Major International Business Headlines Brief::: 07 October 2020

Wed Oct 7 06:46:37 CAT 2020

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Major International Business Headlines Brief::: 07 October 2020

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

ü  Bounce back loans: Criminals may have claimed billions

ü  Trump: US tightens temporary worker visa rules

ü  US tech giants accused of 'monopoly power'

ü  Ikea plans 50 store openings even as shoppers move online

ü  Trump urges Congress to provide $25 billion bailout for U.S. airlines

ü  FAA issues new proposed Boeing 737 MAX pilot training procedures

ü  Asian stocks inch up, defy U.S. stimulus gloom

ü  Southwest flight attendants reject call for pay cuts, urge federal aid

ü  Sharp signs licensing deal with Daimler after winning patent lawsuit

ü  JPMorgan aims to back clients to align with Paris climate pact

ü  Tesla's quarterly report could land Musk another $3 billion

ü  Samsung likely to post 35% surge in third-quarter profit as smartphone sales recover

ü  South Sudan: Oil Firm Bids to Set up a U.S.$500 Million Regional Refinery

ü  Nigeria: New Petroleum Reform Bill to Tackle Oil Pollution in Niger Delta

ü  Nigeria: Only Duly Registered Transport Union to Benefit From FG's N10bn Palliative, Says Minister

ü  Nigeria: States Generate Less Revenue in 1st Quarter 2020 Than 1st Quarter 2019

 <mailto:info at bulls.co.zw> 

Bounce back loans: Criminals may have claimed billions

The BBC revealed how criminal gangs had set up fake companies to claim loans.

An analysis of the government loan scheme for struggling small businesses suggests criminals could have stolen more than £1.9bn from taxpayers.

The National Audit Office also says the UK's five biggest banks will pocket nearly £1bn between them from the scheme.

Under the Bounce Back scheme, small businesses can borrow up to £50,000.

The government said it has tried to minimise fraud through lenders' background checks.

Bounce back loans are 100% government-backed loans of up to £50,000, and were introduced to mitigate the huge pressure on small businesses after the economy went into coronavirus lockdown.

They do not have to be paid off for six years, and are interest-free for the first 12 months.

The £38bn loan scheme is an extension of earlier offers which some businesses complained they could not access as the lending criteria was too strict.

The Public Accounts Committee said it was the government's largest and most risky business support scheme.

It says it will not assess the value-for-money of the scheme, as the loans will not start being paid back until May next year.

The NAO analysis said losses from the scheme are likely to reach "significantly above" normal estimates for public-sector fraud of 0.5% to 5%.

This would mean that more than £1.9bn had been lost to criminals, leaving taxpayers on the hook when they failed to pay the money back, it said.

'Taxpayer's expense'

Meg Hillier, chair of the Public Accounts Committee, said the loans had been a vital lifeline for many businesses.

But she added that "the government estimates that up to 60% of the loans could turn bad - this would be a truly eye-watering loss of public money".

"The bounce back loan scheme got money into the hands of small businesses quickly, and will have stopped some from going under.

"But the scheme's hasty launch means criminals may have helped themselves to billions of pounds at the taxpayer's expense.

"Sadly, many firms won't be able to repay their loans and the banks will be quick to wash their hands of the problem.

Today's report confirms what many people had suspected.

In May, the government had to get money to small businesses as quickly as possible, before tens of thousands of them went bust.

But to do that, they had to make compromises on credit and fraud checks. This opened the doors to a whole range of problems - including fraud by organised criminal gangs.

We've found evidence of more than 100 bogus firms set up by scammers to make fraudulent applications - getting the maximum £50,000 each time.

They've used the stolen, personal details of innocent victims to set up the fake companies - victims who won't know anything about it until the letters demanding repayment start arriving through their doors next summer.

The taxpayer is in the same position - waiting to find out how much the scheme will ultimately cost us. The warning from the National Audit Office is clear - it has the potential to be "very high".

Sue and Dave Burden, from the south of England, were shocked to find that Sue's identity had been stolen to set up a company and claim a bounce back loan.

"I've gone from tears to anger," she told the BBC. "Now I'm going to be scared to do anything."

The report warned that the speed with which the scheme was rolled out heightened the fraud risk. It took a month to ensure businesses could not receive more than one loan.

The government was warned in May that its flagship loan scheme to help small firms affected by Covid was at "very high risk of fraud" from "organised crime", the BBC reported last week.

The state-owned British Business Bank (BBB), which supervises the bounce back loan scheme, twice raised concerns.

A BBC report revealed that criminals were setting up fake firms to get loans worth tens of thousands of pounds.

The BBB expects it will pay out £1.07bn in interest payments to the high street lenders that provided the cash.

Most of this will go to UK's five biggest banks, Barclays, HSBC, Lloyds, NatWest and Santander, which provided £31.3bn of funding.

According to latest Treasury figures, there have been 1.55 million applications for the loans, with 1.26 million approvals.

"We targeted this support to help those who need it most as quickly as possible and we won't apologise for this," a government spokesperson said.

