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05
DEC
11am

Vodafone CEO Nick Read Ousted After 44% Collapse in Shares

Vodafone Group Plc Chief Executive Officer Nick Read will step down at the end of 2022, after he failed to halt a years-long slide in the telecommunication giant’s share price and mergers with major rivals failed to materialize.
Chief Financial Officer Margherita Della Valle will do the job on an interim basis while the board, led by Chairman Jean-Francois van Boxmeer, seeks a replacement. Read, who’d been in the post for four years and at Vodafone for more than two decades, will stay on an as adviser until the end of March, the company said in a statement on Monday.
“I agreed with the board that now is the right moment to hand over to a new leader who can build on Vodafone’s strengths and capture the significant opportunities ahead,” Read, 58, said in the statement.
Vodafone’s share price has sunk about 44% since Read took over in October 2018. In that time the Newbury, England-based mobile and broadband giant has retrenched and cut debt. Read’s biggest move may have been to spin out and list the company’s tens of thousands of mobile masts, selling a stake in Frankfurt-listed listed Vantage Towers AG to a private equity consortium in a deal that valued the business €16.2 billion ($17.1 billion) last month.
Still, Read struggled to finalize deals that would have reduced the number of players in some of Vodafone’s biggest markets such as the UK, Italy and Spain. An approach for the Italian business was rebuffed, a key merger opportunity in Spain was missed, and talks with UK rival Three, owned by CK Hutchison Holdings Ltd., are public but have yet to conclude.
Read More: Vodafone’s Mobile Phones Were the Future Once. Now What Happens?
Vodafone shares were little changed at 12:39 p.m. in London trading. The stock remains close to 25-year lows.
Vodafone’s share price has underperformed the rest of the industry this year, even as the sector lost value as a whole, falling more than the Stoxx Europe 600 Telecommunications Price Index.
Its challenges deepened in 2022 after Russia’s invasion of Ukraine sent energy costs soaring, while interest rates also rose. Read faced pressure from investors including Europe’s largest activist fund Cevian Capital AB, which sold much of its stake earlier this year.
More recently, a vehicle backed by French billionaire Xavier Niel bought 2.5% of Vodafone saying it saw opportunities to accelerate deals and improve profits.
Although major issues like energy prices and coronavirus were outside of ...
05
DEC
11am

Foxconn Reports Big Sales Drop After IPhone Plant Disruption

Hon Hai Precision Industry Co. reported sales for November were down 11.4% from the prior year after some shipments were affected by a Covid outbreak in the Chinese city of Zhengzhou, where the company operates the world’s largest iPhone assembly complex.
The company, also known as Foxconn, said November was the most affected period by the pandemic and it expects the fourth quarter to be “roughly in line with market consensus.” The Covid outbreak led to government lockdowns, a worker exodus and violent protests at the manufacturing facility.
The Zhengzhou campus in central China is where the bulk of the world’s iPhone Pro handsets are assembled, making it critical to Apple Inc.’s ability to satisfy demand for the latest generation. Apple has said it expects deliveries to be delayed this year because of disruption, and analysts have offered a series of increasingly downbeat forecasts for the shortfall in shipments this year. UBS this month said the entire iPhone 14 generation may fall short of earlier expectations by 16 million units.
Apple Faces Deficit of 6 Million IPhone Pros on China Tumult
Foxconn offered reassurances that the situation has been “brought under control” and that its production will improve through the rest of the year.
“In addition to reallocating production capacity of different factories, we have also started to recruit new employees, and are gradually moving toward the direction of restoring production capacity to normal,” Foxconn said in the statement.
Apple shares rose 1.4% at 10:00 a.m. in New York.
China is rolling back Covid restrictions in some cities, including Zhengzhou, where authorities announced on Sunday the immediate end of mandatory Covid testing to enter buses, subway, taxis and other public venues besides for those who depart from the city or go to karaoke bars and internet cafes. Foxconn is continuing with closed loop operations, restricting workers’ movements to their dormitories and the factory, according to a notice posted on WeChat.
“China’s easing of Covid-Zero policy might help lift Hon Hai’s December sales, paving the way for it to meet or even beat 4Q guidance,” Bloomberg Intelligence analysts Steven Tseng and Sean Chen said in a note Monday.
05
DEC
11am

