|Thursday 03rd of January 2019
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'Flash-Crash' Moves Hit Currency Markets @business
It took seven minutes for the yen to surge through levels that have
held through almost a decade.
Traders are still seeking to piece together what happened just before
9:30 a.m. in Sydney, when orders came to sell Australia’s dollar and
Turkey’s lira against the yen. While some pointed to risk aversion
triggered by Apple Inc. cutting its sales outlook, others said
Japanese retail investors were behind the trades. Whatever the cause,
the moves were exacerbated by algorithmic programs and thin liquidity
with Japan on holiday.
The results: the yen jumped almost 8 percent against the Australian
dollar to its strongest since 2009, and surged 10 percent versus the
Turkish lira. The Japanese currency rose at least 1 percent versus all
its Group-of-10 peers, bursting through the 72 yen levels against the
Aussie that has held through a trade war, a stock rout, Italy’s budget
worries and Federal Reserve rate hikes.
“The moves were very violent,” said Stephen Miller, an adviser at
Grant Samuel Funds Management Pty in Sydney and former head of fixed
income at BlackRock Investment Management (Australia). “It’d have
caught some by big surprise.”
Flash crashes have happened before in early Asian trading when
liquidity is thin. The pound plunged 6 percent in two minutes on Oct.
7, 2016 amid concerns over Brexit and speculation of a “fat finger.”
Thursday’s wild moves started around an hour after Apple cut its
fiscal first-quarter revenue, with Chief Executive Tim Cook saying
they were surprised by the magnitude of the slowdown in the Greater
“The Apple news is driving safe haven flows, which have seemingly
triggered a flash crash in FX,” said Brad Bechtel, global head of
foreign exchange at Jefferies LLC.
02-JAN-2019 :: 2019 Annus Mirabilis The markets will be more "Darwinian"
This recent series of Articles was headlined Annus horribilis [which
is a Latin phrase, meaning "horrible year"]. It is complementary to
annus mirabilis, which means "wonderful year". And therefore in the
spirit of Tennyson's "The Death of the Old Year" which concludes:
His face is growing sharp and thin.
Alack! our friend is gone,
Close up his eyes: tie up his chin:
Step from the corpse, and let him in
That standeth there alone,
And waiteth at the door.
There's a new foot on the floor, my friend,
And a new face at the door, my friend,
A new face at the door.
10-DEC-2018 :: Truce dinner @Huawei
Law & Politics
Sirloin steaks, Catena Zapata Nicolas Malbec  Huawei
Technologies Co. and Wanzhou Meng
You will recall that Presidents Trump and Xi Jinping enjoyed a much
anticipated ''Truce'' Dinner at the G20 in Buenos Aires and quaffed a
Catena Zapata Nicolas Malbec  wine with their sirloin steaks and
finished it all off with caramel rolled pancakes, crispy chocolate and
fresh cream, a dinner that ran over by 60 minutes and one where the
dinner Guests broke out into spontaneous applause thereafter.
Brexit drives wedge between Labour members and @jeremycorbyn @FT
Jeremy Corbyn is at odds with the vast majority of Labour’s membership
on Brexit, according to a new poll of more than 1,000 party members.
Mr Corbyn, the Labour leader and longstanding critic of the EU,
believes the government should uphold the result of the 2016 EU
But almost three-quarters of members want a second referendum to try
to reverse Brexit, according to the research by YouGov for the ESRC
Party Members Project, funded by the Economic Social and Research
The findings are awkward because Mr Corbyn seized the leadership of
Labour in 2015 promising to give the party grassroots a whip hand over
''If Jeremy Corbyn genuinely believes, as he has repeatedly claimed,
that the Labour party’s policy should reflect the wishes of its
members rather than just its leaders, then he arguably has a funny way
of showing it — at least when it comes to Brexit,” said Tim Bale,
professor of politics at Queen Mary University of London, who led the
Researchers questioned 1,034 Labour members, of which 83 per cent said
they had voted Remain in the EU referendum. They also talked to a
representative sample of 1,675 voters from across the political
The survey showed that 89 per cent of Labour members believed the UK
was wrong to vote to leave the bloc. This belief was shared by 73 per
cent of Labour voters.
Mr Corbyn’s current position on Brexit is that Labour wants a
permanent customs union with the EU and is trying to force a general
election to try to implement it. Only if that fails would the party
consider backing a second referendum on membership.
