The Nation Newspaper

Tag: Asia

  • UK support for China-backed Asia bank prompts US concern

    UK support for China-backed Asia bank prompts US concern

    The United States has expressed concern over Britain’s effort to become a founding member of a Chinese-backed bank that could rival the likes of the World Bank.

    The UK is the first big Western economy to apply for membership of the Asian Infrastructure Investment Bank (AIIB).

    The AIIB will fund Asian energy, transport and infrastructure projects.

    However, the US has raised questions over the bank’s commitment to international standards on governance.

    In a statement, UK Chancellor George Osborne said the UK had “actively promoted closer political and economic engagement with the Asia-Pacific region” and that joining the AIIB at the founding stage would create “an unrivalled opportunity for the UK and Asia to invest and grow together”.

    The hope is that investment in the bank will give British companies an opportunity to invest in the world’s fastest growing markets.

    But the US sees the Chinese effort as a ploy to dilute US control of the banking system, and has persuaded regional allies such as Australia, South Korea and Japan to stay out of the bank.

    In response to the move, US National Security Council spokesman Patrick Ventrell said: “We believe any new multilateral institution should incorporate the high standards of the World Bank and the regional development banks.”

    “Based on many discussions, we have concerns about whether the AIIB will meet these high standards, particularly related to governance, and environmental and social safeguards,” he added.

    Osborne Joining the AIIB would help the UK and Asia invest and grow together, UK Chancellor George Osborne said.

    Some 21 nations came together last year to sign a memorandum for the bank’s establishment, including Singapore, India and Thailand.

    But in November, last year, Australia’s Prime Minister Tony Abbott offered lukewarm support to the AIIB and said its actions must be transparent.

  • Investors bet on Asia despite U.S. rate threat

    A consensus is emerging among investors that some Asian markets can do well even with the prospect of higher U.S. interest rates on the horizon.

    Fund managers see stepped-up corporate and economic overhauls by leadership in China and India this year, combined with relatively strong growth in Asian economies compared with the rest of the world, as reasons to be bullish. Investors choosing Asia have been rewarded in the past three months. The MSCI Asia ex-Japan index is up 2.4%, topping the 0.4% gain in emerging markets globally and comparable to the 2.6% increase in the S&P 500.

    Last week was a bumpy one for some Asian markets, starting out with bad economic news from China early in the week and anxiety over a Federal Reserve meeting and the Scottish independence vote later in the week. At the same time, investors were selling shares of Asian stocks to fund their purchases of Alibaba Group Holding Ltd. shares in its big U.S. initial public offering, traders said. For the week, the MSCI Asia ex-Japan was off by 1.1%, compared with a 0.7% drop for the MSCI Emerging Markets Index and a 1.3% gain in the S&P 500.

    The Fed said  that it remains on track to end its bond-buying stimulus program in October. It is widely expected to raise interest rates next year. Higher interest rates in the U.S. can hurt Asian assets by drawing investment money into U.S. assets and away from Asia’s markets.

    Despite the concerns over U.S. interest rates, investors say they are selectively investing in Asian markets that they see as cheap and where economic fundamentals have improved or where they believe reforms are on the way.

    Investors continued putting money into Asian emerging markets last month, according to the latest data on money flows from the Institute of International Finance. Stocks and bonds in Asian emerging markets received $9.7 billion in August. While that is down from $23.3 billion in July, Charles Collyns, chief economist at the institute, said last month’s inflows were comparable to the average $15.3 billion that the region  received each month between May and July. In contrast, emerging markets in Europe, the Middle East and Africa saw investors pull out money in August. Data for September are due next week.

    “Flows [to Asia] look more robust because these economies are generally doing quite well and [their] exports [are] benefiting from the recovery of countries tightly linked to the global supply chain,” said Mr. Collyns. “We expect capital flows to Asia to remain solid,” unless the market starts expecting the Fed to raise rates sooner than it does now, he added.

    Still, within Asia, investors are getting pickier. As the time for a likely U.S. interest- rate increase approaches, “we are seeing money be more selective,” says Petr Kocourek, senior portfolio manager of multi-asset solutions at First State Investments.

    Ajay Argal, head of Indian equities at Barings Asset Management, says India is in a better position to withstand higher U.S. interest rates now that it has cut its current-account deficit to less than 2% of gross domestic product.