Jumia Moves Top Bosses to Africa from Dubai in Profit Push

Jumia Technologies AG is closing its office in Dubai and moving senior management to the African countries they oversee as part of a plan to cut losses and redirect the company after its founders quit last month.
Managers will move to countries in their region, with most going to Morocco, Kenya and Ivory Coast, and the 60-person Dubai office will be disbanded, Jumia’s acting head Francis Dufay said in an interview.“As we are an Africa-focused company, we want our leaders to be based with customers, vendors and employees,” he said.
Dufay took over after founders Sacha Poignonnec and Jeremy Hodara left the online retailer last month. He said he’s attempting to cut costs — Dubai’s rents are rising faster than those in New York or London — and become more responsive to the young, tech-savvy population in its African markets while fending off larger competitors.
Read More: Co-Founders Depart Africa’s Rival to Amazon as Losses Pile Up
Jumia went public in 2019 in a New York listing where it was was hailed as the Amazon of Africa. Since then, it’s been struggling with persistent losses and its shares have dropped 68%. The shares were down 1.1% as of 10:30 a.m. on Monday in New York.
Meanwhile, Amazon.com Inc. is planning to expand its e-commerce service into some of the larger African markets as soon as next year, people familiar with the matter said. A representative for Amazon didn’t immediately respond to a request for comment.
Still, Dufay said that the company’s more than 10 years of experience operating in Africa give it an advantage over new competitors. For example, Jumia has built a logistics business from scratch to deal with the lack of formal addresses and city mapping in many of the areas where it makes deliveries.
The company, which was one of the first African companies to achieve so-called unicorn size and has attracted investors such as French drinks maker Pernod Richard SA and US investment bank Goldman Sachs Group Inc., plans to reduce its losses over the next 12 months, Dufay said, without elaborating. Jumia previously guided that it expects an adjusted Ebitda loss of $200 million to $220 million this year.
He said he’ll double down on Jumia’s “bread-and-butter” e-commerce categories, including fashion, beauty, consumer electronics and appliances. The company will also pause the logistics services it offers third parties in its operating countries except for Morocco, Nigeria and Ivory Coast, he said.
“We have spread ...
04
DEC
11pm

Asian equities, commodities rise on China outlook: markets wrap

Asian equities and commodities rose as traders bet on further reopening of the Chinese economy from Covid restrictions. Currencies of materials and energy exporters climbed.
A benchmark of Asian shares headed for its highest close since August and was approaching a technical bull market. The greenback fell versus most of its major counterparts, with notable weakness versus the Norwegian krone and the Australian and Canadian dollars.
China’s offshore yuan strengthened through the 7-per-dollar level for the first time in nearly three months. The Hang Seng China Enterprises Index rallied as much as 4%.
Oil advanced on the prospect of more demand from China, as OPEC+ kept output steady and sanctions on Russian crude kicked in. Iron ore and copper climbed.
Chinese authorities eased Covid testing requirements across major cities over the weekend as Beijing appears to be engineering a gradual shift away from its strict Covid Zero policy amid elevated cases and public protests.
Meanwhile, Treasury yields climbed during Asian trading after last week’s wild moves following the US jobs report. Government bond yields in Australia and New Zealand fell.
Stronger-than-expected US jobs figures on Friday prompted traders to increase their wagers on where rates will top out in the current tightening cycle, rather than changing their bets for the size of the increase at the Federal Reserve’s December meeting. Policymakers are still expected to deliver a downshift to a 50 basis points hike at the gathering.
Employers added more jobs than forecast and wages surged by the most in nearly a year. Nonfarm payrolls increased 263,000 in November, while the unemployment rate held at 3.7%. Average hourly earnings rose twice as much as predicted.
Key events this week:
S&P Global PMI for the Euro zone, Monday
US factory orders, durable goods orders, ISM services index, Monday
ECB president Christine Lagarde speaks, Monday
Australia interest rate decision, Tuesday
US trade, Tuesday
EIA crude oil inventory report, Wednesday
Eurozone GDP, Wednesday
US MBA mortgage applications, Wednesday
ECB president Christine Lagarde speaks, Thursday
US initial jobless claims, Thursday
China PPI, aggregate financing, money supply, new yuan loans, Friday
US PPI, wholesale inventories, University of Michigan consumer sentiment, Friday. BM/DM
04
DEC
11pm

