Major International Business Headlines Brief::: 03 September 2020

Thu Sep 3 06:35:56 CAT 2020

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Major International Business Headlines Brief::: 03 September 2020

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ü  Tesla tumbles 15% as blistering rally cools

ü  Apple more valuable than the entire FTSE 100

ü  India bans PUBG, Baidu and more than 100 apps linked to China

ü  Lego set to open 120 new stores despite pandemic

ü  Rolls-Royce launches £250,000 car as demand rebounds

ü  India's kite-makers see sales fly during lockdown

ü  Unilever to cut fossil fuels from cleaning brands

ü  Speedy return to workplace 'not possible'

ü  United Airlines to cut 16,370 workers, many more going without pay

ü  Airbnb spurns approach from Ackman's blank-check company

ü  Oil holds steady near multi-week lows on demand worries

ü  Asian shares firm on U.S. stimulus hopes, upbeat China data

ü  Analysts upgrade Australia, New Zealand dollars outlook but doubt rally would last

ü  Africa Remains Untapped Market for Booming Black Businesses in America

ü  South Africa facing a tax implosion: analyst

ü  East Africa Business Recovery Strategy On the Cards

 <mailto:info at bulls.co.zw> 

Tesla tumbles 15% as blistering rally cools

(Reuters) - Tesla Inc shares fell as much as 15% on Wednesday, extending previous session’s losses after the electric-car maker announced a $5 billion stock offering that was aimed at cashing in on Wall Street’s heightened interest.

After a nearly six-fold increase in share value this year, Tesla decided on a 5-for-1 stock split, which came into effect on Monday.

“After a strong positive reaction to a split you recently had a share offering, and a large holder selling. People are taking some profits after a monster run,” Elazar Advisors analyst Chaim Siegel said. “Tesla is allowed to have a down day.

One of the top shareholders of the automaker, fund management firm Baillie Gifford & Co, cut its passive stake to 4.25% compared to 7.67% as of Dec. 31, according to a regulatory filing. (bit.ly/3lHcI5T)

Tesla shares were last down 6.8% at $442.8 in afternoon trading.

Apple more valuable than the entire FTSE 100

The valuation of US tech giant Apple has continued to surge, surpassing the entire value of all the members of the UK's top share index.

Apple's shares rose 4% on Tuesday, valuing it at $2.3 trillion (£1.7tn), compared to the £1.5tn value of all the companies in the FTSE 100.

Apple shares fell back on Wednesday, but remained ahead of the London index at the close of trading on Wednesday.

It is just two weeks since Apple became the first US firm to be valued at $2tn.

Investors have been snapping up US tech stocks as demand for tech goods has surged amid the coronavirus pandemic.

More people are relying on technology to work and shop from home, and Apple has been one of the major beneficiaries.

The iPhone-maker has seen its share price more than double since March, when panic about the coronavirus pandemic swept the world's stock markets.

Demand for Apple's shares was also said to be boosted on Tuesday by company's decision to divide its shares, swapping four new ones for every old one investors held. The move is expected to make it easier for individuals to invest.

By contrast, market-watchers said London-listed companies, which include lockdown-hit oil companies and banks, have performed sluggishly compared to the runaway share prices of big US-listed tech firms.

"The FTSE 100 is a dinosaur, full of rather lumbering old-world stocks with precious little growth to offer," said Neil Wilson, chief market analyst for Markets.com. He added that it is also "a very good proxy for the global economy, which we know is on its knees".

With the exception of Ocado, "there is no tech to speak of, which is where the real money has been made this year," he added.

"Whilst the US has Zoom, we have BT and Vodafone. The US boasts Netflix and Amazon - the FTSE can muster ITV and Sainsbury's."

The FTSE 100 is trading at 5,972 points, down 22% from its 2020 high of 7,675 in January.

By contrast, the Nasdaq index in the US, which includes many large tech companies, hit a fresh record on Tuesday. It has almost doubled since the collapse in share prices in the immediate aftermath of the coronavirus outbreak.

Some investors have warned that that all markets - including those trading in stocks, bonds and commodities - are overvalued at the moment.

Stimulus from central banks to support struggling economies - including quantitative easing and historic low interest rates - have buoyed the value of many companies and assets.

In another sign of booming tech valuations, Tesla's 12% stock gain propelled founder Elon Musk's personal fortune to $115bn this week, briefly making him the third-richest person in the world, according to Bloomberg. He temporarily overtook Facebook founder Mark Zuckerberg.--BBC

India bans PUBG, Baidu and more than 100 apps linked to China

A further 118 Chinese mobile apps have been banned by the Indian government, as tensions between the two countries continue to rise.

