<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1920" height="1005" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/3GQDJSI4GBKYFLS5LW25CALRGU.avif" alt="" class="wp-image-550496"/><figcaption class="wp-element-caption">Shoppers walk within Merkato, one of Africa&#8217;s biggest open air market, in Addis Ababa, Ethiopia, April 25, 2024. REUTERS/Tiksa Negeri/File Photo</figcaption></figure>



NAIROBI, Nov 5 (Reuters)&nbsp;&#8211;&nbsp;The International Monetary Fund has raised Ethiopia&#8217;s net international reserves target to facilitate payments of upcoming hard currency bills, the Fund said.



The East African nation secured a $3.4 billion, four-year financing program from the IMF in July after carrying out a series of reforms including floating its birr currency. It is also in the midst of a fresh push to put its debt restructuring back on track.



&#8220;An increase in near-term target is warranted by Ethiopia&#8217;s vulnerabilities and heightened uncertainty around outlook,&#8221; the IMF said in a report published late on Monday.



Lower-than-expected volumes of hard currency sales by the central bank through auctions and higher gold exports contributed to an over-performance of the net international reserves target for August, the IMF said.



The net international reserves stood at $1.3 billion in mid-August, more than double the target of $630 million, the Fund said.



It raised the end-June 2025 target by $300 million to $400 million, to help create a buffer for the country to settle maturing letters of credit for fuel imports issued before reforms started.



The flotation of the birr currency resulted in the convergence of the official and the black market rates, the IMF said, but market activities had picked up at a slower pace than expected, leading to persistent unmet demand for dollars.



Ethiopia plans to reach a deal with bilateral creditors by year-end, the Fund said, followed by a deal with its Eurobond investors &#8220;as soon as is feasible&#8221; after that.



Bondholders have rejected the size of the proposed reduction in the principal amount, known as a haircut, indicated at 18% in a recent investor presentation, saying the government was ignoring the fact that Ethiopia faces a liquidity issue, not an insolvency one.



&#8220;The authorities are making good faith efforts to agree terms with Eurobond holders,&#8221; the IMF said.



(Reporting by Duncan Miriri; Editing by Bernadette Baum)

3GQDJSI4GBKYFLS5LW25CALRGU

IMF raises Ethiopia’s international reserves target after first review

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1920" height="1005" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/WH675YVHBZPIZNYJUJB4CMI73E.avif" alt="" class="wp-image-550493"/><figcaption class="wp-element-caption">A view shows a toll station on the Expressway undertaken by the China Road and Bridge Corporation (CRBC) on a public-private partnership (PPP) basis, in Nairobi, Kenya May 8, 2022. REUTERS/Thomas Mukoya/File Photo</figcaption></figure>



NAIROBI, Nov 5 (Reuters)&nbsp;&#8211;&nbsp;Kenya&#8217;s private sector saw a modest improvement in business conditions in October, as activity levels and employment returned to growth, an S&amp;P Global survey showed on Tuesday.



The headline Purchasing Managers&#8217; Index (PMI) rose to 50.4 in October from 49.7 in September, indicating a marginal upturn in the health of the private sector. A PMI reading above 50.0 signals growth, while below that level indicates contraction.



Business activity increased for the second time in three months, driven by rising sales and greater client interest, despite ongoing cash flow challenges and political uncertainty. Employment levels also rose for the first time since July, although the pace of job creation was mild.



&#8220;Despite the slight rise in output, many firms continued to struggle with cash flow constraints, tough economic conditions, rising costs and political uncertainty,&#8221; the survey reported.



Purchasing efforts accelerated, leading to the most significant increase in inventories since August 2023, as firms stocked up in anticipation of new customers. Input cost pressures remained mild, resulting in only a slight rise in average prices charged.



Confidence regarding future activity rose to a four-month high, with firms planning new outlets and investments in products and marketing. However, sentiment remained subdued compared to historical trends.



While input prices rose modestly, driven by higher tax payments and material costs, reduced fuel prices helped keep cost burdens lower than last year. As a result, the increase in selling prices was among the slowest in nearly four years.



(Reporting by Reuters; Editing by Toby Chopra)

WH675YVHBZPIZNYJUJB4CMI73E

Kenya’s private sector activity returns to growth in October, PMI shows

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="563" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-820x563.jpg" alt="" class="wp-image-550475" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-820x563.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-300x206.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-131x90.jpg 131w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-768x527.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-1536x1054.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/Rajesh-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Rajesh Ramsundhar, Group Head: Investor Services, Transaction Banking, Corporate and Investment Banking Standard Bank</figcaption></figure>



05 November 2024: Africa’s economic potential is undeniable, but to fully realise it, the continent faces a massive need for capital. With an annual financing gap of approximately US$100 billion for infrastructure and a climate finance shortfall of US$213.4 billion through 2030, this demand is vast and urgent. On top of this, achieving the UN Sustainable Development Goals by 2030 is estimated to cost Africa US$1.3 trillion annually equivalent to 42% of the continent’s GDP. What these figures make clear is that Africa needs capital to drive transformation, development, and ultimately, economic growth.



Yet, despite these challenges, Africa&#8217;s resilience stands out. Economic projections show that real GDP growth will rise to 3.7% in 2024 and 4.3% in 2025, continuing to outperform global averages. This resilience opens new opportunities for investors and highlights the region&#8217;s potential as a source of yield, especially as global investors seek assets in emerging markets.



While growth in Africa&#8217;s insurance markets—currently valued at US$87.4 billion in 2023 and expected to grow to US$153.9 billion by 2032, according to the&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://www.imarcgroup.com/africa-insurance-market#:~:text=Africa%20Insurance%20Market%20Size%3A,6.3%25%20during%202024%2D2032.">IMARC Group</a>&nbsp;— it creates pools of capital, these funds must be directed toward tangible investments. But how do we match the growing demand for capital with the need for assets that can absorb this investment?



