Major International Business Headlines Brief::: 09 March 2022

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Major International Business Headlines Brief::: 09 March 2022 

 


 

 


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

 


 

 


ü  McDonald’s, Coca-Cola and Starbucks halt Russian sales

ü  Fitch Ratings warns Russian bond default 'imminent'

ü  Warning oil sanctions will further hit UK living costs

ü  West hits Russia with oil bans and gas curbs

ü  South Africa: Due To Further Failures Of Generation Units, Stage 4
Loadshedding Will Be Implemented From 09:00 Today Until 05:00 On Friday In
Order To Manage The Emergency Reserves

ü  Tanzania: NBC Bank Nears 50-50 Gender Balance

ü  Tanzania: NMB Launches 'Umebima' Insurance Literacy Drive

ü  Makers of basic necessities face 'tradeoff' supplying Russia with
cookies, soap

ü  LME forced to halt nickel trading, cancel deals, after prices top
$100,000

ü  Chinese firms that aid Russia may be cut off from U.S. equipment
-commerce secretary

ü  China Feb factory inflation eases, spotlight on global commodities

ü  Tightening financial conditions sound alarm for world economy

ü  Global LNG demand growth shifts from Asia to Europe on Russia sanctions

 

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 

McDonald’s, Coca-Cola and Starbucks halt Russian sales

Consumer giants including McDonald's, Coca-Cola and Starbucks have joined
the list of firms halting business in Russia due to the invasion in Ukraine.

 

McDonald's said it was temporarily closing its roughly 850 restaurants in
Russia, while Starbucks also said its 100 coffee shops would shut.

 

McDonald's said the move was a response to the "needless human suffering
unfolding in Ukraine".

 

The company said it was "impossible to predict" when it would reopen.

 

"The conflict in Ukraine and the humanitarian crisis in Europe has caused
unspeakable suffering to innocent people," chief executive Chris Kempczinski
said in a memo to staff that was shared publicly.

 

"As a system, we join the world in condemning aggression and violence and
praying for peace."

 

McDonald's said it would continue to pay its roughly 62,000 staff in Russia.
The firm has also been experiencing supply chain issues there.

 

McDonald's, Coca-Cola and other companies have been under pressure to act as
Russian violence against civilians has escalated.

 

#BoycottMcDonalds and #BoycottCocaCola were trending on Twitter on Monday
and over the weekend respectively.

 

Dozens of well-known firms including Netflix and Levi's have already
suspended sales or stopped providing services in Russia amid severe
sanctions imposed by Western allies.

 

McDonald's established its presence in Moscow in 1990, as the Soviet Union
was opening its economy, drawing thousands for its burgers and fries.

 

As tensions with the West increased in 2014 over Russia's annexation of
Crimea, some of its restaurants were shut as part of an investigation into
food standards, which many saw as politically motivated.

 

The closure now likewise carries symbolic weight, and is likely to influence
other firms.

 

McDonald's owns a majority of its stores in Russia. Combined with Ukraine,
the restaurants account for about 9% of the firm's revenue and about 2% of
global sales.

 

It has also temporarily closed its 108 restaurants in Ukraine, where it
continues to pay salaries and has donated $5m to an employee assistance
fund.

 

Growing numbers of firms pull back from Russia

McDonald's said its Ronald McDonald House Charities would remain active in
Ukraine and Russia.

 

Mr Kempczinski said the firm had made the decision over the last week. In
addition to staff, the move will affect hundreds of suppliers and the
millions of customers McDonald's serves in Russia each day.

 

The fast food chain joins a growing list of western brands to cut ties with
Russia over its attack on Ukraine.

 

Coca-Cola on Tuesday said it was suspending operations in Russia, which
accounted for roughly 2% of the firm's operating revenue and income. It also
has a roughly 20% ownership stake in a bottling and distribution business in
Russia.

 

Starbucks also announced it would stop all business activity in the country,
including shipments of Starbucks products.

 

The coffee chain's licensee in the country will temporarily shut more than
100 stores it operates there. The licensee, Kuwait-based Alshaya Group, will
continue pay its roughly 2,000 employees, Starbucks said.

 

Growing backlash

Other major global brands joining the backlash on Tuesday included the
world's largest music company, Universal Music Group, which said it was
suspending all operations in Russia and closing its offices there.

 

"We urge an end to the violence in Ukraine as soon as possible," the firm
said in a statement sent to the BBC.

 

Unilever, maker of Marmite, Dove beauty products and PG Tips among other
brands, also said it had suspended trade with Russia and planned to halt its
advertising and media spending and investments there.

 

It said it would continue to supply "everyday essential food and hygiene
products" that are made in Russia.

 

L'Oreal, the world's biggest cosmetics company, is also shutting its stores
and concessions in Russia and suspending online sales.

 

However, some firms have have defended plans to continue operating in
Russia, including Uniqlo owner Fast Retailing, whose founder told Japan's
Nikkei newspaper that "clothing is a necessity of life".