Those on the list include several of Tencent's products including the hit video game PUBG Mobile and WeChat Work.

Previously the government had banned 59 of the most popular apps including TikTok over national security concerns.

India's IT Ministry said it had "credible information" the latest batch were acting against India's interests.

Other apps affected include:

·         two of search giant Baidu's apps

·         CamCard's business card scanner

·         Alibaba's Alipay payment app and its Taobao e-commerce platform

·         Netease games including Marvel Super War

·         Sina News

The ministry said it had received many complaints from "various sources" including several reports about "misuse of some mobile apps available on Android and iOS platforms for stealing and surreptitiously transmitting users' data in an unauthorised manner to servers which have locations outside India".

"The compilation of this data, its mining and profiling by elements hostile to national security and defence of India, which ultimately impinges upon the sovereignty and integrity of India, is a matter of very deep and immediate concern which requires emergency measures."

The ban comes against the backdrop of tensions along a disputed Himalayan border.

Both India and China deployed more troops to the Ladakh region in June and clashes have left at least 20 Indian troops dead.

Satellite images appear to show that China has built new structures overlooking the Himalayan border region.

The US has also recently taken action against Chinese apps, threatening to ban TikTok and ordering US firms to stop doing business with Tencent's WeChat platform. White House trade advisor Peter Navarro has said that the administration also has other Chinese apps within its sights.--BBC

Lego set to open 120 new stores despite pandemic

Hundreds of stores have shut during the pandemic but not at Lego, which is on track to open 120 new shops this year.

The Danish toy firm told the BBC bricks-and-mortar stores had a solid future, despite the drop in footfall on high streets and social distancing restrictions in shops.

"When our stores have reopened after lockdown, there have been queues," boss Niels Christiansen said.

"We give people the brand experience in our shops which we can't do outside."

It comes as the toy firm announced revenues of DKK 15.7bn (£1.8bn) for the first half of the year, up 7%, while operating profit grew by 11%.

The company currently has 612 stores across the globe, with 14 in the UK. Of the new stores it is opening, 46 were launched in the first half of the year.

Overall, 80 of them will be based in China.

Lego bets on shops despite toy market downturn

Age: 43. Hobby: Lego. Rise of the middle-aged toy fans

The big change the company has noted since the start of the crisis is that more adults are getting involved in building Lego kits.

"We have a more than a million adult fans signed up to our website," Mr Christiansen said.

"We saw a very positive development during the coronavirus lockdown when families began playing and building Lego sets together."

Sales of the more complicated - and more expensive - big Lego sets grew by two and a half times in the first half of the year, he said, as families looked for big projects to make together during lockdown.

"We've seen momentum continue into the second half of the year even after people started going back to work and to school. So the result is not just a reflection of two months when everyone was sitting at home," Mr Christiansen said.

Alongside its store openings, the firm said e-commerce remained vital to the business, with visits to its website doubling to 100 million in the first half of 2020.

Its said its themed sets continue to prove popular, with the top-performers including Star Wars, Disney Princess, and Harry Potter.--BBC

Rolls-Royce launches £250,000 car as demand rebounds

The boss of carmaker Rolls-Royce has said global demand for luxury vehicles is rebounding despite the pandemic.

Boss Torsten Müller-Ötvös told the BBC that markets in Asia, Europe and the US were now "more or less back to normal".

Mr Müller-Ötvös was speaking at the launch of the new Rolls-Royce Ghost, the company's latest model, which is expected to retail at around £250,000.

He said sales for the first half of 2020 were down 30%, but now "times are starting to become better and better".

Mr Müller-Ötvös described the launch of the new Rolls-Royce Ghost, a complete redesign of the most successful car in the firm's history, as a "seminal moment".

At the height of the coronavirus pandemic, Rolls-Royce shut down production for a couple of weeks, while dealerships around the world followed suit.

The slump in sales came after a bumper year in 2019, which Mr Müller-Ötvös described as "the best-ever year in the 116-year history of Rolls-Royce Motor Cars".

"But of course, then Covid happened," he added.

New car registrations see first rise this year

Hundreds of job losses at Mini car plant

Since then, the firm had seen an "upward trend", he said. "Business is coming back to what I would call far more normal."

The Rolls-Royce boss rejected suggestions that the carmaker was overly dependent on one region for its sales, saying it was "well balanced worldwide".

Although the US was its biggest market and China was important, there was also strong demand in countries such as the UK, which accounted for 10% of its sales, he said.--BBC

India's kite-makers see sales fly during lockdown

Mohammad Ahmed has been selling kites for the past 11 years, and he says he has never seen it so busy.