The answer lies in the creation and availability of investable assets. Africa’s listed markets are relatively small, but as the continent develops, we expect to see more issuances from both corporates and governments, particularly in the debt markets. Additionally, as African governments look to privatise state-owned entities, the equities market will likely see large listings and corresponding growth. The growth in the listed market will not be sufficient to absorb both local and foreign capital. Africa has a significant portion of assets in the private/non-traditional markets, and there is significant scope and opportunity for both investor and owners of assets to unlock access to these markets.



<h2 class="wp-block-heading" id="h-unlocking-assets-through-tokenisation">Unlocking Assets Through Tokenisation </h2>



A key opportunity to bridge this gap lies in the adoption of Distributed Ledger Technology (DLT) and tokenisation. Tokenisation refers to the creation of digital tokens on a blockchain platform representing assets—whether financial (bonds, equities), tangible (real estate, commodities), or intangible (digital art, intellectual property). By digitising these assets, we can bring them to market, enabling liquidity and broadening access for both local and global investors.



Imagine the transformative potential of tokenised infrastructure investments in Africa—tradable, liquid assets that can drive development. Whether it’s property, infrastructure, or commodities, tokenisation allows these assets to be traded and settled more efficiently. Analysts predict that by 2030, between $4 trillion and $5 trillion worth of tokenised digital securities could be issued globally, underscoring the vast potential of this market.



<h2 class="wp-block-heading" id="h-the-need-for-market-harmonisation">The Need for Market Harmonisation</h2>



But it’s important to remember asset creation is only one side of the equation. For Africa’s capital markets to thrive, they need to be simple and efficient. Currently, many African markets, particularly outside of South Africa, are fragmented. They operate with disparate technologies, regulations, and frameworks, which make investing complex and costly. If we are to compete on the global stage, we need to harmonise our markets, aligning regulations and infrastructure to create a cohesive, unified system.



The question we must ask ourselves is: why do we each need to invest in separate technologies and infrastructures when we could share them? By consolidating infrastructure and adopting world-class systems, we can spread costs, create consistency, and ensure that African markets are globally competitive.



As Africa’s largest bank, Standard Bank is committed to driving this change. Whether it’s leveraging DLT to unlock private market assets or working towards common infrastructure that connects African markets, we have the expertise to support this transformation. The future of Africa’s capital markets lies in collaboration, harmonisation, and embracing new technologies that will enable us to realise our continent&#8217;s full potential.



The time is now for Africa to reimagine how we build our markets. We must work together, leverage our collective strengths, and seize the opportunities that lie ahead. Africa’s growth story is just beginning, and with the right strategies in place, we can ensure it reaches its full potential.

Rajesh 1

Transforming Africa’s Capital Markets through innovation and unity

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="612" height="408" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/istockphoto-1076949610-612x612-1-2.jpg" alt="" class="wp-image-524623" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/istockphoto-1076949610-612x612-1-2.jpg 612w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/istockphoto-1076949610-612x612-1-2-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/istockphoto-1076949610-612x612-1-2-135x90.jpg 135w" sizes="auto, (max-width: 612px) 100vw, 612px" /></figure>



JOHANNESBURG, Nov 5 (Reuters)&nbsp;&#8211;&nbsp;The following scheduled economic events, equity and currency market moves may affect South African markets on Tuesday.



<h2 class="wp-block-heading" id="h-economic-events">ECONOMIC EVENTS</h2>



S&amp;P Global Whole Economy PMI for October



South Africa&#8217;s weekly auction of long-term bonds



<h2 class="wp-block-heading" id="h-south-african-markets">SOUTH AFRICAN MARKETS</h2>



South Africa&#8217;s rand gained on Monday against a weaker dollar, as investors geared up for the U.S. to elect its next president and the Federal Reserve&#8217;s interest rate announcement this week.



On the Johannesburg Stock Exchange, the blue-chip Top-40 index closed little changed.



<h2 class="wp-block-heading" id="h-global-markets">GLOBAL MARKETS</h2>



Stock markets moved sideways and an uneasy calm settled over currencies and bonds as investors waited for the United States to choose a new leader with polls showing the contest on a knife edge.



<h2 class="wp-block-heading" id="h-wall-street">WALL STREET</h2>



U.S. stocks closed slightly lower after a choppy session on Monday, as investors prepared for a crucial week in which Americans will elect a new president and the Federal Reserve will announce its policy statement.



<h2 class="wp-block-heading" id="h-gold">GOLD</h2>



Gold traded in a narrow range on Tuesday as investors stayed away from taking big positions ahead of the U.S. presidential election and the Federal Reserve policy meeting later this week.



&#8211; &#8211; &#8211; &#8211;



Some of the main stories out in the South African press:



<h2 class="wp-block-heading" id="h-business-day">BUSINESS DAY</h2>



&#8211; SA efforts to tackle child poverty miss the mark



&#8211; Treasury may tap PIC for health funding



(Compiled by Tannur Anders)

istockphoto-1076949610-612×612-1

South African Markets – Factors to watch on Nov 5

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="612" height="350" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1040865674-612x612-1.jpg" alt="" class="wp-image-400879" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1040865674-612x612-1.jpg 612w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istockphoto-1040865674-612x612-1-300x172.jpg 300w" sizes="auto, (max-width: 612px) 100vw, 612px" /><figcaption class="wp-element-caption">Stock market report. 3d illustration</figcaption></figure>



Nov 5 (Reuters) &#8211; The following company announcements, scheduled economic indicators, debt and currency market moves and political events may affect African markets on Tuesday.