    “India had quite a big scare last year” with its current-account deficit rising to more than 4.5 per cent of GDP as the prospect of the Fed winding down its stimulus program was announced.

    “We still believe in the long-term fundamentals in India,” and increased investments in its infrastructure should help boost economic growth, says Pruksa Iamthongthong, Asian equities investment manager at Aberdeen Asset Management.

    The firm is still overweight Indian stocks even after taking some profits as the market has outperformed its counterparts in the region this year. India’s S&P BSE Sensex index is up 28% for the year.

    Also looking past the Fed’s tighter monetary stance, asset managers such as Edinburgh-based Standard Life Investments and New York-based AllianceBernstein are investing more in China. The country’s capital accounts are closed, helping protect the domestic economy from the potential impact of a U.S. rate increase.

    AllianceBernstein’s director of research for Asia ex-Japan equities, Rajeev Eyunni, says while a U.S. rate rise might weigh on Chinese sectors like property, which are sensitive to borrowing costs, it hasn’t stopped the firm from building up its exposure there.

    Chinese stocks are cheap and Chinese company profits will benefit from lower commodity prices and increased consumer demand due to higher wages, as well as opportunities for firms to gain market share in still fragmented industries, said Stuart Rae, the firm’s chief investment officer.

    The MSCI Asia ex-Japan index has gotten cheaper on a price-to-book basis compared with the MSCI World Index, suggesting there is “no argument for overheating” in Asia, Mr. Rae said.

    Fund managers in China have also been able to focus on fundamentals in the country, including improvements at its big state-owned enterprises.

    “We’ve generally been underweight SOEs, but now we’re adding,” says Alistair Way, investment director of emerging markets at Standard Life. He cited China’s largest oil refiner, China Petroleum & Chemical Corp., as an example.

  • SkyTeam launches package for Asia Pacific

    SkyTeam, the largest airline alliance in the Asia Pacific region, has launched its new Go Round Asia and Southwest Pacific Pass, providing customers with a flexible way to explore 26 countries. The latest in SkyTeam’s series of regional travel passes, the Go Round Asia and Southwest Pacific pass has been designed as a ‘mini-Round the World’ ticket that offers cost savings on flights operated by SkyTeam members serving these regions.

    Customers wishing to purchase a Go Round Asia and Southwest Pacific Pass can choose from a minimum of three to a maximum of 11 flights for travel in Economy or Business Class. Fares are calculated within three mileage bands of 13,000, 17,000 and 21,000 miles and travel must begin and end in the same country and at least one stop must be in Australia or New Zealand.

    Unlike SkyTeam’s other regional travel passes, the Go Round Asia and Southwest Pacific pass can be purchased without an intercontinental round-trip or Round the World ticket and is valid for travel originating within the region. Plus, travelers can buy a pass three days in advance of their travel dates.

  • The case for African-Asian Union (AAU)

    The case for African-Asian Union (AAU)

    By cross-examining continents, one would discover that only Africa and Asia are predominated by the Less Developed Countries (LDCs) and notably, Africa and the LDCs in Asia have been witnessing slow or series of fluctuating economic growth in quantity and quality.

    African and Asian countries especially the LDCs woo capital imports of FDI from developed world simply because it serves as a catalyst for economic growth and as a propellant to economic development.

    Therefore, for an LDC predominated continent like Africa to attain a higher economic growth, beyond influx of FDI, the continent will further need to mix-up or align with a superior continent like Asia, the closest and immediate neighbour of Africa for economic growth spillover, necessitating the establishment of African-Asian Union (AAU)of ninety-eight (98) member countries with a merger of the African Union (AfU) and the Asian Regional Economic Communities (RECs).

    Referring to the world map below, it is obvious that Africa shares the highest proximity with Asia in the North-East Africa via the Middle-East while linguistically, another common trait is that, across continents, only both Africa and Asia made up of Arabic speaking countries especially in the North Africa and the Middle-East respectively.

    AFRICA, the world’s second largest continent and the second most populous continent (after Asia) comprises fifty-four (54) countries including the newest South Sudan. With over a billion people it accounts for just over 14% of the world’s human population and it also contains the Nile River system, the world’s longest, and the massive Sahara Desert, the world’s largest.

