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Emerging-Market Stocks Head for Biggest Two-Day Rally

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Emerging Markets

Emerging-market stocks headed for the biggest two-day rally since 2011 as oil held onto its gains and on optimism some of the world’s biggest central banks will boost stimulus to prop up plunging markets.

All 10 sectors in the index rose, led by energy shares, backing up the biggest increase in the gauge since August on Friday. Brent crude advanced, after jumping the most in more than seven years over Thursday and Friday in a rally sparked by hedge funds reducing bets prices would keep falling. A measure of emerging-market currencies rose for a third day to extend its recovery from a record low. The won led gains to head for its biggest two-day advance since October before data forecast to show South Korea’s economic growth quickened last quarter from a year earlier.

European Central Bank President Mario Draghi’s indication that stimulus could be boosted as early as March, along with speculation China will cut interest rates further and the Federal Reserve will delay raising them, is driving a recovery in global markets. While China’s economy is decelerating, it won’t be a cataclysmic slowdown, according to several attendees at the World Economic Forum in Davos, Switzerland, last week including Nobel laureate Joseph Stiglitz and Credit Suisse Group AG Chief Executive Officer Tidjane Thiam.

“The probable closing of short oil contracts leading oil prices higher and the consensus in Davos on a soft landing for China eased market fears,” Attila Vajda, managing director of Project Asia Research & Consulting Pte, a Singapore-based advisory firm, said from Ho Chi Minh City. “But it’s likely that we are not out of the woods yet, so the rebound in the market might be just a relief rally.”

Stocks

The MSCI Emerging Markets Index rose 1.3 percent to 719.52 at 12:14 p.m. in Hong Kong. The gauge has fallen 9.4 percent this year and is trading at 10.5 times its projected 12-month earnings, compared with 14.8 for the MSCI World Index. Hong Kong’s Tencent Holdings Ltd. provided the biggest boost to the gauge, rising 2.8 percent, followed by China Mobile Ltd. with a 2.4 percent increase.

The Hang Seng China Enterprise Index of mainland shares in Hong Kong climbed 1.3 percent, while the Shanghai Composite Index advanced 1 percent. The gauge, whose gyrations at the start of the year sparked the global selloff, ended up 1.3 percent on Friday as China signaled it would curb overcapacity in industries such as coal that have been dragging down economic growth.

Equities indexes in Thailand, Taiwan and Indonesia were up by 1 percent or more, while Vietnam’s VN Index rose 3.1 percent. Malaysian markets are closed for a public holiday.

Currencies

The developing-nation currencies gauge rose 0.1 percent, following a 1 percent jump on Friday after it fell to an unprecedented low two days earlier. The won was up 0.6 percent, backing up a 1.1 percent advance on Friday, while the Taiwanese dollar strengthened 0.4 percent and Thailand’s baht climbed 0.2 percent. Brent crude has rallied 16 percent in three days, but is still down 13 percent this year.

“Emerging-market currencies have benefited from expectations of more central bank policy easing,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd. “I think the market is generally hopeful that the Fed may highlight the risk to inflation from lower oil prices and therefore push back against expectations of tightening” when it meets this week, he said.

The offshore yuan rose for the first time in five days after China stepped up verbal defense of its currency to ward off speculators betting on depreciation. The currency is down 0.6 percent this year, while the onshore yuan has dropped 1.3 percent.

Bonds

Chinese sovereign bonds fell on speculation the central bank will be cautious in cutting lenders’ reserve requirements amid depreciation pressure on the yuan. The 10-year yield rose nine basis points to 2.87 percent in the biggest increase since November.

The yield on similar-maturity Philippine securities dropped seven basis points to 4.30 percent, while that on South Korean notes fell one basis point to 2.03 percent.

Bloomberg

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigeria Has Lost N531 Million on The Suspended Abuja to Kaduna Train Service

Federal Government has lost about N531 million in revenue on the suspended Abuja to Kaduna train service. 

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Lagos-Ibadan Train Services - Investors King

Federal Government has lost about N531 million in revenue on the suspended Abuja to Kaduna train service. 

The Managing Director, Nigeria Railway Corporation (NRC), Mr Fidet Okhiria disclosed that the country has lost N531 million between March 28 when terrorists attacked Abuja to Kaduna train to September 2022. 

Okhiria noted that the money would have been remitted to the federal government. 

It would be recalled that terrorists unleashed an attack on the Abuja to Kaduna trail which led to the death of eight passengers. About 41 others were injured while scores were kidnapped.

Although some of those that were kidnapped have been released, about 22 are still in the den of the terrorists. Reports had it that about 970 passengers were onboard the train during the attack. 

In response, the Nigerian Railway Corporation halt service along the Abuja to Kaduna train corridor. 

According to the Managing Director of NRC, while speaking to newsmen in Lagos, he said the corporation will not resume service on Abuja to Kaduna rail until all those who remain with the terrorist are released. 

