Major International Business Headlines Brief::: 12 May 2021

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Major International Business Headlines Brief::: 12 May 2021

 


 

 


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ü  Myanmar coup: Firms quit office block with military ties

ü  US petrol supplies tighten after Colonial Pipeline hack

ü  UK economy shrank by 1.5% in first quarter

ü  Uber and Lyft set to offer free rides to US vaccine sites

ü  Stock markets slide on fears of rising inflation

ü  Greensill: Watchdog to probe 'potentially criminal' collapse of firm

ü  Pret a Manger heads to Tesco in battle for new customers

ü  Morrisons hails 'renaissance of the supermarket'

ü  Greggs profits set to bounce back to pre-pandemic levels

ü  Fed officials sift through tea leaves of weak U.S. jobs report

ü  Inflation anxiety jolts stocks, Asia tumbles to two-month lows

ü  SoftBank reports $37 bln Vision Fund profit on Coupang

ü  Chesapeake Energy posts profit after bankruptcy exit, declares dividend

ü  Germany's Merck sees boost from labs supplies earnings

ü  Toyota expects profit rebound, shrugs off pandemic slump and chip
shortage

ü  Nigeria: Multi-Million Naira Bridge Collapses a Week After Construction
in Kogi

 

 

 

 

 

 

 

 


 <https://www.facebook.com/Hyundaizimbabwe/> 

 


 

Myanmar coup: Firms quit office block with military ties

A high-end office block in Myanmar linked to the country's military leaders
is seeing an exodus of international organisations.

 

Coca-Cola, the World Bank and McKinsey have told the BBC they have moved out
or are reviewing their leases at the Sule Square complex in Yangon.

 

The United Nations said the complex was built on land owned by the military.

 

Myanmar's military seized power from the democratically elected government
in February.

 

It has been 100 days since the early morning coup, sparking mass protests
across the country in which hundreds have died.

 

However, even before they took power on 1 February, Myanmar's military -
which initially ruled the country for almost half a century after seizing
power in 1962 - owned large areas of land and controlled companies involved
in everything from mining to banking.

 

The land on which the building stands was leased from the military,
according to a 2019 United Nations fact-finding mission report.

 

Last month, activist group Justice for Myanmar called on 18 tenants of the
complex of offices and shops in the heart of Myanmar's commercial hub Yangon
to stop indirectly supporting the army.

 

"Sule Square has big-name tenants that continue to lease office space in the
building, indirectly supporting the army," Justice for Myanmar said in a
report.

 

According to news agency Reuters, six of the companies have said they have
moved out or were reviewing their plans, but only one mentioned the military
link. Other firms cited various reasons, including business prospects.

 

In a statement via email, Coca-Cola told the BBC that it would not renew its
lease when it ends in the middle of next month due to "changing business
requirements".

 

"Our office-based employees at Coca-Cola Limited (Myanmar) will continue to
work from home for the rest of 2021 as part of overall safety measures. We
will be communicating our new office location at a later date," it added.

 

In a statement sent to the BBC, consultancy McKinsey & Company said: "We no
longer have space in a serviced office leased in Sule Square. We terminated
our lease in early 2021."

 

Reuters said it is not currently using its Sule Square office and was
reviewing its tenancy.

 

A spokesperson for World Bank, which also has an office in the complex, told
the BBC that it was "assessing the situation in Myanmar, according to
internal policies and procedures".

 

Norway's state-owned telecoms operator Telenor said it had known that the
military owned the land Sule Square is built on before it moved in but it
had picked the location due to a number of reasons, including safety.
Telenor has not said whether or not it plans to move out of the building.

 

Sule Square, which is close to the historic Sule Pagoda in Yangon, opened in
2017. It was developed by a local affiliate of Hong Kong listed Shangri-La
Asia, which also manages the building and a neighbouring hotel.

 

Shangri-La said in 2017 that it had invested $125m (£88.5m) in the
development.--BBC

 

 

 

US petrol supplies tighten after Colonial Pipeline hack

US motorists have been urged to not hoard fuel as supplies tighten due to a
major pipeline remaining shut after a cyber-attack.

 

Some drivers in the south east were seen stocking up as petrol stations
began running dry and prices rose.

 

The average price for petrol was the highest on Tuesday since November 2014,
at $2.98 (£2.11) per gallon, the American Automobile Association said.

 

North Carolina, Virginia and Florida have declared a state of emergency.

 

But US Energy Secretary Jennifer Granholm said there was no need for
motorists to hoard petrol.

 

Ms Granholm said there was not a shortage but a supply "crunch" in North
Carolina, South Carolina, Tennessee, Georgia and southern Virginia, regions
that typically rely on Colonial for fuel.

 

Colonial attack

A ransomware cyber-attack on Friday forced Colonial Pipeline to shut down
the main part of its network.

 

The operator has forecast that it will not substantially restore operations
of the 5,500-mile (8,900km) pipeline network that supplies nearly half of
the East Coast's fuel until the end of the week.

 

The FBI has accused a criminal gang called DarkSide of the ransomware
attack.

 

The gang is believed to be based in Russia or Eastern Europe and avoids
targeting computers that use languages from former Soviet republics, cyber
experts said.

 

Ransomware is a type of malware designed to lock computers by encrypting
data and demanding payment to regain access.

 

Russia's embassy in the US rejected speculation that the country's
government was behind the attack.

 

President Joe Biden a day earlier said there was no evidence so far that
Russia was responsible.

