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Asia stocks retreat as virus threatens economic reopening

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Asian share markets began the week with a cautious tone on Monday as the relentless spread of the coronavirus finally made investors question their optimism on the global economy, benefiting safe harbour bonds and crimping oil prices.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.3 per cent and further away from a four-month top hit last week.

Japan’s Nikkei shed 2.2 per cent and Chinese blue chips 0.9 per cent.

E-Mini futures for the S&P 500 eased 0.2 per cent, while EUROSTOXX 50 futures lost 0.7 per cent and FTSE futures, 0.9 per cent.

Wall Street had faltered on Friday as some United States states reconsidered their reopening plans.

The global death toll from COVID-19 reached half a million people on Sunday, according to a Reuters tally.

About one-quarter of all the deaths so far have been in the United States, with cases surging in a handful of southern and western states that reopened earlier.

“The increase in the United States COVID-19 infection rates has dented momentum across markets despite the improvements in the global economy, which continues to beat most data expectations,’’ wrote analysts at JPMorgan in a note.

“Our strategists remain sanguine and recommend to buy on dips but also selectivity,’’ they added.

“Traditional hedges like JPY vs USD, USD vs EM FX, gold and quality stocks are still outperforming this month.

“We stay overweight the United States equities but move EM equities to neutral and stay neutral United States credit.’’

Sovereign bonds benefited from the shift to safety with yields on United States 10-year notes falling to 0.64 per cent, having briefly been as high as 0.96 per cent early in June.

The United States dollar has generally gone in the opposite direction, rising to 97.461 against a basket of currencies from a trough of 95.714 earlier in the month.

It had less luck on Monday, easing back to 107.08 yen, though it remained well within the recent range of 106.06 to 107.63.

The euro stood at $1.1240 having found solid support around $1.1167.

It is an important week for the United States data with the ISM manufacturing index on Wednesday and payrolls on Thursday, ahead of the Independence Day holiday.

Federal Reserve Chair, Jerome Powell, is also testifying on Tuesday.

“United States economic data will reinforce that the economy is through the worst of the recession in our view,’’ said CBA Currency Analyst, Joseph Capurso.

“But a double‑dip recession is possible if widespread restrictions are reimposed, leading to a surge in the dollar.’’

In commodity markets, gold held near its highest since early 2012 at $1,773 an ounce.

Oil prices slipped amid concerns the pandemic would slow the reopening of some economies and thus hurt demand for fuel.

Brent crude futures fell 83 cents to $40.19 a barrel, while United States crude lost 84 cents to $37.65.

AIB

Edited By: Abdulfatah Babatunde (NAN)

Babatunde Abdulfatah: is a graduate and a professionally trained journalist, with experience in national news reporting/editing and verification at the News Agency of Nigeria. NNN is a Nigerian online news portal that publishes breaking news in Nigeria, and across the world. Our journalists are honest, fair, accurate, thorough and courageous in gathering, reporting and interpreting news in the best interest of the public, because truth is the cornerstone of journalism and they strive diligently to ascertain the truth in every news report. Contact: editor[at]nnn.com.ng

Foreign

Alibaba Cloud announces business expansion in Southeast Asia

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Alibaba Cloud, the cloud computing arm of China‘s internet giant Alibaba, on Thursday announced the building of its third data center in Indonesia, and the formation of a cloud ecosystem alliance in the Philippines.

Selina Yuan, President of Alibaba Cloud Intelligence International, said Alibaba Cloud has become the largest cloud service provider in regional markets, including Malaysia and Indonesia.

The business expansion in Indonesia came after Alibaba Cloud built its first data center in 2018 in the country, with the second center constructed last year.

Alibaba Cloud currently has over 20 local partners from various industries in the Philippines, and plans to help 5,000 local businesses in their digital migration, and train 50,000 local professionals within the next three years.

The company ranked first in the Asia Pacific region with a market share of 28.2 percent in 2019, up 2.2 percentage points from the previous year, according to global research and advisory firm Gartner.

(XINHUA)

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Africa, Asia lead digital financial inclusion: IMF study

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Digitalization increased financial inclusion between 2014 and 2017, with Africa and Asia leading the way, a new study released by the International Monetary Fund (IMF) showed.

