Major International Business Headlines Brief::: 03 July 2021

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Major International Business Headlines Brief::: 03 July 2021

 


 

 


 <https://www.nedbank.co.zw/> 

 


 

 


ü  US jobs growth picks up speed amid reopening

ü  Vauxhall set to announce Ellesmere Port electric van

ü  The codes helping visually-impaired people shop

ü  France investigates retailers over China forced labour claims

ü  M&S Bank branch closures reflect shift to online

ü  Asda to allow permanent hybrid working for offices

ü  Global tax overhaul backed by 130 countries

ü  U.S. jobs gain largest in 10 months; employers raise wages, sweeten perks

ü  No, the jobs aren't all back yet - in any top U.S. industry

ü  Wall Street hits record on robust June jobs data

ü  Ransomware breach at Florida IT firm hits 200 businesses

ü  Amazon to grant new CEO Jassy over $200 million in stock

ü  Arm CEO says Nvidia merger better than going public

ü  Tesla Q2 deliveries meet analysts' estimates as chip shortage weighs

ü  Citigroup to raise base pay for junior bankers - memo

ü  U.S. economy is 'on the move,' Biden says as jobs jump

ü  Kenya: China Halts Kenya Loans Amid Debt Reprieve Bid

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

US jobs growth picks up speed amid reopening

US jobs growth picked up speed in June as the economic reopening continued,
official figures show.

 

Employers created a larger-than-expected 850,000 jobs last month, driven by
new posts in bars and restaurants, retail and education.

 

Despite the boost in hiring, the unemployment rate was little changed at
5.9%, the US Bureau of Labor Statistics said.

 

It comes as different industries offer incentives to battle a worker
shortage.

 

Although the number of job vacancies has seen a record high of 9.3 million,
firms such as McDonald's and Chipotle in the hospitality industry, for
example, have increased the minimum wages in their company restaurants to
try to entice new staff.

 

The new monthly figures showed that average hourly earnings rose 0.3% last
month after increasing 0.4% in May.

 

Although more than half of the jobs added in June were in leisure and
hospitality, employment in those sectors is still down by about 2.2 million
on pre-pandemic levels.

 

But President Biden said the figures marked "historic progress pulling our
economy out of the worst crisis in a hundred years."

 

He said on Friday: "We've now created over three million jobs since I took
office, more jobs than have ever been created in the first five months of
any presidency in modern history, thanks to the incredible work of the
entire team."

 

Positive signs

And some experts said the figures suggested a recovery was "well underway".

 

"Key for us was the fact that jobs gains were led by the services sector,
signalling the strong positive momentum in these areas," said Xian Chan,
chief investment officer of wealth management at HSBC.

 

"It also reminds us what a difference a year makes! In April last year,
about 15% of people in the US were unemployed - a figure worse than the
global financial crisis."

 

Fed warns the path of the economy depends on Covid

'We offered people a $300 bonus to work for us'

He said that in contrast, it now looks like there are not enough workers to
fill vacant positions.

 

Surveys have suggested that some people are hesitant to re-enter the
workforce because of healthcare risks, child-care issues and unemployment
benefits.

 

Under the $1.9tn coronavirus rescue package that President Joe Biden signed
into law in March, some workers can get a $300 weekly supplemental benefit
if they are out of a job.

 

But at least 25 states have opted to cut unemployment benefits prematurely,
so people are not persuaded to stay at home.

 

"With economic growth booming, labour demand is strong and job openings have
risen to all-time highs," said John Leiper, chief investment officer at
Tavistock Wealth. "Now it's just a case of letting supply catch up."

 

As part of its decision on when and how to tackle the rising cost of living,
the Federal Reserve is monitoring unemployment and wage increases as supply
in the labour market remains tight.

 

Mr Leiper added the better-than-expected June figures "make it more likely
the Fed will pull back sooner, and with greater force, than currently
anticipated."

 

Fed officials, including its chair Jerome Powell, have played down worries,
saying that rising costs reflect "transitory factors" as the economy
reopens.

 

He recently said it was important to continue support as the recovery from
the Covid crisis is still underway.

 

"The economic downturn has not fallen equally on all Americans, and those
least able to shoulder the burden have been hardest hit," he said in June.

 

It was certainly a strong figure for a single month's job gains as the US
labour market continued to repair the damage done to it by the pandemic.

 

That was reflected in the large contribution from leisure and hospitality,
industries that have been hit very badly and which are now responding to the
easing of restrictions.

 

But there is still a long way to go. The number with a job, though much
improved on last year's low, is still 6.8 million below its pre-pandemic
peak. It is even further adrift of what it would have been without the
health crisis as job growth would otherwise surely have continued.

 

The number of unemployed is also far below its worst, but is still higher
than before the arrival of the coronavirus. Another important statistic is
the number of people classified as not in the labour force, which covers
people who don't have and are not seeking work.

 

Many of the 100 million or so Americans in that group are there because they
want to be - they may be homemakers, students or retired. But many are not,
some thinking the opportunities are not available.

 

The fact that the number is five million higher than at the start of last
year is another indicator that the jobs recovery is far from complete.--BBC

 

 

Vauxhall set to announce Ellesmere Port electric van

The owner of Vauxhall could announce as early as next week plans to build
electric vans at its Ellesmere Port plant in Cheshire, the BBC understands.

 

The investment, said to be worth hundreds of millions of pounds, would
safeguard about 1,000 factory jobs.

 

The future of the plant had been in doubt after Vauxhall's parent company,
Stellantis, scrapped plans to build a new Astra model there.

 

Nissan this week said it will make new electric cars at its Sunderland
plant.

 

Stellantis has been discussing options for the site with the UK government
for several months, and is known to have been seeking financial support for
its plans.

 

Sales of vans have been booming during the pandemic, as a result of growing
home delivery sales.

 

Making vans may not be particularly glamorous, but right now it makes a lot
of sense.

 

While car sales have been badly affected by the pandemic, demand for smaller
commercial vehicles has been soaring, due to the home delivery boom. Fleet
operators are increasingly turning to low-emission options because of the
tax advantages they provide.

 

For Carlos Tavares, the pragmatic and outspoken CEO of Stellantis, it offers
a useful compromise. He has been scathing about the UK government's plans to
outlaw the sale of new petrol and diesel cars from 2030 - accusing them of
destroying his company's business model in the UK.

 

Now there is a new business model - and with Mr Tavares having previously
made it clear that future production in the UK would depend on what support
the government could offer, it's likely help from the taxpayer will be part
of it.

 

line

Stellantis is the world's fifth-largest car maker and also owns Peugeot,
Fiat and Chrysler.

 

The push into electric vehicle manufacturing has grown since the UK and
other European countries announced a ban on the sale of new petrol and
diesel cars as of 2030.

 

Nissan on Thursday announced a major expansion of electric vehicle
production at its car plant in Sunderland which will create 1,650 new jobs.

