Major International Business Headlines Brief::: 27 August 2021

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Major International Business Headlines Brief::: 27 August 2021

 


 

 


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ü  Apple chief executive Tim Cook gets $750m payout

ü  Peloton cuts price of bike as sales growth slows'

ü  Twelve-year-old boy makes £290,000 from whale NFTs

ü  UK loses 83% of department stores since BHS collapsed

ü  South Korea becomes first major Asian economy to raise interest rates

ü  Qantas says pandemic to cost billions in lost revenue

ü  BA in talks over short-haul Gatwick flights

ü  Delta Airlines imposes $200 monthly surcharge on unvaccinated staff

ü  Alphabet's Waymo to stop selling lidar self-driving car sensors

ü  Barclays buys $3.8 billion Gap credit card portfolio in the U.S.

ü  Asian shares inch up, caution prevails ahead of Jackson Hole

ü  Exit game: Central banks' shift from crisis policies gathers momentum

ü  LG Chem shares slide amid electric vehicle battery-fire probe with GM

ü  U.S. judge declines to stop J&J from splitting talc liabilities from main business

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

Apple chief executive Tim Cook gets $750m payout

Apple chief executive Tim Cook has received more than five million shares in the technology giant, as he marks ten years in the job.

 

A company filing with the US Securities and Exchange Commission (SEC) watchdog shows that he sold most of the shares for more than $750m (£550m).

 

It is part of a deal he struck when he took over from co-founder Steve Jobs.

 

The award depended on how well Apple's shares performed compared to other firms on the S&P 500 stock index.

 

According to Apple's filing with the SEC, Mr Cook was eligible for the award as the company's shares had risen by 191.83% over the last three years.

 

It also noted that Apple's share price has increased 1,200% since he became chief executive on 24 August 2011.

 

 

The company behind the iPhone, iPad and MacBook now has a market valuation of almost $2.5tn.

 

Last year, Mr Cook agreed to a new pay package that runs to the end of 2026.

 

A SEC filing also showed that earlier this week Mr Cook donated almost $10m worth of Apple shares to charity, without naming the recipient.

 

In 2015, Mr Cook said he would give away his entire fortune before he dies, and is known to have donated tens of millions of dollars to charity.

 

He currently has a net worth of around $1.5bn, according to the Bloomberg Billionaire's Index.

 

Mr Cook has often spoken publicly about his concerns over issues including HIV and Aids, climate change, human rights and equality.

 

He follows other mega-rich US business people who have said they would give away all or a significant portion of their fortunes in their lifetimes.

 

In 2010, Microsoft co-founder Bill Gates and investment veteran Warren Buffett launched the Giving Pledge, which called on billionaires to give away at least half of their fortunes.

 

Earlier this year, Mr Buffett donated to charity another $4.1bn worth of shares in his company Berkshire Hathaway.

 

-BBC

 

 

 

Peloton cuts price of bike as sales growth slows

The fitness bike maker Peloton is to slash the price of its flagship bike as people head back to the gym and do less exercise at home.

 

The US firm will cut the price of its less expensive Bike machine by about 20% to $1,495 from Thursday.

 

The change will take effect in all of its markets, including the US, UK, Canada, Australia and Germany.

 

It came as losses widened at the firm in the fourth quarter of the year and revenue growth began to slow.

 

The company has also had to shoulder costs associated with a treadmill it recalled in May, following the death of a child.

 

As more people exercised at home during the pandemic, sales of Peloton products surged, more than doubling to $4bn in the year to 30 June.

 

However, the New York-based firm said it only expected revenue of $800m in the first quarter of the financial year, far below market estimates of $1bn.

 

Peloton set to build first US factory

It also said the decision to slash the price of its flagship bike would hit near-term profitability, sending its shares down 15% in after hours trading.

 

It is the second time in a year that the firm has cut the price of its Bike product.

 

"We know price remains a barrier and are pleased to offer our most popular product at an attractive everyday price point," the firm said in a letter to shareholders.

 

Peloton said it would begin selling a cheaper redesigned model of its Tread running machines next week in the US, after an older version and its more expensive Tread+ machine were pulled over safety concerns.

 

It came after a child was pulled under the Tread+ and died. Users had also reported the touch screen falling off the Tread.-BBC

 

 

Twelve-year-old boy makes £290,000 from whale NFTs

A 12-year-old boy from London has made about £290,000 during the school holidays, after creating a series of pixelated artworks called Weird Whales and selling non-fungible tokens (NFTs).