    The African continental community otherwise called African Union (AU) is blessed with many regional economic communities namely, Economic Community of West African States (ECOWAS), Economic Community of Central African States (ECCAS), Common Market for Eastern and Southern Africa (COMESA), Arab Maghreb Union (UMA), Intergovernmental Authority on Development (IGAD), East African Community (EAC) and the Southern African Development Community (SADC).

    Asia, the world’s largest continent covers about 30% of the world landmass consisting of forty-four (44) countries and assorted islands. Notable features of Asia include the tallest mountain of Mt Everest in Nepal (and China) with a height of 29,035 ft (8,850m). Also, Asia is blessed with world’s most populated countries, China and India; the world’s longest coastline and the world’s deepest lake, Lake Baykal among other notable rivers. The continent’s major regional economic communities include Asia-Pacific Trade Agreement (APTA), Association of Southeast Asian Nations (ASEAN), Cooperation Council for the Arab States of the Gulf (CCASG), Economic Cooperation Organization (ECO), Eurasian Economic Community (EAEC), Shanghai Cooperation Organisation (SCO) and the South Asian Association for Regional Cooperation (SAARC).

    The proposed African-Asian Union, AAU is a means to put African economies of fifty-four countries on a strong footing while Asia of forty-four countries will also benefit from African skills, gifted hands and a more serene environment for marketing Asian products as well as importation of raw materials from Africa for the manufacturing industries in Asia. With less reference to Brazil in South America and the Eurasian Russia, the rest of India, China and South Africa from BRICS nucleus are the demonstration of Asia and Africa intimation and fusion.

    The Africa-Asia tie is expected to tremendously benefit both continents especially Africa where all her nations, except South Africa are less developed. The rationale/gains of the proposed AAU especially for Africa include but not limited to the following: (a) Free Visa/Borderless Continents, (b) enhanced economic growth and development (G&D), (c) high influx of Foreign Direct Investments (FDI), (d) Access to softer foreign loans and aids, (e) Human Resources Exchange (HRE) (f) intercontinental job opportunities,and (g) Technological Transfer (TT), to mention a few.

    Sequel to a paper I presented at the 2nd International Trade and Academic Research Conference (ITARC) held at Wembley Plaza Hotel, Middlesex, London, United Kingdom, November 7-8, 2011 titled African and Asian Economic Unions: A Call for the Establishment of Afrasian Economic Community (AAEC/AfrAsEC),  I also had a paper presentation titled A Panel Co-integration Approach to Foreign Direct Investment and Growth in Africa: New Evidences from ECOWAS, ECCAS, EAC and SADC Blocsat the 9thinternational conference of Global Academy of Business and Economic Research (GABER) held at the Sheraton LaGuardia East Hotel, New York City, New York, United States (US), October4-5, 2012 where my paper won Best Paper Award.

    Through the Federal Government of Nigeria’s Tertiary Education Trust Fund (TETFUND) conference attendance intervention,I further delivered a paper on Foreign Direct Investment (FDI) and Growth in Asia and Africa: A Panel Data Analysis at the International Journal of Arts and Sciences (IJAS)  multidisciplinary conferencein a “study abroad” format at the KatholischeAkademie der Erzdiozese, Freiburg, Germany on December 3-6, 2013 with a major recommendation to establish African-Asian Union (AAU) of ninety-eight (98) member countries.

    Apart from presentation of my paper in Freiburg, Germany onDecember 6, 2013, my research,in company of other IJAS conference participants, took me to many monumental cities of Alsace, Colmar and Strasbourg in France and Bern, Basel in Switzerland on December 4-5, 2013 respectively.

    In conclusion, it is noteworthy that this research presentation has commenced in London, United Kingdom (UK), Nov 8, 2011, New York City, USA on October 4-5, 2012 and finally concluded in Freiburg, Germany, December 6, 2013.  The proposed AAU will mutually benefit both Africa and Asia in different capacities while the AAU will be formed from the merger of the African Union (AU) and the Asian Regional Economic Communities (RECs).

    I am highly indebted to Professor Adeyemi Ibukunoluwa Idowu, Provost, Adeyemi College of Education (ACE), Ondo for establishing a ‘New ACE’ by providing state-of-the-art teaching, learning and research environment for staff and students of the Great College. Mention must be made of my lecturers in the department of Economics, at the better by far University of Ilorin, Ilorin, Kwara State. I appreciate the dons for tapping from their wealth of knowledge during my undergraduate and postgraduate periods. As the African-Asian Union(AAU) proponent,my profound sense of gratitude also goes to my model and mentor, Professor ‘Dibu Ojerinde, OON, Registrar/CEO, Joint Admissions and Matriculation Board (JAMB), Abuja on his all-round support for me.

