Major International Business Headlines Brief::: 21 February 2021

[Bulls n Bears]

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Major International Business Headlines Brief::: 21 February 2021

 


 

 


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ü  Bitcoin, ether hit fresh highs

ü  Bitcoin and ethereum prices 'seem high,' says Musk

ü  Wall Street Week Ahead: Rising U.S. bond yields pose new threat to
sky-high stocks

ü  Google fires second AI ethics leader as dispute over research, diversity
grows

ü  Foxconn chairman says expects 'limited impact' from chip shortage on
clients

ü  Former Bank of England Governor Carney joins board of digital payments
company Stripe

ü  Airbus CEO urges trade war ceasefire, easing of COVID travel bans

ü  Bolsonaro's nominee to run Petrobras stresses need for "balance" in fuel
pricing

ü  Facebook has 'tentatively friended' us again, Australia says

ü  Nigeria: Shell Rattled By Restrictions On Bank Accounts, Moves to Vacate
Order

ü  China Loans to Nigeria Hit N3.2 Trillion - DMO

ü  Nigerian Breweries Announces Lowest Dividend in 15 Years As Profit
Shrinks

ü  Rwanda: Restaurants Allowed to Host Clients, Curfew Extended

ü  China Cancels $6 Million Debt to Rwanda, Offers Extra Grants

ü  Mozambique: Court Seizes Bus Company Workshops

 

 

 


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Bitcoin, ether hit fresh highs

SINGAPORE/NEW YORK (Reuters) - Bitcoin hit a fresh high on Saturday,
extending a two-month rally that took its market capitalization above $1
trillion on Friday.

 

The world’s most popular cryptocurrency rose to a record $57,553, taking its
weekly gain to around 20%. It has surged nearly 100% this year.

 

Bitcoin’s gains have been fueled by evidence it is gaining acceptance among
mainstream investors and companies, such as Tesla Inc, Mastercard Inc and
BNY Mellon.

 

Ether, the second-largest cryptocurrency by market capitalization and daily
volume, on Saturday hit a record $2,040.62, for a weekly gain of about 12%.

 

Ether is the digital currency or token that facilitates transactions on the
ethereum blockchain. In the crypto world, the terms ether and ethereum have
become interchangeable.

 

Ether futures contracts launched on derivatives exchange CME earlier this
month.

 

Elon Musk, the billionaire chief executive of Tesla, said on Saturday the
price of bitcoin and ethereum seemed high.

 

 

 

Bitcoin and ethereum prices 'seem high,' says Musk

(Reuters) - Billionaire CEO Elon Musk said on Saturday the price of bitcoin
and ethereum seemed high, at a time when the cryptocurrencies have hit
record highs, with bitcoin crossing the $1 trillion market-capitalization
threshold.

 

The chief executive of Tesla Inc, whose recent tweets have fueled the
digital-currency rally, made the remark on Twitter while replying to a user
who said that gold was better than both bitcoin and conventional cash.

 

Musk, who earlier in the week remarked that he found the prospect of holding
bitcoin adventurous for an S&P 500 company, said in a tweet: “Money is just
data that allows us to avoid the inconvenience of barter ...”

 

“That said, BTC & ETH do seem high lol,” he added.

 

Bitcoin, the world’s most popular cryptocurrency, hit a fresh high in Asian
trading on Saturday, extending a two-month rally a day after the digital
currency’s market capitalization exceeded $1 trillion.

 

Ethereum or ether is the second-largest cryptocurrency by market
capitalization and daily volume.

 

Musk, an ardent proponent of digital currencies, has defended Tesla’s recent
purchase of $1.5 billion of bitcoin, which has ignited mainstream interest
in the digital currency.

 

 

 

Wall Street Week Ahead: Rising U.S. bond yields pose new threat to sky-high
stocks

NEW YORK (Reuters) - The U.S. stock market has so far digested a surge in
Treasury yields, but some investors are worried that a continued ascent
could prove more problematic.

 

The yield on the benchmark 10-year Treasury note, which rises when bond
prices fall, climbed to a one year high of 1.36% this week, fueled by
expectations that progress in the countrywide vaccination program and
further fiscal stimulus would further spur economic growth.

 

So far, stocks have responded with little more than a wobble. But some
investors worry that a continued rise in yields on Treasuries -- which are
backed by the U.S. government -- could dim the allure of comparatively
riskier investments such as equities and weigh on the S&P 500 that has risen
about 75% since last March.

 

“When ... government bond yields rise, all asset prices should reprice lower
-- that’s the theory,” said Eric Freedman, chief investment officer at U.S.
Bank Wealth Management, adding that he does not believe yields have yet
risen far enough to provide an competitive alternative to stocks.

 

The rise in yields comes as the S&P 500 hovers near all-time highs at the
end of a fourth-quarter earnings season that has seen companies overall
report earnings 17.2% above expectations, according to Refinitiv data.
Earnings will continue to be in focus next week along with data tracking the
economic recovery and developments with President Joe Biden’s proposed $1.9
trillion coronavirus relief package.

 

Despite solid corporate results, worried investors can point to any number
of signs -- including blistering rallies in Bitcoin and Tesla shares and the
proliferation of special purpose acquisition companies (SPACs) -- that
ultra-easy monetary policy and fiscal stimulus have fueled an excessive
appetite for risk that could be curbed if yields start to rise.