 

The Japanese carmaker will build its new-generation all-electric model at
the site as part of a £1bn investment that will also support thousands of
jobs in the supply chain.

 

And Nissan's partner, Envision AESC, will build an electric battery
plant.-BBC

 

 

 

The codes helping visually-impaired people shop

A new, colourful kind of barcode technology, developed by a Spanish firm, is
being adopted for the first time in food packaging in the UK.

 

It aims to help blind and partially-sighted people identify products in
shops, and access health and safety information about food.

 

"I generally don't go shopping anymore because I can't do it without any
kind of help," explains Beth Fowler, who is 19 years-old. "Because I can't
see, practically
 most things."

 

She is a pupil at St Vincent's School in Liverpool, a specialist school for
people with sensory impairment.

 

"Shopping in supermarkets is a complete and utter pain," adds Marcia Shaw,
20, a recent graduate from the school, who is sight-impaired too. The store
layouts keep changing, and you have to get help from assistants to find what
you need, she explains.

 

But new technology is being rolled out that may help provide a solution to
some of these problems.

 

The school has been taking part in a trial with cereal manufacturer
Kellogg's. The company has been testing out colourful barcodes on its
packaging that mobile phone cameras can easily pick up using an app.

 

Normal barcodes, or QR codes, are not particularly useful for blind and
partially-sighted people, because it takes a lot of dexterity to focus and
frame them correctly, at close range, on a phone's camera.

 

These colourful ones can be detected at a distance of up to three metres,
and in low-light conditions.

 

The technology is developed by a company from Murcia, Spain called NaviLens.

 

Its codes are already in use in Spain across public transport networks and
museums. The New York City Subway system also uses it. Heathrow Airport in
London began a trial, but this was postponed due to the pandemic.

 

All Kellogg's cereal packets will eventually display the code, starting with
Special K cereal in January.

 

"With the new app I can just pick the food off the shelf and scan it,"
explains Beth, "and read all the information, like ingredients, for example.
Everything that a sighted person could see is made accessible."

 

Many pupils at St Vincent's School also have food allergies, explains Dianne
Waites, who teaches Braille and assistive technology at the school, so this
technology is even more vital for them.

 

Braille is a universal language that relies on physical touch, text is read
by running your fingers over indentations on a surface. These indentations
can be embossed on to food packaging, but take up a lot of space to convey
limited information.

 

Only around 10% of blind and visually impaired people actually use Braille,
according to the Royal National Institute for the Blind (RNIB).

 

All medicines in the UK must have the name of the medicine displayed in
Braille on the labelling, and patient information leaflets must be available
to the blind and partially sighted. But at the moment the vast majority of
food products don't have Braille on their packaging, and there is no legal
or regulatory requirement for them to include it.

 

Because the NaviLens digital codes trigger audio notes, the amount of
information that can be conveyed is potentially limitless.

 

In addition to allergy warnings - like traces of nuts and the presence of
gluten - the full range of information about ingredients, like fat and
glucose composition, for example, can also be offered.

 

This kind of information can already be accessed across all products if you
are shopping online - however when you are choosing products in a physical
shop on the High Street, it's a different matter - customers also want to
access the information at home when cooking.

 

There are a few other technologies already on the market aiming to address
similar problems.

 

Google's Lookout app uses Artificial Intelligence to identify products
through image recognition. This means no barcode or similar marker is
necessary on the product packaging itself, but results are not perfect.

 

Meanwhile, Supersense, developed at the Massachusetts Institute of
Technology (MIT), is an app that reads out in a computer voice any text that
you hover the camera over, and it can also read standard barcodes on food
packages.

 

And Be My Eyes allows users to call volunteers for assistance, who can
describe in real time what they see in front of them on a video call.

 

In 2018, Procter & Gamble introduced tactile markings on its Herbal Essences
products so that people can distinguish between shampoo and conditioner.
Sure deodorants, manufactured by Unilever, introduced Braille labelling this
year.

 

Breakfast-only solution

However, with a proliferation of technologies companies may choose to invest
in very different solutions, meaning a confused picture for consumers. So,
for now, those who download the NaviLens app will find it only helps them
fill a small but important part of their shopping basket - breakfast.

 

The RNIB surveyed its members and found that more than 95% want more
assistive technology on products that can be accessed through phones.

 

"I describe my mobile phone as my Swiss Army Knife," explains Marc Powell,
strategic accessibility lead for the RNIB, who is registered blind.

 

He says his phone allows him to access all kinds of information which he
struggled to get hold of before, from bus timetables to courier delivery
arrival times.

 

"There hasn't been technology available before that provides this amount of
information all at once," he says.

 

"Standards need to start to change, we all have equal rights to access
information, to independence. Technology is playing its part in making that
happen."

 

Beth at St Vincent's school agrees it would make a really big difference to
her life if the technology was adopted more widely.

 

"If we put accessible labels on bleach and medication, why shouldn't they be
on food?" she says. "They can't put Braille on everything, but with these
barcodes, it shouldn't be a massively difficult thing."-BBC

 

 

 

France investigates retailers over China forced labour claims

Retailers have hit back after authorities in France opened a "crimes against
humanity" probe into their activities in China's Xinjiang region.

 

French prosecutors are looking into accusations four fashion bands sourced
goods made by forced labour from Uyghur Muslims in China.

 

Uniqlo, Zara-owner Inditex and French textile firm SMCP deny the claims,
while Skechers declined to comment.

 

China strongly rejects claims of human rights abuses in the region.

 

In March, the US, the European Union, UK and Canada imposed sanctions on
Chinese officials, citing abuses in Xinjiang. Beijing retaliated immediately
with its own.

 

French authorities opened the probe after complaints from the European
Uyghur Institute and other pressure groups that the retailers were profiting
from the use of forced labour.

 

H&M sees China sales slump after Xinjiang boycott

Who are the Uyghurs?

An Inditex spokesperson told the BBC: "We strongly refute the claims in this
complaint. Inditex conducts rigorous traceability controls and we intend to
fully cooperate with the French authorities to confirm that the allegations
are unfounded."

 

"At Inditex, we have zero tolerance for all forms of forced labour and have
established policies and procedures to ensure this practice does not take
place in our supply chain," the spokesperson added.

 

Inditex said it "fully complies" with all existing legislation and
recommendations regarding the protection of workers' rights. The company
says it has implemented a human rights compliance framework "based on the
highest international standards."

 

Uniqlo's parent company, Tokyo-based Fast Retailing, said: "If and when
notified, we will co-operate fully with the investigation to reaffirm there
is no forced labour in our supply chains."

 

The spokesperson added that the company was aware of the media reports about
the investigation but had not been contacted by authorities.

 

Uniqlo said it conducted audits to ensure no human rights violation in their
supply chain and add that none of their production partners are located in
Xinjiang.