 

If the general public or politicians ever needed proof of how devastating
cyber-attacks can be, this hack will more than suffice: chaos at the pumps,
states of emergency declared and the White House calling for calm.

 

And this is just the stuff we're being told about.

 

In Colonial Pipeline's latest press update, we're given hints about the
mayhem inside the company.

 

With high-tech sensors and safety systems taken offline, the firm says it's
hired dozens of staff to walk or drive the 5,000-mile length of the pipeline
every day.

 

It's also deployed helicopters to check on the pipes and a growing fleet of
delivery trucks.

 

Another clue to the chaos is that the company's website has been
periodically taken offline.

 

Colonial says this is a separate problem, but tellingly it has now blocked
all traffic from outside of the US.

 

Even the hackers themselves seem surprised by the damage they've caused.

 

According to new research from cyber-security company FireEye, the hackers
known as Darkside launched global crime spree in August last year, raking in
millions from organisations in more than 15 countries.

 

But this hack seems like it may have crossed some sort of line even for
these hardened criminals. The true test of their morals, though, will depend
on whether or not they will continue the extort the company or help it
recover.

 

Emergency measures

More than 7% of petrol stations in Virginia and 5% in North Carolina were
out of fuel on Tuesday as demand jumped 20%, tracking firm GasBuddy said.

 

On Tuesday, the government stepped in to issue an emergency fuel waiver
lasting one week, designed to help alleviate any shortages.

 

The Environmental Protection Agency (EPA) said the move, which relaxes some
rules usually applied to fuel, would run until 18 May in Pennsylvania,
Virginia, Maryland, and Washington DC.

 

In addition, Georgia suspended sales tax on petrol until Saturday.

 

On Monday North Carolina declared a state of emergency and temporarily
suspended vehicle fuel regulations "to ensure adequate fuel supply supplies
throughout the state".

 

While the pipeline outage is having short-term consequences in some regions,
some experts believe the longer term impact will be small.

 

"Markets will go crazy, but two weeks later no one knows it happened," said
Chuck Watson, director of research at Enki, which studies the economic
effects of natural and other disasters.

 

Price rises

Fuel prices were expected to rise with the start of the summer driving
season, although the US Energy Information Administration said on Tuesday
that the ongoing effects of the Covid-19 pandemic would "significantly
affect petroleum markets in the summer of 2021".

 

The pipeline shutdown contributed to the rise in fuel prices, the AAA said.

 

"We might see the delivery challenges due to the attack add a few cents to
the expected increase in the national average," a spokesperson added.-BBC

 

 

 

UK economy shrank by 1.5% in first quarter

The UK economy shrank by 1.5% in the first quarter of 2021, as the country
experienced a lengthy winter lockdown.

 

School closures and a large fall in retail sales earlier in the quarter
dragged down economic growth, said the Office for National Statistics.

 

The economy is now 8.7% smaller than where it was before the pandemic.

 

However, there was a strong recovery in March with the economy growing 2.1%
as shops and schools reopened.-BBC

 

 

 

Uber and Lyft set to offer free rides to US vaccine sites

Uber and Lyft are set to offer free rides to anyone travelling to or from
Covid-19 vaccination sites in the US.

 

They will be available within the next two weeks through the taxi firms'
apps until 4 July as part of government efforts to increase vaccine take-up,
the White House announced on Tuesday.

 

It comes as demand for jabs in the US has slowed in recent weeks.

 

The boss of Uber said: "Vaccines are our best hope to beat this pandemic".

 

Chief executive Dara Khosrowshahi added: "This is a proud moment for me, for
Uber, and for our country. More and more Americans continue to get
vaccinated every day - let's keep moving forward, together."

 

President Joe Biden has said he would like to see 70% of US adults receive
at least one vaccine dose in time for 4 July Independence Day celebrations.

 

As of Monday, 46% of Americans have received at least one vaccine dose,
according to the US Centers for Disease Control and Prevention.

 

The new initiatives come at a time when US demand for vaccines has declined
significantly, forcing the administration to figure out new ways to motivate
people to get vaccinated.

 

The free rides from the ride-hailing apps were highlighted by the White
House as part of efforts to help the vaccine roll-out.

 

Neither will be paid by the government to transport people to and from the
sites, but said they will pick up the costs themselves.

 

 

A new feature will launch in about two weeks on both apps, which will allow
customers to get a code they can use to get rides to and from a vaccination
site after providing some details.

 

Uber and Lyft have previously announced free rides to vaccine clinics would
be available to vulnerable communities lacking healthcare and transportation
at increased risk of Covid-19.

 

But the new offer will be available to all US residents with a vaccine
appointment.

 

Lyft said that its code would cover $15 (£10.60) each way, and it expects
that would cover "most, if not all, of riders' fares".

 

Its co-founder and president John Zimmer said: "The vaccine is the key to
getting us all moving again, and we're proud to do our part to move the
country forward.

 

"We've always believed transportation has the power to improve people's
lives, and this initiative makes that truer than ever."

 

An Uber spokeswoman told the BBC that more details would be announced for
its app in the coming weeks.

 

Both transport firms also confirmed that the offer would not have an impact
on drivers' take-home pay.

 

Vaccination efforts

The partnership comes after Uber sent a letter to the Biden team in
December, offering help with vaccinations.

 

It also urged the administration to maintain Uber drivers' status as
independent contractors, while offering the ability to provide some
benefits.

 

Mr Biden campaigned on providing more benefits to gig workers by
reclassifying them as employees, which the companies involved are against.

