Major International Business Headlines Brief::: 27 September 2020

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Major International Business Headlines Brief::: 27 September 2020

 


 

 


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

 


 

 


 

 

ü  U.S. shale producer Devon in talks to acquire peer WPX - sources

ü  Judge to hold hearing Sunday on planned TikTok U.S. app store ban

ü  China's industrial profits grow for fourth straight month

ü  U.S. tightens exports to China's chipmaker SMIC, citing risk of military
use

ü  Daimler's designated chairman Zetsche renounces job

ü  Beijing autoshow: China's back, EVs booming, outlook uncertain

ü  Wall Street Week Ahead: Trump-Biden debate could spark stock volatility

ü  Some 3,500 U.S. companies sue over Trump-imposed Chinese tariffs

ü  American Airlines secures $5.5 billion Treasury loan, could tap more

ü  The lockdown saw a spike in food prices across South Africa – and some
groceries are still more expensive than before

ü  Beyond tourism: A call for business ideas that protect African wildlife,
ecosystems

ü  Choppies holds on to dividend amid Covid-19 hit

ü  MultiChoice steps up as new PSL sponsor

ü  Equity fundraising to become necessity for SA firms, even if investors
don’t like it

 

 

 

 

 

 

 

 

 


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

 


 

U.S. shale producer Devon in talks to acquire peer WPX - sources

NEW YORK (Reuters) - U.S. shale producer Devon Energy Corp is in talks to
acquire rival WPX Energy Inc in an all-stock transaction that would create a
company worth around $6 billion, people familiar with the matter said on
Saturday.

 

The deal talks show how consolidation in the oil and gas industry is picking
up, as low energy prices drive some independent producers to seek scale
through mergers. In July, Noble Energy Inc agreed to be acquired by Chevron
Corp for $5 billion in stock.

 

The deal, which would value Tulsa, Oklahoma-based WPX at a small premium to
its current share price, could be announced as soon as next week, according
to one of the sources.

 

The sources, who requested anonymity to discuss the private talks, cautioned
that an agreement was not guaranteed.

 

Devon and WPX did not immediately respond to requests for comment.

 

Buffered by reduced demand for hydrocarbons amid coronavirus lockdown
measures, which helped push U.S. crude prices briefly into negative
territory for the first time earlier this year, U.S. oil and gas producers
are seeking out combinations.

 

Such mergers allow companies to remove duplication and create economies of
scale, while structuring them at a small premium or none to existing
valuations to retain as much cash as possible.

 

Oklahoma City-based Devon was valued at $3.4 billion as of the end of
Friday. WPX shares closed on Friday at $4.44, giving the company a market
capitalization of $2.5 billion.

 

Both companies have substantial operations in the Delaware portion of the
Permian basin, the heart of the U.S. shale revolution across parts of Texas
and New Mexico.

 

Devon also holds acreage in the Eagle Ford play of south Texas, Oklahoma and
Wyoming. Outside of the Permian, WPX has land in North Dakota.

 

 

 

 

Judge to hold hearing Sunday on planned TikTok U.S. app store ban

WASHINGTON (Reuters) - A judge will hold a hearing on Sunday on whether to
allow a Commerce Department ban on new TikTok downloads from Apple Inc and
Alphabet Inc Google app stores from taking effect.

 

The Justice Department faced a 2:30 p.m. EDT (1830 GMT) Friday deadline to
either delay the ban or oppose TikTok’s preliminary injunction. It filed its
objection under seal, citing submissions made by TikTok’s Chinese owner,
ByteDance, that include confidential business information.

 

ByteDance has said it made a preliminary deal for Walmart Inc and Oracle
Corp to take stakes in the short video sharing app, but the exact terms of
the agreement remain unclear.

 

The Commerce Department gave the companies an additional week to finalize a
deal before an order banning TikTok from U.S. app stores takes effect,
citing “recent positive developments.”

 

U.S. District Judge Carl Nichols in Washington set a 9:30 a.m. EDT Sunday
hearing on the preliminary injunction request.

 

Another U.S. judge, in Pennsylvania, is also considering issuing a
preliminary injunction after three TikTok content creators filed suit last
week arguing they would “lose access to tens of thousands of potential
viewers and creators every month, an effect amplified by the looming threat
to close TikTok altogether.”

 

On Sept. 20, a judge in California issued a preliminary injunction that
blocked a similar order from taking effect on Tencent Holdings’ WeChat app.
The Justice Department has asked the judge to allow the ban to take effect
pending appeal.

