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Take Five: Shall we try again? World markets themes for the week ahead

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(Reuters) – Following are five big themes likely to dominate thinking of investors and traders in the coming week and the Reuters stories related to them.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 8, 2019. REUTERS/Brendan McDermid

1/ THIRD TIME LUCKY? MAY-BE

If at first you don’t succeed, try and try again. And again and again. The UK Parliament has voted to extend the March 29 exit date but Prime Minister Theresa May is still hoping to railroad lawmakers into approving the EU divorce deal she’s negotiated. The unpopular agreement has already been heavily rejected twice but prospects of a long delay or even another referendum that may reverse Brexit could well swing eurosceptic Tories over to her side. So a third “meaningful” vote, dubbed MV3, is planned for the coming week. If that fails, well, MV4 is already being touted.

There is, of course, no guarantee an exasperated EU will play ball — all 27 remaining members have to agree the extension. And there are doubts a three-month delay will break the deadlock. If MV3 fails, the EU’s March 21 summit will be key, first to see if it agrees an extension and second, whether it presses Britain for a delay of one year or more.

With the parliamentary votes, meaningful or otherwise, grabbing the limelight, there’s probably not much the Bank of England can add at its meeting on March 21. It’s already said no-deal Brexit is a bad idea; any clarity on its policy intentions is likely only after the manner and timing of Brexit becomes evident.

(GRAPHIC: No-deal” Brexit probabilities – tmsnrt.rs/2Ua88yG)

2/ FIGURE IT OUT BOEING

President Trump has told Boeing to “figure it out fast”. That’s probably good advice for the company, a long-standing stock market darling that’s lost almost $28 billion, or 13 percent of its value, since the March 10 Ethiopian Airlines’ crash.

The disaster has prompted country after country into grounding Boeing’s fleet of 737 MAX aircraft – the model involved in the Ethiopian crash and another recent one in Indonesia. Possible links between the accidents have rocked the aviation industry, scared passengers worldwide, and left the company scrambling to prove the safety of its best-selling model that was intended to be the standard for decades. Before the crash, Boeing was the seventh most valued stock on the Dow Jones, but it’s fallen to 14th. Its shares hit record highs just a week before the crash, having risen a stunning 52 percent since the end of December. They are still up almost 20 percent year-to-date.

So what’s next? Moody’s reckons Boeing will overcome the near-term challenges. The question for investors is whether the share price slide takes into account the damage to the bottom line and potential legal exposure. Analysts will be assessing the possible fallout; chances are, some earnings downgrades will start coming through.

– Boeing faces crisis with worldwide grounding of 737 MAX jetliners- Boeing 737 MAX 8 groundings spread around the world- Boeing shares cheaper, but are they a buy?

(GRAPHIC: Boeing valuation – tmsnrt.rs/2O6oKWa)

3/ PAUSE PERFECT

U.S. unemployment is plumbing its lowest level in half a century, wages are ticking up but the Federal Reserve, meeting on Tuesday and Wednesday, is not poised to snatch away the proverbial punch bowl.

On Wall Street at least, the Fed’s dovish 2019 conversion is paying off: The S&P 500 is up about 6 percent since the Fed’s Jan 30 meeting signalled it was putting in abeyance a tightening policy that began in 2015.

Labor shortages notwithstanding, the slowing economy is keeping prices in check, giving the central bank leeway to stand pat on interest rates after hiking four times in 2018. Compared to the Fed’s 2 percent inflation target, producer inflation was up 1.9 percent in the year to February, while consumer inflation rose just 1.5 percent to its smallest annual gain in 2-1/2 year.

The next reading of the Fed’s preferred inflation measure, the core personal consumption expenditures price index, is due on March 29. But that gauge rose 1.9 percent year-year in December.

Already, money markets are building in some easing in 2020. By then, the Fed should have completed a review of how it manages its policy mandate of keeping prices stable and employment high.

    

(GRAPHIC: U.S. price and wage growth – tmsnrt.rs/2O4K4ex)

4/ SURPRISES GOOD AND BAD

It’s been a rough old time for Europe’s economy, with momentum steadily waning last year even as the United States powered ahead. Growth warnings issued by the OECD and the European Central Bank have rattled investors further this year, as they try to assess what kind of toll the euro zone has suffered from trade wars, Brexit and Italian debt concerns.

But finally! There are some signs the nasty surprises are fading. Citi’s well-known economic surprise index – a gauge showing how much economists have been over- or underestimating economic performance compared to what indicators actually deliver – now shows a cross-over between the euro zone and the United States.

That means negative surprises from economic indicators in the world’s top economy have worsened dramatically in recent weeks. Euro zone data misses, meanwhile have been less bad than previously.

