Major International Business Headlines Brief::: 24 February 2022

[Bulls n Bears]

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Major International Business Headlines Brief::: 24 February 2022 

 


 

 


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

 


 

 


ü  Covid: 'We'll still ask staff to isolate despite rule change'

ü  Barclays freezes ex-boss's bonus amid Epstein links

ü  Sunak says he 'firmly believes in lower taxes' despite April increase

ü  Petrol prices hit new high amid Ukraine tensions

ü  Mini Oxford plant production halted due to chip shortage

ü  Russia's plan to fight back against Western sanctions

ü  Brazil's Petrobras smashes all-time profit record amid Brent bonanza

ü  Stocks dive, oil surges as Putin issues warning on Ukraine

ü  U.S. slaps sanctions on company building Russia's Nord Stream 2 pipeline

ü  JPMorgan cuts Russian equities to 'neutral' as Ukraine crisis worsens

ü  Oil steadies as U.S. seen unlikely to sanction Russian exports

ü  FAA issues 5G warning for Boeing 737s but says practical effects are limited

ü  HSBC boosts profitability goal on higher rates, profit doubling

ü  Biden team seeks port revival plans as it spends infrastructure cash

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 

Covid: 'We'll still ask staff to isolate despite rule change'

For small business owner Cathy Frost, the removal of all coronavirus rules in England from Thursday "seems a bit too quick".

 

Ms Frost, who runs a small independent gift and homeware shop, is one of several firms urging her staff to isolate if they test positive for Covid.

 

She also hopes to continue testing workers twice a week but is worried about the new costs for them, with tests no longer free for most people from 1 April.

 

"I feel conflicted as, while we're keen to get back to normality on the high street, we need to protect ourselves and our customers and it worries me that the rules are going so fast," she said.

 

Ms Frost is not alone. While business groups have broadly welcomed the government's latest "Living with Covid" plan after almost two years of restrictions, some firms are nervous about the changes and unions have raised concerns.

 

>From today, people with Covid will no longer be legally required to self-isolate but guidance will remain in place for those who test positive to stay at home for at least five days.

 

People in contact with someone with Covid will also no longer be advised to isolate or take daily tests and workers will no longer be required to tell their employer if they need to self-isolate.

 

Ms Frost said she felt regular testing was the "one thing that kept the virus in check".

 

She told the BBC she will continue to ask her two self-employed workers at her Ipswich-based business to isolate if they test positive, which she said was "the right thing to do" in the short term.

 

"I would not come into work [with Covid] and I would not expect my two members of staff to," she added.

 

Ms Frost explained she would make a "private agreement" with her staff if they needed to isolated to "make sure they were ok", given they would not be entitled to statutory sick pay.

 

Natalie Faulkner, owner of salon Beauty With Inn in Northampton, also wants her staff to isolate if they test positive.

 

She said she didn't think her customers would feel safe if a member of staff who had Covid was doing their hair.

 

"Our main concern will be safety and that's it," she said.

 

The salon lost £4,000 from cancelled appointments due to Omicron cases in December so Ms Faulkner said she is keen to avoid having to "suck up all the costs" from any potential cases arising in the shop.

 

The hairdresser said she was unsure how her business "would cope" with a positive test due to being unable to pay an employee to isolate, but added she planned to discuss any options with her five staff.

 

The British Independent Retailers Association (Bira) said the removal of Covid restrictions "should be positive for retail and the high street in general", but said "clear messages" for staff were needed.

 

The trade body's chief executive Andrew Goodacre added that "it always feels counter-intuitive to remove restriction when cases are so high, but we hope the science supports such moves".

 

High street cosmetics retailer Lush also announced it will pay staff who test positive to isolate and will continue with Covid safety measures in its stores.

 

Scientists have offered different opinions on restrictions being removed. Prof Sir Andrew Pollard, who helped develop the Oxford-AstraZeneca vaccine, has said that "there isn't a right or wrong answer" to when restrictions change.

 

Meanwhile, Prof Anthony Costello, professor of global health and sustainable development at UCL, had said there was a worry that "we are telling not only our population, but the world, that there is really nothing to worry about, that it's all over, when it isn't".

 

However, some business owners feel little trepidation about the change of rules.

 

Hotelier Sir Rocco Forte, chairman of Rocco Forte Hotels, said if a employee tested positive for Covid he would allow them to come into work if they felt well enough.

 

"The reality of this is we are saying Covid isn't a pandemic anymore. It's an endemic disease like flu it should be treated like flu," he told the BBC's World at One.

 

"And therefore you don't test every worker who falls ill with flu. You tell people to stay at home if they are not feeling well."

 

Hospitality has been one of the hardest-hit sectors by the pandemic, with the industry body UK Hospitality estimating restaurants, hotels and pubs have lost £115bn since March 2020.

 

Matt Shiells-Jones, a hotel manager in Manchester, said he welcomed the removal of mandatory isolation, but added he understood concerns still existed.

 

He said his business was allowing staff to "self-determine" over whether they isolated or not under its sickness policy, which gives staff the option to accumulate time in lieu, used banked overtime, take holiday pay, or get statutory sick pay.

 

"Sickness is a part of running a business with people and it is ultimately my responsibility to be prepared for that; ultimately if I cant be prepared for this after all this time operating under measures, then I haven't learnt any lessons or made the changes needed to be a valuable employer post-Covid," he said.

