The Daily Economic and Business News Update, Monday, 10 June … · Foreign Currency, Money,...

Group Corporate Strategy

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The Daily Economic and Business News Update, Monday, 10 June 2019

Foreign Currency, Money, Equities & Commodities Markets Overview

Foreign Currency Markets International Stock Markets Year–On-Year Inflation Rates

Currency 10-06-19 07-06-19 Index 07-06-19 06-06-19 Change Country Rate

USD/RTGS 5.8500 5.6150 Dow Jones 25,983.94 25,720.66 +1.02% Zimbabwe 75.86%Apr

USD/ ZAR 14.9311 15.0671 NASDAQ 7,742.10 7,615.55 +1.66% South Africa 4.4%Apr

EUR/ USD 1.1308 1.1266 FTSE All Share 4,008.15 3,970.37 +0.95% Malawi 9.1%Apr

GBP/USD 1.2712 1.2703 Nikkei 225 21,130.15 20,898.03 +1.11% Zambia 16 8.0% May

USD /BWP 10.9051 10.9529 DAX 12,045.38 11,953.14 +0.77% Botswana 2.5% Apr

Old Mutual Implied Exchange Rates Mozambique 3.27%Apr

Currency 07-06-19 06-06-19 May 2019 Apr 2019 Mar 2019 Feb 2019 Namibia 4.5% Apr

USD/ZWL 9.4820 11.0315 9.7191 6.1291 5.4150 4.4057 Kenya 5.49% May

ZWL/ZAR 1.5704 1.5449 1.2609 1.2938 1.3073 3.1868 Ghana 9.5% Apr

Regional Stock Markets Nigeria 11.37%Apr

Index 07-06-19 06-06-19 Change Interest rates 07-06-19 Brazil 4.66%May

ZSE Industrial Index 632.94 636.93 -0.63% SARB Prime Rate 10.25% China 2.5%Apr

ZSE Mining Index 241.02 229.36 +5.08% BOB Prime Rate 5.00% Canada 2.0%Apr

ZSE All Share 189.60 190.63 -0.54% LIBOR One Month 2.412% Germany 1.4%May

JSE All Share 58,099.84 57,090.53 +1.77% LIBOR Three Month 2.453% Australia 1.3%Apr

Ghana SE-CI 2,463.83 2,451.81 +0.49% LIBOR One Year 2.348% U.K. 2.1%Apr

Nairobi All Share 150.47 151.22 -0.50% Federal Discount Rate 1.000% Japan 0.9% Apr

Nigeria All Share 30,432.13 30,527.07 -0.31% Federal Prime Rate 3.500% U.S.A. 2.0%Apr

ZSE Counter 07-06-19 (US$)

06-06-19 (US$)

Last Traded (US$)

Daily Change (US$)

YTD Change (US$)

YTD Change

(%)

Issued Zimbabwe

Shares Market Cap.

(US$)

ZB Financial Holdings 0.48 0.48 0.48 0.000 +0.12 +33.33% 175,190,642 84,091,508.16

First Capital Bank Limited 0.08 0.087 0.087 -0.007 +0.02 +33.33% 2,156,260,176 172,500,814.08

CBZ Holdings Limited 0.49 0.49 0.49 0.000 +0.34 +226.7% 687,231,691 336,743,528.59

Econet Wireless Zimbabwe 1.7016 1.7438 1.7438 -0.0422 +0.8016 +89.07% 2,590,577,000 4,408,125,823.20

FBC Holdings Limited 0.5 0.5 0.5 0.000 +0.3 +150.0% 671,949,927 335,974,963.50

Fidelity Life Assurance 0.11 0.11 0.11 0.000 0.000 0.00% 108,923,291 11,981,562.01

Get Bucks 0.12 0.12 0.12 0.000 +0.083 +224.3% 1,093,567,251 131,228,070.12

NMBZ Holdings Limited 0.2706 0.2706 0.2706 0.000 +0.1806 +200.7% 392,954,830 106,333,577.00

Old Mutual Plc 13.5 13.7289 13.7289 -0.2289 +8.8 +187.2% 64,173,594 866,343,519.00

