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FTSE 100 Drops Amid US-China Trade Tensions

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  • FTSE 100 Drops Amid US-China Trade Tensions

Britain’s top stock index dipped on Monday as trade tensions between the United States and China kept the pressure on equity markets across Europe, weighing on multinational companies.

The FTSE 100 fell 0.03 per cent to its lowest since May 30 but substantially outperformed other European stock markets. Germany’s DAX – home to big autos stocks on the trade dispute’s front line – sank 1.4 per cent while the STOXX 600 fell 0.8 per cent.

Strong energy stocks underpinned the FTSE 100, while a weaker pound also boosted the index’s mainly exporting companies, according to Reuters.

US President Donald Trump announced tariffs on $50bn of Chinese imports on Friday, laying out a list of more than 800 imports including cars that would be subject to a 25 per cent tariff starting on July 6.

China said it would respond with tariffs “of the same scale and strength” and that any previous trade deals with Trump were “invalid.”

Multinational consumer stocks, vulnerable to higher barriers to trade, were the worst performing, with heavyweights Diageo, Reckitt Benckiser and British American Tobacco down.

Oil stocks opened lower but jumped into positive territory as crude prices snapped back ahead of Friday’s meeting of the Organisation of Petroleum Exporting Countries, expected to result in production increases.

Crude was falling earlier after China threatened duties on American oil imports.

Oil majors BP and Royal Dutch Shell turned from the biggest drag to the biggest boost to the index, rising 1.2 to 1.3 per cent by the close.

Petrofac, a mid-cap oil services firm, declined by 1.3 per cent as a negative note from Morgan Stanley weighed.

Analysts at the broker said the market’s focus was on whether Petrofac had sufficient liquidity to repay a $677m October bond in cash or whether additional capital would be required.

Sterling weakened, helping support the FTSE, as traders cut positions in the currency ahead of a Bank of England policy meeting this week and another parliamentary confrontation over the government’s Brexit plan.

Shares in Ocado fell to their lowest in 10 days, down 7.8 per cent, on the online grocer’s first day of trading on the FTSE 100.

Promotion means index-tracking funds are forced to buy the stock, but Ocado is already up 162 per cent this year.

Bookmaker GVC rose 2.3 per cent on its first day of trading.

In dealmaking news, mid-sized bank CYBG sealed a deal to acquire Virgin Money for 1.7 billion pounds, creating Britain’s sixth-largest bank by assets.

Virgin Money shares initially rose more than two per cent, before reversing course to end the day down by 2.2 per cent. CYBG shares were down by 0.7 per cent.

Also among mid-caps, Cobham shares rose by 4.5 per cent after Morgan Stanley upgraded the defence stock to “overweight” from “equal-weight”.

“We think current management have stabilised performance, with necessary costs sunk and measures taken to aid operational delivery,” they wrote.

“With multi-year upcycles beginning in core defence and aerospace markets, and other niche exposures appearing to be at or close to the bottom, we see consensus underpinned.”

Shares in drugmaker Indivior rose by 1.6 per cent after a US court granted a temporary restraining order blocking Dr Reddy’s Laboratories from launching a generic version of the firm’s best-selling opioid addiction treatment.

It was still far from recovering its losses from Friday when it sank by 27 per cent on fears of a generic launch.

Overall British stocks have performed well in recent weeks, and analysts have upgraded earnings expectations.

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.

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CBN Directs Banks to go After COVID-19 Financial Criminals

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Godwin Emefile

Central Bank Asks Banks to Stay Abreast Frauds and Rising COVID-19 Financial Crimes

The Central Bank of Nigeria has directed all financial institutions in Nigeria to update alert protocols in their Anti-Money Laundering/Combating the Financing of Terrorism monitoring tools, in accordance with emerging trends of rising COVID-19 related financial crimes.

In a circular titled, ‘Administrative letters to all banks and other financial institutions’ issued on Monday and signed by J.M. Gana, the Director, Financial Policy and Regulation Department, the apex bank said changes in business activities and financial transactions due to the shift caused by COVID-19 pandemic have led to the surge in financial crimes globally.

Therefore, it said financial institutions must now adapt quickly and keep abreast of the new emerging financial risks and other developments to arrest this new and emerging ML/TF.

According to the circular, this includes strategic investment in data mining and artificial intelligence software to monitor financial transactions effectively and report as quickly as possible.