 

With NFTs, artwork can be "tokenised" to create a digital certificate of ownership that can be bought and sold.

 

They do not generally give the buyer the actual artwork or its copyright.

 

Benyamin Ahmed is keeping his earnings in the form of Ethereum - the crypto-currency in which they were sold.

 

This means they could go up or down in value and there is no back-up from the authorities if the digital wallet in which he is holding them is hacked or compromised.

 

He has never had a traditional bank account.

 

Extremely proud

Benyamin's classmates are as yet unaware of his new-found crypto-wealth, although he has made YouTube videos about his hobby, which he enjoys alongside swimming, badminton and taekwondo.

 

"My advice to other children that maybe want to get into this space is don't force yourself to do coding, maybe because you get peer pressured - just as if you like cooking, do cooking, if you like dancing, do dances, just do it to the best of your ability," he said.

 

Benyamin's father, Imran, a software developer who works in traditional finance, encouraged Benyamin and his brother, Yousef, to start coding at the ages of five and six.

 

The children have had the advantage of a strong network of technology experts to call on for advice and help - but he is extremely proud of them.

 

More serious

"It was a little bit of a fun exercise - but I picked up on really early that they were really receptive to it and they were really good," Imran said.

 

"So then we started getting a little bit more serious - and now it's every single day... but you can't cram this stuff, you can't say I'm going to learn coding in three months."

 

The boys did 20 or 30 minutes of coding exercises a day - including on holiday, he said.

 

Weird Whales is Benyamin's second digital-art collection, following an earlier Minecraft-inspired set that sold less well.

 

This time, he drew inspiration from a well known pixelated whale meme image and a popular digital-art style but used his own program to create the set of 3,350 emoji-type whales.

 

"It was interesting to see all of them hatch, as they appeared on my screen slowly generating," he said.

 

Benyamin is already working on his third, superhero-themed collection.

 

He would also like to make an "underwater game" featuring the whales.

 

"That would be amazing," he said.

 

Imran is "100% certain" his son has not broken copyright law and has engaged lawyers to "audit" his work, as well as getting advice on how to trademark his own designs.

 

The art world is divided over the current trend for NFTs.

 

Artists say they are a useful additional line of revenue.

 

And there are many stories of eye-wateringly high sales.

 

But there is also scepticism over whether they are a realistic long-term investment.

 

And former Christie's auctioneer Charles Allsopp told BBC News buying them made "no sense".

 

"The idea of buying something which isn't there is just strange," he said earlier this year.

 

"People who invest in it are slight mugs - but I hope they don't lose their money."-BBC

 

 

 

UK loses 83% of department stores since BHS collapsed

The UK has lost 83% of its main department stores in the five years since the collapse of the BHS chain.

 

The figure highlights the extent of the upheaval in the High Street as the Covid pandemic sped up changes in shopping habits.

 

The data, compiled by commercial property information firm CoStar Group, also reveals that more than two-thirds of these shops remain unoccupied.

 

Some 237 big stores have yet to be taken over by a new business.

 

"The data undoubtedly highlights the acceleration of change in the retail sector in recent years, which the pandemic has only exacerbated," said CoStar Group's head of analytics, Mark Stansfield.

 

CoStar tracked the UK's largest chains, from BHS and Beales to Debenhams and House of Fraser, from 2016 to the present day.

 

Five years ago, they had 467 stores between them. Now, however, only 79 are left.

 

Department store closure graphic

CoStar Group also examined what had happened to the 388 that had closed.

 

Although 237 are currently sitting empty, 52 already have either firm plans in place or early planning approval for a change of use or repurposing. The research was done in July.

 

Vacant UK department stores graphic

Mr Stansfield told the BBC he believed the pace of change would soon step up.

 

"We are increasingly seeing forward-thinking real estate owners getting ahead of the problem and reshaping what are key assets in our town centres to provide a focal point for regeneration," he said.

 

"I think we'll see many more plans come to light in the coming months. With these store closures come new opportunities."

 

No quick fix

Department stores have long been the cornerstone of UK shopping areas. Many are in purpose-built shopping centres, while some occupy historic buildings.

 

Figuring out what to do with all this redundant space is one of the biggest challenges for landlords, as well as for the town centres that host those properties.

