus pandemic and a sharp drop in oil prices,
which has dented Nigeria’s spending plans because oil sales make up 90% of
its foreign exchange earnings.

 

The money from the International Monetary Fund, African Development Bank,
World Bank and Islamic Development Bank is to fund the deficit.

 

“As regards the IMF loan, there are no usual onerous conditions for
borrowing, such as currency devaluation and deregulation of certain sectors
of the economy attached to this loan,” a Senate committee on the loans
stated.

 

Buhari submitted a revised budget of 10.51 trillion naira ($29.19 billion)
to parliament last week for approval. Lawmakers can make changes to the
budget, before it is sent back to the president to pass into law should he
agree to any revisions.

 

Borrowing requests must be approved separately by lawmakers.

 

 

 

S.African watchdog expands rand-rigging case, adds new banks

JOHANNESBURG (Reuters) - South Africa’s competition watchdog has expanded
its long-running rate-rigging case to target other lenders, including some
of the country’s biggest banks, it said on Tuesday.

 

The Competition Commission has, following a probe that began in 2015, been
seeking fines against 23 local and foreign banks that it alleges colluded to
coordinate activities when giving quotes to customers buying or selling the
rand and the dollar.

 

The country’s antitrust tribunal concluded last year that it had no powers
to charge foreign banks but declined to throw the case out altogether,
asking the commission to submit a new charge sheet.

 

The commission said in a statement on Tuesday it had done this, and in the
process added five new banks to the case, taking the total to 28. These
included Nedbank and units of two of South Africa’s big four lenders,
FirstRand and Standard Bank.

 

“These charges will not go away,” said Tembinkosi Bonakele, who heads the
commission.

 

“Some of the individual traders involved in the currency manipulation have
been dismissed, but their employers - the banks - are yet to be held
accountable in South Africa,” he added.

 

Nedbank and Standard Bank said they were reviewing the commission’s referral
papers. Nedbank CEO Mike Brown added that it would respond in due course and
remains committed to free and fair markets.

 

Rand Merchant Bank, the FirstRand unit named in the case, said a team
comprising internal and external parties had investigated the matter in
detail in 2015 and found no wrongdoing or unethical conduct on the part of
the bank.

 

“RMB intends to work constructively with the relevant regulators to resolve
this matter,” it added in an emailed statement.

 

 

 

 

US to ban passenger flights from China

The US is to ban passenger flights from China from 16 June, in the latest
sign of tensions between the two economic giants.

 

The Department of Transportation said it is punishing Beijing for refusing
to let US airlines resume flights to China as its pandemic subsides.

 

In recent weeks the countries have sparred over coronavirus and China's
policies in Hong Kong.

 

But Washington said it would continue to "engage" on the air travel issue.

 

The Department of Transportation order applies to four airlines - Air China,
China Eastern Airlines, China Southern Airlines and Hainan Airlines - which
have continued to fly between the two countries during the pandemic,
although at reduced levels.

 

It needs final approval from US President Donald Trump, who has repeatedly
accused China of engaging in unfair trade, and in recent weeks criticised
its handling of coronavirus and protests in Hong Kong.

 

The Chinese embassy in Washington did not immediately comment. Officials
have previously said its restrictions, which were introduced to control
coronavirus, were fair since they apply to all airlines.

 

'Fair and equal opportunity'

Beijing in March said domestic and foreign airlines could operate no more
than one weekly flight between China and any given country, adding that
carriers could not exceed the level of service they were offering on 12
March.

 

Trump accuses WHO of being a 'puppet of China'

Trump targets China over Hong Kong security law

The Department of Transportation said the March order had effectively banned
US airlines, which had voluntarily suspended service between the two
countries in February due to the pandemic and Mr Trump's order barring entry
to the US for most Chinese travellers.

 

It said the refusal to grant requests by US airlines to resume service this
month violated the agreement governing air travel between the two countries,
which dates back to 1980.

