NEW YORK (Reuters) &#8211; At the height of the coronavirus pandemic last spring, the heads of U.S. banks including Morgan Stanley, Bank of America Corp and others pledged not to cut any jobs in 2020 because it was the wrong thing to do.



However, as executives prepare for an extended recession and loan losses that come with it, layoffs are back on the table, said consultants, industry insiders and compensation analysts.



Compared with April projections, bank economists and executives expect the U.S. economy to take longer to recover, with high unemployment into 2021 and interest rates staying near zero for the foreseeable future.



On top of that, working from home has shown some managers that they need fewer employees to do the same amount of work.



“No question, layoffs (will) come across the board for all the banks,” said Barry Schwartz, chief investment officer at Toronto-based Baskin Wealth Management, which invests in JPMorgan Chase and other large Canadian banks.



Banks have to cut costs because of expected credit issues, as well as low interest rates and regulatory pressure to trim dividends, he said.



Bank staff could shrink by an average of 5-10%, mainly at mid- and lower levels in technology, human resources and finance departments, according to Alan Johnson, head of the compensation consultancy Johnson Associates, Inc.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" src="https://www.cnbcafrica.com/wp-content/uploads/2020/08/071-1-576x1024.jpg" alt="" class="wp-image-378628" width="704" height="1252" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/08/071-1-576x1024.jpg 576w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/071-1-169x300.jpg 169w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/071-1-450x800.jpg 450w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/071-1-768x1365.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/071-1-864x1536.jpg 864w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/071-1-scaled.jpg 1152w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/071-1-696x1237.jpg 696w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/071-1-1068x1899.jpg 1068w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/071-1-1920x3413.jpg 1920w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/071-1-600x1067.jpg 600w" sizes="auto, (max-width: 704px) 100vw, 704px" /></figure>



JPMorgan Chase &amp; Co already cut around 100 jobs in mid-July, according to comments on social media. People who said they worked in three divisions – the community and consumer bank, the commercial bank and the corporate and investment bank – said they were let go. JPMorgan representatives declined to comment.



Wells Fargo &amp; Co resumed cutting jobs in August after putting layoffs on hold in March. The affected staff have so far been in technology and retail banking, and management is planning thousands more layoffs this year and next, sources said.



“We didn’t see a lot of restructuring or layoffs with the banks (earlier in the pandemic). We’re starting to see it now,” said Dennis Baden, partner-in-charge at executive search firm Heidrick &amp; Struggles.



“Things will get a little bit worse &#8230; and we might see an increase in restructuring.”



Among global banks, Standard Chartered PLC and HSBC Holdings PLC have let go of several hundred employees this year. Standard Chartered plans to lay off a few hundred more this year and early next year, according to bank sources.



A Standard Chartered spokesman said the job cuts are not due to the pandemic, but are part of a more than 4-year-old strategic plan. Any Standard Chartered employees let go in 2020 will be paid their salary for the rest of the year and will receive severance pay, according to a bank statement.



HSBC announced this month it was restarting a plan to cut 35,000 jobs.



The Bank of Nova Scotia also let go of some U.S. investment bank staff, according to several sources familiar with the development. The bank declined to comment.



Reuters reported in May that large Wall Street banks were widely expected to cut budgets, including areas in technology and operations, like third-party consultants, business analytics, process management and call centers.



<h3 class="wp-block-heading">FROM RECORD REVENUES TO JOB CUTS</h3>



Wall Street’s trading and investment banking businesses generated huge revenue from the market volatility in March and April. But CEOs and analysts have since cautioned that capital-markets revenue will trend downwards for the rest of the year, despite market indexes posting record highs recently.



Analysts still expect banks to report decent profits in coming quarters, and some may continue to invest in core businesses in an opportunistic way. For instance, JPMorgan Chase opened 13 new branches in July, after having closed 22 branches in June on a net basis, according to S&amp;P Global.



Still, banks are planning staff cuts because costs are expected to be high relative to revenue, and management teams have found that remote work setups function better than expected, said Johnson.



“Everyone has been surprised by how much more efficient you can be,” he said. “Later this year or early next year, (managers will) look around and say we just have many more people than we need.”

Banks eye layoffs as short-term crisis ends, long-term costs emerge

GENEVA (Reuters) &#8211; Wealthier countries that join the World Health Organization’s COVID-19 vaccine plan are being offered a new option to pick and choose which shots they get while reserving a right to receive their “full share” of doses, documents seen by Reuters show.



The change appears aimed at convincing governments which have negotiated their own bilateral deals securing experimental vaccines to also sign up for the global COVAX facility by Monday’s deadline for submitting expressions of interest.



“They are trying to be more flexible for self-financing countries to make it more interesting&#8230; There are some advantages to incentivise you to pay upfront,” said a Western diplomat familiar with the terms.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="887" height="1024" src="https://www.cnbcafrica.com/wp-content/uploads/2020/04/Dr-Matshidiso-Moeti-WHO-Regional-Director-for-Africa-887x1024.jpg" alt="" class="wp-image-367526" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Dr-Matshidiso-Moeti-WHO-Regional-Director-for-Africa-887x1024.jpg 887w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Dr-Matshidiso-Moeti-WHO-Regional-Director-for-Africa-260x300.jpg 260w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Dr-Matshidiso-Moeti-WHO-Regional-Director-for-Africa-693x800.jpg 693w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Dr-Matshidiso-Moeti-WHO-Regional-Director-for-Africa-768x887.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Dr-Matshidiso-Moeti-WHO-Regional-Director-for-Africa-1330x1536.jpg 1330w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Dr-Matshidiso-Moeti-WHO-Regional-Director-for-Africa-scaled.jpg 1774w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Dr-Matshidiso-Moeti-WHO-Regional-Director-for-Africa-696x804.jpg 696w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Dr-Matshidiso-Moeti-WHO-Regional-Director-for-Africa-1068x1233.jpg 1068w, https://cms.cnbcafrica.com/wp-content/uploads/2020/04/Dr-Matshidiso-Moeti-WHO-Regional-Director-for-Africa-1920x2217.jpg 1920w" sizes="auto, (max-width: 887px) 100vw, 887px" /></figure>



