Major International Business Headlines Brief::: 04 September 2020

Fri Sep 4 07:14:01 CAT 2020

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Major International Business Headlines Brief::: 04 September 2020

 <mailto:info at bulls.co.zw> 

ü  Tech stocks slide as Wall Street goes into reverse

ü  France in huge coronavirus recovery plan focusing on green energy

ü  Government 'overseeing the demise of UK aviation'

ü  Coronavirus vaccine trial begun by drug firms GSK and Sanofi

ü  Amazon to create 7,000 UK jobs

ü  Costa Coffee warns up to 1,650 jobs are at risk

ü  Asian stocks slip after Wall Street selloff dents tech rally

ü  Hong Kong financial firms step up compliance hiring amid U.S. sanctions, security law

ü  Ghana court dismisses MTN's challenge against market

ü  Private creditor debt relief for Africa may be long-term positive

ü  South Africa's Implats earnings up nearly 400% on weak rand, costly metal

ü  Nigeria central bank sells $50 mln to gauge foreign FX

ü  Kenya August private sector activity growth slows, firms cut staff

ü  S.Africa's Comair needs $72 mln and to cut 400 jobs, administrators say

 <mailto:info at bulls.co.zw> 

Tech stocks slide as Wall Street goes into reverse

US and Asian stock markets have gone into reverse after shares in America's biggest technology firms tumbled.

Companies that have powered US markets to record highs - Apple, Amazon, Alphabet, Microsoft and Facebook - fell between 4% and 8%.

Analysts said fears about the economic shock of coronavirus and a possible second wave prompted the sell-off.

The tech-heavy Nasdaq closed down 5%, the Dow Jones fell almost 3%, and the broad-based S&P 500 lost 3.5%.

In Asian trading Tokyo's Nikkei index was 1% lower, while Hong Kong's Hang Seng was down by 1.4%.

Carmaker Tesla, whose shares have soared this year, tumbled 9% on Thursday after falling sharply in the previous two sessions. Another tech heavyweight, Nvidia, ended 9.3% down. Apple's 8% fall meant $150bn (£113bn) was wiped off the value of the iPhone maker.

The sell-off came after mixed US economic data on Thursday that included a report showing slower services sector growth in August, bigger-than-expected drop in new jobless claims, record job cuts this year and an unexpectedly big trade deficit for July.

While the latest weekly initial jobless claims fell more than anticipated, they remain high amid growing worries that employment growth could stall without further economic stimulus.

Chicago Federal Reserve president Charles Evans said on Thursday that Congress would need to deliver more fiscal aid. And he indicated that US monetary policy would be eased further and interest rates kept at ultra-low levels for years to help the economy recover its pre-pandemic strength.

Growing worries about US economic health were underlined by the Vix index, also known as the "fear gauge". This reached its highest since mid-July.

Sentiment wasn't helped by a warning from US infectious diseases expert Dr Anthony Fauci who said there is doubt a Covid-19 vaccine will be developed by the end of October.

US election

The downturn in the US hit European markets. London's FTSE 100 ended down 1.5% at 5,850 points, and Germany's Dax fell 1.4%.

Wall Street had reached fresh highs this week on what Connor Campbell, financial analyst at Spreadex, called "a combination of relatively unfounded vaccine and stimulus speculation". Markets were now seeing a "sharp turnaround", he said.

On Wednesday, the S&P 500 and the Nasdaq closed at record levels, and the Dow came within 1.5% of its February peak,

Emily Roland, co-chief investment strategist at John Hancock Investment Management, said markets were due a reality check.

"Think about the mounting number of risks the market has been shrugging off over the last couple of months. We're 60 days away from the election. That may be an area where investors are getting a bit spooked," she said.--BBC

France in huge coronavirus recovery plan focusing on green energy

France has unveiled a 100bn-euro (£89bn) economic stimulus package to help repair the economic damage caused by coronavirus.

President Emmanuel Macron's government said the investment would include big spending on green energy and transport.

Dubbed "France re-launch", it is aimed at reversing rising unemployment, and includes tax cuts for business.

