Major International Business Headlines Brief::: 11 July 2021

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Major International Business Headlines Brief::: 11 July 2021

 


 

 


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

 


 

 


ü  Biden signs new order cracking down on Big Tech

ü  Classic Football Shirts warns customers of scam

ü  Holiday firms launch legal action over travel lists

ü  UK economic growth slows in May

ü  G20 finance ministers back deal to tax companies

ü  Vauxhall owner Stellantis to invest €30bn in electric vehicles

ü  Virus variants threaten global recovery, G20 warns

ü  U.S.'s Yellen says will try to address concerns of tax deal holdout countries

ü  France pushes for 25% target for taxing multinationals' super-profits

ü  Chinese antitrust regulator blocks Tencent's $5.3 bln video games merger

ü  Analysis: China's RRReminder that economies remain fragile

ü  Wall St Week Ahead Investors eager for earnings amid growth concerns

ü  China widens clampdown on overseas listings with pre-IPO review of firms with large user data

ü  U.S. pledges $500 mln to increase meat processing capacity

ü  U.S. adds 14 Chinese companies, to economic black list over Xinjiang

ü  Tanzania: REA Commits to Connecting All Remaining Villages to Electricity

ü  Tanzania: BoT to Pilot New Payment System

ü  Tanzania: Tantrade Throws Weight On Spices Industry

ü  Malawi: How Malawi Leaf Limited Lost Billions

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

Biden signs new order cracking down on Big Tech

President Joe Biden has signed an executive order aimed at cracking down on big tech firms and promoting competition.

 

The move points to Mr Biden's desire for tougher scrutiny of Big Tech, which the administration has accused of "undermining competition".

 

"Capitalism without competition isn't capitalism. It's exploitation," Mr Biden said at Friday's signing event.

 

The order includes 72 actions and recommendations involving ten agencies.

 

It suggests that problems have arisen because of large tech firms collecting too much personal information, buying up potential competitors and competing unfairly with small businesses.

 

Several recommendations it sets out include:

 

Greater scrutiny of mergers in the tech sector

New rules to be set out by the Federal Trade Commission (FTC) on data collection

Barring unfair methods of competition on internet marketplaces.

The Biden administration is also targeting a number of other sectors with the order.

 

It encourages other government agencies to take action to improve competition across healthcare, travel and agriculture.

 

Once fully implemented, it would allow hearing aids to be sold over the counter, for example, as well as the ban of early exit fees from internet contracts. It also intends to make it easier for consumers to claim refunds from airlines.

 

"For decades, corporate consolidation has been accelerating," the fact sheet released by the White House says, describing the order as "a whole-of-government effort to promote competition in the American economy".

 

Mr Biden said that the order seeks to limit the use of "non-compete agreements" as a condition of getting a job, which he claimed can make it harder for people to change jobs and therefore limits wages.

 

The executive order alone, however, does not mean these recommendations will come into force immediately.

 

The government agencies responsible will need to implement the changes, while some elements could be subject to court challenges.

 

Biden is on the warpath - and he has Big Tech in his sights.

 

For Biden, there's no better example of broken competition than in Silicon Valley.

 

The "fact sheet" accompanying the executive order doesn't name companies by name - but it's clear which firms he's talking about.

 

Big Tech has long been accused of making "killer acquisitions", essentially buying up the competition.

 

It's something the president wants to cut down on - expect greater scrutiny of mergers going forward.

 

The fact sheet also talks about other criticisms of Big Tech.

 

It describes how companies that run dominant online retail marketplaces can see how small businesses' products sell and then use the data to launch their own competing products.

 

It's pretty clear Biden is talking about Amazon here - an accusation the company has always denied.

 

These executive orders, though, lack teeth. They aren't going to suddenly usher in a new competition regime.

 

But it's the clearest direction of travel we've seen yet from the president. Biden thinks Big Tech is too big, and he wants to do something about it.

 

The US Chamber of Commerce criticised the order, saying it was "built on the flawed belief that our economy is over-concentrated, stagnant and fails to generate private investment needed to spur innovation".

 

Neil Bradley, the Chamber's executive vice president and chief policy officer, said: "Our economy needs both large and small businesses to thrive - not centralised government dictates.

 

"In many industries, size and scale are important not only to compete, but also to justify massive levels of investment," he added.

 

It comes weeks after the House Judiciary Committee also voted to approve a series anti-trust bills, which could eventually become law and force big tech firms to transform or even break up their businesses.

 

Some tech firms have also been hit with various lawsuits claiming they have violated competition law and allege anti-competitive behaviour.--BBC

 

 

 

Classic Football Shirts warns customers of scam

A firm selling retro football team shirts and merchandise has apologised to customers after a cyber-security attack accessed their data.

 

Classic Football Shirts said customers' details had been accessed through one of its third party providers' systems.

 

Some customers complained of receiving emails offering cashback on their previous orders.

 

The firm is now telling customers not to follow the link if they have received the cashback phishing email.

 

Classic Football Shirts said it became aware of the cashback emails at 20:30 on Thursday night - half an hour after they were sent.

 

The firm believes password data and payment information has not been compromised.

 

But in a Twitter post, the company urged customers to be "vigilant" and contact their bank to cancel their cards if they supplied their card information on the link from the cashback form.

 

The clothes business said payment information was "never stored on their system" and apologised for the "inconvenience caused".

 

But many customers commented with concern that scammers were able to access their names, addresses, email addresses and order history.

 

Others, after placing an order had noticed that the email offering cashback was from orders at classicsfootballshirts.co.uk <mailto:orders at classicsfootballshirts.co.uk>  rather than classicfootballshirts.co.uk.

 

One customer, Fernando Paredes, told the BBC he saw that $700 (£504) was taken from his account. He cancelled the credit card and his bank is investigating the transaction.

 

Mr Paredes bought a football shirt from the online store on 14 March to be shipped to his address in Peru. He says received the phishing email and did not notice the extra "s".

 

"The company did well making a statement about the breach," he adds, but says he is still "concerned about the third party provider's systems".

 

Phishing email offering cashback

Customers also commented that it was "unprofessional" and that they were "worried" that their information was not properly protected.

 

Classic Football Shirts did not immediately respond to the BBC with an estimate of how many customers had been affected.

 

The Manchester-based firm was started in 2006 by two students. Its website says it has the world's largest collection of football shirts, with a product range of 30,000 individual items and more than 500,000 units available in stock.-BBC

 

 

Holiday firms launch legal action over travel lists

A group of leading travel businesses including Ryanair, BA, travel business Tui and Manchester Airports Group have launched legal action against the government over its travel curbs.