Technology is changing the landscape of the financial sector, increasing access to financial services in profound ways, according to the study, authored by Ratna Sahay, Ulric Eriksson von Allmen and others.

According to the study, Ghana, Kenya, and Uganda are front-runners in Africa. In comparison, the Middle East and Latin America tend to use digital financial services more moderately.

In most countries, digital payments services are evolving into digital lending, as companies accumulate user data and develop new ways to use it for credit worthiness analysis, according to a related IMF blog, which noted that marketplace lending, which uses digital platforms to directly connect lenders to borrowers, doubled in value from 2015 to 2017.

While so far concentrated in China, Britain, and the United States, it appears to be growing in other parts of the world, such as Kenya and India, according to the blog.

During the COVID-19 pandemic, technology has created new opportunities for digital financial services to accelerate and enhance financial inclusion amid social distancing and containment measures, the authors said, noting that low-income households and small firms can benefit greatly from advances in mobile money, fintech services and online banking.

While the pandemic is set to increase use of these services, it has also posed challenges for the growth of the industry’s smaller players and highlighted unequal access to digital infrastructure, they argued.

To tap the high potential of digital financial services in the post-COVID era, many factors need to fall into place, including equal access to digital infrastructure, greater financial and digital literacy, and the avoidance of data biases, they said.

(XINHUA)

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Sport

India among 5 countries interested in hosting 2027 Asian Cup 

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India is one of five countries to have expressed interest in hosting the 2027 Asian Cup, the Asian Football Confederation (AFC) said on Wednesday.

Qatar, the reigning champions and 2022 World Cup hosts, are also interested in hosting the continental championship, as are regional football powerhouses Iran and Saudi Arabia, and Uzbekistan.

“The AFC will now work with each bidding member-association on the delivery of the necessary bidding documentation.

“We will announce the hosts for the 19th edition of the AFC Asian Cup in 2021,” the continental governing body said in a statement.

AFC President Shaikh Salman bin Ebrahim Al Khalifa hailed the “biggest-ever edition” in the United Arab Emirates (UAE) last year and said he expected China to surpass all expectations in 2023.

Qatar staged the competition in 1988 and 2011, while Iran have fond memories of hosting it in 1968 and 1976, winning the title on both occasions.

India bagged hosting rights for the 2022 Women’s Asian Cup last month.

(

Edited By: Chinyere Bassey and Olawale Alabi) (NAN)

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Interview: IMF official urges boosting intra-Asia trade amid anti-globalization sentiment

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Anti-globalization sentiment will rise due to the COVID-19 pandemic, and intra-regional trade will become very important for Asian countries, said an International Monetary Fund (IMF) official, urging them to further open up their markets to each other.

“I think it’s very important for us to emphasize that trade is important for every country’s growth and everyone’s welfare,” Chang Yong Rhee, director of the IMF’s Asia and Pacific Department, told Xinhua in a video interview Monday.

TRADE EXPECTED TO CONTRACT

According to IMF projection released Tuesday, Asia will see a 1.6-percent contraction in 2020 amid the mounting COVID-19 fallout, a downgrade to the forecast of zero growth in the April World Economic Outlook (WEO).

Asia is heavily dependent on global supply chains and cannot grow while the whole world is suffering, Rhee said, noting that Asia’s trade is expected to contract significantly due to weaker external demand.

The multilateral lender revised down its forecast for the global economy, projecting a 4.9-percent contraction in 2020, 1.9 percentage points below the April forecast, according to an update to April WEO released last week.

Rhee said COVID-19 hit Asia early, and many Asian economies, including China, South Korea and Vietnam, handled it quite effectively, contributing to a better-than-projected economic growth for the Asian region in the first quarter.

Since some Asian countries have contained the virus relatively well, tourism is likely to rebound among neighboring countries, which will be an “important source of growth” for the region, the IMF official said.

For China, which boasts a large domestic market, switching from export-oriented growth model to domestic-demand-driven growth model is possible, but for smaller Asian economies, such transition might not be a solution, Rhee said, adding that intra-regional trade will become very important for Asian countries.

Noting that tariff rate among Asian nations is actually much higher than tariff against Europe and the United States, Rhee said “in some sense, there’s more need to open our market to each other.”

The IMF official said any bilateral, regional or multilateral trade agreement will be especially important in this environment, while adding that countries “have to consider and improve the weakness we have seen to make the benefit more inclusive.”