 

French textile firm SMCP also said that it conducts regular audits and does
not have "direct suppliers in the region mentioned in the press."

 

But Sophie Richardson, China director at Human Rights Watch, told the BBC
that while international firms may conduct audits that do not find evidence
of forced labour in supply chains, "political repression in the Xinjiang
region is so pervasive that labour inspectors cannot interview workers
freely without fear of reprisals".

 

She said inspectors cannot visit facilities without advance warning, and
they cannot compel regional authorities to provide essential information
about hours, pay, or other key labour conditions.

 

Rahima Mahmut, director of the UK World Uyghur Congress, agreed and said it
is "impossible" to "carry out this investigation independently in the region
because of the regime".

 

"We need more collaboration across countries and welcome this move by France
but want the whole of Europe to carry out such investigations."

 

Sandra Cossart, director of anti-corruption organisation Sherpa, one of the
groups that filed the complaint, added that the investigation "testifies to
the potential involvement of economic actors in the commission of the most
serious crimes in order to increase their profit margins".

 

MPs state Uyghur genocide is taking place in China

China uses forced labour on solar panels - report

The Xinjiang region produces 85% of China's cotton and accounts for about a
fifth of global supplies.

 

Retailers Nike, H&M and Burberry are also facing a backlash in China after
they expressed concerns about the alleged use of Uyghur forced labour in
cotton production earlier this year.

 

Evidence shown to the BBC suggests that up to half a million Uyghur workers
a year are being marshalled into seasonal cotton picking.

 

Uyghurs have been detained at camps where allegations of torture, forced
labour and sexual abuse have emerged. China has denied these claims saying
the camps are "re-education" facilities aimed at lifting Uyghurs out of
poverty.-BBC

 

 

 

M&S Bank branch closures reflect shift to online

The closure of all 29 M&S in-store bank branches is another sign of how
bricks and mortar banking is falling out of favour, an analyst has said.

 

All 29 are shutting on Friday, ahead of the withdrawal of M&S Bank from the
current account market.

 

It is a turnaround from the launch of branches in its department stores in
2012 when it promised to provide something different for customers.

 

But analyst Katie Brain said Covid had compounded issues for branch
networks.

 

M&S to close 30 more shops as Ocado deal pays off

The introduction of banking counters in supermarkets and other stores became
popular for a few years.

 

However, with more and more people using smartphones for their banking
needs, providers have been reassessing the need for such an extensive High
Street presence.

 

"Consumers most likely to require a branch for their banking needs are those
who, for a variety of reasons, are not able to use online or mobile banking;
potentially older, more vulnerable customers," said Ms Brain, from data
specialists Defaqto.

 

They would only be served if banks co-ordinated to ensure at least one
branch in town remained open, or different banks operated in shared
premises, she said.

 

M&S Bank, which is a joint venture between the retailer and HSBC, has built
up more than three million customers.

 

Although all M&S in-store branches are closing, its services will continue
online and over the phone. In-store travel money bureaux, which are located
in more than 100 stores, are unaffected.

 

M&S Bank will also continue to provide credit card, insurance, savings and
loan products.

 

However, in plans announced in March, its current accounts will be scrapped
in August. Customers have been told to switch to a new provider. Anyone
failing to do so will have their account frozen.

 

On Thursday, the government announced it was planning new laws to ensure
consumers and businesses could withdraw and deposit cash within "a
reasonable distance" of their home or premises.

 

The closure of branches and ATMs, as well as fears of retailers starting to
refuse cash, have prompted concern about access to cash for millions of
people who still rely on it.-BBC

 

 

Asda to allow permanent hybrid working for offices

Asda has announced it will make hybrid working permanent at its head offices
once Covid restrictions are lifted.

 

The supermarket group said staff at Asda House in Leeds and George House in
Leicester can choose where they work.

 

Around 4,000 staff work at both offices, with the majority based in Leeds.

 

England is set to lift final Covid measures on 19 July and many businesses
have indicated they will continue to allow flexible working.

 

However, not all companies plan to embrace a hybrid approach. Goldman Sachs
International has said it wants people to come back into the office once
restrictions have ended.

 

Asda said its new approach "will encourage colleagues to select the best
location to do their job", including home, head office or even a store or
depot.

 

When employees have meetings or training, they will be encouraged to come
into the office.

 

But Asda said staff also "have the flexibility to work from home when it is
more productive to do so, such as tasks that involve planning or research".

 

Asda's plan is similar to one adopted by Nationwide, which will allow the
building society's 13,000 office employees to "work anywhere".

 

Nationwide is closing three offices in Swindon and the 3,000 staff based at
those sites can either move to the nearby headquarters, work from home or
mix the two. Some employees may be able to work from a local High Street
branch if they prefer, instead of travelling to an office.

 

Jacki Simpson, Asda's vice president of people operations, said: "We have
learned a great deal about working patterns during the last 16 months and
have seen colleagues work productively across different locations."

 

She said the retailer had consulted with staff about how they wanted to work
in the future.

 

"We know they welcome the increased flexibility of remote working," she
said. "However, they also acknowledge there is some work that is simply
better done from the office, so as we move forward a hybrid working model is
the right approach for our people and the business."-BBC

 

 

 

Global tax overhaul backed by 130 countries

The OECD said on Thursday that negotiators had backed a proposed minimum
corporate tax rate of at least 15%.

 

US Treasury Secretary Janet Yellen said: "Today is an historic day for
economic diplomacy."

 

Tax on big tech firms has been a source of friction between the US and
others.

 

The Organisation for Economic Co-operation and Development (OECD), which led
the talks, said that the plans could generate about $150bn (£109bn) in tax
revenues a year.

 

But the Paris-based organisation confirmed that Ireland and Hungary -
countries with low corporate taxes - had not joined the deal on the global
minimum.

 

All G20 countries, such as the US, UK China and France, did back the
agreement.

 

Participating governments are now expected to try to pass relevant laws to
bring in the minimum, although details such as possible exemptions for
certain industries are still up for negotiation.

 

"A detailed implementation plan together with remaining issues will be
finalised by October 2021," said a statement signed by 130 out of 139
countries and jurisdictions involved in the talks.

 

Countries have also signed up to new rules on where the biggest
multinational companies are taxed. They would see taxing rights on more than
$100bn of profits shift to countries where profits are generated, rather
than where a business might have its headquarters.

 

'No nation has won this race'

The US Treasury Secretary, Janet Yellen, said the agreement sent a sign that
a "race to the bottom" on tax rates was coming to an end.

 

"For decades, the US has participated in a self-defeating international tax
competition, lowering our corporate tax rates only to watch other nations
lower theirs in response.

 

"The result was a global race to the bottom: Who could lower their corporate
rate further and faster?"

 

She said that "no nation" had won the race.

 

The Biden administration has been pushing for a deal internationally while
it seeks to raise taxes domestically. It has, for example, called for an
increase in the US corporate tax rate from 21% to 28%.

