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Investors’ Confidence Returns In Developed Markets

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Sentiment toward stocks rose around the world, reaching a record level in the US, as reports on manufacturing showed the global economy is recovering and investors bet that profits grew for the first time since 2007.

Investors forecast gains in each of the nine countries represented in the Bloomberg Professional Confidence Survey for the first time since the data began in 2007. The sentiment measure for the Standard & Poor’s 500 Index climbed 35 per cent to 54.37.

That’s only the second time the reading exceeded 50, signaling participants anticipate a rally in the next six months. The responses from 4.101 Bloomberg users were gathered January 4-8 as the MSCI World Index added 2.6 per cent.

Rising factory output in the US China and Europe helped send the S & P 500 to six straight gains to begin the year.

Analysts estimate that fourth quarter earnings reports beginning this week will show S&P 500 profit rose 62 percent, according to data complied by Bloomberg.

The results will follow the biggest annual rally since 2003 for MSCI World Index of equities in 23 developed nations. “The market is clearly in an upside trend”, said Luis Benguerd, a trader at inter-brokers Espanola in Barcelona, Spain, who participated in the survey.

“As long as we keep getting these macro figures and companies do as good as analysts expect them to do, that’s enough to keep this trend going”

The MSCI World has rebounded 74 percent from a 13-year low in March after the Federal Reserve left its benchmark interest rate at almost zero and the US government lent, spent or guaranteed as much as $9.66 trillion to end the recession and unlock credit markets. 

US factory output expanded in December at the fastest pace in more than three years, according to a report from the Tempe, Arizona-based Institute for supply Management. Chinese manufacturing surged the most since April 2004 last month, data compiled by London-based H SBC Holdings Plc and Market Economics showed. Production increased for a third month in December, Markit said.

The three reports were released January 4. The Bloomberg Sentiment Indexes for the US, Japan and Spain rose above 50 and reached all-time highs. The U.K gauge topped 50 for the first time since October, while Switzerland climbed to a record.

Spain exceeded 50 for the first time, adding 17 percent to 51.41. Confidence in Switzerland climbed 3.6 per cent to 60.89 and U.K index surged 22 per cent to 55.61. The measures for Italy, France and Germany increased 14 per cent, 3.7 per cent and 2.4 per cent to 62.61, 57.77 and 53.33 respectively.

The Dow Jones Stoxx 600 Index of European equities may advance 9.2 per cent through the end of 2010 as the economy grows strategists at New York based Citigroup Inc wrote in a January 4 report. Signs that the global economy is rebounding from its first recession since World War II have helped push prices on the MSCI World to 34.7 times profit from the past year at its 1.656 companies. That’s the most expensive valuation since 2002, making equities vulnerable should earnings fail to materialise.

Alcoa Inc., the biggest US aluminium producer, began earnings season on January 11 by missing the average analyst profit forecast. The S&P 500 lost 0.9 per cent following the New York based company’s report.

“Alcoa’s bottom-line number was not good and investors are selling because expectations were high”, said Mark Bronzo, a money manager in Irvington, New York, at security global investors, which oversees $21 billion. “The fear gets heightened”.

The MSCI World fell 0.4 per cent on Wednesday morning in New York  on a decline in oil and concern the Federal Reserve is preparing markets for higher interest rates.

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Nigeria, 12 Others To Drive Global Trade By 2030 – Report

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A trade research report has indicated that Nigeria and 12 other countries will be responsible for the driving of the global trade to the tune of $30 trillion by the year 2030.
The research, which was commissioned by Standard Chartered and prepared by PwC Singapore posited that Nigeria and 12 other countries would be responsible for driving global trade to $30tn by 2030.
According to the report sponsored by the Singaporean organisation, the global exports would be more than double from $17.4tn to $29.7tn over the next decade, while much of the growth would be driven by 13 markets.
It said Nigeria would be growing at an annual rate of 9.7 per cent, with about $112bn in exports by 2030, through key corridors such as India, Indonesia and Mainland China.
It also stated that Kenya, the second African nation on the list, would be growing by 7.6 per cent annually, with $10bn in exports by 2030 through key corridors namely, Pakistan, Uganda and the United States of America.
The list consists mostly of Asian countries with Mainland China contributing the most at $5.02tn by 2030 and growing at 7.1 per cent annually.
Other countries are Hong Kong ($939bn, 5.7 per cent), South Korea ($972bn, 7.1 per cent), and India ($564bn, 7.6 per cent).
Bangladesh, Singapore, United Arab Emirates, Indonesia, Malaysia, Vietnam, and Saudi Arabia also featured in the report.
The report is based on an analysis of historical trade data and projections until 2030, as well as insights from a survey of more than 500 C-suite and senior leaders in global companies.
According to the report, global trade will be reshaped by five key trends: the wider adoption of sustainable and fair-trade practices, a push for more inclusive participation, greater risk diversification, more digitisation and a rebalancing towards high-growth emerging markets.
It said almost 90 per cent of the corporate leaders surveyed agreed that these trends would be shaping the future of trade and would be forming part of their five to 10-year cross-border expansion strategies.
The research also found a significant trend towards the adoption of sustainable trade practices in response to climate concerns and a rising wave of conscious consumerism.
It said while almost 90 per cent of corporate leaders acknowledged the need to implement these practices across their supply chains, only 34 per cent ranked it as a ‘top three’ priority for execution over the next five to 10 years.

