Asian Equities Tumble as Investors Await Government’s Stimulus Measures
By Investors Hub
Asian stocks ended mostly lower on Wednesday as investors reacted to negative headlines around the coronavirus and watched for government stimulus measures to combat the outbreak’s economic impact.
There were doubts about whether expected stimulus measures would be adequate to soften the economic blows from the coronavirus outbreak.
Media reports suggest U.S. President Donald Trump briefed Senate Republicans on Tuesday on his proposed economic stimulus package in response to the coronavirus.
White House economic adviser Larry Kudlow declined to specify the dollar amount for the package but confirmed that Trump prefers it include a payroll tax “holiday” through the end of this year.
China reported an increase in imported coronavirus cases today, reversing four straight days of fewer new cases. Infections in Italy topped the 10,000 mark, reaching more than anywhere but China.
The total number of cases worldwide neared 120,000, with rapid growth in new infections in France, Spain, Germany and Iran.
China’s Shanghai Composite Index shed 28.24 points, or 0.9 percent, to finish at 2,968.52, while Hong Kong’s Hang Seng Index dropped 160.90 points, or 0.6 percent, to 25,231.61.
Japanese stocks ended sharply lower despite a solid lead from Wall Street overnight. The Nikkei 225 Index plunged 451.06 points, or 2.3 percent, to 19,416.06, marking its lowest close since December 26, 2018.
The broader Topix ended 1.5 percent lower at 1,385.12. Tech stocks fell broadly, with Advantest and Tokyo Electron losing around 6 percent.
Toyota dropped 1 percent on reports that it plans to temporarily cut production of its Lexus models in Japan due to falling demand in China amid the coronavirus outbreak.
Australian markets slipped into bear market territory due to disappointment over a lack of details on U.S. economic stimulus.
The benchmark S&P/ASX 200 Index tumbled 213.70 points, or 3.6 percent, to 5,725.90 despite the government announcing a $2.4 billion (US $1.6 billion) package to help tackle the virus outbreak. The broader All Ordinaries Index slumped 206.50 points, or 3.4 percent, to 5,789.30.
The big four banks lost 5-7 percent, while mining heavyweights BHP and Rio Tinto ended down 2.5 percent and 1.1 percent, respectively. Energy companies such as Woodside Petroleum and Santos gave up 4-5 percent.
Gold miner Newcrest Mining plummeted 8.6 percent after cutting its full-year gold production forecast.
Australian consumer confidence declined to a five-year low in March, as worsening coronavirus outbreak and the associated rout in the financial markets weighed on households’ major purchase decisions and finances, survey data from Westpac showed.
Reserve Bank of Australia Deputy Governor Guy Debelle said at a business summit that a mix of fiscal and monetary policy will help the economy to navigate through the difficult period.
Seoul stocks succumbed to heavy selling pressure as foreign funds sold off shares despite short-sale curbs. The benchmark Kospi fell below the psychologically important 1,900 level for the first time since February 2016 before ending the session down 54.66 points, or 2.8 percent, at 1,908.27.
Nigeria’s Debt Profile Jumps 17% to N46.25trn in 2022
By Adedapo Adesanya
Nigeria’s total public debt stock increased by 17 per cent to N46.25 trillion or $103.11 billion as of December 2022 from N39.56 trillion or $95.77 billion in 2021.
This information was revealed by the Debt Management Office (DMO) on Thursday.
This means that the country’s debt profile precisely increased by 16.9 per cent or N6.69 trillion or $7.34 billion within one year, as the government borrow funds from various quarters for its budget deficits.
The agency said the new figures comprise the domestic and external total debt stocks of the federal government and the sub-national governments (36 state governments and the Federal Capital Territory).
The DMO statement partly read, “As of December 31, 2022, the total public debt stock was N46.25 trillion or $103.11 billion.
“In terms of composition, total domestic debt stock was N27.55 trillion ($61.42 billion) while total external debt stock was N18.70 trillion ($41.69 billion).
“Amongst the reasons for the increase in the total public debt stock were new borrowings by the FGN and sub-national governments, primarily to fund budget deficits and execute projects. The issuance of promissory notes by the FGN to settle some liabilities also contributed to the growth in the debt stock.
“On-going efforts by the government to increase revenues from oil and non-oil sources through initiatives such as the Finance Acts and the Strategic Revenue Mobilization initiative are expected to support debt sustainability.”
“The total public debt to gross domestic product (GDP) ratio for December 31, 2022, was 23.20 per cent and indicates a slight increase from the figure for December 31, 2022, at 22.47 per cent.