 

The rides build on existing schemes Uber and Lyft launched at the end of
last year, which help the public but also the companies as they seek to have
drivers and riders return to the road.

 

Uber had offered 10 million self-funded free or discounted rides to
vaccination sites, while Lyft said it would provide an uncapped amount of
free vaccination rides paid for in partnership with other corporate
sponsors.

 

Mr Biden also will announce funding through the Federal Emergency Management
Agency (FEMA) for states for on-the-ground efforts to promote vaccinations,
such as phone banking and door-to-door canvassing.

 

The announcement follows attempts by other companies to encourage customers
to get vaccinated.

 

McDonald's announced on Tuesday that in the US it would start printing "We
can do this" slogans, alongside links to websites with further information
about vaccines, on its coffee cups.

 

Consumer giant Unilever will also be giving away milkshakes and ice creams
to healthcare workers and those getting vaccinated across several US sites
on 14 May.-BBC

 

 

Stock markets slide on fears of rising inflation

Stock markets across the world have slid amid worries that US inflation is
set to rise.

 

In the US, the Dow fell 474 points to lose 1.4% on Tuesday - its largest
one-day drop since late February.

 

European bourses also saw steep declines on fears among traders that rising
consumer prices could push up interest rates.

 

The UK's benchmark share index, the FTSE 100, closed 2.47% lower.

 

The index retreated below the 7,000 mark to 6,947.99 after hitting a
post-pandemic high of 7,164 on Monday.

 

"The market just can't shake the inflation fears which are clouding the
recovery from Covid," said AJ Bell investment director Russ Mould.

 

"Surging commodity prices are acting as a canary in the coal mine for
inflation - with the huge infrastructure and stimulus packages in the US a
key contributing factor."

 

Stimulus effect

In March, US President Joe Biden signed a $1.9tn (£1.4tn) economic relief
bill that saw the government send $1,400 cheques to most Americans, and last
month he set out plans for more government spending on jobs, education and
social care.

 

It has led to a build-up of savings which is now being spent as the economy
reopens, driving prices higher.

 

Inflation hit 2.6% in the 12 months to March, breaching the Federal
Reserve's target of 2% and raising fears it might raise rates to cool things
down.

 

There are similar concerns in other economies, but central banks have so far
played down the risks.

 

US inflation chart

The tech-heavy US Nasdaq share index initially fell more than 2% on Tuesday
as markets opened, but reversed those losses later on.

 

The sell-off also continued in Asia and Europe, with both France's Cac 40
index and Germany's Dax index down nearly 2%.

 

Ben Yearsley, investment director at Shore Financial, said inflation was
always likely to pick-up over the next few months given that in the same
period a year ago economies were closed and oil prices slumped.

 

He said investors should only get concerned if higher inflation continues.
"If inflation persists and we are still talking about it in six months, for
example, then that is a different scenario and will maybe lead to higher
interest rates."

 

Other analysts raised concerns that new data released by the US Labor
Department on Tuesday showed that the number of job vacancies jumped by
597,000 to a record high of 8.1 million on the last day of March.

 

The food and hotels sectors added the most vacancies, with the report
following figures that showed last week that job growth slowed sharply in
April, curbed by shortages of available workers despite huge fiscal
stimulus.

 

On the London Stock Exchange, British Airways owner IAG was one of the
biggest fallers, with its shares falling more than 7% on the back of
negative investor reaction to the government's green list of safe countries
to travel to.

 

Shares in NatWest Group fell more than 3%.The government announced on
Tuesday morning it had sold another chunk of shares in the bank, reducing
its stake from 59.8% to 54.8% and raising £1.1bn for taxpayers.

 

The concerns in markets are not only about the United States, but that is
the main focus of the nervousness. In common with many other governments,
the US has supported household incomes, at a time when people have been
unable or unwilling to spend as they normally would.

 

So there has been a build-up of unplanned savings. As restrictions are
lifted and vaccinations make people feel more confident, much of that is
likely to be spent. If there are any persistent disturbances to supply
chains, that would only add to the pressure pushing prices higher.

 

Will it lead the Federal Reserve and other central banks to change policy,
to raise interest rates or curb their purchases of financial assets, or
quantitative easing?

 

So far, the Fed has said it thinks the rise in inflation is due to
"transitory factors" and it says expectations about future inflation are
"well anchored".

 

So there is clearly no rush on its part to change policy. But investors are
likely to remain wary that inflationary pressures might prove to be
persistent and lead the Fed to rethink.-BBC

 

 

 

Greensill: Watchdog to probe 'potentially criminal' collapse of firm

The UK's financial watchdog has opened an investigation into the collapse of
Liberty Steel backer Greensill Capital.

 

The Financial Conduct Authority (FCA) said "potentially criminal"
allegations had been made about the circumstances of the financial firm's
failure.

 

Liberty Steel owner GFG has been scrambling to raise funds since Greensill
failed in March, leaving 3,000 jobs at risk.

 

It comes as David Cameron faces questions over lobbying for Greensill.

 

The former prime minister has said he regrets texting ministers, including
Chancellor Rishi Sunak, but maintains that he did not break government rules
on lobbying.

 

'Number of allegations'

In a letter to Mel Stride, the chair of the Treasury Committee in the House
of Commons, FCA chief executive Nikhil Rathi said the investigation was
looking into Greensill Capital, its subsidiary Greensill Capital Securities
and the oversight of the latter by its principal, Mirabella Advisers.

 

"A number of allegations have been made in the press regarding the
circumstances of Greensill's failure, some of which are potentially criminal
in nature," Mr Rathi said.