Whether this run continues or not will become evident in coming days. First up on Tuesday, comes Germany’s ZEW economic index. Purchasing manager indexes, a crucial forward-looking gauge, will be released on Friday from the United States, Euro zone and Japan.

(GRAPHIC: Macro surprises U.S. versus Euro zone – tmsnrt.rs/2Fb2JT4)

5/ SEARCHING FOR MEANING

To many economists, the Bank of Japan’s forecasts have long seemed to be on the optimistic side. The key difference in views was the global outlook. Well, the world economy is slowing down and even if Japanese companies are awash with cash and no major central bank runs a looser policy than the BOJ, the No.3 economy is still feeling the pinch.

What’s worse, inflation encounters less resistance on the downside than it does on the upside. So the BOJ is well and truly in a corner. There was little it could do at its March meeting save keeping policy unchanged and tempering its economic outlook predictions. But might the BOJ be forced to resort to further policy easing? That question is being asked of the ECB too, while central banks elsewhere — from Australia to the United States — may also have to cut rates.

Upcoming data on Japan’s trade and price growth will help investors determine what happens next. Policymakers will also be hoping for a resolution soon to the U.S.-China trade dispute. The data could intensify the debate on whether the BOJ’s dogged adherence to a 2 percent inflation target means anything – finance minister Taro Aso predicted “things could go wrong” if the BOJ hung on to that goal.

 

(GRAPHIC: Japan inflation – tmsnrt.rs/2FbxTJT)

Reporting by Sujata Rao, Karin Strohecker and Josephine Mason in London; Alden Bentley in New York and Marius Zaharia in Hong Kong; Editing by Toby Chopra

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Second-round M-Akiba bond issue a letdown again

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By JAMES ANYANZWA
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The Kenya government’s attempts to boost national savings through its retail market bond dubbed M-Akiba failed to excite the market for the second time in a row posting a 21 per cent undersubscription.

The government reopened the mobile-based infrastructure bond hoping to raise Ksh250 million but only managed Ksh197 million ($1.97 million), accounting for a 79 per cent subscription rate.

The bond, which was listed on the Nairobi Securities Exchange on March 12, has a duration to maturity of 18 months and will be redeemed on September 7, 2020.

The proceeds of the bond issue were meant to settle total interest payments valued at Ksh12.38 million ($123,800) for investors who bought into the initial tranche of Ksh150 million in March 2017.

The Central Depository and Settlement Corporation Ltd has so far paid out, on behalf of the government, a total of Ksh59.67 million ($596,700) in interest to M-Akiba bondholders since the first issue.

The government is targeting investors with as little as Ksh3,000 ($30) in investment capital to purchase the bond and benefit from an annual rate of return of 10 per cent paid after every six months, implying that such an investor would receive Ksh150 ($1.5) through his phone after six months and a total of Ksh300 ($3) in a year.

But according to Financial Sector Deepening Kenya, some investors feel that the Ksh3,000 would be better allocated to alternative savings groups or investment opportunities that could provide quick returns or access to credit.

Although the M-Akiba bond was launched with the aim of promoting a national savings culture and reducing the government borrowing costs, this is yet to happen. The government had set a target to raise Ksh1 billion ($10 million) through the M-Akiba bond but last year the issue failed after a successful pilot project.

The government had put M-Akiba bond worth Ksh1 billion ($10 million) on offer, with hopes that the issue would sell out and even allowed a green-shoe option of Ksh2.8 billion ($28 million), that in case of oversubscription it could take up a massive Ksh3.8 billion ($38 million.

However, the government managed to raise only Ksh247 million ($2.47 million) of the targeted Ksh1 billion ($10 million).

Over 300,000 people registered on the M-Akiba platform but only 5,988 purchased the M-Akiba $2.47 million, less than a quarter of the Ksh 1 billion ($10 million) on offer.

It was a three-year bond with a coupon rate of 10 per cent paid semi-annually and a tax-free status in line with other infrastructure bonds.



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Uhuru visits Africa’s biggest fish freezing factory, says Kenya will copy Namibia’s example

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He said African nations should work together and learn from the examples of countries like Namibia, which has implemented progressive measures to develop its fisheries sector/PSCU

, WALVIS BAY, NAMIBIA, Mar 23 – President Uhuru Kenyatta has said African countries must take stronger steps to benefit from their immense marine resources.

He said many nations including Kenya gain almost nothing from their sea resources including fish.

The President said it was disappointing that foreign nations are benefiting more from the abundant fish in the territorial waters of many African countries.

He said African nations should work together and learn from the examples of countries like Namibia, which has implemented progressive measures to develop its fisheries sector.