Sales at his shop in Delhi have soared over the past six months - thanks to coronavirus.

Mr Ahmed says that most days since India went into lockdown on 25 March he has restocked his shop with kites worth a total 150,000 rupees ($2,000; £1,500), only for them to sell out by the evening.

"I am tired of taking phone calls," he says. "Suddenly everybody has needed kites. I am still getting calls from all over the country - Maharashtra, Tamil Nadu, Rajasthan… There is still so much demand that I am not able to fulfil it."

While Italians sang songs from their balconies and windows to boost morale when they were stuck at home due to Covid-19 restrictions, Indians flew kites from their terraces and roof tops.

Ahsan Khan, a seller in Mumbai, says the country was at risk of running out.

"The period between April and August is usually the leanest [for kite sales]," he says. "But this year, I have sold about 500,000 kites [during that time]."

He adds that neighbouring Pakistan had also caught the kite-flying bug during its lockdown. "I am even getting calls from Karachi and Lahore in Pakistan, from people offering to pay me double the usual amount."

Kite-flying has been a popular pastime in India for centuries, with historians saying that it was introduced to the country by Chinese travellers.

It is however, usually a seasonal activity in India. In most parts of the country sales peek around the festival of Makar Sankranti - celebrated on 14 January to mark the beginning of spring and harvest season.

The tradition of kite-flying has long been associated with this festival, with the western state of Gujarat organising an international kite festival on the same day.

Preparations for this begin months earlier, with kite-makers from other parts of the country going to Gujarat, and the city of Mumbai, just to the south, to lend their expertise in making India's traditional brightly-coloured paper kites.

Some other festivals, like Basant Panchami and Pahela Baishakh, keep up the demand in northern India till April, after which sales start to fall. They then recover just before 15 August when India celebrates its Independence Day.

But this year, the coronavirus lockdown has kept the kite industry very busy during its usual lean months. Even after the lockdown began being eased in stages from June to the end of August, children, mostly boys, kept the demand high as the schools remained shut.

"You couldn't go out, you couldn't take your children to the park, so people resorted to kite-flying to pass their time," says Shahida Rehman, who manages a kite business with her son in Mumbai.

Although in one or two India cities and towns kite flying ended up being banned during the lockdown because authorities were concerned that neighbours all going out on their terraces could transmit the virus to each other, overall it was allowed and sales boomed.

The Indian kite-making sector was said to be worth $85m (£64m) in 2018. While it exports around the world, sales are dominated by the vast home market.

But while it is boys and young men who do most of the flying, the industry is heavily dependent on women workers. Tens of thousands of them, often accompanied by their children and other family members, work from their homes around the country, cutting, crafting and designing kites.

Hiba is one such manufacturer. She can make up to 50 kites per day with her sister at their home in the city of Bareilly, some 250km east of Delhi. The big rise in demand during the lockdown has boosted their income, as both the sales and prices of kites rose.

The cost of a simple paper and wood kite doubled from 10 rupees (14 US cents; 10p) to 20 rupees.

Mohammad Ashraf, a kite-seller in Bareilly, says that despite not being able to open his store in the early, most strict stages of the lockdown, he sold more than 200,000 rupees worth of kite before August.

"This year changed everything," he says. "It has been a extra income bonanza."

Global Trade

More from the BBC's series taking an international perspective on trade:

·         Blueberry farmers warn of 'disaster' crop

·         'We have had parents crying for us to open'

·         The millions being made from cardboard theft

·         The islands that want tourists as well as fish

Mr Khan says that sales have been led by India's smaller cities and towns, as that is where more people have individual terraces or roof tops. This is in contract to the big cities, like Mumbai, where most people live in flats and have to share such outdoor areas. These communal spaces were officially out of bounds during the lockdown.

Like all countries, India may now be at risk of returning to lockdown. This is especially true after the nation reported almost two million new cases in August, the biggest monthly number globally since the pandemic started.

While the health and safety of the populace is obviously the main concern, kite flying is likely to remain a popular distraction for a great many people if they are forced to stay at home again.--BBC

Unilever to cut fossil fuels from cleaning brands

Unilever has pledged to drop fossil fuels from its cleaning products by 2030 to reduce carbon emissions.

The consumer goods giant said it would invest €1bn (£890m, $1.2bn) in the effort.

Unilever said it would replace petrochemicals with ingredients made from plants, and marine sources like algae.

The company's best-selling cleaning brands include Omo, Cif, Sunlight and Domestos.