The United States, Japan, Britain and the European Union have struck their own deals to secure millions of COVID-19 vaccine doses for their citizens, ignoring the WHO’s warnings that “vaccine nationalism” will squeeze supplies.



The WHO did not respond to a request for comment. Reuters could not determine if the documents were the final offer. The document with the new terms and conditions was dated Aug. 5.



The offer is the latest sign of concern in the U.N. agency about its effort to unite the world behind its vaccine as it struggles to get wealthier countries on board beyond pledges of funding and warm words about donating surplus vaccines.



It’s not clear if the new terms will be enough to win back the European Union, which has told member states they can help fund the programme but can’t seek to buy vaccines via both schemes.



The latest WHO plan, circulated to its 194 member states in the last days, promises to “negotiate the best possible pricing from manufacturers” and to establish a “marketplace” for trading or selling doses.



The deadline for confirming commitment is Sept. 18, with upfront payment due by Oct. 9.



<h3 class="wp-block-heading">‘OPTIONAL PURCHASE’</h3>



The COVAX facility, launched in late April, is designed to serve as an “invaluable insurance policy to secure access to safe and effective COVID-19 vaccines” through a portfolio of experimental vaccines using a broad range of technologies, the WHO said. For now it relies on nine experimental vaccines.



It aims to deliver at least 2 billion doses of approved vaccines by the end of 2021 and to ensure “equitable access”.



Through the WHO’s standard “Committed Purchase” arrangement already on offer, self-financing states are to make a lower upfront payment of an estimated $1.60 per dose, plus a $8.95 financial guarantee per unit, but have to make firm guarantees to buy doses, it said.



If the final price exceeds double that total of $10.55 per dose, or $21.10, countries are allowed to drop out, it said.



Under the new “Optional Purchase” arrangement, their higher upfront payment is $3.10 per dose. This covers their full pro-rata share of the investments required by the COVAX facility to enter into agreements with manufacturers and accelerate scale of production and access, it said, adding that the estimated all-inclusive cost per dose might still be $10.55.



“These participants have the possibility to opt out of vaccine allocations while still reserving their ‘options’ to receive doses of a subsequent vaccine being provided through the Facility,” the WHO said.



“This option may be more attractive for countries that already have bilateral deals in place and may not be interested in acquiring more of those vaccines.”



While a country exercising this option retains an ability to receive its full share of doses, it should recognise that opting out of a particular vaccine “may delay the time until a country receives doses, particularly in the initial phase where there may only be one or two vaccines and the quantities will be limited”.



The optional scheme would cost an estimated $262.8 million based on a country with a 60-million population electing to cover 20% of that and a 2-dose regimen, the WHO document said. The standard one would cost $253.2 million.



So far some 172 countries have registered expressions of interest, including 92 low- and middle-income countries eligible to secure doses through the GAVI vaccine alliance which covers much of their cost.



Some 80 potentially self-financing countries have submitted expressions of interest.



“No self-financing participant will receive doses of vaccine to cover greater than 20% of its population until all self-financing participants have either also been offered doses in an amount to achieve 20% coverage or hit their elected quantity (if lower than 20%),” the WHO said.

Dr Matshidiso Moeti – WHO Regional Director for Africa

Exclusive: WHO sweetens terms to join struggling global COVAX vaccine facility – documents

BLANTYRE (Reuters) &#8211; Malawi will allow airlines and schools to resume operations from Sept. 1, as it seeks to limit the economic and social damage from its coronavirus lockdown, authorities said on Thursday.



Schools and airports have been closed since March, when the government imposed a lockdown to try to contain the epidemic.



Malawi has recorded 5474 cases and 173 deaths from the virus so far, although the real figure may be higher as fewer than 50,000 tests have been conducted.



The main international airport in the administrative capital Lilongwe will now open to limited flights next week.



“The government has carefully considered adverse effects of the suspension of air travel on all sectors of the economy and has therefore decided to lift the suspension with effect from 1 September 2020,” James Chakwera, Acting Director of the Department of Civil Aviation, said in a statement.



He added that initially only a limited number of flights would operate, while all arrivals will be required to produce Covid-19 negative test results based on tests conducted within 10 days prior to arrival.



The school closures left more than 5 million pupils across all levels out of class.



“We’ll take a phased approach starting with examination classes from September 7th&nbsp;to the others later in October,” Education Minister Agnes Nyalonje said in a statement.

Opposition Malawi Congress Party leader Lazarus Chakwera addresses supporters after a court annulled the May 2019 presidential vote in Lilongwe

Malawi to lift COVID-19 air travel, school restrictions from September

JOHANNESBURG (Reuters) &#8211; South Africa’s Aspen Pharmacare Holdings Ltd expects growth in its headline earnings per share (HEPS) from continuing operations of between 7-11% for the full year that ended June 30, the company said in a statement on Thursday.