The economy shrank by 13.8% between April and June, the biggest quarterly fall since the Second World War.

Unveiling the plan, whose €100bn price tag is the equivalent of 4% of France's annual economic output, Prime Minister Jean Castex said it was almost four times bigger than the rescue strategy implemented after the financial crisis of 2008.

Its goal is to move away from the emergency funding of the coronavirus crisis and to make long-term investments in employment and training, as well as in France's transformation to a green economy.

About €40bn of the funding will come from the new European Union recovery fund.

About €35bn has been earmarked for projects to make the economy more competitive, and €30bn will be used on greener energy policies. About €6bn is slated for making public buildings and homes better insulated. The hydrogen industry, a sector which is receiving huge investment in Germany, will get €2bn.

The rest of the investment package will go on supporting jobs, training and broader social initiatives with the aim of creating at least 160,000 jobs next year.

Mr Castex said the money would be spent over the next two years, and he hoped the investment would return the economy to its pre-pandemic levels by 2022. The next French presidential election is due to get under way in April 2022.

"Economically and socially it is infinitely better to temporarily worsen the pubic finances to invest, re-arm the economy and move forward than to sink into austerity and let unemployment and human drama explode," Mr Castex told a media briefing.

Mathieu Orphelin, who left Mr Macron's party last year to set up a more environmentally-focused party, told Reuters."It [the plan] is good, but this can't be limited to two years, we need to keep it up for 10 years."

Thierry Drilhon, president of the Franco-British Chamber of Commerce, told the BBC he thought the stimulus package would help those industries that had suffered "significantly" in the coronavirus crisis, as long as the investment was properly implemented.

"Obviously execution will be key to make sure that investment will be well utilised," he said. "We all know that you can have the right vision, but vision without execution is just hallucination."

France is on course for one of Europe's worst recessions, with an 11% drop in economic output forecast for 2020 as a whole.--BBC

Government 'overseeing the demise of UK aviation'

Leading figures in UK aviation have expressed frustration that the government has still not given backing for Covid-19 testing at airports.

The head of Southampton, Aberdeen and Glasgow airports accused ministers of "overseeing the demise of UK aviation".

And the bosses of Virgin Atlantic and Heathrow Airport said "leadership" was needed on the testing issue, warning of the huge number of jobs at stake.

The Department for Transport said it had given huge support to the sector.

The aviation industry sees airport testing as a way for passengers to leave quarantine early, and also help the travel industry get back on its feet after lockdown.

Foreign travel was paralysed for several months by the pandemic, with airlines, airports and tour firms shedding thousands of jobs.

Derek Provan, chief executive of AGS Airports, which runs Southampton, Aberdeen and Glasgow, said the sector was seeing more job losses than the demise of the coal industry in the 1980s.

"That's surely not an accolade any government would like to have," he said.

Mr Provan said the government was "overseeing the demise of UK aviation".

France and Germany are already using testing at airports for passengers arriving from countries with a higher infection rate.

Ministers in the UK have for months been considering whether to back testing at UK airports.

They are said to be looking at a two-test system to reduce the risk of someone who recently contracted the virus giving a "false negative" result.

Under that system two negative results, several days apart, would mean someone would not have to quarantine for the full 14-day period.

Shai Weiss, chief executive of Virgin Atlantic, said testing was "essential" to help kick-start the economy.

"Without free and fast travel with the US, we won't see a rebound of aviation and this will stall the economic recovery of the UK, which of course is already in recession," he said.

A pilot project was set up at Heathrow to trial coronavirus testing but it is currently not in operation because the tests have not been endorsed by the government.

With the list of countries on the UK's quarantine list changing every week, the boss of Heathrow said travellers to and from Britain were facing "quarantine roulette".

Holidaymakers returning from countries on the UK's quarantine list are required to self-isolate for 14 days.

Countries are normally added to the list when they record more than 20 cases per 100,000 people in the past week.

Last week, Switzerland, Jamaica and the Czech Republic joined France, Spain and a number of others on the list.

Ministers are expected to decide later whether Portugal and Greece should be added.

