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Lagos HQ for 52% of Chinese Owned Firms in Nigeria

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China Industrial Output
  • Lagos HQ for 52% of Chinese Owned Firms in Nigeria

The concentration of Chinese holdings in Nigerian firms is predominant in Lagos State where over half of firms with at least one Chinese shareholder operate.

An Asoko Insight analysis of Nigeria Corporate Affiars Commission data indicated that 3,321 registered companies in Nigeria have at least one shareholder of Chinese nationality.

Out of the 36 states in the country and the Federal Capital Territory, only Gombe and Taraba State do not have registered firms with stakeholders of Chinese nationality.

The FCT accounts for 15 percent of the total number of firms with Chinese ownership followed by Anambra, Kano and Ogun which constitute 6.4 percent, 4.7 percent and 2.9 percent respectively. Other states that completed the top ten are Enugu (2.9%), Kaduna (2.1%), Rivers (2.0%), Delta (1.9%) and Imo State (1.3%).

Lagos State is understandably leading the pack as it is the economic centre of the country with a diverse demography and a government constantly trying to improve the ease of business.

“Lagos is the commercial capital and natural centre for merchandise trade because the biggest ports are in Lagos,” said Muda Yusuf, the director general, Lagos Chamber of Commerce and Industry (LCCI).

“This is where the market is so importers, traders, and investors coming into Nigeria will go to the trouble to set base in Lagos which may be at an additional cost, but Lagos is still their best bet.”

The South West region had a total of 1,865 companies with Chinese ownership with Ogun and Oyo State driving the numbers with 97 and 24 companies respectively while Ekiti, Ondo and Osun has 4 each.

The North Eastern region had only 26 companies with Chinese ownership representing 0.8 percent of the total and was the least of all the regions.

Of the total 3,321, 47 firms had no registered address, but were nonetheless categorized as operational in Nigeria, often with a Chinese base of operation.

According to the report, the data by sector shows that less than 5 percent of firms with Chinese ownership are engaged in Mining or Oil and Gas extraction in Nigeria. Meanwhile, more than one-third of the firms are engaged in service delivery.

Industrial manufacturing accounts for just over 25 percent of the companies followed by Construction and Real Estate, which together represents 8 percent of the total. Education, Leisure and Tourism, Media and Consumer Goods fall at the lower end of the scale.

On how the trade war could bring more of these investments to Nigeria, according to Yusuf “there are some investors in China that produce to export to the United States now that it will be more difficult to export to the United States, some of them may be relocating to other countries where they can export to the US without any tariffs.”

“The trade war between US and China may be something positive for us because imports from China to the US will become more expensive because of the tariffs and that will create additional market for Nigeria if we take advantage of AGOA (African Growth and Opportunities Act) and other countries who are not engaged in a trade war with the US,” Yusuf said.

In 2017, Mckinsey, a global consulting firm, reported that out of the 930 Chinese companies operating in Nigeria, only 317 are documented by the Chinese ministry of commerce. The report also highlighted issues of labour and environmental violations by Chinese-owned businesses ranging from inhumane working conditions to illegal extraction of natural resources.

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.

Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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Crude Oil

Oil Prices Extend Gains to $64.32 Ahead of OPEC+ Meeting

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oil

Oil Prices Rise to $64.32 Amid Expected Output Extension

Oil prices extended gains during the early hours of Thursday trading session amid the possibility that OPEC+ producers might not increase output at a key meeting scheduled for later in the day and the drop in U.S refining.

Brent crude oil, against which Nigeria oil is priced, gained 0.4 percent or 27 cents to $64.32 per barrel as at 7:32 am Nigerian time on Thursday. While the U.S West Texas Intermediate gained 19 cents or 0.3 percent to $61.47 a barrel.

“Prices hinge on Russia’s and Saudi Arabia’s preference to add more crude oil production,” said Stephen Innes, global market strategist at Axi. “Perhaps more interesting is the lack of U.S. shale response to the higher crude oil prices, which is favourable for higher prices.”

The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, are looking to extend production cuts into April against expected output increase due to the fragile state of the global oil market.

Oil traders and businesses had been expecting the oil cartel to ease production by around 500,000 barrels per day since January 2021 but because of the coronavirus risk and rising global uncertainties, OPEC+ was forced to role-over production cuts until March. Experts now expect that this could be extended to April given the global situation.

“OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market,” ANZ said in a report.

Meanwhile, U.S crude oil inventories rose by more than a record 21 million barrels last week as refining plunged to a record-low amid Texas weather that knocked out power from homes.

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Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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