HEPS is the main profit measure in South Africa.



Its HEPS is likely to be between 12.39 rand ($0.7322) and 12.86 rand, it said.



Most pharmaceutical companies were declared essential operations during the country’s coronavirus lockdown, imposed at the end of March, but as most people stayed at home demand for over-the-counter medicines declined.



Revenue growth for the year will be between 8% and 10%, while it will be between 3% and 5% in constant exchange rates, as the rand weakened against most other currencies, Aspen said.



South Africa’s biggest supplier of drugs said the company benefited from positive demand trends in products used in the clinical management of COVID-19, stockpiling of healthcare products and advanced filling of prescriptions during early and peak periods of the spread of the virus.



But most of these benefits were offset due to a decrease in demand as the pandemic progressed, delays in elective or planned surgeries in most regions and reduced infection rates in non-COVID communicable diseases due to social distancing, the company said.



Aspen, which has a 22% market share in sub-Saharan Africa, said impairments for the year were expected to be approximately 1.5 billion rand, as compared with 3.8 billion rand seen last year.



($1 = 16.9224 rand)

Aspen_Place,_Durban_South_Africa

South African drugmaker Aspen expects 7-11% full-year earnings growth

JOHANNESBURG (Reuters) &#8211; South Africa’s rand was slightly weaker early on Thursday, ahead of the release of the producer price index (PPI) which will give more clues about inflation dynamics in Africa’s most industrialised economy.



Many analysts expect a rate-cutting cycle by the South African central bank to be over, but there is still a slim chance of further rate cuts in the remainder of the year if inflation pressures remain contained.



At 0632 GMT, the rand traded at 16.9250 versus the dollar, 0.3% weaker than its previous close.



PPI data is due around 0930 GMT and is forecast to show an increase of 1.7% in July, following a 0.5% increase in June.



The consumer price index rose 3.2% last month, data showed on Wednesday. The rand fell after that release as some traders felt it left the door open for the South African Reserve Bank to cut its repo rate again.



The SARB has already cut rates by 300 basis points this year in response to a collapse in inflation and weak economic projections linked to the COVID-19 pandemic.



Government bonds were also a touch weaker early on Thursday, with the yield on the 2030 bond rising 3 basis points to 9.325%.

ArcelorMittal South Africa fined R3.64 million over hydrogen sulfide emissions

South African rand dips before producer price data

WINDHOEK (Reuters) &#8211; Dirk Mudge, a white Namibian who began his political life with the pro-Apartheid National Party but later lobbied for Namibia’s independence from South African white-minority rule, has died after contracting COVID-19, aged 92.



He died in a hospital in the capital Windhoek late on Tuesday.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" src="https://www.cnbcafrica.com/wp-content/uploads/2020/08/mudge.jpeg" alt="" class="wp-image-380145" width="661" height="462"/></figure>



A polarising figure, Mudge’s opponents accused him of delaying Namibia’s independence from neighbour South Africa by setting up a 1975–77 national conference.



It aimed to make small reforms that would appease Namibia’s indigenous population and prevent a full-scale independence war with rebels.



Namibia, a former German colony, had been run by South Africa since World War I, when the latter was under British imperial rule. It only achieved independence in 1990, nearly six decades after Britain relinquished control of South Africa, whose settler Afrikaner community went on to create Apartheid.



Mudge joined the Namibian branch of the white nationalist party in 1955, but later realised that its white rulers’ best interests lay in negotiating with the black majority to open up to democracy &#8211; much as F.W. de Klerk later did in South Africa.



“Although we represented different political backgrounds and ideals &#8230; Dirk Mudge &#8230; was a leader who was willing to make compromises in the interest of peace and a new Namibia,” Namibian President Hage Geingob said in a statement.



Mudge was a member of the Constituent Assembly, which drafted Namibia’s constitution after the 1989 election that led to the country’s independence a year later.

mudge

Namibia Apartheid politician turned independence advocate dies of COVID-19

JOHANNESBURG (Reuters) &#8211; South African retailer Massmart Holdings Ltd said on Thursday its first-half headline loss widened to 1.1 billion rand ($65.21 million), as sales at its stores fell due to COVID-19 restrictions.



The company, majority-owned by Walmart and operator of supermarkets and wholesalers, including Makro and Game, said in a statement its headline loss, the main earnings measure in South Africa, dropped by 36% in the six months to June 28 from a headline loss of 800 million rand in first half of 2019.



Sales fell by 9.7% to 39.6 billion rand, with comparable store sales decreasing by the same amount, impacted by trading restrictions on liquor, tobacco, building materials, DIY and general merchandise products like TV sets.



Online sales, however, surged by 95% as consumers shied away from shopping in store to avoid the coronavirus.



The retailer, operating 420 retail and wholesale stores in 13 African countries, impaired certain Game, Cambridge and wholesale cash &amp; carry stores resulting in impairment expenses of 55.5 million rand during the period.



It also incurred restructuring costs of 47.4 million rand following the closure of all of its electronic retail chain Dion Wired stores and 11 cambridge and wholesale cash &amp; carry stores.