 

Pepsi, which has a much larger presence in Russia than rival Coca-Cola, said
it was halting the production and sale of Pepsi and other global brands in
Russia and suspending capital investments and advertising, citing "horrific
events" in Ukraine.

 

But the company, which started operating in Russia during the Cold War and
now employs 20,000 people there, said it would continue to offer other
products.

 

"As a food and beverage company, now more than ever we must stay true to the
humanitarian aspect of our business," boss Ramon Laguarta said. "That means
we have a responsibility to continue to offer our other products in Russia,
including daily essentials such as milk and other dairy offerings, baby
formula and baby food."-BBC

 

 

 

 

Fitch Ratings warns Russian bond default 'imminent'

A leading ratings agency has warned Russia is likely to soon default on its
debts, as it downgraded the country's bonds further into "junk" territory.

 

Fitch Ratings slashed its assessment of Russia to almost the bottom of its
scale, just days after downgrading it from investment status.

 

It is the latest blow to the country's creditworthiness in the wake of its
invasion of Ukraine.

 

This week, Moscow said its bond payments may be affected by sanctions.

 

"The further ratcheting up of sanctions, and proposals that could limit
trade in energy, increase the probability of a policy response by Russia
that includes at least selective non-payment of its sovereign debt
obligations," Fitch said.

 

The announcement from Fitch came after the US and UK said they will ban
Russian oil, as they step up the economic response to the invasion of
Ukraine.

 

US President Joe Biden said the move targeted "the main artery of Russia's
economy".

 

Meanwhile, the European Union said it will end its reliance on Russian gas.

 

As a major exporter of energy, the measures are aimed to hit Moscow's
finances, although experts warn this is also likely to send the price of oil
and natural gas higher on global markets.

 

West hits Russia with oil bans and gas curbs

What sanctions are being imposed on Russia?

On Sunday, Moscow told investors that it would continue to service its
sovereign debt.

 

However, it warned that international sanctions imposed on its energy
industry could limit its ability and willingness to meet its obligations.

 

"The actual possibility of making such payments to non-residents will depend
on the limiting measures introduced by foreign states in relation to the
Russian Federation," the finance ministry said in a statement.

 

If Russia did fail to make payments on its debt it raises the possibility of
the first major default on the country's sovereign bonds since the wake of
the 1917 Bolshevik revolution.

 

In recent days, rival ratings agencies Moody's Investors Service and S&P
Global Ratings have also slashed their assessments of Russian sovereign
debt.

 

It means the country's sovereign debt is now considered to be below
investment grade, or in "junk" territory, by three of the world's major
ratings companies.

 

S&P said the move followed measures it believed would "substantially
increase the risk of default".

 

Shane Oliver of investment management company AMP Capital believes a default
on Russian debt was "effectively already occurring".

 

"It will only service it in much depreciated roubles anyway and foreign
investors are offloading it at fire sale prices. Fortunately the global
exposure to it is relatively low," he told the BBC.

 

The Russian rouble has also hit record lows as countries around the world
imposed increasingly tough sanctions on the country.

 

Last month, Russia's central bank more than doubled its interest rate to 20%
in an attempt to stop the value of its currency from sliding further.

 

Dozens of global brands - including McDonald's, Coca-Cola and Starbucks -
have halted business in Russia due to the invasion of Ukraine.-BBC

 

 

 

Warning oil sanctions will further hit UK living costs

Western plans to ban or curb Russian oil and gas imports will further hit UK
living standards, analysts say.

 

Experts say global commodity prices are set to soar even higher as a result
of the UK, US and EU announcing plans to punish Moscow for invading Ukraine.

 

The RAC says UK petrol prices could hit £1.60 a litre this week and £1.65
soon.

 

And one think tank warned household disposable incomes could see the biggest
fall since 1955 as prices surge in the second quarter of the year.

 

The UK, which gets 8% of its oil from Russia, said on Tuesday that it plans
to phase out these imports by the end of 2022.

 

Meanwhile, the US said it would immediately ban Russian oil and gas and the
EU vowed to cut is gas imports by two thirds this year.

 

Business Secretary Kwasi Kwarteng tweeted that the UK's transition would
give its "market, businesses and supply chains more than enough time to
replace Russian imports".

 

Robert Buckley, an energy analyst at Cornwall Insight, told the BBC the UK
ban was "largely symbolic" because Russian oil was such a small part of its
overall energy mix.

 

However, together with the US ban, and widespread boycotts by western
companies, the move is likely to increase already high oil prices in the
coming weeks, he said.

 

"This is a global market and you've got to replace that displaced supply
somehow," Mr Buckley told the BBC.

 

"At the margin, this decision will act to support oil prices which are
already extremely high."

 

The price of Brent crude - the global oil benchmark - has climbed for weeks,
hitting a 14-year high of $139 a barrel at one point on Monday. Prices
jumped 7% on Tuesday after the sanctions were announced.

 

Brent crude was trading just below $130 on Asian markets on Wednesday
morning.