 

"We conclude that these circumstances require the Department's action to
restore a competitive balance and fair and equal opportunity among US and
Chinese air carriers," the Department of Transportation said.

 

"Our overriding goal is not the perpetuation of this situation but rather an
improved environment."

 

'Accelerating trend'

If the order goes forward, it will hurt travel, trade and other exchange
between the two countries, said Daniel Kliman, director of the Asia-Pacific
Security Program at the Center for a New American Security.

 

But that breakdown was already under way, he added.

 

"We're already seeing de-coupling of the United States and China," he said,
pointing to US efforts to restrict technology sales and the US-China trade
war. "It's an acceleration of a trend that has really been building up."

 

In recent weeks, China has moved to loosen restrictions on charter flights
from some countries but not the US, according to a report last month in the
Community Party's Global Times.

 

Officials told the newspaper the government would also consider increasing
general flights, pending better control of the outbreak.

 

Mr Kliman said there is some chance the two countries could resolve the
matter before 16 June - but once the US ban goes into effect it will be hard
to undo.

 

In January, there were about 325 round-trip flights weekly between the US
and China. Those have numbered around 34 since the end of March, the US
said.

 

Delta Airlines, one of the companies that had sought to resume flights this
month, said it welcomed the US order.

 

"We support and appreciate the US government's actions to enforce our rights
and ensure fairness," it said.

 

The US China Business Council, which represents 200 big US companies that do
business in China, said: "Commercial air travel provides a vital bridge
between the US and China. Prior to the pandemic, millions of travellers
crossed the ocean each year to conduct business, enjoy holidays, study and,
most important, learn about the other through direct experience.

 

"This travel is especially important during times of conflict, suspicion and
misunderstanding. We call on the governments of both countries to get the
airplanes flying again - in both directions."--BBC

 

 

 

HSBC and StanChart back China security laws for HK

HSBC and Standard Chartered have given their backing to China's new security
laws for Hong Kong.

 

Both banks made statements saying the proposed law can help maintain
long-term stability in the troubled city.

 

On Wednesday HSBC's Asia Pacific chief executive Peter Wong signed a
petition backing the law which has been widely criticised.

 

But this backing comes as Japanese bank Nomura said it is "seriously"
examining its presence in Hong Kong.

 

It is unusual for a bank to enter into political debate, particularly one as
controversial as China's new security laws which many feel could mark the
end of Hong Kong's unique freedoms.

 

HSBC's statement noted that the Hong Kong Association of Banks had already
issued a statement saying the law would contribute to a stable business
environment.

 

What did the banks say?

Although it is Europe's largest bank, HSBC has a strong presence in Asia,
particularly Hong Kong.

 

HSBC "respects and supports all laws that stabilise Hong Kong's social
order," it said in a post on social media in China.

 

The bank's full name is the Hongkong and Shanghai Banking Corporation and
has its origins in the former British colony. While HSBC moved its
headquarters to London in 1993, Hong Kong is still its biggest market.

 

Standard Chartered also has a strong presence in Asia. "We believe the
national security law can help maintain the long-term economic and social
stability of Hong Kong," it said in a statement.

 

It added that "the 'one country, two systems' principle is core to the
future success of Hong Kong and has always been the bedrock of the business
community's confidence".

 

Hong Kong's Tiananmen vigil banned for first time

 

UK to offer citizenship 'route' to HK residents

Coronavirus: HSBC puts 35,000 job cuts on hold

Meanwhile, Japanese investment bank Nomura said it is reviewing its scale of
operations in Hong Kong.

 

The bank's chief executive Kentaro Okuda said while Hong Kong remained its
most critical Asian hub outside Japan, the situation now was "not the same
as it used to be" in an interview with the FT.

 

What are the new security laws?