Scotland put Greece on its quarantine list following reports of people in the UK testing positive after holidaying on the island of Zakynthos.

'Unprecedented support'

John Holland-Kaye said the government needed to change its approach. "I think the government has been very cautious, really focusing on the health crisis and yet we have an unemployment crisis looming.

"The UK government needs to get behind testing as an alternative to quarantine to save millions of jobs in this country," he said.

The impact of air travel crisis was underlined on Wednesday when Heathrow said it was in talks with unions about pay cuts for about 2,500 staff. The move was needed to protect jobs, the airport said.

Aviation bosses also want "regional travel corridors" when certain parts of a country have a low infection rate.

Mr Provan said calls for regional travel corridors and testing at airports were falling on deaf ears. "We are not getting any response back from the government."

And he said that this was causing "huge frustration" across an industry that was already having to shed tens of thousands of jobs.

A spokesman for the Department for Transport said: "We provided unprecedented support to the aviation industry - taking early action on airport slots, loans, tax deferrals, and paying people's wages through the furlough scheme.

"While protecting public health remains our priority, we are working closely with experts to keep our approach to quarantine under constant review," the spokesman said.--BBC

Coronavirus vaccine trial begun by drug firms GSK and Sanofi

Drug companies GSK and Sanofi have said they are starting clinical trials of their coronavirus vaccine.

The two firms said 440 adults would be given the vaccine at 11 sites in the US.

They hope to have the first results of the trial by December and if it is successful they will move on to further trials by the end of the year.

They join around 20 pharmaceutical companies holding clinical trials in the race to find a vaccine.

The partnership between the UK's GSK and France's Sanofi uses the same protein-based technology as one of Sanofi's seasonal influenza vaccines.

"The initiation of our clinical study is an important step and brings us closer to a potential vaccine which could help defeat Covid-19", said Thomas Triomphe, executive vice president and global head of Sanofi Pasteur.

"Our dedicated teams and partner continue to work around the clock as we aim to deliver first results in early December. Positive data will enable a prompt start of the pivotal phase 3 trial by the end of this year".

If the third stage trial goes ahead and enough data are collected, the companies plan to apply for regulatory approval in the first half of 2021.

Earlier this week, pharmaceutical company AstraZeneca, which is holding advanced clinical trials for the vaccine it is developing with Oxford University, announced it had made a deal with Oxford Biomedica to reserve production lines at the company's new manufacturing plant.

The UK government has ordered 100 million doses of the AstraZeneca vaccine, which is one of around 23 vaccines in clinical trials globally.

It is not yet known which of these experimental vaccines will work.--BBC

Amazon to create 7,000 UK jobs

Online retail giant Amazon has said it will create a further 7,000 UK jobs this year to meet growing demand.

Amazon said it had already added 3,000 roles so far in 2020, and so by the end of the year it will have created a total of 10,000 new jobs.

This will take its total permanent UK workforce to more than 40,000.

Amazon says the new jobs will be permanent and pay a minimum of £9.50 an hour. It is also recruiting 20,000 seasonal posts for the festive period.

The company has faced criticism in the past from unions over the way it treats staff and health and safety.

Shifting trends

The coronavirus crisis and lockdowns, which saw many High Street shops temporarily closed, prompted massive growth in online shopping, benefiting online giants such as Amazon.

The latest retail sales figures showed that UK online sales in July were more than 50% higher than pre-pandemic levels in February.

Online sales as a proportion of all UK retail sales hit a record high of more than 30% in May, before falling back to more than 28% in July.

Amazon took on thousands of temporary workers during the pandemic, and it says many of them will now be able to move into these new permanent roles.

The company is recruiting at more than 50 sites. It said the creation of the new roles, which will include engineers, graduates, human resources, IT, health and safety and finance specialists, as well as the teams who will pick, pack and ship customer orders, was in response to growing customer demand.

"At the centre of the job creation programme are three new, state-of-the-art fulfilment centres in Darlington, Durham and Sutton-in-Ashfield, Nottinghamshire, each fitted out with advanced Amazon Robotics technology and each creating more than 1,000 new permanent roles," the firm said in a statement.