 

The latest fund manager survey by BofA Global Research showed a record in
the net percentage of investors taking higher-than-normal risk, cash
allocations at their lowest level since March 2013 and allocations to stocks
and commodities at their highest point in around a decade.

 

Citi strategists said in a report this week that a 10% pullback “seems very
plausible,” noting that “if rising bond yields drag down some mega-cap IT
growth names... that will impact the broad index as a result of the
over-representation of such stocks.”

 

Analysts at Nomura, meanwhile, said earlier this week that a move above 1.5%
on the 10-year could spark an 8% drop in stocks.

 

Low yields and interest rates support equities in several ways, such as
reducing debt and borrowing costs, making stocks look relatively attractive
to bonds and helping increase the value of companies’ future cash flows.

 

At 22.2 times its forward price-to-earnings ratio, the S&P 500’s valuation
is well above its long-term average of 15.3, according to Refinitiv
Datastream, though several investors said stocks still look relatively
inexpensive compared to bonds.

 

Plenty of investors are sanguine about the move, noting that yields appear
to be rising due to expectations of an improving economy.

 

J. Bryant Evans, a portfolio manager at Cozad Asset Management, recently
added bank and mortgage company stocks to a high dividend portfolio this
week to take advantage of the improving economic outlook and rising rate
environment.

 

More broadly, he was targeting a 3% yield on the 10-year for when bonds
might start competing more aggressively with stocks.

 

“For my clients, I would urge some balance and wait a little bit before
moving to fixed income because I think interest rates are still extremely
low historically speaking,” Evans said.

 

Paul Nolte, portfolio manager at Kingsview Investment Management, is
watching whether rising yields eventually come with a “change in tone at the
Fed” that suggest the central bank will start tapering its bond purchases as
it reins in its stimulus, which could shake the market.

 

Still, he isn’t pulling back on his equity exposure for now because of the
recent rise in yields, convinced a strengthening economy will continue
buoying stocks, particularly those that should shine in a recovery such as
financials and other value shares.

 

The steeper yield curve, Nolte said, is “the bond market’s way of telling
everybody that the economy is recovering and getting healthy.”

 

 

 

Google fires second AI ethics leader as dispute over research, diversity
grows

(Reuters) - Alphabet Inc’s Google fired staff scientist Margaret Mitchell on
Friday, they both said, a move that fanned company divisions on academic
freedom and diversity that were on display since its December dismissal of
AI ethics researcher Timnit Gebru.

 

Google said in a statement Mitchell violated the company’s code of conduct
and security policies by moving electronic files outside the company.
Mitchell, who announced her firing on Twitter, did not respond to a request
for comment.

 

Google’s ethics in artificial intelligence work has been under scrutiny
since the firing of Gebru, a scientist who gained prominence for exposing
bias in facial analysis systems. The dismissal prompted thousands of Google
workers to protest. She and Mitchell had called for greater diversity and
inclusion among Google’s research staff and expressed concern that the
company was starting to censor papers critical of its products.

 

Gebru said Google fired her after she questioned an order not to publish a
study saying AI that mimics language could hurt marginalized populations.
Mitchell, a co-author of the paper, publicly criticized the company for
firing Gebru and undermining the credibility of her work.

 

The pair for about two years had co-led the ethical AI team, started by
Mitchell.

 

Google AI research director Zoubin Ghahramani and a company lawyer informed
Mitchell’s team of her firing on Friday in a meeting called at short notice,
according to a person familiar with the matter. The person said little
explanation was given for the dismissal. Google declined to comment.

 

The company said Mitchell’s firing followed disciplinary recommendations by
investigators and a review committee. It said her violations “included the
exfiltration of confidential business-sensitive documents and private data
of other employees”. The investigation began Jan. 19.

 

Google employee Alex Hanna said on Twitter the company was running a “smear
campaign” against Mitchell and Gebru, with whom she worked closely. Google
declined to comment on Hanna’s remarks.

 

Google has recruited top scientists with promises of research freedom, but
the limits are tested as researchers increasingly write about the negative
effects of technology and offer unflattering perspectives on their
employer’s products.

 

Reuters reported exclusively in December that Google introduced a new
“sensitive topics” review last year to ensure that papers on topics such as
the oil industry and content recommendation systems would not get the
company into legal or regulatory trouble. Mitchell publicly expressed
concern that the policy could lead to censorship.

 

Google reiterated to researchers in a memo and meeting on Friday that it was
working to improve pre-publication review of papers. It also announced new
policies on Friday to handle sensitive departures and evaluate executives
based on team diversity and inclusion.

 

 

 

Foxconn chairman says expects 'limited impact' from chip shortage on clients

TAIPEI (Reuters) - The chairman of Apple Inc supplier Foxconn said on
Saturday he expects his company and its clients will face only “limited
impact” from a chip shortage that has rattled the global automotive and
semiconductor industries.

 

“Since most of the customers we serve are large customers, they all have
proper precautionary planning,” said Liu Young-way, chairman of the
manufacturing conglomerate formally known as Hon Hai Precision Industry Co
Ltd

 

“Therefore, the impact on these large customers is there, but limited,” he
told reporters.

 

Liu said he expected the company to do well in the first half of 2021,
“especially as the pandemic is easing and demand is still being sustained.”