 

This agreement has been years in the making. The talks had lost momentum,
reflecting to a large extent the United States' lack of enthusiasm for
either of the main proposals.

 

But that all changed with the new administration, which took power in
Washington in January. President Joe Biden and his Treasury Secretary, Janet
Yellen, wanted a deal and made specific proposals. They want to raise more
tax to repair the public finances after the pandemic and to cover their
spending plans.

 

A few countries have held out against the reforms, including three in the EU
- Ireland, Hungary and Estonia, which have at least some corporate taxes
below the proposed minimum.

 

If the deal works as planned, though, staying out won't help them. It
includes a "top-up" provision, so that a parent company would get an
additional bill if a subsidiary paid less than the minimum.

 

The news was also welcomed by other finance ministers.

 

Chancellor Rishi Sunak cited last month's G7 talks in London, where rich
nations agreed to battle tax avoidance: "We achieved a historic agreement
that will see the largest multinational tech giants pay the right tax in the
right countries.

 

"I'm pleased to see this momentum has continued and welcome the OECD's
progress today.

 

"I look forward to continuing discussions with our global partners in the
coming months with a view of finalising the details by October," he said.

 

French Finance Minister Bruno Le Maire described it as the "most important
international tax deal reached since a century" during a news conference.

 

And German Finance Minister Olaf Scholz said on Thursday that while details
still needed to be worked out, the agreement marked "colossal progress" and
would allow countries to increase spending on "important priorities" such as
infrastructure and efforts to fight climate change.

 

Explaining its decision not to join the agreement, Ireland said it had not
signed up because of reservations over the proposed corporate tax "floor".

 

"Ireland expressed our broad support... but noting our reservation about the
proposal for a global minimum effective tax rate of 'at least 15%'," the
government said in a statement.

 

"As a result of this reservation, Ireland is not in a position to join the
consensus."-BBC

 

 

 

U.S. jobs gain largest in 10 months; employers raise wages, sweeten perks

(Reuters) - U.S. companies hired the most workers in 10 months in June,
raising wages and offering incentives to entice millions of unemployed
Americans sitting at home, in a tentative sign that a labor shortage hanging
over the economy was starting to ease.

 

The Labor Department's closely watched employment report on Friday showed
151,000 people entered the labor force last month, though the proportion of
working-age Americans who have a job or are looking for one did not budge
from the tight range it has been in since June 2020.

 

The acceleration in hiring suggested the economy ended the second quarter
with strong momentum, following a reopening made possible by vaccinations
against COVID-19.

 

"While businesses are still having a hard time filling positions, staffing
challenges do not seem quite as dire based on today's pickup in payrolls,"
said Sarah House, a senior economist at Wells Fargo in Charlotte, North
Carolina.

 

The survey of establishments showed nonfarm payrolls increased by 850,000
jobs last month. The economy created 15,000 more jobs in April and May than
previously reported. Employment is about 6.8 million jobs below its peak in
February 2020.

 

Economists polled by Reuters had forecast payrolls would advance by 700,000
jobs. Women, who have been hardest hit by the pandemic, took nearly half of
the jobs created last month. There are a record 9.3 million job openings.

 

President Joe Biden hailed the pick-up in hiring.

 

"This is historic progress, pulling our economy out of the worst crisis in
100 years, driven in part by our dramatic progress in vaccinating our nation
and beating back the pandemic as well as other elements of the American
Rescue Plan," Biden said in remarks at the White House. read more

 

The leisure and hospitality industry added 343,000 jobs, accounting for 40%
of the employment gains in June. More than 150 million people are fully
immunized against COVID-19, which has led to the lifting of pandemic-related
restrictions on businesses and mask mandates. Government employment jumped
by 188,000 jobs, driven by state and local government education, which were
boosted by fewer end-of-school-year layoffs relative to the previous year.

 

Manufacturing added a modest 15,000 jobs, with employment at motor vehicle
assembly plants declining 12,300. A global semiconductor shortage has forced
some automakers to cut production. Other manufacturing industries are also
grappling with shortages of raw materials and workers.

 

Construction payrolls contracted for the third straight month. Though the
sector remains supported by robust demand for housing, scarcity of workers
and expensive raw materials like framing lumber are hampering homebuilding.

 

Politicians, businesses and some economists have blamed enhanced
unemployment benefits, including a $300 weekly check from the government,
for the labor crunch. Lack of affordable child care and fears of contracting
the coronavirus have also been blamed for keeping workers, mostly women, at
home.

 

There have also been pandemic-related retirements as well as career changes.
Economists generally expect the labor supply squeeze to ease in the fall as
schools reopen and the government-funded unemployment benefits lapse, but
they caution that many unemployed will probably never return to work.

 

Record-high U.S. stock prices and surging home values have also encouraged
early retirements. About 3.4 million people have dropped out of the labor
force since February 2020.

 

Stocks on Wall Street rose, with the S&P 500 (.SPX) index and the Nasdaq
Composite (.IXIC) hitting record highs. The dollar fell against a basket of
currencies. U.S. Treasury prices were higher. 

 

UNEMPLOYMENT RATE RISES

 

Average hourly earnings rose 0.3% last month, led by low-wage industries,
after gaining 0.4% in May. That raised the year-on-year increase in wages to
3.6% from 1.9% in May. Annual wage growth was in part flattered by so-called
base effects following a big drop last June.

 

According to job search engine Indeed, 4.1% of job postings advertised
hiring incentives through the seven days ending June 18, more than double
the 1.8% share in the week ending July 1, 2020. The incentives, which
included signing bonuses, retention bonuses or one-time cash payments on
being hired, ranged from as low as $100 to as high as $30,000 in the month
ended June 18.

 

Some restaurant jobs are paying as much as $27 per hour plus tips, according
to postings on Poachedjobs.com, a national job board for the
restaurant/hospitality industry. The federal minimum wage is $7.25 per hour,
but some states have higher minimum wages.

 

The average workweek dipped to 34.7 hours from 34.8 hours. With employment
not expected to return to its pre-pandemic level until sometime in 2022,
rising wages are unlikely to worry Federal Reserve officials even as
inflation is heating up because of supply constraints. Fed Chair Jerome
Powell has repeatedly said he expects high inflation will be transitory.

 

The U.S. central bank last month opened talks on how to end its crisis-era
massive bond-buying. read more

 

"We still think Fed officials will need to see several more months of
strengthening to achieve their 'substantial further progress' tapering
criterion," said Jim O'Sullivan, chief U.S. economist at TD Securities in
New York.

 

Details of the smaller and volatile household survey, from which the
unemployment rate is derived, were mixed. Household employment fell 18,000
in June. But according to Michael Feroli, chief U.S. economist at JPMorgan,
adjusting "the household measure to match the employment concept used in the
establishment survey the figure was up 604,000."