($1 = 16.8686 rand)

gettyimages-504773984-594×594

South Africa’s Massmart loss widens to over $65 mln as virus hits store sales

(Reuters) &#8211; Moderna Inc (<a href="https://www.reuters.com/companies/MRNA.O">MRNA.O</a>) said on Wednesday its experimental COVID-19 vaccine induced immune responses in older adults similar to those in younger participants, offering hope that it will be effective in people considered to be at high risk for severe complications from the coronavirus.



The company is one of the leading contenders in the race to develop a vaccine against the virus that has killed more than 820,000 people worldwide. Its candidate, mRNA-1273, is already in late-stage human trials testing its ability to safely prevent infection.



The latest data from an early Phase I study includes an analysis from 20 additional people detailing how the vaccine performed in older adults.



The analysis looked at subjects given the 100-microgram dose being tested in the much larger Phase III trial. Moderna said the immune responses in those aged between ages 56 and 70, above age 70 and those 18 to 55-years-old were similar.



Health officials have been concerned about whether vaccine candidates would work in older people, whose immune systems typically do not respond as strongly to vaccines.



Moderna shares, which have more than tripled in value this year, rose about 6% after the data’s release.



The company has so far enrolled over 13,000 participants in its late-stage study. About 18% of the total participants are Black, Latino, Native American or Alaska Native, groups that have been particularly hard hit by the pandemic, and are often under represented in clinical trials.



Dr. Jacqueline Miller, Moderna’s head of infectious disease development, told a U.S. Centers for Disease Control and Prevention (CDC) panel the company plans to post weekly updates on enrollment of Black and Latino trial subjects on its website.



Pfizer Inc (<a href="https://www.reuters.com/companies/PFE.N">PFE.N</a>) told Reuters last week that 19% of the 11,000 subjects already enrolled in its vaccine trial are Black or Latino.



Miller said the demographic makeup of Moderna’s trial is a frequent topic at meetings with U.S. officials heading the White House program aimed at accelerating development of COVID-19 vaccines and treatments.



<h3 class="wp-block-heading">DEEP FREEZE</h3>



Companies and health officials also are working on ways to distribute COVID-19 vaccines, some of which must be shipped and stored at extremely cold temperatures.



Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, questioned Pfizer’s plans after the company said its vaccine must be stored at ultra-low temperatures for up to 6 months or in specially designed shipping containers for up to 10 days.



Once removed from the containers, the vaccine can be kept for up to a day at a temperatures between 2 and 8 degrees Celsius (36-46°F) &#8211; roughly the temperature of a normal refrigerator &#8211; or 2 hours at room temperature.



“The complexities of this plan for vaccine storage and handling will have major impact in our ability to efficiently deliver the vaccine,” Messonnier said.



Pfizer told the CDC panel it is working on making the vaccine stable at higher temperatures. Pfizer shares were down about 1.5%.FILE PHOTO: A sign marks the headquarters of Moderna Therapeutics, which is developing a vaccine against the coronavirus disease (COVID-19), in Cambridge, Massachusetts, U.S., May 18, 2020. REUTERS/Brian Snyder/File Photo



Moderna’s vaccine has to be kept at minus 20 degrees Celsius for shipping and longer-term storage of up to six months, but it can be kept at regular refrigeration temperatures for up to 10 days. The vaccine will be distributed in 10-dose vials with no preservatives, the company said.



Moderna is also working to make the vaccine stable at higher temperatures, Miller said.



Moderna, which has never brought a vaccine to market, has received nearly $1 billion from the U.S. government under its Operation Warp Speed program. It has also struck a $1.5 billion supply agreement with the United States.

Clarification on COVID-19 “hotspots” as SA moves to level 3 lockdown

Moderna COVID-19 vaccine appears to work as well in older adults in early study

NAIROBI (Reuters) &#8211; Kenya’s president extended a nationwide curfew for another 30 days on Wednesday, saying coronavirus cases were rising in areas outside the capital.



In a televised address, Uhuru Kenyatta also ordered bars and nightclubs shut for another 30 days &#8211; but increased the number of people allowed to attend weddings, funerals and other events.



He said infections were slowing in Nairobi and the port and tourism hub of Mombasa.



“This crisis has however began to percolate to the counties. The new frontier of this invisible enemy is increasingly shifting to the counties and to our rural areas,” he said.



At present Kenya has 33,016 cases of the novel coronavirus, 564 deaths and 19,296 recoveries, Kenyatta said.



The outbreak has hit the economy, with the finance ministry projecting growth will slow to 2.5% this year from 5.4% last year.



Kenyatta said the economy had so far performed better than expected during the period, citing performance in the horticulture sector, whose earnings rose to 81 billion Kenyan shillings ($748 million) in January to June from 76 billion shillings in the same time a year ago.



“Even under COVID, our economy is growing at 4.6% compared to 5.5% at the same time last year,” he said without specifying the period he was referring to.



“The current economic indicators without doubt are lower- but definitely far better than we ever anticipated.”



He said he had asked investigative agencies to conclude within 21 days investigations into reports of impropriety at the state-run Kenya Medical Supplies Agency.



The head of the agency has been suspended over allegations the agency procured low quality protective gear for use by healthcare workers handling COVID-19 cases, and inflated prices of others.



“I want to once again reiterate that all persons found to be…culpable as a result of those ongoing investigations should be brought to book not withstanding their public office or their political or for that matter their social status,” Kenyatta said.







The outbreak has hit the economy, with the finance ministry projecting growth will slow to 2.5% this year from 5.4% last year.



Kenyatta said the economy had so far performed better than expected during the period, citing performance in the horticulture sector, whose earnings rose to 81 billion Kenyan shillings ($748 million) in January to June from 76 billion shillings in the same time a year ago.