 

The global spread of COVID-19 has increased demand for laptops, gaming
consoles, and other electronics. This caused chip manufacturers to
reallocate capacity away from the automotive sector, which was expecting a
steep downturn.

 

Now, car manufacturers such as Volkswagen AG, General Motors Co and Ford
Motor Co have cut output as chip capacity has shrunk.

 

Counterpoint Research says the shortage has extended to the smartphone
sector, with application processors, display driver chips, and power
management chips all facing a crunch.

 

However, the research firm predicts Apple will face a minimal impact, due to
its large size and its suppliers’ tendency to prioritise it. Apple is
Foxconn’s largest customer.

 

Foxconn is looking at other areas for growth, including in electric vehicles
(EVs), and Liu said their EV development platform MIH now had 736 partner
companies participating.

 

He expected it would have two or three models to show by the fourth quarter,
though did not expect EVs to make an obvious contribution to company
earnings until 2023.

 

Liu also said the company was still looking for semiconductor fab purchase
opportunities in Southeast Asia after not winning a bid to take over a stake
in Malaysia-based 8-inch foundry house Silterra.

 

 

 

Former Bank of England Governor Carney joins board of digital payments
company Stripe

(Reuters) - Mark Carney, former head of the UK and Canadian central banks,
has joined the board of U.S. digital payments company Stripe Inc, days after
the company was reported to be planning a primary funding round valuing it
at over $100 billion.

 

“Regulated in multiple jurisdictions and partnering with several dozen
financial institutions around the world, Stripe will benefit from Mark
Carney’s extensive experience of global financial systems and governance”,
the company said on Sunday, confirming a report by the Sunday Times
newspaper.

 

Forbes magazine had reported on Wednesday that investors were valuing Stripe
at a $115 billion valuation in secondary-market transactions.

 

A senior Stripe executive told Reuters in December that the company plans to
expand across Asia, including in Southeast Asia, Japan, China and India.

 

The company offers products that allow merchants to accept digital payments
from customers and a range of business banking services.

 

Stripe raised $600 million in April in an extension of a Series G round and
was valued back then at $36 billion.

 

Consumer-facing fintechs have seen a boost to their businesses during the
COVID-19 pandemic, as people have been staying at home to avoid catching the
virus and have increasingly been managing their finances online.

 

Carney, who headed the Bank of England and the Bank of Canada, had a 13-year
career at Wall Street bank Goldman Sachs Group Inc in its London, Tokyo, New
York and Toronto offices.

 

He is the United Nations special envoy on climate action and finance.

 

 

 

Airbus CEO urges trade war ceasefire, easing of COVID travel bans

PARIS (Reuters) - The head of European planemaker Airbus called on Saturday
for a “ceasefire” in a transatlantic trade war over aircraft subsidies,
saying tit-for-tat tariffs on planes and other goods had aggravated damage
from the COVID-19 crisis.

 

Washington progressively imposed import duties of 15% on Airbus jets from
2019 after a prolonged dispute at the World Trade Organization, and the EU
responded with matching tariffs on Boeing jets a year later. Wine, whisky
and other goods are also affected.

 

“This dispute, which is now an old dispute, has put us in a lose-lose
situation,” Airbus Chief Executive Guillaume Faury said in a radio
interview.

 

“We have ended up in a situation where wisdom would normally dictate that we
have a ceasefire and resolve this conflict,” he told France Inter.

 

Boeing was not immediately available for comment.

 

Brazil, which has waged separate battles with Canada over subsidies for
smaller regional jets, on Thursday dropped its own complaint against Ottawa
and called for a global peace deal between producing nations on support for
aerospace.

 

Faury said the dispute with Boeing was particularly damaging during the
COVID-19 pandemic, which has badly hit air travel and led to travel
restrictions or border closures. He expressed particular concern about
widening bans within Europe.

 

“We are extremely frustrated by the barriers that restrict personal movement
and it is almost impossible today to travel in Europe by plane, even
domestically,” he said.

 

“The priority no. 1 for countries in general is to reopen frontiers and
allow people to travel on the basis of tests and then eventually
vaccinations.”

 

The comments come as businesses increase pressure on governments to reopen
economies as coronavirus vaccine roll-outs gather pace across Europe.

 

France has defended recently introduced border restrictions, saying they
will help the government avoid a new lockdown and stay in force until at
least the end of February.

 

Germany installed border controls with the Czech Republic and Austria last
Sunday, drawing protest from Austria and concerns about supply-chain
disruptions.

 

Berlin calls the move a temporary measure of last resort.

 

Poland said on Saturday it had not ruled out imposing restrictions at the
country’s borders with Slovakia and the Czech Republic due to rising
COVID-19 cases.

 

 

 

Bolsonaro's nominee to run Petrobras stresses need for "balance" in fuel
pricing

RIO DE JANEIRO (Reuters) - Brazilian President Jair Bolsonaro’s nominee to
lead state-run oil company Petrobras said on Saturday the company needs to
find “balance” in fuel pricing, considering the impact on shareholders,
investors, sellers and consumers.

 

Joaquim Silva e Luna, a retired army general and former defense minister
overseeing the state-run Itaipu hydroelectric dam on the border with
Paraguay and Argentina since 2019, was tapped on Friday to be the next chief
executive of Petróleo Brasileiro SA.