 

The unemployment rate rose to 5.9% from 5.8% in May. The jobless rate
continued to be understated by people misclassifying themselves as being
"employed but absent from work." Without this misclassification, the
unemployment rate would have been 6.1% in June.

 

But the number of people working part-time for economic reasons declined
644,000. As a result, a broader measure of unemployment, which includes
people who want to work but have given up searching and those working
part-time because they cannot find full-time employment, dropped to a
15-month low of 9.8% from 10.2% in May.

 

Women continued to trickle back, with 148,000 re-joining the labor force.
That lifted women's labor force participation rate to 57.5% from 57.4%. The
overall participation rate was unchanged at 61.6%.

 

The Thomson Reuters Trust Principles.

 

 

No, the jobs aren't all back yet - in any top U.S. industry

(Reuters) - No major U.S. industry has regained its pre-recession level of
employment in the 16 months since COVID-19 torpedoed the labor market, a
sobering reality check on the lasting mark of the pandemic as the nation
heads into Independence Day weekend.

 

Labor Department data released Friday showed total employment across the 10
major nongovernment sectors ranged from between 87% and 99% of their levels
in February 2020, with even those relatively unscarred by the pandemic yet
to fully retrace their losses.

 

"We are an economy in transition," Labor Secretary Marty Walsh said in an
interview, adding that it will be a "few more months" before the economy
gets to pre-pandemic numbers across the board.

 

"We need to focus on areas that might not be growing – is there something
else happening? Lack of supply? Permitting? Who knows what it might be."

 

Growing fastest is the leisure and hospitality sector, which added 343,000
jobs in June as restaurants and hotels hired at their fastest pace since
February. Even so, employment in the industry - which at its low last year
had shed roughly half its workers - has only recovered to about 87.1% of its
pre-pandemic level.

 

By contrast, employment in the finance industry - one of the least
pandemic-hit industries, as many workers were able to do their jobs from
home - has nearly recovered, at 99.2% of its pre-crisis level. But that
level has not changed in three months.

 

In construction, it's 96.9% - also a figure that has shown no improvement
since the end of winter. Construction employment, in fact, has fallen for
three straight months during what is typically a hiring season for the
industry, a lull officials say may be the result of building materials
shortages.

 

Overall, in none of the major industries has employment breached February
2020 levels, when the U.S. economy was by most accounts firing on all
cylinders.

 

One factor feeding in, economists say, is that millions of Americans appear
to have left the workforce, whether for retirement or to take care of
children or elderly parents, and it's unclear when or even if they will
return.

 

Labor force participation - a measure of how many workers are doing or
seeking jobs - was stuck at 61.6% in June, Friday's report showed, well
below the 63.3% registered before the pandemic.

 

As factors constraining labor supply, including worries over health and
childcare, recede, that figure should rise, said Kathy Bostjancic of Oxford
Economics. She projects a return to about 63% by the end of next year.

 

But the jobs recovery may not be even across sectors, she said, with
automation and other factors allowing some industries to permanently get by
with fewer workers.

 

"The longer it takes for supply/demand balances to align better, perhaps the
more employers rely on automation to fill the labor demand needs in certain
sectors," she said.

 

Such a development would mean higher productivity growth, if overall
economic output stays on its blistering trajectory of well-above trend
growth for this year and next. But it also suggests lower inflation, which
all things equal moves opposite to productivity, falling when productivity
growth rises.

 

That in turn could complicate matters for policymakers at the U.S. central
bank, who have to figure out how to calibrate policy to engineer both
maximum employment and stable inflation at 2%.

 

One bright spot in the June jobs report was the rise in labor force
participation among those aged 25 to 54, a group unlikely to retire and in
the prime of their working years. That jumped to 81.7%, from 81.3% in May,
though is still down from the 82.9% level in February 2020.

 

"That bodes well for employment returning closer to or eventually above
pre-pandemic levels if the increase continues, as I think it will," said
Roberto Perli of Cornerstone Macro, though extended unemployment benefits as
well as automation and fear of infection could factor in, he said. "In the
end, I’m sure that post-pandemic some sectors will perform a lot better than
others in terms of jobs."

 

With much of the job growth in lower-wage sectors like restaurants, the
latest data may raise questions about the trajectory of household spending,
a mainstay of the U.S. economy.

 

For now, that won't matter much, given the high level of household savings
accumulated from government aid and built-up savings among higher-income
families who couldn't use their money on travel and leisure while the
pandemic was raging.

 

"It would be a drag on consumption later on, after excess savings are
exhausted, if employment stayed below pre-pandemic for long," Perli said.

 

The Thomson Reuters Trust Principles.

 

 

 

Wall Street hits record on robust June jobs data

(Reuters) - Wall Street scaled new highs on Friday, with the S&P closing up
for a seventh straight day, after jobs data for June showed robust hiring
yet persistent weakness in the labor market that will keep the Federal
Reserve from raising interest rates any time soon.

 

The three major U.S. indices - the S&P, Dow and Nasdaq - closed at record
highs. The streak was the longest run of consecutive record closes since
June 1997, according to S&P Dow Jones Indices.

 

The Labor Department's employment report showed nonfarm payrolls increased
by 850,000 jobs last month, but the total is 6.8 million below its peak in
February 2020. read more

 

The better-than-expected data was a tentative sign that a labor shortage
overhanging the U.S. economy was starting to ease but was not enough to
force the Fed to raise rates.

 

Big tech led stocks on Wall Street higher while the yield on the benchmark
10-year U.S. Treasury note slid to 1.431%.

 

"For capital markets, equities and bonds, this was a goldilocks report,"
said Darrell Cronk, chief investment officer at Wells Fargo Wealth &
Investment Management. "There were enough jobs that you'd want to see, but
not so much that it concerns people that the Fed may have to act sooner."

 

Investors have feared a stronger-than-expected recovery and the prospect of
surging inflation that could force the Fed to pare its support and raise
rates, hurting technology shares whose growth and cash flow is farther in
the future.

 

Microsoft Corp (MSFT.O) added the most to the S&P's broad advance, followed
by Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Google parent Alphabet
Inc (GOOGL.O). Financial stocks, which earn less on lower rates, fell as did
utilities.

 

The Dow Jones Industrial Average (.DJI) rose 152.82 points, or 0.44%, to
34,786.35, the S&P 500 (.SPX) gained 32.4 points, or 0.75%, to 4,352.34 and
the Nasdaq Composite (.IXIC) added 116.95 points, or 0.81%, to 14,639.33.

 

For the week, the S&P rose 1.7%, the Dow added 1.0%, the nasdaq gained 1.9%.

 

Trading was light heading into the long weekend, with U.S. markets shut on
Monday in observance of Independence Day. Volume on U.S. exchanges was 7.95
billion shares, compared with the 10.81 billion average for a full session
over the last 20 trading days.