First Mutual Holdings 0.18 0.18 0.18 0.000 -0.015 -7.69% 690,143,060 124,225,750.80

Mashonaland Holdings 0.0371 0.0371 0.0371 0.000 +0.0025 7.23% 1,859,073,947 68,971,643.43

ZSE Gainers ZSE Losers

Counter 07-06-19

(US$) Previous

(US$) Change (%) Counter 07-06-19 (US$)

Previous (US$) Change (%)

Ariston 0.0540 0.0450 +20.00% FCB 0.0800 0.0870 -8.05%

Masimba 0.1054 0.0882 +19.50% Cassava 1.6993 1.7439 -2.56%

RioZim 2.000 1.8500 +8.11% Econet 1.7016 1.7438 -2.42%

Nampak 0.3225 0.3000 +7.50% Old Mutual 13.5000 13.7289 -1.67%

ZSE Market Data International Commodity Prices

+0.042%

Index 07-06-19 06-06-19 Commodity 07-06-19 06-06-19 Jan 19 Jan 18

Turnover Value ($m) 1.9971 10.2511 Gold (US$/oz) 1,339.90 1,334.80 1,283.50 1,317.10

Foreign Buys ($m) 0.0077 2.8478 Platinum (US$/oz) 806.00 802.00 792.00 942.00

Foreign Sales ($m) 0.0004 1.5185 Silver ( US$/oz) 14.970 14.870 15.470 17.150

Market Cap ($m) 25,069.77 25,239.35 Palladium ( US$/oz) 1,338.00 1,332.00 1,252.00 1,086.00

YTD Change (Market Cap) +30.64% +31.53% Brent Crude Oil (US$/barrel) 63.29 61.67 53.80 66.55



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Local Business News

1. Zimbabwe last year enjoyed a trade surplus of US$445 million with China, in a show of the

positive upshots of the growing relations between Harare and Beijing. China’s Ambassador to

Zimbabwe, Ambassador Gou Shaochun, said this in an exclusive, disclosing that he was eager

to see more Chinese investors in Zimbabwe, particularly in the manufacturing sector, which is

key to the country’s industrialisation and modernisation. He said trade between Zimbabwe and

China stood at US$1.3 billion in 2018, with Zimbabwe enjoying the larger share of exports.

(Herald)

2. Vice President Kembo Mohadi says the country’s economy is on the verge of recovery as

government has stepped up its re-engagement efforts in line with its economic trajectory of

transforming Zimbabwe into an upper middle income economy by 2030. In an interview

yesterday, VP Mohadi said the austerity measures, which Zimbabweans were undergoing, were

part of a painful reform process to achieve transformation and modernisation of the economy.

He said last week’s meeting between the government and the European Union (EU)

ambassadors in Harare marked the beginning of a formal dialogue process for re-engagement

which seeks to reintegrate Zimbabwe into the global family of nations. The meeting was based

on Article 8 of the Cotonou Partnership Agreement which governs relations between member

states of the African-Caribbean-Pacific regions and the EU. (Herald)

3. Finance and Economic Development Minister Mthuli Ncube’s austerity measures are paying

dividends with respect to government finances, once in shambles due to successive budget

deficits, with the latest report on the state of public accounts showing that nearly half a billion

RTGS dollars surplus was achieved in the first quarter of this year. A national budget surplus

means a government’s finances are in a healthy state and the extra financial resources can be

used to pay off debts (which reduces interest payable), can help reduce taxation and help



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finance new and existing public programmes (social security or medical care). (Herald)

4. The Zimbabwe Revenue Authority has moved to undertake an employee audit to rationalise and

optimise its staff in line with the organisation’s 2019-2023 strategic plans. The audit may result

in the laying off of some employees. The tax collector is already looking for a local or

international human resources consultancy firm to carry out the audit. This is contained in the

government Gazette published last week on Friday under General Notice 949 of 2019. (Herald)

5. Proposed amendments to the Money Laundering and Proceeds of Crime Act will incorporate

provisions for the High Court to issue out unexplained wealth orders, as Government moves to

consolidate efforts to curtail financial and economic crimes such as tax evasion. This comes

after President Mnangagwa made temporary provisions for such orders in the Presidential