Unilever said the chemicals used in its cleaning and laundry products make up 46% of its overall carbon footprint. Replacing them with more sustainable ingredients will reduce that footprint by up to 20%.

Ben & Jerry's maker Unilever settles on UK base

Ice cream in, personal hygiene out in lockdown

Unilever to cut plastic use to appeal to Gen Z

Coronavirus lifts demand for cleaning products

The Anglo-Dutch firm, which also makes Dove soap and Persil laundry detergent, said it was facing unprecedented demand for cleaning products during the coronavirus pandemic.

"People want more affordable sustainable products that are just as good as conventional ones," said Peter ter Kulve, Unilever's president of its home care division.

"We must stop pumping carbon from under the ground when there is ample carbon on and above the ground if we can learn to utilise it at scale," he added.

Unilever said the €1bn investment would go towards funding biotechnology research and creating biodegradable and water-efficient products.

The announcement is the first phase in its Clean Future initiative, which pledges net zero emissions from its products by 2039.

This year the Carbon Disclosure Project, a global non-profit group, ranked Unilever as one of only seven of 182 major companies to achieve an A rating based on its governance around climate change, water and forests.--BBC

Speedy return to workplace 'not possible'

A senior Bank of England official has cast doubt on the government's drive to get workers back to the office as coronavirus curbs are eased.

Alex Brazier, the Bank's executive director for financial stability, said a "sharp return" to "dense office environments" should not be expected.

Social distancing guidelines in the workplace and public transport capacity were two factors holding people back.

"We should expect a more phased return," he told a committee of MPs.

"I feel safe coming to work, but I quite understand why many people might not," he said in evidence to the Treasury Committee.

"It's not possible to use office space, particularly in central London and dense places like that, with the intensity that we used to use it.

No plan for a return to the office for millions

Warnings of 'ghost towns' if offices stay empty

"It's not possible to bring lots of people back very suddenly."

Mr Brazier's remarks come after the government launched an ad campaign encouraging people to go back to the workplace.

Business leaders have warned of economic damage being done to city centres as people stay away from offices.

Last week, head of the CBI Dame Carolyn Fairbairn said the prime minister needed to do more to get workers to return, warning of a "high price for local businesses, jobs and communities".

However, an increasing number of employers say that home working - which was initially brought in as a temporary measure during lockdown - could become a more permanent state of affairs.

The law firm Linklaters, Lloyds Banking Group, NatWest, Fujitsu, Capita and Facebook are among those who plan to allow much more flexible working in the future.

Meanwhile, 50 of the biggest UK employers questioned by the BBC said they had no plans to return all staff to the office full-time in the near future.

One of the main reasons given for the lack of a substantial return was that firms could not see a way of accommodating large numbers of staff while social distancing regulations were still in place.

Government campaign

This week, the government launched a campaign asking employers to reassure staff it is safe to return by highlighting measures taken to prevent the spread of Covid-19.

But there was confusion when Health Secretary Matt Hancock said he cared more about how employees performed than where they were working, contradicting other ministers.

Campaign to encourage workers back to offices

On Wednesday, during Prime Minister's Questions in the Commons, Boris Johnson made several references to the need to get people back to work, saying he and his colleagues were working to get the country and the economy "back on its feet".

The PM's spokesman recently said: "The message from the PM is he recognises the importance that returning to work has in stimulating the economy, and that's why we have changed the guidance to give employers more discretion in how employees can work safely."--BBC

United Airlines to cut 16,370 workers, many more going without pay

CHICAGO (Reuters) - United Airlines (UAL.O) said on Wednesday it is preparing to furlough 16,370 workers when federal aid expires on Oct. 1 as the coronavirus pandemic continues to devastate the airline industry, though one union said many more people will be without pay.

United’s cuts include 6,920 flight attendants, but the union representing them said 14,000 will not have a paycheck in October unless Congress acts to extend $25 billion in aid.

This is because many have opted for leaves that will provide healthcare but no money, Association of Flight Attendants-CWA International President Sara Nelson said.

“United’s furlough announcement does not tell the full story,” she said.

Airlines have been lobbying Washington for a second stimulus package to protect jobs through March while the industry awaits a recovery. The first $25 billion, which covered airline payrolls, expires this month, but talks have stalled as Congress has struggled to reach agreement on a broader coronavirus assistance package.

Chicago-based United had over 90,000 employees before the pandemic brought the industry to a near standstill in March. It warned in July that 36,000 jobs were at risk of involuntary furloughs as demand remained weak.

U.S. passenger airlines are still collectively losing more than $5 billion a month as 30% of planes remain parked. Passenger travel demand is down about 70% and, on average, planes that are flying are half-full.