 

TikTok has said the restrictions, amid rising U.S.-China tensions under the
Trump administration, “were not motivated by a genuine national security
concern, but rather by political

 

considerations relating to the upcoming general election.”

 

ByteDance, Walmart and Oracle said last Saturday that their agreement would
to allow TikTok to continue to operate in the United States. But U.S.
officials have expressed serious concerns that the personal data of as many
as 100 million Americans who use the app was being passed on to China’s
Communist Party government.

 

ByteDance has said its deal with Oracle and Walmart will see the creation of
a standalone U.S. company and does not involve any transfer of technology,
though Oracle will be able to inspect TikTok U.S. source code. It has also
said the deal needs approval from both China and the United States.

 

 

 

 

China's industrial profits grow for fourth straight month

SHANGHAI (Reuters) - Profits at China’s industrial firms grew for the fourth
straight month in August, buoyed in part by a rebound in commodities prices
and equipment manufacturing, the statistics bureau said on Sunday.

 

 

China’s recovery has been gaining momentum as pent-up demand, government
stimulus and surprisingly resilient exports propel a rebound.

 

Industrial firm profits grew 19.1% year-on-year in August to 612.81 billion
yuan ($89.8 billion), the statistics bureau said.

 

That compares with a 19.6% increase in July and is the fourth straight month
of profit growth.

 

However, industrial firms’ profits still face external pressures as rising
tensions between Washington and Beijing cloud the global trade outlook.

 

Raw material manufacturing profits increased by 32.5% in August, up from
14.7% in July, according to Zhu Hong, an official at the statistics bureau.
This was driven in part by a rebound in the prices of international
commodities such as crude oil and iron ore, he added.

 

Meanwhile, profits of the general equipment manufacturing sector notched up
37% in August on-year, with electrical machinery up by 13.3% over the same
period.

 

Economic indicators in August, ranging from exports to producer prices and
factory output, all pointed to a further pickup in the industrial sector.

 

However, factory activity grew at a slower pace with smaller firms facing
sluggish market demand and financial strains.

 

The country has introduced a slew of measures to kick-start the economy,
from tax and fee reductions to grace periods for the calling in of debt.

 

China’s economy may stagnate if it fails to rise up the value chain, as it
faces increasing competition from countries with advanced technologies and
lower labour costs, economists warned.

 

Authorities have pledged to boost investment in strategic industries
including core tech sectors such as 5G, artificial intelligence and
semiconductors, and accelerate new material development to ensure stable
supply chains.

 

For January-August, industrial firms’ profits fell 4.4% from a year earlier
to 3.72 trillion yuan, better than the 8.1% decrease in the first seven
months.

 

Liabilities at industrial firms rose 6.6% on-year at end-August, edging
higher than the 6.5% at end-July.

 

Earnings at state-owned industrial firms were down 17% on an annual basis
for the first eight months of the year, versus a 23.5% decline in the first
seven months.

 

Private-sector profits fell 3.3% in January-August, narrowing from
January-July’s 5.3% fall.

 

 

 

U.S. tightens exports to China's chipmaker SMIC, citing risk of military use

SHANGHAI/WASHINGTON (Reuters) - The United States has imposed restrictions
on exports to China’s biggest chip maker SMIC after concluding there is an
“unacceptable risk” equipment supplied to it could be used for military
purposes.

 

 

Suppliers of certain equipment to Semiconductor Manufacturing International
Corporation 0981.HK will now have to apply for individual export licenses,
according to a letter from the Commerce Department dated Friday and seen by
Reuters.

 

The latest move marks a shift in U.S. policy from earlier this year, when
applicants seeking “military end user” licenses to sell to SMIC were told by
the Commerce Department that the licenses weren’t necessary, according to
three people familiar with the matter.

 

SMIC said it had not received any official notice of the restrictions and
said it has no ties with the Chinese military.

 

“SMIC reiterates that it manufactures semiconductors and provides services
solely for civilian and commercial end-users and end-uses,” SMIC said.

 

“The Company has no relationship with the Chinese military and does not
manufacture for any military end-users or end-uses.”

 

SMIC is the latest leading Chinese technology company to face U.S. trade
restrictions related to national security issues or U.S. foreign policy
efforts. Telecoms giant Huawei Technologies [HWT.UL] had its access to
high-end chips curtailed by its addition to a Commerce Department blacklist
known as the entity list.