Erdogan’s fastest inflation is set for first fall in over a year

The fastest inflation of President Recep Tayyip Erdogan’s two decades in power is poised to ease for the first time in over a year and a half, though expectations and various measures to revive the Turkish economy ahead of elections in 2023 may keep it elevated for some time.
The statistical effect of a high base a year earlier and two months of relative stability in the Turkish currency are starting to help contain cost increases. Data on Monday will show consumer prices rose an annual 84.9% last month, according to a Bloomberg survey of analysts, down from a 24-year high of 85.5% in October.
Retail inflation in Turkey’s most affluent city Istanbul has already ebbed slightly, slowing in November to an annual 106% from 109% a month earlier.
Turkish policies that prioritised economic growth and cheap lending at the expense of the lira and price stability have culminated in this year’s inflation shock. Officials have blamed faster price increases on high commodity costs, partly caused by Russia’s invasion of Ukraine, and other external factors.
What Bloomberg Economics Says.
“Expansionary policies ahead of next year’s elections will add fuel to the fire. To make matters worse, risks are also on the upside: the recent slow-down in the economy could prompt an even larger fiscal stimulus from political leadership, boosting demand and price gains further.”
– Selva Bahar Baziki, economist.
While inflation is peaking later than initially expected by authorities, Erdogan has been reiterating his unconventional view that lower rates have the power to ease prices. He has pressured the central bank to cut its benchmark into single digits, a goal it reached at a meeting in late November by bringing the key interest rate to 9%.
As a result, Turkey has one of the world’s deepest negative rates when adjusted for prices. But the president has already signaled the country will stick with the ultra-loose monetary policy approach.
“We cut the rates to single digits and this will continue as such. Don’t worry, inflation will also come down,” he said in a speech in Konya on Nov. 26.
Missing target
The longer-term damage from the crisis may be in the way it warps price expectations. A November survey by the central bank found that respondents anticipate inflation to be 68% at the end of 2022 and almost 21% as far out as two years.
The central bank has a more upbeat assessment. It predicts consumer inflation will end this year at about ...
04
DEC
11pm

Morgan Stanley upgrades China stocks on reopening bullishness

Morgan Stanley is turning bullish again on Chinese stocks after almost two years, joining a growing chorus of Wall Street banks that are sanguine on the nation’s outlook as it moves to relax Covid-19 measures.
“Multiple positive developments alongside a clear path set toward reopening warrant an upgrade,” strategists including Laura Wang wrote in a note dated Sunday. “We are at the beginning of a multi-quarter recovery in earnings revisions and valuations.”
The brokerage lifted China to overweight from an equal-weight position it had held since January 2021. It raised its end-2023 targets for the MSCI China Index to 70 from 59 and for the Hang Seng Index to 21,200 from 18,200.
The new targets imply more than 10% upside, even after stocks surged in Hong Kong and on the mainland on Monday as authorities accelerated a shift toward reducing pandemic curbs.
A slew of positive developments is helping improve the outlook for Chinese assets, with more market watchers calling for a bottom in the nation’s stocks. The benchmark CSI 300 Index jumped almost 10% in November, its best month since July 2020, as a global rally enhanced the impact of Covid-regulation relaxation and property rescue measures.
Morgan Stanley suggests further increasing exposure to reopening beneficiaries such as consumer names, and adding allocation to offshore Chinese equities. It’s now “more confident that a new bull cycle is beginning” for emerging market stocks given higher earnings growth and expansion of multiples.
The upgrade of Chinese equities is in line with the brokerage’s preference of North Asian markets such as South Korea and Taiwan. Still, China’s recovery path “is set to be bumpy as earnings pressure continues into early next year”, the strategists said. BM/DM
04
DEC
11pm