 

Bolsonaro has criticized Roberto Castello Branco, current CEO of the state
firm known formally as Petroleo Brasileiro SA, for ignoring the complaints
of truckers as he hiked diesel prices 15% this week, tracking global markets
higher.

 

Petrobras shares plunged on Friday due to growing investor fears of
political interference in fuel pricing, which has triggered billions of
dollars in losses over the past decade.

 

Luna was cautious in some of his first public comments since Bolsonaro made
the announcement in a late Friday social media post, seeking to allay
concerns that the company would lose autonomy to set prices in Brazil, where
it dominates the market.

 

“There is no way to have interference in the pricing policy. There’s
executive management ... and we have the capacity to handle the issue. We’ll
reflect on the economy as well as on the trucker who has no cargo to
transport,” he told Reuters in an interview.”We need to find a balance,
considering the shareholder, the market, oil prices, the currency, as well
as the people, because gasoline and diesel prices have an impact on the
whole chain of production. We cannot ignore this reality,” he said.

 

Reflecting on his background in the military and government service, Luna
said he would be “a manager and not a general” at Petrobras. “My profile is
to deliver results,” he added.

 

Current CEO Castello Branco’s term ends March 20. Cheered by investors for
his efforts to sell underperforming assets and cut debt, the University of
Chicago-trained economist would be the second Petrobras head in three years
to leave over disagreements in fuel pricing. In 2018, then-CEO Pedro Parente
resigned when the government forced fuel prices lower in a concession to
striking truckers.

 

Parente had vowed to set domestic prices in line with global markets,
breaking with a policy that made Petrobras sell fuel below international
parity, triggering some $40 billion in losses from 2011 to 2014.

 

 

 

Facebook has 'tentatively friended' us again, Australia says

CANBERRA (Reuters) - Facebook Inc is back at the negotiating table,
Australian Prime Minister Scott Morrison said on Saturday after the tech
giant this week blocked news on its site in the country.

 

Facebook’s abrupt decision to stop Australians from sharing news on the site
and strip the pages of domestic and foreign news outlets also erased several
state government and emergency department accounts, causing widespread
anger.

 

The company has “tentatively friended us again,” Morrison told a news
conference in Sydney. “What I’m pleased about it that Facebook is back at
the table again.”

 

Facebook has publicly indicated no change in its opposition to a proposed
law requiring social media platforms to pay for links to news content.
Morrison was not asked about that.

 

Australia’s Treasurer Josh Frydenberg said on Friday he had spoken with
Facebook CEO Mark Zuckerberg and further talks were expected over the
weekend. It was not clear whether those talks have happened.

 

A Facebook spokeswoman and representatives for Frydenberg did not
immediately respond to requests for comment.

 

The stand-off comes as Australia’s vows to press ahead with the landmark
legislation, which could set a global precedent as countries like Canada
express interest in taking similar action.

 

The Australian law, which would force Facebook and Alphabet Inc’s Google to
reach commercial deals with Australian publishers or face compulsory
arbitration, has cleared the lower house of parliament and is expected to be
passed by the Senate within the next week.

 

Simon Milner, Facebook’s Asia-Pacific policy director of policy for the
Asia-Pacific region, was quoted on Saturday as telling the Sydney Morning
Herald the company had three main objections to the legislation.

 

 

Facebook objects to being barred from discriminating between different news
outlets that ask for money, to arbitration models that allow an independent
body to select one payment over another, and to the obligation to enter
commercial negotiations with Australian media companies, Milner said.

 

Facebook declined to make Milner available to speak with Reuters.

 

Australia’s legislation is being widely watched overseas.

 

Canadian Heritage Minister Steven Guilbeault said on Thursday his country
would adopt the Australian approach as it crafts its own legislation in
coming months.

 

Google, which has initially threatened to close its search engine in
Australia, has announced host of preemptive licensing deals over the past
week, including a global agreement with News Corp.

 

Facebook’s move had an immediate impact on traffic to Australian new sites,
according to early data from New York-based analytics firm Chartbeat.

 

Total traffic to the Australian news sites from various platforms fell from
the day before the ban by around 13% within the country.

 

 

 

Nigeria: Shell Rattled By Restrictions On Bank Accounts, Moves to Vacate
Order

There are strong indications that last Tuesday's injunction of a Federal
High Court, Lagos, barring Royal Dutch Shell's Nigerian subsidiary from
withdrawing money at 20 local banks until it ring-fences potential damages
in a lawsuit brought against the oil major by Aiteo Eastern E&P is already
rattling the oil firm.

 

The interim Mareva injunction is aimed at recovering the cash value of more
than 16 million barrels of crude allegedly diverted by the oil giant from
the indigenous oil company, AITEO.

 

However, SPDC is said to have mandated its lawyers to work round the clock
in order to get the injunction vacated when the court proceeding resumes
next Wednesday.

 

Although a source from SPDC clarified yesterday that 15 out of the 20 banks
so identified had since declared that their names were listed in error,
since they were not holding any account of the SPDC, it was gathered that
the freezing of the oil firm's account in the other five banks is already
threatening its operations.

According to the source, "there is no way such restraining order will not
affect the company's activities. It is bound to affect its activities
because bills have to be paid and such hold on the company's account would
affect its commitment to its business partners."

 

Consequently, SPDC's lawyers are said to be working round the clock to
ensure the injunction is vacated on Wednesday in order to bring about a
smooth running of the company.