While the details are still being fleshed out, the new security laws would
make criminal any act of:

 

secession - breaking away from the country

subversion - undermining the power or authority of the central government

terrorism - using violence or intimidation against people

activities by foreign forces that interfere in Hong Kong

Hong Kong residents are concerned this will affect free speech and their
right to protest. In China this would be seen as subversion. People are also
worried about suggestions that China could set up its own institutions in
Hong Kong responsible for security.

 

"The new national security law will deal the most severe blow to the rights
of people in Hong Kong since the territory's transfer to China in 1997,"
according to Human Rights Watch.

 

HSBC had been previously caught up in Hong Kong's anti-government protests,
with its branches vandalised and bronze lion statues outside its
headquarters defaced during a protest march in January.

 

The bank is also facing its own challenges from the coronavirus pandemic
with the prospect of thousands of job losses and a significant drop in
earnings.

 

HSBC didn't respond to a request from the BBC for further comments about the
social media post.--BBC

 

 

 

China's cinemas could face widespread closures

More than 40% of cinemas in China could go bust according to a bleak report
by the China Film Association.

 

Having been temporary closed during the virus pandemic, audiences may
struggle to return, the association says.

 

Millions of Chinese have enjoyed watching movies online during cinema
closures thanks to a wide range of streaming services.

 

As a result, thousands could shut permanently in a "massive bloodbath"
predicts one Chinese business expert.

 

There are now more than 12,000 cinemas in China according to market research
firm IBISWorld. This figure has more than doubled in the last decade as
China has embraced movie-going.

 

But four out of ten said they "are very likely to close" in the near future,
according to the China Film Association survey. This could mean nearly 5,000
cinemas going bust as a result of the pandemic.

 

Cinemas have been among the last venues to reopen in China, as lockdown
measures are gradually lifted. The Chinese government said that cinemas,
along with other indoor entertainment venues, could reopen with limited
bookings.

 

In the first quarter of 2020, China's box office takings have fallen
significantly according to the film association. Small cinemas with fewer
than 500 seats suffered the most, with revenues only reaching 10% of those
taken during the same period last year.

 

If cinema reopenings are delayed until October, annual revenues would plunge
by 91% across the board it predicts. Last year, China generated 64.2bn yuan
(£7.2bn) from movie ticket sales as millions flocked to cinemas.

 

Online boom

Shaun Rein, founder of the China Market Research Group, believes a major
challenge will be the growing strength of China's online movie sector which
is hugely competitive with platforms like Iqiyi, Youkou and Tencent Video.

 

He said subscriptions are cheap at around $2 a month for the basic
subscriptions while while movie tickets often sell for $20. "Chinese players
are just so cheap, often because they are subsidised as they are owned by
giant internet players like Alibaba, Baidu or Tencent".

 

"Aside from fears over catching Covid-19, consumers won't go back to cinemas
anytime soon as the digital offerings are too good and cheap," he said.

 

He also predicts more pain for cinemas if film companies start to launch
direct-to-digital offerings and charge higher prices for online movie
releases on a pay-as-you-go basic on top of subscription rates. "I expect
the cinema sector to face a massive bloodbath and many will go out of
business," he added.

 

Lack of new releases

Another challenge is getting people back into cinemas due to the lack of new
films, with production curtailed due to travel and social restrictions.

 

"We hear about 20% of local productions have begun or resumed physical work,
with the balance postponed or in financial difficulty related to the
Covid-19 outbreak," said Rance Pow, chief executive of Artisan Gateway, an
Asian film industry consultant.

 

"So that complicates the timing and recovery of cinemas as well; 'must see'
films will be needed like never before to bolster the industry recovery".

 

Some have warned that China's film industry will lose up to 30bn yuan this
year, including the National Film Administration, a government body.

 

Others are less pessimistic about the fortunes of China's cinemas. "The
predictions are dire, but I'm more optimistic," said Chris Fenton, a former
motion picture president and author of Feeding the Dragon. He points to the
Chinese government's desire to have a world-class film industry and largest
market in the world.