 

“There’s been a lot of coverage on the Trump administration’s actions
regarding TikTok, but the more significant action - from a global economic
standpoint and that will have considerable ripple effects through global
supply chains - are the increasing restrictions on SMIC and other Chinese
national champions like Huawei,” said Nicholas Klein, a Washington lawyer
who specializes in international trade. He said these actions are more
likely to draw a retaliatory response from Beijing.

 

The United States has moved to ban the popular short video app TikTok,
citing national security concerns stemming from its Chinese ownership.

 

SMIC’s new designation is not as severe as being blacklisted, which makes it
difficult to get any export license approved.

 

The Pentagon earlier this month, Reuters was first to report, said it was
working with other agencies to determine whether to blacklist SMIC for its
purported links to the Chinese military.

 

U.S. companies including Lam Research LRCX.O, KLA Corp KLAC.O and Applied
Materials AMAT.O, which supply chipmaking equipment, may now need to get
licenses to ship certain goods to SMIC.

 

It is unclear which suppliers received the letter, but typically once the
Commerce Department comes to the conclusion that there is a risk of military
use or diversion, it sends that information to the companies.

 

The Commerce Department’s Bureau of Industry and Security declined on
Saturday to comment specifically on SMIC, but said it was “constantly
monitoring and assessing any potential threats to U.S. national security and
foreign policy interests”.

 

The administration has increasingly trained its focus on Chinese companies
that bolster Beijing’s military. Last month, the United States blacklisted
24 Chinese companies and targeted people it said were part of construction
and military actions in the South China Sea, its first such sanctions
against Beijing over the disputed strategic waterway.

 

 

 

Daimler's designated chairman Zetsche renounces job

FRANKFURT (Reuters) - Daimler’s Dieter Zetsche will not seek to become
chairman of the German carmaker’s supervisory board, he told Frankfurter
Allgemeine Sonntagszeitung newspaper.

 

Zetsche, 67, a former chief executive of the company which owns the
Mercedes-Benz brand, was due to take a seat as chairman on the board of
directors, which in Germany is known as the supervisory board.

 

“Naturally I would like to have done the job. I also believe I would have
done it well. But in the end I decided that I do not want it, that I
renounce this opportunity,” Zetsche is quoted as telling the paper.

 

“We acknowledge Dr. Zetsche’s decision with great respect,” a Daimler
spokesman said.

 

Zetsche says Daimler’s top investors would have backed him to succeed
Manfred Bischoff but that there may have been opposition from other
shareholders.

 

“The fact that after 40 years of work I am not regarded by some as an asset,
but as a burden, I do not need that,” Zetsche is quoted as telling the
paper.

 

Zetsche, who aside from being chief executive of Daimler, was also head of
Mercedes-Benz, was due to succeed Bischoff at Daimler’s annual general
meeting on March 31, 2021.

 

Earlier this month Daimler agreed to pay $2.2 billion to resolve a U.S.
government diesel emissions investigation and claims from 250,000 U.S.
vehicle owners.

 

 

 

 

Beijing autoshow: China's back, EVs booming, outlook uncertain

BEIJING (Reuters) - China’s auto market has rebounded smartly from the
COVID-19 crash in recent months, executives said on Saturday, as a rare
in-person trade show was dominated by talk of recovery in the world’s
biggest car market.

 

 

While conditions have improved vastly from lockdowns that froze economic
activity in the country where the pandemic erupted, the Beijing autoshow is
a far cry from the usual ebullience as fewer attend, new models are scant
and prospects remain uncertain.

 

Doubts remain over the durability of the recovery, but the focus for now is
on bright spots such as strong demand for mid-sized to large luxury vehicles
and a flood of interest - and investment - in electric vehicles.

 

"The recovery in the Chinese market has been very remarkable, and our key
segments have returned to the previous year's level if not slightly better,"
Nissan Motor Co 7201.T CEO Makoto Uchida told a news conference via a video
link from Japan.

 

“I expect this rebound to continue, but we need to watch for signs of
trouble,” said Uchida, who announced Japan’s second-biggest carmaker would
launch a number of new vehicles in China over the next five years as it
struggles to return to profit.

 

China’s auto sales rose 11.6% in August from a year earlier, the fifth
straight monthly rise after plunging during the lockdown.

 

When almost all residents were told to stay home in February, sales
collapsed by a record 79% to their lowest since 2005.

