Major International Business Headlines Brief::: 26 January 2022

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Major International Business Headlines Brief::: 26 January 2022 

 


 

 


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

 


 

 


ü  Global chip shortage: US says firms' stocks have plunged

ü  Why Italy's new president could make or break economy

ü  Autonomous-car 'users not legally accountable' call

ü  IMF expert: Families may need help with energy bills

ü  Food firms warn of product shortages if CO2 deal not agreed

ü  AFRICA’S Billionaires: Dangote tops 2022 list; Masiyiwa ranked 10th and US$100m richer

ü  Holiday bookings jump as UK Covid travel tests axed

ü  Inflation-fighting Fed likely to flag March interest rate hike

ü  Global share sell off pauses in Asia as investors await Fed policy update

ü  Investors seek refuge in China as Fed, inflation roil other markets

ü  Microsoft offers strong forecast, lifting shares

ü  Debt-laden China Evergrande to hold investor call on Wednesday - sources

ü  U.S. seeks more information from Tesla on distracted drive game probe

ü  LG Display Q4 profit drops 30% on year, hit by lower TV panel prices

ü  Samsung Elec says chip manufacturing facilities in Xian, China back to normal

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

Global chip shortage: US says firms' stocks have plunged

Manufacturers have seen their stocks of semiconductors plunge amid the global chip shortage, the US Department of Commerce has warned.

 

A survey of more than 150 firms found supplies had fallen from an average of 40 days' worth in 2019 to just five days in late 2021.

 

Sales of devices soared during the pandemic, leaving semiconductor makers struggling to keep up with demand.

 

The shortage has resulted in huge disruptions for major industries.

 

Millions of products - cars, washing machines, smartphones and more - rely on these chips, also known as semiconductors.

 

"With sky-rocketing demand and full utilisation of existing manufacturing facilities, it's clear the only solution to solve this crisis in the long-term is to rebuild our domestic manufacturing capabilities." the US secretary of commerce Gina Raimondo said in a statement.

 

The research also found that demand for semiconductors was as much as 17% higher last year than it was in 2019.

 

Meanwhile, US House Democrats on Tuesday unveiled legislation aimed at increasing US competitiveness with China and spending $52bn (£38.5bn) on semiconductor production and research, after the Senate approved funding in June.

 

President Joe Biden's administration is pushing to persuade Congress to approve funding to help boost chip production in the US, as shortages of the key components have exacerbated supply chain bottlenecks.

 

Why is there a chip shortage for computers and cars?

Last week, Intel said it would invest $20bn to build what could be the world's biggest chip-making complex in Ohio.

 

In November, Samsung announced that it had chosen a site close to the US city of Taylor in Texas for its new $17bn computer chip plant.

 

The plant is expected to be operational by the second half of 2024. It is the South Korean electronics giant's biggest-ever US investment.-BBC

 

 

 

Why Italy's new president could make or break economy

MPs in Italy are electing a new president this week, a secret ballot that is usually hard to predict and this time is no different.

 

The head of the Italian state has limited powers, but the President does appoint a prime minister and can influence the government's economic strategy and with a general election due early next year, a lot is at stake.

 

The next prime minister, probably heading a coalition government, must ensure the recovery of the economy continues.

 

The pandemic hit Italy hard, but it faced years of stagnation before that, and foreign investors hope the EU member state will stay on the path towards growth.

 

Economy at risk from political divisions

On Tuesday, following a second round of voting, which proved inconclusive, Italy's conservative alliance proposed three possible candidates, leaving the centre-left parties to respond as parliament remains divided over a successor to President Sergio Mattarella.

 

The leader of the League, Matteo Salvini, told a news conference: "We are not here to impose anything on anybody."

 

Critics of Italy's political system, where governments are usually a coalition of different parties, may say the economy has dodged a bullet because the controversial former prime minister Silvio Berlusconi pulled out of the race at the weekend.

 

The current Prime Minister, Mario Draghi, a former head of the European Central Bank, is seen as the frontrunner to take up residence in the Quirinale Palace, once the home of Popes and Kings, but the favourite rarely wins.

 

As president he would have the power to appoint a prime minister, veto appointments to the cabinet and send legislation back to parliament for MPs to reconsider. These are powerful tools to keep reforms on track and could stop any future government from derailing the economy.

 

If Mr Draghi did become the next President of the Italian Republic, who would replace him as the prime minister and would the current political stability in Rome suddenly be in doubt?

 

At the start of the coronavirus pandemic the Italian economy suffered heavily, as the country went into a severe lockdown, but businesses are seeing good growth.

 

"The current government is a broad coalition led by former ECB President, Mario Draghi, and it's not clear which kind of coalition might come out of the next general election, which is currently due in early 2023," Paola Subacchi, Professor of International Economics at Queen Mary University of London, told the BBC's World Business Report.

 

The health of the economy is tied to political stability and that has been achieved with Mario Draghi at the helm, she said.

 

Mr Draghi has successfully garnered cross-party support for the European Union's recovery plan and created momentum for reforms and stronger financial discipline.

 

Italy is the largest beneficiary of the EU's €750bn ($847bn, £627bn) recovery fund and it is expected to receive €191bn ($215bn, £160bn) in grants and loans.

 

Once in a generation opportunity

If Mr Draghi wins the race to become president, his success at creating political unity as Prime Minister, which led to positive momentum for the economy, could be undermined with new cracks appearing between parties which would be posturing ahead of the general election next year.

 

Forecasts of economic growth of about 4% this year are promising and compare favourably with the dramatic contraction of almost 9% in gross domestic product in 2020 as the country suffered from the shock of the pandemic.