 

But it's not just employers who are grappling with the new Covid conundrum, workers are as well.

 

Sarah, who works in financial services, is apprehensive over the removal of all restrictions as she takes immunosuppressant medication for multiple sclerosis.

 

While her boss has allowed her to continue to work from home for the foreseeable future, she said she is worries of the wider implications for vulnerable people.

 

Once the isolation rules have ended, Sarah, who has received four jabs, said she planned to avoid crowded places such as restaurants and concerts because she feels that she "will now be excluded" from these places she used to love.

 

"It creates a two-tier society of the vulnerable and everyone else so I think it's a big setback for equality," she added.

 

Sarah's concern is one which has been raised by the Trades Union Congress, who has said people should not be forced into making a "terrible choice" over going into work with Covid or risking losing income by self-isolating at home.

 

The union has also raised concerns that lower-paid staff will face the toughest choice when deciding whether to isolate, with up to two million workers not qualifying for sick pay due to the amount they earn.-BBC

 

 

 

 

Barclays freezes ex-boss's bonus amid Epstein links

Barclays has suspended millions of pounds in bonus share awards to former boss Jes Staley amid an investigation by regulators into his relationship with Jeffrey Epstein.

 

Mr Staley left the bank last November after watchdogs began a probe into his links to the dead sex trafficker.

 

Mr Staley is contesting the City regulators' findings.

 

But Barclays has announced that in the meantime it is freezing long-term bonus and share payments for Mr Staley.

 

Mr Staley's share awards that have been suspended are worth nearly £22m based on Barclays' share price on Wednesday.

 

The bank said in a statement: "In line with its normal procedures, the committee exercised its discretion to suspend the vesting of all of Mr Staley's unvested awards, pending further developments in respect of the regulatory and legal proceedings related to the ongoing Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA) investigation regarding Mr Staley."

 

Regulators are investigating whether Mr Staley's relationship with Epstein was closer than he described to the board.

 

According to Barclays latest annual report, Mr Staley holds 9 million unvested shares - stock that has been promised but not yet paid out - which are subject to performance targets, and an additional 2.1 million shares not subject to targets.

 

Based on Barclays' latest share price, Mr Staley's package is worth £21.9m.

 

He also holds an additional 6.7 million shares that he owns outright. These are worth £13.1m.

 

Barclays revealed the move as it published its full-year results which showed a sharp rise in pre-tax profits to £8.4bn for 2021 compared to £3.1bn the previous year. Barclays' share price rose by 3.3% to 196p in early trading.

 

Profits were lifted by the release of £700m that Barclays had set aside to cover anticipated losses on Covid loans. That compares to £4.8bn the bank set aside in 2020 for Covid loan losses.

 

Mr Staley's relationship with Epstein can be traced back to US investment bank JP Morgan where the former Barclays boss used to work and where the sex offender was a client.

 

Mr Staley has characterised his relationship with Epstein as professional. He said that his contact with Epstein - who took his own life in 2019 - began to "taper off" around 2013 when he left JP Morgan.

 

Mr Staley had already admitted he maintained contact with Epstein for about seven years after his 2008 conviction for solicitation of prostitution involving a minor.

 

Regulators concerned

It is also known that Mr Staley visited Little St James, a retreat owned by Epstein in the US Virgin Islands in 2015, months before taking the top job at Barclays.

 

The investigation by the FCA and the PRA began in 2019 after JP Morgan handed over 1,200 emails - initially to US regulators - sent between Mr Staley and Epstein mostly around 2008 to 2012, according to the Financial Times.

 

Regulators were concerned that the emails showed a closer relationship between the two men than was characterised in a previous letter from Barclays which had described it as professional.

 

Mr Staley resigned late last year after the regulators sent their conclusions of the investigation to Barclays' board.

 

He said he was "shell-shocked, angry and upset" at the findings and that he would contest them.

 

At the time, Barclays said: "It should be noted that the investigation makes no findings that Mr Staley saw, or was aware of, any of Epstein's alleged crimes, which was the central question underpinning Barclays' support for Mr Staley following the arrest of Mr Epstein in the summer of 2019."

 

In its annual report for 2021, Barclays chairman Nigel Higgins praised Mr Staley, stating that the bank's performance for the year "was in no small way a credit to Jes Staley... and the team he assembled".

 

He said Barclays is "grateful for the hard work that he put in for the company".-BBC

 

 

 

Sunak says he 'firmly believes in lower taxes' despite April increase

Chancellor Rishi Sunak will pledge to "deliver a low tax, higher growth economy" amid criticism from MPs over rises to National Insurance.

 

Mr Sunak will tell an audience at the Bayes Business School on Thursday that he will cut taxes "sustainably".

 

It comes as National Insurance rates are set to rise from 1 April to help fund health and social care.

 

The rise means employees, employers and the self-employed will all pay 1.25p more in the pound.

 

"I am going to deliver a lower tax economy but I am going to do so in a responsible way, and in a way that tackles our long term challenges," Mr Sunak will say in his speech.

 

"I firmly believe in lower taxes."

 

 

However, the chancellor will also argue that taxes should not be cut if spending plans are unfunded.

 

Shadow chancellor Rachel Reeves said the Conservative Party was "now the party of high tax".