 

Executives at Germany's BMW BMWG.DE and Guangzhou-based GAC 601238.SS, which
has partnerships with Toyota Motor Corp 7203.T and Honda Motor Co 7267.T,
forecast full-year sales growth in China, while Chongqing Changan Automobile
000625.SZ predicted the same for its local joint venture with Ford Motor Co
F.N.

 

Great Wall Motor Co 601633.SS, China's top pickup truck maker, aims to boost
overseas sales this year, helping to ease an overall drop caused by
COVID-19.

 

Germany's Audi AG NSUG.DE is in talks with long-term partner China FAW Group
Corp [SASACJ.UL] about creating a second joint venture to build electric
cars on its PPE platform in China, Germany's Automobilwoche reported.

 

LIMITED UPSIDE

China’s typically busy car-buying season, “Golden September, Silver
October”, is off to a good start, according to preliminary data, with
passenger car sales up 12% in the first 20 days of September.

 

The rebound means this year’s sales will fall less than 10%, the China
Association of Automobile Manufacturers estimates, better than its May
forecast of a 15% to 25% decline.

 

Much of the upturn is driven by sales of larger passenger cars by makers
such as Daimler AG DAIGn.DE and BMW, boosted by new models, automakers'
discounts and a broader recovery in the world's second-largest economy.

 

Premium vehicles accounted for a record 15% of the Chinese market in August,
up from around 10% for all of last year, the China Passenger Car Association
said.

 

Electric vehicles are also providing buzz to the Beijing show, as a boom in
Tesla TSLA.O shares has propelled interest in China.

 

EV startups such as Nio NIO.N, Xpeng XPEV.N, Li Auto LI.O and WM Motor have
together raised more than $8 billion this year.

 

But the recent improvement reflects Chinese carmakers making earlier model
launches as they could not wait for the usual hype from the delayed autoshow
before going to market. That suggests a more limited upside to the current
sales rise.

 

“This year’s auto sales are very different from previous years,” said LMC
Automotive senior analyst Alan Kang. “Many cars were sold during summer
because customers delayed purchases after the lockdown.”

 

Sales of larger sedans and sport-utility vehicles have returned to last
year’s levels, but competition among mass-market brands is intensifying,
said Yale Zhang, head of Shanghai-based consultancy AutoForesight.

 

That's a key battle ground for international and domestic brands including
Volkswagen VOWG_p.DE, Toyota 7203.T, and Geely 0175.HK.

 

“Sales performance in these two months will give us a clue of what will
happen next,” said Zhang.

 

 

 

 

Wall Street Week Ahead: Trump-Biden debate could spark stock volatility

(Reuters) - Some U.S. stocks could face more volatility next week as
President Donald Trump and rival Joe Biden face off in their first debate
ahead of a November election that betting services currently view as almost
a coin flip.

 

A strong performance in Tuesday’s debate by Biden, who currently has a
modest lead in betting odds and polls, might boost stocks related to global
trade and renewable energy, while a perceived debate victory by Trump could
benefit fossil fuel and defense companies.

 

The first of three scheduled debates comes at a fraught moment on Wall
Street.

 

The S&P 500 has tumbled 10% from record highs in recent weeks as investors
worry about a prolonged recovery from the coronavirus and uncertainty
related to the Nov. 3 vote, including the possibility of a delay in
announcing a winner.

 

If one candidate emerges stronger on Tuesday, “the debate could be an
individual stock and sector play,” said Jack Ablin, Chief Investment Officer
at Cresset Wealth Advisors.

 

“For example, I think life under Biden would be a lot simpler for Apple than
life under Trump,” Ablin said, referring to Trump’s trade conflict with
China.

 

Individual stocks and other assets have been susceptible to market moves as
a result of debates, even as broader markets have generally shrugged them
off.

 

The Sept. 26, 2016 debate between Trump and Hillary Clinton, for example,
sparked a 2% surge in the Mexican peso, as well as moves in oil, gold and
Treasuries, according to a University of Michigan and Dartmouth College
study.

 

Many investors view Biden as more likely to raise taxes, and see a second
term for Trump, who favors deregulation, as better for the overall stock
market. At the same time, a Trump win could spark concerns over ramped up
tensions between Washington and Beijing.

 

With expectations of a delayed vote count, the options market shows
investors are bracing for volatility in November and December. Trump
declined on Wednesday to commit to a peaceful transfer of power if he loses,
and said he expected the election battle to end up before the Supreme Court.

 

Adding to political uncertainty, betting websites are offering odds giving
Biden a 53% chance of beating Trump, down from as much as 61% in early
August, according to RealClearPolitics.