By: Corlins Walter

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Currency In Circulation Rose By N129bn In Oct – CBN

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The currency in circulation in the country rose by N129bn to N2.97tn in October from N2.84tn in September, according to the figures from the Central Bank of Nigeria (CBN).
The currency in circulation had fallen to N2.78tn in August from N2.81tn in July.
It stood at N2.74tn in June, N2.79tn in May, N2.79tn in April, N2.8tn in March, N2.78tn in February and N2.83tn in January.
The CBN said, “The currency in circulation increased by N465.47bn or 19.06 per cent to N2.91tn in 2020, compared with N2.44tn in 2019.
“In 2020, there were higher withdrawals by DMBs than deposits, due to the panic need to hold cash to deal with the emergencies and reduced banking hours due to restrictions to curb spread of the pandemic”.
The apex bank said to maintain public confidence and ensure integrity of circulated notes in the economy, it developed and unveiled a clean note policy and banknote fitness guidelines in 2018.
The guidelines outlined details of quarterly and yearly activities towards the achievement of this objective.
According to the CBN, the clean note policy encapsulates diverse currency management activities to preserve the integrity and maintain the quality of banknotes in circulation.
The policy provides that every newly printed and existing banknotes should conform to predefined standards before circulation and re-circulation in the economy.
Currency in circulation is defined as currency outside the vaults of the central bank – that is, all legal tender currency in the hands of the general public and in the vaults of the deposit money banks.
The CBN said it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in the country.
It said this approach involved tracking the movements in currency in circulation on a transaction-by-transaction basis.
According to the CBN, for every withdrawal made by a DMB at one of CBN’s branches, an increase in CIC is recorded; and for every deposit made by a DMB at one of CBN’s branches, a decrease in CIC is recorded.
The transactions are all recorded in the CBN’s CIC account, and the balance on the account at any point in time represented the country’s currency in circulation.

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CBN’s eNaira Records 600,000 Downloads Within One Month

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Barely four weeks after its launch in October, the eNaira app of the Central Bank of Nigeria (CBN) has witnessed about 600,000 downloads.
The CBN Governor, Godwin Emefiele, who disclosed this in a statement at the weekend, said, “In less than four weeks since its launch, almost 600,000 downloads of the e-Naira application have taken place.
“Efforts are ongoing to encourage faster adoption of the e-Naira by Nigerians who do not have smart phones.
“The support of the financial industry will be critical in the ongoing deployment of the e-Naira and efforts are ongoing to encourage continued partnership between the CBN and stakeholders in the financial industry”.
The CBN governor also said that building a robust payment system that would provide cheap, efficient, and faster means of conducting payments for most Nigerians have always been the focus of the apex bank.
According to him, the growing pace of digitization globally makes it essential that they leverage on digital channels in fulfilling this objective.
Emefiele disclosed that total transaction volumes using digital channels were more than doubled between 2018 and 2020, as volumes rose from 1.3 billion to over 3.3 billion financial transactions in 2020.
He added that digital payment channels also helped to support continued conduct of business activities during the lockdown.
The CBN boss noted that the robust payment system has continued to evolve towards meeting the needs of households and businesses in Nigeria. This, according to him, reflects the confidence people have in the payment system.
He said that between 2015 and September 2021, about US$900 million has been invested in firms being run by Nigerian founders.
“Notwithstanding these gains, close to 36 per cent of adult Nigerians do not have access to financial services.
“Improving access to finance for individuals and businesses through digital channels can help to improve financial inclusion, lower the cost of transactions, and increase the flow of credit to households and businesses,’’ Emefiele added.

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