By Alec Hogg
In today’s global business headlines:
- US share prices rose strongly last night, with the three major indices gaining almost 1.5%. Traders say this flows from confidence of positive outcomes on two major issues – ending the US/China trade war; and a settlement removing the prospect of another partial government shutdown. Markets were also helped by US Fed chairman Jerome Powell who said yesterday he did not see an elevated possibility of recession in the US this year or next. His views, however, were challenged by Nobel prize winner and Yale economics professor Robert Shiller who forecast the longest US bull market in history would end soon, triggered by a recession that would taking hold later this year or in 2020.
- After decades of steadfast support for the socialist regime in Venezuela, China is now hedging its bets on tyrant Nicolas Maduro. Earlier this week Chinese officials held talks with representatives of the country’s Parliamentary leader Juan Guaido. The discussions were intended by China to safeguard its oil interests in Venezuela and ensure its $20bn in debt would be repaid by the likely new regime. For the past two decades, China and Russia have funded Venezuela through loans-for-oil agreements. But since 2013, as oil production fell by more than half through a combination of incompetence and corruption, repayments have fallen, leaving massive debt outstanding.
- Italian energy group Enel SpA has been called in by the South African government to help sort out the country’s two new power stations which the country says have been “badly designed and badly constructed.” The two plants, Medupi and Kusile, cost a combined $21bn, more than double the expected budgets, and were targeted to produce 9,600 megawatts by 2015. Instead, production has been delayed and erratic, forcing Eskom to this week re-introduce the worst load shedding in four years. On Monday, Enel announced the investment of €200m in a 140mW renewables energy project in the Eastern Cape, the first of five it intends building.
- In other South African related news, the controversial Electronic Communications Amendment Bill, which proposed heavy state control over the sector, has been withdrawn. Market leader Vodacom congratulated new Communications minister Stella Ndabeni-Abrahams, saying the withdrawal of the legislation confirms a fresh approach where the private sector will play a greater role in delivering low cost data and other services.