 

BHS is a good illustration of why there is no quick fix for the problem. Five years after the retailer ceased trading, a quarter of its former outlets have still failed to attract new tenants.

 

BHS graphic

In 2016, the BBC visited the old BHS store on Edinburgh's Princes Street, one of the biggest in the chain. The owners already had new ideas for the site - and crucially, they decided to turn it into a building with a mix of different uses.

 

Its six floors, once riddled with asbestos, have slowly been transformed. The old staff locker rooms and half of the building have been turned into hotel bedrooms by Premier Inn.

 

They're also putting the finishing touches to a state-of the art office right at the top, while the basement will hopefully become a bowling alley. There will also eventually be retail, just a lot less than before.

 

"It costs a lot of money and takes a lot of time to turn these large format spaces into new uses," says the architect behind the project, Frank Hinds of CDA.

 

"In development terms, we did this in a relatively short space of time."

 

When it comes to repurposing, says Mr Hinds, the stumbling blocks are often financial. Investors have to be able to make a return to justify the huge investment. Luckily for this BHS, it's on a world-class street.

 

"The viability comes from the location and the desire that people have to be in that location," he adds.

 

For Premier Inn, the hotelier involved, it was an opportunity too good to miss. "Buildings like this don't come along very often with beautiful views across to the castle," says Valerie Graham, regional operations director.

 

"Seeing so many people get use of the space is just fantastic. And the demand is there. We're creating jobs too."

 

Edinburgh has lost four of its main department stores in the past few years, but, fortunately, there are solutions under way for all of them.

 

For instance, the former House of Fraser store at the other end of Princes Street is about to open its doors as the Johnnie Walker Whisky Experience.

 

Small town blues

Filling the gaps in smaller towns is a much greater challenge. In Dumfries, the old Debenhams store is still vacant.

 

It's the biggest retail unit in the town, with no takers so far for the space.

 

"It comes down to money," says Scott Mackay, who runs the Midsteeple Quarter, a local company founded to benefit the community.

 

Through crowdfunding, donations and public money, it's buying old, empty, shops and bringing them back to life with new tenants.

 

"This is a small rural town historically and there isn't the amount of money to be invested in Dumfries compared with our bigger cities. We stand or fall on our own two feet," he says.

 

Would he like to take on the former Debenhams site as well? "If we had the funding, absolutely we would take on a building like this," he says.

 

"I think it would make a great small boutique cinema or food court on the ground floor, with potentially residential on the upper floors."

 

Some of form of intervention is needed, he believes, to avoid the store sitting empty for years.

 

Debenhams is a more recent casualty of the changing High Street environment than BHS, having shut its last stores in May this year.

 

In all, 149 former Debenhams stores are currently vacant, as the data from CoStar Group shows.

 

Debenhams graphic

CoStar Group's team has been scouring planning applications and talking to property agents on the ground as well as big landlords for this research, which is the most comprehensive picture to date on the huge structural changes to have hit this part of British retail.

 

The appetite for quality shop space hasn't completely diminished. For instance, Next has already taken space in Debenhams stores for its new beauty concept, while Mike Ashley is redeveloping or re-letting space for his Flannels brand.

 

But if BHS is anything to go by, reviving many of these these vast sites will take time, as well as some radical thinking.-BBC

 

 

 

South Korea becomes first major Asian economy to raise interest rates

South Korea has become the first major Asian economy to raise interest rates since the coronavirus pandemic began.

 

The Bank of Korea increased its base rate of interest from a record low of 0.5% to 0.75%.

 

The move is aimed at helping curb the country's household debt and home prices, which soared in recent months.

 

Central banks around the world are trying to balance the impact of ongoing Covid-19 infections against economic risks such as high inflation.

 

It is the first time the Bank of Korea has raised its main interest rate for almost three years.

 

The decision comes as the central bank attempts to balance helping to support the country's economic recovery against the risks of surging debt and rising inflation.

 

Policy makers for Asia's fourth largest economy had been signalling that they were ready to increase the cost of borrowing since May.

 

The move was delayed as the latest Covid-19 outbreak put the country into a partial lockdown last month.

 

Central banks around the world are preparing to start dismantling their pandemic-era policies that have seen emergency stimulus measures brought in as economies were shut down to slow the spread of Covid-19.