Powers (Temporary Measures) (Amendment of Money Laundering and Proceeds of Crime Act

and Exchange Control Act) Regulations, 2018, gazetted in SI 246/2018, but have since recently

expired. (Herald)

6. High carbon ferrochrome exports have registered a 35% jump in the first quarter of the year

compared to 85 000 tonnes produced the same period last year, earning the country US$100

million, according to official statistics. The industry has continued to heed President

Mnangagwa’s call not to export unbeneficiated chrome. The first four months of the year saw

the Minerals Marketing Corporation of Zimbabwe (MMCZ) shipping out 115 000 tonnes of high

carbon ferrochrome compared to 85 000 tonnes last year. Statistics from MMCZ show that the

exports also earned the country US$95.5 million up from US$84.9 million, which signifies a

12.4% increase in monetary value. The jump in value added high carbon ferrochrome exports

has cushioned the industry against depressed global market prices. (Herald)



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7. Government says it is in negotiation with a consortium of local and international dairy investors

with a view of concluding a deal that could see the country augmenting current production

which is in excess of 65 million litres. Zimbabwe has for more than a decade failed to produce

enough milk and has resorted to importing from South Africa, losing foreign currency. High

production costs such as electricity, labour, stock feeds and chemicals have been the major

stumbling blocks to the full recovery of the dairy industry. Despite the myriad of challenges

being experienced in the sector, national milk output has been on a marginal increase over the

past few years. (Herald)

8. The country’s sole yeast manufacturer, Lessafre, has embraced Government’s call for

companies to help reduce the import bill, after growing winter wheat on 64 hectares this

season. Zimbabwe imports wheat valued at US$100 million per annum, but current shortages of

hard currency have seen Government imploring millers, bakers and other companies that can

grow wheat and other crops such as soyabeans and sunflower to do so. In an interview,

Lessafre general manager Munyaradzi Mutsvairo said: “We have planted 64 hectares of wheat

this winter season, with a projected yield of about 450 tonnes. (Herald)

9. The Zimbabwe Diamond and Allied Minerals Workers’ Union (Zdamwu) says workers in the

mining sector should be paid in United States dollars since the sector is one of the top foreign

currency earners in the country. Zdamwu general-secretary Justice Chinhema said mining

workers should be given US$790 per month as salary, and not the ZWL$486 they are currently

getting. “If you go around Zimbabwe, the mining industry is one of the lowest paying industries

despite us producing the foreign currency which government is crying for,” he said. “This 80%

increase is nothing to us. (NewsDay)

10. Tobacco sales are down 44% at $292.8 million after 53 days of trade, compared to $523.5



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million achieved last season, data from the industry regulator Tobacco Industry and Marketing

Board (TIMB) shows. Deliveries are down 12% at 157.7 million kg from 180.3 million kg

delivered in the same period last year. The prices being offered for the crop is also lower than

last year at an average of $1.85 per kg, down from $2.87 per kg. So far, the highest price

fetched at the auction floors is $4.66 per kg, down from the $4.99 last year. Zimbabwe Tobacco

Association chief executive Rodney Ambrose said despite the challenges, this year’s target of

220 million kg was still attainable. (NewsDay)

11. As the prices of basic goods continue to go nuts, the president of the Confederation of

Zimbabwe Retailers, Denford Mutashu, has called on suppliers, supermarkets and other retailers

to charge reasonable prices for their stocks. Mutashu’s call comes as long-suffering

Zimbabweans are experiencing a fresh wave of steep price increases on basic consumer goods,

most of which have been priced out of the reach of ordinary citizens. Meanwhile, the prices of

basic commodities continue to sky-rocket on a daily basis, and well beyond the reach of many

people, as the RTGS dollar continues to tumble against the US dollar. (DailyNews)