HARDSHIP WILL COME

Noting that Asia used to grow 5 percent or 6 percent, Rhee told Xinhua that the sheer slowdown of the economy has a lot of negative impacts towards many sectors, especially the hard-hit service sectors, with the burden falling more on the less educated, poor, informal and migrant workers.

The IMF official also noted that compared with advanced economies, Asia’s social safety net is weaker, and medical facilities are not adequate.

“Even though relatively speaking in terms of growth numbers, we are doing better than advanced economies, but the real heavy burden is the same to the Asian economy, especially for those who are unfortunate,” he said.

In the absence of a second wave of infections and with an unprecedented policy stimulus to support the recovery, growth in Asia is projected to rebound strongly to 6.6 percent in 2021, according to IMF’s latest projection.

“But even with this fast pickup in economic activity, output losses due to COVID-19 are likely to persist,” Rhee said.

The multilateral lender projects Asia’s economic output in 2022 to be about 5 percent lower compared with the level predicted before the crisis, and this gap “will be much larger” if China is excluded, where economic activities have already started to rebound, he said.

The IMF official noted that projections for 2021 and beyond assume a strong rebound in private demand, though there are “clouds on the horizon,” which could undermine Asia’s recovery.

Such “clouds” include slower growth in trade, longer than expected lockdowns, rising inequality, weak balance sheets and geopolitical tensions.

“So actually what matters for Asia from now on is not 2020, we cannot be complacent,” Rhee told Xinhua. “From 2021, I think the hardship will come too, and Asia will face as equally or even more hardship than other countries.”

The IMF official said Asian countries are experimenting re-opening, and policies must be geared toward supporting the nascent recovery without exacerbating vulnerabilities. “They must use fiscal stimulus wisely and complement it with economic reforms,” he said.

CHINA’S ROLE IN GLOBAL RECOVERY

Rhee said China could greatly help sustain the global growth at this difficult time.

China produces many medical products, which is essential for the global fight against the pandemic, the IMF official said, noting that China could also play an important role in supplying medical products for those in need.

“China’s growth is very critical for the maintaining (of) commodity prices for many commodity exporters,” he said.

Rhee also noted that China joined the debt relief initiative of the Group of Twenty (G20) for low-income countries, and it can help those countries as a major creditor.

In the midst of anti-globalization sentiment, Rhee said, “I think China can play a very important opinion leader in global economy who make the multilateral system survive and maintain open economy.”

Noting that heavily relying on investment and export driven growth can’t be sustainable, the IMF official said China’s transition toward a consumption-driven economy is good for its own growth.

“In that sense, we are emphasizing the building of the social safety net, so people can reduce the precautionary saving and spend more domestically,” he said.

(XINHUA)

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The latest: IMF revises down forecast for Asian economy, warns of “clouds on the horizon”

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The International Monetary Fund (IMF) on Tuesday revised down its forecast for the Asian economy amid the mounting COVID-19 fallout, projecting a 1.6-percent contraction in 2020, and warning of “clouds on the horizon.”

The latest projection is a downgrade to the forecast of zero growth in the April World Economic Outlook (WEO), indicating stronger global headwinds as the pandemic‘s impacts continue to ripple throughout the world.

“Projections for 2020 have been revised down for most of the countries in the (Asian) region due to weaker global conditions and more protracted containment measures in several emerging economies,” Chang Yong Rhee, director of the IMF’s Asia and Pacific Department, wrote in a blog post.

Rhee noted that Asia’s economic growth in the first quarter of 2020 was better than previously projected, partly owing to early stabilization of the virus in some countries.

In the absence of a second wave of infections and with an unprecedented policy stimulus to support the recovery, growth in Asia is projected to rebound strongly to 6.6 percent in 2021, according to Rhee.

Photo taken on Aug. 9, 2019 shows a view of the headquarters of the International Monetary Fund (IMF) in Washington D.C., the United States (Xinhua/Liu Jie)p>

Photo taken on Aug. 9, 2019 shows a view of the headquarters of the International Monetary Fund (IMF) in Washington D.C., the United States. (Xinhua/Liu Jie)

“But even with this fast pickup in economic activity, output losses due to COVID-19 are likely to persist,” he wrote.