"We've looked to minimise fraud - with lenders implementing a range of protections including anti-money laundering and customer checks, as well as transaction monitoring controls.

"Any fraudulent applications can be criminally prosecuted for which penalties include imprisonment or a fine or both."-BBC

Trump: US tightens temporary worker visa rules

Donald Trump signed an executive order on H-1B visas in April.

The US government has announced it will tighten the requirements for the popular H-1B visa.

These visas are widely used by tech firms and visa recipients are mostly Indian and Chinese.

The temporary visas are intended to allow US companies to use foreign workers to fill skills gaps.

But the Trump administration says the visa has been abused, often at the expense of American workers.

Up to 85,000 people are granted an H-1B visa each year, and about 500,000 people are currently living in the US under the visa programme.

According to US Department of Labor statistics, more than two-thirds of H-1B visa holders come from India, and more than 10% come from China.

‘Cheaper foreign labour’

The new rules, which were jointly announced by the Department of Labor and the Department of Homeland Security (DHS), will narrow the definition of “specialty occupations” eligible for the visa.

It will also increase the minimum wages companies must pay for workers enrolled in the H-1B programme.

The acting director of Homeland Security Kenneth Cuccinelli said US companies had abused loopholes in the system to drive wages lower.

“Companies have been incentivised to avoid hiring Americans or even lay off their own qualified, better-paid American workers and replace them with cheaper foreign labour,” he said.

The new rules will also require firms to make "real" offers to US residents before seeking to bring in foreigners,

DHS has vowed to “increase compliance through worksite inspections.”

The plan will be implemented after a 60-day comment period.

Economic crisis

The move will likely face criticism from business groups, who have long argued that the visas are needed to help address a shortage of skilled US workers.

President Donald Trump first announced a review of the visa programme in April.

In June, the administration banned H-1B workers and some other visa holders from entering the US until the end of this year, citing the economic crisis caused by the pandemic.

Amazon, Apple, Facebook, Microsoft, Netflix and Twitter were among many companies who argued that temporary visa bans would damage US firms.

The US Chamber of Commerce and other business groups sued the government over the ban.

Last week, a District Court in California granted them a preliminary injunction blocking the government from ending the H-1B programme.--BBC

US tech giants accused of 'monopoly power'

A report backed by Democratic lawmakers has urged changes that could lead to the break-up of some of America's biggest tech companies.

The recommendation follows a 16-month congressional investigation into Google, Amazon, Facebook and Apple.

"These firms have too much power, and that power must be reined in," Democratic lawmakers working on the probe wrote.

But Republicans involved in the effort did not agree with the recommendations.

In a statement, one Republican congressman Jim Jordan dismissed the report as "partisan" and said it advanced "radical proposals that would refashion antitrust law in the vision of the far left."

Others have said they support many of the report's conclusions about the firms' anti-competitive tactics but that remedies proposed by Democrats go too far.

"Antitrust enforcement in Big Tech markets is not a partisan issue," said Republican Ken Buck. "But an ounce of prevention is worth a pound of cure—I would rather see targeted antitrust enforcement over onerous and burdensome regulation that kills industry innovation."

Monopoly power?

US tech companies have faced increased scrutiny in Washington over their size and power in recent years. The investigation by the House Judiciary Committee is just one of multiple probes firms such as Facebook and Apple are facing.

The 449-page report, penned by committee staff, accused the companies of charging high fees, forcing smaller customers into unfavourable contracts and of using "killer acquisitions" to hobble rivals.

"To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons," it said.

It said the findings should prompt politicians to consider a series of changes.

Those included stronger enforcement of existing competition law, as well as changes to limit the areas in which a firm may do business or prevent companies from operating as players in areas where they are the dominant provider of infrastructure - as Amazon does, for example, when it acts as both a seller and marketplace for other merchants.

This report is blockbuster.

It carries heft too - it's stacked with evidence collected over 16 months.

But the key thing here is these are Democrat suggestions.

This is not a bi-partisan set of recommendations.

In fact, from what we've already heard from Republicans many of the recommendations are "non-starters" for conservatives.

It's also been reported that some Republicans were angered by omissions in the report.

Republicans wanted sections on alleged anti-conservative bias - which was apparently blocked by Democrats.

There are, however, Republicans who want to find common ground on antitrust.

For example, Republican Ken Buck has indicated he'd support some of the recommendations. For example, shifting the anti-competition burden of proof for acquisitions - making it more difficult to buy up the competition.

In truth though, we're unlikely to see any concrete legislative proposals until after the election.

But what's now crystal clear is both Biden and Trump - in their own different ways - offer existential challenges to the power of Big Tech.

'Fringe notions'

In testimony before the committee in July, the bosses of tech firms defended their actions.

On Tuesday, Amazon hit back at what it described as "fringe notions of anti-trust" law, as competition law is known in the US.

"The fact that third parties having the opportunity to sell right alongside a retailer's products is the very competition that most benefits consumers and has made the marketplace model so successful for third-party sellers", the company said in a blog post.

Divisions in Washington between Republicans and Democrats make the prospects of significant action against the firms unlikely, tech analyst Dan Ives of Wedbush Securities said.