 

Experts are saying Italy has a once in a generation opportunity for an economic reboot.

 

Valentina Meliciani, a professor of economics at Luiss University in Rome, said: "Political parties have different views about the direction of different economic policies for the future of the country.

 

"However political stability is really necessary for overcoming the pandemic and for making the best use of the resources that are now available from the recovery."

 

She told the BBC World Service that "in the last year we experienced an exceptionally high rate of growth, more than 6% and also the forecasts for the coming year are quite positive."

 

Political crisis?

Mario Draghi is not regarded as part of the Italian political structure and before being parachuted in to take over as Prime Minister in February last year, the economist and academic had been the President of the European Central Bank from 2011 to 2019. He is credited as saving the euro currency, which had been under threat during the eurozone debt crisis.

 

Lorenzo Codogno, a former chief economist at the Italian Treasury, is worried that if Mario Draghi wins the race to the Quirinale Palace the challenge to fill the vacancy in the Prime Minister's office could cause a crisis.

 

"There might be political crisis because the parties might no longer be wiling to support the Draghi government and that would precipitate early elections," he told the BBC.

 

"In a year that is so important for the EU recovery plan and Italy's promises on reforms and investment losing five or six months of policy making is something that Italy cannot afford to do," he said.

 

Economic recovery primary

The next Italian President will quickly have to start the process of creating political unity to ensure there are no major divisions that could torpedo economic policies.

 

Valentina Meliciani, from Luiss University in Rome, says foreign investors are watching the presidential election closely.

 

"A non-divisive president may play an important role in ensuring that the general interests of the country prevail over the specific interest of the different parties."

 

"In order for our country to perform well in the long run and keep debt under control we need growth, in order to fulfil all these conditions, stability and competence in the President and Prime Minister are really essential," she said.

 

It is worth remembering that role has not traditionally gone to a party leader and the favourite going into the race to move into the Quirinale often loses out.

 

Secret vote

The president is elected for a term of seven years by an electoral college comprising 1,009 people, mostly members of parliament, as well as senators and 58 delegates of Italy's regions.

 

In the first three rounds of voting, the winner must secure at least a two-thirds majority, but from the fourth round, an absolute majority is enough.

 

Last month Mario Draghi issued a coded message to insiders in Rome that he was open to becoming president, describing himself as a "grandfather at the service of the institutions."

 

Other candidates who may be in the race include a former premier, Paolo Gentiloni, the 67-year-old European Union commissioner for the economy

 

Those hoping to see Italy's first female president may pay close attention to the current and former justice ministers, Marta Cartabia, 58, and Paola Severino, 73.-BBC

 

 

 

Autonomous-car 'users not legally accountable' call

Human drivers should not be legally accountable for road safety in the era of autonomous cars, a report says.

 

In these cars, the driver should be redefined as a "user-in-charge", with very different legal responsibilities, according to the law commissions for England and Wales, and Scotland.

 

If anything goes wrong, the company behind the driving system would be responsible, rather than the driver.

 

And a new regime should define whether a vehicle qualifies as self-driving.

 

In the interim, carmakers must be extremely clear about the difference between self-drive and driver-assist features.

 

There should be no sliding scale of driverless capabilities - a car is either autonomous or not.

 

And if any sort of monitoring is required - in extreme weather conditions, for example - it should not be considered autonomous and current driving rules should apply.

 

Dangerous driving

The law commissions were asked in 2018 to come up with a series of reports on the regulatory framework for automated vehicles and their use on public roads.

 

In this final report, their recommendations include:

 

·         a user-in-charge cannot be prosecuted for offences arising directly from the driving task, such as dangerous driving, speeding or running a red light, but remains responsible for other tasks, including insurance and checking people are wearing seatbelts

·         some vehicles may be allowed to drive themselves with no-one in the driving seat and a licensed operator responsible for overseeing the journey

·         data to understand fault and liability following a collision must be accessible

·         sanctions for carmakers who fail to reveal how their systems work

Transport Minister Trudy Harrison said the government would "fully consider" the recommendations.

 

The Scottish and Welsh governments will also decide whether to introduce legislation.

 

Matthew Avery, chief research strategy officer at Thatcham Research, which was involved in the consultation, said: "We applaud the recommendations that compel carmakers to use appropriate terminology when marketing these systems, to prevent motorists from becoming convinced that their car is fully self-driving when it is not.

 

"In the next 12 months, we're likely to see the first iterations of self-driving features on cars in the UK.

 

"It's significant that the Law Commission report highlights the driver's legal obligations and how they must understand that their vehicle is not yet fully self-driving"

 

Last year, the Department for Transport gave the green light to automated lane-keeping systems (ALKS), the first type of hands-free driving to be legalised in the UK.

 

Drivers using ALKS will not need to monitor the road or keep their hands on the wheel but must stay alert and be able to take over within 10 seconds when requested by the system.

 

Video game

Tesla, one of the leading companies developing driverless cars, has faced a barrage of questions over its marketing of Autopilot, which is similar to ALKS and considered level two on the five defined levels of self-driving cars.

 

Last week, Californian prosecutors filed two counts of vehicular manslaughter against the driver of a Tesla went through a red light, while using Autopilot, hitting another car and killing two people - the first time someone has been charged with manslaughter when using a partially automated driving system.

 

Previously in the US, a driver was killed when playing a video game while using Autopilot.

 

And in 2018, a UK resident was banned from driving after climbing into the passenger seat of his Tesla on the motorway.-BBC

 

 

 

IMF expert: Families may need help with energy bills

Struggling UK families may need help with energy bills as inflation soars, an International Monetary Fund expert has said.