According to an update to April WEO released last week, the IMF revised down its forecast for the global economy, projecting a 4.9-percent contraction in 2020, 1.9 percentage points below the April forecast, followed by a growth of 5.4 percent in 2021.

“The downgrade from April reflects worse than anticipated outcomes in the first half of this year, an expectation of more persistent social distancing into the second half of this year, and damage to supply potential,” IMF Chief Economist Gita Gopinath said in a virtual news conference.

Advanced economies are projected to contract 8 percent this year, and emerging markets and developing economies are projected to shrink by 3 percent this year, according to the updated report.

China is expected to grow by 1 percent, the only major economy that could see growth this year, followed by an 8.2-percent growth in 2021.

Consumers select merchandises at a market in Shanghai, east China, May 24, 2020. (Xinhua/Chen Fei)

Consumers select merchandises at a market in Shanghai, east China, May 24, 2020. (Xinhua/Chen Fei)

The IMF projects Asia’s economic output in 2022 to be about 5 percent lower compared with the level predicted before the crisis, and this gap “will be much larger” if China is excluded, where economic activities have already started to rebound, Rhee said.

The IMF official also noted that projections for 2021 and beyond assume a strong rebound in private demand, though there are “clouds on the horizon,” which could undermine Asia’s recovery.

Such “clouds” include slower growth in trade, longer than expected lockdowns, rising inequality, weak balance sheets and geopolitical tensions.

“Asia is heavily dependent on global supply chains and cannot grow while the whole world is suffering,” Rhee said. “Asia’s trade is expected to contract significantly due to weaker external demand.”

He added that reorienting Asia’s growth model toward domestic demand and away from a heavy reliance on exports has begun but will take more time to be completed.

Noting that not all recent developments have been negative, Rhee said many Asian countries have been able to provide significant monetary and fiscal policy support — often in the form of guarantees and loans to households and firms.

Students return for classes at Seryun Elementary School in Seoul, South Korea, May 27, 2020. (Photo by Lee Sang-ho/Xinhua)

Students return for classes at Seryun Elementary School in Seoul, South Korea, May 27, 2020. (Photo by Lee Sang-ho/Xinhua)

Additionally, lower oil prices and improved market sentiment and financial conditions are helping the recovery, he said, adding that these factors “may not last.”

“Asian countries are experimenting re-opening, and policies must be geared toward supporting the nascent recovery without exacerbating vulnerabilities,” the IMF official said. “They must use fiscal stimulus wisely and complement it with economic reforms.”

The priorities, he argued, include close coordination between monetary and fiscal policies, ensuring resources are reallocated appropriately, as well as addressing inequalities.

Inequality had already been rising in Asia, Rhee said, noting that IMF’s recent research shows how past pandemics led to higher income inequality and hurt employment prospects of those with limited education.

“These effects are likely to be exacerbated in Asia due to the large proportion of informal workers, making the recovery more protracted,” he said.

The IMF officials urged Asian policymakers to broaden access to health and basic services, finance, and the digital economy, and expand social safety nets to extend unemployment insurance coverage to informal workers.

Addressing pervasive informality will also require comprehensive labor and product market reforms to improve the business environment and removing onerous legal and regulatory obstacles (especially for startups), and policies to rationale the tax system, he added.■

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Roundup: IMF revises down forecast for Asian economy, warns of “clouds on the horizon”

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The International Monetary Fund (IMF) on Tuesday revised down its forecast for the Asian economy amid the mounting COVID-19 fallout, projecting a 1.6-percent contraction in 2020, and warning of “clouds on the horizon.”

The latest projection is a downgrade to the forecast of zero growth in the April World Economic Outlook (WEO), indicating stronger global headwinds as the pandemic‘s impacts continue to ripple throughout the world.

“Projections for 2020 have been revised down for most of the countries in the (Asian) region due to weaker global conditions and more protracted containment measures in several emerging economies,” Chang Yong Rhee, director of the IMF’s Asia and Pacific Department, wrote in a blog post.

Rhee noted that Asia’s economic growth in the first quarter of 2020 was better than previously projected, partly owing to early stabilization of the virus in some countries.

In the absence of a second wave of infections and with an unprecedented policy stimulus to support the recovery, growth in Asia is projected to rebound strongly to 6.6 percent in 2021, according to Rhee.