The Managing Director further disclosed that four members of the railway corporation are among those still held captive. 

He, however, expressed optimism that all those still in captivity will soon be released. He noted that the Minister of Transportation is leading the struggle for the safe release of those still in captivity. 

Meanwhile, the federal government has set up a committee to ensure maximum security for train passengers and all train facilities.  The committee is to liaise with the appropriate ministries and agencies to fine-tune a safer railway system. 

“We are talking about present-day technology so that we can have real-time monitoring. We will also be deploying a lot of security agencies to be at strategic locations”.

Some of the places the committee has visited include the office of the Inspector General of Police(IG) and the Ministry of Information.

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Economy

Federal Government to Create Jobs Through Sugar Production

Nigerian government to create jobs and earn foreign exchange through sugar production

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Sugar - Investors King

Nigerian government to create jobs and earn foreign exchange through sugar production. 

The Executive Secretary of the National Sugar Development Council (NSDC), Zacch Adedeji disclosed during an interview in Abuja that Nigeria will soon be competing globally in sugar production. 

Zacch Adedeji pledged that the National Sugar Development Council under his leadership will open doors for job creation and foreign exchange. He further stated that the sugar production sector has a lot of potential that can enhance the economy if the sector is vigorously explored. 

He also stated that the implementation of the Nigerian Sugar Master Plan (NSMP)  has been able to attract huge investment to the sugar sector. 

Investors King could recall that the Federal Executive Council in September 2012 approved the National Sugar Master Plan (NSMP) as a government strategy roadmap for the development of the Nigerian sugar sub-sector.

According to the NSDC boss, “The Federal Government, through the National Sugar Development Council, is committed to building a globally competitive sugar industry that would boost the local economy, provide jobs for Nigeria’s teeming youth population and position Nigeria as a net exporter of the commodity.”

Adedeji also disclosed that the council is trying to address this issue of inadequate qualified indigenous manpower. He noted the council has created the Nigeria Sugar Institute in Ilorin, Kwara State to help drive local production and possibly export in the future. 

“The Institute has commenced the training of young Nigerian graduates both in field and factory operations through an exchange programme with famous sugar institutes like the National Sugar Institute, Kanpur, India as well as the Mauritius Sugar Industry Research Institute, in Mauritius”. 

Meanwhile, the Federal Government at its weekly Federal Executive Council meeting (FEC) yesterday approved the second phase of the National Sugar Masterplan. The MasterPlan which is a 10-year plan is aimed to save $350 million yearly from foreign exchange and also create 110,000 jobs.

While addressing newsmen after the meeting, the Minister of Industry, Trade and Investment, Niyi Adebayo disclosed that the second phase of the National Sugar Masterplan will span from 2023 to 2033. 

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Economy

CBN Not Mandated to Sell Dollars to Airlines, Godwin Emefiele Tells Foreign Airlines

The Central Bank Of Nigeria (CBN) has disclosed that it was not mandated by any law to sell dollars to foreign airlines operating in the country.

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Emirates Airlines

The Central Bank Of Nigeria (CBN) has disclosed that it was not mandated by any law to sell dollars to foreign airlines operating in the country.

The central bank governor Godwin Emefiele while speaking at the monetary policy committee meeting stated that the apex bank is committed to clearing up trapped funds of foreign airlines, however, it was not the CBN’s responsibility to provide the funds in dollars.

The CBN governor said, “The sector is a sector that has always enjoyed priority allocation. For other sectors where there are priorities like the airlines, we have always granted them the priority that they desire because we know people want to travel and they don’t want to be constrained by the need for them to travel. 

“In spite of this, we have seen that the number of travels or naira value of tickets issued by the airlines has increased. We decided to release $265 million when the pressure was building aggressively. 

“We will do everything possible and are determined to clear the backlog and consistently, at all the retail interventions. As long as the bank accounts are funded, we will continue to ensure that the cumulative backlog is cleared. 

“But I think it is important for me to say this — the foreign airlines are saying this because they said we should respect bilateral air services agreements (BASA) that say proceeds of all their ticket sales must be repatriated out of the country.

“It did not say you must repatriate all your dollars. There is no law that makes it compulsory that you must buy your dollars from the central bank. When you put money in your account, what it means is that you tell your bank to buy your dollar.

“Your bank will go to the legitimate or approved sources which in this case is the I&E to buy dollars and pay for your ticket sales proceeds.

“If they don’t find, they may resort to the CBN but it doesn’t mean that the CBN is under compulsion to provide your dollars because it is good for me to say this so that people don’t just rest on the conclusion that CBN is under compulsion to provide the dollars.” 

Recall that the issue of trapped funds had generated several reactions from aviation stakeholders and the non-repatriation of airlines revenue had grown from $450 million in May to $464 million in July. The CBN intervened by releasing $265 million to clear part of the forex backlog.

It should be recalled that earlier this month, Investors King had reported that the federal government of Nigeria sought to sanction airlines selling tickets in dollars.

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