<h2 class="wp-block-heading" id="h-events">EVENTS:</h2>



Release of the Stanbic Bank Kenya Purchasing Managers&#8217; Index survey for October.



German Chancellor Olaf Scholz and Somali President Hassan Sheikh Mohamud hold a press conference in Berlin.



<h2 class="wp-block-heading" id="h-global-markets">GLOBAL MARKETS</h2>



Stock markets moved sideways and an uneasy calm settled over currencies and bonds as investors waited for the United States to choose a new leader with polls showing the contest on a knife edge.



<h2 class="wp-block-heading" id="h-world-oil-prices">WORLD OIL PRICES</h2>



Oil prices traded in a narrow range on Tuesday ahead of what is expected to be an exceptionally close U.S. presidential election, after rising more than 2% in the previous session as OPEC+ delayed plans to hike production in December.



<h2 class="wp-block-heading" id="h-south-africa-markets">SOUTH AFRICA MARKETS</h2>



South Africa&#8217;s rand gained on Monday against a weaker dollar, as investors geared up for the U.S. to elect its next president and the Federal Reserve&#8217;s interest rate announcement this week.



<h2 class="wp-block-heading" id="h-kenya-markets">KENYA MARKETS</h2>



The Kenyan shilling was steady against the dollar on Monday, as foreign exchange supply from tourism and tea exports matched demand from the manufacturing and oil sectors, one trader said.



<h2 class="wp-block-heading" id="h-sudan-politics">SUDAN POLITICS</h2>



Salwa Abdallah was recuperating from a caesarean section and tending to her one-month old baby when soldiers from the Rapid Support Forces barged into her home in Sudan&#8217;s eastern El Gezira state late last month.



<h2 class="wp-block-heading" id="h-nigeria-protests">NIGERIA PROTESTS</h2>



Nigerian President Bola Tinubu directed that all minors detained during anti-government protests in August be freed and treason charges against them dropped, Information Minister Mohammed Idris said on Monday.



<h2 class="wp-block-heading" id="h-comoros-disaster">COMOROS DISASTER</h2>



At least 25 people died off Comoros islands after traffickers capsized their boat on Friday night, the United Nations&#8217; migration agency IOM said on Monday, the third such incident in three months.



((Compiled by Nairobi Newsroom))

Stock market report. 3d illustration

African Markets – Factors to watch on Nov 5

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="522" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/KZ4R5MANMJIQPBC4GDTYRR7RTA-820x522.jpg" alt="" class="wp-image-550420" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/KZ4R5MANMJIQPBC4GDTYRR7RTA-820x522.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/KZ4R5MANMJIQPBC4GDTYRR7RTA-300x191.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/KZ4R5MANMJIQPBC4GDTYRR7RTA-141x90.jpg 141w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/KZ4R5MANMJIQPBC4GDTYRR7RTA-768x489.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/KZ4R5MANMJIQPBC4GDTYRR7RTA-1536x977.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/KZ4R5MANMJIQPBC4GDTYRR7RTA-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A teller is seen at a Pick n Pay store at Maponya mall in Soweto, South Africa, October 20, 2022. REUTERS/Siphiwe Sibeko/File photo</figcaption></figure>



JOHANNESBURG, Nov 5 (Reuters)&nbsp;&#8211;&nbsp;South Africa&#8217;s private sector maintained its growth trajectory in October, bolstered by a decline in business costs and selling prices, a Purchasing Managers&#8217; Index (PMI) survey showed on Tuesday.



The S&amp;P Global South Africa PMI recorded a reading of 50.6, slightly down from September&#8217;s 51.0, but still above the 50.0 mark that indicates growth.



The PMI has now signalled expansion for three consecutive months.



New orders continued to grow, marking the longest period of expansion since mid-2022, although the pace slowed to a marginal rate. The growth was primarily driven by the industry and wholesale &amp; retail sectors, while construction and services lagged.



A notable development was the first drop in input costs in over four years, driven by a strong rand, lower fuel prices and reduced interest rates. This allowed firms to cut selling prices, boosting customer spending.



&#8220;October was another strong month for the South African economy,&#8221; said David Owen, senior economist at S&amp;P Global Market Intelligence.



&#8220;The survey data also provided further evidence that inflationary pressures are falling.&#8221;



Despite rising sales, employment decreased for the fifth consecutive month as firms remained cautious about costs. However, input purchases rose for the first time since May, with firms increasing inventories amid improving demand and lower borrowing costs.



Business confidence improved, with 52% of respondents expecting output to rise over the next year, citing political stability and improved power availability as key factors. Nonetheless, challenges remain, with delivery delays persisting due to domestic port congestion.



(Reporting by South Africa bureau; Editing by Toby Chopra)

A teller is seen at a Pick n Pay store

South Africa’s private sector growth sustained in October as costs fall, PMI shows

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="2048" height="1365" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/4IJSVHM2FFM5LEEQMNYEX3P3XQ-scaled.jpg" alt="" class="wp-image-550389" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/4IJSVHM2FFM5LEEQMNYEX3P3XQ-scaled.jpg 2048w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/4IJSVHM2FFM5LEEQMNYEX3P3XQ-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/4IJSVHM2FFM5LEEQMNYEX3P3XQ-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/4IJSVHM2FFM5LEEQMNYEX3P3XQ-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/4IJSVHM2FFM5LEEQMNYEX3P3XQ-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/4IJSVHM2FFM5LEEQMNYEX3P3XQ-1536x1024.jpg 1536w" sizes="auto, (max-width: 2048px) 100vw, 2048px" /><figcaption class="wp-element-caption">David Lammy arrives at 10 Downing Street, following the results of the election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay</figcaption></figure>



ABUJA, (Reuters) &#8211; Nigeria and Britain said on Monday they had established a strategic partnership to boost economic growth, strengthen security cooperation and enhance personal ties.