Some 7,400 United employees have opted to take early retirement or departure packages and the company is working through several other voluntary temporary leave programs to further reduce the number of furloughs, United officials said, without providing specific numbers.

The leaves would give the company flexibility to call back staff once travel returns, they said.

United’s furloughs will also affect around 2,850 pilots, 2,010 mechanics and 1,400 management and administrative positions, among others, though negotiations continue with pilots to reduce the final number.

Rival American Airlines (AAL.O) last week said it would lay off 19,000 workers without federal aid. Including voluntary departures or leaves, its 140,000 pre-pandemic workforce will shrink by 30%.

Delta Air Lines (DAL.N) plans to lay off nearly 2,000 pilots, but has not yet numbered potential cuts for its other workers.

President Donald Trump has said his administration would help U.S. airlines but has not given any details.

Congress also approved another $25 billion in loans for airlines under the first stimulus package, but not all of them are tapping the funds.

Airbnb spurns approach from Ackman's blank-check company

(Reuters) - Billionaire investor William Ackman has approached short-term home rental company Airbnb Inc about going public through a reverse merger with his blank-check company, according to people familiar with the matter.

The discussions are currently not moving ahead and Airbnb is prioritizing going public through a traditional initial public offering this year in what would be one of 2020’s most high-profile stock market debuts, the sources said.

Representatives for Airbnb and Ackman declined to comment.

Airbnb said last month it had filed confidentially for an IPO with U.S. regulators.

The approach by Ackman’s Pershing Square Tontine Holdings Ltd PSTH_u.N underscores the scale and ambition of the types of deals Ackman is pursuing with the new vehicle, which raised $4 billion through an IPO on the New York Stock Exchange earlier this year to buy a private company.

A blank-check company, or special purpose acquisition company (SPAC), is a shell company that raises money through an IPO to buy an operating company, typically within two years.

A deal for Airbnb at the company’s roughly $18 billion valuation in a debt deal earlier this year would be the largest SPAC transaction ever.

Bloomberg News earlier reported on the talks.

Merging with a SPAC has emerged in recent months as an increasingly popular alternative to an IPO. The likes of sports betting platform DraftKings Inc and electric vehicle maker Nikola Corp have gone public this year through reverse mergers with SPACs.

A SPAC can be a quicker route to the public market. In a SPAC merger, the company going public can also share detailed earnings forecasts with investors publicly, which is not done in an IPO.

Ackman and his team “are in discussions with a number of potential companies that are owned and/or controlled by private equity firms, families, start-up company founders, as well as other private companies,” the manager wrote in a letter to investors last week.

Through the end of August, Ackman’s Pershing Square Holdings portfolio returned 46%.

Oil holds steady near multi-week lows on demand worries

MELBOURNE (Reuters) - Oil prices were little changed in early trade on Thursday, sitting near multi-week lows hit overnight on worries about fuel demand due to a patchy U.S. economic recovery.

U.S. West Texas Intermediate (WTI) crude CLc1 futures inched up 3 cents, or 0.1%, to $41.54 a barrel at 0115 GMT, while Brent crude LCOc1 futures slipped 7 cents, or 0.2%, to $44.36 a barrel.

Both benchmark contracts fell more than 2% on Wednesday, with WTI sliding to its lowest close in nearly four weeks and Brent at its lowest since Aug. 21, after a U.S. Federal Reserve survey showed the economic recovery was mixed.

At the same time, data showed jobs growth was slower than expected in August, while factory orders in July were higher than expected.

In further signs of a limited recovery, U.S. gasoline demand dropped in the week to Aug. 28 to 8.78 million barrels per day from 9.16 million bpd a week earlier, the Energy Information Administration said.

“All in all, we think there is enough spare oil capacity and enough pressure on demand growth to justify only a gradual increase in oil prices over the next 12 months,” Commonwealth Bank (CBA) commodities analyst Vivek Dhar said in a note.

U.S. refinery run rates fell to 76.5% of total capacity last week. While that was due to shutdowns ahead of Hurricane Laura, analysts said the upcoming refinery maintenance and the end of summer driving season would limit crude demand.

“These factors suggest a seasonal drop off in refinery runs and higher oil inventory levels as we advance through September,” said AxiCorp market strategist Stephen Innes.

CBA forecasts Brent will average $46 a barrel in the fourth quarter before rising to $55 by the end of 2021.

“We see downside risks to our outlook linked to the uncontrolled spread of COVID-19,” Dhar said in the note.