 

They want more transparency over how the government takes decisions on Covid travel rules.

 

In particular, they want to know how it assesses the Covid threat in destination countries.

 

The action is going ahead despite an easing of travel rules on Friday.

 

The chief executives of the groups involved said in a statement: "British consumers need to understand how decisions are made so they can confidently plan their travel, which is why we are asking the government to provide the data and advice that is underpinning its decision making."

 

The rules on travel now mean that, starting from 19 July, fully-vaccinated British residents returning from so-called amber list countries, which are deemed a medium-risk, will no longer have to quarantine on arrival back in the UK.

 

The traffic light system rates countries green, amber or red based on their Covid risk.

 

Red-list countries have the strictest rules, with only UK or Irish nationals, or UK residents, allowed to return - and they must pay for a 10-day stay in a government quarantine hotel.

 

There are still just a handful of "green" destinations, which tend to be smaller islands, for example, Malta.

 

Major holiday destinations, such as Spain, Greece, France and the US, remain amber.

 

Fewer than 30 destinations are on the green list, while more than 50 countries are on the red list.

 

Travel companies have long complained they have little idea how the government makes decisions on travel rules.

 

The group wants a wider re-opening of travel.

 

Airlines and travel companies say the limits on trave lhave had a devastating impact on the industry.

 

Their case, which is against the transport minister Grant Shapps, was heard at London's High Court on Friday.

 

The Department for Transport spokesperson said its traffic light system was intended to manage the risk of new variants, and added that the department could not comment on legal proceedings.-BBC

 

 

 

UK economic growth slows in May

The UK's economy grew more slowly than expected in May after a rebound in the hospitality sector was offset by disruptions to car production.

 

The economy expanded by 0.8% in May as coronavirus restrictions eased to allow pubs and restaurants to serve indoors.

 

While that was the fourth consecutive month of growth, it was also a slowdown from the 2% growth seen in April.

 

The economy is still 3.1% below pre-pandemic levels, the Office for National Statistics said.

 

"Of course, the pace of the recovery was always going to slow as the economy climbed back towards its pre-crisis level. But we hadn't expected it to slow so much so soon," said Paul Dales, an economist with Capital Economics.

 

Pubs and restaurants "were responsible for the vast majority of the growth seen in May", said Jonathan Athow, ONS deputy national statistician for economic statistics

 

"Hotels also saw a marked recovery as restrictions lifted," he added.

 

Accommodation and food services grew by a massive 37.1% in May, with the overall services sector growing 0.9%.

 

But UK carmakers struggled with a shortage of microchips, with the manufacture of transport equipment falling by 16.5%.

 

Construction firms were hit by very wet weather in May as firms lost working days, although the ONS said the sector remained 0.3% above February 2020's pre-pandemic level.

 

GDP chart

British Chambers of Commerce head of economics Suren Thiru said: "While the latest figures confirm the rebound in economic activity continued into May, the sharp slowdown in growth suggests that the recovery is losing a little steam as the temporary boost, from the earlier phases of reopening, fades."

 

Overall, in the three months to May, economic output rose by 3.6%, helped by strong retail sales, and as pubs, restaurants and schools reopened from March.

 

Chancellor Rishi Sunak said: "The government is continuing to support the recovery, with the furlough scheme in place until September, and schemes like Restart helping people who have sadly lost their jobs get back into work."

 

Looking ahead, Emma-Lou Montgomery, associate director at Fidelity International, said: "A sporting summer may not directly cause an 'it's coming home' bounce, but the impact on consumer confidence can't be ignored.

 

"That being said, there are many unknowns ahead. The UK is set on its roadmap to 'freedom day' but cases are rising, challenges in the labour market persist and the initial spending boom could slow in pace."

 

Still weak

After shrinking at the start of the year under renewed lockdowns, the economy is meant to be surging back. On a chart, a line graph looks like the second bounce of a precipitous economic bungee jump.

 

In that light, today's figures are a disappointment. The consensus forecast was for growth of 1.5% in May.

 

Instead we got barely half that - 0.8% - with activity in construction shrinking for the second month in a row and manufacturing also down.

 

Some of that was down to one-off factors such as the shortage of microchips, which forced carmakers to send workers home.

 

But while activity in restaurants and pubs jumped as customers were allowed inside for the first time in months, it's clear that our economic bungee cord is slackening before it was expected.

 

The economy remains 3.1% below where it was in February last year, and no larger than it was in January 2017, making it one of the two weakest performers in the G20 group of advanced economies.

 

What is GDP?

In the UK, new GDP figures are produced every month, but the quarterly figures - covering three months at a time - are the most widely watched.

 

In a growing economy, quarterly GDP will be slightly bigger than the quarter before, a sign that people are doing more work and getting (on average) a little bit richer.

 

Most economists, politicians and businesses like to see GDP rising steadily.

 

Rising GDP means more jobs are likely to be created, and workers are more likely to get better pay rises.

 

If GDP is falling, then the economy is shrinking - bad news for businesses and workers. If GDP falls for two quarters in a row, that is known as a recession, which can mean pay freezes and lost jobs.

 

A separate statement from the Office for National Statistics on trade figures showed that the UK is still importing more goods from outside the EU than from the bloc following Brexit. However, the difference is narrowing.

 

The value of imports from non-EU countries were £20bn in May, while imports from the bloc - many of which face new barriers to cross-border trade - were £18.4bn, the ONS said.

 

The value of goods exported to non-EU countries - £13.7bn - was also higher than to EU countries, at £12.9bn.--BBC

 

 

 

G20 finance ministers back deal to tax companies

G20 finance ministers have backed an "historic" plan which will see multinational companies pay their "fair share" of tax around the world.

 

The plan to battle tax avoidance puts in place a minimum global corporate tax rate of 15%.

 

It is likely to affect companies like Amazon and Facebook.

 

So far, 132 countries have signed up to the framework, being championed by The Organisation for Economic Cooperation and Development (OECD).

 

The agreement is a further boost for the plan signed up to by leaders of the G7 major economies in Cornwall a month ago.

 

The G20 finance ministers - who represent 19 countries with the largest and fastest-growing economies, as well as the European Union - announced their support following a two-day meeting in Venice, Italy.

 

The UK's Chancellor Rishi Sunak hailed the deal as "historic", adding it would ensure the "global tax system is fit for purpose in a digital age".

 

French Finance Minister Bruno Le Maire said there would be "no turning back".