 

Those rising wholesale costs are feeding through to higher petrol prices at
the pump, a trend the RAC expects to accelerate.

 

"We were at £1.56 per litre for petrol and £1.62 for diesel yesterday, both
records," the RAC's fuel spokesman Simon Williamson told the BBC.

 

"In 2016, you could regularly get petrol for under £1 a litre at
supermarkets and other low-cost retailers."

 

He said he expected prices to remain high as long as the conflict continued,
although a deal to unlock supply from Iran or Venezuela - both of which face
their own oil sanctions - could ease the pressure.

 

"It's not just about what consumers pay at the pump," he added. "Everything
in our shops has ultimately been moved by a diesel powered lorry and
businesses are obviously likely to pass on these costs."

 

Even before Russia invaded Ukraine, the UK's cost of living was rising at
its fastest rate in 30 years amid surging global demand for oil and gas as
pandemic restrictions eased.

 

But the war has added to this pressure, driving up the cost of not just fuel
and energy but also other commodities like wheat and metals.

 

Nathan Piper, an oil and gas analyst at Investec, said the EU's decision on
Tuesday to reduce its reliance on Russian gas was also likely to hit the UK.

 

Wholesale gas prices have been climbing for months and analysts expect the
UK's energy price cap - which limits what consumers pay for gas and
electricity - to rise to more than £3,000 a year for the average household
when it is next reviewed in October.

 

"We are on the cusp of a prolonged period of high oil and gas prices,
possibly lasting several years," Mr Piper told the BBC.

 

"You can't just cut the second largest gas producer and third largest oil
producer out of global supply and not expect it to have big impact on
consumers," he added.

 

He said there would be "extreme fuel poverty" over the next few years, with
the government facing growing pressure to offer more support.

 

In research published on Tuesday, the Centre for Business and Economic
Research (CEBR) warned that a combination of rising commodity and oil prices
and sanctions was likely to have major impact on the UK economy.

 

It estimates that GDP growth this year will be more than halved - down from
a previously forecast 4.2% to 1.9%.

 

The CEBR also expects inflation to hit 8.7% in the second quarter of this
year and disposable incomes to fall by 4.8% in 2022 - the largest drop since
records began in 1955.

 

"The forecast fall in living standards this year is an estimated £71bn -
which amounts to £2,553 per household," it said.-BBC

 

 

 

West hits Russia with oil bans and gas curbs

The US and UK are banning Russian oil and the EU is ending its reliance on
Russian gas, stepping up the economic response to the invasion of Ukraine.

 

US President Joe Biden said the move targeted "the main artery of Russia's
economy".

 

Energy exports are a vital source of revenue for Russia but the move is also
likely to impact Western consumers.

 

Major brands have meanwhile continued to pull out of Russia, with McDonald's
and Coca-Cola the latest to leave.

 

Russia's economy is heavily dependent on energy. It is the world's
third-biggest oil producer, behind Saudi Arabia and the US.

 

Before the measures were announced, Russia warned of "catastrophic"
consequences for the global economy and said it might close its main gas
pipeline to Germany.

 

On the ground in Ukraine, civilians have been evacuated from two
under-attack areas while the US has said up to 4,000 Russian troops may have
been killed in the conflict.

 

The conflict has already sent petrol prices to record highs in the US and
the UK and experts warn they could go even higher.

 

However, Venezuela could increase its oil production to help replace Russian
oil.

 

Reinaldo Quintero, president of the association that represents Venezuelan
oil companies told the BBC that the country could potentially raise its
production levels by 400,000 barrels a day.

 

"I think we can reach 1.2 million barrels per day with the infrastructure we
have right now at this moment. So that will make us able to supply the need,
some of the need, to the North American market," he said.

 

Russian oil 'no longer acceptable'

President Biden's announcement followed pressure from both sides of the US
political divide to do more to target the Russian economy.

 

"We're banning all imports of Russian oil and gas and energy," he said.

 

"That means Russian oil will no longer be acceptable at US ports and the
American people will deal another powerful blow to [President Vladimir]
Putin."

 

Mr Biden admitted the move was "not without cost at home," adding the
decision was taken "in close consultation" with allies.

 

In a similar move, the UK is to phase out Russian oil imports by the end of
2022.

 

The UK Prime Minister, Boris Johnson, accepted that the move would not hit
Russia immediately but added "what it will do is add to the pressure we're
already seeing on Russia and don't forget that the economic impact of the
sanctions that the UK has led has been extreme".

 

About 8% of US oil and refined product imports come from Russia, while
Russia makes up about 6% of the UK's oil imports.

 

By contrast, the EU is much more reliant on Russian energy, so the bloc's
response stopped short of a ban.

 

The European Commission said it would switch to alternative supplies and
expand clean energy faster to fill the shortfall, with the aim of making
Europe independent from Russian fossil fuels "well before 2030".

 

 

"We're not standing here to say this is going to be in any way easy," said
the European Commission's Vice-President Frans Timmermans.

 

"But I am also deeply convinced that even if it's not easy, even if it's
very hard, it's something we need to do, because now it's also intimately
linked to our security."

