Major International Business Headlines Brief::: 20 September 2020

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Major International Business Headlines Brief::: 20 September 2020

 


 

 


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

 


 

 


 

 

ü  ByteDance gets Trump nod to avoid TikTok shutdown

ü  Wall Street Weekahead: Corporate debt frenzy rolls on as worries loom
over markets

ü  Fiscal fizzle saps U.S. economic recovery, a possible boost to Biden

ü  BoE's Haldane says UK recovering 'faster than anyone expected'

ü  Germany plans reform to avoid bankruptcy wave due to corona

ü  Rolls-Royce plans to raise up to 2.5 billion pounds as COVID-19 bites

ü  Despite Covid-19, some rebound and growth exist in tourism sector

ü  Giant Glencore coal mine faces threatAs fund refuses backing

ü  Tax move on contract miners will affect the entire sector

ü  SA looks to mining industry to fuel Covid-19 recovery

ü  Goldman Sachs Made $100 Million Off Tesla Trades This Year

ü  AstraZeneca, Under Fire for Vaccine Safety, Releases Trial Blueprints

ü  Bitcoin price volatility expected as 47% of BTC options expire next
Friday

 

 

 

 

 

 

 


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

 


 


ByteDance gets Trump nod to avoid TikTok shutdown

WASHINGTON/NEW YORK (Reuters) - U.S. President Donald Trump said on Saturday
he supported a deal in principle that would allow TikTok to continue to
operate in the United States, even as it appeared to conflict with his
earlier order for China’s ByteDance to divest the video app.

 

 

ByteDance was racing to avoid a crackdown on TikTok after the U.S. Commerce
Department said on Friday it would block new downloads and updates to the
app come Sunday. U.S. officials had expressed concern that the personal data
of as many as 100 million Americans that use the app were being passed on to
China’s Communist Party government.

 

Trump signed an executive order on Aug. 14 giving ByteDance 90 days to sell
TikTok. The deal announced on Saturday, however, is structured as a
partnership rather than a divestment.

 

TikTok will be owned by a new company called TikTok Global and will be
headquartered in the United States, possibly in Texas, Trump said. Oracle
Corp ORCL.N will take a 12.5% stake in TikTok Global and store all its U.S.
user data on its cloud to comply with U.S. national security requirements,
the companies said. Retail giant Walmart WMT.N said it would take a 7.5%
stake in TikTok Global. The implied valuation for TikTok Global as a result
of these investments could not be learned.

 

While Oracle and Walmart said that TikTok Global will be majority-owned by
U.S. investors, this is the case only if one takes into account ByteDance’s
investor base, according to a source familiar with the matter who requested
anonymity to discuss the deal’s structure. This is because ByteDance will
own 80% of TikTok Global, the source said.

 

Given that U.S. investors currently own about 40% of ByteDance, the White
House will count that towards how much of TikTok Global is owned by U.S.
parties, the source added. As a result, Oracle, Walmart, and ByteDance’s
U.S. investors will own, directly or indirectly, about 53% of TikTok Global,
a second source said.

 

Beijing-based ByteDance did not immediately respond to a request for
comment. Walmart and Oracle also did not offer more information on TikTok
Global’s ownership structure.

 

It was not immediately clear what spurred the White House to compromise on
its push for an outright sale of TikTok. However, the deal comes with
pledges that cater to Trump’s ‘America First’ policy agenda. It also averts
alienating TikTok’s young users ahead of the Nov. 3 U.S. election.

 

ByteDance agreed to create 25,000 new U.S. jobs at TikTok, up from a little
over 1,000 now. Trump, who had previously called on companies such as Oracle
and Walmart to pay the United States a “fee” to participate in the TikTok
deal, said there would also be a $5 billion U.S. education fund as part of
the deal.

 

“I said, you know, do me a favor, could you put up $5 billion into a fund
for education so we can educate people as to the real history of our
country, not the fake history,” Trump told a rally of supporters in
Fayetteville, North Carolina on Saturday.

 

Oracle and Walmart described the agreement differently. They said that
together with ByteDance top investors General Atlantic, Sequoia and Coatue
they would create an educational initiative to deliver an
artificial-intelligence driven online video curriculum for children, from
basic reading and math to science, history and computer engineering.

 

The companies did not say how much they would spend on the education
initiative. However, they said TikTok Global would pay more than $5 billion
in new taxes to the U.S. Treasury.

 

While ByteDance will get to keep TikTok’s source code under the deal, Oracle
will get to inspect it. Oracle CEO Safra Catz said her company was “100%
confident in our ability to deliver a highly secure environment to TikTok
and ensure data privacy to TikTok’s American users, and users throughout the
world.”

 

Catz served on Trump’s transition team in 2016, while Oracle’s co-founder
and chairman Larry Ellison is one of the few top technology executives to
openly support the U.S. president.

