Good morning. Here’s what you need to know
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Markets anticipate Kwacha to drop further in value
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No asset has been pledged in debt restructuring – Musokotwane
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ECB grows more confident about cutting rates
In Local Business and Finance News
Finance and National Planning Minister Situmbeko Musokotwane has clarified that the country has not pledged any assets as collateral in debt repayment. And Economics Association of Zambia president Oswald Mungule has advised government to consider debt refinancing options such as debt for nature swaps, among others. And CSO-Debt Alliance Chairperson Fr Alex Muyebe says there is a lot of work to be done beyond debt restructuring and has since urged government to ensure reduced overall expenditure and fight corruption. Speaking during a News Diggers organised Public Discussion Forum on Zambia’s Debt, Dr Musokotwane said he would consult Attorney General Mulilo Kabesha and the lenders on the possibilities of publishing the contents of the debt restructuring deal. Read more: News Diggers
Jesuit Centre for Theological Reflection (JCTR) has disclosed that the cost of living for a family of five in Lusaka reduced by K255.14 in April, 2024, and currently stands at K10,348. Centre Social & Economic Development Programme Manager, Muchimba Siamachoka, revealed in a statement that this is compared to the March basic needs and nutrition basket which stood at K10,603. Ms. Siamachoka attributed the decline in the basket to lower charcoal prices which dropped to K343.33 from K428.33 for a 90kg bag and a reduction in the cost of selected food items. “Notably the price of 40 kg of vegetables reduced to K511.97 from K571.93 while the price of 1kg of fruits such as apples and oranges reduced to K37.12 from K43.23,” Ms. Siamachoka stated. She however noted that the persistently high cost of commodities in the market, as underscored by the basic needs and nutrition basket, remains a pressing concern. Read more: MoneyFM
More than K16 million has been reportedly paid out to Investrust Bank’s (in possession) depositors by ZANACO Bank PLC since the start of the exercise on April 26, 2024. The bank was appointed by the Bank of Zambia to facilitate payment for Investrust Bank depositors with balances of up to K30,000 in an exercise ending on May 10, 2024. This followed the repossession of the bank by the Central Bank. The bank claimed that it had been diligently working to facilitate the transfer of funds to ensure that depositors were able to access their money without delay, according to its Head Retail Product Sales, Ricky Nyirenda. Nyirenda said this in a statement issued on Monday. Read more: Zambia Monitor
The Zambian Kwacha is anticipated to drop further in value in the near term after it traded on the backfoot of the United States (US) dollar in Friday’s trading session. On the market average interbank bid and offer, the USD/ZMW opened at K26.9400/26.9900 and closed at K27.0347/27.0847, respectively. “As the market trend of low foreign currency supply and strong foreign currency demand continued, market participants in need of hard currency expressed concern over the performance of the local unit,” according to a daily market report released by Access Bank Zambia. Absa bank in its report indicated that short term outlook suggested a potential bearish trend for the Kwacha, as supply remained thin to meet demand. The report showed that the Zambian currency in Friday’s trading session traded under pressure on a close to close basis as the supply and demand imbalance continues to characterize the market. Read more: Zambia Monitor
In International News
European Union chief Ursula von der Leyen has said she will push for competition with China that is “fair and not distorted” in talks with Chinese President Xi Jinping. “I have made clear that the current imbalances in market access are not sustainable and need to be addressed,” von der Leyen, who is the president of the EU Commission, said hours ahead of a meeting between her, Xi and French President Emmanuel Macron in Paris. Xi on Sunday began a three-country tour of Europe as EU officials are probing the trade practices of Chinese firms operating in the bloc. The European Commission last week opened an investigation to determine if European suppliers of medical devices are given fair market access in China. The inquiry follows similar probes into Chinese wind turbine suppliers and Chinese subsidies for solar panels, electric vehicles (EVs) and trains. European carmakers such as Volkswagen and Renault are losing ground to Chinese electric vehicle makers, which have received billions of dollars worth of state subsidies in recent years. Read more: Al Jazeera
Saudi Aramco’s first-quarter net profit fell 14% year-on-year amid lower oil prices and production. Net income for the three months up to March 31 came in at $27.3 billion, down from $31.9 billion for the same period last year, the company reported. The figure was in line with analyst expectations, according to Reuters. Aramco announced its free cash flow for the quarter at $22.8 billion, down from $30.9 billion in the first quarter of 2023, and cash flow from operating activities at $33.6 billion compared to last year’s $39.6 billion. Still, the Saudi state oil giant will be delivering a total $31 billion dividend to the Saudi government and other shareholders, comprised of a $20.3 billion base dividend and a “fourth performance-linked dividend distribution of $10.8 billion” which will be paid in the second quarter, the company’s earnings statement said. Aramco, which is the world’s largest oil exporter, expects total dividends of $124.3 billion to be declared in 2024, it said. Read more: CNBC
The European Central Bank is growing more confident about cutting interest rates as euro zone inflation continues to ease, three ECB policymakers said on Monday. ECB policymakers Philip Lane, Gediminas Simkus and Boris Vujcic said separately that the latest inflation and growth data cemented their belief that inflation will head back to the central bank’s 2% target by the middle of next year. Euro zone inflation stood at 2.4% in April and a crucial indicator of underlying price pressures slowed while the economy staged a small rebound. “Both the April flash estimate for euro area inflation and the first quarter GDP number that came out improve my confidence that inflation should return to target in a timely manner,” ECB Chief Economist Lane told Spanish newspaper El Confidencial. Simkus, Lithuania’s central bank governor, was more outspoken, saying he continued to expect the ECB to reduce rates three times by the end of 2024. Read more: Reuters
Japan may have to take action against any disorderly, speculative-driven foreign exchange moves, the government’s top currency diplomat Masato Kanda said on Tuesday, reinforcing Tokyo’s readiness to intervene again to support a fragile yen. “It is preferable for exchange rates to remain in a stable manner following fundamentals, and if the market is functioning soundly in this way, there is of course no need for the government to intervene,” Kanda, Japan’s vice minister of finance for international affairs, told reporters. “However, when there are excessive fluctuations or disorderly movements due to speculation, the market is not functioning and the government may have to take appropriate action. We will continue to take the same firm approach as we have in the past.” Tokyo is suspected to have intervened on at least two separate days last week to support the yen after it tumbled to lows last seen more than three decades ago. Read more: Reuters
Finally, Capital Markets News
In 207 trades recorded yesterday, shares 551,619 were transacted resulting in a turnover of K2,247,188.41. The following share price changes were recorded yesterday: +K0.44 in Standard Chartered Bank Limited, +K0.04 in PUMA, and -K0.01 in Zambia Breweries. Trading activity was recorded in AECI, Airtel, CEC Zambia, Chilanga Cement, Real Estate Investments Zambia, Shoprite, ZANACO, Zambeef, Zambia Sugar and ZAFFICO. The LuSE All Share Index (LASI) closed at 12,856.09 points, 1.31% higher than its previous day close at 12,689.34 points. The market closed on a capitalization of K100,141,295,905.37 including Shoprite Holdings and 65,358,610,465.37 excluding Shoprite Holdings.
No Govt Bond trades were processed yesterday.