Major International Business Headlines Brief::: 29 May 2020

Fri May 29 05:33:52 CAT 2020

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Major International Business Headlines Brief::: 29 May 2020

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ü  Nigeria's central bank cuts benchmark lending rate to 12.5%

ü  South African state asset manager proposes converting Eskom bonds into equity - chairman

ü  Kenya central bank governor says small businesses need urgent help

ü  S.Africa plans $20.5 bln of public works to spur economy - ANC official

ü  RMB confirms Total's $15 bln funding for Mozambique LNG project

ü  Sibanye-Stillwater detects 51 COVID-19 cases at Rustenburg operations

ü  South Africa's Old Mutual warns of 20% drop in first-half profit

ü  Angola warns that COVID-19 could delay oil bid round

ü  Mr Price has no plans to buy Jet

ü  Trump signs executive order targeting Twitter after fact-checking row

ü  Rishi Sunak urged by MPs to extend self-employed help

ü  UK sees almost no car manufacturing in April

ü  Renault prepares for 15,000 job cuts

ü  What if the US removes Hong Kong's special status?

 <mailto:info at bulls.co.zw> 

Nigeria's central bank cuts benchmark lending rate to 12.5%

LAGOS (Reuters) - Nigeria’s central bank cut its benchmark lending rate to 12.5% from 13.5%, the central bank governor said on Thursday.

Central Bank Governor Godwin Emefiele said seven of the 10 members of the monetary policy committee backed the cut. It is the first cut since March 2019.

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South African state asset manager proposes converting Eskom bonds into equity - chairman

JOHANNESBURG (Reuters) - South African state asset manager the Public Investment Corporation (PIC) has submitted a proposal to government on converting bonds it holds in struggling state utility Eskom into equity, PIC chairman Reuel Khoza told Reuters in an interview.

Khoza said the PIC had discussed the proposal with its main client, the Government Employees Pension Fund, and that the two were “in principle in agreement”.

Khoza gave 90 billion rand ($5.17 billion) as a ballpark figure for the PIC’s holdings of Eskom bonds, out of Eskom’s total debt of around 450 billion rand. Eskom’s debt is one of the main reasons why it is mired in financial crisis.

Khoza said the proposal, which was submitted to government several weeks ago, featured a number of conditions, including that Eskom improves its operational performance and governance.

“It’s still at the conceptual stage, but it’s a concept that we want to believe ... could serve as a chopping block for thinking,” Khoza said.

The PIC is one of the largest asset managers in Africa, managing assets worth more than 2 trillion rand. Its holdings include equity stakes in major companies on the Johannesburg Stock Exchange and debt issued by state companies.

A spokeswoman for the National Treasury asked Reuters to submit questions by email. An Eskom spokesman declined comment.

($1 = 17.4134 rand)

Kenya central bank governor says small businesses need urgent help

NAIROBI (Reuters) - Kenya’s small and medium businesses need urgent help to survive the economic slowdown caused by the novel coronavirus, and many are at risk of shutting down by the end of June, the head of the central bank said on Thursday.

On Wednesday, the bank said business were expected to take advantage of credit available to them once a planned credit- guarantee scheme was in place.

“I wanted to underscore the urgency of ... putting in place the credit guarantee scheme,” central bank Governor Patrick Njoroge told a virtual news conference. “This is extremely urgent. We cannot do this as business as usual.”

At its March meeting, the central bank’s monetary policy committee reduced the amount of cash banks are required to set aside, releasing 35.2 billion shillings for lending. Bank loans worth 273 billion shillings have also been restructured due to coronavirus-related hardships.

The monetary policy committee has also cut its main interest rate by a total of 125 basis points over two meetings to support the economy. On Wednesday, it left its benchmark rate at 7.0%, saying that its accommodative stance remained appropriate.

In early May, the International Monetary Fund’s executive board approved $739 million in emergency financing to help Kenya respond to the pandemic.

Citing a study in April, Njoroge said 75% of businesses surveyed had said without help they would close by the end of June because they lacked credit buffers and other resources to survive the slowdown.