 

It comes as the IMF predicted that the UK economy will grow more slowly than expected this year as it recovers from the Covid pandemic.

 

The forecast for UK growth in 2022 was cut to 4.7% from 5% in the IMF's latest world economic outlook.

 

However, this will be the fastest in the G7 industrialised nations.

 

It partly reflects a rebound from sharp falls the UK suffered during initial pandemic lockdowns two years ago.

 

The International Monetary Fund is an organisation of 190 countries that works to secure financial stability.

 

Its first deputy managing director, Gita Gopinath, told the BBC that targeted help might be needed to help vulnerable households deal with higher energy bills as they face a cost-of-living squeeze.

 

She said: "The UK has done very well on the vaccination front, on testing and tracing and so on.

 

"All that has to be continued. An argument can be made that, especially for instance, in April, as more of the energy price pass-through happens, then that could be a big, sharp increase in the cost of living.

 

"And one could see a case for very, very targeted help to highly vulnerable households for a short space of time."

 

Surging food and energy prices drove inflation to 5.4% in the 12 months to December, up from 5.1% the month before, in a blow to struggling families.

 

The International Monetary Fund expressed concern that a Russian invasion of Ukraine could see energy prices go even higher and stay there for longer.

 

Its first deputy managing director, Gita Gopinath, backed the idea of help with spiralling energy bills in the UK.

 

That intervention could be helpful to the Treasury, which is currently deciding what type of help could be given to mitigate a £50-a-month rise in bills.

 

Some MPs want the government to delay its announced rise in National Insurance, especially after lower-than-expected public borrowing figures.

 

The Treasury is believed to be looking instead at focusing support on those most in need.

 

On Tuesday, the IMF sharply downgraded its forecasts for the two biggest global economies - the US and China - citing high energy prices and new Covid curbs among its reasons.

 

Overall, the IMF now expects global growth to go from 5.9% in 2021 to 4.4% in 2022, half a percentage point lower for this year than in its last prediction in October 2021.

 

"The global economy enters 2022 in a weaker position than previously expected," said the IMF report.

 

As the new Omicron Covid-19 variant spread, countries had reimposed restrictions, it added.

 

"Rising energy prices and supply disruptions have resulted in higher and more broad-based inflation than anticipated, notably in the US and many emerging market and developing economies.

 

"And the ongoing retrenchment of China's real estate sector and slower-than-expected recovery of private consumption have limited growth prospects."

 

The IMF predicted that the higher levels of inflation currently seen in the global economy would go on for longer than it anticipated in its last forecast, persisting for most of 2022.

 

It said supply chain disruptions, energy price volatility and localised wage pressures meant that "uncertainty around inflation and policy paths" was high.

 

Big revisions

US economic growth for this year was downgraded by the IMF from 5.2% to 4% after it removed the effects of President Joe Biden's Build Back Better fiscal policy package from its calculations.

 

The legislation is currently stalled in Congress and is unlikely to be enacted in its present form.

 

China's forecast for 2022 was cut from 5.6% to 4.8%.

 

"In China, disruption in the housing sector has served as a prelude to a broader slowdown," the IMF report said.

 

"With a strict zero-Covid strategy leading to recurrent mobility restrictions and deteriorating prospects for construction sector employment, private consumption is likely to be lower than anticipated."

 

The IMF said the cut in expectations for global growth also reflected revisions among some other large emerging markets.

 

In particular, the two biggest Latin American economies, Brazil and Mexico, suffered the largest growth downgrades.

 

Brazil, where far-right President Jair Bolsonaro is seeking re-election later this year, is now expected to grow by just 0.3% in 2022, down from the previous forecast of 1.5%.

 

Mexico also saw a downgrade of 1.2 percentage points and is now predicted to see growth of 2.8%.-BBC

 

 

 

Food firms warn of product shortages if CO2 deal not agreed

Food and drink firms have raised fears over shortages as a deal that secured vital carbon dioxide (CO2) supplies is about to end without an extension.

 

CO2 is used for keeping packaged food fresh, to stun pigs and chickens before slaughter and in fizzy drinks.

 

A supply chain crisis was averted last year when the government stepped in to broker a three-month price-fixing deal between CO2 producers and industry.

 

The food industry said a new deal had to be reached before 31 January.

 

"We are concerned with just days now remaining before that agreement comes to an end, and energy prices still very high, there will be further CO2 shortages once again," said industry body the Food and Drink Federation (FDF).

 

"This could lead to shortages in the products we find on our supermarket shelves - adding further pressures to families already coping with high food-price inflation."

 

Critical CO2 supply deal for food industry agreed

However, it would appear that the government is unlikely to put up more money to secure supplies, saying it is up to CO2 firms to ensure continued supplies.

 

CO2 is essential across industry and in the National Health Service.

 

One US fertiliser firm, CF Industries, makes 60% of the UK's commercial carbon dioxide as a by-product of producing ammonia for fertiliser.

 

Last year, it temporarily shut its facilities after fertiliser manufacturing became uneconomic because of the rising price of wholesale gas, cutting off a vital source of CO2 for other sectors.

 

Supermarkets began reporting limited stocks of some food items, while the pig industry warned that if slaughterhouses could not process animals, then farmers would have to cull their stocks.

 

The government intervened to persuade CF Industries to continue supplies of the gas until the end of January.