 

Most countries that have raised the cost of borrowing so far this year have been in emerging economies that have seen inflation accelerate as demand for goods and services recovered.

 

In Asia, Sri Lanka last week became the first country in the region to raise interest rates.

 

Also in the Asia-Pacific region last week, New Zealand was expected to become the first advanced economy to increase rates in the wake of the coronavirus crisis.

 

However, the day before the monetary policy decision was announced Prime Minister Jacinda Ardern imposed a nationwide lockdown.

 

The Reserve Bank of New Zealand kept its rate at a record low of 0.25%, saying in a statement "the decision was made in the context of the Government's imposition of Level 4 COVID restrictions on activity across New Zealand".-BBC

 

 

 

Qantas says pandemic to cost billions in lost revenue

The boss of Qantas has said that the pandemic is likely to cost the firm A$20bn (£10.6bn) in lost revenue by the end of 2021.

 

Alan Joyce made the comments as the Australian airline announced an annual pre-tax loss of A$1.83bn.

 

The loss was for the year to the end of June and does not include the latest lockdown in Sydney.

 

However, Qantas says it is hopeful that some international travel will reopen in time for Christmas.

 

"This loss shows the impact that a full year of closed international borders and more than 330 days of domestic travel restrictions had on our national carrier," Mr Joyce said.

 

"The trading conditions have frankly been diabolical," he added.

 

But the company said it was optimistic it would be able to resume some international flights from December, after Australia's vaccination rate reached 80% of the eligible population.

 

The firm hopes to resume flights to "Covid-safe destinations", which could include the UK, US, Canada, Japan and Singapore.

 

The airline also expects to bring five of its A380 super jumbos back into service by the middle of next year to meet high demand for flights to Los Angeles and London.

 

Qantas said that its "Covid recovery plan" had seen 9,400 people leave the company, while around 6,000 workers remained stood down due to the closure of Australia's international borders.

 

On top of that a further 2,500 staff were stood down earlier this month as the lockdown in Sydney impacts air travel across Australia.

 

Also in August, the company said that all of its employees must be vaccinated against Covid-19.

 

Frontline workers including pilots, cabin crew and airport staff were told they must be fully vaccinated by mid-November.

 

The firm said its remaining employees have until the end of March next year to receive both doses.-BBC

 

 

 

BA in talks over short-haul Gatwick flights

British Airways is considering plans for a short-haul flight operation at Gatwick Airport.

 

The airline confirmed it was working with unions on the proposals but said it would not comment further.

 

The British Airline Pilots Association told the BBC British Airways and the union were in the "final stages of negotiations" over pay and conditions.

 

Acting general secretary Martin Chalk said the union "cautiously" welcomed the airline's decision.

 

Mr Chalk said the move would "create a number of much needed new pilot jobs".

 

"We hope to bring these talks to a conclusion shortly," he added.

 

The Wall Street Journal, which first reported the story, said the airline was looking to create a new unit at London Gatwick, after it halted its short-haul flights from the airport at the start of the coronavirus pandemic.

 

The paper reported carriers such as British Airways have typically relied on short-haul operations to feed traffic onto more profitable longer routes.

 

Last month, British Airways owner IAG said it was ramping up its flight schedules as global air travel restrictions are eased.

 

IAG said it would operate at about 45% of passenger capacity between July and September compared with pre-Covid levels, possibly rising to 75% by the end of 2021.

 

The company, which also owns Aer Lingus and Iberia, revealed a loss of more than €2bn (£1.7bn) in the six months to the end of June.

 

In April 2020, British Airways announced it would cut up to 12,000 jobs in response to the Covid crisis.-BBC

 

 

 

Delta Airlines imposes $200 monthly surcharge on unvaccinated staff

America's third largest airline, Delta, is to impose a $200 (£145) monthly surcharge on employees who are not vaccinated against Covid-19.

 

It will also only pay sick pay to Covid sufferers who have been double-jabbed but still get infected.

 

Boss Ed Bastian said it would help stem the "aggressive spread" of coronavirus as infections rise across the US.

 

It is the latest attempt by a big firm to cajole staff into getting jabbed.

 

In a memo to staff, Mr Bastian said Delta's surcharge would apply from 1 November to staff enrolled in its healthcare insurance plan, meaning most of its 75,000 workers will be affected.

 

He said the average hospital stay for Covid-19 now costs Delta $50,000 per person which is untenable.