 

A Biden win could boost the S&P 500 by about 1% the following day, while a
Trump re-election would push the index down about 4%, according to an
analysis by Cornerstone Macro based on a statistical comparison of recent
asset prices and election betting odds.

 

“A possible interpretation of this result is that markets have increasingly
priced in a Biden win and view the alternative as posing some risks,
possibly stemming from potential escalating trade tensions or similar
factors,” Cornerstone Marco wrote.

 

Gullane Capital Partners LLC, a hedge fund in Memphis, Tennessee, is
focusing on each presidential candidate’s likely effect on specific stocks
it owns, rather than what each candidate might mean for Wall Street as a
whole, said Managing Partner Trip Miller.

 

“Biden is good for some of our businesses, like solar, and Trump is better
for some of our other businesses that benefit from lighter regulation,”
Miller said.

 

UBS in a report this week predicted that a second term for Trump would have
little effect on healthcare. On the other hand, a Biden victory would lead
to only modest changes, rather than a major overhaul of health insurance,
even if Democrats took control of the Senate.

 

“We believe that the rhetoric on changes to healthcare policy exceeds the
reality of what can be accomplished,” UBS analysts wrote.

 

 

 

 

Some 3,500 U.S. companies sue over Trump-imposed Chinese tariffs

WASHINGTON (Reuters) - About 3,500 U.S. companies, including Tesla Inc
TSLA.O, Ford Motor Co F.N, Target Corp TGT.N, Walgreen Co WBA.O and Home
Depot HD.N have sued the Trump administration in the last two weeks over the
imposition of tariffs on more than $300 billion (£235.35 billion) in
Chinese-made goods.

 

 

The suits, filed in the U.S. Court of International Trade, named U.S. Trade
Representative Robert Lighthizer and the Customs and Border Protection
agency and challenge what they call the unlawful escalation of the U.S.
trade war with China through the imposition of a third and fourth round of
tariffs.

 

The legal challenges from a wide variety of companies argue the Trump
administration failed to impose tariffs within a required 12-month period
and did not comply with administrative procedures.

 

The companies challenge the administration's "unbounded and unlimited trade
war impacting billions of dollars in goods imported from the People's
Republic of China by importers in the United States," according to a suit
filed by auto parts manufacturer Dana Corp DAN.N.

 

The suits challenge tariffs in two separate groups known as List 3 and List
4A.” List 3 includes 25% tariffs on about $200 billion in imports, while
List 4A included 7.5% tariffs on $120 billion in goods.

 

One suit argues the administration cannot expand tariffs to other Chinese
imports “for reasons untethered to the unfair intellectual property policies
and practices it originally investigated.”

 

Companies filing suit include heavy truck manufacturer Volvo Group North
America VOLVb.ST, U.S. auto parts retailer Pep Boys, clothing company Ralph
Lauren, Sysco Corp SYY.N, guitar manufacturer Gibson Brands, Lenovo's
0992.HK U.S. unit, Dole Packaged Foods, a unit of Itochu Corp 8001.T and
golf equipment manufacturer Callaway Golf Co.

 

Home Depot’s suit noted it faces tariffs on bamboo flooring, cordless drills
and many other Chinese-made products. Walgreen, a unit of the Walgreen Boots
Alliance, said it is paying higher tariffs on products like “seasonal
novelties; party, first aid, and office supplies; and household essentials.”

 

Lighthizer’s office did not immediately respond to requests for comment.

 

On Sept. 15, the World Trade Organization found the United States breached
global trading rules by imposing multibillion-dollar tariffs in Trump’s
trade war with China.

 

The Trump administration says tariffs on Chinese goods were justified
because China was stealing intellectual property and forcing U.S. companies
to transfer technology for access to China’s markets.

 

 

 

 

American Airlines secures $5.5 billion Treasury loan, could tap more

CHICAGO/WASHINGTON (Reuters) - American Airlines AAL.O said on Friday it has
secured a $5.5 billion government loan and could tap up to $2 billion more
in October depending on how the U.S. Treasury allocates extra funds under a
$25 billion loan package for airlines.

 

Airlines have until Sept. 30 to decide whether to take the U.S. Treasury
loans, which were authorized under the CARES Act coronavirus relief bill
passed by Congress in March.

 

American Airlines was originally allocated $4.75 billion, but carriers
including Delta Air Lines DAL.N and Southwest Airlines LUV.N have already
said they do not intend to take their share of the package, opening the door
for the funds to be used by other airlines.