"The lack of consensus and divergence among both sides of the aisle on the antitrust issues remains a major issue to move things forward," he said.

While that could change if Democrats gain more power in the upcoming US election, he said, "Despite the report/content and framework for recommendations around Big Tech players (e.g. M&A, business practices) without core law changes we believe this antitrust momentum hits a brick wall."

In response, Facebook said in a statement: "Instagram and WhatsApp have reached new heights of success because Facebook has invested billions in those businesses.

"A strongly competitive landscape existed at the time of both acquisitions and exists today. Regulators thoroughly reviewed each deal and rightly did not see any reason to stop them at the time."

What did the report say?

·         Facebook had "monopoly power" in the market for social networking, which it maintained by using its data advantage to "acquire, copy or kill" nascent threats.

·         Google monopolised online search and advertising using "a series of anti-competitive tactics", including privileging its own content ahead of other websites.

·         Amazon possessed "significant and durable market power" in online shopping, which it furthered in part by "anticompetitive conduct in its treatment of third-party sellers" which it referred to as "internal competitors" behind closed doors.

·         Apple exerted monopoly power via its App store,which it leveraged "to create and enforce barriers to competition and discriminate against and exclude rivals while preferencing its own offerings".--BBC

Ikea plans 50 store openings even as shoppers move online

Furniture store giant Ikea plans to open a record number of stores this year even as more and more shopping is done online.

The Swedish company and its franchisees will open 50 stores worldwide - including in the UK - adding to the 445 stores currently run by the brand.

Ikea's biggest franchisee said demand was rising after lockdown as people seek to do up their homes.

It comes as Ikea's sales in the year to August fell 4% to €39.6bn (£36bn).

It is a better result than company bosses had expected at the height of the global lockdown.

Jesper Brodin, boss of Ingka Group, a franchise company that operates the majority of Ikea stores, told the BBC that people were increasingly keen on improving their homes after spending long periods indoors.

"We were expecting a gradual ramp-up in our business [when our stores began to reopen around the world], but we like many others were absolutely wrong," he told the Today programme.

"From day one of opening we have had a tremendous interest in coming back to our stores."

Ingka will open 30 new stores in the next 12 months, including an Ikea in Hammersmith, London due to open in spring.

In June, Ikea said it would repay money it got from state wage support schemes around the world, including in the US and Ireland.

However, it did not include the UK as although the furniture chain furloughed 10,000 UK workers it did not claim back their salaries from the government.--BBC

Trump urges Congress to provide $25 billion bailout for U.S. airlines

WASHINGTON/CHICAGO (Reuters) - U.S. President Donald Trump said late on Tuesday Congress should quickly extend $25 billion in new payroll assistance to U.S. passenger airlines furloughing thousands of workers as air travel remains down sharply amid the coronavirus pandemic.

Trump’s new demand came hours after he announced his administration would abandon talks with congressional Democrats over proposals to spend at least $1.6 trillion in additional coronavirus relief funds, a move that appeared to scuttle a new $25 billion bailout for U.S. passenger airlines to keep tens of thousands of workers on the job for another six months.

But Trump later issued a call on Twitter, urging Congress to “IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support.... I will sign now!” he wrote, saying Congress could tap unused funds from prior coronavirus relief to fund airlines and a separate program for small business.

American Airlines AAL.O and United Airlines UAL.O last week began laying off 32,000 workers, but had said they would reverse course if lawmakers reach a deal on a new government program to fund payroll costs.

A prior $25 billion airline payroll support program of mostly cash grants approved by Congress in March expired on Sept. 30.

House Speaker Nancy Pelosi last Friday expressed support for a standalone bill to keep airline workers on the job if a broader package could not be reached.

A Pelosi spokesman did not respond to a request for comment late Tuesday.

Congress is expected to return to session on Oct. 19 and lawmakers may make a new attempt to pass a standalone measure to provide the $25 billion sought by airlines but the prospects are uncertain, even though the airline relief enjoys strong support in both the House and Senate.

One remaining issue is how Congress would pay for the new funding, a senior congressional aide told Reuters Tuesday.American Airlines closed about 4.5% lower after Trump's tweet on ending talks, while shares of United Airlines UAL.O closed 3.6% lower. Southwest Airlines LUV.N stock fell 2.4% and Delta Air Lines DAL.N shares closed 2.9% lower.

Airlines for America, the trade group representing major U.S. airlines, noted “thousands of airline workers across the country have already lost their jobs – and more furloughs are expected in the coming weeks.” But the group added “there is a glimmer of hope that our leaders in Washington will act and save these jobs before it’s too late.”

The U.S. Travel Association said “with millions of Americans suffering, it is woefully shortsighted to end relief negotiations” and added that “without immediate aid, 50% of all travel-supported jobs will be lost by December — an additional loss of 1.3 million jobs.”

U.S. airlines are collectively burning about $5 billion of cash a month as passenger traffic has stalled at around 30% of 2019 levels. After tapping capital markets, they say they have enough liquidity to last them at least 12 months at that rate.

