- Zambia’s Secretary to the Treasury Fredson Yamba on Friday stated that the country has appointed communication firm Highgate Advisory Ltd as it negotiates with creditors to restore its debt to sustainable levels. According to a statement by Yamba, Highgate has been engaged for a period of 6-months at a cost of 333, 403 pounds, and the firm specializes in debt restructuring communication and has assisted a number of countries in debt restructuring programs.
- On the coronavirus front, President Lungu on Friday ordered schools to delay reopening by two weeks to February 1 from January 18. According to the president, the delay is meant to allow school authorities to prepare adequately in terms of putting in place preventive measures against the pandemic. He added that the country has seen a surge in infections that could put learners and staff at risk if schools resumed teaching without effective safety measures.
- Copper prices have started the week on the front foot this morning driven by growth numbers out of China. The 4th quarter GDP number released today came in at 6.5% according to the Chinese National Bureau of Statistics, which is faster than the 6.1% penciled in by economists in a Reuters poll. This comes on the back of an equally robust print of 4.9% in the 3rd quarter, China is poised to have a stellar 2021 which will underpin pricing action on the base metals’ counters going forward.
- On the corporate front, Vedanta Zinc International has announced that they have restarted mining at Gamsberg mine in South Africa. The mine closed in November following a pit collapse which trapped miners underground. One worker is still missing after eight workers were res-cued and one died during the collapse. The mine did not give details as to what level of capacity they were operating at.
- The US will be enjoying a public holiday today for Martin Luther King Day implying markets will be closed. For the markets that are still trading, they will likely experience thinner trading conditions. The upcoming inauguration will also likely keep investors somewhat cautious, although the fact that the Trump protests this weekend were a non-event should help ease fears.
- This week’s inauguration will be the main event. It will be held under very different circumstances and will not enjoy the usual fanfare while the pandemic rages on. Furthermore, FBI reports of potential violent protests has the National Guard on high alert with some 25,000 troops to be deployed across the country to protest Federal buildings and sites. Judging from the protests seen over the weekend, the inauguration will likely proceed without any trouble. The combination of Trump losing support, the blowback received from the storming of the Capitol building and the deployment of the National Guard will all contribute to ensuring a smooth transition.
- It is widely anticipated that Biden will announce a strong of executive orders soon after he takes office that will effectively unwind most of the decisions that Donald Trump took, restoring the pre-Trump status quo. Furthermore, he will likely announce plans for a massive stimulus pack-age, and will resign the Paris accord. He will try and salvage some trade relations where possible and will seek to mend diplomatic ties that have become strained in the past four years.
- Shifting to the FX markets, the USD appears to be on the front foot this morning. Speculation that incoming Treasury Secretary Janet Yellen will affirm the US’s commitment to a strong USD policy has helped generate some support for the greenback. This is a fundamentally different stance to the Trump administration who believed that a weaker USD was necessary to promote exports and return production to US shores. What that means in practical reality is difficult to ascertain when the Federal government is racking up enormous quantities of debt and the Federal Reserve is still committed to pursuing ultra-accommodative monetary policy. Both policies are USD negative.
- Locally, a broader bearish bias remains entrenched on the Kwacha, and as noted in previous commentary, in the absence of clarity on debt restructuring and the implementation of meaningful reforms, the Kwacha might struggle to rebound in the near-to-medium term.
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