Good morning. Here’s what you need to know
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Use of dollar for local transactions may become a criminal offense soon
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ZAMEFA attributes K1.4 billion revenue growth to kwacha depreciation
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S&P 500, Nasdaq post record closing highs
In Local Business and Finance News
Metals Fabricators of Zambia PLC, known as ZAMEFA, has seen a remarkable 36% increase in revenue, reaching about K1 billion compared to the previous year’s ZMW 1,000 million with the current operating profit for the six-month period ended 31 March 2024, increasing to K83 million from K37 million in the previous year. The Ultimate parent company for ZAMEFA is Reunert Limited, a company incorporated in South Africa. ZAMEFA was incorporated in 1968 and was privatized in 1996. According to the Company financials seen by the Zambian Business Times and signed by the Company Secretary, the depreciation of the Zambian Kwacha has substantially contributed to the surge in revenue during the period under review. The company’s substantial revenue growth has ignited a currency controversy due to the significant portion of revenue being generated in United States Dollars (USD), leading to a heated debate about the impact of Zambian Kwacha depreciation against the USD. Read more: Zambian Business Times
The UAE’s International Resources Holding (IRH) has withdrawn a bid to buy a stake in Vedanta Resources Ltd’s Zambian copper mines, it said on Wednesday, after talks collapsed because of a failure to agree on the assets’ value. IRH, an arm of United Arab Emirate (UAE)’s International Holding Company, the emirate’s richest company, had offered to buy a 51% stake in Vedanta’s Konkola Copper Mines (KCM) for more than $1 billion, Reuters reported in April. It had wanted the mines to consolidate its copper position in Zambia after buying a 51% stake in Mopani Copper Mines in a deal concluded in March. But IRH told Reuters it was “not currently pursuing the acquisition of a majority stake in the Zambian assets”. “IRH terminated the transaction discussions two months ago due to discrepancies in valuation,” it added in an emailed statement. Read more: MSN
The Bank of Zambia (BoZ) has drafted new regulations to curb the use of foreign currencies in the economy, particularly during a local transaction. The Currency Regulation would be issued by the Finance and National Planning Minister as a Statutory Instrument. Once the Statutory Instrument was gazetted, the currency issued by the BoZ (Kwacha and Ngwee) would be the sole legal tender in the country for domestic public and private transactions. The bank is concerned that the use of foreign currency in the local economy, commonly called dollarisation, had continued blunting its policy tools, while putting pressure on the exchange rate. This prompted the central bank to introduce regulations which would criminalise the use of foreign currency in the local economy. Read more: Zambia Monitor
The Bankers Association of Zambia (BAZ) has proposed zero rating the interest component of a Finance Lease, a measure expected to make the service more affordable for acquisition of assets and assist businesses to grow. Under the Value Added Tax (VAT) proposals for the 2025 national budget, the bankers are contesting the Tax Policy Statutory Instrument (SI) No. 68 of 2014 regarding the Finance Lease. In the submission made by the BAZ Chief Executive Officer, Leonard Mwanza, the bankers indicated that the proposed measure would increase the uptake (sales) on finance leases by making the service more affordable for acquisition of assets and assist businesses to grow. Mwanza noted that cheaper financing to acquire business assets should be supported for the overall benefit of the economy. Additionally, Mwanza stated that the measure would also assist to reverse the distortion created in the VAT mechanism when dealing with leases. Read more: Zambia Monitor
In International News
World stocks clocked up more record highs on Thursday after U.S. data had narrowed the odds on a September Fed interest rate cut, while Europe was on politics watch again as UK voters headed to the polls in national elections. The July 4 holiday in the United States made for thin trading, amplified as investors tried to sit on their hands to see just how large a majority the Labour Party might get when UK vote results begin to come out late in the evening. Markets are well prepared for a change given opinion polls have for months put the centre-left party on course for a landslide victory over the Conservatives who have held power for 14 years, including both for Brexit and the COVID-19 pandemic. Read more: Reuters
The U.S. trade deficit widened for a second straight month in May amid a decline in exports, indicating that trade likely remained a drag on economic growth in the second quarter. The trade deficit increased 0.8% to $75.1 billion, the Commerce Department’s Bureau of Economic Analysis said on Wednesday. Data for April was revised slightly to show the trade gap rising to $74.5 billion instead of $74.6 billion as previously reported. Economists polled by Reuters had forecast the deficit increasing to $76.2 billion in May. The goods trade deficit widened 0.9% to $100.2 billion, the highest since May 2022. Adjusted for inflation, the goods trade deficit rose 0.5% to $94.5 billion. Trade subtracted from gross domestic product in the first quarter, restricting the economy to a 1.4% annualized growth pace. The economy grew at a 3.4% pace in the October-December quarter. Growth estimates for the second quarter are around a 2% pace. Read more: Reuters
The Democratic Republic of Congo’s state miner has started selling its share of copper from joint-venture projects for the first time as the country seeks greater control over a metal key to the energy transition. Gecamines holds minority stakes in large mines run by firms such as China’s CMOC Group and Glencore Plc. Until now, the joint ventures themselves have sold all the production. But the state company is taking a more active role in marketing its portion — totaling hundreds of thousands of tons a year – according to people familiar with the matter. Gecamines is offering copper from CMOC’s giant Tenke Fungurume mine, in which it holds a 20% interest, the people said, asking not to be identified discussing private negotiations. The state miner is assessing bids — including from Glencore, Trafigura Group and Mercuria Energy Group — for 90,000 tons from the project, two of the people said. Read more: Mining
China hopes to reach an agreement with the European Union soon on the bloc’s planned tariffs for imported Chinese electric cars, the Ministry of Commerce said Thursday. The European Commission announced in mid-June that if discussions with China did not go well, the bloc would start to impose additional duties on imported Chinese EVs on Thursday, July 4. “Definitive measures” would take effect four months after that date, according to a press release. “We hope that the European side will work with China to meet each other halfway, show sincerity, speed up the consultation process, and, on the basis of rules and reality, reach a mutually acceptable solution as soon as possible,” Chinese Commerce Ministry spokesperson He Yadong told reporters in Mandarin, according to a CNBC translation. He reiterated China’s opposition to the European Union’s anti-subsidy probe and pointed out the two sides still have a four-month window. Read more: CNBC
Finally, Capital Markets News
In 186 trades recorded yesterday, 64,941 shares were transacted resulting in a turnover of K569,448.65. No price changes were recorded yesterday. Trading activity was recorded in Airtel, CEC Zambia, Chilanga Cement, Madison Financial Services, National Breweries, PUMA, Real Estate Investments Zambia, Standard Chartered Bank Limited, Zambeef, ZANACO, Zambia Sugar, FARM and CEC Africa on the quoted tier. The LuSE All Share Index (LASI) maintained its previous day close at 13,873.85 points. The market closed on a capitalization of K114,439,619,865.59 including Shoprite Holdings and K70,961,263,065.59 excluding Shoprite Holdings.
A Govt Bond trades with a face value of K5,800,000 and turnover K4,925,590 was processed yesterday.