"Construction of these new fulfilment centres began last year. Darlington started operations in May and the sites in Durham and Sutton-in-Ashfield will launch later this autumn."

Amazon's "huge expansion" in the UK "comes as little surprise, given the massive surge in sales the tech giant has experienced, as the e-commerce sector boomed during the pandemic," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"Despite spending billions of dollars gearing itself up to operate through the coronavirus crisis, Amazon still delivered a huge increase in profits during the second quarter.

"With expansion planned right across the UK, High Street retailers are going to have to deliver some dramatic changes if they're to compete with the king of e-commerce," she added.

The news that Amazon is creating another 7,000 permanent jobs should perhaps come as no surprise. Amazon has now quadrupled its workforce from 10,000 to 40,000 in the last five years and the onset of COVID-19 has accelerated a very clear trend towards online rather than physical retail.

Just last week, Tesco announced it was creating 16,000 new permanent posts as they reported that online sales which had taken 20 years to reach 9% of their sales took just 20 weeks to nearly double to 16%.

Both Amazon and Tesco had hired thousands of temporary workers to cope with that demand - both clearly feel this shift is permanent.

At a time when many people are losing their jobs - announcements of thousands of new jobs are welcome. But the rise and rise of Amazon has been mirrored by the decline and recent fall in overall retail employment.

As Amazon has added 30,000 jobs in five years, The Office for National Statistics says there are 106,000 fewer total retail jobs over the same period which doesn't even include the COVID impact.

Amazon is often criticised for paying too little tax but taxes are levied on profits and Amazon's retail business works on close to zero profit margins. That is very hard to compete with.

Business Secretary Alok Sharma said the pandemic had been a "challenging time for many businesses" but that the new Amazon jobs were "hugely encouraging".

Many firms - especially High Street retailers - have been cutting jobs in recent months, due to the effects of the coronavirus pandemic and as the government's jobs retention scheme starts to wind down.

The number of employees on UK payrolls fell by 730,000 between March to July, according to the most recent figures.

However, while many sectors have been hit hard, some companies have been recruiting.

Courier firm DPD and B&Q owner Kingfisher said in June that they would be hiring thousands more staff.

Supermarkets, which saw a surge in demand for online deliveries due to the pandemic, have also been hiring.

Tesco said in August that it would create 16,000 permanent jobs after lockdown led to "exceptional growth" in its online business.--BBC

Costa Coffee warns up to 1,650 jobs are at risk

Coffee chain Costa Coffee has said that up to 1,650 roles are at risk of being cut, as it is forced to reduce costs because of the impact of coronavirus.

It says there are still "high levels of uncertainty" as to when trade will regain pre-pandemic volumes.

The firm is consulting with staff to try to find roles in other parts of the business for those facing redundancy.

Costa Coffee said the decision to cut jobs was an "extremely difficult" one to make.

"Our baristas are the heart of the Costa business and I am truly sorry that many now face uncertainty following today's news," said Neil Lake, managing director for Costa Coffee UK and Ireland.

The company is suggesting the role of assistant store manager will be removed in branches across the UK.

Most of its UK coffee shops that were closed during lockdown have now reopened, but the impact of Covid-19 remains "challenging", the company said in a statement.

Despite benefiting from measures such as the government's cut in VAT for the hospitality industry and the "eat out to help out" scheme, the company said, "there remain high levels of uncertainty as to when trade will recover to pre-Covid levels".

It added that it had already frozen all pay increases within its support centre and cut all non-essential expenditure.

Warnings of 'ghost towns' if offices stay empty

Costa employs 16,000 people in its wholly owned coffee shops, and there are a further 10,500 people working in its franchise network.

"We have had to make these difficult decisions to protect the business and ensure we safeguard as many jobs as possible for our 16,000 team members, whilst emerging stronger, ready for future growth", the company said.

It is the latest food and drink company to make cuts following the lockdown and the resulting lack of shoppers and office workers in town centres.

Businesses that rely on lunchtime or after-work trade from offices have been particularly hard hit.

Last week, sandwich chain Pret A Manger announced it would be cutting 3,000 jobs, a third of its workforce.