 

CF Industries said it "continues to negotiate with our industrial gas customers to extend CO2 off-take and pricing agreements".-BBC

 

 

 

AFRICA’S Billionaires: Dangote tops 2022 list; Masiyiwa ranked 10th and US$100m richer

Africa’s billionaires are richer than they have been in years, despite the global pandemic. As a group, the continent’s 18 billionaires are worth an estimated $84.9 billion – a 15% increase from twelve months ago and the most since 2014, when a larger number of billionaires–28–were worth a combined $96.5 billion. On average, the continent’s billionaires are worth $4.7 billion now vs. $3.4 billion in 2014. Soaring stock prices from Nigeria to Zimbabwe lifted the fortunes of these tycoons, as demand for products from cement to luxury goods ticked up.

 

For the 11th year in a row, Alike Dangote of Nigeria is the continent’s richest person, worth an estimated $13.9 billion, up from $12.1 billion last year following a 30% increase in the stock price of Dangote Cement, his most valuable asset. A surge in housing developments in Nigeria and growth in government infrastructure spending drove higher demand in the first nine months of 2021, analysts found. Jumping into the No. 2 spot–up from No. 4 last year–is luxury goods magnate Johann Rupert of South Africa.

 

A more than 60% surge in the share price of his Compagnie Financiere Richemont–maker of Cartier watches and Montblanc pens–pushed his fortune to $11 billion, up from $7.2 billion a year ago, making him the biggest dollar gainer on the list. South African Nicky Oppenheimer, who formerly ran diamond mining firm DeBeers before selling it to mining firm Anglo American a decade ago, ranks No. 3, worth an estimated $8.7 billion.

 

Only two of the 18 billionaires are worth less than last year: Koos Bekker of South Africa, who dropped to $2.7 billion from $2.8 billion as the share prices of consumer Internet firms Naspers and Prosus fell more than 20% each, and Mohammed Dewji of Tanzania, whose fortune declined to an estimated $1.5 billion from $1.6 billion a year ago due to lower multiples for publicly traded competitors.

 

The 18 billionaires from Africa, none of whom are new to the ranks, hail from seven different countries. South Africa and Egypt each have five billionaires, followed by Nigeria with three and Morocco with two. All of the continent’s billionaires are men; the last woman to appear in the ranks, Isabel dos Santos of Angola, fell off the Forbes list in January 2021.

 

METHODOLOGY

 

Our list tracks the wealth of African billionaires who reside in Africa or have their primary business there, thus excluding Sudanese-born billionaire Mo Ibrahim, who is a U.K. citizen, and billionaire London resident Mohamed Al-Fayed, an Egyptian citizen. Strive Masiyiwa, a citizen of Zimbabwe and a London resident, appears on the list due to his telecom holdings in Africa.

 

Net worths were calculated using stock prices and currency exchange rates from the close of business on Wednesday, January 19, 2022. To value privately held businesses, we start with estimates of revenues or profits and apply prevailing price-to-sale or price-to-earnings ratios for similar public companies. Some list members grow richer or poorer within weeks-or days-of our measurement date. -newzim

 

 

 

Holiday bookings jump as UK Covid travel tests axed

Holiday bookings have jumped with "notable increases" in trips planned for February half-term and Easter ahead of Covid travel tests being scrapped.

 

Jet2 said bookings had increased by 30% on last week after the announcements that rules would be relaxed for people arriving in the UK.

 

The rule changes mean fully-vaccinated people arriving in those countries from abroad do not need to take Covid tests.

 

The change will come into effect from 04:00 GMT on 11 February.

 

Steve Heapy, chief executive of Jet2, told the BBC the removal of testing was "game-changer" for the travel industry.

 

He said demand was "already strong" before the rule changes for England and Scotland were announced on Monday, but said bookings had since risen further.

 

 

On Tuesday, the Welsh government confirmed it was "reluctantly retaining alignment" with the UK government to also remove tests.

 

However, First Minister Mark Drakeford said the devolved government would "implement measures to encourage travellers arriving into Wales to take a lateral flow test, plus a follow-up PCR test if positive".

 

Northern Ireland has since announced it will align with the other nations.

 

The phasing out of domestic testing rules has resulted in demand growing for flights and holidays through January, though the increase in bookings is from a lower base than pre-pandemic times.

 

What are the travel rules?

Jet2 has said it has planned a larger summer holiday package for 2022 than 2019.

 

"We have seen a notable increase in demand for holidays and flights across all seasons, particularly February half term, the Easter holidays and Summer 22," Mr Heapy said.

 

The company said the Canary Islands, Balearic Islands, mainland Spain, Italy and Portugal were "selling strongly". It added there was "enormous growth" for bookings for Greece, Turkey and Cyprus.

 

Ski flights to Geneva, Salzburg Grenoble, Chambery and Lyon were also up, the company said, after being buoyed by France also easing some restrictions on UK travellers.

 

'Confidence returning'

Although testing requirements have been removed in the UK, people travelling abroad will also be required to follow the isolation and testing requirements of the country they are heading to.

 

According to online travel search firm Skyscanner, there are currently 106 countries, including Spain, Italy and the US, with low restrictions where people who are fully vaccinated can visit by showing proof of vaccine status or a negative test.

 

The Netherlands, along with 19 other destinations, have moderative restrictions where forms of quarantine are required. A total of 30 places still have major travel restrictions, such as Australia and New Zealand.

 

Laura Lindsay, head of consumer travel at Skycanner, said "confidence" was returning for people to book, with the travel search engine seeing the "firm favourites get straight back on travellers' agendas".

 

"Spain, Portugal and the US are all topping the charts again as they did in 2019 before the pandemic," she said.