12. Prospect Resources says it is in discussions with international financial institutions for possible

project financing of its Arcadia Lithium project in Zimbabwe. The Australia-based lithium

developer said the discussions are at various stages of maturity and contemplate a variety of

structures from traditional debt and equity financing through to 100% debt financing. Prospect

said it is also in discussions with a European family office consortium (DailyNews)

13. Workers in the sugar milling industry have been awarded a 45% salary increase to cushion

them against the harsh economic conditions, government has announced. According to the

government gazette, the least paid employee in the Sugar Milling Industry who was earning

$217 a month prior to the adjustment, will now be getting $315. On the other hand, the highest



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paid employee who was getting $510.35 will now be earning $740.82 with the new

arrangement. (DailyNews)

Regional News

1. South African Airways (SAA) appointed its head of operations as acting chief executive on

Friday and said it needs 4 billion rand ($265 million) from the government to survive the current

financial year. Zukisa Ramasia becomes interim CEO after Vuyani Jarana unexpectedly resigned

last week after less than two years in the job, saying his turnaround strategy was being

undermined by a lack of state funding and too much bureaucracy. (Reuters)

2. A row within South Africa’s ruling African National Congress (ANC) party about the role of the

country’s central bank is unnerving investors because it is being driven by bitter factional battles

rather than sober policy debate. Broadening the South African Reserve Bank’s remit to promote

jobs and growth as well as taming inflation would not be seen by analysts as a problem per se,

given other central banks including the U.S. Federal Reserve have similar dual mandates.

(Reuters)

3. A group of 30 international and local campaign groups have petitioned two banks to abandon

plans to raise funds to build an oil pipeline to export Ugandan oil, saying the project would

damage local livelihoods, water resources and wildlife. The 1,445 km (900 mile) pipeline, which

will run from fields in the west of Uganda to Tanzania’s Indian Ocean port of Tanga, is vital to

developing the East African nation’s oil reserves. South Africa’s Standard Bank Group and

Japan’s Sumito Mitsui Banking Corporation are helping to raise the debt needed to finance the

$3.5 billion pipeline. (Reuters)



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4. South Africa’s net foreign reserves dipped to $43.178 billion in May from $43.245 billion in April,

the Reserve Bank said on Friday. Gross reserves fell to $48.329 billion at the end of May from

$49.538 billion in the prior month, central bank data showed. The forward position, which

represents the central bank’s unsettled or swap transactions, was $1.152 billion in May from

$1.874 billion in April. (Reuters)

5. Ethiopia, Africa’s top coffee producer, is expected to export a record-high 4 million 60-kg bags

of coffee in 2019/20, the U.S. Department of Agriculture attache in Addis Ababa said, as yields

improve and the area dedicated to coffee farming increase. Production of coffee is expected to

rise to 7.35 million tonnes in 2019/20, a 1.4% increase from the 2018/19 season. Exports

account for just over half of overall production, and are forecast to grow 0.5% in 2019/20 from

the previous year to reach 4 million bags. Coffee is Ethiopia’s most important export. Exporters

in the country are facing increased regulation, the USDA said, with the government banning

several exporters in recent months for defaulting on their contracts and hoarding beans.

(Reuters)

6. The Economic Commission for Africa (ECA) Executive Secretary, Vera Songwe, says African

Continental Free Trade Area (AfCFTA) is an exciting and promising stimulant for economic

growth in Africa. She says the trade bloc will boost infrastructure investments as well as help

address the economic causes for African migration to Europe, among others. Songwe said this

when she met and discussed with a European Union delegation in Addis Ababa, Ethiopia on the

role of non-state actors in ensuring the success of the AfCFTA. The EU delegation was led by

the President of the European Economic and Social Committee (EU-EESC), Luca Jahier.