Julie Palmer, partner at the business recovery firm, Begbies Traynor, said many firms were currently trying to cut costs.

"Attempts are being made by some businesses to work with local councils in order to utilise outside spaces where consumers feel more comfortable, but with winter approaching, they are running out of time", she commented.

"It's likely that as businesses try to recoup their losses from the past few months, many others will follow a similar suit to Costa Coffee."-BBC

Asian stocks slip after Wall Street selloff dents tech rally

SINGAPORE (Reuters) - Asia’s stock markets had their worst session in two weeks on Friday following a tech-led plunge on Wall Street, though gains in safer assets like bonds and dollars were muted as investors awaited U.S. job data to see if it triggers a bigger selloff.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.6% and looked set for a 2.4% weekly loss, its biggest since April.

Japan’s Nikkei dropped 1%, Hong Kong’s Hang Seng fell 1.8% and Australia’s ASX 200 2.8%.

That was shallower than the 5% plunge on the tech-heavy Nasdaq overnight or the S&P 500’s 3.5% drop. Those were the steepest Wall Street losses since June, but traders said a correction was overdue given recent frothy gains.

“It was steady rather than panic selling throughout,” said ING’s regional head of research Rob Carnell.

“It just doesn’t sound or feel like anything other than a bit of profit taking...if this was a massive risk-off move, you’d have expected the dollar to rally, and it didn’t really.”

The focus is on U.S. payrolls figures due at 1230 GMT, which are seen as a possible selling trigger if it disappoints economists’ expectations that some 14 million jobs were created in August.

Futures traded under pressure but backed off early-session lows in Asia. Nasdaq 100 futures were last down 1.3%, S&P 500 futures were down 0.3%. Dow futures were flat.

The dollar was steady, but a drop in the euro over last few days on talk that the European Central Bank is concerned about its strength had the greenback eying its best week in more than two months against a basket of currencies.

The euro seems to have arrested its slide for now, and sat at $1.1852. The Antipodeans were under gentle pressure while the yen was steady at 106.16 per dollar.

Bonds pared what was a pretty modest rise overnight, given the selloff in the equity market. Benchmark U.S. 10-year bond yields rose 1.5 basis points on Friday, having fallen about 3 basis points overnight.

TECH TUMBLE

Thursday’s tumble was the biggest one-day percentage drop on the tech-focused Nasdaq 100 since March and the darling stocks of recent months were hit hardest.

Apple fell 8%, Tesla 9% and Microsoft 6%. Still, the plunge only wound the Nasdaq back as far as where it sat last Tuesday. It is still up 28% for the year so far and 73% higher than its March trough.

“No single factor sparked the sell-off,” said Kerry Craig, Global Market Strategist at J.P. Morgan Asset Management, citing more general worries the rally had run too far, too fast.

“However, this is unlikely to be a repeat of the tech wreck of the late 1990s, given how much the market and sector have changed,” he added.

Tech selling in Asia was limited. In South Korea Samsung fell 1.6% and there was modest pressure on Apple suppliers in Shanghai and Taipei. But falls in consumer staples and financials led losses on the Hong Kong and China bourses.

Australia’s soaring consumer lender Afterpay, which seems to track the tech sector, fell 5% and is set for its worst weekly percentage drop since March.

In commodity markets, the stronger dollar has kept pressure on prices. Oil was headed for a weekly loss amid worries about demand as the U.S. summer driving season draws to a close.

Brent crude futures fell1% to $43.64 a barrel and U.S. crude also fell 1% to 40.93 a barrel.

Gold drifted lower as equities sold off overnight but was last up 0.2% for the day at $1,934 an ounce.

Hong Kong financial firms step up compliance hiring amid U.S. sanctions, security law

HONG KONG (Reuters) - Financial firms in Hong Kong are scrambling to fortify their compliance operations following U.S. sanctions and China’s new national security law, even as the sector pushes to cut costs amid the coronavirus pandemic.

This underscores the growing challenges for firms operating in the Asian financial hub, which was roiled last year by often-violent pro-democracy, anti-China protests and is now in the crosshairs of mounting Sino-U.S. tensions.