 

Aside from changes for fully-jabbed travellers, rules have been eased for unvaccinated people, who will no longer have to take a day eight test or self isolate, but will still need pre-departure and day two tests.

 

However, everyone arriving in the UK, regardless of vaccination status, will need to fill in a passenger locator form.

 

Growing demand

Tour operator Tui told the BBC it had also seen a "big increase in bookings".

 

Andrew Flintham, managing director for Tui UK said, the removal of arrival tests was a "huge leap forwards in getting travel back to normal".

 

Long-haul destinations including Mexico, Dominican Republic, Cape Verde and the Canary Islands were proving the most popular for winter escapes, he added

 

"We now expect summer 2022 bookings to be back to pre-pandemic levels."

 

EasyJet boss Johan Lundgren said every occasion the government had reduced some international travel restrictions, the airline had seen "big surges in the sales numbers".

 

"We now hope testing and travel is a thing of the past which it should because it was never an efficient measure in anyway to reduce the spread of the virus," he told the BBC.

 

Elsewhere, Thomas Cook, which was rebranded as an online holiday company after it collapsed in 2019, said Turkey and Italy were among the most in-demand destinations for summer holidays.

 

It said overall weekly bookings were up by "more than 300% on 2021".

 

Boss Alan French said: "After two years of bans and changing rules, it feels like we've really turned a corner and with the end of testing in sight we expect to see even more people look ahead to a summer of sunshine, beaches and glistening blue seas."

 

However, the trade body for the testing firm industry has said the rules have been lifted too quickly.

 

On Monday, Tom Watson, chairman of the Laboratory and Testing Industry Organisation, said the body had "consistently backed relaxing unnecessary restrictions", but added the "only way" to avoid future lockdowns was to maintain "a robust Covid testing regime to quickly discover new variants".-BBC

 

 

 

Inflation-fighting Fed likely to flag March interest rate hike

(Reuters) - The Federal Reserve is expected on Wednesday to signal plans to raise interest rates in March as it focuses on fighting inflation and sets aside, at least for now, economic risks posed by the ongoing coronavirus pandemic, a bout of market volatility, and Western fears of a Russian invasion of Ukraine.

 

(Analysis: Investors worry about hawkish Fed hurting growth, even theorize over next recession)

 

The policy decision, due to be released at 2 p.m. EST (1900 GMT) after a two-day meeting, won't commit the U.S. central bank to a particular course of action when its rate-setting committee meets again in seven weeks.

 

But absent a marked change in the course of the economy the Fed is likely at its March meeting to start withdrawing its pandemic-era support, banking that a combination of higher interest rates and a smaller central bank presence in financial markets will help slow the pace of price increases.

 

The meetings before such policy actions are typically used to telegraph what's coming.

 

With U.S. inflation "very high" and the unemployment rate now just 3.9%, Fed Chair Jerome Powell and his colleagues "will talk up the economy without sounding apocalyptic on inflation and prepare the ground for a March liftoff" of interest rates, Cornerstone Macro economist Roberto Perli wrote in a note ahead of the decision. They are likely also to continue debating how and when to reduce the central bank's massive holdings of Treasury bonds and mortgage-backed securities as a further way to tighten monetary policy.

 

Powell is due to begin a news conference half an hour after the release of the statement. Fed officials will not provide updated economic and interest rate projections on Wednesday, so it will be up to Powell to elaborate on how the central bank's views align with investors who are expecting a more vigorous fight against inflation, and who have sold off U.S. stocks and begun raising long-term interest rates this month as a result.

 

The Fed is expected on Wednesday to keep its benchmark overnight interest rate unchanged at the near-zero level.

 

Trading on Wall Street this week has been notably volatile, and the S&P 500 (.SPX) index is down about 8% this year. That, along with the rise in market rates for things like home mortgages, will force Powell to walk a line between wanting to keep the economic recovery on track while also affirming that control of inflation is currently the Fed's first priority.

 

"He won't sound nervous about inflation remaining high for a long time," Perli wrote, but will leave open the possibility of raising rates faster than anticipated, or even by more than the usual quarter-percentage-point increment, "as insurance against inflation tail risks, which are obviously substantial."

 

Those risks have become steadily more pronounced over the last five months. Powell in August used a high-profile speech to outline why he thought high inflation would be "transitory," but since then economic data have shown otherwise.

 

With consumer inflation rising at 7% annually, the fastest pace since the early 1980s, the issue has been flagged by the White House as a key economic and, for President Joe Biden's Democratic Party, political risk.

 

New data released later this week will likely show that the resurgent pandemic both reduced the pace of economic growth at the end of 2021, and kept the inflation measures watched most closely by the Fed rising at well above its 2% target.

 

There's little respite in sight. If anything, international developments hold a risk of worse to come. China's strict coronavirus lockdown policies mean global supply chains may be slower to return to normal, and a military conflict between Russia and Ukraine could add to inflation as well.

 

"The consequences for the energy market ... likely would be a further increase in prices of oil and natural gas, and therefore of energy costs more broadly for many countries in the world," Gita Gopinath, the first deputy managing director of the International Monetary Fund, said on Tuesday after the IMF lowered its 2022 economic growth forecasts for the U.S., Chinese and global economies. read more

 

"So in terms of headline inflation numbers, it certainly could keep headline inflation much more elevated for longer," she said.

 

The Thomson Reuters Trust Principles.

 

 

 

Global share sell off pauses in Asia as investors await Fed policy update

(Reuters) - Asian share markets steadied on Wednesday after three sessions of losses as investors awaited any hints about faster tightening of monetary policy from the U.S. Federal Reserve later in the day.

