Business
Japan’s Nikkei Comes Back to Life
TOKYO – Japan’s benchmark stock index jumped to its highest closing level since May as a falling yen and strong earnings brought the market back to life after several months of listless trading.
The Nikkei Stock Average rose 2.1% to 14876.41 on Thursday, taking gains so far this week to 5.6%, on track for its third-best week of the year. The index traded in bull-market territory, meaning it has gained at least 20% intraday from its June 13 low, putting it within striking distance—4.8%—of the May 22 close, the highest since December 2007.
.Weakness in the yen in recent months has helped exporters such as Toyota Motor Corp. and Hitachi Ltd. to post impressive quarterly results, spurring the market higher. And the currency has softened in recent sessions, approaching the psychologically important ¥100 mark against the dollar.The Nikkei’s rise on Thursday “was a continuation of what we’ve seen over the last several days; hedge funds have been trying to ride the weak yen down and buying futures,” said Kenichi Hirano, a market analyst at Tachibana Securities in Tokyo. “Despite a lack of signs of any major tapering in the U.S. Fed’s easing policy—which would push up interest rates—the yen looks fundamentally weak, and players are now giving up betting against” further weakening.
Higher interest rates in the U.S. would likely increase the dollar’s value against all major currencies, including the yen. A weaker yen is typically beneficial for Japanese stocks because it gives exporters a pricing edge against competitors in countries with stronger currencies. As the currency weakens, companies receive more yen when they repatriate profits from overseas operations.
The dollar has strengthened against the yen this week, partly on news that the U.S. had added more jobs in October than expected. It briefly breached the ¥100 level Thursday after Finance Minister Taro Aso said, “Japan must have tools to counter speculative moves in the currency market,” giving investors a strong indication that the nation would probably push back against any tentative strengthening of the yen.Government data Thursday that showed the economy expanded at an annualized rate of 1.9% in the three months ended Sept. 30, beating forecasts for 1.7%, provided some support for the Nikkei’s move higher.
The stock index is on the move after several months of rangebound trading. Stocks surged dramatically in the first five months of year as investors bought into Prime Minister Shinzo Abe’s pro-growth policies, but the rally came to an abrupt end in May. The index fell 7.3% in a single day, bottoming out a few weeks later in bear-market territory, indicating it has fallen 20% from a recent peak.
The loss of momentum in recent months has called into question Mr. Abe’s formula for growth, known as “Abenomics.” Mr. Abe has likened the elements of his plan to arrows. The first comprised aggressive monetary easing by the Bank of Japan, a move that yielded a sharp weakening of the yen, while the second element was increased spending on public works.
The third arrow, structural changes to bring sustainable growth to the economy, has been harder to get aloft, though the prime minister’s party has initiated legislation to tackle issues such as labor and agricultural reform.“Abenomics going forward will be OK, but it will not be the main driver of the market,” said Angelo Corbetta, head of Asia equity at Pioneer Investments in London, which managed assets totaling €168.9 billion at the end of September. “From now on, the companies will have to deliver, and we will see a separation between companies that deliver and those that cannot do that.”
Among companies in the first section of the Topix that have reported results for the first half of the April-March financial year, recurring profits have risen 50.7% from a year earlier, according to a recent Goldman Sachs research note. Earnings were 17.5% above guidance issued by the companies, and 49% of the companies earned more than the consensus forecast among analysts.
“It is true that rapid yen depreciation is not expected for now, and the policies for the Abenomics third arrow are not ones that we have expected,” said Kuninobu Takeuchi, chief general manager and senior portfolio manager at asset management company DIAM Co. in Tokyo, which manages $126 billion in assets. “However, I assume that the peak reached in May will be surpassed as earnings have been steadily recovering.”
– WALL STREET JOURNAL
The Shell Petroleum Development Company of Nigeria Limited (SPDC JV) – Operator of the NNPC Limited, SPDC, TotalEnergies and Nigerian Agip Oil Company Joint Venture – has, announced the donation of US$1 million to support efforts to provide relief to over half a million people displaced in flood impacted communities of Borno State.
Managing Director, SPDC, and Country Chair, Shell Companies in Nigeria, Osagie Okunbor, said, “The donation will go into the procurement and distribution of relief materials and medical supplies for displaced residents who are now in urgent need of critical aid.”
He added that a Non-Governmental Organisation (NGO), local to the region with understanding of working with displaced people, will manage the distribution of the materials in collaboration with the Borno State Emergency Management Agency.
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According to Okunbor, the SPDC JV intervention was in response to the alert issued in September by the National Emergency Management Agency (NEMA), following the significant rise in water levels caused by the overflowing of the Alau Dam, and the calls for support by Borno State Governor, Babagana Umara Zulum.
“We consider providing this support to be of necessity to demonstrate our commitment to our society and the duty of care to our people. It expresses our deep concern for the victims of the devastating floods in Borno State,” Okunbor said.
He noted that the SPDC Joint Venture’s gesture is a continuation of similar assistance given over the years to the region that is recovering from recent conflicts.
Chief Upstream Operating Officer of the NNPC Upstream Investment Management Services (NUIMS), Bala Wunti, in a statement, added, “The urgency in providing this relief is important given the region’s existing vulnerabilities, with people recently barely recovering from conflict-induced displacement. The flooding has severely disrupted socio-economic activities, with women and children being disproportionately affected and we are glad that the joint venture is able to provide succour at this time.”
