Nigerian stocks hit 15-year high after Emefiele?s suspension

Days after Governor of the Central Bank of Nigeria, Godwin Emefiele was suspended by President Bola Tinubu, Nigerian stock market surged to its highest level since July 2008. 


The main index of the Nigerian Exchange Limited (NGX) rose 2.7 percent to above 57,437 points, taking the year-to-date gains of the market to 11.8 percent, almost double the six percent return on the MSCI index.


The NGX Banking Index on Tuesday, June 13, also soared 8.5 percent to 570.64, the biggest advance in more than eight years.


Tajudeen Ibrahim, head of research at Chapel Hill Denham who spoke to Bloomberg said it reflects optimism over the policy signals from the President. He said; 


“An improvement in the economy will enhance the performance of companies operating in the market. The exchange rate convergence is expected to lead to improvement in liquidity in the foreign currency market and will increase trading activities for the banks.”




Australia has been dealt yet another injury blow to its fast-bowling stocks.

Josh Hazlewood has been ruled out of the first Test against India due to an Achilles issue, which he says stems from the Sydney Test last month.

The SCG match was plagued by rain, and when umpires did order players back onto the ground the bowlers found their run-ups to be soft.

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“It’s still lingering from the (SCG) Test match,” Hazlewood told reporters in Bangalore, where the Aussies are camped before flying to Nagpur for the first Test beginning on Thursday.

“We obviously bowled after a lot of rain and the jump-offs were quite soft, where we were taking off from and they ended up replacing them as well.

“It sort of worked to a degree, but just that extra load jumping off a soft ground to bowl and again first Test match (back from injury) your body is not used to that sort of workload as well.

“I was bowling a fair bit leading into the (India) tour at home and sort of just pushing up against it. It probably wasn’t recovering as well as I would have liked between each session.”

Hazlewood has played only four Test matches in the last two years for Australia due to various injuries.

His latest setback is a blow for the Aussies, who are already missing Mitchell Starc for the Nagpur match.

Fast-bowling all-rounder Cameron Green will also likely not bowl in Nagpur as he recovers from a finger injury.

The Hazlewood news opens the door for either Scott Boland or Lance Morris to come into the XI.

Boland has never played a Test outside Australia, while Morris is yet to be presented with his baggy green.

“Scotty has bowled plenty at the MCG when it was a flat wicket, it probably wasn’t swinging or reverse swinging so he knows how to work hard for a long period of time,” Hazlewood said of Boland.

“You’ve got Lance Morris who has worked hard on reverse swing for the last month and then a nice lead in here with a few sessions.

“The guys are excited first of all to play in the subcontinent, they both haven’t yet, but they’re very well qualified to do so.”

Australia will name an XI either on Wednesday or at the toss on Thursday.

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Hong Kong
CNN Business

Hong Kong stocks had their worst day since the 2008 global financial crisis, just a day after Chinese leader Xi Jinping secured his iron grip on power at a major political gathering.

Foreign investors spooked by the outcome of the Communist Party’s leadership reshuffle dumped Chinese equities and the yuan despite the release of stronger-than-expected GDP data. They’re worried that Xi’s tightening grip on power will lead to the continuation of Beijing’s existing policies and further dent the economy.

Hong Kong’s benchmark Hang Seng

Index plunged 6.4% on Monday, marking its biggest daily drop since November 2008. The index closed at its lowest level since April 2009.

The Chinese yuan weakened sharply, hitting a fresh 14-year low against the US dollar on the onshore market. On the offshore market, where it can trade more freely, the currency tumbled 0.8%, hovering near its weakest level on record, even as the Chinese economy grew 3.9% in the third quarter from a year ago, according to the National Bureau of Statistics. Economists polled by Reuters had expected growth of 3.4%.

The sharp sell-off came one day after the ruling Communist Party unveiled its new leadership for the next five years. In addition to securing an unprecedented third term as party chief, Xi packed his new leadership team with staunch loyalists.

A number of senior officials who have backed market reforms and opening up the economy were missing from the new top team, stirring concerns about the future direction of the country and its relations with the United States. Those pushed aside included Premier Li Keqiang, Vice Premier Liu He, and central bank governor Yi Gang.