UK faces recession and lost decade without growth plan, CBI says

The UK economy faces a decade of lost growth unless the government takes action on investment tax reliefs, the Northern Ireland protocol and the shrinking workforce, the Confederation of British Industry has warned.
In its latest forecast, the CBI said the UK has already fallen into a “short and shallow” recession that will leave business investment 9% below 2019 levels and productivity 2% below its pre-pandemic trend at the end of 2024.
CBI director general Tony Danker said Britain seems to be retreating from priorities raised by Prime Minister Rishi Sunak at his Mais Lecture in February when he was Chancellor and is now removing incentives to invest and innovate, and abandoning any agenda for growth.
“Britain is in stagflation – with rocketing inflation, negative growth, falling productivity and business investment,” Danker said. “Firms see potential growth opportunities but a lack of ‘reasons to believe’ are causing them to pause investing in 2023. Government can change this. We will see a lost decade of growth if action isn’t taken.”
The bleak outlook accompanied its forecast for the economy to shrink 0.4% next year as the cost of living crisis hammers household spending and interest rates rise to 4%. GDP recovers in 2024 with growth of 1.6%.
Unemployment in the CBI’s outlook rises by around 500,000 from 3.6% to 5% next year, while inflation, currently at 11.1%, squeezes household incomes throughout 2023 and remains above target at 2.6% at the end of 2024.
“Britain fails to invest as much as it should compared to our G7 competitors in capital, people, and ideas, and it was [Sunak’s] view that the government needed to play a role in changing that,” Danker said. “But the truth is, we still have no plan.”
The CBI’s bleak projections follow forecasts for an even deeper recession outlined by the Bank of England, the Office for Budget Responsibility and the Organization for Economic Cooperation and Development.
The CBI expects the UK to suffer the second worst recession of major economies after Germany. Persistent weak productivity and business investment “doesn’t bode well for the country’s potential to grow,” it said.
Danker said the government can take action to restore confidence among businesses and boost growth, chiefly through a massive tax break on investment. In April, the corporation tax super-deduction expires and the tax rate rises six percentage points to 25%.
The CBI has called the super-deduction to be replaced with full-expensing, under which every penny invested in plant and ...
02
DEC
12pm

Congo Publishes Oil Block Agreement with Billionaire Gertler

The Democratic Republic of Congo will pay Israeli billionaire Dan Gertler more than $250 million to resolve a dispute over two oil blocks, according to a settlement agreement.
Under the terms of the deal released by the government on Thursday, Gertler will return mining and oil assets potentially worth billions of dollars to the state in exchange for the reimbursement of expenses and Congo’s assistance in getting US sanctions against him ended.
Gertler was sanctioned in 2017 by the US Treasury for “opaque and corrupt mining and oil deals” in Congo under the previous administration of President Joseph Kabila.
“It is Mr. Gertler’s fervent hope that with his full withdrawal from active business in the DRC and the implementation of compliance changes, the US government will view him as having responded to the US sanctions in the appropriate manner,” his spokesman said in an emailed statement.
Congo Backs Billionaire Gertler’s Bid to End U.S. Sanctions
Gertler’s companies will continue to receive royalties from three copper and cobalt projects in Congo owned by Glencore Plc and Eurasian Resources Group, according to the agreement. He will also give up two oil permits on Lake Albert along the border with Uganda, as well as iron and gold exploration permits.
Congo is currently offering the two oil blocks up for tender.
According to the agreement, Congo has a year from the signature date to pay Gertler’s company, Ventora Development SASU, the entirety of 240.7 million euros ($252 million) plus 6% annual interest whether or not the country has managed to re-sell his permits.
Gertler’s Ventora will also pay 249 million euros to state-miner Gecamines for a previous deal giving him royalties to Glencore’s KCC project, according to the agreement. The payment is partly offset by a 192 million euro loan Gecamines owes to Gertler.
Congo is required to publish all mining contracts as part of the conditions of a $1.5 billion International Monetary Fund loan program and the country’s mining code.
On Friday, a coalition of Congolese and international non-governmental organizations known as Congo Is Not For Sale said the settlement “confirmed the fears of a detrimental deal for the country” and called on the government to publish any other annexes and documents related to the agreement.
02
DEC
12pm

