Good morning. Here’s what you need to know
-
Zambia’s inflation rate rises to 14.7% in May, trade surplus hits K2.4 billion
-
We contributed $727.8m to Zambia’s economy in 2023 – FQM
-
Billions in smuggled gold flow from Africa into UAE annually, SwissAid reveals
In Local Business and Finance News
Zambia’s annual inflation rate rose by 0.9 percentage points to 14.7 percent in May 2024, driven by price increases in both food and non-food items. This is as the country recorded K2.4 billion trade surplus. The Zambia Statistical Agency (ZamStats) Statistician General, Goodson Sinyenga, provided an overview, noting that the annual inflation rate increased from 13.8 percent in April 2024. This reflects an average price increase of 14.7 percent for goods and services between May 2023 and May 2024. In trade, Sinyenga reported a total trade value of K163.1 billion from January to April 2024, a 21.9 percent increase from the same period in 2023. Read more: Zambia Monitor
President Hakainde Hichilema has pledged to increase investments in Zambia’s trade corridors, emphasising their role in driving growth in critical economic sectors. Speaking at the Copperbelt Agricultural Mining, Industrial, and Networking Expo (CAMINEX) in Kitwe, he highlighted the importance of innovation-driven growth and the strategic advantages of transport corridors like Lobito, Tazara, Walvis Bay, and Nacala. These corridors enhance Zambia’s access to international markets, which he said was crucial for capitalizing on the high demand for critical minerals necessary for the global energy transition. Hichilema noted that this demand underscored Zambia’s strategic position and significantly contributed to the nation’s economic transformation agenda. He stated, “The trade and investment portfolio is further strengthened by various transport corridors, facilitating easy and cost-effective access to international markets, which we need to take advantage of.” Mines and Mineral Development Minister Paul Kabuswe echoed these sentiments, pointing to a mining boom in the region due to the recapitalization of Mopani Copper Mine. Read more: Zambia Monitor
Zambia may experience a prolonged contraction in its manufacturing sector this year as input inflation continues to rise. As indicated by the Purchasing Managers’ Index (PMI), manufacturing activity is heavily influenced by input prices, which are determined by currency and energy prices, liquidity, employment, and business confidence measures. Zambia has been burdened for an extended period by a lack of liquidity, currency depreciation, and increasing petroleum prices, which have kept its PMI below 50. (Readings below 50 signal contraction, while those above 50 indicate expansion). The latest headline reading in May was 47.7, down from 48.8 the previous month, marking five consecutive months of contraction as cost-of-living pressures and limited money circulation took their toll. These conditions have not improved, and as such, the forecast remains bleak. Read more: The Business Telegraph
Zambia has never been known as a gold producer and currently has not a single commercial scale gold mine in operation but this situation could change within the next three years as emerging resources company Westate Resources is planning to revive the historic Matala gold mine. The company’s CEO Paul Berresford tells Arthur Tassell that Westate is targeting an annual gold production from Matala of plus 50 koz. Matala forms part of what had traditionally been known as the Matala Dome gold project (or sometimes the Luiri Hill gold project), consisting of two historic mines, Matala and Dunrobin, 7 km apart, together with a number of exploration targets. Both Matala and Dunrobin were mined between 1928 and 1941 although total production was extremely modest, with Dunrobin recovering an estimated 31.59 koz and Matala an estimated 6.75 koz of gold over this period. Read more: Mining Review
In International News
Billions of dollars worth of gold is smuggled out of Africa annually, with most of it being exported to the United Arab Emirates for processing, according to a report by SwissAid. 321-474 tonnes of African gold produced through artisanal and small-scale mining goes undeclared each year, representing a value of between $24-$35 billion. According to SwissAid, the smuggling of African gold is on the rise, having “more than doubled between 2012 and 2022.” The report states that more than 435 tons of gold bullion were smuggled out of Africa in 2022 alone. The revenue fuels conflict, finances criminal and terrorist networks, undermines democracy and facilitates money laundering. Smuggled gold originates from 12 African countries, with most of the informal trade coming from Mali, Ghana and Zimbabwe. Read more: Business Insider
China’s manufacturing activity unexpectedly fell in May, keeping alive calls for fresh stimulus as a protracted property crisis in the world’s second-largest economy continues to weigh on business, consumer and investor confidence. The official manufacturing purchasing managers’ index (PMI) dropped to 49.5 in May from 50.4 in April, the National Bureau of Statistics (NBS) said on Friday, below the 50-mark separating growth from contraction and missing analysts’ forecast of 50.4. The disappointing number adds to a series of recent indicators showing the $18.6 trillion economy is struggling to get back on its feet, eroding earlier optimism seen after better-than-expected output and trade data. Read more: Reuters
The U.S. economy grew more slowly in the first quarter than previously estimated after downward revisions to consumer spending and a key measure of inflation ticked down, keeping the Federal Reserve on track to possibly begin cutting interest rates at least once before the end of the year. Gross domestic product – the broadest measure of economic activity – grew at an 1.3% annualized rate from January through March, the Commerce Department reported on Thursday, down from the advance estimate of 1.6% and notably slower than the 3.4% pace in the final three months of 2023. The first-quarter growth downgrade suggests the U.S. central bank’s aim of gradually cooling the economy through high interest rates is having an impact as consumers increasingly balk at higher prices, although it remains uncertain whether the weakening trend in inflation will continue. Corporate profits dropped for the first time in a year, falling 0.6% to $3.39 trillion from the fourth quarter’s record high. Read more: Reuters
Saudi Arabia’s state-controlled Aramco said it would sell some $11.5 billion worth of additional stock in an offering that begins Sunday, as Riyadh tackles pressure to raise funds for an array of wide-ranging projects aimed at diversifying its fossil fuel-based economy. Aramco will offer 1.545 billion shares in a price range between 26.70 and 29 Saudi riyals per share, according to a company filing. At the midpoint of that range, the sale would total nearly $11.5 billion. The sale represents a follow-on offering, after Aramco initially entered the public markets in 2019 and raised $29.4 billion in the world’s largest ever initial public offering. Read more: CNBC
Finally, Capital Markets News
In 260 trades recorded yesterday 221,805 shares were transacted resulting in a turnover of K606,906.88. The following price changes were recorded yesterday: K0.01 gain in Bata, K0.02 gain in CEC Zambia, K0.02 gain in ZANACO and K0.01 loss in CEC Africa on the quoted tier. Trading activity was also recorded in Airtel, Chilanga Cement, FARM, Real Estate Investments Zambia, Standard Chartered Bank Limited, ZAFFICO, Zambeef and Zambia Sugar. The LuSE All Share Index (LASI) closed at 13,105.28 points, 0.11% higher than its previous close of 13,091.42 points. The market closed on a capitalization of K101,331,448,201.84 including Shoprite Holdings and K66,548,762,761.84 excluding Shoprite Holdings.
4 Govt Bond trades with a total face value of 2,285,000 and turnover 1,538,610 were processed yesterday.