Njoroge said details of the credit guarantee scheme were still being worked on. Last month, he said it could be around 100 billion shillings ($935.89 million).

Kenya has 1,618 confirmed coronavirus cases and 58 deaths. To limit its spread, Kenya has suspended commercial flights in and out of the country, imposed a dusk-to-dawn curfew and banned public gatherings. It has also halted movement in and out of five regions, including Nairobi, the capital.

S.Africa plans $20.5 bln of public works to spur economy - ANC official

JOHANNESBURG (Reuters) - South Africa is planning projects worth $20.5 billion in sectors such as transport, energy and water as it looks to drive an economic recovery from the coronavirus crisis, a top official in the governing African National Congress (ANC) said on Wednesday.

Paul Mashatile, the ANC’s treasurer general, told a video conference organised by think tank Chatham House that the infrastructure projects would soon be approved by President Cyril Ramaphosa’s cabinet after talks with the private sector and multilateral development banks.

The projects would focus on areas such as railways, ports, energy, information technology, water and sanitation and housing, he added.

Africa’s most industrialised economy was already in recession before the COVID-19 pandemic struck, with the central bank now predicting a 7% gross domestic product contraction this year and some economists forecasting a double-digit budget deficit.

“It is clear that given the scale of the damage to our economy, the post-COVID-19 reconstruction effort will be no mean feat,” Mashatile said.

Enoch Godongwana, who heads the ANC’s economic transformation subcomittee, told the same video conference that the government hoped to stimulate economic demand via the infrastructure programme, drawing on lessons from the 2010 soccer World Cup the country hosted.

“Global trade is going to be subdued, therefore exports will be minimal, we have got to look at how we stimulate demand in our given circumstances,” Godongwana said.

RMB confirms Total's $15 bln funding for Mozambique LNG project

JOHANNESBURG (Reuters) - South Africa’s Rand Merchant Bank (RMB) confirmed on Thursday that it is part of a consortium of banks providing $15 billion funding for French energy major Total’s Mozambique liquefied natural gas (LNG) project.

Sources told Reuters last week that Total had secured $14.4 billion in funding for the project with a group of about 20 lenders.

RMB, owned by FirstRand Bank, said the signing of $15 billion in financing was scheduled for June.

“It will be a remarkable achievement in the circumstances,” Jonathan Ross, head of oil and gas coverage at RMB, said in a statement, adding that other projects have experienced delays.

“The backdrop could not have been worse for Total and partners to raise huge volumes of long tenor funding – the economic fallout of COVID-19 has put enormous pressure on banks’ funding and capital and has triggered an oil price crash.”

Exxon Mobil in early April delayed approval of its $30 billion Rovuma LNG project in Mozambique as the COVID-19 pandemic forced the industry to rein in spending.

Total concluded the acquisition of Anadarko’s 26.5% interest in the Mozambique LNG project for $3.9 billion in September. It is expected to start production in 2024.

Sibanye-Stillwater detects 51 COVID-19 cases at Rustenburg operations

JOHANNESBURG (Reuters) - Sibanye-Stillwater has detected 51 positive cases of the new coronavirus at its Rustenburg operations in South Africa, it said on Thursday.

The miner said it conducted further tests and tracing of its employees after two workers from the Thembelani shaft in Rustenburg tested positive for COVID-19 late last week.

To date Sibanye-Stillwater has detected 65 positive COVID-19 cases across all its South African operations.

South Africa's Old Mutual warns of 20% drop in first-half profit

JOHANNESBURG (Reuters) - South African insurer Old Mutual on Thursday said it expects first-half profit to fall by more than 20% but will cut costs to contend with the impact of the coronavirus pandemic.

The 175-year-old company said the pandemic and related lockdowns and restrictions in most of its markets had hurt sales and it expects recovery to be slow.

“To mitigate the expected pressure on earnings, we have implemented a series of management actions focusing on reducing expenses in 2020,” it said, adding that internal stress-testing had left it comfortable with capital and liquidity levels.

“We are also working on a number of medium-term initiatives to capitalise on the growth opportunities the pandemic presents.”