 

"The chancellor may say he 'believes' in low taxes in his lecture - but the hard facts are that Sunak has hit households and business with 15 tax rises in two years in post - with an unfair National Insurance rise down the line - and he has raised the most tax on average per budget than any chancellor in the last 50 years," Ms Reeves said.

 

Her comments come as Labour Party leader Sir Keir Starmer is to deliver a speech in Huddersfield outlining how his party would help "put money back in people's pockets" and end insecure employment.

 

Sir Keir will say that a Labour government would end the "economic fatalism" of the Conservatives and ensure the technological revolution "works for all".

 

"We will build a new economy of security, where stable employment will be the bedrock of a better future for the next generation," he will say.

 

Chart showing how much extra employees will pay as a result of NI changes

Mr Sunak will say he is "disheartened when I hear the flippant claim that 'tax cuts always pay for themselves'".

 

"They do not," he will add. "Cutting tax sustainably requires hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere."

 

In Mr Sunak's two years in his role he has overseen hundreds of billions in Covid-related government spending through furlough payments, business grants and testing.

 

He has also been at the helm as taxation as a share of the economy has risen to its highest level since the 1950s.

 

Under the government's plans, employees, employers and the self-employed will all pay 1.25p more in the pound for National Insurance from April for a year.

 

After that, the extra tax will be collected as a new Health and Social Care Levy.

 

The changes will see an employee on £20,000 a year pay an extra £89 in tax, while someone on £50,000 will pay £464 more.

 

The Liberal Democrats and some backbench Tory MPs have called for the chancellor to scrap the incoming NI hike to ease the financial burden on households and businesses at a time of rising costs.

 

In the speech Mr Sunak will also set out his priorities to increase the UK's economic growth, and will argue that "what government does is far less important than creating the conditions for private businesses and individuals to thrive".

 

Tony Danker, director general of the business group the CBI, said setting out how firms could "achieve sustainable growth for the long term" was "vital" at a period of volatility in the economy.

 

"Government enabling firms to invest, thrive and deliver prosperity is absolutely the right direction of travel," he added.

 

Mr Danker has called for a permanent "super-deduction" tax break to boost business investment in the UK.

 

The super-deduction allowance currently gives businesses investing in certain types of equipment, like machinery, a much higher tax reduction than usual but will expire in March next year.-BBC

 

 

 

Petrol prices hit new high amid Ukraine tensions

Average UK petrol and diesel prices have hit new highs as the Ukraine crisis continues to affect oil prices, the RAC has said.

 

On Wednesday, petrol prices rose to 149.30p per litre amid warnings it could soon pass £1.50.

 

Oil prices jumped after Russia ordered troops into two Ukrainian regions this week to "maintain peace".

 

Wholesale gas prices also continue to climb, threatening to further push up heating bills.

 

Russia is the world's second-largest oil exporter after Saudi Arabia and the top producer of natural gas globally.

 

The UK only gets 6% of its crude oil and 5% of its gas from Russia, but there are concerns sanctions could constrict supplies and drive up prices worldwide.

 

UK consumers are already paying a high price for energy and fuel, with demand surging following the easing of Covid restrictions.

 

Former National Grid boss Steve Holliday told the BBC's Today programme: "For the UK, it's a price issue, it's not a security supply issue.

 

"We already know that we've got consumers that are already experiencing huge jumps in their energy bills, so this is really very unwelcome."

 

The price of Brent crude oil, an international benchmark, hit a seven-year high of more than $99 (£73) on Tuesday before falling back on Wednesday.

 

However, fuel pump prices lag behind oil prices and the RAC has warned petrol could go higher than £1.50 a litre in the coming days.

 

Diesel has also risen, hitting 152.68p a litre on Wednesday.

 

Matt Williams, 30, runs Williams & Yates, a removals company that operates across the UK and Europe with a fleet of 11 vans and lorries.

 

Rising fuel costs have forced it to put up its prices and he fears it might impact the business in the months ahead.

 

"Unfortunately, we do have to pass [these costs] onto the customer," he told the BBC. "All the competition has to do the same, but I think it does make some consumers reconsider their moving options."

 

The firm offers basic and bespoke services, and he expects more customers to choose the cheaper option in the coming months rather than "paying loads of money".

 

Gordon Balmer, executive director of the Petrol Retailers Association, a trade body for independent UK forecourts, said whether fuel prices continue to rise depends on a number of factors.

 

"If [conflict] really sparks off in Ukraine, we could prices escalating dramatically," he said.

 

However, he added that the US is in the process of negotiating a nuclear deal with Iran which could see more oil come onto the market.

 

Gas prices

UK wholesale gas prices also jumped following Germany's decision on Tuesday to halt the final approval of Nord Stream 2 - a new gas pipeline connecting the country with Russia.

 

That decision drew a swift response from Dmitry Medvedev, Russia's former president and now deputy chairman of its Security Council.

 

German Chancellor Olaf Scholz has issued an order to halt the process of certifying the Nord Stream 2 gas pipeline. Well. Welcome to the brave new world where Europeans are very soon going to pay €2.000 for 1.000 cubic meters of natural gas!

 

— Dmitry Medvedev (@MedvedevRussiaE) February 22, 2022

The BBC is not responsible for the content of external sites.

View original tweet on Twitter

"Well, welcome to the brave new world where Europeans are very soon going to pay €2,000 for 1,000 cubic meters of natural gas!" he tweeted - suggesting prices were set to double.