“Even under COVID, our economy is growing at 4.6% compared to 5.5% at the same time last year,” he said without specifying the period he was referring to.



“The current economic indicators without doubt are lower- but definitely far better than we ever anticipated.”



He said he had asked investigative agencies to conclude within 21 days investigations into reports of impropriety at the state-run Kenya Medical Supplies Agency.



The head of the agency has been suspended over allegations the agency procured low quality protective gear for use by healthcare workers handling COVID-19 cases, and inflated prices of others.



“I want to once again reiterate that all persons found to be…culpable as a result of those ongoing investigations should be brought to book not withstanding their public office or their political or for that matter their social status,” Kenyatta said.

Uhuru_Kenyatta_2015

Kenya extends coronavirus curfew as cases rise outside capital

LONDON (Reuters) &#8211; The option of a one-time payment holiday during times of intense crisis might enable countries to pandemic-proof their bonds, a prominent debt fund believes



Economic fallout from COVID-19 has triggered a record number of sovereign defaults in 2020, and managers at Boston-based GMO, heavily involved in sovereign restructurings in recent years, have proposed redesigning bonds so that countries can suspend or even wipe off debt payments for up to a year.



Credit rating agency S&amp;P has downgraded 51 countries this year, and four &#8211; Lebanon, Ecuador, Argentina and Belize &#8211; have already defaulted, beating a record set in 2017.



“In the case of Ecuador, it might have provided enough liquidity relief to prevent a default,” said GMO’s Carl Ross, one of the payment holiday plan’s two architects and a negotiator in Ecuador’s and Argentina’s restructurings.



He favours that idea over current approaches such the linking of debt payments to economic fortunes chosen in 2012 by Greece, and the “hurricane clause” &#8211; offering debt relief if a second catastrophic storm hits &#8211; used in Grenada’s 2015 restructuring.



“Our proposal is to revert to something much simpler,” Ross said. “The whole idea is to prevent countries getting into distress in the first place”.



Sui-Jim Ho, a partner at Cleary Gottlieb &#8211; the law firm that helped draft Granada’s hurricane clause &#8211; said discussion around temporary debt suspensions was gaining traction.



However, he questioned how simple implementing them would be.



“We still need to figure out how the pandemic trigger event should be drafted,” he said “&#8230;Defined too loosely and it could be triggered too easily. Defined too restrictively and you could end up with too little too late.”



Graphic: Bond prices plunge ahead of defaults&nbsp;<a href="https://fingfx.thomsonreuters.com/gfx/mkt/dgkvllxenvb/Pasted%20image%201598352935580.png">here</a>



<figure class="wp-block-image"><a href="https://fingfx.thomsonreuters.com/gfx/mkt/dgkvllxenvb/Pasted%20image%201598352935580.png" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://fingfx.thomsonreuters.com/gfx/mkt/dgkvllxenvb/Pasted%20image%201598352935580.png" alt="Reuters Graphic"/></a></figure>



<h3 class="wp-block-heading">GAME THEORY</h3>



Ross said the potential criticism that GMO’s proposal could be abused by politicians looking for creative funding options was a low risk.



Bond markets would soon work out governments that tried to play the system, and as the deferral option would only be available once &#8211; or perhaps once a decade for long-term bonds &#8211; it was also likely to be used sparingly.



“Interactions between bond markets and governments are a ‘repeated game’ &#8230; We believe this dynamic would be a very effective self-policing mechanism,” he said.



His idea would need International Monetary Fund or U.S. Treasury support to take off, and a country would also have prove it was workable.



Ross said he suggested it to Ecuador but the process was moving too fast by then, and it wouldn’t have prevented Argentina or Lebanon defaulting as their debts had already spiralled out of control.



Countries hit by multiple crises wouldn’t be saved either as having more than one deferral or debt forgiveness option would ramp up their borrowing costs.



Ross and the proposal’s co-author, Mustafa Ulukan, estimate that a single one-year deferral option might only add 0.6% to the 8% a country with a low B-grade rating might pay to borrow for 10 years.



The approach could also address ‘freeriding’ criticism private sector bondholders are now facing for not following G20 governments and allowing the world’s poorest countries to suspend debt payments during COVID-19.



Pressure for that to happen is growing but creditors warn the rating agencies would class it as a default, opening up a host of problems. That is something GMO thinks its plan would avoid.



“This (deferral) option, if broadly used, would be extraordinarily valuable in the current global environment,” Ross said. “This year and 2021, we have a lot of countries that are going to default.”

london

Payment holiday parachute might COVID-proof government bonds, top fund says

LONDON (Reuters) &#8211; The COVID-19 pandemic has forced sovereign wealth funds to think the previously unthinkable.



With prime office blocks lying empty around the world, hotels half-vacant and retailers struggling to stay afloat, the funds are retreating from many of the real estate investments that have long been a mainstay of their strategies.



Sovereign wealth funds (SWFs) invested $4.4 billion in the sector in the first seven months of 2020, 65% down from the same period a year ago, according to previously unpublished data provided to Reuters by Global SWF, an industry data specialist.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1110" height="624" src="https://www.cnbcafrica.com/wp-content/uploads/2020/08/001-1110x624.jpg" alt="" class="wp-image-379848" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/08/001-1110x624.jpg 1110w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/001-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/001-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/001-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/001-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/001-scaled.jpg 2048w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/001-696x392.jpg 696w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/001-1068x601.jpg 1068w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/001-1920x1080.jpg 1920w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/001-600x338.jpg 600w" sizes="auto, (max-width: 1110px) 100vw, 1110px" /><figcaption>SAMSUNG CSC</figcaption></figure>



The nature of property investments is also shifting, with funds increasingly investing in logistics space, such as warehousing, amid a boom in online commerce during the pandemic, while cutting back on deals for offices and retail buildings.