These additional measures will be communicated to the market in due course, it said.

Old Mutual has spent the past few years breaking up its international conglomerate structure to become a standalone African financial services group listed in Johannesburg, but efforts have been hindered by various crises.

The abrupt sacking of CEO Peter Moyo last year created a long-running scandal and court battle that knocked the insurer’s reputation and share price. That has left a temporary CEO, Iain Williamson, to lead the company through a global pandemic that has further dented performance.

Headline earnings per share - the main profit measure in South Africa - for the six months to June 30 is likely to be down more than 20% year on year, the company said, after a 33% drop in operating profit in the first quarter.

($1 = 17.3228 rand)

Angola warns that COVID-19 could delay oil bid round

LAGOS (Reuters) - A bid round for nine oilfield licenses in Angola could be delayed by the coronavirus outbreak, the national petroleum regulator said on Thursday.

The Agencia Nacional de Petroleo, Gas e Biocombustiveis (ANPG) said data packages were now available for three fields in the Lower Congo and six in the Kwanza that are to be auctioned this year - but warned the virus could impact the process.

“All conditions were created so that by the end of May, the announcement of the intention to launch the public tender was made,” ANPG said on its website.

“Due to the current economic constraints caused by the COVID-19 pandemic, this date may undergo minor adjustments.”

While Angola has reported just 71 cases of the COVID-19 disease and four deaths, the global impact of the outbreak has severely impacted its oil industry, halting drilling for the first time since 1984.

Angola launched a series of oil and gas licence auction rounds last year as part of a multi-year plan to boost declining output. The ANPG itself was created in February 2019 by presidential decree to remove oversight of oil and gas exploration from state oil company Sonangol in an effort to boost flagging production.

Mr Price has no plans to buy Jet

JOHANNESBURG (Reuters) - Budget retailer Mr Price is not looking to buy department chain operator Edcon “in part or in whole”, the company said on Thursday, responding to market speculation.

Last week, Mr Price said it wanted to raise capital via a share issue at an appropriate time and could use the proceeds for growth opportunities.

This prompted speculation that Mr Price, which also sells homeware and sportswear, was pursuing budget clothing retail chain Jet, owned by Edcon.

“The company wishes to address this speculation and advises that the group has no intention to acquire Edcon, in part or in whole,” Mr Price said on Thursday.

Mr Price said last week that a capital raising would enable the company to pursue and accelerate growth opportunities “whether they are organic or acquisitive in nature.”

Debt-laden Edcon, which also owns department store chain Edgars, entered a form of bankruptcy protection in April after coronavirus lockdown restrictions hammered its sales and left it without money to pay its suppliers.

Administrators in charge of Edcon told creditors in a presentation last week that significant interest has been expressed by various parties to acquire or take over various parts of Edcon.

Trump signs executive order targeting Twitter after fact-checking row

US President Donald Trump has signed an executive order aimed at removing some of the legal protections given to social media platforms.

It gives regulators the power to pursue legal actions against firms such as Facebook and Twitter for the way they police content on their platforms.

President Trump accused social media platforms of having "unchecked power" while signing the order.

The order is expected to face legal challenges.

Legal experts says the US Congress or the court system must be involved to change the current legal understanding of protections for these platforms.

Mr Trump has regularly accused social media platforms of stifling or censoring conservative voices.

On Wednesday, Mr Trump accused Twitter of election interference, after it added fact-check links to two of his tweets.

On Thursday, Twitter added "get the facts about Covid-19" tags to two tweets from a Chinese government spokesman who claimed the coronavirus had originated in the US.

What does the executive order say?

The order sets out to clarify the Communications Decency Act, a US law that offers online platforms such as Facebook, Twitter and YouTube legal protection in certain situations.

Under Section 230 of the law, social networks are not generally held responsible for content posted by their users, but can engage in "good-Samaritan blocking", such as removing content that is obscene, harassing or violent.

The executive order points out that this legal immunity does not apply if a social network edits content posted by its users, and calls for legislation from Congress to "remove or change" section 230. Mr Trump said Attorney General William Barr will "immediately" begin crafting a law for Congress to later vote on.