 

Headwinds that have weighed on hiring, including jobless benefits and
vaccine concerns, are likely to diminish in the fall and might help jobs
growth accelerate, said David Joy, chief market strategist at Ameriprise
Financial.

 

A security camera is seen next to signage outside of the New York Stock
Exchange (NYSE) in New York City, New York, U.S., June 28, 2021.
REUTERS/Andrew Kelly

"But for now, the recovery in the labor market is not so robust as to bring
forward any further the Fed's eventual tightening," Joy said.

 

The report served as evidence of the economy's ongoing recovery, said Bill
Northey, senior investment director at U.S. Bank Wealth Management.

 

"Some of the most impaired corners of the U.S. economy, namely retail,
leisure and hospitality, showed some of the strongest improvements," Northey
said.

 

Focus now shifts towards the second-quarter earnings season and progress on
President Joe Biden's infrastructure bill that could help the equity market
keep the momentum.

 

Investors will look to minutes from the Fed's June meeting next week for the
latest view on inflation, bond tapering and rates at a time when the easy
monetary stance appears to be at an inflection point amid a booming U.S.
economy.

 

Tesla Inc (TSLA.O) rose 0.15% after it posted record vehicle deliveries for
the second quarter that also beat Wall Street estimates. The stock was lower
much of the session. CEO Elon Musk has warned of challenges securing chips
and raw materials. read more

 

Virgin Galactic Holdings (SPCE.N) rose 4.1% after the space tourism firm
said billionaire entrepreneur Richard Branson would travel to the edge of
space on the company's test flight on July 11, beating out fellow aspiring
billionaire astronaut Jeff Bezos. read more

 

Didi Global Inc (DIDI.N) fell 5.3% after China's cyberspace administration
said it would conduct a new investigation into the Chinese ride-hailing
giant to protect national security and the public interest. read more

 

Advancing issues outnumbered declining ones on the NYSE by a 1.13-to-1
ratio; on Nasdaq, a 1.48-to-1 ratio favored decliners.

 

The S&P 500 posted 58 new 52-week highs and no new lows; the Nasdaq
Composite recorded 79 new highs and 45 new lows.

 

The Thomson Reuters Trust Principles.

 

 

 

Ransomware breach at Florida IT firm hits 200 businesses

(Reuters) - Hundreds of American businesses were hit Friday by an unusually
sophisticated ransomware attack that hijacked widely used technology
management software from a Miami-based supplier called Kaseya.

 

The attackers changed a Kaseya tool called VSA, used by companies that
manage technology at smaller businesses. They then encrypted the files of
those providers' customers simultaneously.

 

Security firm Huntress said it was tracking eight managed service providers
that had been used to infect some 200 clients.

 

Kaseya said on its own website that it was investigating a "potential
attack" on VSA, which is used by IT professionals to manage servers,
desktops, network devices and printers.

 

It said it shut down some of its infrastructure in response and that it was
urging customers that used VSA on their premises to immediately turn off
their servers.

 

"This is a colossal and devastating supply chain attack," Huntress senior
security researcher John Hammond said in an email, referring to an
increasingly high profile hacker technique of hijacking one piece of
software to compromise hundreds or thousands of users at a time.

 

Hammond added that because Kaseya is plugged in to everything from large
enterprises to small companies "it has the potential to spread to any size
or scale business." Many managed service providers use VSA, although their
customers may not realize it, experts said.

 

Some employees at service providers said on discussion boards that their
clients had been hit before they could get a warning to them.

 

Reuters was not able to reach a Kaseya representative for further comment.
Huntress said it believed the Russia-linked REvil ransomware gang - the same
group of actors blamed by the FBI for paralyzing meat packer JBS (JBSS3.SA)
last month - was to blame for the latest ransomware outbreak.

 

DEMANDS FOR RANSOM

 

A private security executive working on the response effort said that ransom
demands accompanying the encryption ranged from a few thousand dollars to $5
million or more.

 

The corruption of an update process shows a marked escalation in
sophistication from most ransomware attacks, which take advantage of
security loopholes such as common passwords without two-factor
authentication.

 

An email sent to the hackers seeking comment was not immediately returned.
In a statement, the U.S. Cybersecurity and Infrastructure Security Agency
said it was "taking action to understand and address the recent supply-chain
ransomware attack" against Kaseya's VSA product.

 

Supply chain attacks have crept to the top of the cybersecurity agenda after
the United States accused hackers of operating at the Russian government's
direction and tampering with a network monitoring tool built by Texas
software firm SolarWinds.

 

Kaseya has 40,000 customers for its products, though not all use the
affected tool.

 

The Thomson Reuters Trust Principles.

 

 

 

Amazon to grant new CEO Jassy over $200 million in stock

(Reuters) - Amazon.com Inc (AMZN.O) plans to award incoming Chief Executive
Andy Jassy more than $200 million in extra stock, which will pay out over 10
years, the company said in a regulatory filing on Friday.

 

Amazon will record the grant of 61,000 shares on July 5, the filing said.
That's the date Jassy succeeds Jeff Bezos in the online retailer's first CEO
transition since its founding in 1994. As of Friday's close, those shares
are worth about $214 million.

 

The award's exact value will depend on how the shares are trading when they
pay out in future years, encouraging Jassy to grow a company that's worth
$1.77 trillion today. Though Amazon did not disclose the vesting schedule,
its previous stock grants have not vested right away.

 

Jassy's base salary has been $175,000, filings show. On top of that, he has
$45.3 million in previously awarded stock that is vesting this year and had
$41.5 million vest in 2020.

 

The annual median pay at Amazon was $29,007 last year across full, part-time
and temporary employees worldwide, excluding Bezos, whose base salary was
$81,840. The founder's outsized stake in Amazon has made him the richest
person in the world.

 

Jassy's vested equity was still smaller than payouts to rival CEOs in the
technology industry. Microsoft Corp's (MSFT.O) Satya Nadella had $215
million in stock vest for the fiscal year ended June 30, 2020, on top of a
base salary of $2.5 million, for instance. Apple Inc's (AAPL.O) Tim Cook had
$281.9 million in stock vest, according to its 2021 proxy.

 

Some governance experts have criticized such pay schemes because they reward
executives irrespective of whether they achieve corporate milestones. Stock
grants can be more appropriate for startups than for established companies
like Amazon, said, John C. Coffee Jr., director of the Center on Corporate
Governance at Columbia Law School.

 

“It is rewarding compensation a little prematurely,” Coffee said. “It’s like
winning the prize for the race before the race is won.”

 

Amazon plans to stop its prior biannual stock grants to Jassy, aiming for
the latest award to account for most of his compensation in the coming
years, a person familiar with the matter said.

 

The Thomson Reuters Trust Principles.