Such shifts in behaviour can have seismic effects on the global real estate market, given such funds are among the largest investors in property and have interests worth hundreds of billions of dollars in total. Three sovereign funds sit within the top 10 largest real estate investors, according to market specialists IPE Real Assets.



A big question is whether the changes are structural for the funds, for which property is an asset-class staple at about 8% of their total portfolios on average, or a temporary response to a huge, unexpected and unfamiliar global event.



“Real estate is still a big part of sovereign wealth fund portfolios and will continue to be so,” said Diego López, managing director of Global SWF and a former sovereign wealth fund adviser at PwC.



“What COVID has accelerated is the sophistication of SWFs trying to build diversification and resilience into their portfolio &#8211; and hence looking for other asset classes and industries.”



Sovereign funds have been more bearish on property than public pension funds, another big investor in the sector, Global SWF found. While they have outstripped the pension funds in overall investment across most industries and assets this year, by two to one, that ratio is reversed for real estate.



Funds are nursing hits to their existing property portfolios stemming from the introduction of lockdowns and social-distancing restrictions. While other parts of their portfolio, such as stocks and bonds, have rebounded from March’s trough, a real-estate recovery is less assured.



Property capital value globally is expected to drop by 14% in 2020 before rising by 3.4% in 2021, according to commercial real estate services group CBRE. Analysts and academics question whether the pandemic’s impact may prove long-lasting, with more people working from home and shopping online.



“I think there’s a real threat to some commercial business districts in the big cities as I can’t see us all return to the 9-to-5 schlep in, schlep out,” said Yolande Barnes, a real-estate specialist at London university UCL.



The value of property assets of some funds has fallen in 2020, with those experiencing the biggest drops including Singapore’s Temasek Holdings and GIC, Abu Dhabi Investment Authority (ADIA) and Qatar Investment Authority (QIA), according to data compiled for Reuters by industry tracker Preqin.



Those four funds have collectively seen the value of such assets drop by $18.1 billion to $132.9 billion, the data showed.



Reuters was unable to confirm whether the fall was due to lower valuations or asset sales. The funds either declined to comment or did not respond.



Many sovereign funds do not publicly disclose data on property investments, with Norway’s one of the exceptions.



The Norwegian fund, which has around $49 billion invested in real estate, up from $47 billion at the end of 2019, said last week its unlisted property portfolio returned minus 1.6% in the first half of 2020.



Sovereign funds have also largely steered clear in 2020 of new direct investments in London or Los Angeles, hotspots in normal times, according to property services firm Jones Lang LaSalle (JLL), which said SWFs were “on the defensive”.

SAMSUNG CSC

Safe bet? Sovereign funds rethink once-reliable real estate

By Charles Leyeka Lufumpa, Acting Chief Economist and Vice President for Economic Governance and Knowledge Management at the African Development Bank Group.



After demonstrating its resilience during the Ebola outbreak and the global financial crisis, Africa is once again facing a severe test of its strength and agility because of the coronavirus pandemic.



 The good news is that the continent has entered this crisis in reasonably good shape following decades of progression in health, education and economic outcomes. As of early 2020, macroeconomic fundamentals in Africa were improving, with investments, rather than consumption, accounting for more than half of the region’s growth. Inflation was falling and the continent was making impressive strides towards accomplishing the United Nations Sustainable Development Goals (SDGs). Africa must build on the momentum and strive to prevent the coronavirus pandemic from reversing the gains of the past 20 years.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1110" height="740" src="https://www.cnbcafrica.com/wp-content/uploads/2020/08/Dr.-Charles-Lufumpa-002-5-1110x740.jpg" alt="" class="wp-image-379845" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/08/Dr.-Charles-Lufumpa-002-5-1110x740.jpg 1110w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/Dr.-Charles-Lufumpa-002-5-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/Dr.-Charles-Lufumpa-002-5-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/Dr.-Charles-Lufumpa-002-5-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/Dr.-Charles-Lufumpa-002-5-2048x1365.jpg 2048w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/Dr.-Charles-Lufumpa-002-5-696x464.jpg 696w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/Dr.-Charles-Lufumpa-002-5-1068x712.jpg 1068w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/Dr.-Charles-Lufumpa-002-5-1920x1280.jpg 1920w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/Dr.-Charles-Lufumpa-002-5-600x400.jpg 600w" sizes="auto, (max-width: 1110px) 100vw, 1110px" /><figcaption>Charles Leyeka Lufumpa</figcaption></figure>



 Admittedly, that’s easier said than done: despite their best efforts, many countries still struggle with fragile health systems, high debt levels, weak external balances, as well as high rates of poverty and unemployment. The African Development Bank now projects that Africa will fall into a recession in 2020 with economic growth contracting by at least 1.7 per cent. In a worst-case scenario, this figure could turn out as high as 3.4 per cent. Cumulative losses in gross domestic product (GDP) across the continent could range between $173.1 billion and $236.7 billion in 2020 and 2021. The coronavirus pandemic threatens to increase the debt burden of African countries from 60 per cent to 70 per cent of gross domestic product, heightening the likelihood of a sovereign debt crisis. The additional financing required to cushion the consequences of the crisis could be in excess of $150 billion.