 

UK gas prices for delivery in March rose by 13.5p to 200p per therm, though that is still much lower than the highs of December last year, when it peaked at over 400p per therm.

 

Western nations and Japan on Tuesday punished Russia with new sanctions for ordering troops into separatist regions of eastern Ukraine.

 

The UK said it was ready to impose further sanctions in the event of a full invasion of Ukraine, targeting more Russian banks and individuals as well as companies in the energy, defence, technology and chemical sectors.

 

After a volatile trading session on Tuesday, global stock markets climbed on Wednesday before falling back again.

 

Towards the end of the day, the UK's FTSE 100 was flat while France's CAC-40 and Germany's Dax had lost between 0.2% and 0.5%. The main three US indexes were all in the red.

 

'Enormous' rises

High energy prices in the UK have played a major part in pushing up the cost of living recently, while wages have lagged behind price rises.

 

Inflation currently stands at 5.5% - its highest level in 30 years.

 

Speaking to the Treasury Select Committee of MPs on Wednesday, Jonathan Haskel, a member of the Bank of England's Monetary Policy Committee, said energy prices accounted for nearly half of the rise in inflation over the last year.

 

That is likely to rise to 70% in the first three months of 2022, according to Bank of England governor Andrew Bailey.

 

The Bank deputy governor, Ben Broadbent, said: "If you look at the increase in energy bills this year, it is just about twice as big as any single year in the 1970s - it is enormous."

 

The Bank expects inflation to hit 7% in spring when the price cap on household energy bills is raised. This is far above the Bank of England's 2% target.

 

>From April, about 18 million homes on standard tariffs will see an average increase of £693. Meanwhile, 4.5 million prepayment customers can expect their energy costs to rise by an average £708.

 

Consumers are also being squeezed by rising prices on goods as many companies pass on higher costs such as fuel, shipping and wages to their customers.

 

As well as the rise in energy prices in April, staff, companies and the self-employed will also have to pay an extra 1.25p on the pound in National Insurance. The rise is being introduced by the government to fund health and social care.-BBC

 

 

 

Mini Oxford plant production halted due to chip shortage

Production at Oxford's BMW Mini plant has been suspended for a week due to a global shortage of computer chips.

 

BMW said it was standing down production at its Cowley factory from Monday to Friday and was "monitoring the situation very closely".

 

It comes after the firm suspended its production for three days in April over the shortage.

 

Manufacturers around the world have been struggling to secure supplies of semiconductors.

 

Chips are vital to modern cars, with features including touchscreen controls, automatic emergency brakes, reversing cameras, fuel efficiency equipment and airbag deployment systems all relying on them.

 

In a statement BMW said: "As a result of the global semiconductor shortage, an issue that has affected the entire automotive industry for the last year, Plant Oxford is making some short-term adjustments to its production schedule.

 

"Plant Oxford is standing down five days of production - Monday 21 February to Friday 25 February inclusive, for all shifts.

 

"We are monitoring the situation very closely and are in constant communication with our associates and suppliers."

 

The firm has been approached for further comment.

 

Around 3,500 workers are based at the plant which normally produces about 5,000 cars a week.

 

Reacting to the announcement, Oxford East MP Anneliese Dodds said: "I am pleased to hear that BMW is working closely with the union to manage this situation, and that no employees will be going without pay as a result."

 

Car makers around the world have been impacted by the chip shortage, along with supply chain disruptions, Covid-19 restrictions and rising prices of raw materials.

 

Motor industry giants including Toyota, General Motors, Ford, Nissan, Daimler, BMW and Renault, have all been forced to scale back production in recent months as they struggled to secure enough semiconductors.

 

In February, Jaguar Land Rover (JLR) said semiconductor supplies constrained sales and it expected the chip shortage to continue throughout this year.-BBC

 

 

 

 

Russia's plan to fight back against Western sanctions

Russia has spent years preparing for this moment.

 

In 2014, when Russian troops moved into Crimea, annexing part of Ukraine, it provoked a first round of international sanctions. And that taught Moscow an important lesson.

 

Since then it's been setting up defences, moving away from relying on the dollar, and trying to sanction-proof the Russian economy.

 

President Putin may be betting that he can withstand sanctions for longer than the West assumes.

 

International reserves

By January this year, the government's international reserves, in foreign exchange and gold, were at record levels - worth more than $630bn (£464bn).

 

International Reserves

That is the fourth highest amount of such reserves in the world - and it could be used to help prop up Russia's currency, the rouble, for some considerable time.

 

 

Notably only about 16% of Russia's foreign exchange is now actually held in dollars, down from 40% five years ago. About 13% is now held in Chinese renminbi.

 

All of this is designed to protect Russia as much as possible from American-led sanctions.

 

There have also been other changes in the structure of the Russian economy.

 

Over time it has reduced its reliance on foreign loans and investments, and has been actively seeking new trade opportunities away from Western markets.

 

China is a big part of that strategy.

 

The government in Moscow has also taken initial steps to create its own system of international payments, in case it gets cut off from Swift - a global financial messaging service which is overseen by the major Western central banks.

 

And it has been cutting the size of its budget - prioritising stability over growth.

 

That has meant the Russian economy has grown at an average of less than 1% a year over the past decade. But it may have become more self-reliant in the process.