It also says "deceptive" blocking of posts, including removing a post for reasons other than those described in a website's terms of service, should not be offered immunity.

Republican senator Marco Rubio is among those arguing that the platforms take on the role of a "publisher" when they add fact-check labels to specific posts.

"The law still protects social media companies like Twitter because they are considered forums not publishers," Mr Rubio said.

"But if they have now decided to exercise an editorial role like a publisher, then they should no longer be shielded from liability and treated as publishers under the law."

The executive order also calls for:

·         the Federal Communications Commission (FCC) to spell out what type of content blocking will be considered deceptive, pretextual or inconsistent with a service provider's terms and conditions

·         a review of government advertising on social-media sites and whether those platforms impose viewpoint-based restrictions

·         the re-establishment of the White House "tech bias reporting tool" that lets citizens report unfair treatment by social networks

·         What effect will the order have?

·         Donald Trump promised "big action" in response to Twitter's decision to append a fact-check message to two of his posts. While his announcement of an executive order was heavy on rhetoric - accusing social media companies of being monopolies that threaten free speech - it will be a long process before the talk turns into real action, big or otherwise.

Independent government agencies will have to review federal law, promulgate new regulations, vote on them and then - in all likelihood - defend them in court. By the time it's all over, the November presidential election could have come and gone.

That explains why Trump is also pushing for new congressional legislation - a more straightforward way of changing US policy toward social media companies.

The real purpose of the president's order, however, may be symbolic. At the very least, the move will cause Twitter to think twice about attempting to moderate or fact-check his posts on their service.

The president relies on Twitter to get his message out without filtering from the mainstream media. If Twitter itself start blunting one of his favourite communication tools, he is sending a message that he will push back - and make things, at a minimum, uncomfortable for the company.

How have the social networks responded?

Twitter called the order "a reactionary and politicized approach to a landmark law," adding that Section 230 "protects American innovation and freedom of expression, and it's underpinned by democratic values".

Google, which owns YouTube, said changing Section 230 would "hurt America's economy and its global leadership on internet freedom."

"We have clear content policies and we enforce them without regard to political viewpoint. Our platforms have empowered a wide range of people and organizations from across the political spectrum, giving them a voice and new ways to reach their audiences," the firm said in a statement to the BBC.

In an interview with Fox News on Wednesday, Facebook's chief executive, Mark Zuckerberg, said censoring a social media platform would not be the "right reflex" for a government concerned about censorship.

"I just believe strongly that Facebook shouldn't be the arbiter of truth of everything that people say online," said Mr Zuckerberg.

"I think in general private companies probably shouldn't be - especially these platform companies - shouldn't be in the position of doing that."

One conservative think tank warned the executive order could have unintended consequences.

"In the long run, this conservative campaign against social media companies could have a devastating effect on the freedom of speech," said Matthew Feeney of the Cato Institute.

And changing the Communications Decency Act to "impose political neutrality on social media companies" could see the platforms filled with "legal content they'd otherwise like to remove" such as pornography, violent imagery and racism.

"Or they would screen content to a degree that would kill the free flow of information on social media that we're used to today," he said.

Mr Feeney said the draft of the executive order was a "mess" but could prove politically popular in the run-up to a presidential election.

What sparked the latest row?

The long-running dispute between Mr Trump and social media companies flared up again on Tuesday, when two of his posts were given a fact-check label by Twitter for the first time.

He had tweeted, without providing evidence: "There is no way (zero) that mail-in ballots will be anything less than substantially fraudulent."

Twitter added a warning label to the post and linked to a page describing the claims as "unsubstantiated".

What are executive orders?

Twitter tags Trump post with fact-checking warning

Trump threatens to shut down social media firms

Then on Wednesday, Mr Trump threatened to "strongly regulate" social-media platforms.

He tweeted to his more than 80 million followers that Republicans felt the platforms "totally silence conservatives", and that he would not allow this to happen.

In an earlier tweet, he said Twitter was "completely stifling free speech".