 

ByteDance also had to give up some of its control of TikTok. Reuters
reported on Thursday that TikTok Global would have a majority of American
directors, a U.S. chief executive and a security expert on the board.
Walmart said on Saturday its CEO Doug McMillon would serve as one of the
five board members of TikTok Global.

 

It is possible that ByteDance’s ownership of TikTok will be reduced further
next year. Reuters was first to report on Thursday that ByteDance is
planning an initial public offering (IPO) of TikTok Global. The filing of
the IPO would be on a U.S. stock exchange and could come in about a year.

 

 

CFIUS APPROVAL

The Commerce Department said on Saturday it would delay by one week an order
that had been set to take effect late Sunday that would have forced Alphabet
Inc's Google GOOGL.O and Apple Inc AAPL.O to stop offering TikTok for
download, so the TikTok deal can be completed. The Committee on Foreign
Investment in the United States (CFIUS), the U.S. government panel
overseeing the deal talks, has to approve the transaction.

 

Oracle beat out Microsoft Corp MSFT.O, which said last week that its offer
to acquire TikTok's U.S. business was rebuffed by ByteDance.

 

The Trump administration has stepped up its efforts to purge what it deems
"untrusted" Chinese apps from U.S. digital networks. An order to require app
stores to stop downloads of Tencent Holding Ltd's 0700.HK WeChat is still
set to take effect Sunday night.

 

TikTok interim chief executive Vanessa Pappa said in a video posted on
Saturday that “Tiktok is here to stay.”

 

China also has to approve the deal. “We’ll see whether or not it all
happens,” Trump said.

 

The first Chinese reaction to the deal came from Global Times, which is
published by the People’s Daily, the official newspaper of China’s ruling
Communist Party. Global Times editor Hu Xijin said “this scheme is still
unfair, but it avoids the worst result that TikTok is shut down or sold to a
U.S. company completely.”

 



 

Wall Street Weekahead: Corporate debt frenzy rolls on as worries loom over
markets

NEW YORK (Reuters) - Investors are gearing up for the year’s record-breaking
pace of corporate bond issuance to continue in the coming week, even after
the U.S. Federal Reserve rattled nerves at its September meeting with a
gloomier-than-expected economic outlook.

 

The past week has seen roughly $42 billion of high-grade debt come to market
in 39 deals, most of which were small and offered by first-time issuers.

 

“I would expect next week to be similar,” said Monica Erickson, portfolio
manager, global developed credit, at DoubleLine.

 

The breakneck pace of fresh issuance illustrates how the Fed’s late March
pledge to backstop credit markets and its policy of holding interest rates
near zero have spurred borrowing by corporations this year. Companies had
already issued $1.7 trillion in debt through the end of August, according to
SIFMA, compared with $944 billion in the same period last year.

 

Demand is likely to stay elevated in the next few weeks, investors said, as
historically low rates continue to drive a hunt for yield despite a cluster
of economic and political concerns. Those include the Fed’s downbeat
economic projections as well as worries over waning fiscal support and
potential uncertainty around the U.S. presidential election.

 

“You have low interest rates, you have tight credit spreads: If I’m an
issuer, I’m going to issue as much as humanly possible because it’s cheap
debt,” said Nick Maroutsos, head of global bonds at Janus Henderson
Investors. “That demand is there because people are craving any sort of
return.”

 

Just over $18 billion in high-yield debt had priced in the week through
mid-morning Friday, with two more deals in the pipeline from Aetheon United
and PM General Purchaser, according to IFR Refinitiv. IFR’s data showed that
Friday’s issuance was expected to drive the year-to-date total over $337
billion, past the previous annual record of $332 billion set in 2012.

 

Jason Vlosich, head fixed income trader at Brown Advisory, said he expects
an additional $40 billion or so in new investment-grade deals through the
end of the month. Bank of America in August forecast that this month’s
investment-grade issuance was likely to be between $120 billion and $140
billion. September issuance stood at about $115 billion on Friday, according
to Refinitiv IFR.

 

In the coming week, investors will be watching earnings reports from
Jefferies Financial Group JEF.N, which is typically seen as a preview of
what's to come from Wall Street banks, Nike NKE.N, cruise line Carnival
CCL.N and retailers including Rite Aid RAD.N and Costco COST.O. The economic
data calendar is comparatively light, with Markit's Purchasing Managers'
Index on Wednesday and weekly jobless claims on Thursday.

 

In a break with recent trends, about 50% of new investment-grade debt in
2020 has been issued to pay off or refinance existing debt, versus the 20%
or 30% that is typical, said Erickson.

 

“Companies will come to market and buy back higher-priced debt just to lower
their interest expense.”

 

As a result, a slowdown in M&A and share buybacks - expected to continue
through the end of the year - is less likely to dent issuance.

 

Several factors could potentially slow the pace of corporate debt offerings,
investors said. Junk-rated issuers could have trouble accessing the market
if it appears the nascent U.S. recovery is flagging, Vlosich said.

