The Daily Economic and Business News Update 16-12-11

Group Economics & Strategy 3rd Floor ZB House, 46 Speke Avenue, Box 3198, Harare Tel: +263(0)-4-757471-9, 757535-43
Fax: +263(0)-4-253815 Email: groupeconomics@zb.co.zw
The Daily Economic and Business News Update Friday, 16 December 2011
Foreign Currency, Money, Equities & Commodities Markets Overview
Foreign Currency Markets Currency USD/ZAR EUR/ USD GBP/ USD USD/ BWP USD/ JPY 16-12-11 8.3683 1.3026 1.5528 7.6608 77.8550 15-12-11 8.4158 1.2996 1.5450 7.7131 78.0600 Index Dow Jones Nasdaq FTSE All Share Nikkei 225 Dax Change -0.99% -1.29% +0.88% 0.00% -0.45% -0.11% International Stock Markets 15-12-11 11,868.81 2,541.01 2,772.25 8,377.37 5,730.62 14-12-11 11,823.48 2,539.31 2,754.78 8,519.13 5,675.14 Change +0.39% +0.07% +0.63% -1.65% +0.98% 15-12-11 9.000% 0.283% 0.555% 1.099% 0.749% 3.250% YearOn-Year Inflation Rates(Sep 11-Nov 11) China 4.20%Nov. Ghana 8.56%Oct. Nigeria Kenya Botswana Malawi Zambia Zimbabwe South Africa Canada Australia U.K. Japan U.S.A. 10.50%Oct. 18.91% Oct 8.80%Oct. 8.10%Oct. 8.70%Oct. 4.20%oct. 6.00%Oct 2.70%Oct. 3.52%Sep. 5.00%Oct. -0.20%Oct. 3.52%Oct.
African Stock Markets 15-12-11 14-12-11 Index Zimbabwe Industrial 138.29 139.67 Zimbabwe Mining JSE All Share Ghana SE-CI Nairobi SE 20 Nigeria SE All Share 80.3 32,006.70 964.21 3,106.90 19,828.40 81.35 31,727.03 964.20 3,120.88 19,849.31
Interest SARB Prime Rate LIBOR One Month Libor three month LIBOR One Year Federal Discount Rate Federal Prime Rate
ZSE Financial Counters (US cents) Last Traded 16 75 4.5 9.5 9 5.8 14 2 1.1 105.1 4 1.2 Daily Change (USc) -5 -0.5 -2 +0.3 +0.01 +6.9 +0.1 YTD Change (USc) 8.00 25.00 -4.50 -5.00 -11.00 2.30 9.50 -0.20 0.11 -38.00 3.30 0.00 YTD Change (%) 100.00% 55.56% -50.00% -35.71% -55.00% 65.71% 380.00% -8.00% 11.00% -25.33% 412.50% 0.00% Issued Zimbabwe Shares 175,190,642 63,754,460 2,152,730,176 684,144,546 20,636,244 591,850,127 108,923,291 559,450,159 2,807,107,289 63,036,205 750,829,320 357,891,256 Market Cap. (US$) 28,030,502.72 44,628,122.00 96,872,857.92 61,573,009.14 1,857,261.96 34,327,307.37 13,070,794.92 12,867,353.66 31,158,890.91 70,600,549.60 30,784,002.12 4,294,695.07
Counter ZBFH ABC Barclays CBZH INTERFIN FBCH Fidelity Nicoz NMB Old Mutual TNH Trust
15-12-11 16 9.5 14 105.1 4 -
14-12-11 70 4.5 9 12 2.3 1.11 112 4.1 -
ZSE TOP FOUR GAINERS (US CENTS) Counter Previous 15-12-11 2 2.3 11.99 112 Change (%) 33.3% 15.0% 9.1% 6.6% Counter
ZSE TOP FOUR LOSERS (US CENTS) Previous 30 3.1 0.3 1.4 15-12-11 8.0 2.0 0.2 1 Change (%) -73.3% -35.5% -33.3% -28.6%
PHOENIX 1.5 NICOZ 2 M&R 11.00 OLD MUTUAL 105.1 ZSE Market Capitalization (US$ billion) Index Industrial Mining Total YTD Change MoM Change 15-12-11 3.412 0.073 3.486 -9.16% -5.41%
RADAR ASTRA IND INTERFRESH ARISTON
International Commodities Markets Commodity Gold (US$/ oz) Platinum (US$/ oz) Silver(US$/ oz) Palladium (US$/ oz) Brent Crude (US$/ barrel) 15-12-11 1,570.60 1403.00 29.28 618.00 105.55 14-12-11 1,576.50 1,499.00 28.96 615.00 107.38 Jan 11 1,414.60 1,766.00 30.67 781.00 95.80 Jan 10 1,120.90 1,522.00 17.20 421.00 81.68
14-12-11 3.444 0.074 3.519 -8.29% -4.48%
Disclaimer: This document may be legally privileged and/or confidential and has been prepared for informative purposes only. No liability whatsoever for any loss howsoever arising from the use of this review or its contents or otherwise arising in connection therewith shall be accepted by ZB Financial Holdings, any of its directors, employees, or associates. Any person who makes use of this document shall be solely responsible for making his or her own independent investigation of the issues discussed in this report. ZB Financial Holdings accepts no responsibility whatsoever for the accuracy or completeness of the information contained in this document. -Page 1-
Group Economics & Strategy 3rd Floor ZB House, 46 Speke Avenue, Box 3198, Harare Tel: +263(0)-4-757471-9, 757535-43 Fax: +263(0)-4-253815 Email: groupeconomics@zb.co.zw
Business and General Economic News

