Kemi Osukoya
January 7, 2016
Turmoils in Asian markets and deepening concerns for Chinese economy continued to keep investors and the financial industry on their toes. For the third straight days in a row, China stock markets closed low Thursday, down 7.32 points, falling to a three-month low.
The stocks selloff caused a circuit breaker burnout that halted the market after just 29 minutes of trading, according to news reports.
The U.S economy is in decent shape, however, the stock markets is expected to open low Thursday due to the spillovers from the Chinese stocks fiasco.
The Dowjones closed lower Wednesday at 16.906.51, 252.15 point, or minus 1.47 percent; Nasdaq was down 55.67 points at 4,835.76; Japan Nikkei 225 17,767.34; South Africa FTSE/JSE Top 40 Index down by 1,383.15 points or minus 3.13 percent to 42,767.31; China Shanghai Composite down 7.32 percent to 3.115.89.
Crude oil was 33.10; Gold added 6.90 points, closing at 1,098.80; Platinum was down point 78 percent, Sugar remains unchanged and Copper was down 2.81 percent.
Analysts say the Chinese government is seeing worse growth in economy and the new trading triggers put in place by the government to stop further markets plunge are actually creating more problems.
China is the second largest economy in the world after the United States, and is the biggest trading partner with U.S., as well as with several African countries, including Nigeria- Africa’s largest economy.
Nigeria, Africa’s largest economy and the biggest oil producer in the continent, is battling its own economic challenges brought on by weakening global oil demand and lower oil prices.
Nigerian federal government – Central Bank- since early 2014 has restricted access to forex money as part of its measures to curb the weakening oil prices erosion from spilling over into its overall economy. This effort, however, has proved less favorable with the international community and investors.
International Monetary Fund Managing Director, Christine Lagarde, on a visit to Nigeria this week met with President Buhari and his team on Wednesday to discuss ways the international organization can support the government’s efforts by providing technical assistance on public financial management.
Lagarde urged the government to take diligent steps such as making fundamental changes to the way it conducts its business. She added that making tough fiscal disciplines about the country’s revenues, expenditure, debt and investment management, broadening the tax base, improving compliance and enhancing tax collection efficiency as well as reducing leakages can lead to a prudent fiscal policy and future for the country.
Lagarde said going forward, Nigeria government should consider flexible exchange rate policy, and higher VAT taxes.
Lagarde applauded the Buhari administration on the progress and initiative it has made so far on discouraging graft in the country but said more needs to be done such as making key policy changes/ priorities- investing in quality infrastructure, making the bank work, and improving governance. highlight road, investment in infrastructure and energy.
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