 

Although the spokesperson for SPDC, Mr. Bamidele Odugbesan, said the company
was working to secure an expeditious discharge of the freezing injunction
which it alleged was obtained by Aiteo without any valid basis, however, he
did not disclose how the company would do so.

 

Court documents seen by Reuters show that Aiteo is seeking compensation over
what it said was the poor condition of the pipeline and associated lost oil
sales.

 

Aiteo is seeking about $4 billion in total over alleged problems with the
Nembe Creek Trunk Line (NCTL) pipeline it bought from the Anglo-Dutch group
in 2015 and over claims Shell undercounted its oil exports.

 

Aiteo also accuses Shell of deliberate improper metering of the Nigerian
company's oil exports from the Bonny Light terminal. It is seeking $2.7
billion over the pipeline deal plus $1.28 billion for lost oil sales, the
court documents show.

 

Odugbesan said the allegations are "factually incorrect".

 

Aiteo declined to comment on an ongoing legal case.

 

A statement by the SPDC spokesperson explained: "The claims underpinning the
interim freeze order obtained by the plaintiff, Aiteo Eastern E&P Company
Limited, relate to the sale of the interests of SPDC and two other SPDC JV
partners in the Nembe Creek Trunk Line (NCTL) and OML 29 to Aiteo in 2015;
and crude reallocation programme between injectors into the SPDC JV's Trans
Niger Pipeline and injectors into the Aiteo NCTL which is a normal industry
practice.

"The crude theft/diversion allegation is also factually incorrect. This is a
distinct issue that relates to the directive by the Department of Petroleum
Resources to SPDC as operator of the Bonny Oil and Gas Terminal, an asset
belonging to the SPDC Joint Venture, to implement a crude re-allocation
programme between injectors into the SPDC JV's Trans Niger Pipeline and
injectors into the NCTL."

 

Justice Oluremi Oguntoyibo, while giving the interim Mareva injunction,
directed the banks where the Shell companies operate accounts in Nigeria to
"ring-fence any cash, bonds, deposits, all forms of negotiable instruments
to the value of $2.7 billion and pay all standing credits to the Shell
companies up to the value into an interest yielding account in the name of
the Chief Registrar of the court, who is to hold the funds in trust" pending
the hearing of the motion and determination of the motion on notice for
interlocutory injunction filed before it by AITEO.

 

AITEO, alongside some other indigenous oil producers, have had a protracted
dispute with Shell alleging that the company shortchanges them using the
unapproved methodology to calculate the volume of crude it lifts on their
behalf from the terminal. They jointly allege that Shell deploys underhand
practices including using unapproved meters to facilitate crude theft.

 

Following an investigation into the dispute by the Department of Petroleum
Resources (DPR), Shell in a letter to the agency, admitted that it had
indeed installed unapproved metering systems and agreed to refund more than
two million barrels of crude it had illegally taken from the producers
(Belema Oil, AITEO, Eroton and NewCross) between 2016 and 2018.-This Day.

 

 

 

Nigeria: China Loans to Nigeria Hit N3.2 Trillion - DMO

The director general of the Debt Management Office says the country is open
to issuing 30-year plus bonds.

 

In this interview, Patience Oniha, the director general of Debt Management
Office (DMO) explains the major considerations the informed the Nigerian
government's recent issuance of a new Medium-Term Debt Management Strategy
for the period 2020-2023. The policy was approved last Wednesday by the
Federal Executive Council (FEC).

 

Mrs Oniha who spoke on Arise TV Xchange show on Wednesday, said Nigeria's
loans from China are about N3.2 trillion and constitute about 11 per cent of
its total external debt.

The official said they are all concessional loans that are project-tied and
that there are no reasons for Nigerians to be worried about them.

 

She said Nigeria's debt to Gross Domestic Products (GDP) is currently
sustainable, but that there is a need for the country to do much better in
terms of debt services to revenue.

 

What are the key considerations of the Debt Management Office towards the
preparation of this new medium term debt management strategy document for
Nigeria?

 

Oniha: MTDS is a strategy that guides your borrowing to reflect your
economic objectives and then have targets, so that it is measurable. For
this specific one, several things influenced the strategy and the target.
Let me quickly say that we had actually prepared one before COVID-19
started, we had actually started but of course the assumptions were no
longer realistic, so we started afresh. So what's one of those assumptions?
Of course the GDP was now going to be negative in terms of growth, secondly,
borrowing was going to be higher so, if you remember the first 2020
Appropriation Act had a borrowing of about N1.7 trillion. That had to be
revised and became about N4.2 trillion.

So it was revised to reflect lower GDP, new borrowing, increased spending
obviously by the government for COVID-19 related issues whether on social
welfare or on infrastructure. But it also included the fact that they are
several activities that are going on that will affect the debt stock. So you
probably must have heard about the promissory loans that we are issuing to
settle the arrears of government, there's also the Ways and Means advances
at the CBN, and then the debt stock of some state-owned enterprises which,
because we're a signatory to IMF, we are required to include in the debt
stock. So what I am saying essentially is there is some debt that would come
on the balance sheet that has before now, except for 2018 when some promises
started appearing. So those were the key considerations, and I think the
other considerations which probably came as a shock also to everybody is
that the sources of borrowing of course had changed. You remember we were
very active in the International capital market before, but with COVID-19
things changed. So those were the key considerations behind the strategy.