 

Since many big name investment-grade companies have already come to the
market this year, the remainder of 2020 could mean smaller, lesser-known
companies dominate issuance, resulting in lighter volumes. An uptick in
Treasury yields could also diminish the allure of corporate debt, which is
seen as a far riskier investment.

 

For now, however, the intense demand for higher yielding debt remains in
place.

 

Flows into both high-yield and investment grade funds rose in the last week
and are up 45% and 18% respectively since the start of April, according to
Lipper.

 

“I don’t see this stopping anytime soon,” said Maroutsos of Janus Henderson.

 

 

 

 

Fiscal fizzle saps U.S. economic recovery, a possible boost to Biden

(Reuters) - This week’s economic data offers fresh hints that the U.S.
recovery will slow without new federal aid, a possible blow to President
Donald Trump’s reelection bid, especially since any new spending before the
Nov. 3 presidential election seems unlikely.

 

A slowdown in U.S. consumer spending in August provided the clearest
evidence this week that as millions of Americans lost the extra unemployment
benefits that had sustained their finances in the early months of the
COVID-19 recession, they have begun to cut back.

In an economy where consumer spending accounts for two-thirds of the total
output, less shopping means less overall growth.

 

The number of Americans filing new claims for unemployment dropped less than
expected, and applications for the week before were revised up, suggesting
the labor market recovery has plateaued.

 

Meanwhile, a Fed survey released Friday showed that American households were
better off financially in July than they were in the first months of the
crisis, in large part because of their access to government aid.

 

Other data this week indicate the recovery is ongoing in some parts of the
economy.

 

U.S. factory production increased for a fourth straight month in August, and
confidence rose to a record among single-family homebuilders, who saw a
boost to demand from low interest rates and pandemic-fueled demand for homes
suited to remote work.

 

Broad consumer sentiment also picked up in September, a report showed
Friday. Democrats grew more upbeat about the economy’s outlook while
Republicans’ enthusiasm dipped, but overall consumer optimism is still down
compared with before the crisis.

 

STIMULUS IS COMING, EVENTUALLY

Next week Federal Reserve Chair Jerome Powell is scheduled to address
lawmakers at three separate hearings, where he will undoubtedly make the
same observation he has repeatedly made for months, including after this
week’s policymaking meeting: more stimulus “is likely to be needed” for the
recovery to continue.

 

The House, controlled by Democrats, and the Senate, controlled by
Republicans, are deadlocked on any stimulus bill, and there’s little chance
of it passing before the election.

 

Eventually, Congress will pass some pandemic relief, no matter who wins the
presidential contest. But it’s likely to be less under Trump, a Republican,
than under Democratic presidential nominee Joe Biden.

 

“If Trump wins and (Republicans) retain control of the Senate and the
president says he wants more stimulus, Republicans will find a way to go
along with that,” said Eric Winograd, senior economist at AllianceBernstein.
“If Biden wins, you would get bigger stimulus.”

 

Goldman Sachs economists said they would likely boost their fourth-quarter
GDP forecast if Biden wins and Democrats retake the U.S. Senate, because
Democrats would approve a spending package larger than the $1 trillion
Goldman has penciled in.

 

VOTERS FOCUSED ON VIRUS

Despite overall concerns about the strength of the recovery, and millions
out of work since the pandemic hit, a recent Reuters/Ipsos poll found that
45% of U.S. adults think Trump is the better candidate for rebuilding the
economy. That’s compared with 36% who say Biden would be better.

 

But the same poll showed that likely voters were much more concerned about a
candidate’s ability to fight the coronavirus and restore trust in
government, both issues on which voters gave Biden a lead.

 

COVID-19 has killed more than 197,000 in the United States since the
pandemic began. New daily cases are now averaging about 40,000, about 60% of
the July peak.

 

 

BoE's Haldane says UK recovering 'faster than anyone expected'

LONDON (Reuters) - Britain is recovering faster than anyone had expected
from the economic impact of COVID-19, but businesses need better incentives
and access to finance to invest in technology, Bank of England chief
economist Andy Haldane said.

 

“UK GDP had, by July, recovered around half of its Covid-related losses,
rebounding further and faster than anyone expected,” Haldane said in an
article for the Mail on Sunday newspaper written jointly with the former
chairman of John Lewis Partnership, Charlie Mayfield.

 

Britain’s central bank said in a policy statement on Thursday the economy
was recovering faster than it had forecast in August, though prior to that
several policymakers had struck a more cautious tone than Haldane.

 

Haldane said he was writing in his capacity as chairman of a government
commission to boost economic productivity.

 

 

 

 

Germany plans reform to avoid bankruptcy wave due to corona

BERLIN (Reuters) - Germany would relax insolvency rules under proposals set
out on Saturday to help avert a wave of bankruptcies in Europe’s biggest
economy, provided companies hit by the coronavirus crisis have a robust
business model.

 

Keen to avoid bankruptcies and mass layoffs, Chancellor Angela Merkel’s
government has launched a range of stimulus and relief measures as Germany
braces for its biggest slump since World War Two, having shrunk by an
unprecedented 9.7% in the second quarter.