 

"Plus the Chinese have embraced movie-going into the cultural fabric of
society. It's a habit they are rabid about. That urge to visit cinemas
regularly has not waned".--BBC

 

 

 

 

Social media firms fail to act on Covid-19 fake news

Hundreds of posts spreading misinformation about Covid-19 are being left
online, according to a report from the Center for Countering Digital Hate.

 

Some 649 posts were reported to Facebook and Twitter, including false cures,
anti-vaccination propaganda and conspiracy theories around 5G.

 

90% remained visible online afterwards without any warnings attached, the
report suggests.

 

Facebook said the sample was "not representative".

 

A spokesperson for Facebook said; "We are taking aggressive steps to remove
harmful misinformation from our platforms and have removed hundreds of
thousands of these posts, including claims about false cures.

 

"During March and April we placed warning labels on around 90 million pieces
of content related to Covid-19 and these labels stopped people viewing the
original content 95% of the time.

 

"We will notify anyone who has liked, shared or commented on posts related
to Covid-19 that we've since removed."

 

Twitter said that it was prioritising the removal of Covid-19 content "when
it has a call to action that could potentially cause harm".

 

"As we've said previously, we will not take enforcement action on every
Tweet that contains incomplete or disputed information about Covid-19. Since
introducing these new policies on March 18 and as we've doubled down on
tech, our automated systems have challenged more than 4.3 million accounts
which were targeting discussions around Covid-19 with spammy or manipulative
behaviours."

 

Imran Ahmed, chief executive of the Center for Countering Digital Hate, said
the firms were "shirking their responsibilities".

 

"Their systems for reporting misinformation and dealing with it are simply
not fit for purpose.

 

"Social media giants have claimed many times that they are taking
Covid-related misinformation seriously, but this new research shows that
even when they are handed the posts promoting misinformation, they fail to
take action."

 

Rosanne Palmer-White, director of youth action group Restless Development,
which also took part in the survey, said young people were "doing their bit
to stop the spread of misinformation" but social media firms were "letting
them down".

 

Both Twitter and Facebook face questions from the UK's Digital Culture Media
and Sport sub-committee on the way they are handling coronavirus
misinformation.

 

MPs were not happy with an earlier session. They demanded more detailed
answers and said more senior executives should attend the next meeting.

 

For the study, ten volunteers from the UK, Ireland and Romania searched
social media for misinformation from the end of April to the end of May.

 

They found posts suggesting sufferers can get rid of coronavirus by drinking
aspirin dissolved in hot water or by taking zinc and vitamin C and D
supplements,

 

Twitter was deemed the least responsive, with only 3% of the 179 posts acted
upon.

 

Facebook removed 10% of the 334 posts reported and flagged another 2% as
false. Instagram, which Facebook owns, acted on 10% of the 135 complaints it
was sent.

 

Both the social networks insist they have made efforts to bring fake news
about the coronavirus under control.

 

Twitter has begun labelling tweets that spread misinformation about
Covid-19. Facebook has also removed some content, including from groups
claiming the rollout of the 5G network was a cause of the spread of the
virus.

 

All eyes have been on how social media sites have tackled misleading
information on their platforms in recent weeks - and all eyes will be on
them again today, as they're grilled by MPs.

 

Over the course of the pandemic, different social media companies have made
a number of changes to their policies to try to tackle harmful and
misleading information. Facebook and YouTube both say they have cracked down
on conspiracies that could do damage.

 

And in a high-profile move, Twitter decided to label a misleading tweet by
US President Donald Trump - although it was one about postal voting rather
than coronavirus.

 

But these changes in policy don't seem easy to implement. In practice,
misleading posts are often not reported - or when they are, they are not
always removed. The question of the harm different posts pose appears to be
at the root of this problem.

 

Messages posing an immediate threat to life are removed more quickly.
However, misleading messages that pose a less immediate threat can prove to
be just as dangerous - including those from anti-vaccination groups.