The Kenyan leader spoke when he toured Seaflower Pelagic Processing factory in Walvis Bay, Namibia, which has the distinction of being the biggest fish-freezing factory in Africa.

The factory was set up recently at the cost of $40 million (about Sh4 billion) through a partnership between the Namibian Government and a private investor.

The factory freezes 600 tonnes of fish on a daily basis and has created jobs for 700 people.

President Kenyatta instructed Agriculture Cabinet Secretary Mwangi Kiunjuri and Trade and Industry CS Peter Munya to immediately take steps to learn from the Namibian experience so that Kenya can have a similar factory.

Namibia’s Vice President Dr Nangolo Mbumba and Fisheries Minister Bernhardt Esau said the Government embarked on strengthening fishing in order to give Namibia a food security guarantee.

Vice President Mbumba said Namibia and Kenya are united by true friendship that started when Namibians were fighting for freedom.

“When SWAPO was fighting for freedom, the first vehicle it ever owned was bought by Kenya. We will also never forget the role played by the Kenyan contingent of UNTAG which remained behind at the cost of Kenya to protect Namibians until the country was stable,” said Vice President Mbumba.

President Kenyatta toured the fish factory after visiting the headquarters of Namibia port authority, Namport, also in Walvis Bay.

“We are here to learn from how Namibia is benefiting from its blue economy even as we continue to support and partner with them in various other fields,” said President Kenyatta.

The port of Mombasa and Walvis Bay are similar because they serve many nations in the interior of Africa.

The President was taken on a tour of the port and shown how the Government is reclaiming land from the sea to enable the port to handle ships with bigger capacity.

To enhance its efficiency in serving neighbouring landlocked countries, Namport has assigned dry ports to the different nations so that they can manage their own cargo.

President Kenyatta said Kenya would study the idea of dry ports for neighbouring countries that depend on the Port of Mombasa for their imports and exports.

“That kind of arrangement can let them manage their own cargo and our job will be to be efficient port owners,” said President Kenyatta.

He said the port of Mombasa and Namport would partner in the areas of efficiency enhancement, and the bridging of management and administration gaps that lead to corruption with the aim of improving service delivery.

The President said mismanagement and other malpractices at the ports create inefficiencies, which in turn affect economies of many countries that depend on these ports as gateways into their countries.

The Namibian Government has already requested guidance from Kenya in the setting up of a single window system for processing and clearing transit cargo across many borders. The system allows importers to input data once which is then used by all countries through which the goods pass on their way to their destinations.

President Kenyatta said Africa would only succeed when all nations agree to collaborate to achieve progress.

“If Africa succeeds Namibia has succeeded and if Africa succeeds Kenya will also have succeeded,” said President Kenyatta.

President Kenyatta is on a State Visit to Namibia and was Friday hosted at State House, Windhoek, where he held bilateral talks with President Hage Geingob.





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Transfast upgrade to facilitate inter-Africa transfers : The Standard

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The firm is set to unveil new modes of money transfer that seek to guarantee users much convenience at lower cost.

Global money transfer and payment firm Transfast has revealed plans to re-engineer its platforms to allow Kenyans and other East Africans to send money both across and outside Africa.

This is even as transaction times are set to be radically adjusted to allow for much efficiency and further cost reductions.
The far-reaching changes were announced as Transfast recently met with East African business partners to build its network strength in Africa by partnering with a number of banks and other institutions.
New on the list of 18 partners was Postbank Uganda and Tanzania’s NMB Bank. Others were Ecobank Rwanda, Safaricom, Commercial Bank of Africa, as well as Guaranty Trust Bank Kenya.
Gulf African Bank and Kenya’s payment solutions provider PI Consulting, also came on board as Transfast agents.
“As we seek to be a leader giving the best service across the globe, we are looking to invest heavily is upgrading our systems to facilitate transactions at very affordable rates,” said Transfast Eastern Africa Regional Manager Daniel Muchika.
Further, he said the firm is set to unveil new modes of money transfer that seek to guarantee users much convenience at lower cost.
“We are also working at supporting freelance work around the world through integration partnerships with as many job platforms,” he said.
Transfast is a growing international money transfer and cross-border payments company headquartered in New York with additional offices in the UAE and the Philippines.
Founded in 1988, the company is a provider of multi-currency, cross-border payments solutions for consumers and businesses around the world.
Remittances are processed through its direct-to-bank network, and the company offers over 350, 000 cash payout points across 130 countries.
In Africa, Transfast operates in over 30 countries where the company’s bank network covers up to 90 per cent of adult bank account holders in those nations.
Transfast has crossed the 45,000-location mark in India with more than four million customers globally.
To date, the platform is on record for having processed about $8.5 billion worth of transactions.

TransfastMoney transfer





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