 

"This surcharge will be necessary to address the financial risk the decision to not vaccinate is creating for our company," he said.

 

"In recent weeks since the rise of the B.1.617.2 variant, all Delta employees who have been hospitalised with Covid were not fully vaccinated."

 

>From 30 September unvaccinated Delta staff will also have to take weekly Covid tests and wear masks in all indoor Delta settings.

 

Currently, all US airline staff have to wear masks on aircraft but it does not apply in company offices.

 

US firms are trying a range of approaches to encourage staff to get vaccinated as the Delta variant of coronavirus sweeps the country.

 

Some companies, such as United Airlines, Goldman Sachs and tech giants Microsoft and Google, have told staff they must be fully jabbed to come into work.

 

Investment giant Vanguard has offered vaccinated staff a $1,000 bonus, while Amazon and Apple have no policy in place.

 

On Wednesday, investment bank Credit Suisse said it would ask all unvaccinated employees to work from home from 7 September. Like others it has also delayed a full return to the office until October.

 

Delta Airlines' move comes as US carriers fight to restore confidence after a sharp fall in demand during the pandemic.

 

The airline's passenger revenue was $5.3bn in the three months to 30 June - down more than 50% from the same period in 2019 before the crisis began.-BBC

 

 

 

Alphabet's Waymo to stop selling lidar self-driving car sensors

(Reuters) - Alphabet Inc's (GOOGL.O) self-driving unit Waymo said on Thursday that it has ended a two-year effort to sell light detection and ranging (lidar) sensors to other companies.

 

This is a reversal from its earlier strategy to sell the lidars to non-automotive customers to bring down costs of a key and expensive component of self-driving cars.

 

"We're winding down our commercial lidar business as we maintain our focus on developing and deploying our Waymo Driver across our Waymo One (ride-hailing) and Waymo Via (delivery) units," a Waymo spokesperson said in a statement.

 

The spokesperson, however, said it will continue to build its lidars in-house.

 

According to a person familiar with the matter, Waymo is considering both internal technology and external suppliers for its next-generation lidars. read more

 

The move to stop selling lidars comes after the departure of CEO John Krafcik and some other executives, which had fueled questions about whether Waymo would rethink its strategy after failing to generate significant revenue for over a decade.

 

In 2019, Waymo said it was going to sell one of its three different in-house lidars to customers in robotics, farming and others, not to rival self-driving car firms.

 

"We can scale our autonomous technology faster, making each sensor more affordable through economies of scale," Simon Verghese, Head of Lidar Team, said at that time.

 

It was not clear whether Waymo was able to generate enough revenue to offset development and operational costs of its lidar sales business.

 

Lidars use laser pulses to measure distances and render precise images of the environment around the car. Most self-driving firms, including Waymo, say lidars are key to achieving full autonomy. Tesla CEO Elon Musk said companies that rely on the expensive sensors are "doomed."

 

Waymo in 2018 launched the first commercial self-driving taxis, retrofitting Chrysler's minivan with its own self-driving hardware. But it has not yet expanded and scaled up the technology beyond limited areas in suburban Phoenix, and it has recently launched public testing around dense San Francisco with a Jaguar electric car and a new suite of sensors. read more

 

In 2011, Waymo began developing its own set of sensors from the ground up, including three types of lidars, including short-range lidars dubbed Laser Bear Honeycomb.

 

 

But Tim Willis, general manager of the company's Laser Bear lidars, left the company in February and joined lidar company Aeva, according to his LinkedIn profile.

 

Australian Droid + Robot tested prototype robots with Waymo's Honeycomb lidars in mines in Australia.

 

"Everyone knew the risks associated with that venture," Mat Allan, manager of perception and AI at Australian Droid + Robot, told Reuters. "It’s a good product. We haven’t found anything that matches price to performance... It’s a shame though we couldn’t continue the journey," he said.

 

The Thomson Reuters Trust Principles.

 

 

 

Barclays buys $3.8 billion Gap credit card portfolio in the U.S.

(Reuters) - Barclays (BARC.L) said on Friday its United States arm will buy a $3.8 billion credit card portfolio from Synchrony Bank, as the British lender seeks to grow its U.S. profits and diversify further in to fee-earning businesses.

 

The co-branded credit card accounts and receivables were issued in partnership with clothing retailer The Gap Inc (GPS.N), and the deal is expected to close in the second quarter of next year.