Twitter's chief executive, Jack Dorsey, responded to criticism of the platform's fact-checking policies in a series of posts, saying: "We'll continue to point out incorrect or disputed information about elections globally."

Image Copyright @jack at JACK

Report

Mr Trump wrote a similar post about mail-in ballots on Facebook on Tuesday, and no such warnings were applied.

Twitter has tightened its policies in recent years, as it faced criticism that its hands-off approach allowed fake accounts and misinformation to thrive.--BBC

Rishi Sunak urged by MPs to extend self-employed help

Chancellor Rishi Sunak is facing calls from MPs to extend help offered to the self-employed.

They have written to him, warning many would not be able to work once it ends.

One worker in this situation is Yshani Perinpanayagam, a musical director for a show at the Royal Shakespeare Company. When lockdown began, it was cancelled and her work dried up.

She still has some composing and recital work but says she feels “quite unsafe.”

“If the self-employment scheme does not extend, I will not be safe,” she says.

Ms Perinpanayagam does not know how she is going to feed herself.

Her current household expenses have been covered by savings, she says.

She worries that when the rest of the UK returns to normal life but still cannot buy tickets to the theatre, the gap between the self-employed artist and the rest of society will widen.

“If people are missing mortgage payments, there is already an understanding that they need help without them having to prove anything.

"But the self-employed will really have to justify why we can’t pay our bills if the government is not taking a stance that we are worthy of help.”

She adds: “It’s a very difficult corner to fight”

MPs sign letter

Ms Perinpanayagam’s remarks are echoed in a letter sent today by 114 MPs urging the Chancellor to extend the self-employed income support scheme, which ends this weekend.

Under it, the government has given those who qualify a grant of 80% of their average profits, up to £2,500, for three months.

Amounts are based on reported earnings from the last three years.

The scheme’s future hangs in the balance and the clock is ticking, say MPs, who signed the letter urging for its extension.

MPs from almost every party in parliament have signed the letter, written by Labour MP Siobhain McDonagh.

"Under review"

“This scheme is a lifeline for millions of locked-down workers right across the country. There are already significant holes in the support, but removing what is already in place would pull the safety net from under the feet of millions of self-employed workers," said Ms McDonagh.

How can it be right for the furloughed scheme to continue but this scheme to not?”

While the letter congratulates the Chancellor on the programme, it warns that it is too soon to end government support for the self-employed because many have seen their work dry up.

Earlier in May, the Chancellor said in the Commons that the scheme was “under review” but since then, he has not given any indication of its future.

Yesterday, the Prime Minister also said extending the scheme was “under review”.

For full time employees on furlough however, the Chancellor has confirmed, support will continue until October.

People "delivering pizzas"

So far, 2.3 million self employed have signed up grants totalling £6.8bn, including Ms Perinpanayagam.

She also worries that despite efforts in the theatre and broader creative industries to be more inclusive of people from less wealthy backgrounds, a lack of support from the government will make it impossible for artists to survive if they did not come from a privileged background.

“A lot of people I know have been getting out and delivering pizzas, instead. There is this feeling that everyone is abandoning ship because of a lack of trust in the government to help them,” says Ms Perinpanayagam.

The Association of Independent Professionals and the Self-Employed (IPSE) has also sent a letter to the Chancellor calling on him to extend the support scheme.

Its letter also suggests he look again at those who did not qualify for the program in the first place.

This included newly self-employed, those who took maternity leave in the last three years and those with limited companies.

IPSE estimates that 1.6 million sole traders and limited company directors have been left out of the self employment scheme, so far.

The letter is co-signed by creative unions and associations including the Creative Industries Federation, BECTU and Equity.--BBC

UK sees almost no car manufacturing in April

British car manufacturing came to a screeching halt in April, down 99.7% against the same month last year.

It was the lowest output since the Second World War, according to the industry body, Society of Motor Manufacturers and Traders (SMMT).

Just 197 premium and luxury sports vehicles rolled off factory lines, with 45 of those sent to UK customers.

Instead, some plants refocused to make 711,495 items of personal protective equipment for health workers.

