An avalanche of disappointing June economic data from Asia as released by Markit Economics for June has weighed global stocks and commodities offsetting the effects of the Sino US euphoria after the G20 trade war breakthrough earlier this week. China, Japan, Thailand, Malaysia and South Korea all slid into contraction zone reflecting an autopsy of the US-China trade war. Donald Trump and Xi Jinping agreed to restart trade talks which stalled following the slapping of additional tariffs on $250 billion worth of Chinese goods. Medium term risks subside as long term uncertainty looms We don’t believe that this move is…
Author: The Editor
Copper the metal used to manufacture bullets and electric wires rallied to a 6 week high crossing the $6,000 metric ton on news of US and China resuming trade talks on the sidelines of the G20 summit. London Copper is trading 1.4% higher at $6,095 a metric ton after being suppressed for 3 weeks below the $6,000 mark after disappointing economic data from China and the United States weighed prospects of aggregate demand. Donald Trump and Xi Jinping agreed to resume trade talks with Trump commuting to no additional tariffs and a softer staff on Huwawei. Copper is used as…
Africa’s second largest copper producer Zambia had its credit assessment lowered further into junk status by Fitch rating agency. This was according to a note released on the rating agency’s website on 27 June. The copper producers issuer default rating is now pegged at CCC from B- (negative outlook) in October 2018. The rating agency cited the government’s high external financing need coupled with dwindling foreign exchange reserves that increase vulnerabilities to external shocks and rising public/external debt. This rating comes a month after Moody’s downgraded Zambia’s credit rating to Caa2 (-ve outlook) from last years Caa1. Balance sheet vulnerabilities…
Elevated credit risk profile is reflecting in market players affinity for higher yielding shorted dated Kwacha assets Barely a week after the dismal performance of the third treasury bond auction of 2019, the Bank of Zambia sold K852 million worth of treasury bills on Thursday 20 June in an auction that was 90% filled. Market appetite was slightly over a yard (K1.04 billion) in local currency of which 85% was absorbed at cost. This outcome redeems the weak anemic outcome of Friday 14 June fixed income sale that saw the central bank in the copper producer take a deep haircut…
Currency in Africa’s copper producer, the Kwacha, on 18 June 2019 rallied to K12.95 for a unit of dollar propelled by support from taxes and payroll conversions. Most corporates are selling dollars to meet their taxation obligations in local currency with a significant portion also looking to fund month-end payrolls. This is the strongest the copper currency has traded in almost 2 – months after it slid to a 42 – month low weighed by souring sentiment given falling reserves and rising public debt. The Bank of Zambia (BOZ) on 22 May tightened monetary policy 50 basis points (bps) to…
The Central Bank in Africa’s second largest copper producer, the Bank of Zambia (BOZ), sold K170 million worth of treasury bonds in a deeply under-subscribed debt sale on Friday 14 June. With aggregate market liquidity of K782 million on auction date, analysts had forecast a 50% subscription haircut – best case scenario. This was the weakest outcome in over a decade representing a 10.33% subscription. With K1.65 billion on offer, appetite was anemic at K483 million of which only K170 million was absorbed with appetite for 2 and 3 year tenors. The Kwacha bond curve was unchanged as the central…
In a recent publication by the International Monetary Fund – IMF, a review of a total of 133 of their programs ranging between 2011 and 2017. The findings reveal that 75% of the IMF programs were either fully or partially successful in achieving their overall objectives. Key insights that can be drawn from the review include the following: ONLY IN ONE THIRD OF IMF PROGRAMS DID DEBT SUSTAINABILITY IMPROVE, AND IN MANY COUNTRIES, INDEBTEDNESS OVERSHOT EXPECTATIONS In emerging markets and lower-income countries with IMF programs, the review reported a large and rapid increase in debt.Where debt sustainability did improve, it…
Illovo subsidiary and Lusaka Securities Exchange – LuSE listed Zambia Sugar Plc (ISIN: – ZM0000000052) recorded a 68% rally in its H1:19 (to 29 February 2019) headline earnings to K30.44 million. This was established in the company’s financial report published on the Zambian bourse website. Revenues rose 14.22% to K1.22 billion from K1.07 billion same period a year ago on increased uptake of cane sugar given the exemplary quality. Cane quality and supply observed over the last (3) years is attributed to improved irrigation and water supply in the Nakambala area manifesting in a 13.33% rally to 400,000 metric ton…
Half year revenues to 31 March 2019, for Reunert 100% owned subsidiary and LuSE listed Metal Fabricators of Zambia – ZAMEFA (ISIN: ZM0000000243), rose 20.7% to K703.8 million from K582.9 million. This is reflected in the company’s H1:19 results published on the Zambian bourse website. ZAMEFA’s sales volumes widened 9% supported by the rising demand for copper products globally and a stronger dollar which helped boost the listed entities bottom line as export proceeds are denominated in dollars. Operating income (H1:19) rose 28.2% to K18.2 million compared to K14.2 million as finance costs ballooned 25% exacerbated by funding needs which…
Tax conversions and offshore treasury bond interest to offer support in the next fortnight The Kwacha is expected to trend bullish this week as the tax season window opens. The copper currency last traded at 13.24 on Friday 07 June reversing some of the gains it earned earlier last week when the copper currency rallied to 13.1 levels. Support is expected from conversions by corporates looking to fund their mid month tax obligations however the rally will be capped by the mines remitting mineral royalty taxes in dollars directly to the central bank. The local unit is forecast to trade…