Nigerian Foreign Minister Yusuf Tuggar and his British counterpart David Lammy outlined a partnership that also seeks to reinforce ongoing security and counter-terrorism efforts.



&#8220;By advancing our economic ties through investments and trade, we can unlock substantial growth for both nations, drive job creation and enhance local value addition,&#8221; Tuggar said during a joint press conference in Abuja, Nigeria&#8217;s capital.



Lammy, who is on his first official visit to Africa as Foreign Secretary, emphasized Britain&#8217;s commitment to a long-term partnership with Nigeria.



&#8220;It is an overarching framework for our relationship covering the breadth of things that we do together,&#8221; said Lammy, who also highlighted the importance of addressing economic growth, climate change, and security threats.



Lammy also stressed personal connections, adding that the sizeable Nigerian diaspora in Britain offers the potential for increased cultural exchange and economic cooperation.



(Reporting by Felix Onuah; Writing by Elisha Bala-Gbogbo; Editing by Alexander Smith)

Parliamentary election in Britain

Nigeria and Britain hail partnership to boost economic ties, security

Why 27 U.S. States Are Going Broke

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="574" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/SN44UK6HYFKKVFUVO3DEF3KYNI-820x574.jpg" alt="" class="wp-image-550158" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/SN44UK6HYFKKVFUVO3DEF3KYNI-820x574.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/SN44UK6HYFKKVFUVO3DEF3KYNI-300x210.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/SN44UK6HYFKKVFUVO3DEF3KYNI-129x90.jpg 129w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/SN44UK6HYFKKVFUVO3DEF3KYNI-768x537.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/SN44UK6HYFKKVFUVO3DEF3KYNI-1536x1074.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/SN44UK6HYFKKVFUVO3DEF3KYNI-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Britain&#8217;s Prince William arrives at Cape Town International Airport for a 4 day visit where he will present the 4th annual Earthshot Prize in Cape Town, South Africa, November 4, 2024.REUTERS/Esa Alexander</figcaption></figure>



CAPE TOWN, Nov 4 (Reuters) &#8211; Britain&#8217;s Prince William landed in Cape Town on Monday for a four-day trip to South Africa centred on his annual Earthshot Prize for environmental innovators.



The heir to the British throne will attend a global wildlife summit and meet with South African President Cyril Ramaphosa during the trip, which is his first to South Africa since 2010.



On Wednesday he will participate in the awards ceremony for the Earthshot Prize, which gives five winners 1 million pounds ($1.3 million) each to pursue projects addressing climate change and other environmental issues.



William launched the prize in 2020, inspired by a visit to Namibia. Its name is a nod to former U.S. President John F. Kennedy&#8217;s ambitious &#8220;moonshot&#8221; project which led to the 1969 lunar landing.



&#8220;By the end of the week, I want The Earthshot Prize to have provided a platform to all those innovators bringing about change for their communities, encouraged potential investors to speed African solutions to scale and inspired young people across Africa who are engaged in climate issues,&#8221; he said in a statement ahead of the visit.



The Prince Of Wales is making the trip alone as his wife Kate is still managing a return to work after finishing a course of preventative chemotherapy for cancer.



South Africa is a former British colony and some people there have called for the return of diamonds originally discovered in the country and then set in the British crown jewels.



($1 = 0.7717 pounds)



(Reporting by Esa Alexander; Writing by Nellie Peyton; Editing by Olivia Kumwenda-Mtambo and Gareth Jones)

Britain’s Prince William arrives in South Africa

UK’s Prince William arrives in South Africa for climate-focused trip

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="521" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/RLVCCF47LVIWPJR4O2PPITYMVI-820x521.jpg" alt="" class="wp-image-516586" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/RLVCCF47LVIWPJR4O2PPITYMVI-820x521.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/RLVCCF47LVIWPJR4O2PPITYMVI-300x191.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/RLVCCF47LVIWPJR4O2PPITYMVI-142x90.jpg 142w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/RLVCCF47LVIWPJR4O2PPITYMVI-768x488.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/RLVCCF47LVIWPJR4O2PPITYMVI-1536x976.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/RLVCCF47LVIWPJR4O2PPITYMVI.jpg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A teller handles U.S. dollar banknotes and Kenya shilling banknotes inside the cashier&#8217;s booth at a forex exchange bureau in downtown Nairobi, Kenya, February 16, 2024. REUTERS/Thomas Mukoya/File Photo</figcaption></figure>



NAIROBI, Nov 4 (Reuters) &#8211; The Kenyan shilling was steady against the dollar on Monday, as foreign exchange supply from tourism and tea exports matched demand from the manufacturing and oil sectors, one trader said.



The shilling traded at 128.50/129.50 to the dollar at 0656 GMT, the same as last Thursday&#8217;s closing rate. The markets were closed Friday for a public holiday.



(Reporting by Sonia Rao; Editing by Hereward Holland)

RLVCCF47LVIWPJR4O2PPITYMVI

Kenya shilling steady on tourism, tea exports

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/1x-1-2-820x461.jpg" alt="" class="wp-image-400641" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/1x-1-2-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/1x-1-2-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/1x-1-2-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/1x-1-2-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/1x-1-2-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A collection of mixed denomination South African rand coins sit in an arranged photo in Johannesburg, South Africa, on Thursday, June 22, 2017. South Africas inflation rate rose for the first time this year in May after food-price growth quickened from the slowest pace since December 2015. Photographer: Waldo Swiegers/Bloomberg via Getty Images</figcaption></figure>



JOHANNESBURG, Nov 4 (Reuters)&nbsp;&#8211;&nbsp;South Africa&#8217;s rand gained in early trade on Monday against a weaker dollar, as investors geared up for the U.S. to elect its next president and the Federal Reserve&#8217;s interest rate announcement this week.