(Mwnation)

7. Malawi, NBS Bank plc has pledged to consolidate gains made over the past two years while



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repositioning itself to be among the country’s top three commercial banks. The bank’s board

chairperson Vizenge Kumwenda said this on Wednesday on the sidelines of the bank’s 15th

Annual General Meeting in Blantyre. He said the Malawi Stock Exchange (MSE)-listed bank plans

to continue growing capital organically through profits, optimisation of the statement of

financial position and recovery of previously written-off debt. However, Kumwenda, who is also

managing director of Nico Holdings plc, said with interest rates going down, the bank’s focus

will be on increasing its lending space and moving some of its capital from the money market to

grow the lending book. “Interest rates in the banking industry have gone down significantly

which has cost us margins we get from lending,” he said. (Mwnation)

8. Namibia, The Government Institutions Pension Fund improved its market value by N$6.6 billion,

up N$117 billion during the 2018/19 financial year compared to N$110.4 billion seen during the

2017/18 financial year. Moreover, the fund plans investing N$7.2 billion in the local economy,

and channel the funds largely into infrastructure projects. This investment is in line with the

fund aiming to achieve the 45% domestic asset requirement, as expected by the Namibia

Financial Institutions Supervisory Authority's regulation 13. (Namibian)

9. COCA-Cola Beverages Africa have installed 1 740 solar panels and nine solar inverters at their

Windhoek factory. The inauguration of the sustainable solar power system took place on

Wednesday. Coca-Cola Namibia Bottling Company (CCNBC), a subsidiary of Coca-Cola

Beverages Africa (CCBA), will now derive 9% of the factory's total power requirements from a

clean, sustainable energy source, which is the sun. In a year, the new system will reduce

carbon emissions by 832 tonnes, which is equivalent to planting 80 117 trees. CCBA chief

executive officer, Jacques Vermeulen said the company invested just over US$388 000 (roughly

N$5.7 million) in this project. A feasibility study is also currently being conducted for using solar

power as a clean, sustainable, distributed energy resource across nine of the 12 African



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countries in which they currently operate. (Namibian)

10. Bank Windhoek has collaborated with John Deere Financial to offer loans to farmers on an

interest rate that is below the market. According to the bank's head of corporate affairs, Hayley

Allen, the loans are meant for all John Deere agricultural equipment. Allen told The Namibian

this week that the bank signed an agreement with John Deere Financial to provide these loans

to drought-stricken farmers. Interest rate is the cost for money one has to pay back to the

bank/lending institution when they borrow money. A below-market interest rate is lower than

the market-determined cost for borrowing, which will lower the cost for borrowing to the

farmers in this case. (Namibian)

11. The Economics Association of Zambia has commended Power Utility Company ZESCO for its

proactive stance in managing the projected energy deficit across the sectors. Dr. Austin

Mwange, the Association Vice President said the EAZ acknowledges the systemic effects of

drought across the Southern African region as a consequence of climate change effects,

resulting in below average rainfall in areas where the Zambezi and the Kafue rivers flow hence

impacting power generation capacity negatively. (LusakaTimes)

12. The Bank of Zambia has called on business entities and citizens to focus on opportunities that

exist in the country amidst the economic challenges facing the country. Bank of Zambia

Governor Denny Kalyalya has also urged Barclays Bank Zambia and Absa Group to explore ways

in which the Bank can assist in addressing some of the challenges facing the country such as

load shedding. Dr. Kalyalya said this during the groundbreaking ceremony for the Barclays Bank

Zambia new Head office in Lusaka yesterday. (LusakaTimes)



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13. Kenya and Tanzania are pushing to resolve their long-standing trade disputes, which have

slowed down the flow of goods across common borders. Trade officials from the two countries

held bilateral meetings in Arusha, in April, to try and resolve the many contentious trade issues,

including rules of origin for some products and persistent suspicion over the quality of products

traded across the borders. People familiar with the negotiations told The EastAfrican that the

first bilateral meeting was held in September 2017 and the next meeting is scheduled for

Mombasa in early July. (AllAfrica)

14. Motorists, traders and businesses in Nairobi City County will now remit their taxes through an

internally managed system from Monday morning. This is after the County officially parted ways

with Webtribe Limited, the company that was contracted to collect revenue on behalf of the

county back in April 2014. Finance Executive Charles Kerich, said the county was now ready to

collect revenue on its own and they are committed to achieving their set revenue collection

targets. "Our aim is to achieve our annual targets and we are working on ways we make it

possible internally," said Kerich. (AllAfrica)