 In a part of the world where 85 per cent of the population earn their living in the informal sector,unemployment as a direct result of the coronavirus pandemic could push an additional 28 to 49 million people into extreme poverty. Moreover, if we fail to take adequate action, the impact of the crisis on food insecurity and malnutrition may be even worse than anticipated. 



 To counter the fallout of the coronavirus pandemic, Africa needs robust policy responses from every country on the continent, paired with strong support from Africa’s development partners. In the short term, African countries should prioritise healthcare spending for the provision of essential personal protective equipment (PPE) and materials, acceleration of local production of medical supplies including PPE and vaccine and drug discovery. Targeted cash transfers and subsidies for vulnerable households as well as subsidies and tax relief for businesses should be high on the agenda. Central banks must inject liquidity into the economy, turning to unconventional policy tools such as quantitative easing if necessary. In the longer term, countries should seize the imperative of building resilience to future crises. As good times return and economies get back on track, it should become a priority to build domestic and external buffers against any potential exogenous shocks. More money should be earmarked for scientific, economic and social research. Countries should pursue global and continental partnerships to prepare for eventualities. Private sector growth and revamping education and labour markets for the future of work are also key.



 The role of development partners. At the onset of the coronavirus pandemic, multilateral development institutions took immediate action to help Africa’s poorest countries navigate the crisis and help them on the road to recovery. The African Development Bank is playing its part through its USD 10 billion COVID-19 Rapid Response Facility (CRF). The CRF offers immediate relief to African countries to address the crisis by providing additional resources for public health interventions, social protection programs and liquidity and budget support to affected sectors of their economies.



 Civil society and think tanks have a useful role to play by helping to build trust, solidarity and uptake of COVID-19 prevention and containment measures. They can also help to ensure that COVID-19 interventions are carried out equitably and that governments are held accountable for their policies and actions. The African Development Bank stands ready to work with other multilateral financial institutions and wealthier nations to alleviate the impact of the pandemic on African countries. 



 The continent’s youthful and innovative population, its growing middle class, its value addition to the abundant natural resources and its ever-improving governance systems give us plenty of reason to be confident that Africa will overcome the ravages of the coronavirus pandemic.



 This year marks the first time the continent has entered a recession in more than half a century. Over the past two decades, Africa has boasted some of the highest growth rates in the world, setting the region up as the next investment frontier in a post–COVID-19 world. The level of cooperation in Africa has been encouraging. But beyond the crisis, we need to continue working together to help rebuild our economies and prepare them for the future. Africa will emerge from this episode stronger and more resilient than ever before.

Dr. Charles Lufumpa (002) (1)

OPINION: Post COVID-19-Rebuilding Africa and strengthening it against future economic shocks.

(Reuters) &#8211; Old Mutual expects to post a loss in the first half of 2020, it said on Monday, as it deals with weak business volumes and a spike in business interruption insurance claims due to the COVID-19 crisis.



The insurer forecast a basic loss of between 128.5 and 154.2 South African cents per share for the six months ended June 30, versus earnings of 127.3 cents a year earlier.



The 175-year-old company expects results from operations to plunge by between 61% and 71% to 1.31 billion-1.76 billion rand ($44.56 million-$76.80 million) in the period.



Shares in Old Mutual were 4% lower by 0737 GMT, deepening a 35% drop they have seen since the start of 2020.



New business sales volumes were hurt as most of the group’s tied advisers were unable to sell during the lockdown period due to the partial closure of the branch network and lack of access to customers’ homes, worksites and branches, it said.



While lockdown restrictions have been eased and economic activity has somewhat resumed, sales levels remain below prior year levels, it said.



Old Mutual, whose primary operations are in South Africa, serves retail and corporate customers in 14 countries.



The company named Iain Williamson as its permanent chief executive last month after a year of upheaval caused by the exit of his predecessor Peter Moyo, who was fired over an alleged conflict of interest.



Insurers across the globe have been setting aside billions of dollars as they face steep claims resulting from coronavirus lockdowns, which have shut businesses and led to cancellations or postponements of major events including the Olympics.



Another aggravating factor has been higher credit spreads, which Old Mutual said have led to notable unrealised mark-to-market losses in the unlisted equity and credit portfolios of its investment business.



($1 = 17.0563 rand)

gettyimages-103548801-594×594

Old Mutual forecasts H1 loss as coronavirus crisis hammers volumes

JOHANNESBURG (Reuters) &#8211; South Africa’s confirmed COVID-19 cases have surpassed 600,000, the health ministry said on Friday, although the number of new cases has been declining since a peak in July.



Despite imposing one of the world’s toughest lockdowns at the end of March when the country had only a few hundred cases, South Africa saw a surge in coronavirus infections that has left it the hardest hit on the continent.



The ministry said in a statement South Africa now had a total of 603,338 cases and 12,843 deaths &#8211; accounting for more than half of the continent’s cases and around 47% of its deaths, according to a Reuters tally of government and World Health Organization data.



Africa’s most industrialised economy reported 3,398 new cases on Friday, compared with a peak of over 13,000 cases a day seen in July.



“We believe that South Africa is in a way moving past the point of the peak of the pandemic, we believe we have gone beyond the inflection point,” Health Minister Zweli Mkhize said on Wednesday.



