Business
European Bonds Decline on Manufacturing Data as Kiwi Gain
LONDON – European government bonds fell after a report confirmed euro-area manufacturing expanded for a fifth month in November. The New Zealand and Australian dollars rallied as Asian economic reports beat estimates.
German 10-year bund yields climbed four basis points to 1.73 percent at 10:35 a.m. in London. Treasury 10-year note yields gained four basis points and the rate on similar-maturity gilts jumped seven basis points. The pound rose to its strongest level versus the dollar since August 2011, the kiwi jumped 0.8 percent and the Aussie added 0.3 percent.
The Stoxx Europe 600 Index fell 0.2 percent and Standard & Poor’s 500 Index (SPA) contracts were little changed. Gold dropped 0.8 percent while crude oil gained 0.4 percent.
Manufacturing in the euro area expanded, with Markit Economics’s factory index rising to 51.6 in November from 51.3 in October and an estimate for 51.5.
The gauge in Spain fell to 48.6, the lowest since May, and compared with a forecast 51.1. Manufacturing indexes in China beat estimates for November as gauges in South Korea, India and Taiwan climbed. The U.S. Institute for Supply Management’s index was 55.1 in November, falling from the highest level since April 2011, according to the median economist forecast in a Bloomberg survey.
“The European PMIs were stronger than expected, apart from Spain, and this is weighing on bunds,” said Mathias Van Der Jeugt, a fixed-income strategist at KBC Bank NV in Brussels. “In the short term, the data limits the chance that the ECB will ease further. We believe U.S. manufacturing ISM can also beat consensus today and add downward pressure onto bunds.”
Treasuries, Gilts
Treasury 10-year notes rose to 2.79 percent and the rate on similar-maturity gilts climbed to 2.84 percent. Sterling gained 0.3 percent to $1.641 after advancing to $1.6443, the highest since Aug. 29, 2011.
New Zealand’s dollar strengthened against all of its 16 major counterparts, rising the most against the euro. Australia’s dollar strengthened to 91.32 U.S. cents.
The yen weakened 0.3 percent to 102.77 per U.S. dollar and the euro slipped 0.2 percent to $1.3561. Sterling jumped as much as 0.5 percent to $1.6443 before paring its advance to $1.6421.
The Stoxx Europe 600 Index dropped after falling as much as 0.3 percent after the Spanish data. Three stocks declined for every one that rose. The index gained 0.9 percent in November for a third consecutive monthly gain. The gauge has climbed 16 percent this year.
ThyssenKrupp AG slumped 7.8 percent after Germany’s largest steelmaker said it will sell equity equivalent to as much as 10 percent of its market value. ThyssenKrupp agreed to sell its U.S. steel plant to ArcelorMittal and Nippon Steel & Sumitomo Metal Corp. for $1.55 billion, the Essen-based company said in a Nov. 29 statement. ArcelorMittal gained 2.1 percent.
U.S. Futures
Futures (SPX) on the S&P 500 expiring this month declined less than 0.1 percent. The index advanced 27 percent this year and reached an all-time high on Nov. 27.
Spending on a Black Friday weekend fell for the first time since 2009. Purchases at stores and websites fell 2.9 percent to $57.4 billion during the four days beginning with the Nov. 28 Thanksgiving holiday, according to a survey commissioned by the National Retail Federation.
The MSCI Asia Pacific Index dropped 0.1 percent, Japan’s Topix rose less than 0.1 percent, while Australia’s S&P/ASX 200 slid 0.7 percent. Hong Kong’s Hang Seng Index added 0.7 percent and India’s Sensex gained 0.5 percent.
A Chinese index of small companies tumbled by a record after the government said it will resume initial public offerings. China’s securities regulator said 50 companies will be ready for IPOs by the end of January as authorities prepare to lift a more than one-year ban on new listings.
China Data
The Shanghai Composite Index dropped 0.6 percent, while the ChiNext Index sank 8.4 percent, paring this year’s gain to 76 percent. There are more than 760 companies in line for approval and it will take about a year to complete an audit of all the applications, the regulator said on Nov. 30.