Alameda Bet Big on Crypto Miner Genesis Before Sector Implosion

One of the bigger questions surrounding the collapse of Sam Bankman-Fried’s crypto empire is what venture investments his trading firm Alameda Research poured billions of dollars in.
A company document indicates that his largest bet was on the Bitcoin mining company Genesis Digital Assets during the height of the crypto gold rush. Alameda continued to pour money into the firm even as the price of Bitcoin tumbled and soaring energy costs wreaked havoc across the industry.
Alameda has invested a total of about $1.15 billion in Genesis Digital, valuing the company at $5.5 billion in an April fund-raising round, according to an internal spreadsheet listing FTX and Alameda’s venture portfolio obtained by Bloomberg News. The miner isn’t related to crypto lender Genesis, whose lending unit has halted customer withdrawals.
The investment spanned across four rounds between August 2021 and April this year. An initial injection of about $100 million was made last August, followed by another $550 million in January, $250 million in February and $250 million in April. The total amount makes it Alameda and FTX’s biggest venture bet, according to the spreadsheet.
Representatives of Genesis Digital, which has its roots in Iceland, didn’t respond to requests for comment. Caroline Ellison, the head of Alameda Research, didn’t respond to a request for comment.
Read More Crypto Lenders’ Woes Worsen as Miners Struggle to Repay Debt In Sam Bankman-Fried, Venture Capitalists Saw a Model Founder Sequoia Capital Says Sorry for FTX But Defends Vetting Process
In the most recent crypto boom, miners were able to raise billions of dollars from the equity market and lenders at generous terms, often using the equipment purchased as collateral on loans. In the first half of this year, the Bitcoin mining industry saw as much as 90% profit margins.
But the mining industry quickly went from one of the most lucrative corners in the digital world to one of the most distressed sectors, given the plunge in Bitcoin, soaring energy costs and more competition among miners. Some of the largest mining companies are on the verge of bankruptcy with a key mining revenue gauge falling to a record low.
Genesis Mining, the predecessor of Genesis Digital Assets, was one of the oldest mining companies, opening its first facility in Iceland in 2014. It had large-scale mining operations in China before the government imposed a sweeping ban on crypto mining last May. Marco Streng, the founder, later started Genesis Digital Assets in April ...
02
DEC
12pm

Ramaphosa Allies Rally Behind Him as ANC Discusses His Fate

South African President Cyril Ramaphosa’s allies closed ranks behind him as the governing party’s top leaders consider how to respond to an independent panel’s findings that there may be grounds for his impeachment. The rand rallied and government bond yields fell.
Key supporters met on Thursday night to hammer out a plan to keep Ramaphosa from resigning over his handling of a robbery at his game farm in which the president said $580,000 hidden in a sofa was stolen. Despite the panel’s findings that Ramaphosa may be guilty of serious misconduct and had a case to answer, there was no indication that he abused public funds, which should count in his favor, according to two of those who attended the meeting and spoke on condition of anonymity because they aren’t authorized to comment.
Finance Minister Enoch Godongwana said on Friday that there was a 10% chance of Ramaphosa leaving office. Those comments came after Mineral Resources and Energy Minister Gwede Mantashe, the chairman of the governing African National Congress, said it would be premature for Ramaphosa to resign.
“He is more popular than the party,” Godongwana said in an interview with Bloomberg TV. “My prayer for now is that he remains.”
The rand surged as much as 2.2% after Godongwana spoke, and traded 0.9% stronger at 17.4957 per dollar by 5:32 p.m. in Johannesburg. Government bonds also rallied, with the benchmark 10-year yield dropping 23 basis points to 11.31%.
Investor concern that Ramaphosa might step down over the scandal triggered the rand’s worst one-day loss since May and the biggest selloff of government bonds since 2015 on Thursday.
One reason Ramaphosa changed his mind about resigning immediately was because of advice from his lawyers, according to three of the people. The president’s legal team is confident parts of the report can be successfully challenged, they said.
Officials who sit on the ANC’s National Executive Committee adjourned a meeting on Friday after former President Thabo Mbeki raised objections to Ramaphosa’s absence, according to two people who attended the gathering and declined to be identified as they’re not authorized to comment. The panel’s discussions are expected to continue on Sunday.
ANC Treasurer-General Paul Mashatile told the meeting that Ramaphosa plans to take the panel’s report on legal review, the people said.
Ramaphosa’s spokesman, Vincent Magwenya, referred a request for comment to ANC spokesman Pule Mabe, who didn’t immediately respond to questions sent by text message.
Read More:
EXPLAINER: The Scandal That Could Sink ...
01
DEC
11pm