 

"There are, therefore, some aspects of the FCA's interactions with Greensill
entities that I am not able to disclose, so as not to prejudice these
ongoing investigations."

 

He added: "We are also co-operating with counterparts in other UK
enforcement and regulatory agencies, as well as authorities in a number of
overseas jurisdictions."

 

Greensill was the main financial backer of Liberty Steel, which employs
3,000 people in England, Scotland and Wales.

 

However, it collapsed after its insurer refused to renew cover for the loans
Greensill was making.

 

Investors caught in the fallout included Swiss banking giant Credit Suisse
and about 26 German towns.

 

German regulators are investigating Greensill Capital subsidiary Greensill
Bank over balance sheet irregularities.

 

In the UK, MPs have opened an inquiry into Greensill's collapse and heard
evidence from the firm's founder, Lex Greensill, on Tuesday.

 

Mr Greensill, who in the early 2010s worked as an unpaid adviser to Mr
Cameron in Downing Street, told the Treasury Committee he bore "full
responsibility" for the collapse of the company.

 

He said he was "desperately saddened that more than a thousand hard-working
people had lost their jobs" and added that he took "full responsibility" for
the hardship being felt by the company's clients and their suppliers.

 

"It's deeply regrettable that we were let down by our leading insurer, whose
actions assured Greensill's collapse," Mr Greensill said.

 

He said that before Greensill failed, it had provided businesses in more
than 150 countries with finance.

 

"Those people did not do business with me because of our brand," he said.
"They did business with us for one reason, and one reason only, and that is,
they got a better deal with us than they could get from their banks."

 

He added that Greensill failed, "so there clearly was a flaw in our
business", but taking real-time information out of corporate accounting
systems and using that information to make credit decisions "absolutely is
the future".

 

Cameron faces criticism

Mr Cameron, who took a role at Greensill Capital in 2018, two years after
leaving office, has faced criticism for using private contacts with
ministers and government officials to try to win business for Greensill
Capital.

 

In 2020, he lobbied ministers unsuccessfully to allow Greensill to issue
government-backed loans as part of the Corporate Covid Financing Facility
(CCFF) - a scheme to help big firms through the pandemic.

 

Newly released documents show that he and his staff sent ministers and
officials 45 emails, texts and WhatsApp messages concerning Greensill in
between 5 March and 26 June 2020.

 

Mr Cameron denies breaking any codes of conduct or government rules on
lobbying.

 

Mr Rathi will appear before the committee on Wednesday, followed by Mr
Cameron on Thursday.-BBC

 

 

Pret a Manger heads to Tesco in battle for new customers

Pret a Manger will trial opening its concessions in Tesco supermarkets after
seeing a huge drop in demand as more people work from home.

 

The sandwich chain has struggled in the pandemic as many of its branches are
in city centres and rely on office trade.

 

With the remote working trend set to continue post-pandemic, it is exploring
new ways to operate.

 

"We're transforming our business model to adjust to a new way of living and
working," said Pret.

 

With more companies switching to hybrid working, chains such as Pret have
been forced to respond.

 

The move will involve just four Pret branches opening in Tesco stores at
first, but if successful, it will spread.

 

The first shop will open in Tesco's Kensington superstore in London in June,
with three other shops set to open later in the summer.

 

The company launched its first grocery food range in Tesco earlier this
year, selling frozen croissants and granola through the supermarket.

 

Pandemic woes

The move is the latest attempt by Pret to adapt to the changes imposed by
coronavirus.

 

In the days before Covid struck, the food chain's extensive network of
branches in prime urban locations was seen as its greatest strength.

 

But when lockdowns dramatically reduced the number of commuters, the firm
became a symbol of the economic woes inflicted by the pandemic.

 

During 2020, it closed 74 outlets in the UK and 22 in the US.

 

Last summer, it cut 3,000 jobs, more than a third of its workforce, as part
of a rescue plan to save the business.

 

Earlier this year, it scrapped its dividend payment to shareholders and
warned of "material uncertainties" over its future.

 

"As the UK emerges from lockdown, this partnership with Tesco is one way in
which we're transforming our business model," said Pano Christou, Pret's
chief executive.

 

The chain is also increasing its motorway service shops in partnership with
Moto.

 

It opened the first of three at Cherwell Valley in December 2020, followed
by a second at Moto's Rugby service which opened last month.

 

The chain has also introduced a subscription service allowing customers up
to five cups of coffee a day for a £20 monthly fee, while Pret-branded
ground coffee and espresso beans are now available via Amazon.-BBC

 

 

Morrisons hails 'renaissance of the supermarket'

Morrisons says the pandemic has led to a "renaissance of the supermarket" as
Brits enjoy cooking at home more.

 

The UK's fourth-largest supermarket group said sales had increased by 2.7%
in the 14 weeks to 9 May.

 

It added that events such as Mother's Day and Easter were "particularly
successful".

 

As the economy reopens after beginning the year in lockdown, Morrisons said
there had been a strong improvement in sales of snack and takeaway food.

 

"The pandemic is not yet over, but it is in retreat across Britain and there
is much to be positive about as something approaching normal life begins to
take shape," said Morrisons boss David Potts.

 

"Our forecourts are getting busier, we are seeing encouraging recent signs
of a strong rebound of food-to-go, take-away counters and salad bars, and
our popular cafés will soon fully reopen."

 

Shoppers have also become more familiar with buying more of their groceries
online. Morrisons said, with online sales more than doubling compared to the
same period last year.