Between voluntary and involuntary furloughs, major U.S. airlines’ workforce will shrink by at least 25% in October.

Industry experts expect a slight improvement in domestic demand over the winter holidays from current levels, but it will remain far below last year’s volumes. Meanwhile, higher-margin business and international travel remain severely depressed.

Chief executives acknowledge that pre-pandemic air travel demand is unlikely to return for years, and still unknown is how the pandemic, which has forced drastic changes in habits, will impact travel behavior.

American Airlines will end service to 11 smaller airports on Wednesday after Congress failed to approve additional aid.

FAA issues new proposed Boeing 737 MAX pilot training procedures

WASHINGTON (Reuters) - The Federal Aviation Administration (FAA) on Tuesday issued a draft report on revised training procedures for the Boeing BA.N 737 MAX, a key milestone to the plane's eventual ungrounding.

The FAA said the draft Flight Standardization Board report would be open for public comment through Nov. 2 before the procedures are finalized. The proposal adds new training requirements to deal with a key safety system called MCAS tied to two fatal crashes that killed 346 people and led to the plane’s grounding in March 2019.

Boeing did not immediately comment.

MCAS, which was designed to help counter a tendency of the MAX to pitch up, could be activated after data from only a single Angle of Attack (AOA) sensor.

Faulty data that erroneously triggered MCAS to repeatedly activate played critical roles in fatal 737 MAX crashes in Indonesia and Ethiopia, a U.S. House report released last month said.

The FAA is requiring new safeguards to MCAS, including requiring it receive data from two sensors, before it allows the 737 MAX to return to service.

Pilots must undergo new simulator training before they can resume flights, including training on multiple flight deck alerts during unusual conditions along with how to respond to a runaway stabilizer with timely pilot actions required.

Pilots must also get training for erroneous, high AOA malfunctions.

The FAA must finalize the software upgrade requirements and other changes to the 737 MAX before it can issue an ungrounding order, which is expected at some point in November. That could allow the MAX to begin resuming commercial flights before the end of 2020.

Asian stocks inch up, defy U.S. stimulus gloom

SINGAPORE/NEW YORK (Reuters) - Asian stock markets edged higher on Wednesday, brushing off Wall Street’s weaker finish, which came after U.S. President Donald Trump abruptly broke off economic stimulus negotiations with lawmakers.

Trump cancelled talks with Democrats in a Tweet saying that negotiations will stop until after the election, when he promises a major stimulus bill.

That sent Wall Street tumbling and safe assets like the dollar and bonds higher. Investors in Asia, however, seemed less rattled, holding a view that stimulus would be delayed rather than derailed.

MSCI’s broadest index of Asia-Pacific shares outside Japan crept 0.2% higher to a fresh two-week peak, led by a 0.8% gain in Australia where an expansionary budget lifted stocks.

Broad gains in Hong Kong lifted the Hang Seng 0.7% while Japan’s Nikkei fell 0.2%.

S&P 500 futures wobbled either side of flat, finding some support from Trump tweets seeming to promise backing for individual pieces of fiscal stimulus. The dollar was steady at its highest level for the week so far. Oil prices slid and the strong dollar squashed gold to a one-week low.

“There are a couple of ways we still get stimulus, but none of them occur before the election now,” said ING’s chief economist in Asia, Rob Carnell, since both contenders are promising it.

“One way or another we’re going to get some stimulus, it’s just we’re not going to get it now - so we’ll tread water for a bit.”

China’s stock, bond and currency markets are closed for holidays until Oct. 9.

The end to U.S. stimulus talks comes as a few wobbles hit the world’s coronavirus recovery.

U.S. hiring is slowing and on Tuesday U.S. Federal Reserve Chair Jerome Powell warned of the risks if authorities did too little to support the economic rebound.

“The risks of overdoing it seem, for now, to be smaller,” Powell said. “Even if policy actions ultimately prove to be greater than needed, they will not go to waste.”

U.S. markets, which have rallied for a few weeks on hopes of a breakthrough in stimulus talks, tanked on Tuesday. The Dow fell 1.3%, the S&P 500 dropped 1.4% and the Nasdaq fell 1.6%.

COUNTING DOWN THE MINUTES

The flight to safety overnight partially unwound what had been the steepest U.S. bond market selloff in about a month. The yield on benchmark 10-year U.S. government debt fell two basis points to 0.7403%.

Currency traders also bought back dollars, pushing the dollar index to its highest since late last week and leaving both foreign exchange and bond markets delicately poised ahead of the release of Fed minutes at 1800 GMT.

Investors are watching for clues as to how Fed members are thinking about the central bank’s new and more accommodative approach to inflation and what they might do to boost it.

“We think the risks lie more in the extent of disagreement within the FOMC than on the any potential dovish surprise,” said Standard Chartered Bank’s head of FX research, Steve Englander.

The risk-sensitive New Zealand dollar sat at a one-week low of $0.6577. The euro was marginally lower at $1.1725.

The Aussie also touched a week-low $0.7095 and Australian government bonds rallied across the curve, as investors bet a dovish tone from the central bank foreshadowed further monetary easing and perhaps more bond buying.

