Business
Global Weakness Threatens Japan Recovery
TOKYO — The sharp drop in the Japanese stock market underscores a big vulnerability of the Abenomics recovery: weakness in overseas economies may undermine the success of measures to jump-start growth at home.
“Economies are all connected, and we’re really worried about how far the impact will reach” from the recent emerging market turbulence, Toyoaki Nakamura, chief financial officer of Hitachi Ltd., told reporters Tuesday, even as the electronics giant raised its earnings forecast for the fiscal year ending next month, predicting a record profit.
Much of the boom engineered by Prime Minister Shinzo Abe in 2013 was driven by a dramatic expansion in monetary stimulus from his handpicked Bank of Japan governor, who pushed down the value of the yen against the dollar and other major currencies. That gave the country’s manufacturers a lift in global markets by lowering the relative price of their goods. It also helped bring about higher profits and a stock market rally, which in turn lifted domestic spending.But one month into the new year, markets are moving in the opposite direction because of renewed concerns over the health of the U.S. and Chinese economies as well as emerging markets—and how that might filter back to Japan. The yen rose to its highest level in over two months versus the dollar, as investors see the Japanese currency as a safe investment at times of economic turbulence, casting a new shadow over exports.
Following the new yen strength and spreading worries about growth abroad, the Nikkei Stock Average dropped over 4% Tuesday to 14008.47, its lowest closing level in four months.
The market reversal and signs of fragility in overseas demand pose major challenges to Japan’s economy, which is just about to become more dependent on exports and the weak currency for growth. In April this year, the government plans to raise the national sales tax by three percentage points to 8%, a move expected to sap strength off consumption given lackluster growth in wages.The sudden bout of Japanese stock weakness follows a number of positive reports, for domestic firms and for the economy.
As companies have reported earnings for the October to December quarter over the past two weeks, they’ve shown a dramatic recovery thanks to the yen’s nearly 20% drop over the past year. Earnings reports released thus far by 517 listed Japanese companies have shown an average 45% jump in operating profits, according to SMBC Nikko Securities. Honda Motor Co., Japan’s third biggest car maker by volume, posted a net profit of ¥160.7 billion ($1.6 billion) in the quarter through December, more than double its year-earlier result, partly because of a weaker yen.
Government economic data in recent weeks has almost all been upbeat. The most recent figures were released Friday—ahead of this week’s two-day Nikkei plunge of nearly 7%–and showed surprising strength. The most closely watched index for consumer prices was positive in 2013 for the first time in five years, signaling an end to the deflation that has sapped the economy, while the unemployment rate dropped to 3.7%, its lowest level in six years.The Japanese economy regained some momentum in the final three months of last year after a slowdown over the summer, likely expanding 2.4% on reaccelerating consumer spending, according to 12 economists polled by The Wall Street Journal.
Japanese policy makers have urged calm in recent days, insisting the country’s recovery remains on track, despite jitters abroad. “I want market participants to be sure…that there is no need for Japanese markets to move in sync with the U.S. market,” Economy Minister Akira Amari said at a regular news conference Tuesday.
“There is no major change in the economic fundamentals” of the U.S. and Japan, and weakness in the latest ISM data is due to unusually cold weather in the U.S., said Yoshimasa Maruyama, a senior economist with Itochu Economic Research Institute. “You shouldn’t overreact to this.”
But the economy is almost certain to sink, at least temporarily, after one-off rush spending ahead of the sales tax increase runs its course. In December, households boosted spending on autos by 50%, refrigerators by 164% and watches by nearly 200% compared with year-earlier levels, according to government data.The question is whether exports and business investment will gather enough steam to cover the slack to be left by consumption, as forecast by the BOJ.
Export volumes show little sign of life. They rose a meager 2.5% on year in December, slower than a 6.2% in November, as shipments to the U.S. fell and those to Asia moderated. Honda has cut its forecast for global sales for the full year to 4.385 million vehicles from 4.430 million previously, citing uncertainty in emerging markets.