“Investors are weighing the positive economic data that’s coming out from the different markets, trying to gauge if these are sufficient to extend the rally on equities,” Jonathan Ravelas, chief market strategist at BDO Unibank Inc., said in Manila. “The resumption of China IPOs will spur fund rotation to the newcomers on hopes these will provide better returns.”
China’s official manufacturing purchasing managers’ index came in at 51.4 for November, matching the 18-month high reached in October. The median projection in a Bloomberg News survey was for 51.1, with levels above 50 signaling expansion. A separate gauge from HSBC Holdings Plc and Markit Economics was 50.8, topping estimates. HSBC/Markit’s manufacturing index for South Korea rose to 50.4 from 50.2, while a measure for Taiwan output climbed to 53.4 from 53.
Emerging Markets
The MSCI Emerging Markets Index advanced 0.1 percent, headed for the highest level in almost two weeks. The Shanghai Stock Exchange Composite Index (SHCOMP) retreated 0.6 percent, snapping a three-day gain.
The Thai baht weakened to the lowest level since Sept. 9 versus the dollar as the central bank warned a political standoff was hurting Southeast Asia’s second-largest economy. Protesters seeking Prime Minister Yingluck Shinawatra’s ouster vowed to incite more unrest.
PT Bank Rakyat Indonesia led a 1.5 percent gain in the Jakarta Composite Index (JCI) and the rupiah jumped 1.6 percent after data showed a surprise trade surplus. Indian shares climbed to the highest level since Nov. 20 after data showed economic growth quickened last quarter from a four-year low.
The Indonesian rupiah headed for its biggest gain since May 2012. Exports exceeded imports by $42.4 million in October, compared with the median estimate for a $775 million deficit by economists surveyed by Bloomberg, official data showed today.
U.S. Debt
Global stocks beat all assets for a third month in November, the longest winning streak since 2009. The MSCI All-Country World Index of equities rose 1.5 percent including dividends as China pledged to expand economic freedoms, the European Central Bank cut interest rates and speculation increased the Federal Reserve will put off a paring of stimulus.
America’s banks have never been so wary of risking their cash deposits on U.S. government debt. Their $1.8 trillion of the bonds now equal less than 70 percent of their cash, the least since the Federal Reserve began compiling the data in 1973.
Gold, Crude
The cost of insuring corporate bonds against losses fell, with the Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies decreasing 0.6 basis points to 78.8 basis points. The gauge fell to 77 basis points last week, the lowest since April 2010.
Gold for immediate delivery fell for the first time in three sessions in London trading, declining 1 percent to $1,237.50 an ounce. Copper declined 0.6 percent to $7,014.50 a metric ton on the London Metal Exchange, while aluminum traded 0.4 percent lower at $1,748.25 a ton, near a four-year low.
Crude oil was little changed at $93.73 a barrel in electronic trading on the New York Mercantile Exchange. Natural gas fell for the first time in eight days in New York, declining 0.8 percent and snapping the longest rising streak since January 2011.
Soybeans advanced 0.6 percent to $13.445 a bushel in Chicago after earlier touching $13.46, the highest in more than two months, on surging demand for U.S. supplies.
– BLOOMBERG
The need for stronger regional collaboration, government-private sector synergy, and innovative market solutions to unlock Africa’s economic potential has been brought to the fore.
Group CEO of the Nigerian Exchange Group Plc (NGX Group), Temi Popoola, shed light on the transformative potential of Africa’s capital markets at the launch of the Ethiopian Securities Exchange (ESX).
The NGX Group’s strategic investment in ESX underscores its leadership in advancing Africa’s capital market infrastructure. “The launch of ESX represents a pivotal moment for Ethiopia and the broader African financial landscape,” Popoola stated. “ESX will serve as a crucial mechanism for capital formation and market liquidity, driving sustainable economic growth.”
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Expounding on NGX Group’s investment rationale, Popoola highlighted Ethiopia’s immense market potential and the shared vision of fostering economic growth through innovation. “Our partnership transcends traditional investment parameters,” he explained. “It is about ensuring that ESX evolves into a key player in Africa’s financial ecosystem, enabling cross-border investments and setting benchmarks for market development.”