 

Russia later announced plans to ban the exports of certain commodities and
raw materials. The details are still to be worked out, but Russia is a major
exporter of grain and metals.

 

Even countries with low Russian energy imports are set to feel the impact as
the measures are likely to boost already high wholesale prices. Inflation is
soaring in the US, EU and the UK, adding to the pressure on households.

 

The move adds to a long list of economic sanctions imposed against Russia
following its invasion of Ukraine - the central bank has had its assets
frozen, some Russian banks have been cut off from global payment networks
and Germany suspended the Nord Stream 2 pipeline, which would have
transported more gas from Russia to Germany.

 

But energy sales have continued to provide a source of cash despite the
other financial restrictions.-BBC

 

 

 

South Africa: Due To Further Failures Of Generation Units, Stage 4
Loadshedding Will Be Implemented From 09:00 Today Until 05:00 On Friday In
Order To Manage The Emergency Reserves

Wednesday, 09 March 2022: It is with a great deal of disappointment that
Eskom has to inform the public that further failures overnight of generation
units has necessitated the implementation of Stage 4 loadshedding starting
at 09:00 this morning. Unfortunately, this has to continue until 05:00 on
Friday. Thereafter loadshedding will be lowered to Stage 2 until 05:00 on
Monday morning.

 

Eskom would like to apologise for the implementation of loadshedding, and
will continuously review the situation and act appropriately as
circumstances change. Members of the media are invited to an emergency media
briefing starting at 10:00.

 

Overnight a unit each at Kendal, Duvha, Camden and Kusile power stations
tripped. Since then, we have returned four units to service. However, these
units still need to ramp up to full output, which necessitates a high usage
of emergency generation reserves today. This being the fourth day of
extremely high diesel usage, the emergency reserves are being depleted
faster than can be replenished.

 

Stage 4 loadshedding will therefore give us the space required to replenish
the emergency reserves and continue to manage the system safely.

 

Total breakdowns amount to 15 439MW while planned maintenance is 5 505MW of
capacity.

 

Eskom appeals to all South Africans to help us limit the impact of
loadshedding by reducing the usage of electricity and to switch off all
non-essential items.

 

We will communicate promptly should there be any significant changes to the
power system.

 

 

 

Tanzania: NBC Bank Nears 50-50 Gender Balance

NATIONAL Bank of Commerce (NBC) is only two per cent short to attain a 50-50
gender balance at working premises.

 

NBC Managing Director, Mr Theobald Sabi said yesterday at the colourful
event to commemorate the International Women's Day (IWD) that current 48 per
cent of their total workforce is women.

 

"As an institution, we are aware that the issue of women empowerment is
beneficial and researches have already shown that institutions which hire
more women employees are achieving great successes," he said.

 

He added that they used the yesterday IWD platform to talk with all their
workers on different issues concerning equality and that they introduced a
special program to help in safe guarding women matters at the management
levels of the bank.

Additionally, the NBC boss disclosed that last year, women employees at the
bank performed well representing a 53 per cent and that they believe that
investing in women development is key for business prosperity.

 

NBC's Acting Head of Human Resource, Operations and Governance Bernard
Mshana said that as one way to commemorate the IWD, they have introduced
various accounts specifically to benefit women and uplift their statuses.

 

He added that the bank has been on the forefront in supporting different
issues aimed at promoting women affairs and that they actively participated
in a special event organised to raise funds for the national women's team
Twiga Stars.-Daily News.

 

 

 

Tanzania: NMB Launches 'Umebima' Insurance Literacy Drive

THE current low uptake of insurance services in the country can be
significantly increased if the public could be rightly enlightened and
timely mobilized to embrace the risk management service, a senior NMB
official said yesterday.

 

Chief for Retail Banking, Mr Filbert Mponzi, told this reporter that the
country has huge potential to attain the national 50 per cent insurance
services usage target by 2030.

 

He added that it also possesses vast opportunities to tremendously improve
on the current less than one per cent insurance penetration rate, which is
among the lowest in the world. Speaking after officially launching the
"Umebima" insurance literacy campaign in Dar es Salaam, he said what was
required to attain national insurance inclusion targets was investing in
insurance education and sensitizing the masses on the virtues of hedging
against contingent risks or uncertain financial losses.

 

 

Equally important, he explained, was the affordability factor that is why
NMB Bank has partnered with Reliance Insurance to design a policy package
for petty traders whose premium is only 10,000/-.

 

"Today, we are launching the "Umebima" promotion to educate and mobilise
Tanzanians to insure life and property since insurance uptake in the country
remains low with not many people benefitting from the service," Mr Mponzi
said at the Karume market before launching the grassroots campaign.

 

One of top lender in the country said in a statement that "Umebima" is a
campaign aimed at mobilising more Tanzanians to take up insurance services
since the bank believes insurance uptake in the country can exceed the 50
per cent target set in the Financial Services Development Plan for 2020/21 -
2029/30.

