Good afternoon. Here’s what you need to know
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Zambia’s kwacha hits record low against U.S. dollar
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Zanaco income up 34%
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Bank of England holds interest rates steady, but signals a cut is coming
In Local Business and Finance News
Zambia’s kwacha currency hit a record low against the U.S. dollar on Wednesday, touching 27.30 to the dollar amid hard currency shortages and a punishing drought that has led to power cuts in the southern African copper producer. The kwacha has lost almost 5% of its value against the greenback this year and 17% in the last six months, according to LSEG data. Its previous low was 27.23 on February 6. The U.S. dollar index , which tracks the greenback against a basket of currencies, has strengthened 4% to 105.58 this year. But the MSCI International Emerging Market Currency Index, has weakened just 1%, showing the kwacha underperforming larger developing country currencies. One of the largest copper producers on the African continent, Zambia defaulted in 2020 during the COVID-19 pandemic. Its debt restructuring efforts have been beset by delays, although they took a step forward in March when the government and a group of bondholders reached a deal-in-principle. Read more: Reuters
The Zambia National Commercial Bank plc – ZANACO – which is majority owned by a Netherlands-based, international financial services provider, Rabo Financial Institutions Development B.V. (“Rabobank”) has posted a 34% (K1.3 billion) increase in total operating income when wholly locally owned bank Investrust bank has been declared insolvency to a tune of about K850 million. The increase in total operating income is driven mainly by an increase in interest income by 22% (K850 million) supported by the growth of the loan book, 128% (K770 million) growth in treasury trading income. According to the financials seen by the Zambian Business Times – ZBT, ZANACO closed the year at K1.7 billion representing a 49% (K571 million) increase in profits. In a statement signed by the Company Secretary Kaluba G Kaulun’ombe, the growth in profitability was driven by an increase in total operating income and astute management of costs and impairments. Read more: Zambian Business Times
The Energy Regulation Board (ERB) did not consult government before approving electricity tariffs and this has not settled well with the State. This is according to the Chief government Spokesperson, Cornelius Mweetwa, at a press briefing in Lusaka on Wednesday. Mweetwa told the media that the decision by the ERB to announce the increase in electricity tariffs did not sit well with those in central government. “I would like to indicate that this particular announcement [of a pending increase in electricity tariffs] was not done in consultation with the government. “No one can pretend in government that the announcement sat well,” he said. Read more: Zambia Monitor
Cabinet has announced the suspension of the 15 percent import duty and five percent surtax on maize imports, reducing them to zero. The Ministry of Agriculture has been directed to issue import permits to Zambians. Chief Government Spokesperson, Cornelius Mweetwa, announced this measure, aiming to encourage private sector involvement in maize imports and ensure food security in the country. Speaking at a press briefing in Lusaka on Wednesday, Mweetwa stated, “Cabinet also resolved that Zambian truck drivers will be exclusively deployed for maize haulage, bolstering this sector.” Furthermore, he mentioned that a committee of ministers, led by the vice-president, will establish a task force for the efficient redistribution of Food Reserve Agency maize. Read more: Zambia Monitor
President Hichilema arrived in Nairobi, Kenya, ahead of the Africa Fertiliser and Soil Health Summit, which is scheduled for 9th May 2024. This follows the invitation extended His Excellency, Dr. William Ruto, President of the Republic of Kenya. The African Union’s Africa Fertilizer and Soil Health Summit (AFSH24) has attracted over 4,000 participants gathering to address the looming soil health crisis on the continent. The event, co-organized by the African Union and the Government of Kenya, aims to tackle critical issues affecting agricultural sustainability and food security across Africa. Notably, the second edition of the Africa Fertilizer and Soil Health Summit has drawn the attention of global leaders, including eight heads of state and government, as well as ministers, scientists, and representatives from civil society and partner organizations. The summit is a pivotal platform for fostering dialogue and cooperation towards enhancing the value of land as a pivotal asset for farmers across the continent. Read more: Lusaka Times
In International News
The Bank of England on Thursday announced a widely-expected hold on interest rates following its May meeting, as it said restrictive monetary policy was working to bring down inflation. Members of the central bank’s Monetary Policy Committee voted 7-2 to hold, with the latter favoring a cut. In the prior meeting only one member voted for a cut. The MPC nonetheless cautioned that indicators of inflation persistence “remain elevated.” It keeps the BOE’s key Bank Rate at 5.25%. Market anticipation is building for interest rate cuts to begin in the summer, with money markets fully pricing in a 25 basis point reduction in August and 50 basis points overall this year. Read more: CNBC
China’s customs agency released data Thursday that showed exports rose in-line with expectations in April, while imports surged ahead of forecasts. Chinese imports from the U.S., European Union and Russia rose last month, despite a drop in exports to all three, according to CNBC calculations of official data. Worldwide, China’s exports rose by 1.5% year-on-year in April in U.S. dollar terms, while imports climbed by 8.4%, the data showed. Exports were expected to have grown by 1.5% year-on-year, and imports up by 4.8% from a year ago, according to a Reuters poll. In March, exports and imports both fell year-on-year. Read more: Reuters
Google parent Alphabet has urged a London tribunal to block a mass lawsuit which accuses it of abusing its dominance in the online advertising market, in the latest case to focus on the search giant’s business practices. The lawsuit seeks damages of up to 13.6 billion pounds ($16.9 billion) on behalf of publishers of websites and apps based in the United Kingdom, who say they have suffered losses due to Google’s allegedly anticompetitive behaviour. Lawyers for Ad Tech Collective Action asked the Competition Appeal Tribunal (CAT) to certify the case to proceed towards a trial at the start of a three-day hearing on Wednesday. Google, however, said the case was incoherent and did not explain how alleged anticompetitive conduct had supposedly caused losses to the publishers. Read more: Reuters
Ambassadors from EU member states have agreed in principle to seize windfall profits from frozen Russian assets to finance arms supplies to Kyiv. In the wake of Russia’s invasion of Ukraine in 2022, EU countries froze hundreds of billions of euros worth of assets. If the decision is approved at a gathering of EU finance ministers next Tuesday, the interest – worth up to €3bn (£2.5bn) per year – will be used to buy weapons for Ukraine. The European Commission chief, Ursula von der Leyen, said: “There could be no stronger symbol and no greater use for that money than to make Ukraine and all of Europe a safer place to live.” European Trade Commissioner Valdis Dombrovskis also welcomed the decision. He said the funds would have to get to Ukraine as soon as possible, with the first €1bn tranche – to be used “mainly for military support” – ideally reaching the country by summer. “Russia will pay directly for its crimes,” Mr Dombrovskis said. Read more: BBC News
Finally, Capital Markets News
In 155 trades recorded yesterday shares 33,349 were transacted resulting in a turnover of K172,037.60. The following share price changes were recorded yesterday: +K0.04 in Bata, -K0.12 in PUMA, and +K0.01 in ZANACO and +K0.08 in Chilanga Cement. Trading activity was recorded in AECI, Airtel, British American Tobacco Zamba, CEC Zambia, Standard Chartered Bank Limited, Zambia Breweries, ZCCM, Zambeef and Zambia Sugar. The LuSE All Share Index (LASI) closed at 12,844.19 points, -0.05% lower than its previous day close at 12,856.09 points. The market closed on a capitalization of K100,087,880,620.76 including Shoprite Holdings and 65,305,195,180.76 excluding Shoprite Holdings.
A total of 15 Govt Bond trades with total face value of 13,361,000 and turnover 10,700,580 were processed yesterday.