International News

1. The U.S. dollar index fell on Friday to its lowest since March 26 after the U.S. Department of

Labor’s employment report showed that job growth slowed sharply in May and wages rose less

than expected. The weak data suggest that the loss of momentum in economic activity has

spread to the labour market, which will further support forecasts that the Federal Reserve will

cut interest rates this year. Rising expectations of a cut have pulled the dollar 1.2% lower this

week. (Reuters)



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2. China’s exports unexpectedly returned to growth in May despite higher U.S. tariffs, but imports

fell the most in nearly three years in a further sign of weak domestic demand that could prompt

Beijing to step up stimulus measures. Some analysts suspected Chinese exporters may have

rushed out shipments to the United States to avoid new tariffs on $300 billion of goods that

President Donald Trump is threatening to impose in a rapidly escalating trade dispute. (Reuters)

3. Oil prices rose today after Saudi Arabia said producer club OPEC and Russia should keep

supplies restricted at current levels, and in relief that the United States withdrew a tariff threat

against Mexico, removing a cloud over the global economy. Despite Monday’s increases, traders

said concerns about the health of the global economy and its impact on fuel demand still

weighed on oil market sentiment. Front-month Brent crude futures, the international benchmark

for oil prices, were at $63.61 at 0411 GMT, 32 cents, or 0.5%, above Friday’s close. (Reuters)

4. Business sentiment among Singapore firms edged up slightly for the first time after three

consecutive quarters of decline, according to the latest Business Optimism Index by the

Singapore Commercial Credit Bureau (SCCB). The index was +6.91 %age points in Q3 2019, up

from +5.08 percentage points in Q2. However, the index lost ground versus its +10.58 %age

points figure in 2018's third quarter. The figures were derived from polling 200 business owners

and senior executives representing major industry sectors across Singapore, and are calculated

by subtracting the %age of respondents expecting decreases from the percentage expecting

increases. (BusinessTimes)

5. Risks to South Korea's economic growth have risen mostly from outside the country, warranting

stronger policy measures to support growth, the country's top presidential economic policy aide

said. The remarks came as investors have been increasing bets that the central bank would cut

its policy interest rate in the next few months for the first time since mid-2016 to keep Asia's



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fourth-largest economy from weakening further. "Along with the slowing global economy,

downside risks to the South Korean economy have also risen," Mr Yoon Jong Won told

reporters, although he did not comment on interest rate policy. Mr Yoon made the remarks on

Friday, on condition of publication on Sunday. (BusinessTimes)

6. British Foreign Secretary Jeremy Hunt, a contender to replace Theresa May as prime minister,

said on Sunday that German Chancellor Angela Merkel had indicated the EU would be willing to

renegotiate the Brexit divorce deal. Mr Hunt, one of nearly a dozen Conservatives vying to

succeed Mrs May after she resigned as party leader Friday, said he spoke with Dr Merkel at this

week's D-Day commemorations and was convinced changing Mrs May's agreement was

possible. "She said that of course with a new British prime minister we would want to look at

any solutions you have," he told Sky News. "I'm absolutely clear that if we take the right

approach to this, the Europeans would be willing to negotiate on the package." (BusinessTimes)

7. Bank of Japan Governor Haruhiko Kuroda on Saturday maintained his view the global economy

will recover in the latter half of this year, but warned that uncertainties remain as fallout from

the Sino-US trade war deepens. Mr Kuroda said the global economy is "stabilising somewhat"

from its weakness late last year, as central banks maintain supportive policies and China takes

stimulus measures to prop up growth. "There's no change to the view the global economy will

pick up in the latter half of this year," Mr Kuroda told reporters ahead of the Group of 20

finance leaders' meeting to be held in the southern Japanese city of Fukuoka. "But uncertainties

remain, particularly those regarding trade," he added. (BusinessTimes)

8. US job growth slowed sharply in May and wages rose less than expected, raising fears that a

loss of momentum in economic activity could be spreading to the labour market, which could

put pressure on the Federal Reserve to cut interest rates this year. The broad cool-off in hiring