At 0613 GMT, the rand traded at 17.5250 against the U.S. dollar, about 0.8% stronger than its previous close.



The dollar last traded about 0.2% weaker against a basket of currencies.



&#8220;The US presidential election on Nov. 5 is the main event this week, eclipsing even the Federal Reserve&#8217;s interest-rate decision two days later,&#8221; said Jee-A van der Linde, senior economist at Oxford Economics in a research note.



As the world&#8217;s biggest economy heads to the polls on Tuesday, Republican candidate Donald Trump and Democratic candidate Kamala Harris are virtually tied in opinion polls.



On Thursday, markets will look to the Fed&#8217;s latest rate decision, where investors expect a 25-basis-point rate cut.



&#8220;These developments will be the main driving forces for financial market,&#8221; van der Linde added.



South Africa&#8217;s benchmark 2030 government bond was unchanged in early deals, with the yield 9.32%.



(Reporting by Tannur Anders; Editing by Rashmi Aich)

South African Economy As Inflation Rate Rises For First Time In 2017

South African rand gains as markets brace for US election, rate decision

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/UGANDA-SHILLING.jpg" alt="" class="wp-image-524644" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/UGANDA-SHILLING.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/UGANDA-SHILLING-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/UGANDA-SHILLING-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/UGANDA-SHILLING-768x512.jpg 768w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Uganda shillings. Uganda. (Photo by: Godong/Universal Images Group via Getty Images)</figcaption></figure>



KAMPALA, Nov 4 (Reuters) &#8211; The Ugandan shilling was stable on Monday, drawing some support from muted hard currency appetite by merchandise importers, traders said.



At 0826 GMT commercial banks quoted the shilling at 3,655/3,665, same level as Friday&#8217;s close.



(Reporting by Elias Biryabarema; Editing by Hereward Holland)

UGANDA SHILLING

Ugandan shilling stable on muted FX appetite

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="550" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75-820x550.jpg" alt="" class="wp-image-550093" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75-820x550.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75-300x201.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75-134x90.jpg 134w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75-768x515.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75.jpg 1500w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



South Africa’s competition landscape is under intense scrutiny following the Competition Tribunal’s recent decision to block Vodacom’s R14 billion acquisition of a co-controlling stake in Vumatel parent Maziv — even after the merging parties agreed to a range of additional conditions sought by the competition authorities. The decision has shocked the telecommunications sector, threatens a R10 billion investment into fibre networks in underserviced parts of South Africa, and risks halting broader industry consolidation.



South Africa&#8217;s competition policy is a necessary focal point of economic and political discourse, particularly in the context of its ability to foster fair competition while also promoting social equity. It is worth examining a few of this policy’s good, bad and the ugly elements, and considering areas where it could be more effective.



First the good: Our competition policy’s commitment to inclusive growth is commendable. The integration of public interest considerations into merger assessments marked a shift from traditional competition law focused solely on economic efficiency. For instance, high-profile mergers such as Walmart&#8217;s acquisition of Massmart and AB InBev&#8217;s takeover of SABMiller included conditions that mandated support for local businesses and job protection. While imperfect, these demonstrated the policy&#8217;s potential to drive economic transformation by ensuring large corporations positively contribute to the communities in which they operate.



South Africa also benefits from an established and still-strong regulatory framework through independent bodies, notably the Competition Tribunal’s oversight of the Competition Commission. There has also been prosecutorial success against anti-competitive practices in sectors such as construction and food. The penalties imposed for price-fixing practices during the Covid-19 pandemic indicated a willingness to maintain market integrity.



Moving to the bad: The effectiveness of our competition policy is, however, undermined by several factors. By integrating public interest considerations into competition assessments of mergers and acquisitions, the policy creates an unduly complex regulatory environment.



This deters foreign investment. Merger and acquisition evaluations, based on their social impact, can result in investors viewing the regulatory risks as too high, while adding public interest elements increases costs, which erodes South Africa’s ability to attract investment. In the Walmart-Massmart case, for example, among the conditions the Competition Commission attached to Walmart’s acquisition of Massmart, was a commitment not to retrench for a several years — this added a layer of uncertainty, risk and cost for the merging parties that was difficult to predict in a dynamic retail market.



There is also growing criticism about the efficacy of the competition policy’s enforcement mechanisms in the face of anti-competitive practices. While there have been some prosecutorial successes, the current framework may not be sufficient to address emerging challenges.



Finally, the ugly: The historic instances where public interest criteria were misapplied is undoubtedly one of the least attractive aspects of our country’s competition policy. The public interest grounds outlined in Section 12A(3) require consideration of, in summary: the effect the merger will have on an industrial sector or region; employment; the ability of SMEs or businesses owned by historically disadvantaged individuals (HDIs) to enter, participate in or expand within the market; the ability of national industries to compete in international markets; and the promotion of a greater spread of ownership.



However, our research shows that “the ability of national industries to compete in international markets” has hardly featured in merger decisions. This element is vital to ensuring South Africa’s export competitiveness.



Further, the reliance on “the promotion of a greater spread of ownership, in particular to increase the levels of ownership by historically disadvantaged persons and workers within that market” — can be seen as misguided. While it is understandable that the interests of HDIs be considered, direct legislation such as the Broad-based Black Economic Empowerment Act should drive transformation. Using competition regulation in this way even risks flying against the objectives of other direct legislation.