“It appears that the leadership reshuffle spooked foreign investors to offload their Chinese investment, sparking heavy sell-offs in Hong Kong-listed Chinese equities,” said Ken Cheung, chief Asian forex strategist at Mizuho bank.

Officials watch the opening session of the 20th National Congress of the Communist Party of China (CPC) on a TV in Qingdao in east China's Shandong province Sunday, Oct. 16, 2022.

The GDP data marked a pick-up from the 0.4% increase in the second quarter, when China’s economy was battered by widespread Covid lockdowns. Shanghai, the nation’s financial center and a key global trade hub, was shut down for two months in April and May. But the growth rate was still below the annual official target that the government set earlier this year.

“The outlook remains gloomy,” said Julian Evans-Pritchard, senior China economist for Capital Economics, in a research report on Monday.

“There is no prospect of China lifting its zero-Covid policy in the near future, and we don’t expect any meaningful relaxation before 2024,” he added.

Coupled with a further weakening in the global economy and a persistent slump in China’s real estate, all the headwinds will continue to pressure the Chinese economy, he said.

Evans-Pritchard expected China’s official GDP to grow by only 2.5% this year and by 3.5% in 2023.

Monday’s GDP data were initially scheduled for release on October 18 during the Chinese Communist Party’s congress, but were postponed without explanation.

The possibility that policies such as zero-Covid, which has resulted in sweeping lockdowns to contain the virus, and “Common Prosperity” — Xi’s bid to redistribute wealth — could be escalated was causing concern, Cheung said.

“With the Politburo Standing Committee composed of President Xi’s close allies, market participants read the implications as President Xi’s power consolidation and the policy continuation,” he added.

Mitul Kotecha, head of emerging markets strategy at TD Securities, also pointed out that the disappearance of pro-reform officials from the new leadership bodes ill for the future of China’s private sector.

“The departure of perceived pro-stimulus officials and reformers from the Politburo Standing Committee and replacement with allies of Xi, suggests that ‘Common Prosperity’ will be the overriding push of officials,” Kotecha said.

Under the banner of the “Common Prosperity” campaign, Beijing launched a sweeping crackdown on the country’s private enterprise, which shook almost every industry to its core.

“The [market] reaction in our view is consistent with the reduced prospects of significant stimulus or changes to zero-Covid policy. Overall, prospects of a re-acceleration of growth are limited,” Kotecha said.

On the tightly controlled domestic market in China, the benchmark Shanghai Composite Index dropped 2%. The tech-heavy Shenzhen Component Index lost 2.1%.

The Hang Seng Tech Index, which tracks the 30 largest technology firms listed in Hong Kong, plunged 9.7%.

Shares of Alibaba

and Tencent

— the crown jewels of China’s technology sector — both plummeted more than 11%, wiping a combined $54 billion off their stock market value.

The sell-off spilled over into the United States as well. Shares of Alibaba and several other leading Chinese stocks trading in New York, such as EV companies Nio

and Xpeng, Alibaba rivals JD.com

and Pinduoduo

and search engine Baidu

, were all down sharply Thursday afternoon.

The Dow fell more than 450 points, or 1.5%, in midday trading. The S&P 500 was also down about 1.5% while the tech-heavy Nasdaq was off by 1.3%.
There was also not much economic data for investors to focus on other than a new housing report, which was mixed. Housing starts for August rose more than 12% from July, but building permits were down 10%.
The housing numbers are unlikely to change the minds of Fed policy makers, who will announce another rate hike on Wednesday. The market is pricing in a nearly 85% chance of a third consecutive three-quarters of a percentage point increase.
But there are some who believe the Fed will be even more aggressive and raise rates by an unprecedented full percentage point, or 100 basis points, mainly due to continued inflation pressures.

“The consumer price index report has introduced a level of uncertainty about how the Fed will behave,” said Garrett DeSimone, head of quantitative research at OptionMetrics. DeSimone said he thinks the Fed should raise rates by 100 basis points, a move that would be a “ripping off the Band-Aid hike.”

Expectations for higher rates pushed long-term bond yields up as well. The 10-year US Treasury hit 3.6% at one point Tuesday before edging back. That’s the highest level since February 2011.