Wunti said, “As a responsible corporate organization, NNPC is glad to support the SPDC Joint Venture in this essential activity. Our thoughts are with those affected and with the government agencies working tirelessly to provide relief. We pledge to support ongoing efforts through immediate humanitarian aid and long-term partnerships for sustainable recovery.”
Investors on the Nigerian Exchange Limited (NGX) saw a boost of N217 billion added to their portfolios on Thursday, with the All-Share Index rising by 0.37% to close at 96,924.86 points.
This increase also lifted market capitalization to N58.73 trillion, driving the year-to-date return to 29.62%.
The insurance, consumer goods, oil and gas, and industrial goods sectors saw gains, increasing by 1.84%, 0.01%, 1.77%, and 0.02%, respectively, while the banking sector experienced a slight decline of 0.38%.
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A total of 33 stocks advanced, with top gainers including Conoil, Aradel, Eunisell, John Holt, and Thomas Wyatt. Meanwhile, Tantalizer, NGX Group, and Wema Bank were among the 17 decliners.
Trading activity surged with a 744.54% increase in volume and 16.48% increase in value, as 744.54 million shares worth N16.48 billion were traded across 9,700 deals. Consolidated Hallmark led in volume with 124.8 million shares, followed by Japaul Gold and EllahLakes. FBN Holdings, which recently opened its N150 billion rights issue, also featured prominently on the volume chart.
This robust trading activity highlights renewed investor confidence and growing momentum in Nigeria’s capital market.
Nigeria would soon have her own definition of free market, albeit by judicial interpretation, so long as the petroleum sector is concerned.
This follows the legal tussle on the legality of importation of refined products into Nigeria, on the heels of the deregulation of that sector.
Biztellers reports that three oil marketers, AYM Shafa Limited, A. A. Rano Limited, and Matrix Petroleum Services Limited, have approached the Federal High Court in Abuja, praying for a dismissal of a suit filed by the Dangote Petroleum Refinery and Petrochemicals (DPRP) to stop them from importing refined petroleum products.
The marketers, in response to an originating summon filed by the DPRP, filed a joint counter affidavit marked: FHC/ABJ/CS/1324/2024, and dated November 5, 2024.
They maintained that granting the application of the DPRP would spell doom for Nigeria’s oil sector.
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Their legal and economic argument assert that any form of monopoly for Nigeria’s oil sector is a recipe for disaster.
Recall that the DPRP in its originating summon dated September 6, 2024, had sued the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigeria National Petroleum Corporation Limited (NNPC Ltd), AYM Shafa Limited, A. A. Rano Limited, T. Time Petroleum Limited, 2015 Petroleum Limited, and Matrix Petroleum Services Limited as 1st to 7th defendants respectively.
Specifically, the DPRP prayed the court to declare that the NMDPRA was in violation of Sections 317(8) and (9) of the Petroleum Industry Act (PIA) by issuing licenses for the importation of petroleum products.
It asserted that such licenses should only be issued in circumstances where there is a petroleum product shortfall.
Consequently, the DPRP urged the court to declare that the NMDPRA was in violation of its statutory responsibilities under the PIA for not encouraging local refineries, the DPRP inclusive.
As a result, Shafa, A. A. Rano, and Matrix Petroleum, countered that the DPRP does not produce adequate petroleum products for the daily consumption of Nigerians.
According to their affidavit, the plaintiff had not placed anything before the court to prove the contrary.
They argued that they are well qualified and entitled to be issued an import licence by the NMDPRA to import petroleum products in Nigeria within the meaning of Section 317(9) of the PIA.
They also noted that they are fully qualified for the issuance of the import licences issued to them by the 1st defendant, as they duly met all the legal requirements for the issuance of such import licences, before the same were issued to them.
They categorically stated that, “The import licences lawfully and validly issued to the defendants did not in any way whatsoever, cripple the plaintiff’s business or its refinery.
“The import licenses issued to the defendants by the 1st defendant are in line with the provisions of the Petroleum Industry Act, 2021, the Federal Competition and Consumer Protection Act, 2018, and other relevant laws.”
They insisted that giving the DPRP the power of monopoly in Nigeria’s petroleum industry as it sought in the instant suit, would kill competitive pricing of petroleum products in the country.
They cautioned that such an act would further deteriorate the country’s critically ailing economy.
They also added that it would “unleash untold hardship on Nigerians, all of which constitute a recipe for disaster in the polity”.
The marketers explained that if Nigeria puts all her energy eggs in one basket by stopping the importation of petroleum products and allowing the plaintiff to be the sole producer and supplier of petroleum products in Nigeria, with liberty to determine the prices at which it supplies the products, the prices of petroleum products will continue to rise and energy security will elude Nigeria.
In addition, they pointed out that should the DPRP break down being a monopolized sector, Nigeria would be plunged into a-difficult-to-manage energy crisis.
“That in the event of any breakdown in or obstruction to the production chain of the plaintiff which stops it from producing, Nigeria will be thrown into energy crises because it does not have the reserves that would last it for at least 30 days that it would need to order, pay for, freight and import refined products into tanks in Nigeria.
“That amidst the glaring absence of any credible and demonstrable proof that the plaintiff refines and supplies adequate petroleum products for the daily use/consumption of Nigerians, is a recipe for disaster in Nigeria’s energy sector,” they wrote.
They further told the court that granting the reliefs sought by the plaintiff was a design to leave Nigeria and Nigerians at the mercy of the plaintiff with respect to the availability and cost of purchasing petroleum products in the country.
The presiding judge, Justice Inyang Ekwo fixed January 20, 2025, for a report of settlement or service.
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