“With the UK’s car plants mothballed in April, these figures aren’t surprising but they do highlight the tremendous challenge the industry faces, with revenues effectively slashed to zero last month,” said SMMT chief executive, Mike Hawes.

The loss of 400,000 cars that would normally have been made is expected to cost the British car industry up to £12.5bn in revenues.

In April there were 830 new car engines made at UK plants, 781 of which were exported. This level was down 99.5% on the year before.

Mr Hawes said ramping up the industry again would be a “gradual process”. Half of the UK’s engine and car makers are expected to head back to work this week.

Production timescales will be staggered with strict social distancing measures in place. The SMMT has suggested to car manufacturers that factory workers should be provided with PPE.

Nissan backs UK plant but protests erupt in Spain

McLaren to cut 1,200 jobs as virus hits demand

Car manufacturers are also expected to work with fixed teams and with partnering to limit the number of people who interact on a daily basis.

Switch to PPE

Before production mostly stopped, the few cars that were produced were luxury cars from brands like McLaren, Bentley and Rolls Royce.

It takes about a month to assemble a high end luxury sports car.

Although production of vehicle lines had stopped, the finishing touches were still being applied to 197 luxury cars that were sent to customers.

With normal factory work on hold, the industry redirected its capability towards manufacturing PPE for healthcare workers.

Face shields, visors and medical gowns were pieced together in car factories. Rolls Royce and McLaren were among the companies which helped to make medical equipment such as ventilators.

Although the car industry is progressing with plans to slowly resume production, but unions say a severely weakened industry needs urgent government help.

Steve Turner, Unite assistant general secretary, said: "We urgently need a sector plan to support the UK's world class auto industry through this crisis, with investment to defend jobs and support for a transition to electrification.

"The French and German governments have wasted no time in getting behind their manufacturing workers."

He said that in both countries, governments are using the shutdown to intervene, with taxpayer support, in return for a transition to a greener domestic industry and support for their local supply chains.

"The UK government needs to match this ambition, proudly talking up our manufacturing champions and working with unions to recover and meet the challenges of the future, sustaining and creating quality jobs and apprenticeships," he said.--BBC

Renault prepares for 15,000 job cuts

Struggling French carmaker Renault is said to be planning 15,000 job cuts around the world as it tries to contain losses amid the pandemic.

The move comes as the virus deepens the challenges facing the firm, which saw its first annual loss in a decade last year.

The company, which has pledged to cut costs by €2bn (£1.8bn), is expected to discuss the plan on Friday.

Almost one third of the reductions are expected to occur in France.

Speaking on French television, a French labour leader briefed on the plans said many of the cuts in France would come through voluntary layoffs or retirement.

Renault, which claims more than 4% of the global market, employs more than 179,000 people in 39 countries.

Even before the pandemic, the firm was in trouble, with sales down 3% last year. It said last month the number of vehicles sold dropped by 25% in the first three months of the year and plunged even more dramatically in April.

The firm is currently in talks with the French government, which holds a 15% stake in the company, over a €5bn emergency loan package.

The French government has also pledged €8bn in wider rescue funds aimed at shoring up the country's car industry.

In exchange President Emmanuel Macron has said the firm should keep workers and production in the country.--BBC

What if the US removes Hong Kong's special status?

Top members of the US administration have warned that Hong Kong no longer merits a special status when it comes trade, and the territory could be treated the same way as mainland China.

Until now, the US has given Hong Kong favourable trading terms, dating back to the territory's time as a British colony, but US Secretary of State Mike Pompeo told Congress that Hong Kong no longer enjoys a high degree of autonomy from China.

Meanwhile, President Donald Trump's top economic adviser Larry Kudlow said Beijing "will be held accountable" for a new security law set to be imposed on Hong Kong.

The National Economic Council Director told CNBC, "If need be, Hong Kong now may have to be treated the same way as China is treated, and that has implications for tariffs".

So what will it mean if that special status is revoked?

Hong Kong is well-known as one of the world's most important financial centres. With a free economy and a competitive tax regime, it's attracted many multinational companies to its shores.