The central bank said the Nigerian Financial Intelligence Unit, the central repository of suspicious transactions and other financial information, had released a comprehensive report on STRs and others.

It stated that the NFIU had identified cybercrimes, frauds, counterfeiting and substandard goods, diversion of public funds and misuse of non-government organisations funds as some of the ongoing crimes that banks across the nation need to stay abreast and report.

Other suspicious transactions and red flags identified in the report were some e-commerce companies with little or zero history or internet presence suddenly receiving multiple payments from unrelated third parties.

Similarly, it said individuals with zero or little history of financial transactions receiving multiple payments from unrelated third parties. It also noted that customers who suddenly start delaying in the supply or purchases of medical supplies and payment of goods linked to known brands, yet the beneficiary is an individual, not a corporate company should be flagged.

The measures, the apex bank said were necessary due to the rising numbers of unusual transactions from banks’ customers and unscrupulous individuals.

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Union Bank Secures US$40 Million Facility from IFC Global Trade Finance

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Union Bank Secures US$40 Million Facility from IFC Global Trade Finance

Union Bank of Nigeria Plc said it has secured a US$40,000,000 finance guarantee facility from the IFC, a member of the World Bank Group.

In a note to the Nigerian Stock Exchange, the lender said the facility would help boost access to finance for local businesses and enable increased international trade for Nigeria.

It explained that the facility “will support Union Bank to establish working partnerships with nearly 300 major international banks within the GTFP network, thereby broadening access to finance and reducing cash collateral requirements for Nigerian businesses.

“The facility will enable the continued flow of trade credit into the Nigerian market at a time when imports are critical, and the country’s exports can generate much-needed foreign exchange.

Under the IFC’s Global Trade Finance Program (GTFP) terms of the agreement, GTFP offers benefiting banks partial or full guarantees covering payment risk on Union Bank’s trade-related transactions.

Accordingly, these guarantees are transaction-specific and may vary depending on underlying instruments like letters of credit, trade-related promissory notes, guarantees, bonds, and advance payment guarantees.”

Emeka Emuwa, Chief Executive Officer of Union Bank, said, “Union Bank is pleased to join the IFC’s Global Trade Finance Program. This is a significant achievement as we continue to expand our trade financing offerings to our
customers. Even in these peculiar times, we remain focused on contributing to economic growth by developing tailored solutions that help our customers harness the teeming opportunities that still exist in the Nigerian market.

Eme Essien Lore, IFC’s Country Manager for Nigeria, said, “Keeping trade moving is essential to growth and job creation, especially during the challenging economic times we are living through today. We welcome Union Bank to IFC’s Global Trade Finance Program and value a partnership that will make a positive impact on Nigeria’s economy.

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Apapa Customs Command Generate N367.6bn in Nine Months

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Nigeria Customs Service

Customs Command Apapa Realises N367.6bn Between January and September

The Nigeria Customs Service, Apapa Command, said it generated N367.6 billion in the nine-month ended September 2020.

Mohammed Abba-Kura, the Customs Area Controller, disclosed this while speaking with newsmen in Lagos.

He said a total of 328 containers of goods worth N19.5 billion were seized during the period. This, he said represents an increase of 37 containers when compared to the same period of 2019.

Speaking further, Abba-Kura said the N367.6 billion realised in the first nine months of the year, represented a 17 percent or N54.1 billion increase from N313.5 billion it collected during the same period of 2019.

The Apapa Command generated N14.3 billion as revenue in the third quarter from customers’ duty and other charges.

He said “The difference recorded was made possible as a result of resilience of officers in ensuring that importers and agents are made to do proper declarations, adhere strictly to import/export guidelines in tandem with extant laws.”

Commenting on the seizures, Abba-Kura said, “These items were seized mainly because of various forms of infractions which range from false declarations, non-adherence to import/export guidelines and failure to comply with other extant regulations as enshrined in the Customs and Excise Management Act.

“In the area of export trade, the period under review recorded exportation of goods worth N26,273,706,822 exported from the country.”

“These exported goods include mineral resources, steel bars, agricultural products among others with a total tonnage of 378,447 million tonnes free on board value of $85.8m. Similarly, the volume of export from January to September 2020 stood at N78.6bn with FOB $257,003,965.”

He added that the compliance level rose to about 60 percent during the period, highlighting the reason for the surge in the number of seizures made.

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