 

Fort Worth, Texas-based American said it has already drawn down $550 million
of the Treasury loan, which is backed by its loyalty program. The loans also
require airlines to issue warrants and carry restrictions on executive
compensation and buybacks.

 

Among other carriers, United Airline UAL.O said this week it will tap the
Treasury loans, but it was not clear whether the airline would only seek its
$4.5 billion share or more.

 

U.S. airlines received a separate $25 billion in March under the CARES Act
primarily in the form of grants to keep employees on payroll through the end
of this month and avoid furloughs while the industry battles a deep downturn
from the coronavirus pandemic.

 

The have also tapped capital markets to bolster liquidity, but with
passenger traffic still down about 70% from pre-pandemic levels, the
industry is urging Washington to extend another $25 billion in payroll
support through March, 2021.

 

American said it has also closed a $1.2 billion debt offering with Goldman
Sachs, backed by some intellectual property and airport slots.

 

 

 

 

The lockdown saw a spike in food prices across South Africa – and some
groceries are still more expensive than before

The Competition Commission has published its latest report on food prices
during South Africa’s coronavirus lockdown.

 

Alongside enforcement action against price gouging, the Commission also
began to monitor essential food prices more broadly – including upstream
food commodity and fresh produce markets – to better understand the effect
of the pandemic, the preventative measures of government and the economic
crisis on food markets.

 

The commission’s data suggests that while the onset of the Covid-19 pandemic
came with some short-term pricing effects at a wholesale level, particularly
on essential food products, all products where a pricing spike can be
observed also showed an easing of prices after this period.

 

“Thus the data from the Johannesburg fresh produce market as well as the
producer price data of Stats SA suggest that there is likely little concern
for any lasting pricing effects from the pandemic’s initial impact on the
market, at least for the products considered here,” it said.

 

However, the commission said that there is some concern in respect of
retailers and retail markets.

 

The analysis shows that for some essential products, like potatoes and
onions, the margins earned by retailers on the producer price (the wholesale
price) have grown substantially over the lockdown period due almost entirely
to increases in retail prices.

 

“An examination of margins over time shows that when costs come down, prices
tend to come down more slowly, which is of concern to the Commission more
broadly,” it said.

 

An examination of pricing and sales data across all the fresh produce
markets in South Africa has also raised concerns around certain features of
the market, the commission said.

 

“Firstly, pricing varies significantly across South Africa’s fresh produce
markets. These differences do not appear to be explained by the size of the
market or logistics costs involved in getting the product from the farmer to
the market.

 

Coastal markets do appear to be priced higher than inland markets, but the
factors driving this are not clear, it said.

 

“These significant variations in pricing without an understanding of the
factors involved is cause for concern for the Commission and justifies
further consideration of these dynamics to see if the markets are
malfunctioning or not.”

 

The commission said that volatility in pricing is broadly associated with
smaller fresh produce markets, as is expected, but this relationship is
certainly not without exception as some products and smaller markets show
less price volatility than the largest markets.

 

“This suggests that smaller markets need not necessarily be subject to
volatility and it is important to understand why some markets are more
volatile than others, the committee said.

 

“This would also require a consideration of whether some markets are more
susceptible to manipulation than others due to a lack of
liquidity.”-businesstech

 

 

 

Beyond tourism: A call for business ideas that protect African wildlife,
ecosystems

CAPE TOWN — An innovation challenge launched this month hopes to inspire new
ideas for businesses that will provide people in Africa with sustainable
incomes while protecting ecosystems.

 

The African Leadership University’s Kigali-based School of Wildlife
Conservation (SOWC) approaches conservation with the aim of enabling African
communities to “take ownership of wildlife and the environment” as an
incentive to protect ecosystems. The Beyond Tourism in Africa innovation
challenge, seeking to uncover non-tourism business ideas for the “wildlife
economy,” emerges from the school’s view of nature as “a great pillar of
economic growth for Africa.”

 

The challenge is a joint venture between SOWC, WWF Africa, and the
Switzerland-based Luc Hoffmann Institute. Applications opened on Sept. 1. Up
to 15 finalists will be selected in November; they will spend several months
in ALU’s incubator program next year, developing their ideas before pitching
them to investors in September 2021.

 

Tourism is the most familiar example of a “conservation business.”
Successful examples include gorilla tours in Uganda, which generate 60% of
the Uganda Wildlife Authority’s revenue.