 

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) slipped 0.1% on Wednesday, after sharp losses earlier in the week which have left the index off 2.8% this year. It is testing mid-December's one-year low.

 

Japan's Nikkei (.N225) pared some early losses to trade 0.37% lower, hovering around its lowest level since Dec. 2020.

 

The cautious rebound for shares looked set to continue in Europe, with pan-region Euro Stoxx 50 futures 0.5% higher, and FTSE futures were up 0.8%.

 

Nasdaq futures climbed 0.3% in Asian trading, while the S&P 500 e-minis were flat, after all three main U.S. indices had fallen on Tuesday.

 

The Fed is due to update its policy plan later on Wednesday (1900 GMT) after a two-day meeting, and markets are priced for its first rate hike in March, with three more quarter-point increases by year-end.

 

"Asian markets are currently being affected by volatility in global markets, concerns about Fed tightening in the face of higher inflation and uncertainty about events in Russia and Ukraine," said Mansoor Mohi-uddin, chief economist at Bank of Singapore.

 

"We expect the Fed meeting, however, will not add to volatility. The central bank is set to only finish its quantitative easing in March and while it will signal interest rates are likely to be raised in March too, the Fed will endorse market expectations for quarterly 25bps hikes for its fed funds rate rather than more aggressive tightening this year," Mohi-uddin added.

 

Growing tensions as Russian troops massed on Ukraine's border have added to a risk-averse environment for investors. read more

 

Globally, U.S. stocks posted their worst week since 2020 last week, and MSCI's world index (.MIWD00000PUS) is on course for its biggest monthly drop since the COVID-19 pandemic hit markets in March 2020.

 

However, analysts thought this was unlikely to derail the Fed's plans to tighten policy.

 

"As long as turbulence remains relatively contained to equity markets, the bar for the Fed becoming dovish is high," said analysts at Nomura in a note.

 

They said they thought some of the Fed's policy committee would interpret the latest sell off in equities as potentially taking out some of the "froth" in the market, so it would not change their view, especially amid worries about high inflation.

 

On Wednesday, China's blue-chip (.CSI300) index reversed earlier gains to slide 0.33% to its lowest since October 2020, while Hong Kong's Hang Seng Index (.HSI) was down 0.3%.

 

Hao Hong, Head of Research at BOCOM International, expects limited appetite from investors to hold big positions in Asia after heavy market selling, as the Lunar New Year holiday approaches.

 

U.S. Treasuries were steady, with yields on two year notes at 1.0313%, holding onto gains made earlier this month. The yield on benchmark 10-year Treasury notes was 1.7743%, a little below the two-year high of 1.9% hit last week.

 

The dollar index against a basket of major currencies was mostly unchanged, with the greenback near its month high versus the euro hit the day before. FRX

 

U.S. crude dipped 0.4% to $85.22 a barrel, and Brent crude fell 0.25% to $87.96 per barrel, as investors booked profits from recent highs.

 

Gold prices were steady on Wednesday at $1,846 per ounce supported near the previous session's 10-week high.

 

The Thomson Reuters Trust Principles.

 

 

 

Investors seek refuge in China as Fed, inflation roil other markets

(Reuters) - Foreign investors are piling into China at the start of 2022, seeing it as a haven from the inflation, growth and pandemic problems plaguing most other markets.

 

Despite seeing returns last year eroded by Beijing's regulatory and policy purge, global fund managers are pumping money into mainland equities and bonds, betting China's stability pledges, monetary and fiscal easing and subdued inflation could shield them against volatility in other markets.

 

That's in stark contrast to conditions elsewhere. Major central banks are preparing to withdraw the excess stimulus measures of the past couple of years, and the Federal Reserve is hastening monetary tightening to tame runaway inflation, potentially undermining stock values and earnings.

 

For David Dali, head of portfolio strategy at Matthews Asia, China is the "single favourite country" in 2022 among the roughly 30 investible emerging equity markets.

 

"We believe Chinese valuations are some of the least risky and most attractive of all major markets," Dali said.

 

He cited factors including lesser regulatory headwinds, government readiness to stimulate the economy, and a political mandate to maintain stability in a year widely expected to confirm President Xi Jinping's unprecedented third term.

 

Fidelity International also sees China stocks as attractive from a global perspective.

 

"China's policy shift is very clear. And recent data offers signs that the economy has stabilised," Fidelity's Shanghai-based fund manager Zhou Wenqun said.

 

Evidence of that bullishness is in foreign net inflows into Chinese stocks via the Stock Connect scheme, which hit a record-high daily average of $413 million during the first three weeks of 2022, according to Morgan Stanley.

 

Flows were strong in 2021, with a record $67 billion invested through the Connect channel in onshore equities. But the mainland blue-chip index (.CSI300) lost 5.2%, in contrast to a near 27% rise in the U.S. S&P 500 (.SPX) and double-digit gains in most European indices.

 

Bond investors, too, are drawn toward China, against the backdrop of a widening Sino-U.S. monetary policy divergence.

 

Bond markets typically perform badly in a rate hike cycle, but in China, "we see that the monetary policy easing cycle is only at the start," said Paula Chan, senior portfolio manager at Manulife Investment Management, who expects more rate cuts.

 

China's "inflation concern is not as alarming as in other countries", and its bonds are a good hedge, she said.

 

Robust foreign inflows have helped push the Chinese yuan to its highest level against the dollar in nearly four years this week, despite a slew of cuts in key interest rates to support the economy.

 

In contrast, foreign money inflows into emerging markets outside China has "come to an abrupt standstill", the Institute of International Finance (IIF) said.