International asset managers and Asian banks have stepped up compliance hiring, while some are training existing staff and buying new technology to offset a talent crunch as candidates are unwilling to relocate amid the health crisis and the uncertainty in Hong Kong, bankers, lawyers and headhunters said.

Demand for compliance staff has risen by as much as a third from a few months earlier, two headhunters said.

“In the past three months we’ve had demand from top-tier asset managers looking for regulatory compliance lawyers because they need experts in place when the U.S. and China keep slapping sanctions on each other,” said Olga Yung, regional director at recruiter Michael Page Hong Kong.

Because sanctions are a “niche area”, companies are hiring lawyers with some sanctions expertise and supplementing with external law firms, she said.

‘AN ACTIVE MANDATE’

The United States has imposed sanctions on Hong Kong’s Chief Executive Carrie Lam and 10 other officials for what it says is their role in curtailing political freedoms in the territory.

The sanctions came after Beijing imposed in late June a sweeping security law on Hong Kong, targeting seditious and subversive activities.

A senior banker at an Asian lender in Hong Kong said he gave his compliance team a list of individuals and businesses linked to the sanctioned officials and “the immediate response was to either close all those accounts or hire five more sanction-specialists to do a proper audit”.

The banker, declining to be named because the information was private, said they decided to hire two experts and organise sanctions training for the rest of the team, despite a company-wide attempt to limit spending.

Chinese banks are also hiring.

A headhunter said his firm received “an active mandate” from two of China’s Big Four banks for compliance experts in Hong Kong following the U.S. sanctions, without giving their names.

The penalties levied for breaching sanctions can be large.

Global banks operating in Hong Kong, including HSBC (HSBA.L) and Standard Chartered (STAN.L), paid billions of dollars in fines in recent years for violating U.S. sanctions on Iran and anti-money laundering rules.

It is a Catch-22 situation for financial firms in Hong Kong.

There are worries that firms implementing sanctions could run afoul of the security law. But banks also must guard their access to the U.S. financial system.

The security law and the U.S. legislation are broadly worded and give much discretion to enforcement officers, adding to the uncertainty, lawyers said.

This has pushed up the need for professionals, and means advising on compliance is like “reading tea leaves”, one added.

“The phone is ringing off the hook, and everyone doesn’t only want work done, they want it immediately,” said Benjamin Kostrzewa, an international trade and regulatory lawyer at Hogan Lovells. “It’s hard to even sign the engagement letter before the next client walks into the Zoom room”.

However, meeting the demand is difficult. Until recently there was limited need for specific U.S. sanctions knowledge in Hong Kong’s legal and financial industries.

Recruitment from rival financial hubs has been curtailed because of virus-related curbs and political uncertainty in Hong Kong, say headhunters.

Some companies are using technology to bridge the gap.

A year ago “we were very focused on banks, but now clients are insurers and even casinos and real estate companies”, said Bharath Vellore, APAC managing director at Accuity, which provides financial crime and sanctions lists screening software.

Ghana court dismisses MTN's challenge against market

ACCRA (Reuters) - A high court in Ghana has dismissed the local MTN unit’s challenge to move by the national telecommunications regulator aimed at exposing it to greater competition, the company said on Thursday.

In June, MTN appealed a decision by the National Communications Authority (NCA) to designate it a significant market power, a move that requires the regulator to take corrective action.

But in a Sept. 1 decision, the court “dismissed the company’s application,” MTN said in a statement.

It said it maintained its position that the NCA’s decision was unfair from a procedural standpoint and would “explore all available options and next steps in this process,” without giving further details.

Statistics from the NCA showed MTN’s share in mobile data subscriptions accounted for almost 70% of the market from January to March.

Private creditor debt relief for Africa may be long-term positive

LONDON (Reuters) - Private sector involvement in a debt relief scheme for African countries could prove positive in the long-run if it encourages investment and bolsters debt sustainability, Scope Ratings said in a report on Thursday.