1. MBCA Bank Limited, a unit of South Africa's Nedbank, has embarked on a staff and
management rationalisation exercise to reduce costs and establish a structure in line with the Bank's strategy. A total of 52 workers will be affected by the retrenchments. In a statement, the Bank said following applications to the relevant authorities in July 2011 to retrench, staff selected included both managers and non-managers. MBCA said it was currently fulfilling the conditions on the determined and agreed retrenchment packages for the identified managers and non-managers. A market update by the Bank follows media reports on a biting retrenchment dispute with employees who are said to have demanded at least US$10,000 per worker in exit packages. (Business Herald)
2. CBZ Bank and the Zimbabwe Microfinance Wholesale Trust have launched a wholesale funding scheme to financial service providers for on lending to small-scale enterprises. The funding scheme is expected to give impetus to the small and medium enterprises to recapitalise their operations. In a joint statement yesterday, CBZ and ZMWFT said the wholesale loans would be tailor-made to the specific risks and circumstances of each qualifying organisation. The loan size ranges from US$1,000 to a ceiling of US$50,000. This facility has created activity for micro-financiers, who have been struggling with liquidity and with the wholesale funding, they would now be in a position to grow their loan books. (Business Herald)
3. Government is considering paying US$3.7 million to Caledonia Mining Corporation and assume ownership of the Canadian firm's local unit Blanket Mine. The Toronto Stock Exchange-listed company's chief executive Mr. Stefan Hayden stirred a hornets' nest after allegedly labelling indigenisation "a political gimmick" ahead of elections scheduled for early next year. Asked when his firm expected to complete discussions for indigenisation of Blanket Mine, he is alleged to have said they "will continue until before elections". The gaffe riled Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere who threatened
Government takeover of Blanket Mine. Caledonia, sensing the impending danger, pressed the panic button and splashed Press statements refuting its Chief Executive had allegedly labelled indigenisation a political gimmick ahead of elections next year.(Business Herald)
4. Zimbabwe's headline consumer inflation was at 4.2% year-on-year in November, unchanged from its rate in October, the National Statistical Agency said yesterday. On a month-on-month basis, CPI quickened to 0.5% from 0.1% in October. (News Day)
5. The Zimbabwe Revenue Authority's introduction of the latest version of an automated customs clearance management system has brought industry to its knees as goods in transit are stuck at the country's ports. The system challenges at Zimbabwe's ports is particularly worrisome for importers as the majority are set to close shop today for the festive season. Ministry of Finance and Zimra officials were, however, conspicuous by their absence. Sfaaz Chairperson Mr. Phanuel Gukwe said the system, whose implementation commenced in October, had significantly slowed down clearance procedures. (Business Herald)
6. Air Zimbabwe has suspended flights to South Africa with management scared creditors might descend on its planes on landing at OR Tambo International Airport. An Airzim plane was this week impounded at London's Gatwick International Airport over a US$1.5 million debt. Sources at Airzim yesterday told The Herald the national airline is now depending on its domestic flights for survival. Management, sources claim, has made a deliberate decision not to fly Airzim into some countries where there are risks of creditors pouncing on its planes.(Business Herald)
7. Tractive Power Holdings Limited (TPH) revenue went up by 22% in the first quarter (Q1) ended November 30 compared to the same period last year buoyed by contributions from its
divisions Barzem, Farmec and Northmec. The group recorded profit after tax of $397,000 during the quarter. Speaking at the companys annual general meeting on Tuesday 13 December 2011, TPH group Chairperson, Richard Wilde, said trading patterns did not change in the period under review. He said the groups ability to effectively implement its restocking programmes was affected by low liquidity levels on the market as well as long delivery times for machines and equipment which resulted in low levels of available stocks of all products in the sales mix.(News Day)