    For your comments and suggestions to improve  the proposal, please contact the proponent:

     

    Rasheed Olajide ALAO,Department of Economics, Adeyemi College of Education (ACE),Ondo,Nigeria.T: +2348055795353, +2348186034445. Email :roalao@gmail.com

  • Nigeria sells $Ibn bonds – Okonjo- Iweala

    Nigeria sells $Ibn bonds – Okonjo- Iweala

    The Minister of Finance, Mrs. Ngozi Okonjo-Iweala, said on Wednesday that Nigeria returned to the capital market after two years of absence and sold $1 billion dollar bond with ease.

    Okonjo-Iweala said this in Abuja while briefing journalists on the recently concluded road show in Europe and United States to float the billion dollar bond to international investors.

    She said the bonds, which were four times oversubscribed, were improvements on investors’ response to the $500 million bonds floated in 2011.

    “The reason we are excited is because as you know, these are turbulent times, especially following expectations of tapering of Qualitative Easing by the U.S Federal Reserve Bank.

    “So, the fact that Nigeria could go to the bond market, after waiting a while and we got four times our subscription, shows confidence in the strength of the Nigerian economy,’’ the News Agency of Nigeria quoted the minister as saying at the briefing.

    Okonjo- Iweala said the transaction attracted top investors primarily from US, Europe and Asia.

    “ The demand was such that we couldn’t meet all of them. Over 200 investors could not get any share of the bonds because we were oversubscribed,’’ she added.

    The minister said the $1 billion bond was offered in two categories at the international capital market.

    She said that $500 million was offered as a five-year bond at 5.125 per cent interest rate, while the other $500 million was offered as a 10-year bond at 6.375 per cent interest rate.

    She added that the two-category offer gave Nigeria the opportunity to achieve an overall cheaper cost of borrowing.

     

  • N2,319tr imports are from Asia, says report

    Goods worth N2,319.9 trillion were imported from Asia last year, the National Bureau of Statistics (NBS), has said.

    According to NBS report, the imports represent 41.2 per cent of total imports for last year put at N5,624.9 trillion. The records show that the country’s major imports came from Asia.

    Other major imports, according to the report, came from Europe and America, which accounted for N1,490.4 trillion, representing 26.5 per cent and N1,421.9 trillion or 25.3 per cent.

    The import trade is still dominated by the imports of machinery and transport equipment, manufactured goods and commodities.

    NBS had in March said Nigeria’s import trade value dropped significantly last year to a cumulative value of N5.62 trillion, as against the N9.89 trillion value of imported goods into the economy in 2011.This represented 43.1 per cent decline.

    The report noted that the import bill were equivalent to 13 per cent of the Gross Domestic Product (GDP) for last year.

    The trend, according to NBS, indicates that the efforts by the Federal Government to grow the economy by improving local capacity in the agricultural, manufacturing and other key sectors of the economy are yielding to desired results.

    The report released in March, listed beverages and tobacco, crude inedible materials, mineral fuel and oils, fats and waxes as contributing to the significant drop in the value of yearly imports

    However, the decrease in imports was across all categories, as machinery and transport equipment, Nigeria’s biggest import segment, declined by 63 per cent, following modest growth of two per cent in 2011.

     

  • UK to create more jobs in Africa, Asia

    UK to create more jobs in Africa, Asia

    Ms Diana Noble, Chief Executive Officer of CDC, a British Government-owned development finance institution, on Friday said that the organisation would create more jobs in Africa and Asia.

    Nobel said in a statement in Lagos that the organisation was satisfied with its businesses worldwide, and therefore, would increase the number of jobs it provided on the continents.

    “CDC’s new strategy is focused on making investments to grow businesses and create more jobs in Africa and Asia.

    “ CDC wants to demonstrate to other investors that it is possible to invest successfully in harder places, where the private sector is weak and jobs are scarce”.

    Noble said  that the number of jobs provided by CDC increased from 976,000 in 2011 to 1,109,000 in 2012.

    “In 2013, we will build on these achievements to create more jobs at no cost to the taxpayer.

    “CDC also plans to provide expansion to businesses and projects to support local employment,’’ she said