 

"What Russia is doing - in effect - is building almost an alternative financial system so that it can withstand some of the shocks of sanctions that the West might impose," says Dr Rebecca Harding, chief executive of Coriolis Technologies.

 

"But there will be some short-term pain in all of this, and the vulnerabilities in the Russian system are that they have a web spread very thinly across the globe."

 

Strategic interests

It could certainly be a dangerous game for Moscow. Sanctions on major Russian banks, particularly state banks, would hurt.

 

But President Putin may be calculating that the US, the UK and the EU have slightly different strategic interests to consider.

 

It is obviously easier for some countries to impose sanctions on the Russian oil and gas industry than it is for others. The EU, for example, gets 40% of its natural gas supplies from Russia. The UK gets about 3%.

 

Germany's decision to put the Nord Stream 2 gas pipeline on hold, therefore, is damaging for Russia but will have a direct impact on energy prices in western Europe as well.

 

Targeting oligarchs

So, can targeting high net worth individuals have a bigger impact than sanctions imposed on the whole economy?

 

President Putin doesn't hold money and other assets abroad in his own name for obvious reasons. But a network of ultra-rich supporters do it for him.

 

"There have been some sanctions against oligarchs since 2014, but they have not gone far enough. Change will only happen if they are much more targeted against them," says Prof Tomila Lankina of the London School of Economics.

 

Russian armoured vehicles stand on the road in Rostov region, Russia

IMAGE SOURCE,EPA

London is a particular focus, with its long-established network of front companies, property portfolios and political influence.

 

The UK government has now announced new sanctions against specific individuals, but the anti-corruption group Transparency International says there is about £1.5bn of Russian money invested in London property alone, much of it from funds held in offshore havens.

 

"Western governments are not just failing the Russian people by allowing this to happen, they are also failing their own people," Prof Lankina says.

 

Holding back

Western leaders have made it clear that the sanctions announced in the last few days are only the first of several potential steps. The pressure can be ratcheted up considerably.

 

But will it be enough to force Russia to change course?

 

There's no question that sanctions can have an impact, but a package as broad as this has never been imposed on an economy as large as Russia.

 

And to make it effective, the West would have to be in it for the long haul.-BBC

 

 

 

Brazil's Petrobras smashes all-time profit record amid Brent bonanza

(Reuters) - Brazilian state-run oil company Petrobras smashed its all-time record for annual profits and dividend payouts in 2021, as sky-high Brent prices and a laser focus on the firm's exploration and production business continued to bear fruit.

 

In a Wednesday evening securities filing, the firm, formally Petroleo Brasileiro SA , posted a yearly net income of 106.7 billion reais ($21.3 billion). That was more than double Petrobras' previous record, set in 2019, when the firm posted a profit of 40.1 billion reais, which was about $9.2 billion at the contemporaneous exchange rate.

 

It was also well above the Refinitiv consensus estimate of 74.3 billion reais, thanks in part to significant one-off boosts, including asset divestments, impairment reversions and a victory in a major tax dispute. "Recurring" annual profit came in at 83.3 billion reais.

 

Shortly before releasing its results, Petrobras also announced that it was proposing a supplementary dividend of 2.861 reais per share at the next shareholders' meeting in April. If approved as expected, dividends relative to the company's 2021 performance will come to 7.773 reais per share, or 101.4 billion reais in total, a figure the company described as an all-time record.

 

The dividends in particular are likely to please the market. Analysts and investors have begun to pay close attention to the firm's dividend payouts, which were paused for years as the company worked to whittle down its debt load.

 

Yet there are clouds ahead, and Petrobras' results may speed the arrival of the storm.

 

Brazil is gearing up for a contentious presidential election in October. Current President Jair Bolsonaro has occasionally complained of high domestic fuel prices and expressed displeasure at dividend payouts. But over the last year, tangible political interference at the firm has been more subdued than many market observers had anticipated.

 

His main rival, leftist Luiz Inacio Lula da Silva, has promised a shake-up if elected, saying it is Brazilians, rather than international investors, who should be benefiting from Petrobras' performance.

 

The Thomson Reuters Trust Principles.

 

 

 

Stocks dive, oil surges as Putin issues warning on Ukraine

(Reuters) - Global stocks and U.S. bond yields dived on Thursday, while the dollar, gold and oil prices rocketed higher after Russian President Vladimir Putin issued a blistering warning against Ukraine and authorised special military operations in Ukraine's Donbass region.

 

Several explosions were heard in the Ukrainian capital, Kyiv, before dawn, after an initial series of sounds similar to artillery fire, a Reuters witness reported, shortly after Russia announced the military operation.

 

Putin called on Ukrainian soldiers to immediately lay down their weapons and go home, and said the responsibility for any bloodshed will be on the conscience "of the Ukrainian regime" according to comments carried by Russian news agencies. read more

 

The comments worsened an already grim selloff in Asian trade, pushing MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) down more than 3%, with Australian shares (.AXJO) off more than 3% and Chinese blue chips (.CSI300) down 1.3%.

 

Tokyo's Nikkei (.N225) was 2.4% lower. U.S. stock market futures were also down sharply, with S&P 500 e-minis down 2% and Nasdaq futures 2.5% weaker.

 

"The markets figure Russia will now do what ever it wants given how weak the sanctions were, and are pricing in an invasion," said Ray Attrill, head of FX strategy at National Australia Bank.

