Good morning. Here’s what you need to know
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Currency Slump Spurs Zambia to Hike Rates to Seven-Year High
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China-Zambia Ink 18 MoUs Worth USD 1 Billion
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S&P 500, Nasdaq and Dow all hit record highs as US inflation eases
In Local Business and Finance News
Zambia’s central bank hiked its key interest rate to the highest level since 2017 to arrest inflation and support the kwacha as the country battles the effects of its worst drought in four decades. The monetary policy committee lifted the rate to 13.5% from 12.5%, Governor Denny Kalyalya told reporters in the capital, Lusaka, on Wednesday. That matched the median estimate of four economists in a Bloomberg survey. The decision to act was driven by a “persistent rise in inflation expectations, which left unchecked, are poised to undermine macroeconomic stability and efforts to robust and sustained growth,” the governor said. “Inflation is a thief, it really erodes your wealth. We must address inflation,” he said. The key underlying factors fueling inflation include persistent depreciation of the kwacha against major currencies and rising prices of grain, vegetables and energy, he said. Read more: Financial Post
ZESCO will not implement its 10 percent tariff increment which was approved by the Energy Regulation Board (ERB) until exhaustive consultations with stakeholders are concluded. ERB in April had approved a 10 percent upward adjustment in electricity tariffs. The new tariffs were scheduled to be effected on May 1, this year. According to a report by the Times of Zambia, ZESCO Spokesperson, Katongo Maumbi, said the power utility firm was currently engaged in consultations regarding the implementation of the tariffs. In-house consultations, and with other relevant authorities, are reportedly still in the process, Maumbi said. “Only when the final approval was made would ZESCO proceed with a mutually agreed position,” he said. Zambia Monitor
Government has reportedly received K1 million from Stanbic Bank Zambia, meant for disaster management and mitigation activities. Stanbic Bank Chief Executive, Mwindwa Siakalima, said the funds were meant to help government respond to the effects of the drought which had hit the country. Vice-President, Mutale Nalumango, received the funds on behalf of government in Lusaka on Wednesday. Siakalima thanked President Hakainde Hichilema for the timely declaration of the drought as a disaster. “The bank is aware of the negative impact of the drought on the agriculture and energy sector no wonder it is carrying out various activities through its social corporate responsibility,” he said. Siakalima cited the planting of over 20, 000 trees on the banks of the Zambezi river as one such activity. Read more: Zambia Monitor
Bank of Zambia has disclosed that Foreign Exchange Reserves increased to US$3.6 billion, equivalent to 3.9 months of import cover as at the end of March 2024. According to Central Bank Governor Dr. Denny Kalyalya, this is slightly higher than the US$3.3 billion, equivalent to 3.7 months of import cover as at the end of December 2023. Addressing Journalists at a media briefing in Lusaka on Wednesday, Bank of Zambia Dr. Kalyalya attributed the increase in Gross International Reserves to net statutory reserves. He further revealed that in the first quarter of 2024, gold purchases amounted to US$10.6 million, bringing the total value to US$168.1 million since the Bank started purchasing gold locally. Read more: Money FM
Zambia has signed 18 Memorandum of Understandings (MoUs) with Chinese companies, totaling over one billion United States Dollars, in various areas of cooperation. The signing ceremony which is aimed at promoting cooperation occurred during the official opening of the China-Zambia High-Quality development forum in Lusaka that was officiated by President Hakainde Hichilema. President Hichilema reaffirmed Zambia’s commitment for a continued partnership with China and other countries that results into sustainable development. The President stated that such partnerships should be deepened by delivering obligations.He noted that China and Zambia relations has created opportunities for economic development citing, reopening of 28 Shaft on the Copperbelt, support in infrastructure development and China’s input in Zambia’s debt restructuring. Read more: Lusaka Times
In International News
Japan’s economy contracted in the first quarter, squeezed by weaker consumption and external demand and throwing a fresh challenge to policymakers as the central bank looks to lift interest rates away from near-zero levels. Preliminary gross domestic product (GDP) data from the Cabinet Office on Thursday showed Japan’s economy shrank 2.0% annualized in the January to March months from the prior quarter, faster than the 1.5% drop seen in a Reuters poll of economists. Downwardly revised data showed GDP barely grew in the fourth quarter. The reading translates into a quarterly contraction of 0.5%, versus a 0.4% decline expected by economists. Private consumption, which accounts for more than half of the Japanese economy, fell 0.7%, bigger than the forecast 0.2% drop. It was the fourth straight quarter of decline, the longest streak since 2009. Read more: CNN
All three major indexes surged to record highs Wednesday after new data showed that inflation cooled in April after ticking up recently. The S&P 500, tech-heavy Nasdaq Composite and blue-chip Dow all closed at new record highs after the latest Consumer Price Index showed that prices were up 3.4% for the 12 months ended in April, easing from 3.5% the month before. The broad-market S&P 500 gained more than 1.2% on Wednesday and cracked the 5,300-level for the first time, closing at 5,308.15. The Nasdaq was about 1.4% higher, setting a new record at 16,742.39. The Dow, meanwhile, was up 350 points or 0.9% and teetered near the key 40,000-level, closing at 39,908. All three major indexes are tracking toward a winning week. Read more: CNN
The World Bank via its latest Africa Pulse report, revealed that the continent’s public debt is expected to drop in 2024. The public debt, according to the report would drop from 61% in 2023 to 57% in 2024. Africa’s public debt has been a thorn in the side of the continent’s development. Some countries on the continent have been overwhelmed with servicing their debts as opposed to allocating funds for national development. And considering the low-income status of some countries in the region debt servicing can prove to be particularly cumbersome. Fortunately, a report by the World Bank has revealed that much like the continent’s economic growth, Africa’s debt status is set to tread a positive path. As the World Bank relays, more than half of African countries suffer financial issues, unsustainable debt burdens, or want to restructure debts. Governments on the continent rely on market financing and non-Paris Club loans, which significantly increases their public debt service. Read more: Business Insider
Nigeria’s headline consumer inflation, rose to a new 28-year high in April, reaching 33.69% year-on-year, up from 33.20% in March. On a year-on-year basis, the headline inflation rate was 11.47% points higher compared to the rate recorded in April 2023, which was 22.22%, according to the National Bureau of Statistics (NBS). On a month-on-month basis, the headline inflation rate in April 2024 was 2.29%, which was 0.73% lower than the rate recorded in March 2024 (3.02%). Read more: Business Insider
Finally, Capital Markets News
In 138 trades recorded yesterday, 63,422 shares were transacted resulting in a turnover of K437,221.62. The following price changes were recorded yesterday: +K0.01 in Airtel and +K0.01 in CEC Africa on the quoted tier. Trading activity was also recorded in AECI, CEC Zambia, PUMA, Standard Chartered Bank Limited, Zambia Breweries, Zambia Reinsurance, Zambeef and ZANACO. The LuSE All Share Index (LASI) closed at 12,862.47 points, 0.00% higher than its previous day close at 12,862.23 points. The market closed on a capitalization of K100,169,885,010.20 including Shoprite Holdings and K 65,387,199,570.20 excluding Shoprite Holdings.
A total of 10 Govt Bond trades with total face value of 6,150,000 and turnover 4,736,220 were processed yesterday.