 

 

 

Arm CEO says Nvidia merger better than going public

(Reuters) - Nvidia Corp's (NVDA.O) proposed $40 billion acquisition of Arm
Ltd would better support the creation of UK technology jobs than the
SoftBank Group Corp (9984.T) unit becoming a standalone public company once
again, Arm's chief executive said on Friday.

 

"We contemplated an IPO but determined that the pressure to deliver
short-term revenue growth and profitability would suffocate our ability to
invest, expand, move fast and innovate," Arm CEO Simon Segars wrote in a
blog post.

 

"Combining with Nvidia will give us the scale, resources and agility needed
to maximize the opportunities ahead," Segars wrote.

 

Last week, Qualcomm CEO Cristiano Amon told The Telegraph newspaper and
other media outlets that Qualcomm was open to investing in an initial public
offering by Arm if the Nvidia deal falls apart. Amon has told media outlets
that joint ownership of Arm by industry peers would keep the firm
independent.

 

Qualcomm did not immediately respond to a request for comment.

 

Nvidia last year announced its plan to acquire Cambridge, England-based Arm,
long a neutral supplier of chip design technology, from the Japanese
conglomerate, which does not own any other chip companies.

 

Critics like Qualcomm Inc (QCOM.O) have argued that allowing Arm to be owned
by one chip company could cause it to focus on technologies that benefit its
owner rather than the broader industry.

 

The deal is under regulatory scrutiny in the United States, United Kingdom
and European Union.

 

SoftBank bought Arm for $32 billion in 2016, betting on a surge in what are
called internet-of-things (IoT) chips. Arm invested heavily in hiring to
purse the technology. But the IoT market failed to produce a revenue boom
for Arm, and the company later raised prices for some of its technologies,
angering some customers.

 

The Thomson Reuters Trust Principles.

 

 

 

Tesla Q2 deliveries meet analysts' estimates as chip shortage weighs

(Reuters) - Tesla Inc (TSLA.O) on Friday posted record vehicle deliveries
for the second quarter that were in line with Wall Street estimates as the
electric-car maker coped with a shortage of chips and relied on sales of its
cheaper models.

 

Tesla weathered the global supply crisis better than legacy automakers, but
CEO Elon Musk has warned of challenges of securing chips and raw materials.

 

Now eyes are on its second-quarter earnings to see whether recent drops in
bitcoin prices would have an adverse effect on Tesla's bottom line, due to
Tesla's exposure to the cryptocurrency's volatility.

 

Tesla delivered 201,250 vehicles in total during the second quarter.
Analysts had expected Tesla to deliver 200,258 vehicles, according to
Refinitiv data.

 

"It was a solid quarter to volume wise, but I view it as a modest
disappointment," Garrett Nelson, an equity analyst at CFRA Research, said.

 

Shares of the company inched up 0.3%, after rising as much as 3.3% in early
trading on Friday.

 

"Overall, the bulls are breathing a sigh of relief with these delivery
numbers," said Dan Ives, an analyst at Wedbush Securities.

 

The deliveries of its Model 3 sedans and Model Y crossovers, its two lower
priced variants, accounted for 99% of its deliveries, offsetting a drop in
deliveries of higher-end Model S and X vehicles.

 

"Our teams have done an outstanding job navigating through global supply
chain and logistics challenges," Tesla said.

 

Tesla has been raising prices for its vehicles in recent months, which its
billionaire boss, Elon Musk, blamed in May on "major supply chain price
pressure", especially raw materials. read more

 

He also said in early June that "Our biggest challenge is supply chain,
especially microcontroller chips. Never seen anything like it."

 

Brokerage RBC said, "Worst may be over for Tesla" for chip shortage, but
added that potential margin impact from broad supply chain tightness could
persist through the year.

 

CHINA, MODEL S PLAID

 

In China, a major growth market for Tesla, the company is facing large-scale
recalls, heightened scrutiny from regulators and the public, as well as
rising competition from local EV companies. read more

 

"The demand issues were in April around China but clearly rebounded in the
month of May and June," Ives said.

 

Tesla sold 21,936 Model 3 and Model Y cars to Chinese customers in May,
rebounding from a sales slump in April, but still well below March numbers.
read more Its China sales for June will be released in the coming days.

 

Tesla saw the deliveries of its Model S and X vehicles slip to 1,890 during
the April to June period, as a new version of its Model S faced delays
before its June launch. read more

 

A Tesla Model S Plaid electric vehicle with a price tag of $129,990, burst
into flames on Tuesday while the owner was driving, just three days after
the car was delivered. The owner's lawyer called for the model to be
grounded. Tesla did not have an immediate comment when contacted by Reuters.
read more

 

BITCOIN

 

Sharp drops in bitcoin prices also could weigh down on Tesla's
second-quarter earnings, analysts say.

 

On Feb. 8, Tesla disclosed its bitcoin investment of $1.5 billion.  Its
bitcoin holdings helped generate profits in the first quarter, through the
sale of 10% of them.

 

But the investment is also exposing Tesla stocks to the volatile
cryptocurrency prices, which suffered from recent falls.

 

"Tesla stock price has been pretty closely correlating with the price of
bitcoin," Nelson said, adding this hurts investor sentiment despite bitcoin
accounting for a small portion of Tesla's overall cash.

 

The Thomson Reuters Trust Principles.

 

 

Citigroup to raise base pay for junior bankers - memo

(Reuters) - Citigroup Inc (C.N) will lift the base salaries of its junior
investment bankers, according to an internal memo seen by Reuters days after
media reports of a similar move by rival JPMorgan Chase & Co (JPM.N).

 

The memo, dated Friday, said the salary raises for program vice-presidents,
associates and analysts in the Wall Street firm's banking, capital markets
and advisory (BCMA) division would be effective from July 1.

 

Wall Street banks have been rolling out incentives to younger staff after a
group of first-year analysts at Goldman Sachs complained of long hours and
"unrealistic deadlines" in an internal survey in March. read more

 

Citigroup will also continue to focus on wellness initiatives in the unit to
ensure bankers have sufficient time off, BCMA co-heads Tyler Dickson and
Manuel Falcó said in the memo.

 

The bank has previously said that most of the roles at Citi would be
designated as "hybrid" post-pandemic, allowing employees to work from home
for up to two days a week.

 

That was in contrast to rivals Morgan Stanley (MS.N), JPMorgan and Goldman
Sachs Group Inc (GS.N) which are envisioning a return to office like before
the health crisis struck. read more

 

Citi's pay raises were earlier reported by Insider, which also said on
Monday that JPMorgan had raised base salaries for first-year analysts to
$100,000 before bonus. (https://bit.ly/3dFly1x).

 

The Thomson Reuters Trust Principles.

 

 

U.S. economy is 'on the move,' Biden says as jobs jump

(Reuters) - U.S. President Joe Biden and top administration officials hailed
Friday's strong monthly jobs report, saying it was a sign that the White
House's economic and pandemic-fighting strategies were working.