 

Elephant and tourists at Ngorongoro Crater. Photo by George Lamson. Source:
Wikimedia Commons, licensed under CC BY-SA 2.0.

Elephant and tourists at Ngorongoro Crater. Image by George Lamson via
Wikimedia Commons (CC BY-SA 2.0).

Wildlife tourism creates jobs and revenue and a commercial incentive to
protect the wildlife on which photographic safaris or trophy hunting rely.
But it’s surprisingly unclear how much tourism directly contributes to
conserving biodiversity.

 

Sue Snyman, research director at SOWC, says there is not enough data to show
how much tourism contributes as an industry: “Most government revenue from
tourism goes into central coffers and is then dispersed as needed and so
[there’s] no clarity.”

 

Snyman is collating data from a range of industries related to conservation,
including ecotourism, hunting, ranching and non-timber forest projects,
focusing on South Africa, Gabon, Ghana, Kenya and the Seychelles. This is
the first time anyone has gathered data to lay out the economic value,
number of jobs and the size of areas each of these industries can protect.
The report, due out in February 2021, will also suggest which activities
best suit which landscapes.

 

“For me, the key is diversification,” Snyman says. “Not relying on one
thing.” The dangers of this have been demonstrated this year, as tourism
dried up during the COVID-19 pandemic.

 

Brian Child, associate professor at the University of Florida, specializes
in protected area management and the economics of wildlife in Southern
Africa. He says he’s skeptical about the revenue potential of existing
non-tourist wildlife industries, such as REDD+ projects and shade-grown
coffee farming.

 

“People have been going on about alternative livelihoods for 20 years — but
I still haven’t seen one working in the field,” he says. “Except maybe
beekeeping.” He adds that many projects are dependent on NGO funding and
aren’t self-sustaining. There are some success stories, but tourism remains
the dominant industry.

 

The organizers say they hope the innovation challenge — and its call for
applicants from any industry — will inspire creative, out-of-the-box ideas
that go well beyond current conservation thinking, says Julia Pierre-Nina,
senior manager of conservation stakeholders at ALU SOWC. They welcome
undeveloped ideas that will benefit from ALU’s incubation program.

 

The key requirements are that the business must create value for communities
and nature in Africa; that it doesn’t rely on tourism; it empowers
communities with decision-making authority; and is financially sustainable
and scalable. Beyond that, it’s an open field.-mongabay

 

 

 

Choppies holds on to dividend amid Covid-19 hit

Botswana-based food retailer Choppies has opted to hold on to its final
dividend for the year to end-June, after taking a hit to volumes and revenue
from Covid-19.

 

 

The group reported a loss of P370.6m (R537m) to end-June, about a 14%
improvement from the year-earlier period.

 

Group revenue, comprising sale of goods from continuing operations,
increased by 1.1% to P5.42bn. The increase was inflation driven mainly in
Botswana and Zimbabwe, where volumes were under pressure.

 

The effect of the Covid-19 pandemic on revenue from the group’s continuing
operations is estimated at P190m, the statement read.

 

The retailer has been embroiled in legal and accounting scandals, and is
still suspended from the JSE, having previously faced difficulties in
finalising its financial results.

 

In 2019, the retailer announced an investigation by an EY forensic team,
which uncovered accounting irregularities in how it recorded sales and
inventory stocks in SA and Zimbabwe shops. The board then suspended CEO
Ramachandran Ottapathu who was later reinstated.

 

The group said on Friday this matter was closed in August 2020. “No evidence
could be found that any person was prejudiced, nor that fraud was
committed,” Choppies said.-buisnessday

 

 

 

 

MultiChoice steps up as new PSL sponsor

DStv, African’s biggest pay-TVprovider, is the new sponsor of the Premier
Soccer League (PSL), replacing Absa.

 

The sponsorship of the PSL’s Premier Division will make MultiChoice’s stake
in local football even more significant. Soccer is the biggest sport in the
world, attracting billions of dollars in sponsorship from broadcasters and
advertisers. Rights to soccer screenings have been behind the growth of
subscriber-based broadcasters, including MultiChoice, which screens games
across the continent via its DStv service.

 

DStv’s SuperSport channels are already the official broadcaster of the
Premiership‚ providing hugely lucrative rights deals for the league since
2007. Moreover, SuperSport owns the highly successful, three-time Premier
League-winning club SuperSport United FC.