 

"The real worry is that Europe is cut off from Russian gas. The EU couldn't cope with such a supply shock and would have to rein in demand, which would be economically debilitating," he added. "Higher energy prices are also where the rubber hits the road as far as global economic growth is concerned, that's got to be bad for risk sentiment."

 

As one of the worst post-Cold War security crises in Europe for decades worsens, U.S. Secretary of State Antony Blinken said he believed Russia will invade Ukraine within hours after separatists on Wednesday asked for Moscow's help to repel "aggression" and as explosions rocked the breakaway eastern city of Donetsk. read more

 

Asset markets have seen a sharp increase in volatility over the deepening crisis, with oil racing to near $100 per barrel and the Cboe Volatility Index, known as Wall Street's fear gauge, up more than 55% over the past nine days. (.VIX)

 

Brent crude futures , which seesawed between sharp rises and falls on Wednesday, resumed a climb toward $100 a barrel on Thursday, adding 1.22% to $97.98. West Texas Intermediate rose 1.32% to $93.32 per barrel.

 

Spot gold jumped more than 1.2% to $1,930.86, its highest since early January 2021.

 

Putin's comments torpedoed U.S. stocks took a beating, with the Dow Jones Industrial Average (.DJI) down 1.38% to barely above the level that would have confirmed a correction. The MSCI World Index (.MIWD00000PUS), a leading gauge of equity markets globally, skidded to its lowest level since April 2021.

 

Investors have also been grappling with the prospect of imminent policy tightening by the U.S. Federal Reserve aimed at combating surging inflation, which NAB analysts say could be exacerbated by a commodities supply shock.

 

While expectations of an aggressive 50-basis-point hike at the Fed's March meeting have eased, Fed funds futures continue to point to at least six rate hikes this year. FEDWATCH

 

All the same, immediate geopolitical threats weighed on U.S. yields on Thursday, pushing the benchmark U.S. 10-year yield down sharply to 1.9165% from its U.S. close of 1.977% on Wednesday. The 2-year yield also fell, to 1.5358% from a close of 1.6%.

 

The global flight to safety boosted the dollar, which jumped 0.267 against a basket of other major trading partners to 96.444.

 

The euro was down 0.38% on the day at $1.1266.

 

The Russian rouble turned lower, slipping 0.3% against the dollar after falling more than 3% on Wednesday.

 

The sell-off spread to cryptocurrency markets, pushing bitcoin below $36,000 and to a one-month low of $35,197.44.

 

"Markets are now more adequately pricing in the risk of something horrific happening. That combined with the uncertainty is a horrible environment to be in. No one wants risk exposure when that's floating around," said Rob Carnell, head of Asia Pacific research at ING.

 

The Thomson Reuters Trust Principles.

 

 

U.S. slaps sanctions on company building Russia's Nord Stream 2 pipeline

(Reuters) - The United States on Wednesday imposed sanctions on the company in charge of building Russia's Nord Stream 2 gas pipeline, expanding penalties on Moscow after it recognized two breakaway regions in eastern Ukraine.

 

The sanctions, which target the Nord Stream 2 AG company and its CEO, Matthias Warnig, add to pressure on the Baltic Sea project that was designed to double the gas flow capacity from Russia to Germany.

 

Europe's most divisive energy project, Nord Stream 2 has not begun operations pending certification by Germany and the European Union.

 

Germany on Tuesday halted the pipeline, worth $11 billion, citing Russia's actions toward Ukraine. The United States and the EU worry the pipeline will increase Europe's dependence on Russian energy supplies and deny transit fees to Ukraine, host to another Russian gas pipeline.

 

In a statement on Wednesday, U.S. President Joe Biden said his administration had been closely coordinating Nord Stream 2 action with Germany, adding: "Today, I have directed my administration to impose sanctions on Nord Stream 2 AG and its corporate officers."

 

Biden added: "These steps are another piece of our initial tranche of sanctions in response to Russia's actions in Ukraine. As I have made clear, we will not hesitate to take further steps if Russia continues to escalate."

 

The U.S. Treasury Department issued a general license authorizing the "wind down" of transactions with Nord Stream 2 AG until March 2.

 

The sanctions did not affect Gerhard Schroeder, a former German chancellor and a close friend of Russian President Vladimir Putin's who has headed the shareholders committee of Nord Stream since 2005.

 

Nord Stream 2 AG is a registered Swiss firm whose parent company is the Russian state-owned gas giant Gazprom . Gazprom owns the entire pipeline but paid half the costs, with the rest shared by Shell, Austria's OMV (OMVV.VI), France's Engie and Germany's Uniper (UN01.DE) and Wintershall DEA [RIC:RIC:WINT.UL].

 

The Thomson Reuters Trust Principles.

 

 

 

JPMorgan cuts Russian equities to 'neutral' as Ukraine crisis worsens

(Reuters) - JPMorgan analysts downgraded Russian equities to "neutral" from "overweight" on Tuesday, after Moscow sent troops to two breakaway regions in eastern Ukraine after recognising them as independent.

 

President Vladimir Putin's announcement on Monday drew international condemnation. The United States and its European allies are poised to announce sanctions. Britain also imposed sanctions and German chancellor Olaf Scholz halted the certification of the Russia-led Nord Stream 2 gas pipeline. read more

 

JPM analysts expect further declines in the Russian stock market in the near term.