 

"We are putting an end to the race to the bottom and the digital giants will now pay their fair share of taxes," he added. "It's a once-in-a-century tax revolution."

 

The policy - which will also make companies pay more in the countries where they do business - will now go to a meeting of G20 leaders in October for final consideration.

 

Why change the rules?

Governments have long grappled with the challenge of taxing global companies operating across many countries.

 

That challenge has grown with the boom in huge tech corporations like Amazon and Facebook.

 

At the moment companies can set up local branches in countries that have relatively low corporate tax rates and declare profits there.

 

That means they only pay the local rate of tax, even if the profits mainly come from sales made elsewhere. This is legal and commonly done.

 

The deal aims to stop this from happening in two ways.

 

Firstly it aims to make companies pay more tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits.

 

Secondly, a global minimum tax rate would help avoid countries undercutting each other with low tax rates.

 

Not everyone is in favour, however. Ireland is among those countries which have yet to sign up.-BBC

 

 

 

Vauxhall owner Stellantis to invest €30bn in electric vehicles

Vauxhall owner Stellantis has said it will invest more than €30bn (£26bn) in electric vehicles between now and the end of 2021

 

It aims to make the total cost of owning an electric vehicle equal to that of a petrol-driven model by 2026.

 

Stellantis said it would build at least five battery plants in Europe and the US to support its strategy.

 

It has already announced two plants in France and Germany, and the third will be in Italy in Termoli.

 

The world's fourth-biggest car maker, which was formed in January from the merger of Italian-American firm Fiat Chrysler and France's PSA, is gearing up to compete with electric vehicle leader Tesla and other big car manufacturers.

 

Vauxhall UK plant safe with electric vehicle plan

Stellantis said that all 14 of its vehicle brands, which include Peugeot, Jeep, Ram, Fiat and Opel, will start selling fully electrified vehicles.

 

The company said it wanted to focus on keeping the vehicles affordable and sustainable. However, a spokesman declined to indicate what sort of prices Stellantis intended to charge for passenger cars.

 

It will also electrify its commercial vehicle line-up, and roll out hydrogen fuel-cell vans by the end of 2021.

 

"This transformation period is a wonderful opportunity to reset the clock and start a new race," Stellantis chief executive Carlos Tavares said. "The group is at full speed on its electrification journey."

 

The company said its electric cars would be built on four platforms, have driving ranges of 500 to 800 km (300 to 500 miles) on a single charge, and fast-charging capability of 32 km (20 miles) per minute.

 

UK plans

This week the firm announced plans to build electric vans at its Ellesmere Port plant in Cheshire.

 

The £100m investment, to which the UK government will contribute about £30m, will safeguard more than 1,000 factory jobs.

 

The future of the plant had been in doubt after Stellantis scrapped plans to build its new Astra model there.

 

Stellantis is currently building two battery plants, one in France and one in Germany, and it said it would establish a third at Termoli in Italy.

 

The two "gigafactories" at Douvrin in France and Kaiserslautern in Germany will get French and German government support of €1.3bn (£1.1bn).

 

A spokesman said Stellantis would build at least two more such plants, which are likely to be in the US.

 

He add that the company planned to build the battery factories at its major production hubs, and did not have current plans to build any gigafactories in the UK.-BBC

 

 

 

Virus variants threaten global recovery, G20 warns

(Reuters) - An upsurge in new coronavirus variants and poor access to vaccines in developing countries threaten the global economic recovery, finance ministers of the world's 20 largest economies warned on Saturday.

 

The G20 gathering in the Italian city of Venice was the ministers' first face-to-face meeting since the start of the pandemic. Decisions include the endorsement of new rules aimed at stopping multinationals shifting profits to low-tax havens.

 

That paves the way for G20 leaders to finalise a new global minimum corporate tax rate of 15% at a Rome summit in October, a move that could recoup hundreds of billions of dollars for public treasuries straining under the COVID-19 crisis.

 

A final communique said the global economic outlook had improved since G20 talks in April thanks to the rollout of vaccines and economic support packages, but acknowledged its fragility in the face of variants like the fast-spreading Delta.

 

"The recovery is characterised by great divergences across and within countries and remains exposed to downside risks, in particular the spread of new variants of the COVID-19 virus and different paces of vaccination," it read.

 

While G20 nations promised to use all policy tools to combat COVID-19, the Italian hosts of the meeting said there was also agreement to avoid imposing new restrictions on people.

 

"We all agree we should avoid introducing again any restriction on the movement of citizens and the way of life of people," said Italian Economy Minister Daniele Franco, whose country holds the rotating G20 presidency through to December.

 

The communique, while stressing support for "equitable global sharing" of vaccines, did not propose concrete measures, merely acknowledging a recommendation for $50 billion in new vaccine financing by the International Monetary Fund, World Bank, World Health Organization and World Trade Organization.

 

Differences in vaccination levels between the world's rich and poor remain vast. WHO Director-General Tedros Adhanom Ghebreyesus has called the divergence a "moral outrage" that also undermines wider efforts to tame the spread of the virus.

 

While some of the wealthiest countries have now given over two-thirds of their citizens at least one shot of vaccine, that figure falls to well below 5% for many African nations.

 

Brandon Locke, of the public health non-profit group ONE Campaign, decried what he described as the G20's inaction, calling it "a lose-lose situation for everyone."

 

"Not only will it cost lives in poorer countries, it increases the risk of new variants that will wreak havoc in richer ones," he said.

 

Italy said it the G20 would return to the issue of vaccine funding for poor countries ahead of a Rome summit in October and that new variants was an area that needed to be looked at. It did not give further details.

 

"We must agree on a process for everyone on the planet to be able to access vaccines. If we don't, the IMF predicts that the global economy will lose $9 trillion," religious development organization Jubilee USA Network said.

 

It was referring to an IMF forecast that international cooperation on COVID-19 vaccines could speed world economic recovery and add $9 trillion to global income by 2025.

 

TAX HOLDOUTS

 

A Reuters tally of new COVID-19 infections shows them rising in 69 countries, with the daily rate pointing upwards since late-June and now hitting 478,000. https://graphics.reuters.com/world-coronavirus-tracker-and-maps/

 

IMF Managing Director Kristalina Georgieva said the world was facing "a worsening two-track recovery" partly driven by the differences in vaccine availability.

 

The biggest policy initiative at the talks was a well-flagged agreement on the global corporate tax rate, capping eight years of wrangling on the issue.

 

Setting a floor of 15% is intended to stop multinationals shopping around for the lowest tax rate. It would also change the way that companies like Amazon (AMZN.O) and Google (GOOGL.O) are taxed, basing it partly on where they sell products and services, rather than on the location of their headquarters.