 

The deal comes at a time when banks worldwide are trying to grow fee-earning businesses such as credit cards, amid rock-bottom central bank interest rates that have squashed profits from their other main business of lending.

 

The deal follows an agreement in April between Barclays and Gap under which they would issue co-branded credit cards to Gap customers in 2022.

 

 

The acquisition, which Barclays said is being financed from its existing resources, is estimated to reduce the bank's core capital ratio by around 20 basis points.

 

The Thomson Reuters Trust Principles.

 

 

Asian shares inch up, caution prevails ahead of Jackson Hole

(Reuters) - Asian shares were set for their best week since February on Friday as Chinese markets cheered a burst of central bank liquidity although broader enthusiasm was capped ahead of what could be a pivotal speech by the U.S. central bank chief.

 

U.S. stock futures were up 0.2% in Asian hours, suggesting some optimism after sentiment on Thursday was dented by a deadly attack in Afghanistan, and after the Federal Reserve's more hawkish policymakers urged an end to stimulus.

 

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.17%, up 3.78% on the week, which would be its best week since February, while Japan's Nikkei (.N225) shed 0.46%.

 

Chinese blue chips (.CSI300) rose 0.45%, a reversal of recent weeks in which mainland stocks have weighed on the region, as investors took comfort in the central bank's biggest weekly cash injection into the banking system since February. Hong Kong's benchmark (.HSI) rose 0.15%.

 

Recent regulatory crackdowns have roiled sectors from property to tech and wiped half a trillion dollars from China's markets in last week alone. read more

 

"A-shares (onshore Chinese shares) and Hong Kong are taking a break after some pretty extreme movements in the last two weeks," said Qi Wang, CEO of MegaTrust Investment (HK).

 

"Investors are grappling with the regulatory risk versus still strong earnings."

 

ZhongAn Online P & C Insurance Co Ltd (6060.HK) rose 6.3% after posting strong results, for example.

 

Australian (.AXJO) and Korean (.KS11) benchmarks traded either side of flat.

 

In early European trade, the pan-region Euro Stoxx 50 futures were down 0.06%, but FTSE futures rose 0.08%. But the main focus of the day is still to come.

 

Fed Chair Jerome Powell is set to speak at 1400 GMT in the Kansas City Fed's central banking conference, an event normally held in Jackson Hole, Wyoming, which has been used by the bank in the past to provide guidance on future policy.

 

Analysts at RBC said in a note that while much of the summer had been spent waiting for the event, there was "skepticism that the Fed will provide more specific information around a timetable...amidst a rise in Delta variant COVID cases."

 

Ahead of the speech, public remarks by the Fed's more hawkish speakers on Thursday urging the central bank to begin paring bond purchases weighed on Wall Street, which closed slightly lower, ending a streak of all-time closing highs. read more

 

The Dow Jones Industrial Average (.DJI) fell 0.54%, the S&P 500 (.SPX) lost 0.58%, and the Nasdaq Composite (.IXIC) dropped 0.64%.

 

Dallas Fed President Robert Kaplan said he believed the economic recovery warrants tapering of asset purchases to commence around October. Earlier, St. Louis Fed President James Bullard said the central bank was "coalescing" around a plan to begin tapering. read more

 

The dollar and U.S. yields were little moved on Friday ahead of Powell's speech.

 

The yield on benchmark 10-year Treasury notes was 1.3441%, down from a two-week high of 1.375% set the day before, but barely changed from the U.S. close.

 

Gold rose 0.53% to $1,801.55 per ounce as some investors sought safety ahead of the speech.

 

U.S. crude rose 1.39% to $68.36 a barrel, Brent crude rose 1.46% to $72.03 per barrel, as energy companies began shutting production in the Gulf of Mexico ahead of a potential hurricane this weekend.

 

The Thomson Reuters Trust Principles.

 

 

 

Exit game: Central banks' shift from crisis policies gathers momentum

(Reuters) - While the financial world waits for the Federal Reserve to start reversing its ultra-loose policy stance, recent moves by a clutch of other central banks signal the days of pandemic-era accommodation are already numbered even as COVID-19 continues to impede smooth economic recoveries around the world.