 

"The growing reach of our online businesses is attracting new customers," Mr
Potts said.

 

However, while the pandemic may have sparked a renaissance for supermarkets,
it has come at a price.

 

Morrisons said that in the past three months alone, it has faced a £27m bill
for Covid-related costs.

 

"These costs were mainly incurred due to extra colleague absence and more
marshals during the first few weeks of 2021 when the second Covid-19 wave
was still prevalent and Britain remained under strict lockdown," the
supermarket said.

 

People return to supermarkets as online sales slow

But, as the UK emerges from the latest lockdown, Mr Potts said the
successful vaccine rollout and an improving economy would encourage Brits to
celebrate events this summer, including Euro 2020.

 

"That sense of optimism is percolating through the country and it will lead
to people wanting to celebrate events," Mr Potts said.

 

"We'll be doing everything we can to be part of that."-BBC

 

 

 

Greggs profits set to bounce back to pre-pandemic levels

A swift rebound in sales has prompted Greggs to says its profits this year
could bounce back to pre-Covid levels.

 

The bakery chain said sales had seen a "strong recovery" since non-essential
shops reopened in April.

 

While it warned that trading conditions were "clearly highly unusual", it
said profits this year could much higher than previously forecast.

 

Retailer Hotel Chocolat also said sales had been "encouraging" since shops
began to reopen.

 

It added that profits for the year to the end of June were likely to be
"significantly ahead of expectations".

 

Hotel Chocolat also said that, as a results of its successful trading, it
would repay £3,1m of furlough funding it has received from the government.

 

Improved outlook

In March, Greggs reported its first full year loss in 36 years after
battling a sales slump due to the coronavirus pandemic.

 

It had said previously that it did not expect profits to return to pre-Covid
levels until 2022 at the earliest.

 

However, trading this year has been better than expected, and in its latest
update Greggs said it "saw a significant pick up in sales with the reopening
of non-essential retail from 12 April, in part reflecting the pent-up demand
for retail which has boosted High Street footfall".

 

While sales have recovered well in recent weeks, it noted that as
coronavirus restrictions continue to relax it will face more competition
from cafes and restaurants with indoor seating.

 

Nevertheless, Greggs said if restrictions ease in line with current plans
"then we now expect our overall sales performance for the year to be
stronger than we had previously anticipated".

 

UK economy set to grow at fastest rate in more than 70 years

People return to supermarkets as online sales slow.

"However, given our recent trading performance, the board now believes that
profits are likely to be materially higher than its previous expectation,
and could be around 2019 levels in the absence of further restrictions," the
bakery chain said.

 

Whereas like-for-like sales were down more than a fifth in the 10 weeks to
13 March compared with 2019, they were down less than 4% in the eight weeks
to 8 May.

 

Delivery sales had helped Greggs to regain lost ground, it said.

 

Greggs compared current trading with 2019 rather than 2020 because in that
year it was "severely" hit by temporary shop closures.

 

In the first 18 weeks of the year it opened 34 new shops, including 13
franchises, and closed 11, giving a total of 2,101 shops trading as of 8
May.

 

Chocolate bounce

Retailers and financial firms have been noting a boost in shopping since
non-essential shops could reopen in April, and have been cautiously
optimistic about the prospects for the UK economy.

 

But some saw a pick-up in trade before that.

 

Chocolatier Hotel Chocolat said it had a strong Mother's Day and Easter
despite its physical shops being closed, with revenue up 60% in the
eight-week period to 25 April.

 

This year it looks forward to "strong job creation, particularly in our UK
chocolate making and supply teams."

 

It said would start making more of its vegan Nutmilk chocolate, macarons,
and its Velvetiser drinking chocolate flakes.-BBC

 

 

 

Fed officials sift through tea leaves of weak U.S. jobs report

Federal Reserve officials grappled on Tuesday with April’s surprisingly weak
employment growth, maintaining faith in the U.S. economic rebound but
acknowledging the pace of the jobs recovery may prove choppier than
anticipated.

 

The United States added 266,000 jobs last month, about a quarter of the gain
penciled in by economists, including Fed officials themselves, in what had
been anticipated to be the start of a steady run of strong job growth.

 

The April report instead raised a broad set of questions about the
complicated interplay among peoples' decisions about whether to work during
the ongoing coronavirus pandemic, constraints stemming from the lack of
child care and closed schools, the slowing pace of COVID-19 vaccinations,
global supply bottlenecks for critical goods like semiconductors, and the
enhanced federal unemployment benefits that may be encouraging some
potential workers to stay home.

 

In contrast to the low number of jobs created in April, job openings as of
the end of March hit a record 8.1 million, narrowing the wedge with the
roughly 9.8 million people still unemployed.

 

"What the data suggests, and what I hear anecdotally, is that labor demand
and labor supply are both on the path to recovery but they are recovering at
different paces and there may be friction," Fed Governor Lael Brainard told
the Society for Advancing Business Writing and Editing (SABEW).

 

"There are still concerns over contracting the virus, the need to take
public transportation," she said, while many parents are waiting for schools
to reopen.

 

"I do expect to see good improvement on people wanting to go to work and
able to work," Brainard added. "We are just seeing it in fits and starts," a
fact she said validated the U.S. central bank's "patient" promise to leave
crisis-level interest rates and bond-buying in place until the recovery is
more complete.