 

Russia's dollar-denominated RTS share index (.IRTS) hit its lowest since 2020 in early trading and was down 1.7% at 1316 GMT, while the rouble-based MOEX index (.IMOEX) was down 1.8%%.

 

"With uncertainty as high/valuations as low as we can remember and a declining investor appetite to accept Russian risk – either long or short – we move to N (neutral) on Russian within our CEEMEA allocation," analyst Elena Jouronova said in a note.

 

A fall in dividends poses further downside risk. Russia may not pay out to foreign shareholders when U.S. policy is explicitly designed to isolate Russia from markets, JPM added.

 

The crisis in Ukraine is changing from a background risk to "a significant market driver in coming weeks", JPMorgan analysts wrote in a separate note on Tuesday.

 

"For the market, the possibility of defusing and de-escalating the crisis without action has been taken off the table."

 

As investors become more risk-averse, they will deleverage out of the most crowded positions, JPM said.

 

Fixed income in emerging markets will be affected by a move higher in energy prices and by some emerging market central banks taking a more dovish stance in response to the uncertainty and hit to growth caused by the tensions, the analysts said.

 

The Thomson Reuters Trust Principles.

 

 

 

Oil steadies as U.S. seen unlikely to sanction Russian exports

(Reuters) - Oil prices steadied on Wednesday, holding below 2014 highs, as U.S. officials indicated escalation between Russia and Ukraine was unlikely to result in sanctions on energy supplies from Russia, one of the world's top oil producers.

 

Brent crude remained unchanged, settling at $96.84 a barrel, after hitting $99.50, its highest since September 2014 on Tuesday.

 

U.S. West Texas Intermediate (WTI) crude futures ended up 19 cents to $92.10 a barrel. On Tuesday, WTI hit $96.

 

Oil prices rose on Tuesday on fears that sanctions imposed by Western nations on Russia, after it sent troops into two breakaway regions in eastern Ukraine, could hit energy supplies.

 

Sanctions imposed by the United States, the European Union, Britain, Australia, Canada and Japan were focused on Russian banks and elites, while Germany halted certification of a gas pipeline from Russia.

 

But the United States made it clear that sanctions agreed and those which may be imposed will not target oil and gas flows. read more

 

The Biden administration is not expected to target Russia's crude oil and refined fuel sector with sanctions due to concerns about inflation and the harm it could do to its European allies, global oil markets and U.S. consumers, administration officials told Reuters. read more

 

Moscow denies planning an invasion and has described warnings as anti-Russian hysteria. But it has taken no steps to withdraw the troops deployed along Ukraine's frontiers.

 

Ukraine declared a state of emergency on Wednesday and told its citizens in Russia to flee, while Moscow began evacuating its Kyiv embassy. read more

 

Analysts expect oil prices to continue seeing support from the Russia-Ukraine crisis, with some Western countries promising more sanctions if Russia launches a full invasion.

 

"The prospect of more conflict in Ukraine should safeguard the geopolitical risk premium," said Stephen Brennock at brokerage PVM Oil.

 

The potential return of more Iranian crude to the market weighed on prices, as Tehran and world powers inch closer to reviving a nuclear agreement.

 

"Nuclear talks in Vienna are reaching a sensitive and important point," Iran's foreign minister Hossein Amirabdollahian said on Wednesday. read more

 

Yet analysts say there is little chance of Iranian crude returning to the market in the immediate future to ease current supply tightness.

 

"If a U.S.-Iran deal is reached, it will ease some of the pressure but not enough to stop oil prices inching towards triple digits," Pratibha Thaker of the Economist Intelligence Unit said.

 

U.S. crude stocks rose 6 million barrels last week while distillate stocks fell, according to market sources citing American Petroleum Institute figures late Tuesday.

 

Ahead of government data on Thursday, analysts forecast a 400,000-barrel build in crude and a drawdown in fuel stockpiles.

 

The Thomson Reuters Trust Principles.

 

 

 

FAA issues 5G warning for Boeing 737s but says practical effects are limited

(Reuters) - The Federal Aviation Administration has warned that 5G wireless operations can interfere with radio altimeters in Boeing 737s, impeding a crew's ability to safely fly or land, but FAA officials stressed the issue poses little practical effect for airlines.

 

Despite dire-sounding language in the FAA airworthiness directive issued on Wednesday about potential effects on 737 landings, it does not apply to aircraft flying into areas where the 5G environment has been rendered safe for aviation, which the FAA said includes nearly all airports.

 

The overwhelming majority of commercial airports have either established 5G wireless buffer zones around them or lack 5G operations altogether, meaning that planes landing there are protected from radio interference warned about in the FAA directive, agency officials said on Wednesday.

 

The FAA said the directive posted on Wednesday for most of Boeing's 737 aircraft is very similar to notices issued previously for 737 MAX aircraft, as well as 747, 757, 767 and 777 jetliners.

 

However unlikely as a practical matter, Wednesday's directive warns that certain airplane systems may not properly function "during approach, landings, and go-arounds" due to interference with radio altimeters from wireless broadband operations in the 3.7-3.98 GHz frequency band (5G C-Band).

 

This in turn could lead to "increased flight crew workload while on approach with the flight director, autothrottle, or autopilot engaged, which could result in reduced ability of the flight crew to maintain safe flight and landing of the airplane," the directive said.

