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Chinese Brokers Planned $19 Billion Fund to Avert Stock Market

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Various Chinese brokerage firms are coming together to help avert stock market declination after the nation experience its biggest three weeks drop in stock history since 1992.

The 21 top brokers planned to invest 15 percent of their assets which is estimated to worth 120 billion yuan ($19.3 billion) in total, said the Security Association of China on its website.

The fund will focus on blue-chip exchange traded funds since small-cap stocks has lost 33 percent of its early profit. The move is to help margin traders from unwinding positions after every measure failed, with the market losing $2.8 trillion in three weeks, margin traders are losing their capital at a record pace and it’s a matter of time before funds start filing for bankruptcy.

According to Hao Hong, China equity strategist at Bocom International Holdings Co. in Hong Kong, “This 120 billion yuan won’t last an hour in this market, it might help blue-chip stocks, as investors may value them more but the bursting of the bubble in small-cap/tech stocks is likely to continue”

Last week the People’s Bank of China cut interest rates and eased margin-trading rules by cutting trading fees to help traders with their open positions.

Small-Cap Stocks

Early last month ChiNext index of smaller companies was trading at a record high, five times the level of Shanghai Composite Index. Since June 3 peak ChiNext index has lost 33 percent, reducing this year gain to 77 percent.

“The market’s most acute concern is still these smaller cap stocks, as investors levered up to buy them and now margin lending curbs hit them the hardest,” Hong said. “With their valuation in the stratosphere, nobody is willing to step in and bolster these stocks.” Bloomberg

The brokers said as long as the Shanghai Composite Index stays below 4,500 they will not reduce their proprietary investments in equity market, said the association on Saturday. The Shanghai Composite Index closed at 3,686.92 on Friday. It is believe that listed brokers will aggressively buy back shares, while encouraging their parent companies to do the same.

The 21 brokers coming together said “the economic fundamental that had justified the stock market’s rally before the rout hadn’t changed. Therefore, it is our duty to unite in stabilizing this market”

Li-Gang Liu, chief China economist for the Australia & New Zealand Banking Group Ltd., said the market would eventually find its own level.

“If a listed company thinks its shares are undervalued it could buy back shares. Such purchases shouldn’t be triggered by any kinds of administrative calls,” he said. “I believe the market is still under big downward pressure.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Stanbic IBTC Obtains Approvals, License to Establish Life Insurance Subsidiary

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stanbic IBTC Insurance

Stanbic IBTC Holdings Plc on Friday announced that it has obtained all required Regulatory Approvals and a license from the National Insurance Commission to establish a wholly-owned Life Insurance subsidiary, Stanbic IBTC Insurance Limited (SIIL).

In a statement signed by Chidi Okezi, Company Secretary, Stanbic IBTC and released on Friday, the bank said “The establishment of this new subsidiary essentially complements the bouquet of product offerings by Stanbic IBTC as it continues its goal of being the leading end-to-end financial solutions provider in Nigeria. In this regard, SIIL will aim to facilitate long term insurance for already financially included individuals and will seek to become the preferred Insurer in the Life Insurance Business.

“Stanbic IBTC Holdings PLC, a member of Standard Bank Group, is a full-service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management. The group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade deals between Africa, China and select emerging markets. Standard Bank Group is the largest African financial institution by assets. It is rooted in Africa with strategic representation in 21 countries on the African continent.

“Standard Bank has been in operation for over 158 years and is focused on building first-class, on-the-ground financial services institutions in chosen countries in Africa; and connecting selected emerging markets to Africa by applying sector expertise, particularly in natural resources, power and infrastructure.”

 

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World Bank to Discuss New $1.5 Billion Loan Request From Nigeria

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Zainab Ahmed

The Finance Minister, Budget and National Planning, Mrs. Zainab Ahmed, on Friday said the Federal Government has met all the conditions for a fresh loan of $1.5 billion from the World Bank.

The minister disclosed this on Bloomberg TV.

She said the multilateral financial institution is in the final stage of approving the loan. The minister explained that the loan will be discussed in the bank’s next meeting and possibly be approved in the same meeting.

In June, the Senate approved the borrowing plans but the World Bank pushed back demanding Nigeria fulfill the conditions attached to the $3.4 billion loan received from the International Monetary Fund (IMF) in May.

Some of the conditions were to increase revenue generation by upping VAT, the introduction of tariff reflective electricity bill, the removal of subsidy and the unification of the nation’s foreign exchange.

Most of which the Federal Government has done despite protests from most Nigerians who called the new policies anti-people given their current situation.

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Nigeria Realises Over N400 Billion from Company Income Tax in the Third Quarter of 2020

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The Federal Government realised N416.01 billion from Company Income Tax (CIT) in the third quarter of the year, according to the latest report from the National Bureau of Statistics (NBS).

This was 3.48 percent higher than the N402.03 billion generated in the second quarter of the year and represents a decline of 20.13 percent year-on-year from N520.89 billion realised in the third quarter of 2019.

A breakdown of the report showed the professional services sector including the telecoms generated the highest amount of CIT at N55.52 billion during the quarter, while the manufacturing sector followed with N42.03 billion.

The banking and financial institutions realised N24.05 billion while the mining generated the least and closely followed by Textile and Garment Industry and Local Government Councils with N120.93 million, N167.51 million and N321.72 million generated, respectively.

The report added that out of the total amount realised during the quarter under review, a sum of N244.70 billion was generated as CIT locally. The federal government collected N70.34 billion as foreign CIT payment and the remain N100.97 billion was received as CIT from other payments.

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