 

"Available statistics show that currently only 15 per cent of Tanzanians
uses various insurances," reads the NMB press release.

 

NMB's Head of Bancassurance, Mr Martine Massawe, challenges Tanzanians to
use the Umebima campaign to learn more about insurance and the financial
benefits of the service.-Daily News.

 

 

 

Makers of basic necessities face 'tradeoff' supplying Russia with cookies,
soap

(Reuters) - Makers of everyday staples from Pampers diapers to Dove soap are
walking a fine line by continuing to sell their products in Russia, as
pressure grows on multinational companies to take a stand against Russia's
recent invasion of Ukraine.

 

McDonald's Corp (MCD.N) said on Tuesday it was closing its restaurants in
Russia, including its iconic Pushkin Square location in Moscow. PepsiCo Inc
(PEP.O), Coca-Cola Co (KO.N) and Starbucks Corp (SBUX.O) also stopped sales
of their best-known products in Russia. read more

 

But the world's biggest makers of packaged food items and household basics
have lagged some financial services firms, oil and gas companies and
retailers that withdrew entirely from Russia. The consumer products
companies argue that everyday people in Russia rely on their products.

 

Procter & Gamble Co (PG.N) and Unilever Plc (ULVR.L) said this week they are
continuing to sell essential products in Russia, but are ending any new
capital investments and are no longer advertising in the country. Unilever
has suspended all imports and exports of products into and out of the
country.

 

Packaged food maker Nestle SA (NESN.S) and dairy company Danone SA (DANO.PA)
are taking similar approaches.

 

"I give them credit for doing more today than they did yesterday," said
Jeffrey Sonnenfeld, a professor at the Yale School of Management who is
tracking major companies' moves to withdraw from Russia. "The more
comprehensive the pullout, the more you’re advancing the prospects of world
peace."

 

Sonnenfeld added that it was a "mistake" to try to minimize the damage to
Russian people by continuing to supply basics.

 

"There's no middle ground," he said.

 

Cadbury chocolate maker Mondelez International Inc (MDLZ.O) and
Kimberly-Clark Corp (KMB.N), which produces Huggies diapers, have yet to
announce plans to curtail production in Russia.

 

“It’s not about pure profits,” said Katie Denis, a spokeswoman for the
Consumer Brands Association, a trade group representing companies including
P&G and Mondelez. “It’s about, are you going to continue producing things
people need? It’s different than what companies who came out earlier are
dealing with.”

 

WORTH THE RISK?

 

Companies also do not want to be seen as harming regular Russian citizens by
putting them out of work.

 

At least six major fast-food companies – including Yum Brands Inc's (YUM.N)
KFC and Restaurant Brands International's (QSR.TO) Burger King – run more
than 2,500 restaurants in Russia, mostly through franchisees, and employ
tens of thousands more people, according to a Reuters tally that does not
include McDonald's. None of the companies so far have announced plans to
withdraw from Russia.

 

Investors such as the New York State pension fund want companies to consider
whether continuing to do business in Russia is worth the risks. read more

 

Asset manager Federated Hermes is pressing companies in phone calls and
letters to be "open and transparent about what they do in Russia" and share
"what decision-making process they've gone through to come up with a
conclusion" on working in the country, said Hannah Shoesmith, director of
engagement at the firm. Federated Hermes is targeting consumer products
companies in its outreach, Shoesmith said.

 

"We wouldn't ask companies to just leave Russia without asking them to
assess the impact on human rights," Shoesmith said. "There's a tradeoff
companies have to make. It's not so black and white."

 

Companies also "should start to think carefully" about their position on
taxes paid to the Russian government, Shoesmith said.

 

"There are attempts to come up with good solutions around paying tax," she
said. "If they pay tax in Russia, what are the solutions they can come up
with to make up the balance on that?"

 

Shoesmith said that in prior military coups and refugee crises, companies
made payments equivalent to their tax bills to nongovernmental organizations
aimed at helping people.

 

'CORPORATE SUICIDE'

 

"There's a big move in our industry to focus on companies with strong
corporate governance and ethical standards - and that means societal issues
as well," said Jack Martin, investment manager at Oberon Investments, which
holds shares in Unilever, Diageo Plc (DGE.L), Burberry Group Plc (BRBY.L)
and LVMH Moet Hennessy Louis Vuitton SE (LVMH.PA). "It's corporate suicide,
really, at the moment, to not pull back from the region."

 

Joe Sinha, chief marketing officer for Parnassus Investments in San
Francisco, said his firm has no direct exposure to Russian companies, but
that it is reaching out to the U.S. portfolio companies it owns with more
than 2% or so of revenue exposure to Russia to ask for details about their
thinking on whether to stay or leave the country.

 

"We’re not being prescriptive, we’re trying to understand their roles and
choices,” Sinha said. While Parnassus is supportive of steps like sanctions
that cut off Russian banks and technology firms close to the military, he
said, the analysis could be different for food companies that serve
consumers.

 

“For certain goods and services it would harm individual citizens who don’t
have anything to do with the regime,” he said. “There are gray areas.”