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reported by the Labor Department on Friday was before a recent escalation in trade tensions

between the United States and two of its major trading partners, China and Mexico. Analysts

have warned the trade fights could undermine the economy, which will celebrate 10 years of

expansion next month, the longest on record. (BusinessTimes)

9. China’s banking regulator said risks at small- and mid-sized banks are manageable, a central

bank publication reported on Sunday, in the latest move to soothe investors' concerns after the

government took over a troubled regional lender last month. The China Banking and Insurance

Regulatory Commission (CBIRC) took control of Inner Mongolia's Baoshang Bank due to

"serious" credit risks on May 24, rattling Chinese markets and prompting the People's Bank of

China (PBOC) to inject cash into the banking system. While authorities said it was a standalone

case, the seizure came as Beijing is urging banks to boost lending to help cushion an economic

slowdown, fuelling concerns about rising debt and more bad loans. (BusinessTimes)

10. The Reserve Bank of India has eased rules to give lenders laden with bad debt more time to

resolve delinquent accounts and lifted a deadline for pushing defaulters into bankruptcy courts.

The directive, which also covers shadow banks, gives lenders 30 days to review a delinquent

account and a further 180 days to implement a resolution plan, loosening the previous timeline.

Lenders must make additional provisions if there are delays in executing the plan, the central

bank said on Friday. (BusinessTimes)

11. China's foreign exchange reserves unexpectedly bounced back in May after a surprise drop the

previous month, suggesting the central bank intervened only lightly to cushion a sharp fall in

the yuan currency after US-Sino trade ties soured. The country's foreign exchange reserves

rose US$6 billion in May to US$3.101 trillion, central bank data showed today. Economists

polled by Reuters had expected reserves to drop US$5 billion to US$3.090 trillion. The



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unexpected rise in May was due to valuation effects and changes in asset prices, the foreign

exchange regulator said in a statement accompanying the data. (BusinessTimes)

12. Financial leaders of the world's top economies are likely steer clear of promises to avoid

protectionism in their communique on Sunday, amid an escalating trade conflict between the

United States and China, officials said on Saturday. Finance ministers and central bank

governors from the world's 20 biggest economies, the G20, are meeting this weekend in the

Japanese city of Fukuoka to discuss the global economy, with trade tensions between the

world's two biggest economies seen as a key risk to global growth. "As for trade, the language

will be reminiscent of previous communiques," said one G20 official familiar with the draft of

the joint statement. (BusinessTimes)

13. International Monetary Fund (IMF) managing director Christine Lagarde warned on Saturday

that the increasing presence of technology giants using big data and artificial intelligence could

cause a significant disruption to the world's financial system. The rapid development of financial

technology (fintech) has increased access to cheap payment and settlement systems for low-

income households in emerging countries where traditional banking networks are scarce. But it

has raised concern about the increasing dominance of big technology firms in mobile payments,

which could force global policymakers to rethink the way they regulate the banking system and

ensure financial settlements are executed safely. (BusinessTimes)

14. China's central bank governor said there's "tremendous" room to adjust monetary policy if the

trade war deepens, joining counterparts in Europe and the US in displaying readiness to act to

support the economy. In an exclusive interview with Bloomberg in Beijing, People's Bank of

China Governor Yi Gang also signaled that he's not wedded to defending the nation's currency

at a particular level, and stressed that the value of the yuan should be set by market forces.



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(BusinessTimes)

15. The UK and South Korea have signed an in principle free trade agreement (FTA) that seeks to

maintain existing trade arrangements post-Brexit. International Trade Secretary Liam Fox

signed the deal with his South Korean counterpart Yoo Myung-hee in Seoul. The preliminary

agreement marks the first post-Brexit trade deal the UK has secured in Asia. The agreement is

roughly in line with the terms of the existing Korea-EU FTA. It would cover South Korean

exports including cars and auto parts. South Korea exports mostly cars and ships to Britain,

while it imports crude oil and cars. The agreement is designed to provide stability under a no-

deal Brexit, with the UK due to leave the EU on 31 October, with or without a deal. (BBC)

The Daily Economic and Business News Update, Monday, 10 June … · Foreign Currency, Money,...

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