“The ratio of 23.20 per cent is within the 40 per cent limit self-imposed by Nigeria, the 55 per cent limit recommended by the World Bank/International Monetary Fund, and the 70 per cent limit recommended by the Economic Community of West African States,” the debt office said.
12-Month Treasury Bills Now 14.74% as Appetite Falls
By Dipo Olowookere
The 364-day treasury bills stop rate was raised by the Central Bank of Nigeria (CBN) at the primary market auction (PMA) on Wednesday by 5.25 per cent as appetite for the asset class waned.
The central bank, which conducted the exercise, did not record the usual hunger for the debt instrument by investors yesterday, ostensibly because of how the bank had tinkered with the rates in the previous exercises.
But the apex bank surprised subscribers at the PMA on Wednesday when it jerked the rate higher to 14.74 per cent from the 9.49 per cent it cleared in the previous PMA.
According to details of the exercise, the CBN auctioned the one-year bill worth N139.96 billion and received subscriptions valued at N165.28 billion, allotting N142.16 billion.
Business Post reports that it was not only the 12-month dated instrument that enjoyed the rate hike yesterday as the two others benefitted.
The central auctioned N3.34 billion worth of the 182-day bill during the session but had investors stake N1.56 billion on it, with N1.56 billion allotted to successful bidders at 8.00 per cent compared with the previous session’s 5.00 per cent, indicating an increase of 3.00 per cent.
As for the 91-day bill, the rate cleared at 6.00 per cent after it was moved higher by 3.45 per cent from 2.55 per cent. This was after the apex bank allotted N1.75 billion to subscribers, the same amount of bids it received from the N2.16 billion taken to the market on Wednesday.
Recall that some days ago, the Monetary Policy Committee (MPC) of Nigeria’s central bank increased the Monetary Policy Rate (MPR), which is the benchmark interest rate in the country, by 0.50 per cent to 18.00 per cent.
The team explained that the rate hike was mainly to tame rising inflation in Nigeria, which the National Bureau of Statistics (NBS) said stood at 21.91 per cent in February.
China’s Investment in Africa Has Cut Need for Loans from World Bank, IMF—Osinbajo
By Adedapo Adesanya
The Vice President of Nigeria, Mr Yemi Osinbajo, has lauded China’s investment in Africa, saying it has reduced dependency on loans from Bretton Woods, which consists of the World Bank and the International Monetary Fund (IMF).
In a statement seen by Business Post, the VP, at an event at King’s College London on March 27, 2023, stated that “China shows up where and when the West will not and or are reluctant.”
He said this was evident in the investment of the Asian giant in Africa, which he said stood at $254 billion in 2021, about four times the volume of US-Africa trade.
He also noted that, “China is the largest provider of foreign direct investment, supporting hundreds of thousands of African jobs. This is roughly double the level of U.S. foreign direct investment, adding that, “China remains by far the largest lender to African countries.”
He also noted that Chinese companies had taken the lead in exploiting minerals in Africa, many now in lithium mining in Mali, Ghana, Nigeria DRC, Zimbabwe and Namibia.
The Nigerian second-in-command said that China has always shown up for African countries while outrightly condemning Western countries in that regard.
He said, “Most African countries are rightly unapologetic about their close ties with China. China shows up where and when the west will not or are reluctant.”
He added, “And many African countries are of the view that the beware of the Chinese Trojan loans advise forming the west is wise but probably self-serving,” explaining that, “Africa needs the loans and the infrastructure. And China offers them. In any case, the history of loans from Western institutions is not great.”
Taking a step further, Mr Osinbajo sent a salvo to the World Bank and the IMF over the conditions attached to their loan facilities.
“The memory of the destructive conditionalities of the Bretton Woods loans is still fresh, and the debris is everywhere.
“And the preoccupation of western governments and media with the so-called China debt trap might well be an overreaction,” he added.
“I recommend an eye-opening lecture by Professor Deborah Brautigam about two weeks ago at Jesus College Cambridge.
“The truth, as she points out, is that all of the Chinese lendings to Africa is only 5 per cent of all outstanding public and publicly guaranteed debt in low and middle-income countries, compared to 23% held by the World Bank and other multilaterals.”
He alluded that Chinese lenders account for 12 per cent of Africa’s private and public external debt.
“And the Chinese have also been there when the debts cannot be paid. In early 2020 as COVID battered African economies, China came together with other G20 members to launch the Debt Service Suspension Initiative (DSSI).
“About 73 low-income economies benefited from the suspension of principal and interest payments. Chinese banks provided 63 per cent of the total debt relief while being only owed 30 per cent of the debt service payments due,” he quipped.
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