 

 

The Thomson Reuters Trust Principles.

 

 

 

LME forced to halt nickel trading, cancel deals, after prices top $100,000

(Reuters) - The London Metal Exchange (LME) was forced to halt nickel
trading and cancel trades after prices doubled on Tuesday to more than
$100,000 per tonne in a surge sources blamed on short covering by one of the
world's top producers.

 

The LME's shock move came as Western sanctions threatened supply from major
producer Russia and marked the biggest crisis to hit the 145-year-old
exchange in decades.

 

In the 1990s a rogue Sumitomo trader tried to corner the copper market and
tin trading was stopped for five years in the 1980s.

 

"The current events are unprecedented," the LME said in a notice to members.
"The suspension of the nickel market has created a number of issues for
market participants which need to be addressed."

 

Amid market panic sparked by Russia's invasion of Ukraine, buyers are
scrambling for the metal crucial for making stainless steel and electric
vehicle batteries.

 

Traders said some position holders have also been struggling to pay margin
calls.

 

China's Tsingshan Holding Group, one of the world's top nickel and stainless
steel producers, had been building a short position in nickel since last
year, betting prices would fall, three sources familiar with the matter
said. read more

 

Prices rocketed as Tsingshan bought large amounts of nickel to reduce those
short bets and its exposure to costly margin calls, they said.

 

Tsingshan and the LME declined to comment.

 

The LME raised margin requirements for nickel contracts by 12.5% to $2,250 a
tonne and suspended nickel trading on all venues for at least the rest of
the day. read more

 

The LME announced that all trades will be voided from midnight until 8:15
a.m. on Tuesday when trading stopped and added that it was considering a
closure of several days.

 

"People will be asking if this really a functioning market... This is meant
to be a market of last resort and people can't get inventories to deliver
against positions," said Colin Hamilton, managing director of commodities
research at BMO Capital Markets.

 

The LME also deferred physical delivery of maturing contracts and announced
it would temporarily stop publishing official and closing nickel prices.
read more

 

"The LME will actively plan for the reopening of the nickel market, and will
announce the mechanics of this to the market as soon as possible."

 

PRICES DOUBLE IN HOURS

 

Three-month nickel on the LME more than doubled to $101,365 a tonne before
the LME halted trade on its electronic systems and in the open outcry ring.

 

Nickel had pared gains to $80,000 a tonne when trading was halted, up 66% on
the day and a staggering 177% since Monday.

 

In China, the Shanghai Futures Exchange raised fees for nickel trading and
urged investors to "fend off risks, invest rationally, and work together to
maintain market stability".

 

Nickel on the Shanghai exchange hit its upward limit in night trading at a
record 267,700 yuan ($42,380.39) per tonne and also reached the 15% limit up
early on Tuesday.

 

CITIC Futures, China's biggest futures company, warned clients that if
nickel prices continued to jump on Wednesday, the Shanghai exchange could
take action, including forced position cuts, an internal notice seen by
Reuters showed.

 

The explosive gains, which have seen prices quadruple over the past week,
resulted from two major players facing off, said Malcolm Freeman of Kingdom
Futures, who declined to identify them.

 

One entity has control of between 50% and 80% of LME inventories, LME data
shows.

 

"There's a very big short and a very big long who've been sparring. And
because of their sparring, it's brutalised so many other shorts," said
Freeman.

 

Some small industrial users have been caught in the crossfire, having taken
positions to get physical delivery but then hit with margins calls costing
millions of dollars, he added. read more

 

The uncertainty caused by Russia's invasion and resulting sanctions has
added to an already bullish nickel market due to low inventories, which have
halved on the LME since October.

 

Russia not only supplies about 10% of the world's nickel but Russia's
Nornickel is the world's biggest supplier of battery- grade nickel at
15%-20% of global supply, said JPMorgan analyst Dominic O'Kane.

 

The LME is owned by Hong Kong Exchanges and Clearing Ltd.

 

The Thomson Reuters Trust Principles.

 

 

 

Chinese firms that aid Russia may be cut off from U.S. equipment -commerce
secretary

(Reuters) - Chinese companies that defy U.S. restrictions against exporting
to Russia may be cut off from American equipment and software they need to
make their products, U.S. Commerce Secretary Gina Raimondo told the New York
Times.

 

The U.S. could "essentially shut" down Semiconductor Manufacturing
International Corp (0981.HK) or any Chinese companies that defies U.S.
sanctions by continuing to supply chips and other advanced technology to
Russia, Raimondo told the newspaper in an interview published on Tuesday.

 

Washington is threatening to add companies to a trade blacklist if they
skirt new export curbs against Russia, as it ramps up efforts to keep a vast
array of technology out of the country after it invaded Ukraine last month.
read more

 

If the United States were to find that a company like Semiconductor
Manufacturing International Corporation was selling its chips to Russia, "we
could essentially shut SMIC down because we prevent them from using our
equipment and our software," she was quoted as telling the New York Times.