 

In December, emerging markets (EM) outside China suffered an outflow of $9.6 billion, compared with an inflow of $10.1 billion for China. Chinese equities saw an inflow of $12.5 billion, contributing to most of the EM inflows.

 

For non-China EM，"we believe that the outlook is worsened by the Omicron variant and expectations of a stronger dollar and higher U.S. interest rates," IIF said, in its latest capital flows tracker report. "Markets see China rebounding more quickly than other EMs."

 

Foreign buying at the start of the year was concentrated in banking, materials and capital goods sectors, according to Morgan Stanley, which noted top stocks included China Merchants Bank (600036.SS), NARI Technology (600406.SS) and Ping An Insurance Group (601318.SS).

 

UBS Securities said both foreign investors and domestic mutual funds had allocated to what they deem are hot themes, such as new energy and manufacturing.

 

The Thomson Reuters Trust Principles.

 

 

 

Microsoft offers strong forecast, lifting shares

(Reuters) - Microsoft Corp (MSFT.O) on Tuesday forecast revenue for the current quarter broadly ahead of Wall Street targets, driven in part by its Intelligent Cloud unit.

 

The outlook soothed concerns about growth sparked by results for the December quarter, which initially dragged on Microsoft's shares in after-hours trade. But the shares reversed course following the outlook, trading 3% above the closing price.

 

Investors were seeking assurances that the enterprise cloud business is still growing strongly and got it from Microsoft.

 

"So the quarter itself was, ho hum. Good, but not as great as we've seen past quarters," said Brent Thill, an analyst at Jefferies. "But then the guidance for the third quarter really turned the tape around and saved the Nasdaq, if you will."

 

Thill said Microsoft's guidance that Azure revenue would be up sequentially was strong assurance that cloud demand was solid.

 

Microsoft forecast Intelligent Cloud revenue of $18.75 billion-$19 billion for its fiscal third quarter, driven by "strong growth" in its Azure platform. That compared with a Wall Street consensus of $18.15 billion, according to Refinitiv data.

 

Thill said the strong momentum for cloud computing benefiting Microsoft will likely also be reflected in upcoming results for rivals Amazon.com Inc and Alphabet Inc's (GOOGL.O) Google.

 

Microsoft delivered strong outlooks in other areas, too.

 

The More Computing unit expects revenue of $14.15 billion-$14.45 billion for the third quarter, ahead of the Wall Street target of $13.88 billion, and Productivity and Business Processes of $15.6 billion-$15.85 billion compared with the consensus target of $15.72 billion.

 

Full-year operating margins are forecast to be up slightly from the previous year.

 

Microsoft's total second-quarter revenue beat expectations but Azure revenue growth of 46% was only in line with analyst expectations as compiled by Visible Alpha. The Azure growth showed a steady drop from fiscal 2020 when growth was in the 60% range.

 

Microsoft has become one of the most valuable companies in the world by betting heavily on corporate software and services, especially its cloud services and the movement to the web of its Outlook email and calendar software, known as Office 365, which benefited from the switch to working and learning from home during the pandemic. Demand for cloud services from Microsoft and rivals Amazon.com and Alphabet also benefited from the pandemic-fueled shift online.

 

Revenue from Microsoft's biggest segment, which offers cloud services and includes Azure, its flagship cloud offering, rose 26%, while the business that houses its Office 365 services increased 19% in the quarter.

 

Net income rose to $18.77 billion, or $2.48 per share, from $15.46 billion, or $2.03 per share, a year earlier.

 

The company said revenue rose to $51.73 billion in the three months ended Dec. 31, from $43.08 billion a year earlier. Analysts on average had expected revenue of $50.88 billion, according to Refinitiv data.

 

Investors are also focused on Microsoft's proposed $69 billion acquisition of Activision Blizzard Inc(ATVI.O), announced on Jan. 18 read more , a huge expansion for its gaming division. It also broadens the company's efforts in the so-called metaverse, or the merging of online and offline worlds, which will have corporate and consumer applications.

 

Microsoft said the Activision Blizzard deal would help boost Xbox content and services revenue. Growth has fallen sharply from a high in the fourth quarter of fiscal 2020 when Xbox content and services grew 65%. In the past quarter, revenue rose 10%, while in the year-ago quarter it rose 40%.

 

"They have a ton of great content and franchises. And that's where that revenue would eventually come in when the deal lands, for sure," said Brett Iversen, general manager, investor relations at Microsoft, referring to the Activision deal.

 

The Thomson Reuters Trust Principles.

 

 

 

Debt-laden China Evergrande to hold investor call on Wednesday - sources

(Reuters) - China Evergrande Group (3333.HK) will hold an investor call at 9 pm (1300 GMT) on Wednesday joined by its financial advisers, sources said, the first such call since it defaulted on some dollar bond payments last month.

 

Evergrande, once China's top selling real estate developer, has more than $300 billion in liabilities, including nearly $20 billion of international bonds all deemed to be in default.

 

Its debt crisis has engulfed other Chinese developers and roiled global financial markets over the past year, and contributed to a sharp slump in China's property market.

 

Newly appointed company executive director Siu Shawn, who is also the chairman of Evergrande New Energy Vehicle Group Limited (0708.HK), and a member of the property developer's risk management committee, Chen Yong, will join the call, the sources said, speaking on condition of anonymity.

 

Chen is a compliance director of state-owned Guosen Securities. Andrew Huang, Evergrande's Hong Kong branch general manager, will also be present on the call.

 

Evergrande set up the risk management committee in December with mostly members from state enterprises, as the Guangdong provincial government leads the work on the firm's restructuring.