Popoola also drew parallels with global success stories like India, which has leveraged its capital markets to achieve significant economic transformation. He emphasized the importance of responsible market opening to attract local and continental capital. “By following this path, Ethiopia can become a financial hub in Africa,” he remarked.
Prime Minister Abiy Ahmed lauded the launch of ESX as a transformative milestone in the country’s journey toward economic modernization. “Today, we have officially rung the bell to launch the Ethiopian Securities Exchange, our nation’s first stock exchange,” the Prime Minister announced on X. “This is a call to global investors: Ethiopia offers immense potential, a fast-growing economy, and a clear trajectory toward shared prosperity.”
CEO of the Ethiopian Securities Exchange, Tilahun Esmael Kassahun, expressed confidence in the partnership with NGX Group. “We are pleased to welcome NGX Group as a strategic partner, building upon the existing support we continue to receive from them,” he said. Kassahun also emphasized the value of NGX Group’s expertise in shaping ESX’s growth and success.
Drawing from NGX Group’s six decades of experience, Popoola shared insights on diversifying financial instruments and expanding access to investment opportunities. “With the right mix of innovation, policy support, and regional collaboration, Ethiopia’s capital market can play a transformative role in driving economic development and establish itself as a leader in Africa’s financial ecosystem,” he concluded.
With the ESX poised to redefine Ethiopia’s financial landscape, NGX Group’s involvement highlights the critical role of partnerships and shared expertise in advancing Africa’s economic narrative.
The Office of the Auditor-General of the Federation has uncovered financial irregularities amounting to ₦514 billion in the 2021 operations of the Nigerian National Petroleum Company Limited (NNPC Ltd).
The revelations were contained in a comprehensive audit report highlighting non-compliance and internal control weaknesses within Ministries, Departments, and Agencies (MDAs) during the 2021 financial year.
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Breakdown of Infractions
The audit detailed four major financial discrepancies within NNPCL:
“Irregular Deductions: A total of ₦343.64 billion was deducted from domestic crude oil sales at source without proper documentation.
“Sinking Fund Deposits: ₦83.66 billion, categorized as miscellaneous income, was retained in a sinking fund account.
“Unauthorised Refinery Deductions: ₦82.95 billion was deducted from federation revenue purportedly for refinery rehabilitation.
“Unsubstantiated Payments: ₦3.75 billion was flagged for transactions related to petrol sales that lacked proper verification.
The Auditor-General’s report stated that these financial activities violated the 1999 Constitution and the Financial Regulations Act of 2009, underscoring significant lapses in compliance with statutory guidelines.
According to the report, NNPCL generated ₦484.73 billion from domestic crude oil sales in March and May 2021.
However, ₦343.64 billion was deducted for various purposes, including “Value Shortfall,” “Strategic Stock Holding Cost,” and “Pipeline Maintenance.”
The deductions were made unilaterally by NNPCL without adequate documentation or justification.
Additionally, the report flagged ₦50 billion of the net payable amount for May 2021 as unaccounted for, creating a significant gap in the federation’s revenue.
“Audit observed from the review of NNPC SAP payment record for March and May 2021 payments that the sum of ₦484.73bn was the gross amount generated for the sale of domestic crude for the months of March and May 2021.
“The sum of ₦343.64bn from the gross amount was unilaterally deducted from the gross domestic crude sales as NNPC Value shortfall, Strategic Stock Holding Cost, Crude Oil and Products Pipeline Losses, as well as the pipelines maintenance and management costs.
“The details of each of the cost components deducted were not provided for audit review. Hence, the reasons for the deductions could not be justified by the management.”
On the unremitted ₦50 billion from May 2021, the report noted: “In the month of May, the net payable that could have been remitted ought to have been ₦127.075bn, but only the sum of ₦77.075bn was remitted, leaving an unremitted balance of N50bn to the Federation Account, which has remained unaccounted for.”
The report attributed these anomalies to weaknesses in NNPCL’s internal control systems, warning of the risks they pose to public funds.