 

The Thomson Reuters Trust Principles.

 

 

 

China Feb factory inflation eases, spotlight on global commodities

(Reuters) - China's factory inflation in February eased to the slowest
annual pace in eight months, but analysts expect a pick-up in the coming
months from surging prices of global commodities including oil, challenging
policy-making to support the economy.

 

The producer price index (PPI) increased 8.8% on year, the National Bureau
of Statistics (NBS) said in a statement on Wednesday, easing from 9.1%
growth in January but just higher than an 8.7% rise in a Reuters poll.

 

Many Chinese factories closed in the first half of February due to Lunar New
Year festivities, putting a temporary leash on demand for raw materials. But
the war in Ukraine that erupted late last month has since raised concerns of
global supply disruptions, pushing commodity prices to decade-highs.

 

Month-on-month, the PPI swung to a gain from a decline in January, with
international crude oil prices rising sharply and driving up prices in
domestic oil-related industries, according to a separate NBS statement.
Local prices of non-ferrous metals also rose.

 

"We expect year-over-year PPI inflation to stay elevated in the near-term as
oil and metal prices increased sequentially due to geopolitical tensions,"
Goldman Sachs analysts wrote in a note.

 

On Monday, an official at the state economic planner also said China's
efforts to stabilise commodity prices face new challenges partly due to
geopolitical conflicts. read more

 

China sources more than 70% of its oil and 40% of its gas from overseas even
as the government races to increase domestic output.

 

Persistently high oil prices prompted by Russia's attack on Ukraine could
cut a full percentage point off the growth of large oil-importing developing
economies including China, according to the World Bank on Tuesday. read more

 

China is targeting slower economic growth of around 5.5% in 2022 compared
with last year, with the government citing headwinds at home and abroad.
read more

 

POLICY

 

China's central bank in December cut the reserve requirement ratio (RRR) for
commercial lenders, or the amount of cash that banks must hold in reserve,
by 50 basis points, releasing 1.2 trillion yuan ($190 billion) in long-term
liquidity. read more

 

Some analysts said the scope for monetary easing may now be limited due to
the threat of higher commodity prices.

 

"Sanctions on Russia could axe China-Russian trade and may lead to higher
imported prices," said Bruce Pang, Head of Macro and Strategy Research at
China Renaissance Securities.

 

The central bank said on Tuesday it will pay more than 1 trillion yuan in
profit to the central government this year, in a bid to help support fiscal
spending. read more

 

The profits come from its foreign exchange reserve operations in recent
years, said the People's Bank of China (PBOC).

 

"The PBOC's profit transfer is a better way to ease money supply in my
opinion," said Tian Yuan, former vice director of the Beijing Economic
Operation Association.

 

"The focus of the PBOC this year would be adjustments on the structure of
assets and liabilities to keep a relative loose monetary policy."

 

According to ANZ Research, the PBOC profit transfer is equivalent to a
liquidity boost from an RRR cut of more than 50 basis points.

 

China's consumer price index (CPI) inched up 0.9% in February, the data
showed, unchanged from the growth in January and market expectations.

 

The Chinese government left its 2022 CPI target, unveiled on Saturday, at
around 3%, unchanged from 2021. Last year, the CPI rose just 0.9%, reined in
by cautious consumer spending.

 

($1 = 6.3170 Chinese yuan renminbi)

 

The Thomson Reuters Trust Principles.

 

 

 

Tightening financial conditions sound alarm for world economy

(Reuters) - Global financial conditions, perceived as strongly correlated
with future growth, are at the tightest in two years, driven by soaring
energy prices, sliding stocks and the market fallout from the Ukraine-Russia
conflict.

 

Financial conditions is the umbrella phrase for how metrics such as exchange
rates, equity swings and borrowing costs affect the availability of funding
in the economy.

 

How loose or tight conditions are dictate spending, saving and investment
plans of businesses and households.

 

Goldman Sachs, which compiles the most widely used financial conditions
indexes, has in the past shown a 100-basis-point tightening crimps growth by
one percentage point in the coming year, with an equivalent loosening giving
a corresponding boost.

 

The tightening is an unwelcome development for a world economy already
threatened by the fallout from $120-a-barrel oil prices and supply chain
setbacks caused by sanctions on Russia.

 

If these drive inflation steadily higher, and "if the central banks take
their mandates seriously, you will see a further (tightening) in financial
conditions," said Rene Albrecht, strategist at DZ Bank.

 

"Economic dynamics will slow down further, inflation will be high
nonetheless and you will see second round effects and then you get a
stagflation scenario," he added, referring to a combination of rising
inflation and slower economic growth.

 

Goldman Sachs' global financial conditions index (FCI) is at 100.2, 60 basis
points (bps) tighter than prior to Russia's invasion of Ukraine and a level
last seen in March 2020, when the pandemic first hit.

 

The rise was led by its Russian FCI, which rose as high as 114.8 from around
98 at the start of February to the tightest since the 2008 crisis, driven by
a doubling of interest rates and a market implosion.