Asian shares firm on U.S. stimulus hopes, upbeat China data

SYDNEY (Reuters) - Asian equities started strong on Thursday as a sustained recovery in China’s services sector and the prospect of additional U.S. stimulus whetted risk appetite, while the dollar pared gains.

MSCI’s broadest index of Asia-Pacific shares outside of Japan climbed 0.5%, clocking its third straight session of gains to hover near a recent 2-1/2-year high.

Australia’s S&P/ASX 200 rose 0.9% and Japan’s Nikkei added 1.3%. Hong Kong’s Hang Seng index was up 0.2% while China’s blue-chip index was 0.35% higher.

E-mini futures for the S&P 500 were barely changed.

A closely-watched survey showed China’s service sector activity grew for a fourth straight month in August, staying above the 50-mark, while companies hired more people for the first time since January.

The services sector, which accounts for about 60% of the economy and half of urban jobs, had been slower to return to growth initially than large manufacturers, but the recovery has gathered pace in recent months as COVID-19 restrictions on public gatherings lifted.

Analysts expect the equity markets rally to extend further as investors focus on the “easy money” dimension, though risks were growing.

“I think we’re now at a point where tactically it makes sense to be more prudent than two or three months ago as there are still a number of significant risks for investors to contend with,” said Scott Berg, portfolio manager of T. Rowe Price’s global growth equity strategy.

“The economic recovery remains fragile and there is still considerable uncertainty over the growth trajectory beyond the initial rebound phase,” Berg added.

China-U.S. tensions and U.S. presidential elections were other major risks, with a Democrat victory likely seeing a “major switch in policy direction and a different regulatory and tax regime.”

On Wall Street overnight, the three major equity indexes moved higher with gains led by defensive sectors such as utilities as the high-flying tech sector paused.

“The equity market rally overnight (was) characterised by a rotation away from the tech titans that have led gains this year. That broadening of the equity rally is in itself a signal of confidence in a broader economic recovery,” said Steve Miller, investment strategist at GSFM.

Data on Wednesday showed U.S. private employers hired fewer workers than expected for a second straight month in August, suggesting that the labour market recovery was slowing.

A separate report showed factory orders rose more than expected in July, pointing to continued improvement in the manufacturing sector.

In currencies, the dollar gave back some of the gains from earlier this week with its index against a basket of major currencies down 0.1%.

The greenback was slightly higher on the safe haven Japanese yen at 106.25.

The euro was off 0.02% to $1.1851.

In commodities, U.S. crude added 15 cents to $41.66 while Brent gained 5 cents to $44.48 a barrel.

Spot gold was slightly higher at $1,946.8 an ounce.

Analysts upgrade Australia, New Zealand dollars outlook but doubt rally would last

SYDNEY (Reuters) - Analysts again upgraded forecasts for the Australian and New Zealand dollars in the latest Reuters poll, but they still lag the market as investor risk appetite gets a boost from hefty central bank stimulus.

Median forecasts put the Aussie AUD=D3 at $0.7200 on a one- and three-month horizon from $0.7000 and $0.7050, respectively in the previous poll.

The market, however, already has the Aussie at $0.7320, having hit a two-year top of $0.7413 just this week.

Yet the poll shows analysts doubt the rally can get much further, putting the currency at $0.7300 in six months and $0.7400 in one year amid expectations monetary policy will remain accommodative for a long time to come.

The gains in the Aussie have come even as Australia’s A$2 trillion ($1.47 trillion) economy has sunk into its first recession in almost three decades, with unemployment at a 22-year high and wages growth as all-time lows.

The Reserve Bank of Australia (RBA) has stepped in by slashing the cash rate to a record low 0.25%, launching an “unlimited” bond buying programme and offering cheap funding to lenders. It has promised to do more if needed.

But the U.S. Federal Reserve has gone even more dovish, making the greenback weaker and eroding its previous interest rate advantage over rivals.

Also supporting the Aussie is the relative outperformance of the Chinese economy, which continues to suck up Australian resources in a boost to prices for key exports including iron ore.

That has gifted Australia with its largest current account surplus in decades, providing a net trade inflow to the Aussie.

“We continue to see AUD as a relative outperformer in G10,” Geoff Yu, senior market strategist at BNY Mellon wrote in a note.

“The RBA has explicitly highlighted the role of fiscal and Australia’s favourable borrowing conditions to support the economy in greater scale and scope up ahead. Gradually, if successful, these investment trends will be reflected in AUD valuations.”

The New Zealand dollar has benefited from similar forces, though again analysts polled seem to think it has topped out for the moment, putting it at $0.6600 NZD=D3 over three months.