Some economists worry that the new bout of market weakness could undercut support for Mr. Abe’s ambitious economic reform program, seen as crucial for sustaining longer-term growth. “The Japanese public has until now supported economic reforms because of rising stock prices and the falling yen,” which have worked favorably for the nation’s economy, said Ryutaro Kono, chief Japan economist at BNP Paribas. But structural overhauls have made little progress. And with the market now turning unstable, “it could become politically more challenging” to carry out such reforms, which often involve pains, Mr. Kono added.
– WALLSTREET JOURNAL
The Manufacturers Association of Nigeria (MAN) has expressed the view that support of both Nigerians and the government for the Dangote Refinery, would enable the giant refinery to perform optimally.
It added that such support will also serve as an impetus for other investors to invest in the downstream sector of the petroleum industry in Nigeria.
The President of MAN, Otunba Francis Meshioye, who made the call after a tour of the Dangote Petroleum Refinery, Petrochemical Complex and Fertilizer Plant advocated that Nigerians and the government should do all they can to support the multi-billion-dollar company, which he described as a source of pride and a gift not only to Nigeria but also to the African continent and the whole world.
He described the Dangote Refinery as a game-changer in the Nigerian oil and gas industry, saying that it is not only creating jobs and driving economic growth but also contributing to our nation’s energy security and self-sufficiency.
According to him, the project is quite inspiring, and he admired the inspiration of the promoter of the project, Aliko Dangote.
He said, “To have been inspired to establish this facility is very magnificent, it is the first ever in Africa and the first ever of such refinery in the whole world. It has many first, first and first.”
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The company has the capacity to produce all our needs locally, petroleum, and other similar products: no one would come to the facility and he would not be inspired or encouraged to ensure that all the support that the company requires should be given to it.
The MAN President said the government should do all that is humanly possible to ensure that the facility works Optimally. “It is prudent and expedient that the necessary supports are given to the company for the economic benefits of Nigeria.
“If the facility can produce 650,000 barrels of crude per day and Nigeria is producing far above this volume per day, she should give the facility all crude it needed to produce”.
He noted that apart from the fact that the facility can give Nigerians what they need locally, the excess will be exported, and when they are exported, the country benefits because it will earn foreign exchange for the government.
“So, whichever way we look at it, the facility requires the government’s support to be able to operate optimally. We have seen the laboratory which is in a class of its own. It is first among equals around the world. It is functioning very well. It is a complex on its own.
“With this kind of facility that starts from quality control to quality assurance, just to ensure that the harmful effects of the products are at zero level, what can be greater than this? This is very unique and I will encourage all stakeholders to give maximum support, and not by the way support, but maximum support.
“I cannot see anything that is lacking in this company, we have been here since morning and went through all the units. The facility can deliver products between 1760 trucks to 1800 trucks per day. So if you have such several trucks going out of the facility a day to various destinations in Nigeria, so many people will benefit from it. There will be more jobs, many families will be comfortable because of the jobs this will create, many artisans will benefit and it will have a spillover effect on so many sectors of the economy.
“If they can produce AGO, gasoline and Jet A fuel, this is good and the government should have no reason not to ensure the facility gets its backing to carry out its activities, because it is going to benefit massively,” he added.
The MAN boss who stated that his organization is an advocacy group, said to a large extent it will support the Dangote Refinery by pushing its case with the government, and also solicit the support of necessary government agencies that can ensure that it operates fully.
The association, he said, always discusses with the government issues that affect its members and it has always listened to it , and always finds solutions to those issues, stating further that Dangote Refinery’s case will not be different.
“The sheer scale and ambition of this project is truly impressive, and we applaud the vision and determination of the Dangote Group in making this refinery a reality.
As manufacturers, we understand the importance of reliable and affordable energy in driving our businesses forward. The Dangote Refinery will undoubtedly have a positive impact on the entire manufacturing value chain, providing a reliable source of fuel and petrochemical products that are essential for capacity utilisation and value addition.
“I believe that the success of the Dangote Refinery serves as an inspiration to all of us in the manufacturing sector. It demonstrates what is possible when we combine innovation, technology, and investment to create world-class facilities that benefit the entire nation,” he asserted.
Bitcoin surpassed the $91,000 mark for the first time on Wednesday, continuing its postelection momentum as traders digested the latest U.S. inflation data.
The cryptocurrency climbed over 2% in trading, reaching a high of $91,705.