Jitters remained in commodity markets, with oil futures giving up some of their recent gains made amid supply concerns.

A larger-than-expected buildup in U.S. crude stocks had West Texas Intermediate futures down about 2% to $39.91 a barrel. Brent crude futures fell 1.5% to $42.01 a barrel.

Spot gold was steady at $1,879 an ounce after being whacked by a rising dollar overnight.

Southwest flight attendants reject call for pay cuts, urge federal aid

CHICAGO (Reuters) - The union representing Southwest Airlines' LUV.N flight attendants on Tuesday rejected management's call for negotiated pay cuts to avoid furloughs and renewed calls for more airline aid from Washington.

On Monday, Southwest Chief Executive Gary Kelly said he was asking unions to agree to pay cuts in order to prevent furloughs and layoffs through 2021 as the industry struggles to stem losses from the coronavirus pandemic.

U.S. airlines had pleaded for another $25 billion in federal payroll support before a ban on job and pay cuts under a first package expired on Sept. 30.

Lawmakers have so far failed to agree on a second COVID-19 stimulus plan and some airlines have started furloughing thousands of employees, a move Southwest has so far sought to avoid.

But TWU Local 556 President Lyn Montgomery said that before “cracking open the contracts that took us decades to obtain,” the union wants to ensure that no stone has been left unturned, noting that flight attendant concessions may not have a large material impact on Southwest’s daily cash burn.

About 32% of Southwest’s flight attendants have already agreed to voluntary departure or leave packages to help reduce the company’s payroll costs, she said.

U.S. airlines are burning through millions of dollars every day as demand hovers around 30% of 2019 levels and revenues remain sharply depressed.

The union representing Southwest’s pilots said on Tuesday it had tentatively agreed to meet and discuss cost savings if a second COVID-19 relief package does not pass in Washington.

Airline workers in general have been reluctant to accept pay cuts given wage losses in the aftermath of the Sept. 11 attacks and 2009 economic downturn.

Sharp signs licensing deal with Daimler after winning patent lawsuit

TOKYO (Reuters) - Japan's Sharp Corp 6753.T said on Wednesday it has signed a licensing agreement with Daimler DAIGn.DE as it settled a patent infringement lawsuit against the German automaker over in-vehicle mobile communications technology.

The Japanese electronics firm won the patent dispute in a ruling last month by a German court that allowed Sharp to enforce a sales ban against Daimler under certain conditions.

JPMorgan aims to back clients to align with Paris climate pact

(Reuters) - JPMorgan Chase & Co JPM.N aims to support its clients in expanding investment in clean energy and work towards net zero-emissions by 2050, a move that aligns with the Paris climate pact of cutting carbon output, the bank said on Tuesday.

The Trump administration is preparing to pull the United States - one of the world’s biggest emitters of planet-warming greenhouse gases - out of the Paris accord adopted by nearly 200 nations with the aim of limiting global warming to “well below” 2 degrees Celsius and ideally to 1.5 degrees.

While the use of lower-carbon technology is growing within the electric power and automotive sectors, JPMorgan said, few options are available to replace oil and natural gas in long-distance transportation and heavy industry.

To track the progress towards the goals set in the Paris Agreement, JPMorgan said it will aim to evaluate its clients’ carbon footprint relative to their output, and provide insight into changes in performance.

“The goals set in the Paris Agreement are commendable and ambitious, but the world is not on track to meet them,” said Daniel Pinto, co-president of JPMorgan Chase.

“While the world has a long way to go, we at JPMorgan Chase want to do more.”

Tesla's quarterly report could land Musk another $3 billion

(Reuters) - Tesla's TSLA.O upcoming quarterly report could put another $3 billion (£2.32 billion) in Chief Executive Elon Musk's pocket.

The electric car maker on Tuesday saw the six-month average of its stock market value hit $250 billion, a milestone toward triggering the fourth of 12 tranches of options to buy Tesla stock at a discount, granted to the billionaire in his 2018 pay package.

Musk’s compensation is exclusively made up of a series of potential stock options rewards based on market capitalization and operational goals. To secure Musk’s fourth tranche, Tesla still must hit a goal related to revenue or profitability, and that could happen in the company’s third-quarter report, the date of which has yet to be announced.

Tesla’s stock was down 0.8% at mid-day on Tuesday, but the company’s six-month average market capitalization rose, thanks to a strong rally in recent months.

Each tranche gives Musk the option to buy 8.44 million Tesla shares at $70 each, about a sixth of their current price.

At Tesla’s current stock price of $420, Musk would theoretically be able to sell the shares related to the upcoming tranche, plus three other tranches that vested in recent months, for a combined profit of $11.8 billion, or almost $3 billion per tranche.

Musk’s first tranche was worth about $700 million in May, when it vested, but its value has increased along with Tesla’s stock price.

The Silicon Valley billionaire’s pay package, which surpasses anything previously granted to top U.S. executives, was controversial when it was approved by shareholders. The median compensation for Tesla employees last year was about $58,000, according to a company filing.