The kiwi was last trading at $0.6764 after rising for five months on the trot and was not too far from a one-year high touched this week.

Africa Remains Untapped Market for Booming Black Businesses in America

Tareian King is a former intern with CFR's Africa Program and a student at the Elisabeth Haub School of Law at Pace University. She is also the founder of Nolafrique, an e-commerce platform that enables artisans in African villages to have global exposure and opportunities for scale up.

African Americans are in a financial position to start businesses in Africa, and they should. In 2018, businesses owned by African Americans grew more than 400 percent. Since a storm of protests against racial inequality, interest in supporting Black-owned businesses has soared. >From May 25 to July 10, there have been more than 2.5 million searches for Black-owned businesses on Yelp, compared to approximately 35,000 over the same period last year—a 7,000 percent increase. This year, corporate America has also made more commitments to support black-owned businesses. Google, Coca-Cola, ExxonMobil, AT&T, Walt Disney, and Capital One, among others, have participated in the “In This Together” initiative, a campaign to invest $1 billion dollars in Black businesses.

As encouraging as the current wave of support is, it must contend with the cruel reality that Black-owned businesses in America have long lacked access to large amounts of capital. For example, within the first year of business, only 1 percent of Black business owners are approved for a bank loan compared with 7 percent for white-owned firms. Consequently, it is difficult for Black businesses to hire employees in important sectors, such as marketing, consumer relations, and business development, and many owners must use personal wealth or income to fund their businesses. Although Black businesses have become increasingly successful, even though they are experiencing an unprecedented wave of political and economic support, they still confront longstanding financial inequality in America. Therefore, they might turn to Africa for economic opportunity.

Africa is home to many developing economies that have a higher return of interest than developed economies. The amount of money required to start a business in most African countries is relatively small. Notable examples include five entrepreneurs in Africa who started what are now million-dollar businesses with less than $300. In Kenya, an entrepreneur turned $116 into a transportation business that generated $1.5 million dollars in revenue; an entrepreneur in South Africa turned $100 into a pig farming business that generated $2.5 million dollars in revenue; and an entrepreneur in Nigeria turned $250 into a digital marketing business that generated $6 million dollars in revenue. If Black business owners invested in Africa instead of America, maybe they too could be a part of the continent’s notable examples. Though investing in Africa can be tough as the continent has a complex business environment, many African countries are trying to make it easier, and several have favorable investment environments. Ghana is the lead example, creating special investment programs that make it easier specifically for African Americans to invest, but Rwanda, South Africa, and Senegal are also countries with favorable conditions and investment protections.

If Black business owners invested in Africa they could take advantage of these programs, gain profits, and help Africa’s entrepreneurs. Since American capital goes much further in Africa than in America, Black business owners can invest in Africa and support many cash strapped entrepreneurs. Many young entrepreneurs in Africa have innovative ideas but not the financial means to carry them out. Therefore, Black business owners already have prospective business partners on the continent who can help orient them on Africa’s business environment. If Black business owners invested their capital into Africa’s entrepreneurs and created joint ventures, they could profit from businesses in Africa without having to physically be present.

While Black businesses are booming in America, they could perform even better in Africa. Africa offers Black business owners more affordable and diverse business opportunities, and a young entrepreneurial population who would make great business partners.-cfr

South Africa facing a tax implosion: analyst

The increased financial pressure caused by the lockdown is seen in South Africa’s weak tax revenue growth, with the government facing a tax revenue implosion, says Russell Lamberti founder of investment advisory firm ETM Macro Advisors and member of Panda.

In a presentation for business group Sakeliga, Lamberti said that this issue is amplified by the fact that government spending has not been cut over the lockdown period. “The net effect is that the South African government is incurring enormous debt in 2020,” he said.

He cited Treasury data showing that the government will spend close to R2 trillion in its budget this year, but is set to collect only around half of that amount – R1 trillion. “We have seen a colossal collapse in tax revenue over the last four months from around R1.4 trillion to R1 trillion.”

Lamberti said that there were already signs of collection problems in 2018/2019, whereas spending continued to increase.

“Therefore in the future, we are going to be required to continue paying very high taxes. The other risk is that the government will start funding these deficits by printing money or resorting to violation of property rights such as prescribed assets.”

Lamberti said that there are now clear risks associated with this deficit – not least of which is a default and fiscal crisis. This will be detrimental to the currency as well, he said.

Miscalculation

The notion that you can shut down the economy, which acts a ‘life support machine’ for millions of South Africans, was a huge miscalculation, said Lamberti, and shows a misunderstanding of the economy’s role in the country and the contribution it actually has.