Ivory Coast, Angola and Ethiopia are among those to sign up to an initiative offered by official creditors, including the G20, China and the Paris Club to freeze debt service payments owed by the poorest nations through year-end to free up funds to fight the coronavirus outbreak and offset its economic pain.

But private creditors have yet to join the scheme, with some governments expressing reservations that involving the private sector could risk a default and damage their access to debt capital markets.

Similarly to other rating agencies, Scope noted private sector involvement in any debt delay could be considered an event of sovereign default under its methodology.

However, it said any default rating would likely be transitory.

“Longer term, involvement of private sector creditors in debt relief initiatives could be viewed as credit positive if suspension of interest and principal payments facilitates short-run investment and bolster debt sustainability long term,” Scope’s analysts said in a report.

Such benefits would be particularly clear were solvency issues to be eased via the write-off of principal debt in countries with significant private sector debts.

Government’s long-term market access and credit rating may benefit where combined official and private sector debt suspension or relief improves prospects for economic growth and debt sustainability, Scope said.

But it warned the structure of any debt exchange or restructuring was key.

“If a suspension of 2020 bond coupon and principal payments leads to a short-run credit event followed by a significant debt service hump in future years, this could be considered credit negative even post-debt restructuring,” the analysts added.

South Africa's Implats earnings up nearly 400% on weak rand, costly metal

JOHANNESBURG (Reuters) - South Africa’s Impala Platinum’s (Implats) annual earnings jumped by nearly 400% after higher metal prices and a weaker rand offset the impact of the COVID-19 pandemic, the company said on Thursday.

Mining in South Africa has been hit hard by COVID-19 as lockdowns led to mine closures and miners contracted the disease, but a weak local currency that reduces local costs limited the impact of reduced output.

High prices for palladium and rhodium, which Implats extracts together with platinum, also boosted profits as the miner said the dollar basket price of the main minerals it mines rose by 46% year-on-year.

It posted headline earnings per share (HEPS), the preferred profit measure in South Africa, of 20.75 rand ($1.23) for the year ended June, 391% higher than the 4.23 rand a year earlier.

The performance represents a turnaround from 2018 when Implats planned to restructure its Rustenburg operations and cut thousands of jobs.

“The progress made in the strategic repositioning of Implats over the past several years enabled the group to successfully navigate the challenges created by the unprecedented external shock of the COVID-19 pandemic,” Implats CEO Nico Muller said.

Implats, which resumed dividend payments this year, declared a final dividend of 4.00 rand per ordinary share in line with its policy of around 30% of free cash flow, bringing the total dividend to 5.25 rand per share.

Muller said it was “highly likely” more value would be returned to shareholders if prices remain high and the rand exchange rate favourable.

“If we can’t find growth opportunities that would add incremental value, the bulk of the cash then would be returned to shareholders,” Chief Financial Officer Meroonisha Kerber said, adding that it could be through a special dividend, increased dividends or share buy-backs.

A mine worker is shown his temperature, measured ahead of his shift, during a nationwide lockdown due to the coronavirus disease (COVID-19) outbreak. 

During the year, free cash flow reached 14.4 billion rand compared with 7.7 billion rand a year ago.

Implats said pandemic-related disruptions had a 9%, or 290,000 ounce, impact on production during the period.

Along with other miners, it faces the prospect of further disruption as South African state utility Eskom struggles to generate sufficient power.

For the longer term, Implats operations in Zimbabwe and Canada could provide the best growth opportunities, but Muller said he would like to see a more stable policy and regulatory environment in Zimbabwe before investing significant growth capital.

($1 = 16.8449 rand)

Nigeria central bank sells $50 mln to gauge foreign FX

ABUJA (Reuters) - Nigeria’s central bank has sold around $50 million to foreign investors on the spot and forward markets, in what the bank called a test trade to gauge the level of dollar demand on the currency market, traders said on Wednesday.

The central bank has gradually restarted dollar sales after it halted supplies following a coronavirus-induced lockdown to slow the spread of the virus, which also reduced its activities.

Dollar demand has been swelling and piling pressure on the naira. Importers with past due obligations have scrambled for hard currency while providers of foreign exchange, such as offshore investors, have exited.