 

South Korea's central bank on Thursday raised its benchmark interest rate by a quarter of a percentage point to blunt rising financial stability risks posed by a surge in household debt, becoming the first major monetary authority in Asia to do so since the coronavirus broadsided the global economy 18 months ago. read more

 

Even before the rate hike in South Korea, though, central banks in Latin America and eastern and central Europe had begun lifting interest rates this year to beat back inflation that is building on the back of currency fluctuations, global supply chain bottlenecks and regional labor shortages.

 

And larger-economy central banks also are getting into the swing. The Bank of Canada has already cut back on its bond purchases and could proceed to raise borrowing costs in 2022, read more and the Reserve Bank of New Zealand (RBNZ) is expected to lift rates by the end of this year despite balking at an expected hike last week in the face of a snap COVID-19 lockdown.

 

For its part, the Fed is lumbering toward tapering its $120 billion in monthly asset purchases, with an announcement expected before the end of 2021, possibly as early as next month. An actual U.S. interest rate increase is likely a year or more away, however.

 

Fed Chair Jerome Powell is set to speak later on Friday on the economic outlook at the U.S. central bank's annual Jackson Hole summer research conference, which is being held virtually for the second year in a row. His remarks may color expectations at the margin for when the Fed makes its move but are not likely to offer any concrete signal. read more

 

THE DIFFERENCE A YEAR MAKES

 

When Powell spoke at last year's conference - unveiling a new policy framework that is just starting to be tested - fewer than half of the 22 million U.S. jobs lost to coronavirus shutdowns in the spring of 2020 had been recovered and inflation was running at half the Fed's 2% target rate. The outlook outside the United States was no less bleak, with lockdowns still widespread.

 

The situation in the United States and other economies could hardly be more different a year later.

 

The U.S. economy has more than fully recouped all of its lost output read more , roughly 9 million more jobs have been regained and inflation is well above target. Elsewhere, most of the world's economies are back squarely in growth mode, albeit unevenly so in many cases as COVID-19 outbreaks fueled by the highly contagious Delta variant trigger localized lockdowns.

 

In South Korea, the economy grew 5.9% on a year-over-year basis in the second quarter, the fastest pace in a decade read more , and young people are bingeing on debt and kindling financial stability concerns at the Bank of Korea. The export-reliant Asian nation's key factory sector expanded in July for a 10th straight month, even as the Delta variant crimped manufacturing output for rivals like China, Vietnam and Malaysia.

 

Central Europe's recovery also accelerated in the second quarter as lockdowns in the region eased. The improvement - along with an upswing in inflation - has already spurred the Czech central bank to raise interest rates twice this summer and the Hungarian central bank to deliver its third hike on Aug. 24, the first increases across the European Union. Both are expected to deliver more tightening, and Czech officials are debating if they need to deliver more than the standard quarter-percentage point increase.

 

While the earliest movers have been emerging market countries where inflation is often aggravated by movements in choppy currency markets, the gears of tightening are also starting to move in top-tier economies.

 

The RBNZ opted not to raise rates last week because of the messaging complications that would have arisen from such a move alongside a hastily-called lockdown after the island nation reported its first local COVID-19 infection in six months. read more Central bank officials, however, appear determined to get a rate hike in before the year runs out.

 

Meanwhile, Norway's central bank is signaling it will not veer from its plan for its first rate hike next month despite a recent rise in infections, putting it on course to be the first of the Group of 10 (G10) developed economies to raise borrowing costs.

 

"In the committee's current assessment of the outlook and balance of risks, the policy rate will most likely be raised in September," Norges Bank Governor Oeystein Olsen said in a statement last week.

 

While the Fed and several other G10 banks now appear on course to start reducing their pandemic accommodation measures this year, tightening moves by the Fed's two largest peers - the European Central Bank and Bank of Japan - look much further off. read more

 

Still, that doesn't mean they don't see some improvement in conditions even as the Delta variant spreads.

 

Japan was among the Asian economies to experience factory sector growth last month even as COVID-19 cases hit a record high. read more And a key ECB policymaker sees only a limited headwind to the euro zone's recovery due to the variant.

 

"I would say we're broadly not too far away from what we expected in June for the full year," Philip Lane, the ECB's chief economist, told Reuters on Wednesday. "It's a reasonably well-balanced picture."

 

(This story corrects to make clear in paragraph 11 the Hungarian central bank has raised rates three times this summer, not twice.)

 

The Thomson Reuters Trust Principles.