 

“It’s a synergy that is powerful in what it brings to the supporters ... the
PSL continues to innovate and improve its products, which will have the full
backing of DStv, whose offering requires an abundance of local content,”
said PSL chair Irvin Khoza.

 

Absa announced in June that the banking giant would end its 13-year
sponsorship of the premiership. The latest Absa sponsorship had been
reported to be worth R140m a year to the PSL.

 

Absa said at the time that it would explore other avenues to remain involved
in professional football in SA. Absa sponsored the Premiership from 2007 to
2020.

 

The initial Absa sponsorship — then worth R500m over five years — and the
then R1.6bn SuperSport TV rights deal, concluded in the same year at a time
when the country anticipated hosting the 2010 World Cup, changed the
financial landscape of the sport in SA.

 

Football, despite being the biggest sport in the country, had previously
largely played second fiddle to cricket and rugby for the big deals shared
among the big three sports. The Absa and SuperSport deals placed football at
the front of the queue.

 

DStv’s decoder sale expansion across Africa has seen the PSL increasingly
viewed across the continent on SuperSport.

 

In a move to entrench its position in sports broadcasting, in July
MultiChoice brought back content from US-based broadcaster ESPN on to DStv
in a deal that saw two channels being added to the platform. MultiChoice
sister company Showmax, which can be accessed free by some MultiChoice
subscribers, launched a new livesport streaming service called Showmax
Pro.-businessday

 

 

 

 

Equity fundraising to become necessity for SA firms, even if investors don’t
like it

SA is set to see a wave of equity fundraising as banks’ capacity to lend is
under strain from rising bad debts, just as corporations are in need of
funds to cope with the fallout from the coronavirus pandemic.

 

 

SA companies, unlike many of their global peers, have historically been
averse to raising money via the stock market as investors prefer them to
take on more debt. Banks have obliged.

 

But with coronavirus-related bad debts setting SA banks’ profits back by
about a decade, the period of easy money may be drawing to a close.

 

“The economic environment is not going to be conducive (for lending) any
time soon and debt levels will increase over the next six months,” said
Simon Denny, head of Barclays SA. “I am surprised that SA is not seeing any
major equity capital raises.”

 

He said the economic conditions were expected to trigger a round of equity
capital raising from about December.

 

Company management teams, however, will need to convince investors, who have
generally punished stocks for attempting equity raising.

 

 

In August, cement maker PPC’s shares nosedived as investors hammered it
after a rights issue announcement. In July, Famous Brands backed away from
plans to raise equity after its announcement provoked a similar backlash.

 

PPC declined to comment for this story and Famous Brands did not reply to an
e-mail seeking comment.

 

“Generally, there is a higher level of resistance by shareholders for
dilution,” said Richard Stout, Standard Bank’s head of equity capital
markets for SA and Sub-Saharan Africa.

 

Banks’ pre-pandemic willingness to lend allowed many companies to create a
short-term liquidity buffer, he said. But as those funds run out and they
increasingly feel the pandemic's fallout, companies will need to raise
equity from the fourth quarter and extending well into 2021.

 

The likes of Africa Rainbow Capital Investments and condiment maker AllJoy
Food, have already signalled to investors that they will seek to raise
equity in the coming months.

 

“Banks are getting risk averse, which will make several listed entities
raise equity,” said Muhammed Naasif Darsot, CEO of AllJoy, which is pursuing
multiple strategies to raise the capital needed to grow its business.

 

Africa Rainbow Capital, in a circular to shareholders on Monday, said it
planned to raise equity to support investee companies and meet medium-term
fund requirements.

 

Missed opportunity?

 

Stock markets around the world have bounced back after tumbling in March on
fears of a Covid-19-induced economic slowdown. The JSE is among the
strongest performers with its benchmark index up 40% since a March 19 crash.

 

SA companies could capitalise on current high stock prices to raise money.
But so far they have lagged behind international peers, with SA equity
raising totalling just $1.3bn to the end of August.

 

Indian companies, meanwhile, raised $28bn throughout August, while in
Australia companies raised $22bn, Refinitiv data showed, outpacing SA even
after factoring in discrepancies in market capitalisation and the number of
listings.

 

SA companies have essentially kicked the can down the road by not raising
equity, said one international banker, who did not want to be identified.

 

“I think what we need is for the companies to see their third quarter
[September end] performance. That is when they will realise they need to
raise equity,” he said.

 

Reuters

 

 

 

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
investigation into the business, financial condition and future prospects of
any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


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