 

In separate appearances, Cleveland Fed President Loretta Mester,
Philadelphia Fed President Patrick Harker, and San Francisco Fed President
Mary Daly laid out similar arguments, and noted that much may hinge on
whether larger numbers of Americans get vaccinated so that people overall
become more comfortable in close-contact jobs and activities.

 

'HARD CHOICES'

 

The April jobs report has kindled intense debate in Washington about where
the recovery stands and whether current federal policy is stifling aspects
of it.

 

The economy is poised for its strongest growth since the early 1980s, jobs
boards are bulging with open positions, and the number of new daily
coronavirus infections has recently ebbed to levels not seen since the start
of the pandemic.

 

Businesses, even the smaller enterprises that had to be nursed through the
pandemic with federal help, now complain those same benefits are allowing
workers to stay home.

 

Brainard, however, noted that about two-thirds of school-age kids were still
not back in classrooms on a full-time basis, while only about a quarter of
those aged 18 to 64 - the core of the U.S. work force - are fully
vaccinated.

 

The decision by the Biden administration and Congress earlier this year to
extend a weekly $300 federal unemployment benefit until September has become
a particular point of contention, with Republican governors in several
states moving to halt the payments.

 

Fed officials, however, have largely discounted the impact of the extra
payments on workers' willingness to seek jobs, arguing that it isn't the
benefit as much as health risks and other problems that are at play. At the
start of the pandemic, federal benefits were put in place largely so people
would not have to venture out to jobs that might expose them to illness and
allow them to spread it further.

 

"It is true that with the extension of the unemployment benefits people are
in a financial position so that they can make those hard choices, about
whether they feel comfortable reentering or not," Mester said on Yahoo
Finance.

 

The pace of the labor market rebound has a direct bearing on how the Fed
intends to set monetary policy.

 

In particular, the Fed has said it would not change its current $120 billion
in monthly purchases of government securities until there was "substantial
further progress" in reaching maximum employment.

 

Slower job growth pushes that moment further into the future even as
concerns increase that the continuing loose monetary policy may fuel
inflation, or drive up asset prices that will eventually return to earth.

 

New consumer price data this week is expected to stoke that debate as prices
for staple goods and commodities like lumber for home projects move higher.

 

Fed officials, however, say they expect the pressure on prices to also ease
over time, just as the difficulties in the labor market will be resolved.

 

"To the extent that supply chain congestion and other reopening frictions
are transitory, they are unlikely to generate persistently higher inflation
on their own," Brainard said, noting that some of the very forces that might
generate higher prices now - a surge in demand as people get back to normal
activity, for example - won't be repeated.

 

Government fiscal spending is also expected to fade next year.

 

"Remaining patient through the transitory surge associated with reopening
will help ensure that the underlying economic momentum that will be needed
to reach our goals as some current tailwinds shift to headwinds is not
curtailed by a premature tightening of financial conditions," she said.

 

Our Standards: The Thomson Reuters Trust Principles.

 

 

 

Inflation anxiety jolts stocks, Asia tumbles to two-month lows

An extended sell-off drove Asian shares to their lowest in seven weeks on
Wednesday as surging commodity prices and growing inflationary pressure in
the United States prompted markets to bet on earlier rate hikes and higher
bond yields globally.

 

Futures pointed to a gloomy start for European and U.S. shares with those of
Eurostoxx 50 , Germany's Dax and London's FTSE all down 0.2% each.

 

E-mini futures for the S&P 500 stumbled 0.4% while futures for the
tech-heavy Nasdaq were down 0.6%.

 

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS)
slumped 1.5% to the lowest since March 26, adding to Tuesday's 1.6% loss
with all major indices under heavy selling pressure.

 

Analysts said a combination of inflation fears and some investors cutting
their exposure to over-stretched stocks or sectors was behind the recent
downturn.

 

At 678 points, the regional index is not too far from a record high of
745.89 touched in February and is still up 3% this year so far, on top of a
19% jump in 2020 and a near 16% rise in 2019.

 

Australian stocks slipped 0.9% while South Korea's KOSPI index (.KS11)
skidded 1.4%. Japan's Nikkei (.N225) reversed early gains to be down 1.5%.
China's blue-chip share index (.CSI300) was little changed.

 

Taiwan's benchmark index (.TWII) plunged 6% from all-time highs to levels
seen in February on fears it may raise its COVID-19 alert level in coming
days, which would lead to closure of shops dealing in non-essential items as
infections rise. 

 

Analysts, however, doubted the broader equities sell-off would extend much
further in a world of easy accommodative policy and fiscal largesse.

 

"Despite the severity of the moves, we sensed limited panic in our client
conversations with many using (the) weakness as an opportunity to buy the
dip, particularly in the value orientated areas e.g. banks, energy and
insurance," JPMorgan analysts wrote in a note.

 

Overnight on Wall Street, technology stocks were among the biggest losers
though the tech-focused Nasdaq (.IXIC) reversed the bulk of its early 2%
decline over the course of the day. The Dow (.DJI) dropped 1.4% and the S&P
500 (.SPX) fell 0.9%.

 

The equity rout barely helped drive any safe haven flows into the greenback
even as futures pointed to yet another negative open for Wall Street.

 

"What is unusual about the last two days is that the equity-market angst did
not provide the U.S. dollar with a notable lift," said Alvin T. Tan, head of
Asia FX strategy at RBC Capital Markets.

 

Tan said there was no sign of "risk-off" among regional currencies either
with the high-carry Indian rupees and Indonesia rupiah largely holding their
ground.

 

"Still, it is not yet obvious if this signifies a new market paradigm. As
they say, one swallow does not make a summer," Tan added.