 

U.S. Treasury Secretary Janet Yellen said any countries opposed to it would be encouraged to sign up by October.

 

"We'll be trying to do that, but I should emphasise it's not essential that every country be on board," she said, adding the deal included mechanisms against the use of tax havens anywhere.

 

G20 members account for more than 80% of world gross domestic product, 75% of global trade and 60% of the population of the planet, including big-hitters the United States, Japan, Britain, France, Germany and India.

 

In addition to European Union holdouts Ireland, Estonia and Hungary, other countries that have not signed on include Kenya, Nigeria, Sri Lanka, Barbados and St. Vincent and Grenadines.

 

EU Economy Commissioner Paolo Gentiloni told reporters there were still discussions about what level of a company's profits should be taxed at national level, and whether other sectors beyond financial services and mining should be exempt.

 

Among other sticking points, a fight in the U.S. Congress over President Joe Biden's planned tax increases on corporations and wealthy Americans could cause problems, as could a separate EU plan for a digital levy on tech companies.

 

The G20 officials called on the International Monetary Fund "to quickly present actionable options" for rich countries to channel part of a $650 billion issuance of IMF currency reserves to poorer countries.

 

They stopped short of endorsing the IMF's $100 billion target for transferring Special Drawing Rights to countries in need, but called for contributions from all able countries to reach "an ambitious target."

 

The Thomson Reuters Trust Principles.

 

 

U.S.'s Yellen says will try to address concerns of tax deal holdout countries

(Reuters) - U.S. Treasury Secretary Janet Yellen said on Saturday that she would work to try to address the concerns of holdout countries that have not signed onto a global corporate tax deal, but added that it wasn't necessary for all nations to adopt it.

 

Speaking to reporters alongside German Finance Minister Olaf Scholz, Yellen said she believed that some of the concerns of countries such as Ireland, Estonia and Hungary could be addressed in the run-up to a G20 leaders' summit in October.

 

"We'll be trying to do that, but I should emphasise it's not essential that every country be on board," she said.

 

"This agreement contains a kind of enforcement mechanism that can be used to make sure that countries that are holdouts are not able to undermine -- to use tax havens that undermine the operation of this global agreement."

 

Asked how she would bring a divided U.S. Congress on board with the agreement, Yellen said she was working with the tax-writing committees in Congress on a budget resolution that would use budget "reconciliation" rules.

 

These rules would allow passage with a simple majority in the U.S. Senate, where Democrats hold a one-vote majority if all members of their party are aligned.

 

"I'm very optimistic that the legislation will include what we need for the United States to come into compliance with Pillar 2," Yellen said, referring to the part of the Organisation for Co-operation and Development (OECD) that governs the minimum tax.

 

The Biden administration has proposed raising the existing U.S. minimum tax on overseas intangible income to 21% and instituting a new minimum tax that would deny deductions for companies making tax payments to countries that do not adopt the minimum tax.

 

Yellen said the OECD tax deal, agreed in principle by 131 countries and now endorsed by G20 governments, was good for all governments and would raise revenues by ending a "race to the bottom" with countries competing to cut corporate tax rates.

 

The Thomson Reuters Trust Principles.

 

 

 

France pushes for 25% target for taxing multinationals' super-profits

(Reuters) - Countries should be able to tax a quarter of big multinationals' profits no matter where they are earned, France proposed on Saturday at a G20 finance ministers meeting focused on overhauling the rules for cross-border corporate taxation.

 

Key details remain to be hammered out after G20 finance chiefs formally endorsed the outline of plans that would make new rules for where multinationals get taxed and set a global minimum corporate tax rate of 15%.

 

The emergence of digital commerce has made it possible for big tech firms to book profits in low-tax countries regardless where they money is earned.

 

The rules, to be finalised at a Rome summit in October, would allow countries where revenues are earned to tax 20-30% of a big multinational's excess profit - defined as profit in excess of 10% of revenue.

 

Developing countries, such as Brazil, have been pushing for a higher share, EU Economics Commissioner Paolo Gentiloni said at the meeting.

 

"I think that the best solution would be a level of allocation of profit of 25% to meet the concerns of some developing countries which are legitimate concerns," French Finance Minister Bruno Le Maire told reporters.

 

Companies considered in scope for the new rules would be multinationals with global turnover above 20 billion euros ($23.8 billion), although the turnover threshold could come down to 10 billion euros after seven years following a review.

 

Gentiloni said some countries were pushing for the 10 billion threshold while others wanted to exclude some industrial sectors from the scope of the new rules, in addition to financial services and mining industries which are already exempt.

 

The Thomson Reuters Trust Principles.

 

 

Chinese antitrust regulator blocks Tencent's $5.3 bln video games merger

(Reuters) - China's market regulator on Saturday said it would block Tencent Holdings Ltd's (0700.HK) plan to merge the country's top two videogame streaming sites, Huya (HUYA.N) and DouYu , on antitrust grounds.

 

Tencent first announced plans to merge Huya and DouYu last year in a tie-up designed to streamline its stakes in the firms, which were estimated by data firm MobTech to have an 80% slice of a market worth more than $3 billion and growing fast.

 

Tencent is Huya's biggest shareholder with 36.9% and also owns over a third of DouYu, with both firms listed in the United States, and worth a combined $5.3 billion in market value.

 

Reuters first reported the State Administration of Market Regulation (SAMR) plan to block the deal on Monday, which came after the regulator reviewed additional concessions proposed by Tencent for the merger.

 

SAMR said Huya and DouYu's combined market share in the video game live streaming industry would be over 70% and their merger would strengthen Tencent's dominance in this market, given Tencent already has over 40% market share in the online games operations segment.

 

Huya and DouYu are ranked No. 1 and No. 2, respectively, as China's most popular video game streaming sites, where users flock to watch e-sports tournaments and follow professional gamers.

 

Tencent said in a statement it "will abide by the decision, comply with all regulatory requirements, operate in accordance with applicable laws and regulations, and fulfill our social responsibilities."

 

The deal termination comes amid an ongoing crackdown on Chinese tech companies from the government. Earlier this year, the anti-monopoly regulator placed a record $2.75 billion fine on e-commerce giant Alibaba for engaging in anti-competitive behaviour.

 

DouYu said it "fully respects the regulatory decision and actively cooperates with regulatory requirements to operate in compliance with applicable laws and regulations."

 

Huya did not immediately respond to a request for comment.