One of the most egregious examples of the Competition Commission failing to balance public interest considerations was in its initial blocking of the Burger King transaction. Burger King was to be sold by Grand Parade Investments (GPI) — a majority black-owned company — to a foreign private equity firm. In its public statements on the matter, the Commission made no reference to public interest considerations related to employment, or the ability of SMEs or HDI-owned firms to effectively enter, participate in or expand within the market. However, if HDI-owned firms are prevented from exiting their investments, they cannot free up capital for other investment opportunities — effectively preventing them from competing or creating value for their investors.



Black investors in GPI, almost 100% of whom supported the transaction, were directly and negatively affected by the decision. GPI had its competitiveness damaged as a black-owned company and the precedent damaged the competitiveness of HDI-owned investment firms in general. The Commission lost sight the fact that HDIs must be allowed to realise value by exiting investments when they see fit, as well as invest in alternative assets, thereby increasing black ownership elsewhere. Ultimately, the then Minster of the Department of Trade and Industry, Ebrahim Patel, and the parties came to an out-of-court arrangement, which included imposing an employee share ownership trust. But the damage was done – the arbitrariness of how public interest considerations were applied was clear for all to see.



In the Vodacom-Maziv case, the Competition Tribunal has yet to release its reasons for blocking the deal. However, they are largely expected to relate to concerns about market concentration. But not all market concentration is created equally. In certain sectors, notably renewable energy and telecommunications, concentrated players are better positioned to invest in the infrastructure necessary for growth and inclusion. They can achieve the economies of scale needed for lower prices and more efficient operations. In this case, having larger players is not anti-competitive — it stimulates a more competitive economy overall.



The arbitrariness of how public interest considerations are applied appears to be particularly glaring in the Vodacom-Maziv case. The merging parties had committed to investing at least R10 billion and passing at least one million homes in lower-income areas over five years, providing high-speed internet to over 600 adjacent schools and police stations at no cost, creating up to 10 000 new jobs, and establishing a R300 million enterprise and supplier development fund to prioritise SME development. These proposals die with the deal the Tribunal blocked. The cost of this regulatory overreach will be paid disproportionally by South Africa’s poor.



It is worth noting how South Africa’s competition policy differs from other developing markets. The focus on integrating public interest factors and black economic empowerment (BEE) into competition regulation contrasts with many developing countries’ priority to attract foreign direct investment — with less stringent regulatory oversight on foreign acquisitions — and stimulate efficient, competitive markets.



Competition regulation needs to go back to its core objective: fostering competition. Ensuring that consumers have access to choice and are free to exercise their choice leads to clear public benefits. The economy becomes more competitive, every point of supply chains becomes cheaper, consumers are better off and South African final products are more competitive in international markets.



There needs to be a rational and transparent approach to applying competition policy to create a predictable environment and reduce risk for those businesses operating in South Africa in those considering transactions. This would maximise public interest.



Competition policy and our competition authorities play a vital role in South Africa’s economy. These should not be repurposed for other objectives, no matter the merit of those objectives themselves. There should be coherence across government, with different ministries directly regulating the issues within their competencies, rather than using competition law to regulate indirectly.



It is essential that our regulators maintain their focus on fostering genuine competition and stimulating meaningful economic growth. This will provide a bedrock for a more equitable South Africa.

ceb0ac7e-4319-b4d5-fc10-f6e2fa5b8b75

The good, the bad and the ugly: South Africa’s competition policy

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="590" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/5U27LJVU5BN7XKS2NTCXPR65SQ-820x590.jpg" alt="" class="wp-image-550088" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/5U27LJVU5BN7XKS2NTCXPR65SQ-820x590.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/5U27LJVU5BN7XKS2NTCXPR65SQ-300x216.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/5U27LJVU5BN7XKS2NTCXPR65SQ-125x90.jpg 125w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/5U27LJVU5BN7XKS2NTCXPR65SQ-768x553.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/5U27LJVU5BN7XKS2NTCXPR65SQ-1536x1105.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/5U27LJVU5BN7XKS2NTCXPR65SQ-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A branch of South African mobile communications provider Vodacom in Cape Town is shown in this picture taken November 10, 2015. REUTERS/Mike Hutchings/File Photo</figcaption></figure>



JOHANNESBURG, Nov 4 (Reuters)&nbsp;&#8211;&nbsp;The Competition Tribunal&#8217;s decision to block a merger between Vodacom and a major fibre operator will likely derail a push by South African telecoms firms to use big M&amp;A deals as a shortcut to digital infrastructure expansion, analysts said.



The ruling,&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N3M50FV&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">which blocked</a>&nbsp;South Africa&#8217;s top telco from taking a 30% stake in major fibre operator Maziv, could force companies to build their own networks or pursue smaller, less controversial tie-ups, delaying much-needed investment by years.



For Andrew Bahlmann of M&amp;A advisory firm Deal Leaders International, it is a setback for the entire industry.



&#8220;For telcos and fibre network operators contemplating future mergers, this prohibition of a merger for which the business case was clearly positive indicates that the path to consolidation is fraught with challenges,&#8221; he said.



The communications sector in Africa&#8217;s most advanced economy needs significant capital injections to ramp up infrastructure development, particularly if connectivity is to be improved in low income and rural areas.



Dominant companies like Vodacom&nbsp;VODJ.J&nbsp;and MTN&nbsp;MTNJ.J&nbsp;say mergers would allow them to leverage existing networks as a springboard to extending and improving coverage. And some smaller firms, including fibre operators, say tie-ups would provide the funding they need to grow.



But regulators fear that consolidation could lead to higher prices, less choice and lower quality for consumers.