However, 72 per cent of Labour members polled for the ESRC project
want Mr Corbyn to back a fresh referendum on Brexit. If that did
occur, 88 per cent of the membership would vote to stay in the EU,
according to the research. The equivalent figure for Labour voters was
71 per cent.
But the research found that support for Mr Corbyn among Labour members
is broadly holding up despite the disagreement on the EU.
While fewer than a quarter of the general public think he is doing
well as leader of the opposition, 65 per cent of the membership still
think he is performing strongly.
No One Is Ready for a No-Deal Brexit @bopinion
Law & Politics
With Brexit negotiations paralyzed, and fewer than 100 days till the
clock runs out, it’s worth remembering that the U.K. government —
despite its assurances — remains entirely unready for a no-deal exit
from the European Union. Pretending otherwise helps no one.
In recent weeks, the government has started making some frantic
preparations. It has directed 2 billion pounds to no-deal provisions,
hired some 10,000 staffers, and redeployed hundreds of civil servants
to help shorthanded departments. Rather alarmingly, it’s also putting
about 3,500 troops on standby.
All this amounts to an expensive bluff. From the beginning, the
government has tried to use the prospect of a chaotic exit as
negotiating leverage — “No deal is better than a bad deal,” as Prime
Minister Theresa May has said.
It was never terribly convincing, not least because the U.K. was doing
almost nothing to prepare for it. To pretend to get serious now, with
a mere three months to go, is simply delusional. EU negotiators know
full well that Britain could never accept the consequences of no deal
— and these expensive preparations won’t induce them into new
It bears repeating that a no-deal exit would be a disaster. Overnight,
customs and regulatory barriers would rise. Licenses and approvals
issued in Britain would no longer apply across the border. Supply
chains would freeze up. Food distribution could break down. Growth
would crater, the pound could plummet, prices might soar and
unemployment could double. That’s to say nothing of non-economic
consequences: U.K. police could lose access to tools for tracking
terrorists, British planes and pilots could be grounded, hospitals
could run out of medicines, and garbage could pile up — not to mention
A better approach to all of this would be honesty. The time for
bluffing is up. No government could willingly accept a calamity on the
scale of a no-deal Brexit, and May should simply say so. If Parliament
rejects her Brexit deal in January — as in all likelihood it will —
she should push immediately to delay the Article 50 process and stop
the countdown. That would allow time for either new elections or, far
better, a second referendum that would let the public finally break
To continue with Potemkin no-deal preparations will only compound the
damage. Vast sums are being spent to sustain an illusion that isn’t
fooling anyone. Meanwhile, no progress is being made on more realistic
options — and the clock ticks and ticks.
Adieu 2018, legacies of a troubled year @Africa_Conf
Radical political change and peace-making in Ethiopia, together with
the signing of the African Continental Free Trade Area agreement,
lifted spirits in Africa as other regions became embroiled in trade
wars and a wave of nationalism in 2018.
But many of the biggest questions about political power and economic
strategy in Africa remain stubbornly unresolved. Controversy is
welling over the disputed elections in Congo-Kinshasa on 30 December,
the effects of which will spill over into the new year.
Three of Africa's biggest economies – Algeria, Nigeria and South
Africa – have been chugging along in 2018, all underpowered in terms
of their capacity to create jobs and sustain growth. All three are to
choose new political leaders in 2019 but the candidates and campaigns
have yet to inspire a new generation of voters and activists.
Rebellion and dissent in Cameroon and Sudan, fizzing for years under
repressive and dysfunctional regimes, was revving up in both
countries, with many protestors mown down by government forces in the
final days of the year.
Two big economic stories from last year – Africa's ballooning debt
obligations and intensifying competition between China and the United
States for continental influence – will assume still more importance
ETHIOPIA: A perpetual motion prime minister keeps up the pace @Africa_Conf
Without question, the appointment of Abiy Ahmed as Prime Minister in
March was the political story of the year on the continent. After
outmanoeuvring his rivals in the ruling coalition Abiy embarked on a
quick-fire programme of reforms, freeing political prisoners,
encouraging excited oppositionists and most spectacular of all,
calling a formal end to the war with Eritrea and re-establishing
diplomatic ties between the two countries.
Abiy's appointment of a cabinet with women in half the posts, as well
as a female President and female Chief Justice, earned him still more
reform credibility. Ethiopians held their breath, expecting pushback
or much worse from the security forces. So far, Abiy has dealt with
rumblings from his opponents who have been caught off-guard by the
speed of the change and the build-up of popular support for his moves.
Some are advising Abiy to consolidate but he shows no sign of
slackening the pace.