 

“Companies that can show creditors a realistic prospect of restructuring
should be able to implement their concept outside insolvency proceedings,”
said Justice Minister Christine Lambrecht in a statement.

 

Under the draft reform, which would take effect at the start of 2021, the
deadline for firms to file for insolvency would be extended to six from
three weeks and authorities will apply more relaxed benchmarks when
examining over-indebtedness.

 

The government has already taken steps such as allowing firms in financial
trouble due to the pandemic to delay filing for bankruptcy until the end of
the year, extending an original deadline of the end of September.

 

Helped by these measures, the number of firms declaring insolvency in
Germany fell 6.2% to 9,006 in the first half of this year from the same
period last year. Critics say suspending insolvencies delays, but does not
prevent, the collapse of “zombie companies” artificially kept afloat.

 

However, defenders of insolvency protection steps say they have helped to
spare Germany deeper economic contraction and prevent a spike in
unemployment.

 

 

 

Rolls-Royce plans to raise up to 2.5 billion pounds as COVID-19 bites

(Reuters) - Britain's Rolls-Royce Holdings Plc RR.L said on Saturday it was
looking to raise up to 2.5 billion pounds ($3.2 billion) in an effort to
strengthen its balance sheet.

 

The aero-engine maker said it was considering a variety of options,
including a rights issue. Debt and equity issuances are other options being
considered, it added.

 

“We continue to review all funding options to enhance balance sheet
resilience and strength,” its statement said .

 

A Financial Times report said the company was in talks with sovereign wealth
funds, including Singapore’s GIC, as part of its efforts to raise funds.

 

An equity raise will be launched in the first weeks of October, the report
added.

 

GIC did not immediately respond to a Reuters request for comment.
Rolls-Royce declined to comment beyond its statement.

 

The Derby-based company has been reviewing funding options for the past few
months, after suffering a blow from travel restrictions linked to the
COVID-19 pandemic.

 

It reduced at least 9,000 jobs in May, mainly in civil aviation, due to the
slump in air travel and revealed its plans to sell Spanish unit ITP Aero and
other assets, last month.

 

In July, the group said it expected a 1-billion-pound outflow in the second
half of the year after burning through 3 billion pounds in the first half.

 

 

 

 

Despite Covid-19, some rebound and growth exist in tourism sector

On October 1, SA’s borders will open. What sort of post-lockdown volumes and
values from international tourists can we expect in the short term? As just
announced, tourists from countries with high levels of active infections
might not be allowed to travel here. Outside the restrictions we place on
potential tourists, there are also market segments that might choose not to
travel for some time and others that might rebound.

 

 

The three segments most likely to decline are those aged 65 and over;
meetings, incentives, conference and exhibition (Mice) tourists as large
business events are cancelled or postponed; and some “regular” international
business travellers (virtual engagements have partly replaced the need for
business travel). In 2019, the total number of international tourists from
these three segments visiting SA amounted to about 940,000, generating about
R20bn in economic value.

 

About 240,000 tourist arrivals to SA in 2019 were aged 65 and over. Most of
these tourists came from Europe (just over 130,000) and the US (57,000).
Restaurants, retail, experiences, paid accommodation and attractions will
likely be the most affected by a big drop in demand. Some of the drop might
be offset by the return to SA of “swallows” — tourists who follow the summer
sun, some of whom also have homes here.

 

SA received about 400,000 Mice tourist arrivals in 2019. This purpose of
travel is particularly significant for a number of newer, high-growth
markets to SA where we are trying to establish a foothold. These include
India and non-neighbouring African countries.

 

 

Other business tourist arrivals to SA numbered about 300,000 in 2019.
Together with Mice travellers, business travel can lead to trade and
investment and also result in future leisure trips. Recognising this, SA has
worked hard to establish itself as a leading Mice destination, and firms and
the government have developed significant infrastructure to support Mice
tourism. Conference and event venues, hotels, meeting and event planners,
caterers and restaurants will all feel the effect of a market decline. The
spatial effect is likely to be most pronounced in Cape Town, Johannesburg
and eThekwini.

 

Despite the pandemic and its likely duration, certain potential rebound and
growth market segments exist. One major rebound segment is shopping tourism.
This includes tourists shopping for personal items and those shopping for
business, and is a major motivator of travel from our neighbouring
countries. International shopping tourist arrivals in SA ranged between
1.7-million and 2.5-million tourist arrivals each year between 2017 and
2019.

 

Their economic effect is large: research undertaken for the Johannesburg
Inner City Partnership estimated that cross-border shoppers spent R10bn in
Johannesburg alone in 2017. Shopping tourists are not only important for
Gauteng, but Limpopo, the Free State, and Mpumalanga too, where they
comprise a major share of total tourist arrivals and help support the retail
sector. As this travel is relatively nondiscretionary, it is likely to
return quite fast.