Tuesday’s market sell-off follows a modest rally to start the week. Stocks surged at the end of the trading session Monday after hovering near break-even levels for most of the day.
But the market has had a tough couple of days, falling in the past week after a shocking earnings warning from FedEx (FDX), which raised more worries about the health of the global economy and Corporate America.

“We’re seeing a lot of the FedEx hangover still trickling down in the markets,” said Anthony Denier, CEO of Webull, an online brokerage firm. “Transportation stocks are a canary in the coal mine when it comes to the economy.”

Investors are growing increasingly nervous. The CNN Business Fear & Greed Index, which looks at seven market sentiment indicators, slid further into Fear territory.

Asian stocks slid on Thursday, tracking a steep Wall Street selloff, as investors worried about global inflation, China’s zero-COVID policy and the Ukraine war, while the safe-haven dollar eased.

European equity markets also looked set for another rough day. The pan-region Euro Stoxx 50 futures fell 0.52 percent, German DAX futures FDXc1 were down 0.63 percent while FTSE futures FFIc1 were 0.51 percent lower.

Nasdaq futures eased 0.15 percent, although S&P500 futures ESc1 reversed earlier losses to be 0.05 percent higher.

Overnight on Wall Street, retail giant Target Corp warned of a bigger margin hit due to rising costs as it reported its quarterly profit had halved. Its shares plunged 24.88 percent. The Nasdaq fell almost 5 percent while the S&P 500 lost 4 percent.

“The bounce on Tuesday was proven to have been ‘too optimistic’, thus the self-doubt stemming from the misjudgement only makes traders click the sell button even harder,” said Hebe Chen, market analyst at IG.

MSCI’s broadest index of Asia-Pacific shares outside Japan snapped four days of gains and slumped 1.8 percent, dragged down by a 1.5 percent loss for Australia’s resource-heavy index, a 2.1 percent drop in Hong Kong stocks and a 0.3 percent retreat in mainland China’s blue chips.

Japan’s Nikkei shed 1.7 percent.

Tech giants listed in Hong Kong were hit particularly hard, with the index falling more than 3 percent. Tencent sank more than 6 percent after it reported no revenue growth in the first quarter, its worst performance since going public in 2004.

China’s technology sector is still reeling from a year-long government crackdown and slowing economic prospects stemming from Beijing’s strict zero-COVID policy, even though soothing comments from Vice Premier Liu He to tech executives had buoyed sentiment on Wednesday.

Two US central bankers say they expect the Federal Reserve to downshift to a more measured pace of policy tightening after July as it seeks to quell inflation without lifting borrowing costs so high that they send the economy into recession.

‘Concern for inflation’

“It must be said that the concern for inflation has never gone away since we stepped into 2022. However, while things haven’t reached the point of no return, they are seemingly heading in the direction of ‘out of control’. That is probably the most worrying part for the market,” IG’s Chen said.

The US dollar, which had rallied on falling risk appetite, eased 0.15 percent against a basket of major currencies, after a 0.55 percent jump overnight that ended a three-day losing streak.

The Aussie gained 0.8 percent, as an easing in Shanghai’s COVID lockdown helped sentiment.

Data on Wednesday showed that British inflation surged to its highest annual rate since 1982 as energy bills soared, while Canadian inflation rose to 6.8 percent last month, largely driven by rising food and shelter prices.

Bilal Hafeez, CEO of London-based research firm MacroHive, said there was a strong bias towards safe-haven assets right now, particularly cash.

“There may be short-term bounces in equities like the last few days, but the big picture is that the era of low yields is over, and we are transitioning to a higher rates environment,” Hafeez told the Reuters Global Markets Forum.
“This will pressure all the markets that benefitted from low yields – especially equities.”

US Treasuries rallied overnight and were largely steady in Asia, leaving the yield on benchmark 10-year Treasury notes at 2.9076 percent.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 2.6800 percent compared with a US close of 2.667 percent.

Oil prices recovered from early losses, as lingering fears over tight global supplies outweighed fears over slower economic growth.

Brent crude rose 1.2 percent to $110.41 per barrel, while US crude CLc1 was up 0.8 percent to $110.48 a barrel.

Gold was slightly lower. Spot gold was traded at $1814.88 per ounce.

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