 

The embattled firm on Monday sought more time from its offshore bondholders to work on a "comprehensive" and "effective" debt restructuring plan, after a group of Evergrande's offshore creditors said they were ready to take "all necessary actions" to defend their rights if the company did not show more urgency to resolve a default. read more

 

Evergrande has also asked the bondholders to disclose their holdings by mid-this week to identify investors for communications, and hired more financial and legal advisers to follow up with demands from creditors. read more

 

Shares of Evergrande rose over 1% on Wednesday, while its defaulted dollar bond due April 2022 dropped to 16.358 cents on the dollar from 17.074 overnight, according to data by Duration Finance.

 

Rating agency Moody's said in a report on Wednesday that covenant packages in Evergrande's offshore issuances had become increasingly lax, loosening or eliminating key protections, and putting the recovery prospects for offshore bondholders in peril.

 

Offshore bondholders rank behind the creditors of Evergrande's over 1,950 onshore subsidiaries, Moody's added, and none of which guarantee the offshore bonds.

 

The agency said the weakened covenants and increased size of debt carve-outs have allowed the firm to increase leverage materially.

 

"Flexible covenants have left Evergrande and other Chinese property developers with a corporate family rating of B3 negative and below vulnerable to the highly cyclical nature of China's real estate market," Jake Avayou, a Moody's vice president and senior covenant officer, said in the report.

 

The Thomson Reuters Trust Principles.

 

 

 

U.S. seeks more information from Tesla on distracted drive game probe

(Reuters) - U.S auto safety regulators on Tuesday said they have sought additional information from Tesla Inc (TSLA.O) in its probe into 580,000 vehicles over the automaker's decision to allow games to be played by passengers on the front center touchscreen.

 

In December, the National Highway Traffic Safety Administration (NHTSA) opened a preliminary evaluation into 2017-2022 Tesla Model 3, S, X, and Y vehicles over the vehicle's "Passenger Play" feature the agency said "may distract the driver and increase the risk of a crash."

 

NHTSA wants records of any crash reports tied to the feature and for Tesla to furnish a chronology of events and studies supporting its risk assessment "in employment of front seat non-driving related tasks from in-vehicle based devices even if the task is intended only for front seat passenger."

 

Tesla did not immediately respond to a request for comment

 

NHTSA said in December it has "confirmed that this capability has been available since December 2020 in Tesla 'Passenger Play'-equipped vehicles." Before then, the game feature "was enabled only when the vehicle was in park."

 

On Dec. 23, Tesla told NHTSA it would stop allowing video games to be played on vehicle screens while its cars are moving, the agency said.

 

Tesla informed NHTSA a software update will lock the "Passenger Play" feature and make it unusable when the vehicle is in motion, NHTSA said.

 

NHTSA asked Tesla to answer questions by March 4 including providing "trip counts in which game use occurred while the shift indicator was in drive" and include usage where vehicle sensors did not detect an occupant in the front passenger seat. It also wants data where "gameplay was concurrent with any driver intervention measures or active safety measures."

 

The agency in August opened a safety investigation into 765,000 Tesla vehicles over its driver-assistance system Autopilot after a series of crashes involving the system and parked emergency vehicles.

 

A preliminary evaluation is a first step before NHTSA decides whether to upgrade a probe to an engineering analysis, which must happen before the agency can demand a recall.

 

On Nov. 29, Daimler's (DAIGn.DE) Mercedes-Benz recalled 227 U.S. vehicles because the vehicle infotainment systems "might allow activation of the television and internet display while driving, causing a distraction for the driver."

 

In 2013, NHTSA issued guidelines to encourage automakers "to factor safety and driver distraction-prevention into their designs and adoption of infotainment devices in vehicles."

 

The Thomson Reuters Trust Principles.

 

 

 

LG Display Q4 profit drops 30% on year, hit by lower TV panel prices

(Reuters) - South Korea's LG Display Co Ltd (034220.KS) posted on Wednesday a 30% drop in quarterly operating profit on the year, hit by a steep decline in TV panel prices that offset solid shipments of smaller screens used for computers, laptops and smartphones.

 

The Apple Inc (AAPL.O) supplier posted an operating profit of 476 billion won ($397.64 million) for the October-December period, down from 678 billion a year earlier.

 

It missed an average analyst forecast of 588 billion won compiled by Refinitiv SmartEstimate.

 

Revenue rose 18% on year to 8.8 trillion won.

 

During October-December, prices of 55-inch liquid crystal display (LCD) panels for TV sets fell 37% from the previous quarter, according to market data from TrendForce's WitsView.

 

However, LG Display managed to avoid a bigger dent to profits, analysts said, as only 27% of sales came from television panels during the quarter.

 

Solid shipments of LCD panels for notebooks and monitors, whose prices declined by less than LCD TV panel prices, as well as higher-margin OLED panels for smartphones and TVs, should help LG defend its results this year, analysts said.

 

Shares of LG Display ended down 0.7%, versus the wider market's (.KS11) 0.4% fall.

 

($1=1,197.0500 won)

 

The Thomson Reuters Trust Principles.

 

 

Samsung Elec says chip manufacturing facilities in Xian, China back to normal

(Reuters) - Samsung Electronics Co Ltd (005930.KS) said on Wednesday that its semiconductor manufacturing facilities in Xian, China, have returned to normal operation.

 

A surge of COVID-19 cases and tough travel curbs in the city had led Samsung last month to temporarily adjust operations at its Xian manufacturing facilities for NAND flash memory chips, used to serve the data storage market. read more

 

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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