“But even with this fast pickup in economic activity, output losses due to COVID-19 are likely to persist,” he wrote.

According to an update to April WEO released last week, the IMF revised down its forecast for the global economy, projecting a 4.9-percent contraction in 2020, 1.9 percentage points below the April forecast, followed by a growth of 5.4 percent in 2021.

“The downgrade from April reflects worse than anticipated outcomes in the first half of this year, an expectation of more persistent social distancing into the second half of this year, and damage to supply potential,” IMF Chief Economist Gita Gopinath said in a virtual news conference.

Advanced economies are projected to contract 8 percent this year, and emerging markets and developing economies are projected to shrink by 3 percent this year, according to the updated report.

China is expected to grow by 1 percent, the only major economy that could see growth this year, followed by an 8.2-percent growth in 2021.

The IMF projects Asia’s economic output in 2022 to be about 5 percent lower compared with the level predicted before the crisis, and this gap “will be much larger” if China is excluded, where economic activities have already started to rebound, Rhee said.

The IMF official also noted that projections for 2021 and beyond assume a strong rebound in private demand, though there are “clouds on the horizon,” which could undermine Asia’s recovery.

Such “clouds” include slower growth in trade, longer than expected lockdowns, rising inequality, weak balance sheets and geopolitical tensions.

“Asia is heavily dependent on global supply chains and cannot grow while the whole world is suffering,” Rhee said. “Asia’s trade is expected to contract significantly due to weaker external demand.”

He added that reorienting Asia’s growth model toward domestic demand and away from a heavy reliance on exports has begun but will take more time to be completed.

Noting that not all recent developments have been negative, Rhee said many Asian countries have been able to provide significant monetary and fiscal policy support — often in the form of guarantees and loans to households and firms.

Additionally, lower oil prices and improved market sentiment and financial conditions are helping the recovery, he said, adding that these factors “may not last.”

“Asian countries are experimenting re-opening, and policies must be geared toward supporting the nascent recovery without exacerbating vulnerabilities,” the IMF official said. “They must use fiscal stimulus wisely and complement it with economic reforms.”

The priorities, he argued, include close coordination between monetary and fiscal policies, ensuring resources are reallocated appropriately, as well as addressing inequalities.

Inequality had already been rising in Asia, Rhee said, noting that IMF’s recent research shows how past pandemics led to higher income inequality and hurt employment prospects of those with limited education.

“These effects are likely to be exacerbated in Asia due to the large proportion of informal workers, making the recovery more protracted,” he said.

The IMF officials urged Asian policymakers to broaden access to health and basic services, finance, and the digital economy, and expand social safety nets to extend unemployment insurance coverage to informal workers.

Addressing pervasive informality will also require comprehensive labor and product market reforms to improve the business environment and removing onerous legal and regulatory obstacles (especially for startups), and policies to rationale the tax system, he added.

(XINHUA)

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IMF revises down 2020 Asian economy forecast to 1.6-pct contraction

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The International Monetary Fund (IMF) on Tuesday revised down its forecast for the Asian economy amid the mounting COVID-19 fallout, projecting a 1.6-percent contraction in 2020.

The latest projection is a downgrade to the projection of zero growth in April’s World Economic Outlook forecast, indicating stronger global headwinds as the pandemic‘s impacts continue to ripple throughout the world.

“Projections for 2020 have been revised down for most of the countries in the (Asian) region due to weaker global conditions and more protracted containment measures in several emerging economies,” Chang Yong Rhee, director of the IMF’s Asia and Pacific Department, wrote in a blog post.

Rhee noted that Asia’s economic growth in the first quarter of 2020 was better than previously projected, partly owing to early stabilization of the virus in some countries.

In the absence of a second wave of infections and with unprecedented policy stimulus to support the recovery, growth in Asia is projected to rebound strongly to 6.6 percent in 2021, according to Rhee.

“But even with this fast pickup in economic activity, output losses due to COVID-19 are likely to persist,” he wrote.

(XINHUA)

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Foreign

IMF revises down 2020 forecast for Asian economy to 1.6-pct contraction

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(XINHUA)

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IMF PROJECTS ASIAN ECONOMY TO CONTRACT BY 1.6 PCT IN 2020

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(XINHUA)

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