Tesla’s stock has surged 400% in 2020 as the company increased sales of its Model 3 sedan, giving it stock market value of almost $400 billion. After Tesla last week said it delivered a record 139,300 vehicles in the third quarter, investors are now awaiting the company’s quarterly financial report.

While investors focus on gross margins, free cash flow and earnings per share in that report, adjusted EBITDA will be key to Musk’s personal finances. EBITDA, which stands for earnings before interest, taxes, depreciation and amortization, is a non-GAAP operating metric that Tesla further customizes by excluding the cost of stock-based compensation, including Musk’s.

In the four quarters through June, Tesla’s adjusted EBITDA reached $4.42 billion, just short of a $4.5 billion milestone that would open the way for Musk’s next options tranche.

JPMorgan estimated in a recent client note that Tesla will report adjusted EBITDA of $1.183 billion for the September quarter, which would raise Tesla’s rolling four quarters of adjusted EBITDA to $4.52 billion. That, along with Tuesday’s increase in the company’s six-month average market capitalization, would qualify Musk for his next options payout.

Samsung likely to post 35% surge in third-quarter profit as smartphone sales recover

SEOUL (Reuters) - Samsung Electronics Co Ltd's 005930.KS September-quarter profit likely surged more than a third, fuelled by strong smartphone sales and a rush order of memory chips from Huawei Technologies Co Ltd [HWT.UL], analysts said.

Samsung, the world’s biggest memory chip supplier, is scheduled to announce preliminary July-September operating profit and revenue on Thursday.

Profit likely rose 35% to 10.5 trillion won (£7.04 billion) from the same period a year earlier, according to Refinitiv SmartEstimate, derived from analyst estimates weighted toward those more consistently accurate. Revenue likely rose 3%.

While Samsung’s overall chip business was muted, analysts said orders from Chinese smartphone maker Huawei likely propped up sales. Huawei is likely to have built stockpiles before U.S. sanctions from mid-September prevented it from buying chips made using U.S. technology without a license, analysts said.

Last year Samsung’s chip business accounted for roughly half of its profit.

U.S. rival Micron Technology Inc MU.O posted market-beating profit last month, likely helped by Huawei's rush to secure inventory, analysts said.

“Huawei’s emergency orders from late August drove up Samsung’s DRAM and NAND chip shipments, offsetting the effect of weak prices and limiting the drop in semiconductor profits for the quarter,” said analyst Song Myung-sup at HI Investment & Securities.

Prices of DRAM chips, which allow devices to multi-task, and of NAND chips, which store data, fell in July-September, showed DRAMeXchange data.

Samsung’s smartphone profit, which accounted for one-third of earnings last year, likely jumped as handset demand rebounded after the COVID-19 pandemic curbed sales in the first half of 2020. Third-quarter smartphone shipments likely rose 48% to 80 million from the second quarter, according to analysts and data from Counterpoint Research.

Profit at Samsung's display business likely fell, hurt by a later-than-expected launch of customer Apple Inc's AAPL.O new iPhone. However, earnings from television sets and home appliances likely rose as Samsung sold more gadgets online and cut operating costs, analysts said.

Samsung is scheduled to release detailed earnings figures later this month.

South Sudan: Oil Firm Bids to Set up a U.S.$500 Million Regional Refinery

South Sudanese oil marketing giant Trinity Energy Ltd is set to inject $10 million worth of new investments in its Kenyan operations and also plans to build a $500 million crude oil refinery in South Sudan to serve the region with refined petroleum products.

The firm, which controls close to 40 per cent of the South Sudanese oil market, is planning a 40,000 barrels per day (bpd) modular refinery at Paloch in the oil-rich Upper Nile State, with the potential of expanding capacity to 200,000bpd, as well as petroleum storage facilities at Nesitu, in the south of the country.

South Sudan has the third-largest oil reserves on the continent after Libya and Nigeria, estimated at 3.5 billion barrels, with much of it yet to explored.

The refinery, to be built by American firm Chemex, is expected to be operational in two to three years, with plans to start distribution of refined petroleum products to Kenya, Uganda, Tanzania and the Democratic Republic of Congo by road, owing to the absence of railway and pipeline connectivity between these countries.

The EastAfrican has learnt that the feasibility study and the designs for the proposed refinery have already been concluded with Afreximbank together with big regional banks operating in Juba expected to provide financing.

"We are already making steady progress towards our refinery project. We have already identified and secured land for the refinery in Paloch. We have engaged Chemex of the United States as the project manager for this project. Separately we are close to tying up project preparatory work financing from Afreximbank and this will aid in the engineering and design work for the facility," the firm's chief executive Robert Mdeza told The EastAfrican in an interview.

"Various discussions are ongoing with financiers for the various facets of our business. We have opted for segmented approach so that we can kick off with the low-hanging opportunities such as our working capital requirements as we work our way towards financing for the larger projects like the refinery," he added.

Competition

Trinity's refinery will upstage Uganda, where the commencement of the construction of the $4 billion refinery at Kabaale in Hoima district has been pushed to 2025 following the delay in the conclusion of the Final Investment Decision on the basin-wide upstream oil development project.