 

The desire to visit friends and relatives will be a major motivator of
travel for many people who have not been able to see loved ones during
lockdown. These travellers have already shown themselves to be a resilient
segment in the face of ongoing safety and security events (including
xenophobia) and the drought in Cape Town. In total, such tourist arrivals
number about four-million of our total 10-million international tourist
arrivals each year.

 

The marketing tactics here could also be quite different to the approach
taken for first-time holiday or business travellers as many would-be friends
and family tourists rely heavily on their contacts in the destination for
advice on what to see and do (and now, likely risk assurance, too). From a
tactical perspective the question is how can we best leverage our population
to be tourism ambassadors? All our domestic tourism marketing and ongoing
Covid-19 communication has the potential to be amplified by South Africans
to reach potential foreign tourists.

 

In addition to shopping and tourists visiting friends and family, certain
pockets of holiday tourists also exhibit market potential during the
pandemic. The World Travel and Tourism Council’s recovery dashboard
indicates that adventure (including nature-based travel) is the most popular
category of trip search. SA is well-positioned here. The country can also
attract holiday tourists from other African countries, particularly where
they might face restrictions on travel elsewhere.

 

A further attractive segment is digital nomads. These are often young
travellers, working remotely, looking for destinations where their euros or
dollars can go far and where they can live like locals for some months. This
market could help buoy small, local businesses in and around major urban
centres and even further afield.

 

In SA, as we now move into a long, hot summer, many potential tourists are
facing cold northern hemisphere winters and increasing rates of Covid-19
infection in their own countries. We must capture tourists’ imaginations
with creative packaging targeting pandemic growth segments.

 

While “red-listing” of inbound tourist markets by country infection rates
seems to be a widely adopted approach, it is important that SA carefully
tracks the effect and remains adaptable. Implementation might prove
administratively complicated for border management and could also challenge
forward planning by tourists, tour operators and airlines.

 

As with everything else related to Covid-19, we must be vigilant in relation
to unintended consequences. With so much on offer for tourists, SA has what
it takes to inspire again. Let’s get to it.-businesday

 

 

 

 

Giant Glencore coal mine faces threat As fund refuses backing.

Glencore Plc’s plans for a giant new coal mine in Australia’s Bowen Basin
may suffer a setback after key stakeholder UniSuper Management Pty said it
won’t support the project.

 

The A$80 billion ($59 billion) pension fund told its investment partners
that it won’t support the A$1.5 billion Valeria project as the economics
“don’t stack up,” Chief Investment Officer John Pearce said in a University
of Melbourne webinar Thursday night.

 

“Through a complicated structure, a joint venture, we actually own 15% of
that coal mine,” he said. “You might think that, well 15%, how can you stop
it? Well it turns out that some of the decisions require 100%, so it could
be fairly problematic for those.”

 

Pension funds and other large institutional money managers face mounting
pressure from clients and activists to use their resources to fight climate
change. Glencore is the largest coal miner in Australia, the top exporter of
the fuel, and UniSuper’s move may hinder the company’s plan to replace
operations nearing retirement. Valeria is slated to produce about 4% of
Australia’s thermal and metallurgical coal when it starts up, which the
company earlier this year pegged at 2026.

 

UniSuper’s approval isn’t necessary for the Valeria project to proceed,
Glencore said in an emailed statement.

 

“UniSuper has an indirect minority interest,” the company said. “UniSuper
was an existing JV partner attached to the resource when we acquired it from
Rio Tinto Group more than two years ago.”

 

The Melbourne-based fund this week said it would scrap investments that get
more than 10% of revenue from thermal coal, and factor in a carbon tax on
all material medium- to long-term bets as the world transitions to a
low-carbon economy. It follows pressure from members to cut exposure to high
emitting companies and sell investments that undermine the Paris agreement.

 

“I can’t think of a more tangible way of us demonstrating how seriously the
risks are that are posed by decarbonisation” than by withholding support for
Glencore’s mine, Pearce said. “Thermal coal is bound to be a stranded
asset.”-Bloomberg

 

 

 

 

Tax move on contract miners will affect the entire sector

Treasury called upon to properly consider the impact of the proposed
amendment.

 

A proposed amendment to the Income Tax Act to exclude contract miners from
claiming accelerated capital expenditure deductions may have a devastating
impact on the entire industry.

 

Several large mining houses, industry bodies and law firms are preparing
submissions to National Treasury in an effort to ensure the proposal is not
accepted in its current form.

 

Treasury published the proposal in the Draft Taxation Laws Amendment Bill in
July, basically saying that tax legislation should be clarified to state
that only the holder of a mining right will qualify for the accelerated
capital expenditure deductions. The effective date for this proposal is
January 1 next year.

 

According to industry players the proposal stems from the Benhaus judgment
delivered last year. The Supreme Court of Appeal (SCA) found that Benhaus (a
contract mining company) was in fact involved in “mining activities” as it
extracted minerals and was earning mining income.

 

The court held that it qualified for the same capital expenditure allowances
available to mining companies.