 

The notice affects some 2,400 airplanes in the United States and about 8,300 worldwide, the FAA said.

 

A Boeing spokesman said in a statement: "we support the Airworthiness Directive, as it mandates the same guidance that Boeing provided to operators back in January".

 

Telecommunications networks are rolling out next-generation 5G systems that the FAA has previously warned could impact sensitive airplane electronics such as radio altimeters.

 

The Federal Communications Commission and the National Telecommunications and Information Administration (NITA) have vowed to improve coordination on spectrum management after a dispute over 5G aviation.

 

The spectrum rolled out in January, but only after Verizon Communications (VZ.N) and AT&T (T.N) agreed to delay deploying 5G wireless towers near airports.

 

The Thomson Reuters Trust Principles.

 

 

 

HSBC boosts profitability goal on higher rates, profit doubling

(Reuters) - HSBC (HSBA.L) brought forward its key profitability target by a year and more than doubled its annual profit as expected bad loans from the COVID-19 pandemic failed to materialise, and it pointed to rising interest rates lifting its income.

 

Like global peers, HSBC, one of Europe's largest banks, is taking advantage of lower-than-expected impairment charges as its borrowers reap the benefit of government support in markets hit by coronavirus, while economic recovery also helps firms.

 

HSBC's shares shed 3.4% in afternoon trade on Tuesday, compared to a fall of 1.4% in the benchmark FTSE index (.FTSE) as global stocks stumbled after the Ukraine crisis intensified. read more

 

"We have good momentum coming into 2022 and are confident that we can continue to execute against our strategy," Group Chief Executive Noel Quinn said in the results statement.

 

London-headquartered HSBC said it would buy back up to $1 billion of its own shares after the conclusion of an existing $2 billion buyback programme.

 

It said that if central bank interest rates rose worldwide as expected, the resulting improvement in lending margins would meet its goal of a double-digit return on equity in 2023, a year sooner than expected.

 

"Given their large Asia footprint, it will be interesting to see if the zero-COVID policy in the region will adversely impact their performance relative to their other more UK-centric London rivals in 2022," said Sudeepto Mukherjee, head of financial Services at consultancy Publicis Sapient.

 

Quinn, who has run the bank on a permanent basis for the past two years, has doubled down on Asia by moving global executives there and is investing billions of dollars in the lucrative wealth management business.

 

The lender reported pretax profits of $18.9 billion last year, up from the previous year's $8.8 billion, and just below the $19.1 billion average of 17 analyst estimates compiled by HSBC. Asia contributed 65% of the profit.

 

Analysts at Citi said HSBC's guidance for this year was largely in line with consensus, "with some downside risks to provisions and upside risks to capital return".

 

 

The bank said it took a $500 million charge for expected credit losses in the quarter, mainly due to the downturn in China's troubled commercial real estate sector.

 

HSBC expects weaker performance in its wealth management in Asia in the first quarter of 2022.

 

HONG KONG MARKET

 

HSBC CFO Ewen Stevenson told Reuters the wealth management business would be affected by the weakness in global markets and closures of bank branches in Hong Kong, but the bank expected a bounceback later this year.

 

While Asia and most global economies open up, Hong Kong - HSBC's biggest market - is tightening pandemic curbs as it battles a growing outbreak of COVID-19, stoking worries about the economic impact. read more

 

The HSBC results come after Standard Chartered (STAN.L) raised its core profitability goals as it bets on inflation-battling rate increases to boost lending. read more

 

HSBC's London-listed shares have gained 29% over the past year, versus a rise of 16% in StanChart and a surge of 25% in Barclays (BARC.L).

 

The bank reported revenue slipped 2% in 2021 on low global interest rates and falling income in its markets business, but said rising rates this year and beyond should help reverse the decline.

 

"After absorbing the impact of low interest rates for some time, we believe we have turned the corner on revenue," Quinn said.

 

HSBC said it released $900 million in cash it had put aside in case pandemic-related bad loans spiked, as opposed to the corresponding time a year earlier, when it took a charge of $8.8 billion against expected losses.

 

The Thomson Reuters Trust Principles.

 

 

 

Biden team seeks port revival plans as it spends infrastructure cash

(Reuters) - The Biden administration is looking for projects to revamp U.S. ports as it ramps up spending from the $1 trillion infrastructure bill.

 

President Joe Biden, facing political pressure as Americans worry about higher inflation and supply chain woes, has tried to clear port backlogs that have slowed the movement of a record number of goods to market as the U.S. economy recovers from the COVID-19 pandemic.

 

The U.S. Department of Transportation on Wednesday requested proposals for $450 million in grants to expand port terminals, piers, rail yards and storage facilities. It's the highest amount ever offered through the Port Infrastructure Development Program, officials said.

 

Overall, some $17 billion will be spent on the ports effort. Biden officials hope that smoother-functioning infrastructure will get imported goods on store shelves faster and at lower cost. They also hope Buy American provisions in the overall infrastructure bill will lift domestic manufacturing businesses.

 

The Department of Transportation plans to release a broad report this week laying out further recommendations on freight and logistics issues.

 

The Thomson Reuters Trust Principles.

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2022

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


ART

PPC

 

 


Starafrica

Fidelity

Turnall

 


Medtech

Zimre

Nampak Zimbabwe

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 


 

 


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