Flash Briefing: Bulls back for US stocks; MTN to list Africa’s Amazon in NY

By Alec Hogg

In today’s global business headlines:

  • Wall Street analysts are pointing to a raft of technical indicators suggesting the stock market has re-entered a bull trend just four months after September’s sharp reverse. Positive technical signals include how major US indices have broken back above their 200 day moving averages and the increasing number of stocks recording 52-week highs. The Wall Street Journal reports the strong rally, which began last month, has been helped by the US Fed’s switch from hawkish to dovish on interest rates, and anticipation that this week’s trade talks in Beijing will achieve further progress in dismantling the US/China trade war.
  • Brazil is embarking on sweeping free market reforms including an overhaul of pensions, radical tax reform and widescale privatisation. The country’s new minister of the economy, Paulo Guedes, said over the weekend in an interview with the Financial Times of London that after decades of failed state interventions, the country is moving rapidly towards a market-driven economy saying, “anyone who cannot see that is misreading Brazil.” A University of Chicago-trained economist, Mr Guedes is addressing similar challenges to those faced by BRICS partner South Africa: record unemployment – 12m Brazilians are out of work – a large fiscal deficit, snowballing public debt, low productivity and an anaemic economic recovery.
  • Graca Machel, widow to the first democratically elected presidents of Mozambique and South Africa, has weighed in on her homeland’s mushrooming Tuna Bond scandal. In a letter to the bank, Mrs Machel has demanded Credit Suisse publicly declare the people of Mozambique need not pay back a cent of a $2bn loan that was laced with corruption. Three former Credit Suisse executives and Mozambique’s ex-finance minister have been arrested after charges were filed by the US Department of Justice. At least $200m of the loan was used to pay bribes. Mrs Machel says this suggest the loans were illegal. Mozambique has been in default since early 2017 and is trying to reschedule its debt payments.
  • In South African related news, Bloomberg reported over the weekend that MTN is planning to list online retailer Jumia in New York, raising an estimated $600m to help reduce the group’s $5bn debt. The listing is likely to co-incide with the IPO of MTN’s Nigerian subsidiary which will be listed in Lagos before June – after which the South African group intends selling down its majority stake. Lagos-based Jumia, launched by two French entrepreneurs in 2012, provides an Amazon-like service across 13 African countries. It is one of only three African unicorns – a description given to start-ups worth over $1bn. Jumia’s other shareholders include Goldman Sachs, Orange SA and the Africa Internet Group, a venture backed by MTN, Goldman and Rocket Internet.