 

Read: Mining tax provisions have not kept up with the industry

The proposal is seen as a knee-jerk reaction from the South African Revenue
Service (Sars) because the outcome of the SCA case was not its favour.

 

Pieter Janse van Rensburg, director of the boutique tax firm AJM Tax, says
agricultural activities and mining operations have a favourable tax
dispensation. Taxpayers in these sectors are allowed to deduct certain
expenses of a capital nature and have accelerated capital allowances. They
are allowed to claim 100% of the expense in the year it was incurred.

 

“Given that mining contributes approximately R350 billion to the South
African GDP, one can only assume that the consequence [of the proposal] will
be far-reaching.”

 

Read: South Africa could use mining royalties to set up sovereign fund –
minister

 

Industry players note various reasons why the company holding the rights
does not engage in the mining activity itself.

 

Red-tape delays

 

One reason is massive delays to obtain consent from the Department of
Mineral Resources for the transfer of a mineral right when it’s sold to
another company.

 

Adele de Jager, partner at law firm Bowmans, says this can take anywhere
between six months and 10 years. While the purchaser awaits the consent, it
enters into an interim mining arrangement with the holder of the right. The
company that bought the right then has the ability to mine legally without
being the owner of the mining right yet.

 

“The impact of the proposed change on these arrangements will be
significant,” warns De Jager. “This is not beneficial to investments into
the mining industry.”

 

Read: Two sectors may be SA’s economic revivers

 

Another major effect on the industry is where, within a group of companies,
the mining rights are held in one vehicle and another company in the group
carries out the mining operations through a lease agreement. This is done
for various commercial reasons or solvency issues, notes De Jager.

 

The proposed change will result in a situation where the company actually
operating the mine is prevented from the benefits of the accelerated capital
allowance simply because it is not the holder of the mineral right.

 

According to Birt Coetzer, a member of the mining work group at the South
African Institute of Tax Professionals (Sait), the use of contractors in the
mining industry is quite prevalent.

 

“You will find contract miners on any mine in South Africa at any given
time. It is just a natural consequence of the scale of operations.”

 

He believes the proposal will not have a major impact on contract miners,
since 90% of the contractors do not claim the mining capital allowance.
“Most of the contract miners do not consider themselves miners.”

 

He adds that companies that are not involved in mining activities will still
be able to deduct capital expenses by relying on other sections in the
Income Tax Act. However, the deductions can only be claimed over three or
five years, depending on the provision they rely upon.

 

Coetzer acknowledges that it will impact the cash flow position of contract
miners who have been claiming the upfront deduction, since the tax saving
will now be spread over three or five years.

 

Impact on BEE JVs

 

His major concern is around the impact on joint ventures (JVs) between
mining houses and their BEE partners.

 

In many instances the BEE partner holds the mining right, but does not have
the capital to mine.

 

This led to the formation of unincorporated joint ventures where the BEE
partner makes the right available to the mining company in the JV, which
then operates the mine and provides the financing.

 

In this case the ‘actual miner’ will not be able to claim the accelerated
tax deduction.

 

In terms of legislation it is not permissible to split the mining right in
the JV to allow the BEE partner to hold 26% and the mining company 74%. If
that was allowed this entire proposal would have been just a rumour.

 

But, says Coetzer, the battle is not lost yet.

 

According to De Jager there was a desperate call on Treasury during a recent
session with industry players to properly consider the impact of the
proposed amendment.

 

The timing of the final draft is going to be critical since the effective
date is just a few months away.

 

“It is extremely difficult to plan around legislation that is not final and
enacted,” she says.

 

Janse van Rensburg, who is a Sait board member, is of the view that any
proposed change to legislation should focus on the industry as a whole, as
opposed to individual taxpayers operating in that industry.-mineweb

 

 

 

SA looks to mining industry to fuel Covid-19 recovery

South Africa is banking on a rejuvenation of its flagging mining industry to
help counter the economic devastation wrought by the coronavirus and a
lockdown that was imposed to curb its spread.

 

The need to rebuild investor confidence in a sector that once formed the
bedrock of Africa’s most-industrialised economy was identified as a key
tenet of an economic recovery plan that was agreed by the government and
business and labour representatives this week.

 

They undertook to jointly develop a strategy within three months to target
3% of global exploration expenditure and halve the time it currently takes
to secure all mining, prospecting and environmental licenses. Fixing Eskom
Holdings SOC Ltd., the debt-stricken state power company that has stifled
output and investment because it can’t produce enough electricity to meet
demand, and creating regulatory certainty were identified as other top
priorities.

 

“Simplifying and modernising mining regulation will unleash significant
investment by business in exploration and production, generating substantial
employment, both directly and indirectly, as well as contributions to the
fiscus and foreign-exchange earnings,” according to the 13-page document
seen by Bloomberg. President Cyril Ramaphosa is due to release the plan once
the cabinet has signed off on it.