 

In a memo from SAMR published concurrently with the announcement, Zhang Chenying, a member of the state council's anti-trust committee, argued the deal would prevent fair competition.

 

"If Huya and DouYu are to merge, the original joint control of Douyu will become Tencent's complete control of a merged entity," Zhang wrote.

 

"Considering factors such as revenue, active users, livestreaming resources and other key indices, we can expect that a merger would eliminate or restrict fair competition."

 

The Thomson Reuters Trust Principles.

 

 

 

Analysis: China's RRReminder that economies remain fragile

(Reuters) - China's decision on Friday to give its economy a 1 trillion yuan ($154 billion) shot in the arm has given investors a reminder that even the largest economies are likely to the need the occasional pick-me-up while the coronavirus pandemic lasts.

 

In one of its trademark Friday night moves, the People's Bank of China (PBOC) cut its reserve requirement ratio (RRR) - the money banks have to park at the central bank for safety - by 50 basis points (bps).

 

It is the first such step since April last year when COVID was rapidly spreading around the world. Just as significantly, it ends nine months of gradual policy tightening by authorities eager to prevent credit growth getting out of control.

 

"We believe this marks a shift from countercyclical tightening to an easing bias," analysts at Morgan Stanley said, "in view of the recent growth hiccup amid Covid resurgence, supply chain disruptions, and further moderation in domestic consumption."

 

UBS's head of emerging market strategy Manik Narain said the move was a fine-tuning rather than a screeching U-turn by the PBOC. Around 400 billion yuan of the 1 trillion the RRR is estimated to be worth is likely to be used to repay existing PBOC 'Medium-term Lending Facility' funding, while 700-750 billion of tax payments are also due soon.

 

But, from a global perspective, it was a pointed reminder that reeling in COVID support measures isn't going to be a smooth glide for anyone.

 

"China was first in, first out (with COVID policy support)" Narain said. "So if you are thinking about the global significance, it is possible that the message here is that the PBOC is showing that economies are somewhat fragile and inflation is not likely to be too damaging over the medium term."

 

RESPONSE

 

The PBOC's move comes amid a rapid re-acceleration of global COVID cases.

 

At the same time, though, the U.S. Federal Reserve is weighing when to taper its asset purchases and near-zero interest rates it put in place last year and emerging market heavyweights like Brazil, Mexico and Russia are jacking their interest rates up already to address spikes in inflation.

 

The bond market appears to be responding to the turn in China's rate cycle by pricing in lower interest rates over the medium term. Even prior to the RRR announcement, hints earlier this week that a cut was coming led China’s 10-year government bond yield to post its biggest weekly decline this year.

 

Many China watchers believe pent-up COVID demand has now peaked and its growth rates will now moderate, weighed down by weakening exports, surging producer price inflation and Beijing's continued crackdown on the property market.

 

The economy is still expected to grow more than 8% this year, however, against the government's modest growth target of over 6%, suggesting there is no big pressure to step up easing.

 

"We expect fiscal policy to remain focused on specific sectors most affected by the pandemic like small companies. We also expect macro prudential tightening on the property market to remain in place," said Gustavo Medeiros, deputy head of research at Ashmore Group.

 

UBS's Narain said another take away from of Friday's move was that other big emerging markets were likely to see it as sign of things to come in their own economies.

 

"If I am the head of the central bank of Mexico or Brazil and have already been hiking rates, it is also telling me that the (interest rate) hiking cycle is probably going to be shallow."

 

 

($1 = 6.4795 Chinese yuan renminbi)

 

The Thomson Reuters Trust Principles.

 

 

Wall St Week Ahead Investors eager for earnings amid growth concerns

(Reuters) - Investors are looking to U.S. companies' upcoming quarterly results and forecasts about the recovery in the second half of 2021 as some worry that the recent economic surge is already waning.

 

U.S. Treasuries rallied sharply this week on fears that economic growth may slow in the second half, pushing yields to levels not seen since February. On the stock market, there was a selloff in financials, energy and other so-called value shares tied to the recovery.

 

A massive jump in second quarter earnings is expected to mark a peak for U.S. earnings growth and the recovery from last year's pandemic-induced profit collapse. S&P 500 earnings are estimated to have surged 65.8% from a year earlier, according to IBES data from Refinitiv.

 

That's on track to be the biggest percentage growth since the fourth quarter of 2009 following the Great Financial Crisis, according to IBES data from Refinitiv.

 

Starting Tuesday, earnings reports are due from JPMorgan Chase (JPM.N), Goldman Sachs (GS.N), Bank of America (BAC.N) and other big banks, kicking off the quarterly results season. They could give early clues on the economy and stocks tied to growth.

 

Most big U.S. banks are expected to report a big rebound in quarterly profits even with trading income falling and revenue stalling on low interest rates and weak demand. read more

 

Investors are also eager to assess whether earnings will support Wall Street's run higher, with the S&P 500 (.SPX) up roughly 16% for the year so far. Many market watchers say the expected surge in earnings this year is a big reason for the market's strong performance.

 

Yet this week's weaker-than-expected report on U.S. jobless claims and the spread of the Delta coronavirus variant added to investor questions about the economic re-opening.

 

"For this earnings season, what investors will want to see and what we expect is that the earnings trend for the value side is still intact, to give support to (the view) it's too early to leave this trade. And that starts with the banks next week," said Keith Lerner, chief market strategist at Truist Advisory Services.

 

Many investors including Lerner remained bullish on economically sensitive sectors like energy, financials and industrials that are considered value trades because of years of underperformance. read more The S&P 500 value index (.RLV) is down for the week. Over the same period, the S&P 500 growth index (.RLG) - known for companies with upward momentum behind them - is higher, reflecting an advance in technology shares that were helped by the fall in the benchmark 10-year note yields.

 

Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas, Texas, who likes energy, materials, restaurants and some retailers, said while the picture is not all perfect across all companies, earnings season should confirm the strength in the economy.

 

"It's not 100% rosy," he said, but "we would expect earnings to be extremely strong, and so we're optimistic about the market."

 

Among sectors, industrials, consumer discretionary, energy and materials are expected to post the biggest year-over-year profit gains, with industrials (.SPLRCI) estimated up more than 500%, based on Refinitiv's data.

 

Second-quarter earnings estimates are likely still too low, Nicholas Colas, co-founder of DataTrek Research, wrote in a note this week.

 

As a result, estimates for 2021 overall and for 2022 "should continue to increase as we get Q2 financial reports," and that could give investors more confidence that earnings should support the market going into next year, he wrote.