Q: What are the contributions and considerations from the Ministry of
Finance, central bank and others in putting it together?

 

Oniha: Okay, let's just put it this way, it is a direct responsibility of
the central bank because in working on a debt management strategy, obviously
external reserves are important, exchange rates are important. With the
Federal Ministry of Finance, we're looking at revenues and even with the
National Bureau of Statistics we are looking at targets for inflation and
interest rates. So, those are the contributions that come from all of those
and we analyse and then determine which strategy should be adopted. So those
are like inputs into the process but in terms of what that strategy should
be in terms of should we be borrowing more or less? What should be the ratio
between domestic and external? Those are then left to the debt manager (DMO)
to advise on.

 

Q: Walk us through the three parts to the MTDS targets: the fiscal
sustainability, portfolio composition and refinancing risk.

 

Oniha: I think the very first one to explain is that before now the total
public debt to GDP ratio was fixed at 25 per cent, and we have largely
operated within that limit even though it has been increasing but we have
operated within that limit. But given the facts, some of which I have
articulated, we have to increase that from 25 per cent to 40 per cent of the
GDP. Remember I said we are going to add, apart from the increased
borrowing. So if you look at the medium term expenditure framework you will
see that the levels of borrowings are high all the way to 2023, exceeding N4
trillion each year. There was no point leaving it at 25 per cent when you
know that you're going to do new incremental borrowing, you are going to add
Ways and Means, you're going to issue more promissory notes to settle the
arrears of government and then you're going to add the debt of some
state-owned enterprises. So the debt to GDP ratio was the first thing that
went up.

 

In terms of fiscal sustainability, truth be told, even at 40 per cent we are
within the World bank and IMF limit of 55 per cent. The reality is that that
ratio could have been higher, but for consideration of debt services which
speaks to fiscal sustainability really. We kept it conservatively at 40 per
cent while we watch revenue grow. Similarly, in terms of the debt mix, our
target in the previous MTDS was that domestic should be a maximum of 60 per
cent and external 40 per cent. We started January 2016, with that ratio
being about 85:16 per cent. Meaning 85 external and 16 domestic, and in the
implementation of that strategy in the end of 2019 we were able to bring the
domestic down to 67 per cent and external 33.

 

But what have we done this time in this strategy? We have tried to be
realistic and set that ratio to be 70 per cent domestic and 30 per cent
external. And the reason for that really is that we have seen that things
can happen in the international market that would reduce your ability to
access funds from the international market, so it means we have to rely more
on the domestic market and this strategy actually recognises that there
would be more borrowing from the domestic market than external.

 

For the refinancing strategy, what we've done is that we set target as well
there, and said that not more than 20 per cent of the debt stock would
mature within a year and also that the average term to maturity of the debt
stock would be 10 years. And how have we been implementing it or plan to
implement it? Thankfully, we have a 30-year bond in the domestic market and
if you observed from the options that we have, we really are not issuing
short term instruments, we're issuing long term instruments all the way to
30 years, so we think with that we would be able to achieve it. In the
international market as well we have a 30-year bond, so we think we can
continue with that, but ultimately we expect the government revenue profile
to improve. But for now, we're actively borrowing in the long term. And
thankfully the rates are reasonable and that has been extremely useful.

 

Q: But do you know that not many investors are happy with you and maybe with
the CBN as well that yield or treasury bills and government securities went
to ground zero last year?

 

Oniha: The reality is, and that speaks to the question you asked about the
financing risk. The DMO is actually not actively borrowing to finance the
budget using treasury bills. So that gap that investors have some interest
at the short end, was previously filled by OMO Bills. We simply refinance
the treasury bills because we know that our preference is for longer term
instruments so I think the gap came from a shortage if I may use that word,
of OMO bills. So we have remained, we haven't actually decreased the stock
of Nigerian treasury bills, we have continued to refinance that so that
there would be some liquidity in the market. Having said that, low interest
rates are fairly common across the world, whether it is the US dollar rate
or the Euro rates. Rates were generally low, typical of periods of
recession. So Nigeria wasn't unique in that direction.

 

Q: Is the DMO looking into issuing longer dated bond papers locally and what
tenor are you looking at and how soon would that hit the market?

 

Oniha: Typically we work with stakeholders (investors). We have a fairly
diverse portfolio for investors, the banks are typically at the short end,
so we have the pension funds and then the assets and the fund managers who
are becoming extremely significant. So we have those discussions with them
before we extend any tenure. Because in reality we're offering a product and
we want that product to be successful, not just one time but on a continuous
basis. So we would consider those discussions again. If you remember we
introduced a 25- year as well after the 30 years because the longer term
investors wanted something between 25 and 30 years. So let's just say we're
open to considering more than 30 years but we would need to engage with our
stakeholders because liquidity is also important not just that we want to
issue it to raise funds we also want to be sure that there is liquidity so
that we can continue issuing it. That's the only basis on which investors
would buy those securities.

 

Q: In terms of FX, it seems we have a very serious liquidity problem, what
do you at DMO going forward?

 

Oniha: Well, I would say that the central bank is aware of it. Don't forget
several years back, not so long ago, maybe up till early 2015 we had both an
active FGN securities market and active FX market, and those helped to keep
both the FGN and FX securities markets going. We know what happened to
external reserves and FGN inflows, I think that's why they're challenges
with FX markets. Having said so, not speaking for the central bank, I'm sure
we have seen several things changing from last year to this time regarding
FX.