 

The precipitous decline is most evident in the gold industry, which was once
the world’s largest and now ranks eighth. Output has dwindled to less than a
fifth of what it was at its peak, with deposits becoming harder to access
and producers contending with power shortages and regulatory uncertainty.The
mining industry contributed 8.1% of South Africa’s gross domestic product
last year, from a peak of more than 20% in the 1980s. The drop coincided
with robust demand for key metals including iron ore, platinum-group metals,
gold and chrome. The industry directly employs about 450,000 people, down
from 520,000 in 2012, according to the Minerals Council South Africa, a
lobby group for larger producers.

 

Bullion producers AngloGold Ashanti and Gold Fields have pared back
investment in South Africa to target more lucrative deposits elsewhere in
Africa, Australia and Latin America. Platinum giants such as Sibanye
Stillwater and Impala Platinum Holdings have also switched focus toward
North America.

 

Roger Baxter, the Minerals Council’s chief executive officer, declined to
comment on the plan until its official release.

 

The agreement reached on the plan marks a rare moment of compromise between
labour unions, which are allied to the ruling party yet often bicker with it
about economic policy, the government and business groups whose views have
been largely discarded since the end of apartheid in 1994. Other key
components include commitments to boost investment in infrastructure, reduce
port bottlenecks, fight graft and cut red tape to make it easier to do
business.

 

What Bloomberg’s Economist Says

“The most important part of the growth plan with regards to mining will be
electricity availability and policy certainty. The sector has been begging
to generate its own power for a long time now, and even though there is
progress, the proposed licensing arrangement and generation limits will
still be constraining. With regards to policy — the goalposts keep changing.
The sector will want to know that whatever the government decides will not
change every five to 10 years as has been the case in the past.”-Bloomberg

 

 

 

 

Goldman Sachs Made $100 Million Off Tesla Trades This Year

Over the past 6 months, special attention has been paid to Tesla and - more
specifically - euphoric call-buying in the name that undoubtedly helped
propel a gamma squeeze that has seen Tesla's equity scorch higher since the
beginning of the year (something we discussed first in May in "Are
Mysterious Call Option Purchases Forcing Tesla Stock Higher?").

 

Weeks ago we learned that Softbank was helping along the broader market
rally with a strategy of buying OTM call spreads in a handful of high beta
tech stocks - a strategy that netted Softbank upwards of $4 billion.

 

Now it appears as though Goldman Sachs may be cashing in on a similar
strategy.

 

According to IFR Reuters, the investment bank made about $100 million
trading Tesla alone over the last several months. The bank was engaged in
trades that included "stock options, providing financing secured against
Tesla’s shares, and buying and selling its convertible bonds," according to
Bloomberg.

 

Goldman's equity trading desk doesn't deal with retail investors. But the
sizeable revenues it raked in show how the investment bank's traders still
managed to profit from these extraordinary market moves, in part through
using derivatives to position for an upswing in Tesla shares, sources said.

 

In addition to making buck in Tesla calls, the vampire squid also made it
rain buying and selling Tesla converts (which have a face value of over
US$4bn), whose prices climbed sharply this summer as the company's shares
rocketed. Goldman bankers also made money providing financing secured
against shares in the company, or as it is also known, "corporate equity
derivatives deals" involving Tesla. That is an umbrella term for a range of
transactions – including margin loans, or lending money against a company's
shares – which usually involve providing financing against large equity
stakes, IFR reported.

 

The action from Softbank acted as a "tailwind" for the company - and
ultimately for Goldman, as well - as option missiles fired across the tech
sector helped the broader market rise before the NASDAQ dropped about 12%
from highs earlier this month. 

 

According to the report, in a time when single stock option volumes exploded
3x in the second quarter compared to the same period last year, the surge in
Tesla option volumes was even more remarkable - $1.45 trillion in July, up
more than 10x from $124 billion in July of last year. Amazon was the "second
largest beneficiary" of the options trading, Reuters notes, seeing activity
rise from $632 billion to $1.48 trillion over the same period. 

 

 

These imbalances occurred over the summer, where volume is notoriously low
in equity markets. In simple terms, as best as we can understand: major
financial institutions seem to be undertaking equity manipulation via the
reflexivity of options market (where the tail literally wags the dog) as an
actual trading strategy now.

 

Call us old fashioned, but whatever happened to the good old days of banks
simply trading on material non-public information?-Zerohedge.com

 

 

 

AstraZeneca, Under Fire for Vaccine Safety, Releases Trial Blueprints

Experts are concerned that the company has not been more forthcoming about
two participants who became seriously ill after getting its experimental
vaccine.

 

AstraZeneca revealed details of its large coronavirus vaccine trials on
Saturday, the third in a wave of rare disclosures by drug companies under
pressure to be more transparent about how they are testing products that are
the world’s best hope for ending the pandemic.

 

Polls are finding Americans increasingly wary of accepting a coronavirus
vaccine. And scientists inside and outside the government are worried that
regulators, pressured by the president for results before Election Day on
Nov. 3, might release an unproven or unsafe vaccine.

