Business
Fed tapering unease rattles shares, dollar jumps
LONDON – Renewed talk of an early cutback in the U.S. Federal Reserve’s stimulus sent the dollar back above 100 yen on Thursday while driving government bonds yields higher and world shares lower.
Surprisingly weak data from China and the euro zone added to the downbeat tone, outweighing confirmation by the Bank of Japan that its massive stimulus will continue and signals that the European Central Bank was considering easing its policy further.
Minutes of the last Fed policy meeting released on Wednesday showed officials felt they could begin scaling back the bank’s massive bond purchase program at one of their next few meetings if economic conditions warranted it.
Many in the markets took that to mean the program could be trimmed earlier than consensus forecasts, which had been pointing to March.
“I think December is now more likely (for Fed tapering) than was previously the case,” said Simon Smith, chief economist at FXPro, adding this was largely due to the Fed having made clear tapering did not necessarily mean rate hikes would follow.
That shift in perceptions caused a big spike in U.S. bonds yields, boosting demand for the dollar which hit a four-month high of 100.83 yen, up 0.8 percent on the day.
German 10-year bond yields rose 6 basis points to 1.77 percent, tracking the rise in U.S. Treasury note yields, which reached 2.8 percent on Wednesday.
The dollar gains and prospects that the flow of Fed dollars could soon slow also had a major impact on gold, which saw its biggest drop in seven weeks on Wednesday to settle near $1,249 an ounce.
STOCKS ROCKED
Share markets – which have recovered to pre-financial crisis levels this year largely thanks to the loose monetary policies adopted by the Fed and other major central banks – lost ground broadly.
An exception was Japan, where the Nikkei index rose as exporters gained from the weaker yen .N225.
MSCI’s global benchmark index .MIWD00000PUS, which tracks price moves across 45 countries, shed 0.4 percent, putting it on course for its biggest weekly loss since August.
“Having got hooked on both indefinite QE and low interest rates, investors are becoming increasingly restless and inclined to taking profits,” said Alastair Winter, chief economist at Daniel Stewart.
But some analysts said the Fed minutes, from a meeting held there weeks ago, had not settled the debate over the central bank’s next move, which could limit further moves in prices of riskier assets.
“Our house view is that there is 25 percent chance in December, 25 percent in January and 50 percent in March,” Nick Xanders, who heads up European equity strategy at BTIG said.
Europe’s broadest share index, the FTSEurofirst 300 .FTEU3, was down 0.4 percent with banks .SX7P, which are most acutely exposed to the benefits offered by monetary stimulus, among the biggest fallers.
Mining stocks .SXPP dropped further still, shedding 1 percent as the sector took an added hit from data showing activity in China’s vast factory sector grew at a slower pace than expected in November.
Unexpectedly weak surveys of business activity in France and the whole 17-nation euro area piled on the gloom, though these were partially offset by data showing Germany’s manufacturing and services sectors performed better than forecast. ECONEZ
“Output, outside France and Germany, did rise for the fourth month in a row, suggesting the region is returning to growth – but the concern is that the rate of increase we saw in November did slide to the weakest we’ve seen in those four months,” said Chris Williamson, chief economist at survey compiler Markit.
OIL MARKET EYES IRAN
In the oil market, uncertainty over whether world powers will be able to strike a deal with Iran over its nuclear program added to the concerns about an early Fed tapering, sending Brent crude futures below $108 a barrel
“The issue of tapering is back to the fore after yesterday’s Fed minutes,” said Victor Shum, vice-president of energy consultancy IHS Energy Insight. “Talks between Iran and world powers are erasing some geopolitical risk, but the situation in Libya is putting a floor under prices.”
Brent crude fell 12 cents to $107.94 a barrel by 0915 GMT, while U.S. oil shed 17 cents to $93.62
– REUTERS
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.
The Nigerian Naira experienced mixed movements in the foreign exchange markets on Monday, as it depreciated to N1,665 per dollar in the parallel market, down from N1,660 per dollar recorded over the weekend.
In contrast, the official exchange rate saw the Naira appreciate to N1,534.56 per dollar, improving slightly from N1,535 per dollar last Friday, according to data released by the Central Bank of Nigeria (CBN).
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This reflects a marginal gain of 44 kobo in the official Nigerian Foreign Exchange Market (NFEM).
As a result, the gap between the parallel market rate and the NFEM rate widened to N130.44 per dollar, compared to the N125 per dollar margin recorded over the weekend.
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