 

Q: If you look at the debt portfolio, is it likely that Nigeria would
request for a debt referral anytime soon?

 

Oniha: Put it this way, we're extremely conscious of the debt at this level,
which is why we have kept the debt to GDP ratio still at 40 per cent. We
didn't take up the offer from the debt suspension initiative which the World
bank and the IMF championed last year because the amount was extremely small
relative to our total debt because it was only bilateral debt and then it
was for six month. Most of our debt is either multilateral, or Eurobonds and
diaspora bonds. So let me just say that we're looking at all options, but if
at all we get to the point of looking for debt relief, I can assure you that
it would be looked at with very serious considerations and approvals from
very high levels. But the challenge really is to increase revenue. That's
the truth.

 

Q: Is Nigeria's debt currently sustainable?

 

Oniha: I would say that very frankly in terms of debt to GDP, yes. But debt
service to revenue we could do much better. So far let's be very clear that
there has not been any default, whether of local or international debt.
You're aware that some countries have had challenges in servicing their
external debts but we redeemed the Eurobond that matured on the 28 January,
so we are committed to servicing our debt for several reasons.

 

Q: Are there any concerns about Nigeria's debt relations with China that the
market should be aware of or be concerned about?

 

Oniha: No. I know that last year there were a lot in the public space about
borrowing from China. So all of the loans we had from China, the stock of
the bilateral credits which is where China belongs, that we have, is small
relative to the total stock. So loans from China are about N3.2 trillion
which was about 11 per cent of our total external debt. But that was small.
To add, those are all concessional loans and there are no reasons to be
worried about them, they're all project tied which I think Nigeria should be
happy about. We can see the physical infrastructure whether it's the
airport, whether it's the rail lines, whether it's the roads. So we don't
see any reasons for concerns, they're all project tied and they're all
concessional really. There was a lot of debate, but we did get proper
interpretations both from China and the Ministry of Justice. We also as the
DMO had China loans on our website way back june 2020. They're all
concessional loans that are project tied and we are not concerned about
them.

 

Q: Are we looking at a return to double digit yield on government assets --
financial papers -- anytime soon?

 

Oniha: You know we are in the market, so it's a demand and supply thing. We
don't pre-determine the rate, so we look at where the secondary market is.
Securities are offered by auctions, it's the bid that investors bid that we
take and compare that to where the secondary market is, because all of those
securities are traded in the market. It is unfortunate that inflation is on
the upward trend but we are operating the market. It's a bid offer matter. I
think on a second note as well, really the interest rates are lower, it's
good for debt services. Really, really, on our side we shouldn't be looking
for double digits, we pray that inflation comes down.- Premium Times.

 

 

Nigerian Breweries Announces Lowest Dividend in 15 Years As Profit Shrinks

The N0.94 dividend declared for full year 2020 is well below a 10-year
average of N3.55, which dwarfs it by almost 74 per cent.

 

Nigerian Breweries Plc is set to pay shareholders a final dividend per share
of N0.69 for 2020, the beer-maker said Friday, having paid an interim
dividend of N0.25 in December.

 

That brings the total dividend declared for the year to N0.94, the lowest in
at least 15 years, as Nigeria's biggest brewer faces continuing pressure on
its bottom-line.

 

Net profit in the nine months through September 2020 stood at N7.1 billion,
42.4 per cent weaker than the N12.2 billion reported in the same period of
2019.

The firm cited high inflationary pressure, increased excise duty and value
added tax as well as the coronavirus pandemic as grounds for underwhelming
performance in an October statement.

 

The N0.69 dividend is subject to the deduction of the relevant withholding
tax and requires shareholders' approval at the next Annual General Meeting
(AGM) of the firm, timed to hold on April 22, Nigeria Breweries said in a
note to Nigerian Stock Exchange, seen by PREMIUM TIMES.

 

The N0.94 dividend declared for full year 2020 is well below a 10-year
average of N3.55, which dwarfs it by almost 74 per cent.

 

In 2014, sales touched a peak of N307.23 billion since 2006 and are yet to
return to that level.

 

A year before, the profit pool of the Nigerian beer market had reached its
highest point in the period between 2000 and 2020 but fell to one of its
lowest levels in that twenty-year period last year with adverse implications
for the company, which owns the largest share of the market.

Factors ranging from currency devaluation and tax hikes to promotional
intensity, consumer down trading and material cost inflation accounted for
the profit pool decline.

 

"The Directors are also recommending to shareholders for their approval at
the forthcoming AGM, a right of election for qualifying shareholders to
receive new ordinary shares in the Company instead of the final dividend in
cash. The election is required to be made on or before the 10th of April,
2021," the brewer said.

 

"The reference share price for the purpose of determining the number of
shares due to qualifying shareholders who elect for the share option will be
a ten-day trading average of the company's share price on the floor of The
Nigerian Stock Exchange, starting on the 11th of March, 2021."

 

Shares in Nigerian Breweries closed in Lagos on Friday at N59 per unit,
recording no movement.-Premium Times.

 

 

 

Rwanda: Restaurants Allowed to Host Clients, Curfew Extended

Restaurants and cafes will now be allowed to host clients to 30 percent of
their occupancy capacity, according to new cabinet resolutions on the
prevention of the spread of Covid-19 in the country.