It's also an important hub for trade. But all of that could be in jeopardy, if the US changes the way it deals with Hong Kong.

So what is the US threatening?

At the moment, Hong Kong enjoys special trade relations with the US. It operates as a separate customs territory to mainland China. It also has a free port, meaning no tariffs are charged on the import or export of goods.

Those arrangements have helped Hong Kong become a centre for global trade. But now the US is threatening to treat Hong Kong the same as mainland China. That would mean its goods would be subject to additional tariffs, including those extra charges that were introduced as part of the US-China trade war, although some of those have recently been rolled back.

"Hong Kong has had a special trading relationship with different types of tariffs and regulations that have allowed it to trade in a freer way, particularly in relation to capital markets," said Dr Rebecca Harding, independent trade expert and CEO of Coriolis Technologies.

"The US has treated it as an ally, if you like. But it's now saying we are going to treat you in a similar way to how we treat China," she said.

Where does that leave Hong Kong?

Hong Kong is one of the world's top trading territories. In 2018 it was ranked with the 7th highest volume of trade with a total value of nearly $1.2tn.

But much of that trade is made up of goods that pass into, or come out of, mainland China.

In 2018, 8% of mainland China's exports to the US and 6% of mainland China's imports from the US, passed through Hong Kong.

This role as a gateway between the Chinese market and the rest of the world has put Hong Kong in a unique position, but different trade arrangements could change that.

"If there's a new trade regime in place, that changes the calculation for companies," said Dr Tim Summers, a Senior Fellow at Chatham House, based in Hong Kong.

Companies could choose to move their goods directly through ports in mainland China instead, and higher tariffs there will mean higher price tags.

"The people who are going to get hurt are businesses and consumers," Dr Summers said.

Will China be worried?

Not so much as it might have been at the time of the Hong Kong handover. Back in 1997, Hong Kong played a much more significant role in China's economy, accounting for around 18% of China's GDP.

"But over the last 25 years China has grown massively," said Dr Summers. Hong Kong now contributes just 2-3% of China's GDP.

"Put that in context of the ocean of trade coming out of China, it's not so significant any more. So if President Trump were to act on trade, Hong Kong would suffer, but it's not a gamechanger for China," he said.

Beijing will however want to maintain Hong Kong's status as a global financial centre. Mainland Chinese companies are among those which choose to list on Hong Kong's Stock Exchange because of its access to global capital. Mainland Chinese companies also benefit from Hong Kong's large financial services sector.

"Shanghai and Shenzhen already have a vibrant financial services sector serving mainlanders," said David Webb, a former investment banker who's lived in Hong Kong since 1991. But so long as Beijing has capital controls on the movement of money in and out of China for investment, "then it can't compete with Hong Kong on international capital," he said.

How could this affect the US?

Each year, billions of dollars worth of goods and services are traded between Hong Kong and the US. In 2018, the total value of that trade was almost $67bn according to the US Trade Representative, including $17bn worth of imports that Americans bought from Hong Kong.

If Hong Kong faces the same trading terms as mainland China, US consumers will pay more for those goods.

"American businesses both in the US itself and in Hong Kong are lobbying hard to try and get any action diluted," said Rachel Cartland, director of Cartland Consulting and a former Hong Kong civil servant.

The US Chamber of Commerce has warned that far-reaching changes to Hong Kong's status would have "serious implications" for Hong Kong and US businesses.

That puts Washington in a tricky position, according Dr Summers.

He says ostensibly, Secretary Pompeo's threat appears to be about recent developments in Hong Kong, and Beijing's new security law for the territory. But he said, what it's really about is US-China relations.

"If I were going to be really cynical, I would say this has provided an opportunity for some people in Washington to take measures they wanted to take anyway against China, in the context of a wider US-China rivalry," he said.

"That may well drive the thinking of what Trump does next more than any particular concern about the political autonomy of Hong Kong," he said.--BBC

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Companies under Cautionary

Bindura Nickel Corporation

Padenga Holdings

Delta Corporation

Meikles Limited

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