 

Also on the radar will be what companies are doing to pass on price increases they may be grappling with from raw materials, said Sameer Samana, senior global market strategist at the Wells Fargo Investment Institute. Signs of these pressures have come up in economic data in recent months.

 

Other companies due to report next week include Delta Air Lines (DAL.N), UnitedHealth Group (UNH.N) and Kansas City Southern .

 

The Thomson Reuters Trust Principles.

 

 

 

China widens clampdown on overseas listings with pre-IPO review of firms with large user data

(Reuters) - China's cyberspace regulator said on Saturday any company with data for more than 1 million users must undergo a security review before listing its shares overseas, broadening a clampdown on its large "platform economy".

 

The security review will put a focus on risks of data being affected, controlled or manipulated by foreign governments after overseas listings, the Cyberspace Administration of China (CAC) said, posting the proposed rules on its website.

 

China's cyberspace regulators are imposing tighter restrictions on data collection and data storage. Authorities are also more broadly pushing for companies to list domestically.

 

Two new sets of rules, the Data Security Law and the Personal Information Protection Law, which cover data storage and data privacy respectively, are set to go into effect this year.

 

Saturday's announcement will also require firms to submit the IPO materials they plan to file for review.

 

The security review, according to the CAC, will consider national security risks as "risk of supply chain interruption due to political, diplomatic, trade and other factors," and risk of key data "maliciously used by foreign governments after listing in foreign countries."

 

The CAC is seeking public opinion on the proposed rules.

 

The notice comes after Chinese authorities launched a probe of ride-hailing giant Didi Global Inc (DIDI.N) for allegedly violating user privacy, just days after its listing in New York.

 

Didi's shares plunged 20% on news of the probe, and the company said its revenue would be affected.

 

The Thomson Reuters Trust Principles.

 

 

 

 

U.S. pledges $500 mln to increase meat processing capacity

(Reuters) - The U.S. government will invest at least $500 million to expand beef, pork and poultry processing capacity, Agriculture Secretary Tom Vilsack said on Friday, after consumers faced limits on meat purchases during the COVID-19 pandemic last year.

 

The money from a $1.9 trillion pandemic relief package approved in March will be awarded to meat processors in grants and loans to make the supply chain more resilient and increase competition in the sector, Vilsack said at a news conference in Council Bluffs, Iowa.

 

President Joe Biden signed a sweeping executive order that pushes the U.S. Department of Agriculture to crack down on "abusive practices of some meat processors" and promote more competition in the U.S. economy. read more

 

Cattle ranchers say there are too few processing companies that buy livestock to turn into beef, sometimes forcing farmers to accept the one and only bid they receive for animals.

 

Ranchers are now selling cattle for a loss even though meat companies make profits selling beef to consumers, Vilsack said.

 

"It seems to me in fairness profit ought to go both ways," he added.

 

The meatpacking sector came under increased scrutiny after slaughterhouses closed temporarily during the start of the COVID-19 pandemic as workers fell sick.

 

When large meat plants close, meat supplies tighten while ranchers get stuck with cattle that would otherwise have been slaughtered. That means the price of cattle generally falls, while the price of meat in supermarkets rises.

 

A cyberattack against the North American arm of Brazilian meatpacker JBS SA (JBSS3.SA) that shut U.S. beef plants last month highlighted concerns about concentration in the sector. read more

 

Biden's order directs USDA to consider new rules to make it easier for farmers to bring and win legal claims against big processors.

 

The USDA said in June it would pursue three rules to strengthen enforcement of the Packers and Stockyards Act, passed 100 years ago to protect farmers from unfair trade practices.

 

The North American Meat Institute, which represents meat companies, said on Friday that Biden's order will "open the floodgates for litigation."

 

"Government intervention in the market will increase the cost of food for consumers at a time when many are still suffering from the economic consequences of the pandemic," said Meat Institute President Julie Anna Potts.

 

The Thomson Reuters Trust Principles.

 

 

 

U.S. adds 14 Chinese companies, to economic black list over Xinjiang

(Reuters) - The Biden administration on Friday added 14 Chinese companies and other entities to its economic blacklist over alleged human rights abuses and high-tech surveillance in Xinjiang.

 

The Commerce Department said the companies had been "implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass detention, and high technology surveillance against Uyghurs, Kazakhs, and other members of Muslim minority groups in the Xinjiang Uyghur Autonomous Region."

 

Beijing denies the alleged abuses.

 

Reuters first reported the planned additions late Thursday.

 

They include the China Academy of Electronics and Information Technology; Xinjiang Lianhai Chuangzhi Information Technology Co; Shenzhen Cobber Information Technology Co; Xinjiang Sailing Information Technology; Beijing Geling Shentong Information Technology; Shenzhen Hua'antai Intelligent Technology Co., Ltd.; and Chengdu Xiwu Security System Alliance Co., Ltd.

 

The Commerce Department said in total it was adding 34 entities including some from Russia and Iran, and another five entities directly supporting China's military modernization programs related to lasers and battle management system.

 

“The Department of Commerce remains firmly committed to taking strong, decisive action to target entities that are enabling human rights abuses in Xinjiang or that use U.S. technology to fuel China’s destabilizing military modernization efforts," Commerce Secretary Gina Raimondo said in a statement.

 

The list also includes eight entities for facilitating the export of U.S. items to Iran and six entities for involvement in the procurement of U.S.-origin electronic components, likely in furtherance of Russian military programs.

 

The action follows the department's decision last month to add five other companies and other Chinese entities to the blacklist over allegations of forced labor in the far western region of China.

 

China dismisses accusations of genocide and forced labor in Xinjiang and says its policies are necessary to stamp out separatists and religious extremists who plotted attacks and stirred up tension between mostly Muslim ethnic Uyghurs and Han, China's largest ethnic group.

 

"The Chinese side will take all necessary measures to safeguard the legitimate rights and interests of Chinese companies and rejects U.S. attempts to interfere in China's internal affairs," said foreign ministry spokesman Wang Wenbin on Friday.

 

The latest action shows President Joe Biden aims to press China over what the administration says are worsening human rights abuses against the Uyghur population in Xinjiang.

 

Generally, entities added to the economic blacklist are required to apply for licenses from the Commerce Department and face tough scrutiny when they seek permission to receive items from U.S. suppliers.

 

This is not the first time the U.S. government has targeted Chinese firms linked to allegations of high-tech surveillance activity in Xinjiang.

 

In 2019, the Trump administration added some of China’s top artificial intelligence startups to its economic blacklist over its treatment of Muslim minorities.