8. The government has hinted it will soon craft laws to stop platinum miners from exporting the unprocessed mineral after realising it is losing revenue and jobs to South Africa. Mines and Mining Development minister Obert Mpofu said the government was worried about loss of revenue and pilferage of other minerals, which are extracted as byproducts from platinum in the refinery process. He said he would soon approach Cabinet with a law that would force platinum miners to set up refineries in the country. (News Day)
9. Two diamond mining companies that were recently placed on the United States government sanctions list have said the embargo will not affect their operations and marketing of the gems. Mbada Diamonds and Marange Resources' management said this to journalists on a tour of Chiadzwa diamond fields in Marange area on Wednesday 14 December 2011 to familiarise themselves with the gems processing. Marange Resources mine manager, Mr. Munashe Shava, said that the company's operations will not be affected by being placed on the sanctions list. (Business Herald)
10. National Foods Limited (NFL) has ruled out production of cooking oil next year due to a severe shortage of soyabean on the local market. NFL group human resources and communications director Innocent Magaya said they required at least 50,000 metric tonnes to efficiently run their soyabean crushing plant. Our main challenge is getting the raw material locally at the
right volume and right price, he said. The company reopened its Bulawayo flour plant this year after it was mothballed last year. The factory was opened after the company realised that the Harare factory was operating at full capacity. (News Day)
11. West Group, which recently acquired selected assets of Red Star and did business using the trademark, has rebranded the wholesale business and changed the trading name to West Star, as it consolidates its brands for a single group identity. The West Group companies also comprise WestBev, West Food Distribution Network, West Oils, West Fuels, West Property, West Sanitary and Paper and West Agencies and Intercrop & Fellowgold Mining. The group started using the Red Star brand after acquiring the assets of Red Star Wholesalers' Leopold Takawira Street (Harare) and another in Bulawayo. West Foods Chairman Mr. Ken Sharpe said the Red Star brand was dropped to manage perceptions stemming from the brand's "unsavoury" past.(Business Herald)
12. Diamond mining joint venture firm, Anjin Investments says it has to date injected close to $400 million into the operations and has plans to expand its plant in line with its objective of maximising production of the precious stones. The joint venture firm between government and a Chinese-based firm which is tipped to become the biggest diamond producer globally in terms of production and investments, says since inception, close to $400 million has been poured into the operations. In a sideline interview at the two-day media tour of the Marange diamond field meant to expose both local and foreign journalists to developments at the diamond field, Anjin Investments Chief Engineer Hu Shijie noted that the bulk of the investment has been channeled towards setting up of modern diamond mining infrastructure. (ZBC News)
13. Junior Chamber International (Zimbabwe) has launched a foundation that will assist in raising additional funding to further the organisation's activities and mission. Zimbabwe National
Chamber of Commerce president Mr. Oswell Binha, who launched the foundation, implored corporates and individuals to assist in developing the nation's corporate and community leaders. "Contributing to this fund gives one the opportunity to actively support the programmes of JCI Zimbabwe, and in so doing, repay the organisation for the wonderful work it is doing to develop our communities. The ZNCC president is also part of the board of trustees of the foundation. The foundation is expected to develop the next generation of active citizens and corporate and community leaders. (Daily News)
14. Government says it is ready to work with mining companies in mobilising at least $6 billion required towards the setting up of mineral refinery plants with a view to increasing export receipts. The commitment by government to work with mining companies comes at a time when the mining sector is being called on to process raw mineral products into finished commodities. This came out at the 10th anniversary celebrations for a locally-based platinum mining firm in the capital. The Permanent Secretary in the Ministry of Mines and Mining