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The surge came after the October Consumer Price Index (CPI) report showed prices increased by 0.2%, bringing the annual inflation rate to 2.6%, a result that was largely in line with analysts’ expectations.
The steady inflation data fueled investor confidence in assets like Bitcoin, which is often viewed as a hedge against inflation due to its limited supply.
Bitcoin’s recent rally has coincided with a broader uptick in risk assets since the U.S. presidential election.
Investors seem optimistic that fiscal policies under the new administration could drive further growth in the crypto market, though some remain cautious about inflationary pressures.
Other major cryptocurrencies followed Bitcoin’s upward trajectory.
Ether and Solana both saw gains of around 1%.
Dogecoin, meanwhile, soared by 8%, building on its postelection boost.
The meme-inspired token has seen increased attention following the news that Tesla CEO Elon Musk played a role in President-elect Donald Trump’s campaign and has join his administration,
Analysts say that this shift could continue as inflation and fiscal policy debates evolve in the months ahead.
Business
How Oil Cabals Crippled Govt Refineries, Now Scheming Against Dangote Refinery – Pastor Adeboye
The General Overseer of the Redeemed Christian Church of God (RCCG), Pastor Enoch Adeboye, has urged Nigerians to pray for divine intervention in the face of efforts by unscrupulous oil marketers to thwart the operations of the Dangote Petroleum Refinery, following the previous sabotage of Nigeria’s four state-owned refineries.
The respected clergyman made the call for nationwide prayers during the November 2024 Abuja Special Holy Ghost Service themed ‘Total Restoration’, in Nigeria’s capital city.
Though Pastor Adeboye did not explicitly name the Dangote Petroleum Refinery, many read his remarks to have echoed ongoing attempts by oil marketers to prevent the refinery from functioning as it was designed to.
ALSO READ: FIRS Names Dangote Group Most Tax Complaint Business
With the Ibeju-Lekki, Lagos based Dangote Refinery about the only facility currently refining petrol in Nigeria, many read Pastor Adeboye’s comments to reflect the dispute between the refinery and oil marketers, who seek to continue importing refined products.
Pastor Adeboye reminded the congregation that it was God who raised Aliko Dangote to establish a refinery after years of failed attempts to revive Nigeria’s four public refineries, which had consumed billions of Naira with little result.
He questioned the persistence of fuel imports despite Nigeria’s status as a major crude oil producer.
“Are we under a curse?” he asked. “We have four refineries, we poured all kinds of money into them, none of them is working. But God raised someone to build a refinery that works. He is not my relative, he is not from my village. He is not even a Christian, but he is a Nigerian who says, ‘Why should my people suffer when I have the means to build a refinery that can work?’ Now he is refining petrol, and some people want to stop him from selling it, so they can keep importing.”
Pastor Adeboye also pointed out the damage caused by the fuel subsidy, describing it as a significant drain on Nigeria’s resources, contributing to the country’s mounting debts and corruption.
He stressed that when President Bola Ahmed Tinubu announced the end of the subsidy in 2023, Nigerians largely welcomed the decision, but oil marketers, who benefitted from the subsidy regime, were furious.
The marketers, according to the renowned pastor, appear to have gone into alliances with some International Oil Companies (IOCs) and other powerful interests to obstruct the Dangote Petroleum Refinery. This includes restricting access to crude oil, forcing Dangote to import crude from countries like the United States, among others.
He called for prayer for the total restoration of the country, noting that the Nigerian people are suffering the consequences, as the prices of essential goods have soared, pushing many items beyond the reach of ordinary citizens. “The masses are the ones suffering because these marketers, who are bent on keeping imports alive, already have more money than they can ever spend,” he said.
Despite the Dangote Petroleum Refinery’s capacity to meet Nigeria’s entire demand for petroleum products – and even to export surplus fuel – oil marketers continue to pressurise the government to allow ongoing petrol imports. This has placed additional strain on the Naira, which has continued to depreciate.
Recall that the Crude Oil Refineries Owners Association of Nigeria (CORAN) had urged the government to protect local refineries from unfair competition posed by importers and international petroleum traders, in line with provisions in the Petroleum Industry Act (PIA).
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