“The economy is not some sort of cold, money-making machine for greedy capitalists. The economy is this network of production of exchange and is precisely how we live.”

Lamberti said the lockdown has subsequently thrust millions of people into economic uncertainty and that it was difficult to tell just how much damage has been caused as the country is still in flux.

While it is acknowledged that April, May and June was the worst quarter due to the level of the shutdown, he said that the economic uncertainty created will still only be seen in the coming months.

“So when we talk about job losses it is important that we acknowledge that are certain job losses that are temporary, some will be more permanent and some will take later to filter through in the data.”

He said that while some people may not have lost their job during the worst of the lockdown, they may be facing increased uncertainty in the coming months and into next year.

“When we talk about economic uncertainty it’s not at just people lost their jobs. Everyone now faces income insecurity and job insecurity which impacts our savings and how we plan.”

Lamberti cited combined data from Google and Oxford which shows that the stringency of the lockdown also has a direct impact on the country’s economy.

As South Africa had one of the heaviest and most stringent lockdowns, the longer it will take the country to return back to ‘normal’.

“South Africa’s hard lockdown and failure to quickly come out of immobility means Q2 GDP could have been very bad indeed (and) a 20-30% contraction is now probable.”

Lamberti said that the ‘irrationality’ of some of the lockdown rules had a direct impact on this contraction – including a prohibition on e-commerce sales and rules around what you can buy in stores.

“E-commerce was the perfect industry to thrive in a lockdown situation. That was banned for a month and a half of lockdown,” he said.

Lamberti said the severity of Q2 contraction is important for estimating what the total annual GDP will look like, with data showing a possible contraction on -13%.

For context, South Africa’s peak to trough GDP decline during the 2008 financial crisis was closer to -2%. This clearly shows that the country is now in a depression, he said.-businesstech

East Africa Business Recovery Strategy On the Cards

Arusha — A study on post-Covid-19 recovery strategy for businesses in the East African region is on cards.

It will inform business entities on rebound strategies that would enable them to recover from the pandemic's devastating impact.

"Necessary measures to ensure businesses remain afloat will be suggested," said the East African Business Council (EABC).

The study, to be commissioned by EABC, coincides with the easing of travel restrictions earlier imposed to curb spread of the virus. The apex body of private sector associations believes that, despite the devastation, the region can still navigate out of the adverse impacts of Covid-19.

For the East African Community (EAC) region, the most noticeable impact of the pandemic has been on tourism and tourism-related sectors.

This followed the imposition of travel restrictions by tourist source countries affected by the virus. Also, some EAC countries suspended air travel to and from Asia, a fast-growing tourists source market.

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Air travel restrictions not only impacted the hospitality industry - a leading forex earner for EAC - but also fresh produce exports.

However, EABC insists there were ample opportunities for the EAC to diversify its markets and production lines amidst the pandemic.

"This is not limited to the manufacture of PPEs (personal protection equipment)," EABC executive director Peter Mathuki said in a statement.

Recently, an international consultancy estimated that the five EAC partner states would lose more than $5 billion in agricultural exports this year.

McKinsey & Co named the countries as Tanzania, Uganda, Kenya, Burundi and Rwanda - and that the drop would be due to the Covid-19 malady.

The proposed recovery strategy would focus on tourism, manufacturing, agriculture, transportation and logistics.

An earlier survey indicated that over 40 percent of the businesses in EA were uncertain of their business continuity six months after the spread of Covid-19 into the region.

About 30 percent of the enterprises said their businesses may be sustained for between six months and one year.

Only about eleven per cent of businesses said their enterprises would be sustainable for one-to-two years if the pandemic continued at the speed it started.

Also, Tanzania says that, despite earlier projections, there will be no massive drop in tourist arrivals in the country due to Covid-19.

Industry players say the country is likely to register between 900,000 and one million tourists this year.

"The situation for 2020 is not as alarming as it was first projected," the permanent secretary in the ministry of Natural Resources and Tourism, Dr Aloyce Nzuki, said in Arusha last week. He said projections were that the number of tourists coming to Tanzania would only drop by half - to around 900,000 to one million in 2020.

Until last year, the number of foreign tourists to Tanzania had climbed to between 1.5 million and 1.8 million.

Initially - before the outbreak of Covid 19 - it was projected that tourist arrivals would reach two million this year, earning the economy over $2.5 billion.-Citizen.

Invest Wisely!

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INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Companies under Cautionary

Bindura Nickel Corporation

Padenga Holdings

Delta Corporation

Meikles Limited

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