Congo election results may be delayed by slow counting: vote commission @ReutersAfrica
reliminary results from Democratic Republic of Congo’s presidential
election may be delayed past Sunday because of the low number of
voting tally sheets received so far, the head of the electoral
commission, CENI, told candidates on Wednesday.
CENI president Corneille Nangaa said that by Wednesday, vote counting
centers had received just 17 percent of tally sheets, three sources
who were present told Reuters.
NIGERIA: Voter turnout will be the key in February @Africa_Conf
Presidential and state elections in Africa's most populous country and
biggest economy should have caused more of a stir given the challenges
the country is facing. One clear message is that none of the main
candidates have impressed younger voters.
Voter apathy threatens the two main parties but the opposition will be
more vulnerable if the turnout is low. In the last few weeks of 2018,
rival politicians stepped up allegations of historic corruption. The
claimed involvement of key business and political figures in the
scandal over the OPL 245 oil block, as heard in an Italian court, is
fuelling rhetoric on both sides.
Security concerns may also tilt the election. The opposition accused
the government of incompetence in losing the initiative in the fight
against Boko Haram in the wake of several attacks in the north-east.
SOUTH AFRICA: Ramaphosa's critical test - his own man at his own pace @Africa_Conf
A lifelong veteran of the African National Congress, President Cyril
Ramaphosa is unfazed by his country's rapidly changing political
winds. With a small band of advisors and tacticians, he has been
working out the best way to dig out the corruption in the party and
government that has been stalling the economy.
But his painstaking progress is inadequate for many and not radical
enough – on issues such as land reform – for still more South
Africans. The earlier enthusiasm known as Ramaphoria has dissipated.
Ramaphosa has to do much more than fight off his political rivals in
the system. He has to spark a new grassroots enthusiasm for the ANC
well ahead of the elections in May. His first chance to set out his
stall will be at the party's annual conference, to be held in Durban
on 10-13 January.
SUDAN: Protests gather steam, targeting Beshir's regime @Africa_Conf
The chronic failure of the National Congress Party regime in Khartoum
to address deepening poverty and hardship has fuelled a wave of
discontent that has parallels with the 'Arab Spring' revolts that
spread across North Africa in 2011. Initially about the price of bread
and fuel, the protests have escalated into widespread calls for
President Omer Hassan el Beshir to step down.
An important difference between the current dissent and earlier
protests in Sudan has been the national reach of the opposition
activists who have organised demonstrations across the country.
Aware of the threat, the regime has doubled down on security. Amnesty
International says government forces have killed at least 37
oppositionists in the past week, with army snipers in the capital
picking off marchers in demonstrations. Such mass slaughter has
already drawn attention at the United Nations and criticism from
Western diplomats. It may also freeze efforts by the regime to unpick
sanctions by the United States.
Sudan Seeks Foreign Help on Economy as Protests Rage @economics
Sudan’s central bank governor said the country is seeking funding from
unidentified nations to ease its economic crisis, as protests continue
against President Omar al-Bashir’s three-decade rule.
Mohamed Khair al-Zubair mentioned possible foreign funding during a
Tuesday press conference, outlining a three-month plan to boost
revenue, bring in hard currency and print more banknotes. The African
nation, which devalued its pound at least three times in 2018, is
suffering from severe cash shortages and inflation of almost 70
Unidentified Gulf Arab nations extended about $2 billion in
concessional loans to Sudan in 2015, the Finance Ministry said at the
time, while state media in the past two years has reported the central
bank receiving deposits from the United Arab Emirates.
Madagascar police fire tear gas to break up opposition protest
Antananarivo, Madagascar | AFP | Madagascan security forces on
Wednesday fired tear gas to break up a protest by supporters of losing
presidential candidate Marc Ravalomanana, who claims he was denied
victory in last month’s election because of fraud.
In the run-off vote on December 19, Ravalomanana won 44 percent
against the winner Andry Rajoelina on 55 percent, according to
Thousands of Ravalomanana’s supporters gathered in the centre of the
capital Antananarivo but were quickly dispersed by police using tear
gas, according to an AFP reporter at the scene.
“We came to erect a giant screen projecting anomalies in the
second-round election but we were fired at with tear gas,” Hanitra
Razafimanantsoa, a lawmaker from Ravalomanana’s party, told the media.
After years of brutal hyperinflation, Zimbabwe became known as a place where cash was almost worthless. Now, investors are fighting over @EcoCashZW country's homegrown @PayPal like service that has zoomed into the economy's cash void @WSJ
The adversaries in the shareholder dispute include U.S. venture
capitalist Paul Tierney, a former Peace Corps volunteer and former
owner of D.C. United soccer team.