 

All eyes are now on the U.S. consumer price index report to be released by
the U.S. Labor Department on Wednesday with market-based measures of
inflation expectations having moved higher , .

 

"Prices are definitely on the increase and this is evident across a wide
range of sectors and geographies. What is less clear is the longevity of the
increase in prices," ANZ analysts wrote in a note.

 

Treasury yields have remained stuck to a tight range. The yield on benchmark
10-year Treasuries drifted lower to 1.6217%, a far cry from the 2% level
seen in before the coronavirus pandemic.

 

The U.S. Federal Reserve expects higher inflation though officials have
pointed to transient factors and base effects for the temporary rise.

 

"The upshot is the Fed remains far away from achieving its aim of average
inflation of 2% per year. The Fed's ultra-accommodative monetary policy is
part of the reason why we consider the USD downtrend is intact," said
Commonwealth Bank of Australia analyst Carol Kong.

 

The dollar was up 0.2% against the Japanese yen at 108.84 as it meandered in
a narrow 107-110 band.

 

The dollar index , which measures the greenback against six major
currencies, was a shade higher at 90.335, after touching a two-month low of
89.979.

 

The currencies of major natural resource suppliers such as Canada have been
buoyant amid rising commodity prices.

 

The loonie held near a 3-1/2-year high of C$1.2078.

 

The Australian dollar , another proxy for commodity prices, was not far from
a 10-week high of $0.7891 struck on Monday. The Aussie, which is also played
as a liquid proxy for risk, did falter in afternoon Asian trading to
$0.7790.

 

Oil prices were higher with U.S. crude rising 13 cents at $65.41 a barrel.
Brent crude slipped 10 cents to $68.65 per barrel.

 

Spot gold was off slightly at $1,829 an ounce.

 

In cryptocurrencies, ether hit a fresh record high touched on Monday to be
at $4,349.44. The value of the second-biggest digital token has surged over
5.5 times so far this year.

 

Our Standards: The Thomson Reuters Trust Principles.

 

 

 

SoftBank reports $37 bln Vision Fund profit on Coupang

SoftBank Group Corp on Wednesday reported a 4.027 trillion yen ($36.99
billion) fourth-quarter profit at its Vision Fund unit after booking a gain
on investment Coupang , underscoring its recovery a year after a record
loss.

 

"It's clearly validation of Masa's thesis," Navneet Govil, Vision Fund's
chief financial officer, told Reuters in an interview, referring to
Masayoshi Son, the company founder and CEO.

 

Group net profit was 4.99trillion yen in the year ended March. That compares
with an 962 billion yen loss a year earlier after teetering tech bets
depressed the value of its portfolio.

 

Market enthusiasm for tech stocks drove the public listing of
SoftBank-backed e-commerce firm Coupang and used-car trading platform Auto1
Group (AG1G.DE) and the rising share price of ride-hailing firm Uber
(UBER.N) during the quarter.

 

Much of Vision Fund's gain is on paper with the value of the portfolio
locked up in the stock market amid concern over frothy valuations and a boom
in special purpose acquisition vehicles (SPACs) which has drawn regulatory
scrutiny.

 

The total fair value of the first $100 billion Vision Fund and the smaller
second fund was $154 billion at the end of March, with SoftBank distributing
$22.3 billion to limited partners.

 

SoftBank has hiked its committed capital in the second fund to $30 billion
from $10 billion, reflecting the breadth of investment opportunities, Govil
said.

 

Two of SoftBank's highest profile bets, space sharing firm WeWork and
ride-hailing firm Grab, have outlined plans to list via SPAC mergers, with
Vision Fund reportedly in talks to use its own such vehicle to list
portfolio company Mapbox.

 

SoftBank has exhausted much of the $2.5 trillion buyback programme launched
last year, with shares hitting two-decade highs in March before slipping in
line with weakness in U.S. tech stocks.

 

Investors' attention is focused on whether other portfolio companies like
ride-hailing firm Didi and TikTok owner Bytedance can engineer their own
listings and on any further price weakness which could crimp profit in the
current financial year.

 

Those companies have strong revenue growth, healthy market share and a clear
path to profitability, Govil said.

 

The group's trading arm, SB Northstar, is expanding dealmaking this week
leading a $1 billion investment in acquisitive e-commerce firm THG (THG.L). 

 

($1 = 108.8600 yen)

 

Our Standards: The Thomson Reuters Trust Principles.

 

 

 

Chesapeake Energy posts profit after bankruptcy exit, declares dividend

Chesapeake Energy Corp (CHK.O) on Tuesday reported a quarterly profit of
$295 million in its first earnings after emerging from bankruptcy in
February.

 

Once the second-largest U.S. natural gas producer, the company filed for
court protection last June, saddled with more than $9 billion debt from
overspending on assets and a sudden decline in oil prices and demand from
the pandemic.

 

Chesapeake on Tuesday also declared an annual dividend on its common shares
of $1.375 per share. The first quarterly dividend will be paid on June 10.

 

Shares of the company were up about 5% at $51.50 in extended trade.

 

The company expects 2021 production to be between 410,000 barrels of oil
equivalent per day (boepd) and 420,00 boepd, with total capital expenditure
ranging between $670 million and $740 million.

 

Chesapeake said it achieved an average net production rate of about 436,000
boepd during the first quarter.

 

Total production levels in 2022 is expected to remain flat to 2021, the
company added, with natural gas increasing to about 85% of the total
production mix for 2022.