The central bank offered a 150-day forward on the currency on Monday and also sold forex on the spot market, traders said, quoting the central bank as saying that the backlog demand was not huge.

A central bank spokesman confirmed Monday’s intervention on the spot market, widely quoted by investors and importers, saying it had helped the naira rebound from a low of 480 naira on the black market.

Some cars drive past the Central Bank of Nigeria headquaters in Abuja, Nigeria March 24, 2020.

Foreign investors have sold Nigerian assets since February because pandemic lockdowns stalled economic activity and triggered a crash in the price of oil, Nigeria’s main export.

Analysts estimate there is pent up demand of between $1.5 billion and $1.8 billon from investors looking to exit Nigeria, whose economy faces recession in the third quarter. 

The central bank has in the past urged investors to be patient, saying funds can exit in an orderly fashion. On Wednesday, the spot market traded $38.46 million.

The naira firmed almost 10% on the black market to 435 against the dollar on Tuesday on anticipation of resumed dollar sales. The dollar was quoted at 380.50 naira on the official market.

The non-deliverable forwards (NDF) market traded in London, which gives an indication of where the currency could trade, quoted the naira at 403 to the U.S. dollar in three months’ time.

The naira is seen past 400 on the futures market in January.

Kenya August private sector activity growth slows, firms cut staff

NAIROBI (Reuters) - Growth in Kenya’s private sector activity slowed in August, hurt by firms laying off staff to help cut their costs, a survey showed on Thursday.

The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) fell to 53.0 from 54.2 in July, but held above the 50.0 mark that separates growth from contraction. 

“The employment sub-component index still remains below the 50 level, largely reflecting firms scaling back on wage costs,” Jibran Qureishi, head of Africa Research at Stanbic Bank, said.

“Weaker jobs growth indicates the underlying challenges the road ahead presents, even as business confidence has improved over the past two months.”

The survey suggested business activity was helped by the easing of movement restrictions countrywide that had been in place to curb the spread of COVID-19.

The government removed movement restrictions into and out of Nairobi, Mombasa and Mandera counties in July, allowed local commercial air passenger travel and resumed

commercial international travel in August.

“Kenyan firms reported a sharp upturn in new orders during August, as the easing of coronavirus disease 2019 (COVID-19) related restrictions led to rising customer demand,” the survey report said.

S.Africa's Comair needs $72 mln and to cut 400 jobs, administrators say

JOHANNESBURG (Reuters) - South Africa’s Comair Ltd will require up to 1.2 billion rand ($72 million) of funding and will have to cut a fifth of its workforce to restart operations, administrators in charge of restructuring the private airline said.

The airline, which has been under a form of bankruptcy protection since May, will be able to start operations in December if a business rescue plan presented late Wednesday is approved, they said.

The plan, which had been delayed by over two months, will see a group of investors injecting up to 500 million rand of equity, giving them 99% ownership of the company.

Creditors will also have to provide new debt funding of up to 600 million rand, along with another 100 million rand debt from insurer Discovery Ltd.

“This (plan) will further result in resumed employment for the company’s remaining employees, the provision of flying services to its customers and the establishment of resumed revenue with which to service its obligations,” administrators Shaun Collyer and Richard Ferguson said.

The company's total workforce will be cut to 1,800 from roughly 2,200 and its fleet will be trimmed to 25 aircraft from 27, they added in their plan here published on the company's website.

Comair was forced to halt operations from March 26 as South Africa imposed a travel ban to counter the COVID-19 pandemic, cutting off the company’s cashflow and its ability to service burgeoning debt.

Creditors will meet on Sept. 18 to vote on whether to approve the rescue plan.

If approved, the plan will be implemented by the end of November so the airline can start operations by Dec. 1.

Before ceasing operations, Comair operated the local British Airways franchise and budget airline Kulula.com. It was a beacon of private aviation in South Africa for almost seven decades.

South African police enter an airliner in Cape Town October 6, 2006.

The plan will also require the company to be delisted from the Johannesburg Stock Exchange, where its shares had been trading for over two decades. ($1 = 16.7645 rand)

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

 <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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