 

The Commerce Department under Trump targeted 20 Chinese public security bureaus and eight companies including video surveillance firm Hikvision (002415.SZ), as well as leaders in facial recognition technology SenseTime Group Ltd and Megvii Technology Ltd.

 

The Thomson Reuters Trust Principles.

 

 

 

Tanzania: REA Commits to Connecting All Remaining Villages to Electricity

The Rural Energy Agency (REA) has once again assured the general public that it will connect to electricity all the remaining villages in the next 18 months.

 

More than 12,000 villages of the approximately 13,924 in Tanzania and its suburbs have been electrified since the enactment of the Energy Agency Act in 2005. REA Board Chairman Advocate Julius Kalolo expressed the commitment when he visited the Agency pavilion at the ongoing 45th Dar es Salaam International Trade Fair (DITF) Dar es Salaam, insisting that the promise will be fulfilled since all the required equipment have already been procured.

 

"We have planned that by December next year all the remaining villages will have electricity." The main task we are undertaking currently is the distribution of these equipment to 1,924 villages which are yet to be connected to power," said Kalolo.

 

Kalolo said through REA many villages have been connected to electricity, thus improving the livelihood of the people. He noted that a study conducted before the electrification in rural areas showed that students' performance was very poor but after the houses were connected to power the students have improved their performance.

 

"Electricity in villages has brought positive results in various fields including health, education, agriculture and trade and also increased awareness for citizens to be able to focus on development activities, "said Kalolo.

 

He said REA project has contributed significantly to transforming economic growth by contributing to industrial growth and helping to reduce pollution by reducing the use of firewood and charcoal.

 

"REA has helped a lot to reduce the use of firewood thus helping women to use the time they spent in collecting firewood to do other productive activities.-Daily News.

 

 

 

 

 

Tanzania: BoT to Pilot New Payment System

The Bank of Tanzania (BoT) will this month start to roll out the first phase of its new payment system -Tanzania Instant Payments System (TIPS), which has been developed to facilitate real-time payments across all financial service providers in the country.

 

The system will enable Tanzanians to send money instantly to people in their mobile contact list without having to go through the need to search for their phone numbers and enable interoperability of digital financial services amongst payment service providers to make transaction cost effective and secure.

 

Speaking to the Daily News yesterday at the ongoing 45th Dar es Salaam International Trade Fair (DITF), NPS Systems Analyst at BoT, Robert Masalu said TIPS was designed and developed by Tanzanians to help address various challenges in sending money, including delays.

 

"The BoT system specialists, in collaboration with local experts from other government institutions have been able to develop the system which was completed last month (June), and the central bank will this July start to roll out as pilot project to some clients before it officially starts to be used," said Masalu.

 

According to Masalu, the bank started to develop the system last year, taking almost a year to complete it. He said during the one-year period, the specialists were busy crafting it before they came up with a complete thing.

 

He said the system will help to connect financial institutions such as banks, private companies and mobile networks that provide financial transaction services with other stakeholders in facilitating instant cash transfer.

 

"This will reduce the use of hard cash and build a cashless economy," said Masalu, adding that not only that but also it will reduce some taxes and encourage the citizens to do business. Explaining the benefits of the system, BoT Senior Financial Analyst in the Directorate of NPS, Kudeal Mshihiri said it will enhance financial inclusion by promoting the use of electronic payments and transactions, thus reducing the use of hard cash.

 

"Cashless technology will increase transparency and reliability of financial services and eliminate the problem of money laundering, which mostly occur through mobile phone transactions and cause inconvenience to customers," explained Mshihiri.

 

The Payment Systems Act of 2015 authorised the BoT to upgrade and create new financial systems, a step that enabled the creation of such a system.-Daily News.

 

 

 

Tanzania: Tantrade Throws Weight On Spices Industry

Spice producers have all reasons to smile following the launch of Tanzania spices label, a significant step forward for marketability, quality assurance and sustainability.

 

The purpose of the label is to improve the reputation, quality and output of the spices industry across Tanzania. All farmers who take on the label are supposed to adhere to set standards, namely the standards specifications of the Tanzania Bureau of Standards (TBS), registration with ISO as well as production standards such as the use of Good Agricultural Practices (GAP).

 

The spices label is created by Tanzania Trade Development Authority (TanTrade) and the private sector represented by Tanzania Spices Association (TASPA) with the support of the International Trade Centre (ITC) within the framework of the European Union-funded East African Community (EAC) Market Access Upgrade Programme (MARKUP).

 

Speaking at the launching event at the ongoing 45th Dar es Salaam International Trade Fair (DITF), TASPA Chairperson, Mr Edward Rukaka said spice producers now can grow, market and sell their products on a more equal stage.

 

"This increases their comparative advantage in the competitive global spice market, the label establishes a level of pride and patriotism amongst Tanzanians about our spices. It also acts as an identifier for the quality spices produced in our country and impacts the ranking of our products in the global market," he said.

 

According to him, the label also aims to improve and increase competitive market advantage, regulation and standardisation across the supply chain, production and supply across the country, follow-on benefits of employment and improved livelihoods. (TanTrade), Executive Director, Edwin Rutageruka, said Tanzanian spices have never been trademarked.

 

As such, exported products are often repackaged and sold under another country's label.

 

"The Tanzania spices trademark is a timely and much-needed practise that protects and fortifies the reputation of Tanzanian spices in the international market," he said.

 

He said other players in the global spice market such as Vietnam, India and China are adept in marketing and branding. They add value to their products through the same processes before exporting to markets in Europe, Australia and the United States.

 

ITC Representative, Mr Safari Fungo said the spices industry represents an important opportunity for the agricultural sector of Tanzania.

 

"With a rising demand for spices in Asia, there is a real prospect for Tanzanian spices exporters to position themselves as leading suppliers of some of the world's finest spices," he said.

 

The targeted Tanzania Spices global marketing campaign, combined with an effort to encourage value-adding by producers, increases Tanzania's competitiveness.

 

The Tanzania Spices label brings much-need regulation and focuses on the country's spices sector. It covers all production areas across the mainland and islands. Quality standards for the label are based on the existing Tanzania standards specifications, administered by the TBS and the Zanzibar Bureau of Standards (ZBS).

 

These two national institutions are responsible for the quality control of all products on the mainland and in Zanzibar respectively. Both bureaus are registered with the International Organisation for Standardisation (ISO).-Daily News.