 

A BBC Investigation into the human cost of misinformation found that the
potential for indirect harm caused by conspiracies and bad information that
undermine public health messaging - or an effective vaccine - could be huge.

 

And as misinformation about protests and other news events floods social
media, it becomes apparent that the pandemic is just one of many battles
against misinformation to be fought.---BBC

 

 

 

 

Ex-chancellors warn of severe unemployment ahead

As the UK begins to ease lockdown restrictions, three former UK chancellors
have been quizzed by MPs on the Treasury Select Committee about the effects
of coronavirus on the UK economy.

 

Alistair Darling, George Osborne and Philip Hammond were asked about the
severity of the crisis versus the 2008-2009 financial crash; what measures
could revive the economy; and whether taxes should increase to help pay the
UK's mounting debts.

 

They also suggested that unemployment could reach levels not seen since the
1980s.

 

Alistair Darling: "They are very different and this one [coronavirus], in my
view, is much more serious.

 

"The key difference between then and now is that from day one, the
government wanted to get the economy going again, and therefore we
introduced a range of measures, which enabled us to do that.

 

"The situation today is different, in that firstly, it is part of government
policy right across the world, and rightly so, to actually suppress economic
activity through the lockdown and other measures... Unless and until the
government gets control of the virus itself and the spread of the virus,
it's difficult to see how you can pull out the stops and get the economy
going again."

 

George Osborne: "I am more optimistic, I think, than Alistair. If you look
at the history of pandemics and plagues and the like in our society, then
the economic bounceback is going to be relatively rapid.

 

"If you look at the history of banking crises throughout our history, not
just the one 10 years ago, but in the 1920s and 30s and in the 19th Century
and before, recoveries are very slow and protracted and painful, because the
credit channels of the economy are impaired, and despite all the work that
Alistair did, and I did, to try and unclog those channels, it takes a long
time for the allocation of capital to get to the efficiency it has before
the banking crash."

 

Philip Hammond: "In terms of which is the worst, I think it is too early to
say yet, because a lot is going to depend on whether over the next months it
becomes clear that we are heading towards either a vaccine... and that the
future trajectory is one of returning the economy to something like normal,
or whether, by contrast, we are not heading towards an early development of
a vaccine or a treatment, and we have to plan in terms of restarting the
economy living with Covid."

 

What measures should the UK government take to get the economy going again?

Alistair Darling: "The government will need to introduce measures, firstly
to deal with a wave of unemployment which I think will come once the
furlough system starts being phased out, and also to make sure that people
who are displaced from the workplace, who lose their jobs, that we can get
them back into work as quickly as possible.

 

"It will be necessary for the government to make sure that you don't end up
with a recession becoming a depression."

 

Bank boss tells lenders to be ready for no-deal risk

George Osborne: "The central challenge... is how do you withdraw some of the
very necessary schemes to have kept people in work and businesses afloat
during the crisis. The furlough scheme has been absolutely essential... many
people on furlough are going to go back to their jobs.

 

"But we have to be honest and say that quite a lot of those businesses will
not come back... and trapping people on a scheme that is generous to them in
the short term, but actually prevents them from re-entering the labour force
to get the new job they need, is potentially very damaging.

 

"So I think the withdrawal of the furlough is going to be important for
employment in the short term, and at the same time some of these loans to
businesses that are never coming back are going to become an issue."

 

Should the UK bail out airlines?

George Osborne: "There's a whole separate issue about what you do with these
large stakes we're going to take in large companies like airlines,
potentially, and aerospace manufacturers.

 

"All of us have experience on this panel of pretending that you're managing
these bank holdings that we had in the last decade at arm's length, and
still when Treasury questions came up we were being asked about the bonuses
being paid to chief executives, why branches were being closed in the
constituencies of members.