EU closes in on $60 cap for Russian oil as Poles hold out for tougher action

The European Union is closing in on a deal to cap the price of Russian crude oil at $60 a barrel, their latest attempt to clinch an agreement before a Monday deadline, according to people familiar with the matter.
But Poland continues to push to harden the sanctions package before signing off on the price cap, and talks will continue tomorrow, the people said. Warsaw wants new sanctions linked to the cap plan.
EU talks have been dragging on since last week as Poland and the Baltic nations demanded measures that put more pressure on Moscow’s revenues. Even after their efforts, the cap that looks set to be agreed is above the prices most Russian crude already trades at.
As a deal looks within reach, the bloc is set to create a mechanism that would allow for revisions of the price every two months, according to a draft document. There’s also a plan to make sure any resetting of the cap should leave it at least 5% below average market rates.
One official from a coalition country said late on Thursday that each review of the cap price will take into consideration a variety of factors, including changes to market prices, as well as fiscal and economic conditions inside Russia.
The person added that they were encouraged that the price cap project had come this far. At its outset, the person said, the plan was judged to have little chance of success. They said the approach of the cap’s imposition had already forced Russia to discount its prices on crude sales more than the coalition had anticipated.
It’s still not clear how the Kremlin will react to the $60 cap, but Foreign Minister Sergei Lavrov indicated on Thursday that he thought the price cap level was irrelevant. Given the cap is above market rates, Moscow may be able to claim it can just keep selling oil as usual.
The intention of the price cap – first proposed by the US amid concern EU sanctions were too strict – is to keep Russian oil flowing to avoid a global price surge, while also limiting Moscow’s revenue. For the price cap plan to accomplish its goal, the level has to be attractive enough to the Kremlin.
The risk for oil markets is that if the cap is seen as too low, Moscow may make good on a threat to shut down production – sending global crude prices higher.
The country’s flagship ...
01
DEC
11pm

Asia stocks set for mixed open with jobs in focus: markets wrap

Stocks fell in Asia after US equities struggled for direction, with traders awaiting a jobs report later on Friday for clues on the Federal Reserve’s next policy steps.
A gauge of Asian equities dropped, led by Japan, where the yen’s five-day rally increased downward pressure on stocks. A Bank of Japan board member suggesting the need for a policy assessment added to negative sentiment.
Futures contracts for the S&P 500 slid after the index edged lower during the US session. It rallied earlier this week on Fed chair Jerome Powell’s signals of a downshift in the pace of hikes.
Bets on where the central bank rate will peak have now dropped below 4.9%, according to swap markets. The current benchmark sits in a range between 3.75% and 4%.
Fed Bank of New York president John Williams said further hikes are needed to curb inflation. Concern that such tightening raises the odds of a recession became more pronounced after data showing American manufacturing contracted in November for the first time since May 2020.
The Bloomberg Dollar Spot Index steadied after sinking to its lowest since June.
Australian and New Zealand government bond yields slid, following the lead from Treasuries on Thursday, when their rally gathered steam amid a pullback in expectations for Fed tightening. The 10-year US benchmark yield rose slightly to 3.54% during Asian trading.
The remarkably resilient US jobs market is beginning to cool, but Friday’s employment report may fall short of the turning point Fed officials are seeking in their battle to beat back inflation.
Still, Sarah Ponczek, financial adviser at UBS Private Wealth Management, said the jobs figures and other data may start to show a slowing trend in the economy.
“There have been slight hints that the interest-rate hike cycle that we have seen is starting to filter through the economy,” she said on Bloomberg Radio.
In South Africa, the political turmoil risks sending the financial market into deeper rout, with the rand coming off its worst one-day loss since May and yields on the 10-year sovereign bond rising most since 2015.
Elsewhere, oil was set for a weekly gain with China further easing Covid restrictions and the US considering a pause in sales from its strategic reserves. Gold slid. BM/DM

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