The Bank of Japan kept its main monetary stimulus target unchanged Friday while outlining operational changes for its purchases of government bonds, exchange-traded funds and real estate investment trusts.
Friday’s decision to continue expanding the monetary base at an annual pace of 80 trillion yen ($650 billion) was forecast by all but one of 42 economists surveyed by Bloomberg. With analysts almost evenly split on whether the central bank will add to its asset-purchase program next year or stand pat, attention turns to Governor Haruhiko Kuroda’s briefing later this afternoon in Tokyo.
The aim of the changes for JGB maturities, ETF purchases and Japanese real estate investment trusts will be in focus, along with his views on the Federal Reserve’s interest-rate hike, the oil market rout and recent economic indicators. Kuroda said earlier this month that price trends were improving, while repeating he wouldn’t hesitate to adjust monetary policy if needed.
“The BOJ extended the duration of JGBs to show they are not going to taper their stimulus for now,” said Junko Nishioka, chief economist for Japan at Sumitomo Mitsui Banking Corp. in Tokyo. “Now that they adjusted their policy in December, they will wait and see how things will develop.” Nishioka added that she no longer forecasts further easing in January.
The Topic index of stocks jumped as much as 2 percent after the BOJ’s announcement, before falling to trade down 0.6 percent at 1:27 p.m. in Tokyo. The yen fell to 123.56 against the dollar, before recovering to trade 0.4 percent stronger.
Bond Buying Changes
The bank extended the average maturities of Japanese government bonds it buys to seven to 12 years from seven to 10 years currently. This change was opposed by three board members, Takahide Kiuchi, Koji Ishida and Takehiro Sato.
In addition to the annual purchase of 3 trillion yen worth of exchange-traded funds, the bank established a new program to buy 300 billion yen in ETFs. The new program will target companies investing “proactively in physical and human capital” and start from April 2016 with ETFs tracking the JPX-Nikkei Index 400.
These changes passed by a 6-3 vote, opposed by Sato, Ishida and Kiuchi, the only board member to also vote against the main monetary base target.
The bank will increase the maximum amount of real-estate investment trusts it can buy to 10 percent of each issue, from five percent currently.
Data since the last policy meeting in November show that Japan avoided a midyear recession, and people familiar with discussions at the central bank told Bloomberg the economy has been gradually gathering momentum in line with the BOJ’s expectations.
Oil Price Drop
Still, the renewed slide in crude oil and the risk that it could suppress prices in the long term means that BOJ officials are closely watching gauges of inflation expectations, the people said.
The Dubai measure for crude oil is trading around $32 per barrel, compared with the low end of BOJ assumptions for its latest price forecasts of $50 per barrel.
Economy Minister Akira Amari has indicated there is no need for the BOJ to rush to achieve its 2 percent inflation target given the current impact of energy costs, even with the BOJ’s preferred price gauge falling since August.
The Federal Reserve’s first increase in interest rates since 2006 this week underscores the difference in policy between the two central banks, and the renewed pressure this may bring to bear on the yen to weaken against the dollar.
The Japanese currency has lost about 30 percent of its value against the dollar since Prime Minister Shinzo Abe took office in 2012 with a plan to reflate the economy.
Even so, exports haven’t responded. While the value of shipments overseas has jumped 20 percent since November 2012 to last month, volumes are only 1.1 percent higher.
Both Abe and Kuroda have urged companies to invest more, but there has been little sign of them using their cash reserves, which reached another record last quarter.
Stanbic IBTC Obtains Approvals, License to Establish Life Insurance Subsidiary
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.”
World Bank to Discuss New $1.5 Billion Loan Request From Nigeria
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.
Nigeria Realises Over N400 Billion from Company Income Tax in the Third Quarter of 2020
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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