 

"I can imagine an airline saying it wants to shut an uneconomic route to one
of the further-flung parts of the UK... I think that's going to be more
problematic than I think people have realised at the moment."

 

Alistair Darling: "If you take the aviation industry, you'll notice that
France and Germany are not indifferent to whether or not their national
airline is surviving. Our model here is slightly different, in that the idea
of a flag-carrier isn't quite what it was, but I think most people would
take the view that we've got to ensure that we've got a transport industry."

 

Having run up lots of debt, should we increase taxes?

Alistair Darling: "If you want stimulate the economy, the most obvious thing
to do is a time limited VAT reduction.

 

"When we get to the happy day when we're recovering... yes, we are going
have very high debts, like we had at the end of the Second World War, but
one of the things that a government like ours can do, you can actually carry
that for some period. I would be very concerned if in the recovery phase you
start clamping down on things prematurely, and you drive the country back
into a recession."

 

Suppliers 'at risk' without loans for large firms

Philip Hammond: "I don't think there's any economic logic to increasing
taxes in the short term. I think we all accept that the UK as a
credit-worthy, mature, larger economy can carry more debt in the context of
the short term crisis.

 

Of course, we have to remember that debt is cumulative by its nature. We
increased debt very substantially during the course of dealing with the last
crisis, and we'd only just got back to the point where we were starting to
see debt very slightly decline as a share of GDP. Now we're going to see it
increase significantly again as a share of GDP, so eventually we have to
think about how we manage the challenge of debt in the long term.--BBC

 

 

 

 

Bank boss tells lenders to be ready for no-deal Brexit risk

The Bank of England governor has told lenders to be ready for the
possibility that the UK and EU fail to agree a free trade deal by the end of
the year.

 

On a call with financial firms, Andrew Bailey stressed the importance of
ensuring the financial system could cope with a no-deal, Sky News reported.

 

The Bank said the reminder was part of its regular weekly call with lenders.

 

It comes as the UK and EU continue to negotiate over their future trading
relationship, in a fourth set of talks.

 

However, key sticking points remain. The UK left the EU in January but is
covered by a transition period until the end of this year. The UK has
consistently said it will not ask for a longer transition period.

 

The Bank of England said Mr Bailey "meets the leadership of UK banks on a
very regular basis".

 

"As we have said previously, the possibility that negotiations between the
UK and EU over a future trading relationship might not conclude in a deal is
one of a number of outcomes that UK banks need to prepare for over the
coming months," the Bank said in a statement.

 

"It is fundamental to the Bank of England's remit that it prepares the UK
financial system for all risks that it might face," it added.

 

The UK and EU sides still have key sticking points in negotiations that are
taking place, the BBC's Katya Adler told the Radio 4 Today programme this
week.

 

She said that negotiations have faltered and been delayed due to the
coronavirus pandemic, so time is tight, and that if there are clashes
between the two sides, because the talks are taking place online there is
less opportunity to walk around the block to try and reach a consensus.

 

Sticking points include common standards on the environment and labour
markets and how disputes over those standards will be resolved, and access
to fishing grounds.

 

Some of the fundamentals of a no-deal Brexit have remained the same.

 

On Wednesday Japanese car giant Nissan said that the UK's largest car
manufacturing plant is still under threat if the UK leaves the European
Union without a trade deal.

 

Similarly, the Bank of England has warned about the negative economic
effects of a no-deal Brexit for a number of years.

 

The Bank has done stress tests looking at the effect of a "disorderly"
Brexit on the banking system, and in 2018 said that major UK banks have
enough capitalisation to withstand the shock of a no-deal Brexit.

 

In short, the UK banking system would be strong enough to deal with it.

 

In March, as the effects of the coronavirus crisis began to bite, the Bank
said that due to "extensive preparations" by authorities and the private
sector, if there was a no-deal Brexit, most risks to cross-border financial
trade had been mitigated.--BBC

 

 

 

 

 


 

 


 

INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


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

 


 

 


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