 

Chesapeake is currently operating seven rigs across its portfolio, with
three rigs in Appalachia, three rigs in Haynesville and one rig in South
Texas.

 

Our Standards: The Thomson Reuters Trust Principles.

 

 

 

Germany's Merck sees boost from labs supplies earnings

Germany's Merck (MRCG.DE) on Wednesday said its Life Science business, a
leading maker of biotech lab supplies and gear, saw core earnings jump more
than 43% in the first quarter, driven by the pharma industry's efforts to
fight the coronavirus pandemic.

 

Adjusted earnings before interest, tax, depreciation and amortization at the
division rose to 793 million euros ($961 million).

 

The company, which also makes pharmaceuticals and specialty chemicals, on
May 4 reported better-than-expected quarterly earnings for the group ahead
of schedule.

 

At the time it said it expected 2021 adjusted earnings before interest, tax,
depreciation and amortization (EBITDA) of 5.4-5.8 billion euros, up from 5.2
billion last year. It reaffirmed that guidance on Wednesday.

 

($1 = 0.8249 euros)

 

 

 

Toyota expects profit rebound, shrugs off pandemic slump and chip shortage

Toyota Motor Corp (7203.T) said on Wednesday it expects operating profit to
grow by 14% to 2.50 trillion yen ($23 billion) this year as it shrugs off a
coronavirus sales slump and a chip shortage that has hindered other car
makers.

 

The world's biggest automaker by vehicle sales expects renewed demand in the
United States, its biggest market, to drive that recovery and forecast
overall sales to grow 6.4% to 10.55 million vehicles for the year.

 

"Due to the spread of COVID-19 in each region, sales volume declined
significantly in the 1st half of the fiscal year. But in the 2nd half of the
fiscal year, sales volume increased in many regions compared to the previous
fiscal year," CFO Kenta Kon told a press briefing.

 

Toyota shares reversed course to rise 2.1% after the results on Wednesday,
contrasting with a 10% tumble for smaller rival Nissan (7201.T) whose
guidance disappointed investors.

 

Toyota surprised rivals and investors last quarter when it said its output
would not be disrupted significantly by ongoing chip shortages even as
Volkswagen (VOWG_p.DE), General Motors (GM.N), Ford (F.N), Honda (7267.T)
and Stellantis (STLA.MI), among others, have been forced to slow or suspend
some production. 

 

The global auto industry has been grappling with that chip shortage since
late last year, which was worsened in recent months by a fire at a chip
plant in Japan and blackouts in Texas where a number of chipmakers have
factories.

 

Analysts have said Toyota has so far been largely unscathed likely due to
its chip stockpiling policy.

 

The maker of the RAV4 SUV crossover and Prius hybrid almost doubled its
fourth-quarter operating profit to 689.8 billion yen, beating an estimate of
641.5 billion yen from 10 analysts compiled by Refinitiv. The profit was
369.9 billion yen in the same period a year earlier.

 

 

Its forecast of 2.50 trillion yen for the year that began on April 1,
however, was lower than the 2.65 trillion yen average profit forecast from
24 analysts compiled by Refinitiv.

 

Nissan said on Tuesday it expects to break even this business year, defying
expectations for a return to profitability, as the global chip shortage and
commodity price hike curb the car maker's recovery from a record annual
operating loss. 

 

Japan's second-biggest automaker Honda (7267.T), which is due to report
annual results on Friday, said in February it expects a 520 billion yen
profit for the year that ended in March.

 

($1 = 108.8500 yen)

 

Our Standards: The Thomson Reuters Trust Principles.

 

 

 

Nigeria: Multi-Million Naira Bridge Collapses a Week After Construction in
Kogi

The multi-million Naira Ozuma bridge constructed by the administration of
Governor Yahaya Bello in the Central Senatorial District of Kogi State has
collapsed in less than a week of its construction.

 

In a statement signed by the Director, Media and Communication of the
Peoples Democratic Party, PDP, in the state, Comrade Dayo Onibiyo, the party
said the Ozuma bridge in Okengwe, Okene was alleged to have been constructed
with substandard materials that gulped several millions of naira.

 

He said this is another wasteful scheme better described as a conduit pipe
that had exposed road users' lives to unnecessary dangers.

 

"We, therefore, advise Yahaya Bello to borrow a leave from the PDP in the
state on how it successfully completed the notorious Meme bridge and others
without exposing the lives of good people to any danger," he advised.

 

He called on the Standard Organisation of Nigeria (SON) and Nigerian Society
of Engineers (NSE) to come to the aid of the people of Kogi State to
investigate the failed bridge to avoid other impending dangers to human
lives arising from the construction of substandard projects and to ensure
that standards are complied with.

"We are afraid that the ongoing flyover under construction at Ganaja
junction, Lokoja is a heavy risk... if a mere bridge can collapse under a
week of its assumed completion by the same government," according to the
statement.

 

Reacting to the failed bridge in Ozuma, the state's commissioner for works
and housing, Engineer Abubakar Ohiere, dismissed the allegations raised by
the PDP in the state, saying it is untrue.

 

He explained that the collapsed bridge was due to the overzealous act of the
company's truck driver who violated the curing period of the project.

 

Ohiere stressed that all necessary standards were observed, saying the
collapse was not as a result of engineering failure.

 

According to him, the bridge would be reconstructed by the company.-Daily
Trust.

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2021

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


NMB

AGM

virtual

12/05/21 :  3:30pm

 


 

Africa Day

 

25/05/21

 


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:
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