The tribunal has yet to detail the grounds for Tuesday&#8217;s ruling, and Vodacom, which is majority-owned by Britain&#8217;s Vodafone&nbsp;VOD.L, said it was considering an appeal.



The South African Competition Commission, which testified before the tribunal that the deal would open the door to further consolidation and harm consumers, welcomed the decision.



But Old Mutual Wealth Private Client research analyst Tasneem Samodien said it would likely lead to stagnation.



&#8220;What it does is delay investment by current market participants until they determine a commercially viable path to scale,&#8221; Samodien said.



&#8220;For consumers, particularly those in outlying areas where network connection is relatively poor, the roll out of infrastructure could be delayed.&#8221;



<h2 class="wp-block-heading" id="h-inevitable-consolidation">INEVITABLE CONSOLIDATION?</h2>



Both Vodacom and MTN have been aggressively rolling out fixed-wireless networks that use 4G and 5G, while also investing in their small fibre businesses. But as they do this, they require more access to fibre links that carry mobile traffic from base stations back to the core network.



South Africa&#8217;s existing installed fibre capacity is owned by a number of operators of varying sizes. Tying up with them could give the mobile operators access to fibre networks while providing fibre companies capital to expand to new areas.



MTN has called consolidation in the sector &#8220;inevitable and even desirable&#8221;. But even before last week&#8217;s ruling, mergers were facing challenges, mainly over regulatory concerns.



In 2022, MTN&#8217;s talks to buy out smaller rival Telkom fell through. And last year, Rain&#8217;s push to be bought by Telkom ended without a deal.



Vodacom had pledged that much of the 6-9 billion rand ($342-512 million) in cash it was offering as part of the Maziv bid would go to infrastructure investment. It said a further 10 billion rand over five years would target investment in mainly low income areas.



But that was not enough to win over the tribunal.



That now leaves the company, and the sector more broadly, with slow and costly expansion options.



&#8220;Vodacom can continue with its own fibre network rollout and consider merging with several other small regional fibre operators,&#8221; Peter Takaendesa, head of equities at Mergence Investment Managers, said.



Vodacom&nbsp;declined to&nbsp;comment.



But analysts say that the Competition Tribunal&#8217;s decision will make M&amp;A deals in South Africa&#8217;s telecoms sector much less attractive to capital.



And even with financing, factors including environmental approval timelines and fibre equipment supply chains mean the big mobile operators have a long road ahead if they are to make up ground on existing fibre networks.



&#8220;My guess is five to 10 years,&#8221; Takaendesa said.



($1 = 17.5575 rand)



(Reporting by Nqobile Dludla; Editing by Joe Bavier and Mark Potter)

FILE PHOTO: A branch of South African mobile communications provider Vodacom in Cape Town

Blocked Vodacom merger derails S.African telcos M&A push, analysts say

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ADDMXWU7SBNXBLLKVIVC7QKI2I-820x547.jpg" alt="" class="wp-image-550050" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ADDMXWU7SBNXBLLKVIVC7QKI2I-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ADDMXWU7SBNXBLLKVIVC7QKI2I-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ADDMXWU7SBNXBLLKVIVC7QKI2I-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ADDMXWU7SBNXBLLKVIVC7QKI2I-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ADDMXWU7SBNXBLLKVIVC7QKI2I-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/ADDMXWU7SBNXBLLKVIVC7QKI2I-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Botswana opposition leader Duma Boko smiles, after his party UDC won the general election, outside his home in Gaborone, Botswana November 1, 2024 REUTERS/Thalefang Charles</figcaption></figure>



GABORONE, Nov 1 (Reuters) &#8211; Botswana&#8217;s new president, Duma Boko, said on Friday he wanted to conclude talks for a new sales pact with global diamonds giant De Beers as soon as possible.



De Beers, a unit of mining company Anglo American&nbsp;AAL.L, last year agreed a new diamond sales pact, which would see the government&#8217;s share of diamonds from the Debswana joint venture gradually increase to 50% over the next decade. Debswana Diamond Company, equally owned by Botswana and De Beers, currently sells 75% of its output to De Beers.



Although the Botswana government and the country&#8217;s outgoing president, Mokgweetsi Masisi, touted the merits of the deal, it has yet to be signed.



Boko, who took office on Friday after an election that dealt a stinging defeat to Masisi&#8217;s party, said De Beers had been &#8220;considering walking away, not signing at all &#8230; (a) very dangerous position to be in as a country.&#8221;



&#8220;The relationship with De Beers could have been damaged by the way the negotiations were handled,&#8221; he said in a televised statement. &#8220;The first thing that needs to be done is to engage the other party.&#8221;



Boko added that his new administration wants to engage with De Beers to understand its concerns.



&#8220;A proper negotiation involves compromise, where you get a bit of what you wanted, the other person gets a bit,&#8221; he said. &#8220;Then &#8230; you have a durable, sustainable agreement.&#8221;



In an emailed comment, a De Beers spokesperson said: &#8220;We will continue to work with Botswana&#8217;s Government in support of shared objectives, as we always have.&#8221;



Anglo American is looking to divest De Beers as part of a broader restructuring of its sprawling business. Masisi had said in July the Botswana government may raise its shareholding in De Beers from its current 15%.



Anglo American&#8217;s process could become easier now that the election in Botswana has been concluded, diamond mining industry analyst Paul Zimnisky said.



&#8220;Diamonds by far represent the most important industry for Botswana, so this has to be one of the front and centre issues for the (new) president,&#8221; Zimnisky said. &#8220;I would expect to see progress on this front now.&#8221;



Like other luxury goods, diamond prices have been hammered by a slump in global demand. Sales of rough diamonds at Debswana fell about 52% in the first nine months of 2024, according to data released by Botswana&#8217;s central bank on Tuesday.