 

 

Malawi: How Malawi Leaf Limited Lost Billions

An on-going assessment of operations for the financially -struggling AHL Group has revealed how, one of its once competitive subsidiary, Malawi Leaf Company Limited (MLCL) lost millions of dollars due to unreliable international deals that ended up in exorbitant lawsuits.

 

MLCL is now in deep financial stress after posting a loss of about K44 billion and the board is contemplating to either close down the company or have it revived but with a better business model.

 

A task force has since been instituted to analyse the performance of Malawi Leaf and make a recommendation to the board.

 

At the centre of Malawi Leaf's fall is an unworkable business model that has cost AHL a huge fortune.

 

 

Based on inside sources we have been able to extract crucial information - on how a once - buoyant tobacco company has been brought down due to poor sales and accumulated interest and carrying charges.

 

How tobacco marketing works

 

Tobacco trading involves dealing with customers that fall into three major categories.

 

These are low, medium, and blue chip. The blue chip customer category works on a cost-plus costing model with their suppliers (tobacco buyers). The result is that the blue chip customers comparatively offer higher prices than other customer categories.

 

The suppliers for the blue chip customers usually have access to lower priced funds that are used for tobacco purchases. The customers also provide order indications in advance, a situation that helps with planning for tobacco purchases.

 

 

Usually, shipping and payment plans are adhered to by blue chip customers. This helps the suppliers for this category to manage carrying charges and cash-flows better.

 

The medium to small customers only offer prices they can afford irrespective of whether the supplier will make money or not.

 

'Legal Battles'

 

The suppliers for such customers usually access financing at a higher rate. The customers usually do not provide order indications in advance. They prefer suppliers who have stocks at hand.

 

This means that the suppliers for these customer categories have to purchase tobacco stocks in advance before commitments are made by customers.

 

Usually, shipping and payment plans are not adhered to and this makes it difficult to manage carrying charges and cash-flows.

 

But Malawi Leaf between 2013 - 2017, according to the taskforce findings, had two major customers; medium and small customers.

 

 

"Customers who buy Malawi tobacco do so based on quality. They also buy specific qualities only that suit the type of cigarettes that they produce. This means that tobacco buyers can only buy the qualities and type of tobacco that a customer has ordered.

 

"However, some developments in the marketing system of tobacco, especially the introduction of the contract system of tobacco buying which involved buying 80% of tobacco through contract and 20% on auction, compelled the company to buy most of its tobacco through the contract systems and forced it to accumulate uncommitted tobacco stocks" explained one insider who did not want to be named.

 

The taskforce has noted that one major drawback with contract farming is that the buyer is required to buy all the qualities offered under the contracted crop irrespective of whether the buyer has a market for the tobacco qualities or not.

 

"In addition to the above, some customers whom the company supplied significant amounts of tobacco to did not pay for the tobacco. The company had to sue the customers in protracted international legal battles that took years to conclude.

 

"This made the company attract significant legal and interest costs which were not budgeted for" said a senior official working for AHL Group.

 

'Accumulated Stocks'

 

A trail of communication, which the taskforce has analysed, shows that in a number of occasions Malawi Leaf had engaged international law firms demanding payment from some of its customers.n one lawsuit in 2017 Malawi Leaf was claiming about USD 9.9 million from Star Tobacco which was never paid yet the company had spent millions in legal fees and this was the case other years.

 

Narrow customer-base made things worse.

 

During the period that the company had been trading, it generally operated with a very narrow customer base despite aggressive marketing efforts by management to grow the customer base.

 

On average, most of the company's tobacco had been bought by mainly one customer. This company had been buying about 60 percent of company's stocks annually.

 

Despite the fact that the customer bought the bulk of tobacco, there were some challenges that were faced with the customer. These included delayed shipments and delayed payments.

 

"The above challenges contributed to the poor performance of the company because it kept on carrying over significant amounts of stock while incurring carrying costs.

 

"The company had on numerous occasions lobbied the customer through meetings, visits, and letters to ship and pay on time but with very limited success" said the insider.

 

In addition to this, according to sources, the company faced a major setback with its major customer in the period 2014 to 2017 when the customer's country, faced a serious foreign currency shortage.

 

This was at a time when the company was holding high stock levels and had a bank loan that was approaching its due date.

 

"At the same time, there was a significant overdue balance that had to be repaid. It is also at a time when the stocks had accumulated significant amounts of carrying charges to the point where some stocks had a cost higher than the average market price" added the source.

 

The company made all efforts to offer the tobacco stocks to alternative customers but with limited success due to low demand and because most of them were either offering very low prices, or were offering to buy very small quantities.

 

"Therefore, the company eventually resorted to selling the stocks to its major customer, after the forex shortage had been addressed, since that was the only option that was capable to absorb the stock levels that the company had at the time.

 

The customer was persuaded to ship some tobacco and pay for it promptly to allow the company meet its outstanding bank obligations that were overdue. The company's plea was not immediately successful since the customer continued with shipment and payment delays" added another official familiar with the deal.

 

The taskforce has also learnt that in the period running between 2013 to 2017, which is also the period that the company accumulated stocks, the sales prices and demand for tobacco on the international market continued to drop significantly in the medium to small customer categories.

 

Prices, we are told, dropped by over $1 in this period. This negatively affected both the margins and the rate at which the stocks were being disposed of.

 

'Carrying charges'

 

>From what we have gathered from the taskforce the tobacco industry apply a standard tobacco costing model which involves the carrying over of some costs related to the tobacco to the following year if the tobacco was not sold.

 

The company carried over significant amounts of stock to the following year between 2013 and 2017. This is due to low demand, generally delayed shipments by customers and low prices.

 

This led to the progressive increase in the cost of the tobacco during the stated period.

 

"This is the situation that the company found itself in as it tried to sell its tobacco above cost. Since the prices that were being offered were below cost, the company delayed selling the stock in anticipation of higher prices, since the trend on tobacco trading during the stated period was that a low price cycle would usually be followed by a high price cycle" said another insider.

 

This resulted in the build-up of the costs of the stock.

 

In order to salvage the situation, and with pressure from the banks to repay loans, the company decided to dispose of the stock to avoid further losses and quality deterioration of the tobacco.

 

The slower turnaround of the tobacco stocks resulted in the company continuing to incur significant interest charges on the financing accessed through bank loans for working capital tied up in the stocks.

 

"Therefore, according to sources, the company had to resort to additional borrowing to finance its operations over the period that the working capital was tied-up in stock and receivables, making the company incur almost double the interest that it would normally incur on normal seasonal borrowing" added an insider.-Nyasa Times.

 

 

 

 

 

 

 


 


 


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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