Good afternoon. Here’s what you need to know
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Zambia Bonds Rally as Morgan Stanley Praises Budget Restraint
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European Union Resumes Budget Support to Zambia with €20 Million
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Euro zone September factory activity took a turn for the worse, PMI shows
In Local Business and Finance News
Zambia’s dollar bonds climbed after its 2025 spending plan won praise from Morgan Stanley even as it drew concern from locals battling with the impact of the nation’s worst drought in a century. The advance on its $1.7 billion in notes due 2033 sent yields tumbling by the most on record, reaching 7.86%. They’ve dropped more than 30 basis points since Finance Minister Situmbeko Musokotwane announced the budget on Sept. 27, reversing a weakening trend that started after the government completed a debt restructuring in June. The bonds have performed so well that Secretary to the Treasury Felix Nkulukusa on Monday said the window may be closing to exchange them in a potential debt-for-nature swap. Neville Mandimika, emerging-markets strategist at Morgan Stanley, upgraded his view on Zambia’s bonds to “like” after the spending plan showed a strong fiscal performance, with revenues exceeding expectations and expenditures controlled in the first half of 2024. The outlook showed room for further consolidation next year, which will be helped by rising output and prices for copper, Zambia’s biggest export, Mandimika said. Read more: Bloomberg
The European Union (EU) has ended its 10-year withdrawal of budget support to Zambia and has resumed its support with the first disbursement of €20 million. Citing the government’s renewed commitment to strengthening governance and making various reforms, the EU Ambassador to Zambia, Karolina Stasiak, announced the bloc’s resumption of support today. “A decade ago, the European Union had to withdraw its budget support from Zambia. However, with the appointment of a new cabinet in 2021, we witnessed a commitment to ambitious reforms towards strengthening governance and guiding Zambia back onto economic recovery and social development,” said Stasiak. She acknowledged how challenging the past few years have been for Zambia, which has had to weather several crises, including COVID-19, a debt default, a cholera epidemic, and a drought that has resulted in a severe economic crisis. She observed that despite these considerable challenges, the government had “remained steadfast in its efforts to strengthen governance, restore macroeconomic stability, and promote higher, more resilient, and inclusive growth.” Read more: Zambia Digest
Zambia’s tax efficiency is being undermined by a generous incentive regime and ongoing tax administration challenges, according to World Bank’s latest report. In its Zambia Public Finance Review, the Bank highlighted that the country’s tax collection falls short of its potential, limiting the effectiveness of fiscal policy during economic downturns. During the presentation of the report at the 2025 National Budget session in Lusaka on Monday, held at the Mulungushi International Conference Centre, World Bank Country Director, Nathan Belete, noted Zambia’s weak budget credibility. He stated that budget execution for goods and public investment frequently deviates, pointing to widespread project implementation issues across various sectors. “Zambia’s fiscal position has become vulnerable, driven by weak fiscal governance and underperforming public sector investments,” Belete remarked. He also pointed out that underperforming State-Owned Enterprises (SOEs), coupled with weak oversight, have added to the nation’s debt burden by accruing significant losses and liabilities. Read more: Zambia Monitor
The Zambia Development Agency (ZDA) and the Trade Facilitation Office Canada (TFO) have organized a buyer-seller meeting aimed at establishing new export contracts for Zambian women-owned agribusinesses. The meeting, which brought together Zambian sellers and South African buyers, saw the participation of 13 local small and medium enterprises (SMEs). According to a statement from the ZDA, the initiative was part of ongoing efforts to support women entrepreneurs in accessing international markets. ZDA Director-General, Albert Halwampa, explained that the meeting was a continuation of the agency’s four-year collaboration with TFO under the Women in Trade for Sustainable and Inclusive Growth (WIT) project. The project had so far trained over 100 companies through various SME development programmes. Read more: Zambia Monitor
ZESCO says it will be able to maintain stability for the stated hours of load shedding starting Wednesday following the resumption of full operations at Maamba Energy this evening. Transmission Operations and Trade Director, Jusin Loongo has also disclosed that ZESCO has secured an assured 400 megawatts of power imports during off peak and standard times. During a media engagement in Lusaka today, Mr. Loongo however said power importation during peak hours is dependent on availability as countries want to domesticate power during those hours. And ZESCO has resubmitted a fresh application to the Energy Regulation Board -ERB- for an emergency tariff adjustment. Read more: ZNBC
Zambia has exported an estimated value of goods worth over 7.9 billion dollars as of September 27, 2024. Bank of Zambia Deputy Governor Francis Chipimo says that previously this information was not available but that it is now being tracked daily. Dr. Chipimo says that this follows the implementation of the Export Proceeds Tracking Framework which took effect on January 1, 2024. He explains that since implementing the framework, a net international financial inflow position has been recorded, reflecting increased recording of export proceeds. Dr. Chipimo said this during the post budget symposium in Lusaka. And the Bank of Zambia Deputy Governor said that work has advanced in trying to set up a deposit protection fund to safeguard depositors in the event of insolvency. Read more: ZNBC