 

"This is historic progress, pulling our economy out of the worst crisis in
100 years, driven in part by our dramatic progress in vaccinating our nation
and beating back the pandemic as well as other elements of the American
Rescue plan," Biden said in remarks at the White House.

 

"To put it simply, our economy is on the move," the Democratic president
said.

 

The $1.9 trillion American Rescue Plan, which passed Congress in March
without any Republican support, pumped money into businesses, households and
local governments.

 

The Labor Department reported on Friday that U.S. businesses added 850,000
workers in June, ahead of analyst expectations and a sign the economic
recovery may be accelerating. read more

 

"None of this happened by accident," Biden said, calling the strong numbers
a "direct result" of a plan that some had questioned. "Well it worked,” he
said.

 

More than 22 million jobs evaporated when schools and businesses were shut
down in March 2020 to try to stem the spread of the coronavirus; the United
States is now about 6.7 million jobsbelow pre-pandemic levels.

 

Friday's report suggests the United States may return to pre-pandemic
employment levels earlier than once expected, White House economic adviser
Jared Bernstein said in an interview with Reuters.

 

A sign advertising job openings is seen outside of a Starbucks in Manhattan,
New York City, New York, U.S., May 26, 2021. REUTERS/Andrew Kelly

The Congressional Budget Office's new economic forecast, released Thursday,
"shows that the unemployment rate, in their expectation, hits 3.6% by the
end of next year," Bernstein said. "That's close to a 50-year low," he said.

 

Previously, the year-end CBO unemployment rate forecast was about 5%, he
noted.

 

FLIPPING THE SCRIPT

 

Biden also highlighted the jump in wages, which increased 0.3% overall in
June from the month before and were up 3.6% from the year before.

 

"The strength of our recovery is helping us flip the script. Instead of
workers competing with each other for jobs that are scarce, employers are
competing with each other to attract workers," he said.

 

Businesses have complained about the lack of workers available. About half
of U.S. states, most of them led by Republicans, are suspending special
unemployment benefits that were included in the American Rescue Plan, to
push people back into the workforce.

 

The White House is studying areas where jobs aren't improving, Labor
Secretary Marty Walsh told Reuters in an interview, adding it will be months
before the United States returns to pre-pandemic levels across the board.

 

"We need to focus on areas that might not be growing – is there something
else happening? Lack of supply? Permitting? Who knows what it might be," he
said.

 

"There are lots of factors here in people coming back to work, health
reasons, their industry is gone," Walsh said. The U.S. economy needs further
investment, he added.

 

The Thomson Reuters Trust Principles.

 

 

China Halts Kenya Loans Amid Debt Reprieve Bid

China has frozen disbursements of active loans to Kenyan projects in the
wake of differences over Nairobi's bid to extend debt repayment holiday to
December.

 

Chinese-funded projects are facing a cash crunch, with contractors reporting
delayed payments from banks like Exim Bank of China.

 

Executives at State-owned firms say the projects risk delays due to the
funding hitch.

 

Sources familiar with the delay say the Chinese lenders, especially Exim
Bank, are uncomfortable with the terms of the Kenyan request for extension
of the debt service suspension beyond June.

 

"Payment to contractors working on Chinese projects and paid under direct
method have delayed since last month. We are told Chinese banks are not
settling invoice because of the moratorium," said a CEO of a State
corporation who spoke on condition of anonymity.

 

The direct method involves Kenyan firms with Chinese loans sending notices
for supplier payments to Chinese banks through the Treasury.

 

China is one of Kenya's biggest foreign creditors, having lent Ksh758
billion ($7.02 billion) as at April 2021 to build rail lines, roads and
other infrastructure projects in the past decade.

 

On Thursday, the Chinese embassy in Nairobi acknowledged the funding hitch,
adding that the matter was being addressed by officials of the two
countries.

 

"To my knowledge, the relevant parties of the two sides are in close
communication on specific issues under the DSSI framework," said Huang
Xueqing, the Chief of Information and Public Affairs section at the embassy,
said in email response to the Business Daily questions on delayed release of
loans.

 

"They are in communication with each other on this matter also under the
framework of DSSI (Debt Service Suspension Initiative (DSSI)."

 

Kenya's Treasury officials denied delays in release of Chinese loans, saying
the country had received positive response from all countries where they
sought an extension of the debt repayment relief.

 

"Not true," Finance Cabinet Secretary Ukur Yatani said.

 

"I am not aware. All creditors have been very responsive," Director of the
Public Debt Management Office Haron Sirma said.

 

In January, China and other rich countries under the under the Debt Service
Suspension Initiative (DSSI) gave Kenya a six-months debt repayments relief.

 

The impact of the Covid-19 pandemic has battered Kenya's tax revenue
collection at a time when more of its debts are falling due and as it is
still grappling with gaping fiscal deficits.

 

Now, Kenya is seeking deals to suspend debt service with the rich nations
under the Paris Club and other creditors, including China, covering the six
months to the end of December.

 

The G20 countries, including Belgium, Canada, Denmark, France Germany,
Italy, Japan, Republic of Korea, Spain and the USA, rescheduled payments of
Ksh32.9 billion ($304.77 million) in principal and interest due between
January and June to the next four years with a one year grace period.

 

The International Monetary Fund (IMF) has disclosed that Kenya had sought an
extension of the debt relief from G20 countries to December, saving an
additional Ksh39 billion ($361.27 million).

 

While China is a G20 member and a signatory to the deal, a large proportion
of its loans to Kenya has been made on a commercial basis by government
agencies, quasi-public corporations and by state-owned banks, such as China
Development Bank and Exim Bank of China.

 

China has sought to negotiate its debt relief deals separately, but applying
the same terms as the G20 countries while reserving the right on size and
which loans will attract the moratorium.

 

The World Bank had estimated that Kenya could save Ksh55.9 billion ($517.8
million) from China between January and June under the DSSI deal in
principal and interest payment freeze.

 

But China announced that Kenya would be granted a Ksh26 billion ($240.85
million) relief.

 

It is unclear how much relief the government was asking for and which
specific loans were waived. But parliamentary disclosures indicated a
portion of the relief came from the standard gauge railway financier China
Exim bank.

 

President Uhuru Kenyatta's administration has largely taken loans from China
since 2014 to build roads, bridges, power plants and the SGR.

 

This started after Kenya became a lower-middle income economy, locking her
out of highly concessional loans from development lenders such as the World
Bank.

 

China's influence on Kenya's infrastructure development, however, started in
earnest with the construction of the Thika Superhighway between January 2009
and November 2012 at a cost of nearly Ksh32 billion ($296.4 million) during
the last term of President Mwai Kibaki.

 

The deal to fund the first phase of the SGR, Kenya's single-largest
infrastructure project by cost since independence, saw China overtake Japan
as Kenya's largest bilateral lender.-East African.

 

 

 

 


 


 


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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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<mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77
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