The COVID-19 crisis has battered an economy already in recession and pushed millions of South Africans deeper into extreme poverty.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" src="https://www.cnbcafrica.com/wp-content/uploads/2020/06/gettyimages-1152457961-594x594-1.jpg" alt="" class="wp-image-374813" width="707" height="563" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/06/gettyimages-1152457961-594x594-1.jpg 594w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/gettyimages-1152457961-594x594-1-300x239.jpg 300w" sizes="auto, (max-width: 707px) 100vw, 707px" /><figcaption>OSAKA, JAPAN &#8211; JUNE 28: (RUSSIA OUT) South African President Cyril Ramaphosa speeches during a bilateral meeting at the G20 Osaka Summit 2019, June 28, 2019 in Osaka, Japan. Vladimir Putin has arrived to Japan to participate the G20 Osaka Summit and to meet U.S.President Donald Trump. (Photo by Mikhail Svetlov/Getty Images)</figcaption></figure>



The government eased lockdown restrictions this week to allow most of the economy to re-open. But President Cyril Ramaphosa cautioned that cases could surge if people failed to maintain vigilance.

South Africa’s COVID-19 infections breach 600,000 mark

<div style="max-width: 700px;">
 <video-js
 data-account="1571595826001"
 data-player="c0AOssA7"
 data-video-id="6183346917001"
 data-embed="default"
 controls=""
 data-application-id=""
 class="vjs-fluid"></video-js>
</div>
<script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script>
A treadmill, a bench press, a step class – Do you miss them? For five months gym bunnies in South Africa were not allowed to taste the sweet sweat of a gym session, because of Covid-19. Now with a softer lock-down, gyms are allowed to open. But how is it all going to work? Joining CNBC Africa to discuss the impact is Mosima Mabunda, Head of Wellness, Discovery Vitality.

Level 2 lockdown: What the reopening of gyms means for the fitness industry

<div style="max-width: 700px;">
 <video-js
 data-account="1571595826001"
 data-player="c0AOssA7"
 data-video-id="6183341247001"
 data-embed="default"
 controls=""
 data-application-id=""
 class="vjs-fluid"></video-js>
</div>
<script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script>
A bittersweet year for ARB Holdings. 2020 marks the group’s 40th year in business. However, according to the group, this financial year will be remembered for the wrong reasons. Although reporting a 3 per cent increase in earnings, the company’s revenue was held back by COVID-19. Billy Neasham, CEO of ARB Holdings CNBC Africa for more.

ARB Holdings marks bittersweet 40th birthday amid COVID-19 shocks

<div style="max-width: 700px;">
 <video-js
 data-account="1571595826001"
 data-player="c0AOssA7"
 data-video-id="6183316982001"
 data-embed="default"
 controls=""
 data-application-id=""
 class="vjs-fluid"></video-js>
</div>
<script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script>
Rwanda has set up a Financial Intelligence Centre that aims to strengthen the country’s capacity to prevent, combat, and criminalize money laundering and terror financing.

Coronavirus

Banks eye layoffs as short-term crisis ends, long-term costs emerge

Exclusive: WHO sweetens terms to join struggling global COVAX vaccine facility – documents

Malawi to lift COVID-19 air travel, school restrictions from September

South African drugmaker Aspen expects 7-11% full-year earnings growth

South African rand dips before producer price data

Namibia Apartheid politician turned independence advocate dies of COVID-19

South Africa’s Massmart loss widens to over $65 mln as virus hits store sales

Moderna COVID-19 vaccine appears to work as well in older adults in early study

Kenya extends coronavirus curfew as cases rise outside capital

Payment holiday parachute might COVID-proof government bonds, top fund says

Safe bet? Sovereign funds rethink once-reliable real estate

OPINION: Post COVID-19-Rebuilding Africa and strengthening it against future economic shocks.

Old Mutual forecasts H1 loss as coronavirus crisis hammers volumes

South Africa’s COVID-19 infections breach 600,000 mark

Level 2 lockdown: What the reopening of gyms means for the fitness industry

ARB Holdings marks bittersweet 40th birthday amid COVID-19 shocks

Rwanda’s unemployment almost doubles due to COVID-19

News Tips

Advertise With Us

Coronavirus

Banks eye layoffs as short-term crisis ends, long-term costs emerge

Exclusive: WHO sweetens terms to join struggling global COVAX vaccine facility – documents

Malawi to lift COVID-19 air travel, school restrictions from September

South African drugmaker Aspen expects 7-11% full-year earnings growth

South African rand dips before producer price data

Namibia Apartheid politician turned independence advocate dies of COVID-19

South Africa’s Massmart loss widens to over $65 mln as virus hits store sales

Moderna COVID-19 vaccine appears to work as well in older adults in early study

Kenya extends coronavirus curfew as cases rise outside capital

Payment holiday parachute might COVID-proof government bonds, top fund says

Safe bet? Sovereign funds rethink once-reliable real estate

OPINION: Post COVID-19-Rebuilding Africa and strengthening it against future economic shocks.

Old Mutual forecasts H1 loss as coronavirus crisis hammers volumes

South Africa’s COVID-19 infections breach 600,000 mark

Level 2 lockdown: What the reopening of gyms means for the fitness industry

ARB Holdings marks bittersweet 40th birthday amid COVID-19 shocks

Rwanda’s unemployment almost doubles due to COVID-19

News Tips

Advertise With Us

Newsletters