Development, Mr. Prince Mupazviriho said that government will soon engage the mining sector on modalities to mobilise capital for the establishment of mineral refinery plants in order to consolidate the mining industrys position as the second largest economic growth after agriculture.(ZBC News) contributor to
Regional Highlights
1. South Africa's rand firmed against the dollar, recovering from two week lows as data showed U.S. unemployment claims were at a 3-1/2 year low encouraged investors to take on risk assets. Government bonds also got a reprieve after a sell-off this week and yields trended lower. This recovery might be short-lived though and the rand will likely maintain its weaker tone as long as the euro zone debt crisis remains unresolved. Local traders squared their books ahead of a public holiday today, which is traditionally the start of Christmas holidays for most market players in South Africa.(Reuters)
2. South African stocks snapped a five-day losing streak yesterday, rising a little over 1% as Old Mutual surged after the insurer said it would sell its Nordic unit for $3.2 billion. ArcelorMittal South Africa, a unit of the global steelmaker, rose sharply on hopes a South African court ruling will allow it to continue to source iron ore at a discount. "Old Mutual has been struggling for years to dispose of its non-core assets, the sale of the Nordic business is a step in the right direction and the market likes that," saids Nick Kunze, head of dealing at BJM Private Clients in Johannesburg. The benchmark Top-40 index gained 1.08% to 28,556.63, after five sessions of straight decline. (Reuters)
3. South African furniture company Steinhoff Holdings said it would pay $190 million for a 20% stake in PSG Group, giving it access to the investment firm's assets in manufacturing, construction and banking. Steinhoff, the second-biggest retailer of households goods in Europe, said in a statement it will pay 1.6 billion rand to existing shareholders in PSG for the stake. The sellers include Mayfair Speculators Proprietary Ltd, a firm indirectly associated with Steinhoff's CEO, the company said in a statement. The deal with PSG will provide "synergistic benefits" to Steinhoff's current assets, it said. PSG has stakes in 35 companies across several industries, but is probably best known for its assets in financial services, including listed retail lender Capitec Bank and fund manager PSG Asset Management.(Reuters)
4. Botswana's consumer inflation quickened to 9.2% year-on-year in November, from 8.8% in October, the Central Statistics Office said on Thursday 15 December 2011. On a month-onmonth basis the index was at 0.6% from 0.4% in October.(Reuters)
5. Zambia will raise its planned eurobond to $700 million from $500 million as it expects high investor appetite for the debt, Finance Minister Alexander Chikwanda said on Thursday 15
December 2011. "Indications are that the bond might be over-subscribed thereby giving us leeway to raise it to around $700 million," Chikwanda said in a statement in parliament. Zambia has a B+ long-term credit rating with a stable outlook from Fitch and Standard and Poor's.(Reuters)
6. Kenya said on Thursday 15 December 2011 that a $600 million foreign loan it is taking out for infrastructure projects instead of a planned eurobond will have a maturity of two years and either a floating or a fixed interest rate. Interest rates in Kenya have risen steeply to nearly 20% from about 2% in January, making it costly for the government to borrow from the domestic market, especially to fund its ambitious infrastructure development plans which are core to its economic growth aims. Traders lauded the short duration of the loan, which will be in multiple major global currencies, saying it would cushion east Africa's biggest economy from high interest rates and currency volatility. The Ministry of Finance also said in a statement that it had invited commercial and investment banks to bid to arrange for the loan in dollars or any other major reserve currencies.(Reuters)
7. The Kenyan shilling rallied more than 2% to an 8-month high against the dollar yesterday, helped by reduced dollar demand and central bank hoovering up shillings for the third session this week, while stocks edged down. The Central Bank of Kenya took 250 million shillings out of the market through repurchase agreements out of 4 billion shillings targeted, at an average weighted rate of 11.9%. At the 1300 GMT market close, commercial banks quoted the shilling at 85.00/10 against the dollar, 2.3% stronger than Wednesday's close of 87.00/20. (Reuters)
International Highlights
1. Widespread discounting on the High Street failed to stop retail sales falling by 0.4% in November from the month before. Excluding spending on fuel, retail sales fell 0.7% on the