 

 

 

LG Chem shares slide amid electric vehicle battery-fire probe with GM

(Reuters) - LG Chem shares fell to a nine-month low on Friday, as assurances from General Motors of a continued relationship with it failed to calm investor worries stemming from GM's recall of electric vehicles (EVs) powered by the South Korean firm's batteries.

 

LG Chem Ltd (051910.KS) shares slid as much as 3.9% to the lowest since November and were on track for their worst week since early last year with a 14% decline.

 

General Motors Co's (GM.N) CEO Mary Barra signalled on Thursday the automaker would continue its relationship with LG Energy Solution (LGES), the battery supplier at the heart of its $1.8 billion vehicle recall, Bloomberg News reported.

 

She also said that the automaker had "multiple pathways" to secure a leading position in the transition to EVs.

 

GM last week expanded its recall of Bolt EVs due to fire risk from what it called battery manufacturing defects, saying the recall would cost $1 billion and it would seek reimbursement from the South Korean firm. read more

 

GM, LGES and LG Electronics Inc (066570.KS) are still investigating the cause of manufacturing defects.

 

The on-going investigation and media reports that speculate the cause of battery fire have created uncertainty, leading to a drop in LG Chem shares, analysts said.

 

In April, GM and LGES said they would build a second U.S. battery cell manufacturing plant in Spring Hill, Tennessee. Their first joint U.S. battery plant is under construction in Lordstown, Ohio. read more

 

In July, GM initially recalled 69,000 Bolt EVs for fire risks, resulting in a recall of a total of 142,000 vehicles at an estimated cost of $1.8 billion. read more

 

GM has since said it would indefinitely halt Bolt sales.

 

Shares of LG Electronics, which assembles LGES cells into battery modules and packs, were trading down 0.7% as of 0305 GMT, versus the broader market's (.KS11) 0.3% rise.

 

LG Chem was down 2%.

 

The Thomson Reuters Trust Principles.

 

 

 

U.S. judge declines to stop J&J from splitting talc liabilities from main business

(Reuters) - A U.S. judge declined to stop Johnson & Johnson (JNJ.N) from taking steps to offload widespread Baby Powder liabilities from the rest of its business, preserving the option for the healthcare company to move thousands of claims from people who used its talc products to a unit that would file for bankruptcy.

 

U.S. Bankruptcy Judge Laurie Selber Silverstein denied a request from plaintiffs' lawyers to block the move late Thursday. Lawyers for cancer victims wanted her to issue a restraining order against J&J as part of her role overseeing the bankruptcy proceedings of one of the company's former talc suppliers.

 

J&J is exploring a plan to move its liabilities from widespread Baby Powder and other talc-related litigation into a newly created business that would later seek bankruptcy protection, Reuters previously reported. The company's talc products are currently housed in a subsidiary called Johnson & Johnson Consumer Inc. read more

 

"The court rightly denied the plaintiffs' motion aimed at preventing J&J from engaging in legitimate business transactions, in the event that it chooses to do so," said Diane Sullivan, a Weil, Gotshal & Manges LLP lawyer representing J&J, in a statement.

 

The legal skirmish was unusual in that plaintiffs' lawyers were asking the judge to forbid J&J from taking steps the company's lawyers said it had not yet decided whether to pursue. Johnson & Johnson Consumer Inc has previously said it has "not decided on any particular course of action in this litigation other than to continue to defend the safety of talc and litigate these cases in the tort system, as the pending trials demonstrate."

 

The judge is overseeing the bankruptcy case of Imerys Talc America, which once supplied talc to J&J and filed for Chapter 11 court protection amid mounting litigation. Imerys and J&J have since been battling one another over whether J&J is required to cover the former supplier's legal costs under indemnification agreements. Plaintiffs' lawyers argued that allowing J&J to offload its talc liabilities to a unit that would file for bankruptcy would harm Imerys' reorganization.

 

The judge decided it would be improper as part of Imerys' bankruptcy case for her to legally bar J&J from undertaking a hypothetical future restructuring that might result in separating the talc liabilities. She said Imerys could take legal action against J&J should J&J decide to separate its talc liabilities in a way Imerys deems harmful or unlawful.

 

 

 

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2021

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


ART

PPC

Dairibord

 


Starafrica

Fidelity

Turnall

 


Medtech

Zimre

Nampak Zimbabwe

 


 

 

 

 


 <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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