Access Bank Plc has reaffirmed its commitment to empowering women in Southern Africa by relaunching its flagship ‘W’ Initiative in Zambia and Botswana. As part of the bank’s broader strategy to drive financial inclusion and economic growth, the initiative offers an array of financial services specifically tailored to meet the needs of women, ranging from savings products to business loans and mentorship programs. Access Bank in a statement yesterday, noted that the revamped ‘W’ Initiative seeks to elevate women in business and leadership by offering customised financial solutions, promoting financial literacy, and creating opportunities for professional development. Read more: This Day
In International News
The asset management unit of HSBC Holdings is teaming up with International Finance Corp (IFC) to create a joint fund designed to support corporate bond issuers in emerging markets. The fund, which will carry the European Union’s strictest sustainability designation – known as Article 9 – is being set up with a view to mobilising additional institutional investors and increasing the pool of capital available to emerging market issuers pursuing sustainable goals, according to a statement published on Wednesday (Oct 2) by HSBC and IFC, a member of the World Bank Group. “We hope this collaboration demonstrates the financial market opportunity in funding sustainability to help bridge the financing gap for EM corporate issuers whose activities are aligned with and positively contribute to the UN’s Sustainable Development Goals,” Nicolas Moreau, the chief executive of HSBC Asset Management, said in the statement. Read more: Business Times
Kenya’s inflation rate fell in September relative to August. According to the East African country’s bureau of statistics, Kenya’s inflation rate dropped to 3.6% from 4.4% the month prior. As reported by Bloomberg, the inflation decline is coming off the heels of weaker growth in food and energy prices, with the annual inflation recording its slowest pace in almost 12 years. Consumer prices grew 3.6% in September relative to the previous year, the lowest level since December 2012, according to a statement emailed from the country’s capital on Wednesday. The inflation rate fell from 4.4% in August to a figure lower than the 4.3% median projection of four economists in a Bloomberg survey. Prices increased 0.2% on a monthly basis. Read more: Business Insider
S&P Global downgraded Israel’s long-term ratings to ‘A’ from ‘A+’ on Tuesday, citing risks to the country’s economy and public finances from the escalating conflict with Iran-backed armed movement Hezbollah in Lebanon. The rating agency highlighted concerns over potential security threats, including retaliatory rocket attacks against Israel, which could worsen the economic impact. Peer Moody’s cut the country’s credit rating two notches to “Baa1” last week and warned of a drop to ‘junk’ if the current heightened tensions with Hezbollah turned into a full-scale conflict. “We now consider that military activity in Gaza and an upsurge in fighting across Israel’s northern border – including a ground incursion into Lebanon – could persist into 2025, with risks of retaliation against Israel,” S&P said. Read more: Reuters
Manufacturing activity across the euro zone declined at its fastest pace this year in September as demand waned sharply despite factories cutting their prices, a survey showed on Tuesday. The downturn was broad-based and Germany, Europe’s largest economy, recorded its most pronounced worsening of factory conditions for 12 months. HCOB’s final euro zone manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, dropped to 45.0 in September, albeit just ahead of a 44.8 preliminary estimate but further from the 50 mark separating growth from contraction. Read more: Reuters
Saudi Arabia’s oil minister reportedly warned fellow producers that oil could drop to $50 if they don’t comply with agreed production cuts. The Wall Street Journal reported on the comments made by Prince Abdulaziz bin Salman to other Organization of Petroleum Exporting Countries members. The report said he singled out Iraq and Kazakhstan in particular. About half of the oil market is supplied by OPEC members as other countries including the U.S. and Brazil are increasing production. The comments were reported to have been made before Iran lobbed missiles at Israel, which sent crude prices higher. Read more: Morning Star
Frank-Steffen Walliser is moving from Porsche to Bentley to take on the post of Chairman and CEO on July 1. Previously, he was in charge of overall vehicle development at Porsche. “In Frank-Steffen Walliser, Bentley is getting an experienced engineer with distinct product and technology expertise and entrepreneurial experience who brought brand-defining models to the streets at Porsche, including the Porsche 918 Spyder. On Bentley’s ongoing path toward becoming the leading provider in the luxury segment, Frank-Steffen Walliser’s many years of experience and knowledge of the luxury segment will be invaluable,” said Gernot Döllner, Chairman of the Board of Management of AUDI AG, who’s responsible for the Brand Group Progressive comprising Audi, Lamborghini, Bentley, and Ducati within the Volkswagen Group. Read more: Audi Media Centre
China on Wednesday announced that it has filed an appeal with the World Trade Organization, asking the organization to rule on the recent tariffs that Canada imposed on Chinese electric vehicles and metal products. In August, Canada announced it would impose 100% import tariffs on China-made EVs, following in the footsteps of the U.S. and European Union in hitting Beijing with taxes over concerns related to unfair subsidies. The tariffs came into effect on Oct. 1. China’s Ministry of Commerce in a statement alleged that Canada “insisted on following certain countries in taking unilateral repressive measures against China,” according to CNBC’s translation of the Chinese. Read more: CNBC
Finally, Capital Markets News
In 123 trades recorded yesterday 27,899 shares were transacted resulting in a turnover of K314,408.54. The following price changes were recorded yesterday: +K0.04 in Airtel, -K0.25 in PUMA, -K0.04 in Standard Chartered Bank Limited and -K0.01 in ZANACO. Trading activity was also recorded in CEC Zambia, Pamodzi, Real Estate Investments Zambia, Zambia Breweries, Zambeef and CEC Africa on the quoted tier. The LuSE All Share Index (LASI) closed at 15,928.47 points, 0.28% lower than its previous day close. The market closed on a capitalization of K166,343,776,961.61 including Shoprite Holdings and K81,560,981,201.61 excluding Shoprite Holdings.
A total of 7 Govt Bond trades with a total quantity of K217,999,000 and turnover K155,520,080 were processed yesterday.