Along with his son Matthew, he accuses the man behind EcoCash, Strive
Masiyiwa, a jet-setting philanthropist who sits on the board of
Unilever and the Rockefeller Foundation, of trying to use an unusual
debt-for-equity swap to grab a bigger piece of EcoCash now that it has
become a key piece of monetary infrastructure.
Mr. Masiyiwa is the founder and biggest shareholder of EcoCash’s
owner, Zimbabwean cellphone operator Econet Wireless Zimbabwe Ltd. The
company’s shares, which trade on the Zimbabwe Stock Exchange in
dollars, have increased their value nearly 10-fold in the past 18
months and were recently worth more than $7 billion on paper.
After the collapse of the Zimbabwe dollar in 2009, the country adopted
the U.S. dollar to stabilize prices. But since it can’t print them
itself, the country is now so low on dollars that banks have stopped
dispensing cash or transferring money abroad.
The government, under budgetary pressure, has essentially created
quasi-U.S. dollars that exist only electronically in local bank
accounts and are now coursing through the economy. But they are deeply
devalued: On the black market, a $100 bill can cost as much as $350 in
Launched in 2011, EcoCash allows users to trade electronic dollars
over their phones. Users set up a mobile wallet—either linked to a
bank account or topped up through transfers from another user—and then
use the service to make everyday payments by punching codes into the
phone’s call function.
Eight out of 10 transactions in the Southern African nation—whether
paying for milk at the corner store, paying an electricity bill or
buying fuel on the black market—are done using EcoCash, according to
data from the Reserve Bank of Zimbabwe. In a country of 13 million
people, the platform has more than eight million users.
“This is a very, very unique story in the world,” said Roy
Chimanikire, Econet’s finance director. “This is an asset which
basically is running the financial system of the country, that has
stopped the country from collapse.”
In February 2017, with Zimbabwe’s version of the dollar dropping in
value and the company struggling to pay back foreign loans, Econet
raised $130 million through a rights issue, in a mix of local
quasidollars and real U.S. dollars. Investors received shares for 5
cents and debentures, a debtlike instrument with an issue price of 4.7
cents. The debentures were meant to be paid back in six years.
Investors soon deemed the debentures worthless after the government
blocked a plan to let Econet back them with dollars held abroad.
EcoCash’s usage has soared since then and so has Econet’s share price,
trading as high as $2.85 in October.
In November, the company proposed converting the debentures into
equity. Minority investors, some of whom bought shares after the
rights issue, and thus didn’t own the debentures, cried foul.
“There is no justification for this blatant disregard for the rights
of minority shareholders,” Paul and Matthew Tierney wrote in a Nov. 27
letter to the Zimbabwe Stock Exchange.
They said Mr. Masiyiwa, already worth $1.7 billion according to
Forbes, was using those debentures to grab a bigger stake in the
company at a steep discount. Mr. Masiyiwa would turn the debentures he
purchased for just $28 million in 2017 into shares valued around $1.3
billion on the day the conversion was proposed.
If the deal went through, it would lift Mr. Masiyiwa’s stake in Econet
to 46.7%, from 42.6%, while diluting the holdings of investors who
don’t own any debentures.
Other investors unhappy with the proposed conversion include
Zimbabwean financial-services companies Old Mutual Zimbabwe and Imara
Securities as well as South Africa’s Coronation Fund Managers Ltd. ,
Sanlam Ltd. and Allan Grey, which together own some 25% of Econet.
Mr. Masiyiwa “treats Econet as his personal company and minority
investors get stiffed,” said Peter Townshend, portfolio manager for
Sanlam’s Africa Equity Fund
Complicating matters, in December, Econet spun off the EcoCash
business, along with some smaller financial-services ventures, into a
separate company listed on the Zimbabwe Stock Exchange. Dubbed Cassava
Smartech, it immediately became the country’s largest traded company
with a market capitalization of $3.87 billion.
These gains may just be mostly on paper anyway. Zimbabwe investors
have piled into assets denominated in dollars, including stocks, that
they think may retain value in case the country decides to depeg from
the U.S. dollar.
“We have a U.S. dollar operating in Zimbabwe, but actually that U.S.
dollar is not convertible into a U.S. dollar outside Zimbabwe,” said
Mr. Chimanikire, Econet’s finance director. “So it’s not really a U.S.