 

The Russian move has taken an emerging markets FCI to the tightest since
2016.

 

Euro zone moves are sizeable too. Conditions in the bloc, heavily reliant on
Russian energy, are at the tightest since November 2020, having moved 50 bps
in February, driven also by the European Central Bank (ECB) opening the door
to rate hikes this year.

 

Viraj Patel, global macro strategist at Vanda Research, said financial
conditions would take on even more importance for the ECB, which meets on
Thursday.

 

Should it proceed with the unwinding of bond purchases followed by rate
hikes as expected before the invasion, financial conditions could tighten to
levels seen at the height of the pandemic or even the bloc's sovereign debt
crisis a decade ago, he added.

 

U.S. conditions have tightened to a lesser extent.

 

But the indicators Goldman uses to calculate its indexes signal no relief;
safe-haven flows are boosting the U.S. dollar, which is near two-year highs,
and world stocks have fallen 11% this year, led by a near-20% fall in euro
zone equities.

 

U.S. investment-grade corporate bond risk premia have widened 40 bps
year-to-date as investors assess the hit to companies' profits.

 

With conditions historically loose in developed markets, policymakers may
not be too perturbed yet. On an inflation-adjusted basis, borrowing costs
have fallen sharply, hitting a record low -2.5% in Germany on Monday.

 

Peter Chatwell, head of multi-asset strategy at Mizuho, said that gives
central banks "more room to speak hawkishly and for those that are on the
brink of acting hawkishly, acting hawkishly."

 

The Thomson Reuters Trust Principles.

 

 

 

Global LNG demand growth shifts from Asia to Europe on Russia sanctions

(Reuters) - Asia's liquefied natural gas (LNG) demand growth may cool this
year as buyers baulk at record-high spot prices pushed even higher by
Europe's shift to the super-chilled fuel amid the Ukraine crisis, analysts
and industry sources said.

 

High spot prices since late last year have already slowed trade and are
likely to crimp demand growth of the fuel in Asia - the largest consuming
region - even as some countries see widening gas supply deficits as domestic
production falls.

 

This comes just as new LNG buyers in Asia, the Philippines and Vietnam, are
set to enter the market later this year.

 

"The LNG market has been evolving in an unfavourable manner for buyers as
the supplies are forecast to be tight during the 2021-2025 period while
demand is picking up after the pandemic," said Vietnamese state firm PV Gas,
which is set to trial the country's first liquefied natural gas (LNG)
terminal in the fourth quarter.

 

"This will lead to a strong price rising trend over the next years with no
signs of easing in the short term."

 

Asia's spot LNG benchmark price assessed by S&P Global Platts, known as
Platts JKM, jumped to a record $84.762 per million British thermal units
(mmBtu) on Monday on the back of strong prices in Europe as buyers scour
global markets for LNG cargoes to replace Russian gas and LNG.

 

It currently trades around $51 per mmBtu, compared with $6 in March 2021,
according to Refinitive Eikon data.

 

Consultancy Wood Mackenzie expects Asian LNG demand growth to slow to 2%
year-on-year in 2022, from 8% in 2021.

 

"In contrast, European LNG demand is expected to spike up by at least 20% in
2022, reflecting reduced Russian pipeline flows and the need to replenish
depleted European gas storage levels," said Valery Chow, a vice president at
WoodMac.

 

Natural gas and power prices hit all-time highs in Europe as the European
Union rolled out plans to cut EU dependency on Russian gas by two-thirds
this year, and end its reliance on Russian supplies of the fuel "well before
2030". Europe, which relies on Russia for 45% of gas supplies, could demand
more U.S. LNG. read more

 

"Asian buyers will need to pay a premium to pull cargoes over from Europe,
so Asia spot LNG prices will be supported by European gas prices," said
Edmund Siau, LNG analyst at consultancy FGE.

 

However, Rystad Energy analyst Wei Xiong said Asia's appetite to pay for LNG
may not be as high as Europe's so the upside risk for Asia spot prices is
likely to be lower than that of the TTFs, or Dutch gas prices, in Europe.

 

"Demand growth in India is likely to be muted due to very high spot prices
and an increase in domestic production," she said.

 

The spike in prices and limited supplies in a tight global market could
erode demand.

 

"This may result in demand destruction as gas-to-coal or gas-to-oil
switching would become more economical," said Rystad Energy analyst Lu Ming
Pang.

 

However, world's top LNG importer China will continue to drive demand growth
in Asia this year as it adds more regasification terminals to switch away
from coal in the power and industrial sectors.

 

China's imports are expected to increase by 8.5 million tonnes year-on-year
in 2022 and account for about 45% of Asia's LNG imports growth, Rystad
Energy said.

 

Still, China-based industry players are less bullish, pegging growth at 4
million tonnes or lower this year, adding that China could largely shy away
from the red-hot spot market by relying on newly signed term supplies from
countries such as Qatar and the United States.

 

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
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been compiled from sources believed to be reliable, but no representation or
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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
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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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