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Australian Retail Sales Missed Estimates



Australia's Retail Sales Decline
  • Australian Retail Sales Missed Estimates

For the first time in four months Australian retail sales have missed expectations, a disappointing outcome given strength in other spending and sentiment indicators.

According to the ABS, sales rose by 0.2% to $25.665 billion in November in seasonally adjusted terms, just half the rate that had been expected by economists.

It was also a noticeable step down from the 0.6% and 0.5% increases registered in the prior two months.

As a result of the weak November result, the annual pace of sales slowed to 3.3%, down from the 3.5% level reported in October.

It now sits at the weakest level seen since August last year.

By category, sales of food (0.4%), clothing, footwear and personal accessories (1.7%) and household goods (0.2%) all increased, offsetting declines at cafes, restaurants and takeaway food services (-0.8%), department stores (-0.3%) and other goods (-0.1%).

Over the past year, sales of clothing, footwear and personal accessories recorded the fastest pace of growth all categories at 5.8%, edging out sales at cafes, restaurants and takeaway food services which increased by 5%.

Food retailing — the largest component of retail sales by dollar spend — increased by 3.1% to $10.312 billion.

Department store sales — at -3.2% — was the only category to record a decline in sales from the levels of a year earlier.

By state and territory, it was the most populous states that outperformed — New South Wales and Victoria — recording solid gains of 0.5% and 0.5% respectively.

Elsewhere sales grew by 0.3% in the Northern Territory and 0.1% apiece in Queensland and Tasmania, helping to offset declines of 0.6%, 0.4% and 0.1% in Western Australia, South Australia and the ACT.

Mirroring the monthly performance, Australia’s eastern states and territories recorded the strongest growth in sales over the past year.

Despite falling modestly in November, sales in the ACT grew by 6.4% from November 2015, the fastest pace reported across the nation.

At 4.3%, 3.5% and 3.7%% respectively, sales in New South Wales, Victoria and Queensland also outperformed, a sign that higher house prices and reasonable labour market conditions continues to support household spending.

At the other end of the spectrum, sales in Western Australia fell by 0.5% over the past year, indicating that weak labour market conditions as a result of the mining infrastructure downturn continue to weigh on spending.

At 0.3% and 2.8%, sales in Northern Territory and South Australia — highly exposed to the fortunes of the mining industry — were also below the national average.

Despite recording modest growth, the November retail sales report is a disappointment, particularly given strength in other household-specific indicators over the same period.

According to data released by the National Australia Bank on Monday, online retail sales grew by a solid 1.1% over the same period.

That followed a report from the Commonwealth Bank of Australia which revealed that economy-wide spending — including on services — grew at the fastest pace seen since the global financial crisis in November.

The ABS report offsets any optimism that was generated by those reports, casting doubt as to whether household spending — the largest component within the Australian economy — is picking up.

However, not all is lost.

Excluding the today’s report, sales growth has been robust in recent months, suggesting that the weakness seen in November may have been partially as a result of statistical payback.

Consumer confidence also remains elevated, particularly for current family finances, which is a promising sign given it has a tendency to act as a lead indicator on household spending.

Looking ahead, markets will be paying close attention to the December retail sales report, especially as it includes quarterly retail sales volumes which feeds into Australian GDP.

It declined unexpectedly in the September quarter, contributing to the large quarterly contraction reported in Australia’s national accounts.

The market reaction has been modest to the November retail sales report with the Australian dollar and ASX 200 both weakening on the result.

Australian bond futures have also strengthened, indicating that yields have fallen.

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

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Africa Renewable Energy Fund II Secures €125 Million First Close With SEFA and CTF Investments



Solar energy - Investors King

The Africa Renewable Energy Fund II has achieved its first close at €125 million, following a joint investment of €17.5 million from The Sustainable Energy Fund for Africa and the Climate Technology Fund through the African Development Bank.

AREF II, a successor to the original Fund, is a 10-year closed-ended renewable energy Private Equity Fund with a $300 million target capitalization. The Africa Renewable Energy Fund II, managed by Berkeley Energy, invests in early-stage renewable energy projects, thereby not only de-risking the most uncertain phase of power projects, but also promoting increased green baseload in Africa’s generation mix.

The Sustainable Energy Fund for Africa and the Climate Technology Fund will each contribute roughly €8.7 million to mobilize private-sector investment into Africa’s renewable energy sector. The Sustainable Energy Fund for Africa will also contribute financing to the AREF II Project Support Facility, which funds technical assistance and early-stage project support to improve bankability.

Other investors include the U.K’s CDC Group, Italy’s CDP, the Netherlands Development Finance Company (FMO) and SwedFund.

“We are proud to be associated with Berkeley Energy and other like-minded investors, and look forward to AREF’s continued success and leadership in promoting sustainable power development on the continent,” said Dr. Kevin Kariuki, the African Development Bank’s Vice President for Power, Energy, Climate and Green Growth.

In 2012, the African Development Bank selected Berkeley Energy, a seasoned fund manager of clean energy projects in global emerging markets to set up AREF. AREF II has a sharper strategic focus than its predecessor on “green baseload” projects that will deliver firm and dispatchable power to African power systems through hydro, solar, wind and battery storage technologies.