Initially, the FID was expected to be reached in September and the projected completed in three years.

The Kabaale refinery is expected to process an estimated 60,000 barrels of oil per day with an initial output of 30,000 barrels per day at the time of the commissioning of the project.

Uganda, Kenya, Tanzania, Rwanda and Burundi had been allocated a combined 40 per cent shareholding in the refinery, translating into an eight per cent stake for each, with 60 per cent of the shares reserved for private investors. However, only Tanzania took up its full share of eight per cent while Kenya took up 2.5 per cent.

Rwanda and Burundi had not expressed interest in the facility by the expiry of the extended period set aside to do so in 2016. As a result, Uganda was compelled to take up an additional 11.5 per cent shareholding in the Hoima-based refinery, bringing its total shareholding to 19.5 per cent, with French oil giant Total SA taking up a 10 per cent stake.

Trinity Energy is not new to the region, and was incorporated in 2013 with majority ownership by Trinity Holdings which is 90 per cent owned by a local South Sudanese businessman Akol Emmanuel Ayii.

Currently, the firm supplies substantial volumes of refined products to South Sudan, effectively stabilising domestic supply and demand for refined oil products.

"We are now embarking on our next phase of growth with major projects lined up in South Sudan including a 40,000bpd refinery as well as growing our footprint outside of South Sudan. This will be instrumental in our plans to enhance energy stability particularly for South Sudan and our landlocked neighbours," said Mr Mdeza.

The country is seeking to increase crude oil production to pre-conflict levels of 350,000bpd, which is expected to significantly contribute to economic growth and sustainability.

Last year, Africa accounted for more than 7.9 million bpd in oil production, an output level that has significantly dropped from nearly 10 million bpd in the period between 2005 and 2010 largely due to lower global oil prices.

The construction of the refinery in Paloch is expected to strengthen the firm's bid of expanding its operations across the East and Central African region through a combination of acquisitions and greenfield investments as part of its five-year (2020-2024) growth and expansion plan.

"Our strategy is to have a strong presence in East and Central Africa within the next four years, before moving to Southern Africa. This is part of our Pan African growth agenda. We will immediately focus on neighbouring countries such as Uganda, Ethiopia, Eastern DR Congo and the Central African Republic, which like us are landlocked countries that require energy security to support economic growth and future development activities," said Mr Mdeza.

"If there is an opportunity for an acquisition we shall look at them. We are keeping our options open some of which could be starting from the ground and some of which will be. So our options are open, we are going for both greenfield investments and acquisitions where possible," he added.

According to Mr Mdeza, Kenya is also an important market for Trinity Energy Ltd due to the fact that the country is the biggest petroleum market in the region as well as the key entry point for petroleum products destined for the region.

Currently, the firm plans to revive its subsidiary in Kenya, which would play a significant role in its bid to expand its operations to other East African countries.- East African.

Nigeria: New Petroleum Reform Bill to Tackle Oil Pollution in Niger Delta

The 2020 Petroleum Industry Bill (PIB) that is presently before members of the National Assembly will substantially reduce environmental pollution in the oil-producing areas of the Niger Delta when passed into law.

Aside a ban on the use of chemicals for upstream petroleum operations, there will now exist an environmental remediation fund to be established by a body to be set up by the federal government into which all oil companies doing business in the region would contribute.

Much of the restiveness in the oil-producing communities in the area has always been partly due to the degradation of the rivers and the negative impact it has had on the livelihood of the people who mostly depend on fishing and farming for survival.

However, the new proposed law which has already passed first reading in the National Assembly, seeks to assess the oil licence applicants to have the capacity or has provided for the capacity to rehabilitate and manage negative impacts on the environment.

It also bars oil companies from flaring gas, except with express permission of the commission and for emergency purposes and the advance payment of a financial contribution for remediation of environmental damage.

The advanced payment, a copy of the bill obtained by THISDAY, noted, would be deployed in tackling the pollution in the particular area, where the spill happens, if the company fails to clean it up for any reason.

"As a condition for the grant of a licence or lease and prior to the approval of the environmental management plan by the 'Commission or Authority', a licensee or lessee shall pay a prescribed financial contribution to an environmental remediation fund established for the rehabilitation or management of negative environmental impacts with respect to the licence or lease.

"In determining the amount of the financial contribution, the commission or authority, as the case may be, shall take into consideration the size of the operations and the level of environmental risk that may exist.

"The financial contribution to an environmental remediation fund under subsection (1) of this section shall be subject to audit by the licensee or lessee, in accordance with guidelines that the commission or authority may, as the case may be, issue.

"Where a licensee or lessee fails to rehabilitate or manage or is unable to undertake the rehabilitation or management of any negative impact on the environment, the commission or authority, may, upon written notice to the holder, apply the fund under subsection (1) of this section to rehabilitate or manage the negative environmental impact," it noted.

It added that a licensee or lessee shall, pursuant to subsections (1) and (2) of the section assess its environmental liability annually and increase its financial contribution to the satisfaction of the commission.

