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Asian Stocks Rebound as Chinese Economic Data Spur Stimulus Bets

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Asian stocks climbed from a three-year low, sparked by a rally in Chinese shares as the nation’s weakest economic growth since 2009 raised speculation the government will boost stimulus measures.

The MSCI Asia Pacific Index added 0.8 percent to 119.85 at 4:38 p.m. in Hong Kong, reversing an earlier loss of 0.5 percent. The Shanghai Composite Index jumped the most in two months as industrial companies surged. China’s industrial production, retail sales and fixed-asset investment all slowed at the end of the year, while gross domestic product expanded 6.8 percent in the fourth quarter.

The Shanghai benchmark gauge rallied 3.2 percent, with China Communications Construction Co. surging by the daily limit and China Railway Group Ltd. posting its biggest advance since March 2015. The Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong gained 3 percent, while the city’s benchmark Hang Seng index rose 2.1 percent. E-mini futures on the Standard & Poor’s 500 Index jumped 1.3 percent.

Investors need to ask “what is the next policy action in terms of stimulus from the Chinese,” Didier Duret, chief investment officer at ABN Amro Private Banking, told Bloomberg TV in Hong Kong. “It will probably come into infrastructure — railways, telecoms and air space infrastructure. That’s the area that should benefit.”

Chinese shares fell into a bear market last week on waning confidence about the government’s ability to manage its economy and financial markets. Tuesday’s data showed China’s economy is growing at two speeds, with old rust-belt industries from steel to coal and cement in decline while consumption, services and technology do better.
“The market was pricing in much worse,” said Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors Ltd., which oversees about $114 billion. “The markets had intense fears over China.”

Concern about the outlook for global growth, volatility in China and a plunge in commodities prices have roiled markets worldwide, with the MSCI Asia Pacific gauge down 9.2 percent in 2016 and closing Monday at the lowest level since September 2012.
Energy companies had the biggest surge in Asia’s benchmark index Tuesday as Brent oil rebounded from the lowest close in 12 years. PetroChina Co. soared 4.9 percent in Hong Kong and Thailand’s PTT Exploration & Production PCL rallied 7.1 percent to lead gains.

Regional Gauges

Japan’s Topix index closed with a gain of 0.2 percent, after rising as much as 0.5 percent and dropping more than 0.9 percent. South Korea’s Kospi Index added 0.6 percent. Taiwan’s Taiex index increased 0.6 percent while Singapore’s Straits Times Index jumped 1.5 percent, the most since November. New Zealand’s S&P/NZX 50 Index gained 0.4 percent.
The Nikkei 225 Stock Average advanced 0.6 percent. Australia’s S&P/ASX 200 Index added 0.9 percent. Before Tuesday’s gains, both were down 19 percent from their 2015 peaks, close to a 20 percent drop that would meet the definition of a bear market.

The MSCI All-Country World Index slipped to its lowest point since July 2013 on Monday, as banks drove the Stoxx Europe 600 Index to a 13-month low. Markets in the U.S. reopen Tuesday after a holiday.

Bloomberg

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.

Economy

COVID-19 Vaccine: Crude Oil Extends Gain to $48 Per Barrel on Wednesday

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Oil prices rose further on Wednesday as hope for an effective COVID-19 vaccine and the news that the United States of America’s President-elect, Joe Biden has begun transition to the White House bolstered crude oil demand.

Brent crude oil, a Nigerian type of oil, gained 1.63 percent or 78 cents to $48.64 per barrel at 11:50 am Nigerian time on Wednesday.

The United States West Texas Intermediate (WTI) crude oil rose by 1.36 percent or 61 cents to $45.52 per barrel.

OPEC Basket surged the most in terms of gain, adding 3.16 percent or $1.37 to $44.75 per barrel.

This was after AstraZeneca, Moderna and Pfizer-BioNTech announced the positive results of their trials.

Moderna and Pfizer had claimed over 90 percent effective rate in trials while AstraZeneca said its COVID-19 vaccine was 70 percent effective in trials but could hit 90 percent going forward.

The possibility of having a vaccine next year increases the odds that we’re going to see demand return in the new year,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

Also, the decision of President-elect Joe Biden to bring Janet Yellen, the former Chair of Federal Reserve, back as a Treasury Secretary of the United States is fueling demand and strong confidence across global financial markets.

President-elect Biden’s cabinet choices, particularly Janet Yellen’s Treasury Secretary position, are adding to upside momentum across a broad space of asset classes,” said Jim Ritterbusch of Ritterbusch and Associates.

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Economy

Seyi Makinde Proposes N266.6 Billion Budget for Oyo State in 2021

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The Executive Governor of Oyo State, Seyi Makinde, has presented the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly on Monday.

The proposed budget titled “Budget of Continued Consolidation” was said to be prepared with input from stakeholders in all seven geopolitical zones of Oyo state.

Governor Makinde disclosed this via his official Twitter handle @seyiamakinde.

According to the governor, the proposed recurrent expenditure stood at N136,262,990,009.41 while the proposed capital expenditure was N130,381,283,295.63. Bringing the total proposed budget to N266,6444,273,305.04.

The administration aimed to implement at least 70 percent of the proposed budget if approved.

He said “The total budgeted sum is ₦266,644,273,305.04. The Recurrent Expenditure is ₦136,262,990,009.41 while the Capital Expenditure is ₦130,381,283,295.63. We are again, aiming for at least 70% implementation of the budget.”

He added that “It was my honour to present the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly, today. This Budget of Continued Consolidation was prepared with input from stakeholders in all seven geopolitical zones of our state.”

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World Bank Expects Nigeria’s Per Capita Income to Dip to 40 Years Low in 2020

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The World Bank has raised concern about Nigeria’s rising debt service cost, saying it could incapacitate the nation from necessary infrastructure development and growth.

The multilateral financial institution said the nation’s per capita income could plunge to 40 years low in 2020.

According to Mr. Shubham Chaudhuri, Country Director for World Bank in Nigeria, the decline in global oil prices had impacted government finances, remittances from the diaspora and the balance of payments.

Chaudhuri, who spoke during the 26th Nigerian Economic Summit organised by the Nigerian Economic Summit Group and the Federal Government, said while the nation’s debt is between 20 to 30 percent, rising debt service remains the bane of its numerous financial issues and growth.

Nigeria’s problem is that the debt service takes a big part of the government revenue,” he said.

He said, “Crisis like this is often what it takes to bring a nation together to have that consensus within the political, business, government, military, civil society to say, ‘We have to do something that departs from business as usual.’

“And for Nigeria, this is a critical juncture. With the contraction in GDP that could happen this year, Nigeria’s per capita income could be around what it was in 1980 – four decades ago.”

Nigeria’s per capita income stood at $847.40 in 1980, according to data from the World Bank. It rose to $3,222.69 in 2014 before falling to $2,229.9 in 2019.

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