 

“The release of these protocols seems to reflect some public pressure to do
so,” said Natalie Dean, a biostatistician and expert in clinical trial
design for vaccines at the University of Florida. “This is an unprecedented
situation, and public confidence is such a huge part of the success of this
endeavor.”

 

Experts have been particularly concerned about AstraZeneca’s vaccine trials,
which began in April in Britain, because of the company’s refusal to provide
details about serious neurological illnesses in two participants, both
women, who received its experimental vaccine in Britain. Those cases spurred
the company to halt its trials twice, the second time earlier this month.
The studies have resumed in Britain, Brazil, India and South Africa, but are
still on pause in the U.S. About 18,000 people worldwide have received
AstraZeneca’s vaccine so far.

 

AstraZeneca’s 111-page trial blueprint, known as a protocol, states that its
goal is a vaccine with 50 percent effectiveness — the same threshold that
the Food and Drug Administration has set in its guidance for coronavirus
vaccines. To determine with statistical confidence whether the company has
met that target, there will have to be 150 people ill with confirmed
coronavirus among participants who were vaccinated or received placebo
shots.

 

However, the plan anticipates that a safety board will perform an early
analysis after there have been just 75 cases. If the vaccine is 50 percent
effective at that point, it might be possible for the company to stop the
trial early and apply for authorization from the government to release the
vaccine for emergency use.-nytimes

 

 

 

Bitcoin price volatility expected as 47% of BTC options expire next Friday

The open interest on Bitcoin (BTC) options is just 5% short of their
all-time high, but nearly half of this amount will be terminated in the
upcoming September expiry. 

 

Although the current $1.9 billion worth of options signal that the market is
healthy, it’s still unusual to see such heavy concentration on short-term
options.

 

By itself, the current figures should not be deemed bullish nor bearish but
a decently sized options open interest and liquidity is needed to allow
larger players to participate in such markets. 

 

Total BTC options open interest

 

Total BTC options open interest. Source: Skew

 

Notice how BTC open interest has just crossed the $2 billion barrier.
Coincidentally that’s the same level that was achieved at the past two
expiries. It is normal, (actually, it’s expected)  that this number will
decrease after each calendar month settlement.

 

There is no magical level that must be sustained, but having options spread
throughout the months enables more complex trading strategies. 

 

More importantly, the existence of liquid futures and options markets helps
to support spot (regular) volumes.

 

Risk-aversion is currently at low levels

To assess whether traders are paying large premiums on BTC options, implied
volatility needs to be analyzed. Any unexpected substantial price movement
will cause the indicator to increase sharply, regardless of whether it is a
positive or negative change.

 

Volatility is commonly known as a fear index as it measures the average
premium paid in the options market. Any sudden price changes often cause
market makers to become risk-averse, hence demanding a larger premium for
option trades.

 

The above chart clearly shows a massive spike in mid-March as BTC dropped to
its yearly lows at $3,637 to quickly regain the $5K level. This unusual
movement caused BTC volatility to reach its highest levels in two years.

 

This is the opposite of the last ten days, as BTC’s 3-month implied
volatility ceded to 63% from 76%. Although not an unusual level, the
rationale behind such relatively low options premium demands further
analysis.

 

There’s been an unusually high correlation between BTC and U.S. tech stocks
over the past six months. Although it is impossible to pinpoint the cause
and effect, Bitcoin traders betting on a decoupling may have lost their
hope.

 

The above chart depicts an 80% average correlation over the past six months.
Regardless of the rationale behind the correlation, it partially explains
the recent reduction in  BTC volatility.

 

The longer it takes for a relevant decoupling to happen, the less incentives
traders have to bet on aggressive BTC price moves. An even more crucial
indicator of this is traders’ lack of conviction and this might open the
path for more substantial price swings.

 

There’s an unusual concentration of short-term options

Most of the relevant Bitcoin options mature on the last Friday of every
month and some concentration on the shortest ones is expected due to covered
call trades. 

 

This strategy consists of buying BTC either via spot (regular) or futures
markets and simultaneously selling call options.

 

A covered call is closer to a fixed-income trade, aiming to pocket the
substantial option premiums on BTC markets. At expiry, this trader will be
liquidating both his positions on spot, futures, and options markets.

 

The unusual situation displayed on the  chart above shows how 53% of the
2020 calendar options are set to mature on Friday, Sept. 25. 

 

By comparison, this is roughly the same amount of open interest for Ether
(ETH) options expiring in Sept. and Dec. 

 

There might never be a reasonable explanation for why BTC options are so
heavily concentrated but a similar phenomenon occurred back in June which
cut BTC options open interest by $900 million. 

 

As of now, there are no signs of weakness from options markets, but as Ether
options stand at $450 million, any number below $1.5 billion would certainly
not look desirable for Bitcoin.-cointelegraph

 

 

 

 

 

 

 

 


 


 


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.

 


 

 


(c) 2020 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:
<mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77
344 1674

 


 

 

 

 

 

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