month, according the UK Office for National Statistics. The data revealed that consumers had cut back spending on computers, mobile phones, watches and jewellery, but that clothes sales had recovered. The British Retail Consortium said the figures were "miserable". The fall in November follows a surprise rise in sales in October, which analysts said was due to the start of deep discounting by retailers.(BBC News)
2. IMF head Christine Lagarde has said the world economic outlook is "gloomy" and no country is immune from rising risks. She said all nations, starting with Europe, needed to head off a crisis with risks of a global depression. "There is no economy in the world immune from the crisis that we not only see unfolding but escalating," she said. "It is going to be hopefully resolved by all countries, all regions actually taking action." Meanwhile, ratings agency Standard and Poor's downgraded 10 Spanish banks by applying new ratings criteria. And France's official statistics agency, INSEE, said that it expects the Europe's second-largest economy to fall into recession in the final three months of this year and the first quarter of 2012.(BBC news)
3. The downturn in the 17 economies that share the euro eased slightly in December, according to a closely watched survey. The composite survey of thousands of firms by Markit showed a continued contraction - but at a slower rate than in November. Manufacturing in Germany the eurozone's strongest economy - shrank for the third month in a row. However, the figures were not as bad as many economists had expected. "It's an encouraging sign that the index didn't fall any further. Quite what will happen henceforth remains highly uncertain," said Markit's chief economist, Chris Williamson.(BBC News)
4. Indonesia has recovered the investment grade status for its sovereign debt at Fitch Ratings after 14 years, putting the country on the same level as India. The agency said in a statement yesterday that Indonesia had resilient economic growth, low government debt and prudent
policy. The country lost the investment grade rating in December 1997 during the Asian financial crisis. The upgrade is expected to encourage more investment into the economy. Analysts have long expected Indonesia's rating to be raised to investment grade. It brings down borrowing costs and makes the country more attractive to investors at a time when major economies are being downgraded. "Indonesia, in terms of sovereign risk, is better than several Western European countries," said Jerome Booth from Ashmore Investment Management in London.(BBC News)
5. Car production in the UK rose for the sixth straight month in November, according to the Society of Motor Manufacturers and Traders (SMMT). A total of 136,111 cars were made last month, up 8.5% from the same point last year. UK engine production rose by 1.7% in November. "UK vehicle and engine production continues to lead a manufacturing recovery," said SMMT chief executive Paul Everitt. "Despite the challenges in the eurozone, the UK motor industry expects further growth in 2012." For the first 11 months of the year, the total number of cars made was about 1.25 million - 6.1% more than was made in the same period in 2010. Consultancy KPMG said that the production figures were being driven by strong demand, particularly from Asian buyers.(BBC News)
6. US producer prices rose by more than expected in November, according to data from the US
Labor Department. The prices firms pay for goods from factories rose 0.3%, against a 0.3% fall in October, and higher than a 0.2% rise that economists had forecast. Excluding the volatile food and energy sectors, core producer prices edged up 0.1% after being flat in October. Separately, data showed that far fewer people are seeking unemployment benefits than three months ago. The number of people applying for welfare payments fell last week to 366,000, the lowest number since May 2008, according to the Labor Department. The US unemployment rate recently dropped to 8.6%, from 9%. In May 2008, the rate was 5.4%. (Reuters)

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Group Economics & Strategy 3rd Floor ZB House, 46 Speke Avenue, Box 3198, Harare Tel: +263(0)-4-757471-9, 757535-43

Fax: +263(0)-4-253815 Email: groupeconomics@zb.co.zw

15-12-11 16 9.5 14 105.1 4 -

14-12-11 70 4.5 9 12 2.3 1.11 112 4.1 -

RADAR ASTRA IND INTERFRESH ARISTON

14-12-11 3.444 0.074 3.519 -8.29% -4.48%

Business and General Economic News

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