Luka Buljan, Berkeley Energy’s Managing Director, said: “We are very excited to have reached this milestone with strong support from our backers. The catalytic tranche from the Sustainable Energy Fund for Africa and the Climate Technology Fund will assist in mobilising private institutional investors up to full fund size of €300 million. We now look forward to concluding the fundraising and delivering projects that will provide clean, reliable and affordable energy across African markets.”

“AREF is intertwined with the Sustainable Energy Fund for Africa’s history and success, and we have worked closely over the last decade to create precedents in difficult markets and challenging technologies. We look forward to continued collaboration to accelerate the energy transition in Africa,” said Joao Duarte Cunha, Manager for Renewable Energy Initiatives at the African Development Bank and Coordinator of the Sustainable Energy Fund for Africa.

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Crude Oil

FG Earned $34.22B From Crude Oil and Gas in 2019 – NEITI



Crude oil - Investors King

The Nigeria Extractive Industries Transparency Initiative (NEITI) on Thursday released its 2019 oil and gas industry audit report, which shows that Nigeria earned N34.22 billion from the oil and gas industry in 2019.

The audit, conducted by Adeshile Adedeji & Co. (Chartered Accountants), an indigenous accounting and auditing firm, reconciled payments from 98 entities. They include 88 oil and gas companies, nine government agencies and the Nigerian Liquefied Natural Gas (NLNG).

The 2019 figure is an increase of 4.88 percent over the $32.63billion revenue realised from the sector in 2018. A breakdown of the earnings showed that payments by companies accounted for $18.90billion, while flows from federation sales of crude oil and gas accounted for $15.32billion.

The report further showed that 10 years (2010-2019) aggregate financial flows from the oil and gas sector to government amounted to $418.544billion, with the highest revenue flow of $68.442 recorded in 2011, while the lowest revenue flow of $17.055 was recorded in 2016.

According to NEITI, the total crude oil production in 2019 was 735.244mmbbls, representing an increase of 4.87 percent over the 701.101mmbbls recorded in 2018. Production sharing contracts (PSCs) contributed the highest volumes of 312.042mmbbls followed by Joint Venture (JV) and Sole Risk (SR) which recorded 310,284mmbbls and 89.824mmbbls respectively. Others are Marginal Fields (MFs) and Service Contracts (SCs) which accounted for 21,762mmbbls and 1,330mmbbls respectively.

The report also showed that total crude oil lifted in 2019 was 735.661mmbbls, indicating a 4.93 percent increase to the 701.090 mmbbls recorded in 2018, with companies lifting 469.010mmbbls, while 266.650mmbbls was lifted by the Nigeria National Petroleum Corporation (NNPC) on behalf of the federation.

Analysis of crude oil lifted by NNPC showed that 159.411mmbbls was for export, while 107.239mmbbls was for domestic refining. 97 percent of the volumes for domestic refining (104.475mmbbls) was utilised for the Direct Sale Direct Purchase (DSDP) programme while the remaining 3 percent (2.764mmbbls) was delivered to the refineries.

NEITI reported that the value of the 2019 domestic crude oil earnings was N2.722 trillion. Of this figure, N518.074billion was deducted for Petroleum Motor Spirit (PMS) under-recovery by the NNPC.

This figure was N213.074billon above the approved sum of N305billion for under-recovery in 2019. Similarly, the sum of N126.664billion was incurred by the Corporation as costs for pipeline repairs and maintenances which showed a difference of N96.378billion from the approved sum of N30.287billion for that purpose.

The report also pointed out that N31.844billion was also deducted for crude and product losses due to theft.

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Crude Oil

Oil Prices Drop on Stronger U.S Dollar



Crude oil - Investors King

The strong U.S Dollar pressured global crude oil prices on Thursday despite the big drop in U.S crude oil inventories.

The Brent crude oil, against which Nigerian oil is priced, dropped by 74 cents or 1 percent to settle at $73.65 a barrel at 4.03 am Nigerian time on Thursday.

The U.S West Texas Intermediate crude oil depreciated by 69 cents or 1 percent to $71.46 a barrel after reaching its highest since October 2018 on Wednesday.

Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed’s hawkish surprise,” said Edward Moya, senior market analyst at OANDA.

The Fed was expected to be on hold and punt this meeting, but they sent a clear message they are ready to start talking about tapering and that means the dollar is ripe for a rebound which should be a headwind for all commodities.

The U.S. dollar boasted its strongest single day gain in 15 months after the Federal Reserve signaled it might raise interest rates at a much faster pace than assumed.

A firmer greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.

Still, oil price losses were limited as data from the Energy Information Administration showed that U.S. crude oil stockpiles dropped sharply last week as refineries boosted operations to their highest since January 2020, signaling continued improvement in demand.

Also boosting prices, refinery throughput in China, the world’s second largest oil consumer, rose 4.4% in May from the same month a year ago to a record high.

This pullback in oil prices should be temporary as the fundamentals on both the supply and demand side should easily be able to compensate for a rebounding dollar,” Moya said.


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