 

For close to a month, eateries were only allowed to offer takeaway services,
as part of measures aimed at curbing the spread of the Covid-19 pandemic
after a spike in infections was registered in the country towards the end of
2020 and at the beginning of this year.

 

The cabinet meeting that sat on Friday, February 19 also agreed to extend
the Covid-19 curfew by one hour, allowing people to make movements from 4 AM
to 8 PM.

Curfew time has been from 7pm to 4 am recently.

 

In the new measures, businesses have been granted an additional hour of
operation, meaning they will be working until 6 PM.

 

These measures will take effect from the 23rd of this month to March 15.

 

Public offices will resume with essential staff which does not exceed 30
percent capacity. The other employees will continue working from home, and
will only come to office on a rotational basis as their counterparts will
take their turn of working from home.

 

This also applies to private businesses.

 

Markets and malls will continue working with essential vendors, and must not
exceed 50 percent of registered traders.

 

Movements between Kigali, and other provinces and districts of the country
are not permitted except for essential services, medical reasons or tourism.

 

Both local and international tourists must possess negative Covid-19 test
results.

 

Vehicles transporting goods will continue to travel with no more than two
people on board.

 

Public transport buses will be working, but must not exceed 75 percent
capacity.

 

"Bus operators will ensure that passengers observe social distancing and
only passengers with masks will be allowed onboard," the statement read.

 

Taximotos and bicycles are allowed to carry passengers, "and must observe
strict hygiene."-New Times.

 

 

 

Rwanda: China Cancels $6 Million Debt to Rwanda, Offers Extra Grants

Rwanda and China have signed agreements where the Asian country will provide
Kigali with a grant worth $60 million (Rwf59.5 billion).

 

The agreements signed on Friday, February 19 also saw the Asian country
cancel its $6 million (Rwf5.9 billion) loan to Rwanda.

 

The debt relief will now allow Rwanda-whose economy is challenged by the
Covid-19 pandemic-to channel the resources meant to service debt into other
activities.

 

"(It) will free some resources that were otherwise going to be used for debt
payment," Uzziel Ndagijimana, the Minister of Finance and Economic Planning
said, adding that the grant will be used for a priority project to be agreed
upon.

 

"We appreciate this support by the Government of the People's Republic of
China during these challenging times caused by Covid-19 pandemic," he added.

 

Ndagijimana said China has been supportive of Rwanda in major sectors of
development, mainly: transport, agriculture, health, education and energy.

According to Rao Hongwei, the Ambassador of China to Rwanda, China hopes
that by extending the new financial support, to make contribution to
Rwanda's all-round transformation and recovery from the maligning impact of
the Covid-19 pandemic.

 

Rwanda and China are time-tested friends, partners, and brothers and
sisters, he added.

 

Since Chinese President XI Jinping's historic visit to Rwanda in 2018, the
ambassador noted, there has been a significant improvement in the bilateral
relationship between the two nations.

 

"The comprehensive cooperation between the two countries, especially in the
economic field, has been tremendously diversified and intensified," he said.
"In these times of major new opportunities and challenges, we are ready to
work with Rwandan friends to forge new opportunities out of crises, make new
advances amid changes, and build an even more glorious tomorrow for
China-Rwanda relation."-New Times.

 

 

 

Mozambique: Court Seizes Bus Company Workshops

Maputo — The Nampula provincial court in northern Mozambique has ordered the
seizure of two workshops belonging to the company Nagi Investments, after
Nagi failed to compensate passengers injured in a serious traffic accident,
according to a report on the independent television station, STV.

 

Nagi, a company set up with Tanzanian capital, operates bus routes across
Mozambique. On 19 March 2019, one of its buses, travelling from Mueda in
Cabo Delgado to Nampula city, had a serious accident in the Nampula district
of Erati.

 

The bus came off the road and overturned. Two passengers suffered major
injuries, and in both cases doctors operated to amputate their right arm.
The passengers are convinced that excessive speed by the driver caused the
crash, and demanded compensation

 

It took a long time for the case to come to court, but in mid-2020 the Erati
district court ordered Nagi Investments to pay compensation of seven million
meticais (about 95,000 US dollars) to each of the injured passengers.

Nagi should have paid the compensation within ten days, but did not do so.
The lawyers for the two passengers appaealed to the provincial court, and
demanded that Nagi property should be seized and sold off to pay the
compensation.

 

On Wednesday an agreement was reached to pawn two Nagi workshops in Nampula.
They are now in the hands of the court, and serve as collateral. If Nagi
does not pay the compensation, then the workshops will be sold to raise the
money.

 

One of the passengers, 38 year old Neusa Massapa, told STV she is still
fighting to overcome the trauma caused by the loss of her right arm. "It
changed everything. It was my right arm, and I'm a teacher", she said. "I
have work that requires the use of my right hand, and now I can't do it".

 

She recalled that, during the journey, the passengers repeatedly told the
driver to slow down, but he refused. The driver said he was driving at
speed, because he feared the possibility of a terrorist ambush (though there
have never been any terrorist attacks in Erati district).

 

Massapa remembered that the driver showed no respect for the passengers, and
told them "if you don't want to travel, you can get off the bus".

 

 

 

 

 


 


 


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.

 


 

 


(c) 2021 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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