Top global finance headlines: Up to 3.4 percent economic growth expected for sub-Saharan Africa

Global chips shortage, luxury brands under scrutiny and Moody’s fined for negligence make headlines.

This week, a global shortage of chips is not stopping chipmakers like Intel from investing in manufacturing, China plays hardball with Western luxury brands and Moody’s finds itself out of pocket for not disclosing conflicts of interests. On the positive side, sub-Saharan African economies are expected to record positive growth this year.

Credit agency fined
Ratings agency Moody’s has been fined $4.35 million (R64.74 million) for breaching rules, including the failure to disclose conflicts of interests.

Reuters reported that the European Securities and Markets Authority (ESMA) said the fine was for five Moody’s entities based in France, Germany, Italy, Spain and Britain, with all the breaches resulting from negligence on the part of the company.

The European Union’s markets watchdog added that Moody’s had inadequate internal policies and procedures to manage shareholder conflicts of interest, with breaches taking place between 2013 and 2017.

Chips anyone?
The global supply of electronic devices has been upset due to a global semiconductor shortage. This has affected devices from smartphones to gaming consoles to tech-dependent cars, with companies warning the issue may last into the second half of 2021.

The fallout threatens to weigh on share prices for months to come, according to Bloomberg.

In November 2020, Apple Inc. announced that it was facing a shortage of chips for its iPhone. A number of companies have since followed with their own warnings, including Volvo, General Motors and Sony, among others.

On the upside, companies supplying chips could soon see a boost in business.

Intel investment
Intel’s stock rose 6 percent on the back of confident public remarks by its CEO Pat Gelsinger, who showed that he was making big changes.

The American chipmaking giant announced plans to invest $20 million (R294,42 million) in two new factories in Arizona, according to a report on CNBC.

Growth seen for Sub-Saharan Africa
The World Bank has announced its expectation of 2.3 percent to 3.4 percent economic growth in sub-Saharan Africa, following a 2 percent contraction in 2020.

Covid vaccination programmes and diversified economies are the key factors expected to contribute to investor confidence.

The bank did, however warn of significant risks remaining prevalent, according to Reuters.

“The resurgence of the pandemic in late 2020 and limited additional fiscal support will pose an uphill battle for policy makers,” the bank said.

“The next twelve months will be a critical period for leveraging the African Continental Free Trade Area in order to deepen African countries’ integration,” it added.

What’s in a name?
Western fashion and luxury brands, including H&M, Burberry, Nike and Adidas, have chosen not to buy cotton picked in the Xinjiang region of China over concerns about child and forced labour. China’s ruling Communist Party is retaliating for Western sanctions and many Chinese celebrities are breaking endorsements with the brands.

H&M sales in China were $339 million (R 5015,47 million) during the 12 months to November 2020, the retailer’s fourth-biggest market. Chinese consumers constitute 40 percent of Burberry's sales and they spend billions a year with Nike, reports Forbes.