(Reporting by Brian Benza in Gaborone, Felix Njini in Johannesburg, Clara Denina in LondonEditing by Mark Potter, Ros Russell and Frances Kerry)

Botswana opposition leader Duma Boko

Botswana’s new president aims to clinch De Beers diamond sales pact soon

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-820x461.jpeg" alt="" class="wp-image-550005" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A flag stall at the Yiwu Wholesale Market in Zhejiang province, China, on May 10, 2019. Aly Song | Reuters</figcaption></figure>



BEIJING — The size of China’s highly anticipated stimulus plans will likely depend on the outcome of the U.S. presidential election, analysts said.



Investors expect Beijing to announce details on fiscal support Friday. That’s when the standing committee of the National People’s Congress — China’s parliament — is due to wrap up a five-day meeting. The same gathering last year oversaw a rare increase in the fiscal deficit.



This year, the meeting’s timing means any details will be out just days after the U.S. has voted Republican nominee Donald Trump or Democrat rival Kamala Harris in as the next president. Polls are set to close Tuesday local time.



“The size of China’s fiscal stimulus package would be around 10~20% bigger under a Trump win than under the scenario of a Harris win,” Ting Lu, chief China economist at Nomura, said in a note last week.



He cautioned that most of China’s challenges are domestic, though there will be some impact from the U.S. election result.



Trump has threatened to raise tariffs on U.S. imports from China by 60% — or reportedly by even 200% in an extreme scenario. Harris, currently vice president, has not yet signaled a major departure from the Biden administration’s approach of restricting China’s access to advanced technology.



More tariffs would hit China’s exports, a bright spot in an economy grappling with a real estate slump and tepid consumer demand.



Increased trade restrictions would require China to rely more on domestic demand to boost growth, Zhu Bin, chief economist of Nanhua Futures, said in a video presentation last week. That’s according to a CNBC translation of his Mandarin-language comments.



“Without question we can be certain of one thing — if Trump wins the election, China’s domestic stimulus will only be larger, not smaller,” Zhu said. He expects Trump has a greater chance of winning, which he said would increase downward pressure on the Chinese yuan versus the U.S. dollar.



Political analysts debate whether China’s relations with the U.S. would be better under Trump or Harris.



“I think at this point, probably from China’s view, a potential president Harris [makes it] easier to expect what policies likely come,” said Liqian Ren, leader of quantitative investment at WisdomTree.



That doesn’t mean Beijing will embark on large-scale support. Chinese authorities are “constrained by the U.S.-China competition, so the priority number one is to be able to upgrade technology across the board,” She said. “I think as long as that’s your goal then the government’s willingness to stimulate is still going to be lukewarm.”



Ren expects the scale of stimulus will be determined not by who wins the election, but the stock market reaction.



Market volatility in China, but not the United states, is likely to make “China feel more obligated to counter this volatility,” she said. In contrast to three or four years ago, Ren said, Chinese stock market volatility today has a greater impact on economic confidence.



Chinese stocks have tempered their gains in recent weeks after surging in late September. Chinese President Xi Jinping on Sept. 26 led a high-level meeting calling for strengthening fiscal and monetary policy support, and halting the decline in real estate.



While the People’s Bank of China has cut interest rates, the Ministry of Finance has yet to release details on widely anticipated fiscal stimulus. Finance Minister Lan Fo’an last month hinted at an increase in the deficit, and indicated any changes needed to undergo an approval process before being announced.



<h2 class="wp-block-heading" id="h-how-large"><a></a>How large？</h2>



Analyst forecasts for additional debt issuance vary. China is considering more than 10 trillion yuan in debt issuance over a few years, Reuters reported Tuesday, citing sources.



Chinese authorities may not announce a specific number, but if they do, it should be more than 4 trillion yuan, given that was the amount issued in the wake of the 2008 financial crisis, said Zong Liang, chief researcher at Bank of China. He expects the deficit could be expanded beyond 4%.



The Chinese government set a deficit target of 3% for this year, after increasing it to 3.8% late last year.



WisdomTree’s Ren said her analysis of official statements, media reports and investment notes revealed that stimulus expectations are inherently about the same. Whether it is 10 trillion yuan over three to five years, or 2 trillion yuan in one year, the average is about 2 trillion yuan in support a year, she pointed out.



<h2 class="wp-block-heading" id="h-consumption-still-in-question"><a></a>Consumption still in question</h2>



“I think people right now are focusing a lot on the topline number,” Ren said. “But they are missing [how] the local government, they are doing a lot of things that are actually counter[ing] stimulus.”



She noted how local authorities have so strictly enforced tax collection in some areas that they have discouraged business activity. Despite some central government support, she said, she expects it will “probably be quite a while” before local authorities “feel they have the cash to spend.”



Dozens of companies in China this year disclosed in stock exchange filings that they have received notices from local authorities to pay back taxes tied to operations as far back as 1994. Local governments once relied on land sales to real estate developers for revenue.



The finance ministry has emphasized its focus on addressing local government debt problems. Analysts have pointed out how additional stimulus will also likely go toward banks, not direct handouts to consumers.



Consumption stimulus may come more from property support at this stage, Citi analysts said in a report Friday. “Having said that, we believe more decisive consumption support could still be a realistic option under more adverse tariff scenarios.”

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China gears up for a big week as markets await U.S. elections and stimulus details

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China gears up for a big week as markets await U.S. elections and stimulus details

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IMF raises Ethiopia’s international reserves target after first review

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South Africa’s private sector growth sustained in October as costs fall, PMI shows

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