- Zambia is seeking out news investors to purchase a majority stake in Mopani Copper Mines Plc following the sale by Glencore last week. Ac-cording to Barnaby Mulenga, an official from the Ministry of Mines, selling a majority stake would help ZCCM Investment Holdings Plc raise around $300mn to further develop the mine and pay off some of the debt while finding an experienced partner to run the operations. Mu-lenga added that while ZCCM hasn’t started talks over a stake sale, there has been interest from investors in Canada, the US, UK, China, Tur-key and South Africa.
- Copper shed ground yesterday as the mountain to climb in terms of the US stimulus package became clear. Equally there has been a rise in COVID-19 infections in China and this led investors to question whether or not we see selective lockdowns which could hamper growth. This comes as we head into a traditionally lower period of economic activity ahead of the Chinese Lunar New Year celebrations which take place in February. The fear is that the virus could spread widely during this time, as traditionally the urban Chinese travel to their native villages during the holidays.
- There is a lot unfolding in the US at the moment which seems to be dominating headlines across most spheres. On the political front, the House of Representatives has presented the Senate with the articles of impeachment which will set the wheels in motion for a trial. It remains unclear whether the two-thirds majority exists within the Senate to prosecute as there are a number of Republicans that are against the im-peachment process and believe that it will do more harm than good and further divide the country. Should the trial result in Trump’s convic-tion, he would be barred from running in the next election or holding any public office.
- Remaining with the Senate, Janet Yellen has been confirmed as the next Treasury Secretary in what proved to be a well-supported nomina-tion. Both Democrats and many republicans voted for Yellen, who will likely usher in a far more expansive approach to fiscal policy that her predecessor. Biden’s $1.9trln stimulus package will gain added support and although there will be some efforts to moderate the amount by some concerned Republicans, it is likely to be a substantial stimulus effort that is unveiled.
- Looking ahead to this week, the FOMC will be in full deliberation mode today. It is unlikely that the Fed changes policy at this point. With the fiscal authorities pushing for a massive stimulus package, the Fed will likely hold off and allow the dust to settle not only politically, but with re-gards to the pandemic, vaccine rollout, and stimulus efforts. It would be premature for the Fed to act with even more stimulus, when so much has already been done, with more in the pipeline.
- US earnings season gathers momentum today with the likes of GE, J&J, Verizon and Microsoft all reporting. Investors have looked at the grow-ing disparity between the real economy and the financial economy with some concern. Any indications that the earnings do not justify the val-uations could trigger some uncertainty.
- Ahead of the FOMC meeting this week where the Fed is expected to leave monetary policy unchanged, the USD has regained a firmer footing and risen marginally off its lows. There is also an element of improved risk aversion as earnings season gathers momentum and investors turn a little cautious on the valuations given the amazing run of records in the past few months. For now, investors are rotating towards the safety of the USD.
- Kwacha bears regained control at the start of the week as the local unit was back on the defensive against the USD. Note, a broader bearish bias is set to remain entrenched this week, given demand for hard currency is expected to outweigh supply.
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