Accordingly, where the commission, is not satisfied with the assessment and financial contribution referred to in the section, it will appoint an independent assessor to conduct the assessment and determine the financial contribution.

On gas flaring, the bill stated that a licensee, lessee or operator that flares or vents natural gas, except in the case of an emergency; pursuant to an exemption granted by the commission; or as an acceptable safety practice under established regulations, shall be liable to a fine as prescribed by the commission.

"A fine due under this section shall be paid in the same manner and be subject to the same procedure for the payment of royalties to the government by companies engaged in the production of petroleum.

"A fine paid pursuant to this section shall not be eligible for cost recovery or be tax deductible" it stressed.

Prior to the commencement of petroleum production, all oil companies are also to install metering equipment conforming to the specifications prescribed on every facility from which natural gas may be flared or vented as the commission or may prescribe.

The bill further proposed that a licensee or lessee who fails or refuses to install metering equipment pursuant to subsection (1) of the section commits an offence under the Act and is liable to a fine as the body to be established may deem fit under a regulation.

"The commission or the authority may grant a permit to a licensee or lessee to allow the flaring or venting of natural gas for a specific period - where it is required for facility start-up; or for strategic operational reasons, including testing," it stated.-This Day.

Nigeria: Only Duly Registered Transport Union to Benefit From FG's N10bn Palliative, Says Minister

The federal government on Tuesday said that only duly registered road transport unions will be considered under its N10 billion intervention fund for transport workers and operators.

The Minister of State, Ministry of Transportation, Senator Gbemisola Saraki, gave the hint when the National President, National Commercial Tricycle and Motorcycle Owners and Riders Association (NACTOMORAS), Alhaji Muhammed Sani Hassan, led its members on a courtesy call on the minister in her office in Abuja.

Saraki while appreciating the association for the visit, called for synergy among transport stakeholders, even as she assured them of government's commitment to assisting the associations/unions and instill sanity in the sector through a regulatory framework the ministry is coming up with.

The Minister of State, in a statement by the Director of Press, Public Relations of the ministry, Mr. Eric Ojiekwe, stated that the pandemic has necessitated the need for contact tracing of passengers as normalcy is gradually being restored in the country.

She also tasked the executive council to ensure that their members are duly registered as only properly registered road transporters will be considered for the palliative.

Saraki, however, brought to the knowledge of the delegation that: "The ministry is aware of the role 'keke' and 'okada' operators play in transportation in Nigeria, and the Transport Commissioner's Forum had also mentioned to her the essential services the operators provide."

Similarly, the NACTOMORAS National President, in his remarks, implored the Minister of State to give tricycle and motorcycle operators/owners special consideration in the disbursement of the intervention fund.

According to Sani, members of the association were most affected by the COVID-19 pandemic as the business is closest to, "hand to mouth" which stripped off every little savings they had before the catastrophe due to the stay at home order of the federal government.

He said that it was a sigh of relief when news emerged that the federal government has approved a N10 billion support for road transport operators and workers to assuage their challenges and prayed the minister to look into their plea favorably.-This Day.

Nigeria: States Generate Less Revenue in 1st Quarter 2020 Than 1st Quarter 2019

In the whole of 2019, all the states made a combined revenue of ₦1.33 trillion.

This figure dipped by 11.7 per cent from the ₦693.9 billion generated by the states during the same period in 2019.

The NBS said this in its internally generated revenue at state-level report for the first half of 2020 published Tuesday afternoon.

The bureau said Lagos raked in the highest IGR with ₦204.51 billion within January and June.

Rivers placed far second with ₦64.59 billion, followed by FCT with ₦35.2 billion, Delta with ₦30.8 billion, and Ogun State ₦23.7 billion.

At the foot of the log are Yobe, Gombe, Adamawa, Ekiti, and Jigawa States which respectively earned ₦3.9 billion, ₦3.8 billion, ₦3.75 billion ₦3.2 billion, ₦3 billion.

The report also said in the second quarter of the year, the states and the FCT made ₦259.73 billion, a dip from ₦353.14 billion recorded in the first quarter.

"This indicates a negative growth of -26.5% quarter on quarter," NBS wrote.

Meanwhile, in the whole of 2019, all the states made a combined revenue of ₦1.33 trillion.

The quartet made a combined revenue of ₦685 billion, an equivalent of about 51.02 per cent. Others made a total of about ₦650 billion.

According to that report, Lagos alone accounted for about N400 billion of this figure. almost one-third of the total internal revenue of all the states and Abuja. The largest chunk of this was generated from taxes, especially those of formal sector employees, with only about 10 per cent generated by the state's MDAs.

Sitting in far second is oil-rich Rivers which earned N140 billion, about half the amount generated by each of the Federal Capital Territory and Ogun State. As for Rivers and the FCT, taxes from the formal sector account for largest earning for the year; in Ogun, it is funds made from MDAs.

Behind these are Delta which made N64 billion; Kaduna, N44 billion, Kano N40 billion, Akwa Ibom N32 billion; and Enugu N31 billion.-Premium Times.

Invest Wisely!

Bulls n Bears 

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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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