It read, “The above anomalies could be attributed to weaknesses in the internal control system at NNPC, now NNPC Ltd. This is a potential loss of Federation revenue, diversion of public funds, or misapplication or misappropriation of funds.”
The success of the maiden edition of the Lagos Shopping Festival (LSF), Africa’s first 72-hour non-stop commerce and entertainment event has been credited to the Governor of Lagos State, Babajide Sanwo-Olu.
This is the view of Managing Director/Chief Strategist of Chain Reactions Africa Ltd, Israel Jaiye Opayemi, one of the main organisers of the event.
According to Opayemi, though Chain Reactions Africa conceptualised the event, the festival could be rightly described as the Governor’s baby and owes its success to his leadership. “Firstly, the Lagos Shopping Festival could not have come to fruition if the Governor did not buy into our audacious plan when we first presented the idea to him during the Covid-19 pandemic in 2020. Secondly, it was the Governor’s exemplary leadership of the project as its Chief Marketing Officer which attracted the buy-in of key sponsors like Zenith Bank, Tolaram Group, First Bank Plc, and Guinness Nigeria Plc,” Opayemi revealed.
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While the duo of Zenith Bank and First Bank provided their bank on wheel platforms for buyers at the Lagos Shopping Festival, they also supported the Vendors with special Point of Sale Machines with which to process payments from buyers. The banks were also seen marketing their diverse banking products to guests within the shopping arena.
For Tolaram, it was a time to support the citizens and give back to society. Guests at the Lagos Shopping Festival were freely given some of the products of the group such as PowerOil, Indomie and Kellogg’s packaged into goodie bags and given out to prospective buyers at the shopping arena. The Children’s Arena was however activated by Indomie with the children entertained by Santa Claus within a well-equipped arena manned by the Indomie Brands team and the Lagos State Safety Marshalls. The children were daily treated to free Indomie meals daily and given various gifts to go home with.
On its part, Guinness Nigeria came through as the real life of the Nigerian party by organizing product sampling activation for the teeming guests at the festival using brands such as Singleton, Johnnie Walker, Ciroc, Don Royale and Captain Morgan to deliver pleasant experiences to guests aside from Guinness and Malta Guinness.
While unveiling the identity of the festival last month, Governor Babajide Sanwo-Olu had thanked the management of Zenith Bank Plc, Tolaram Africa Group, Guinness Nigeria Plc and First Bank of Nigeria for supporting the idea of a Lagos Shopping Festival, describing it as a value addition on the state’s tourism calendar and the overall efforts to grow the State’s GDP. The Governor further said, “I must specially acknowledge your pioneering sponsorship role. It is easy for a corporate sponsor to jump on the sponsorship band wagon of an already established festival and fund it. But you are supporting the maiden edition of this Lagos Shopping Festival with us. The competition is watching you now. Do not build this brand with us and yield the space for the competition to take over. I do hope you would all commit long term to this brilliant initiative.”
On his part, Girish Sharma, CEO Guinness Nigeria Plc, expressed enthusiasm for the initiative. “Lagos is the commercial heartbeat of Nigeria and Africa’s entertainment capital, and the Lagos Shopping Festival captures its essence. We see opportunities in this initiative because it is a creative fusion of commerce and entertainment. This partnership reflects our dedication to fostering economic opportunities and support the nation’s vibrant entertainment industry.”
A first-of-its-kind, the festival was a convergence of commerce and entertainment, bringing together buyers and sellers in the MSME ecosystem, and hordes of fun-seekers who were entertained with thrilling performances by A-list entertainers, including Adekunle Gold, Wande Coal, Teni, Young Jonn, BNXN, Ayo Maff, SB Live and EmmaOMG. The list also included some of Nigeria’s most sought after DJs such as DJ Neptune, DJ YK Mule, DJ Baddo while Gbenga Adeyinka the 1st and Larry J dished out rib-cracking comedy performances.
Held from 23rd to 25th Day of December 2024, at the iconic Mobolaji Johnson Arena, Onikan Stadium, Lagos, the Lagos Shopping Festival saw thousands of fans throng the main venue and select Lagos malls during the three-day period to bag the latest bargains from local and top global brands.
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