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Asian shares head for worst month since Covid-19 started
Asian shares on Friday were headed for their worst month since the onset of COVID-19, while jitters in currency and bond markets persisted over hawkish talk from central banks, worries about a global recession and rising geopolitical risk.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3pc, taking its monthly loss to a staggering 13pc – the largest since March 2020 when the nascent pandemic threw financial markets into chaos.
Japan’s Nikkei tumbled 2.1pc, Australia’s resources-heavy shares dropped 1.2pc, while Hong Kong and China’s mainland blue-chips gave up earlier gains to trade slightly lower ahead of long holidays.
Barring a sharp reversal, Hong Kong shares were heading for their worst quarter since 2001 and Chinese blue-chips were set to record their biggest quarterly loss since a stock market meltdown in 2015.
Offshore risk appetite remained fragile. The pan-region Euro Stoxx 50 futures were up 0.1pc, FTSE futures eased 0.1pc and S&P 500 futures rose 0.1pc.
“The ‘troubling triad’ of rising rates, slowing growth and strong dollar have all intensified,” said Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs.
“We reduce our forecasts further and expect largely flat regional performance over the next two quarters with better returns on a 12-month view.”
Japan’s factories ramped up output in August and China’s factory activity returned to growth this month, data showed, but that failed to soothe investors for long.
The Reserve Bank of India also raised the repo rate by 50 basis points to 5.90pc on Friday as widely expected, as it continues to battle painfully high inflation and a rapidly weakening rupee.
Currency traders remained edgy given the risk of central bank interventions. Sterling rose 0.3pc in thin and volatile trading to $1.12, having its best week since end of 2020, after intervention from the Bank of English to buy long-dated bonds calmed markets.
The dollar climbed 0.3pc against a basket of major currencies on Friday and is up 3.1pc for the month, the best since April.
The U.S. currency’s relentless rise has pushed the yen, Chinese yuan and many emerging market currencies to long-term lows, piling pressures on policymakers to step in.
China’s central bank has asked major state-owned banks to be prepared to sell dollars for yuan in offshore markets.
In Europe, Britain’s gilt market has been roiled by government plans for heavy borrowing to finance spending.
Prime Minister Liz Truss said on Thursday she will stick to her plan to reignite economic growth, breaking her silence after nearly a week of financial market chaos.
German Chancellor Olaf Scholz also set out a 200 billion euro ($196 billion) “defensive shield”, including a gas price brake and a cut in sales tax for the fuel, to protect companies and households from the impact of soaring energy prices.
That came as Europe braces for a double-digit inflation reading later in the day, as the European Central Bank voiced support for another big interest rate hike. German inflation accelerated to 10.9pc this month, far beyond market expectations.
“Increased uncertainty and risks – and higher interest rates – logically see higher volatility in financial markets. Even G7 countries are now trading like emerging markets,” said Jan Lambregts, head of global economics and markets research at Rabobank.
“Indeed, markets now also see a far wider range of possible outcomes when it comes to FX and rate movements.”
U.S. Treasuries stabilised somewhat after a renewed bout of selling on hawkish talks from Federal Reserve officials, with the yield on 10-year bonds up by 5 basis points to 3.7943pc.
The two-year Treasury yield rose a similar amount to 4.2188pc.
A strong U.S. jobs market, with weekly jobless claims hitting a five-month low, adds to the case for more aggressive tightening from the Fed.
Overnight hawkish comments from Fed officials offered no indication that recent foreign exchange and bond market drama will lead the central bank to back off from its rate hike course.
Further weighing on market sentiment, Russian President Vladimir Putin is scheduled to announce the annexation of four Ukrainian regions on Friday, a move the United Nations said would mark a “dangerous escalation” and jeopardize prospects for peace.
Oil prices eased. U.S. crude lost 0.3pc to trade at $81.04 a barrel while Brent crude fell 0.7pc to $87.89 per barrel.
Gold was slightly higher. Spot gold was traded at $1662.5 per ounce. ($1 = 1.0195 euros)
Russian President Vladimir Putin aims to bolster the count of foreign students in the nation’s universities to at least 500,000 by 2030, as outlined in a decree setting forth national development objectives.
The decree stipulates, “The number of foreign students pursuing higher education in Russian higher learning institutions and scientific organizations should rise to at least 500,000 by 2030.”
As per the Russian Education and Science Ministry, the current tally exceeds 355,000 foreign students studying in Russian universities. Acting Minister Valery Falkov previously highlighted Russia’s position as the world’s sixth-largest host of foreign students.
TASS calculations reveal a notable surge of over 20% in foreign student enrollment across Russian universities over the past five years. Predominantly, foreign applicants admitted to Russian universities hail from China, Vietnam, former Soviet republics, as well as various Asian and Middle Eastern countries.
Prime Minister Sheikh Hasina today (25 April) called for speaking out against all forms of aggression and atrocities, and say ‘no’ to wars.
“We must speak out against all forms of aggression and atrocities, and say ‘no’ to wars,” she said adding that Bangladesh supports the UN Secretary General’s ‘New Agenda for Peace.
The prime minister was addressing the 80th Session of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) held at the ESCAP Hall (2nd floor), United Nations Conference Center (UNCC) here.
She arrived in Bangkok on Wednesday on a six-day official visit to Thailand.
The PM said the pre-condition for sustainable development is lasting peace and security.
“We must settle regional disputes and tension through dialogue. Our mutual respect for national sovereignty and territorial integrity must remain paramount,” she said.
Hasina called upon the Asia-Pacific region, especially ASEAN, to redouble their efforts to end Rohingya crisis as all efforts at regional connectivity, integration, and prosperity will continue to be marked by a missing puzzle without it.
“The origin of their crisis has been in Myanmar, and its solution also lies in Myanmar,” she declared.
“As long as that solution remains out of reach, all our efforts at regional connectivity, integration, and prosperity will continue to be marked by a missing puzzle. Let us redouble our efforts to put that puzzle back in place,” she said.
She said that in August 2017, when thousands of Rohingya men, women, and children from Myanmar fled to Bangladesh, Bangladesh offered them temporary shelter.
“With an ever growing population, this has now become one of the largest humanitarian situations in the world,” she said.
Sheikh Hasina said that In the backdrop of ongoing armed conflicts in Myanmar, the Rohingya repatriation process is also getting delayed.
“This is creating serious security risks within and beyond our territories,” she said.
She called upon the Asia-Pacific region, especially ASEAN, to play a proactive role in resolving the volatile situation in Myanmar.
“We must ensure that the Rohingya can go back home in safety and dignity at the earliest possible,” she said.
The prime minister said that the Asia-Pacific region must stand united against its common enemies of poverty and hunger.
She said Bangladesh has reduced poverty from 41.51 percent to 18.7 percent between 2006 and 2022.
It also reduced extreme poverty from 25.1 to 5.6 percent during the same period.
“We remain confident about eradicating extreme poverty by 2030,” she said.
She mentioned that Bangladesh has made notable progress on food security, with focused interventions on maternal and child nutrition.
“Our current priority is to address inequalities through income distribution, asset ownership, and social protection,” she said.
The prime minister said that Asia-Pacific region must put up a united front in tackling the climate crisis, biodiversity loss, and transboundary pollution.
“We need to push for ambitious climate financing goals beyond 2025 at COP-29. We need to cooperate on cross-border water management and air quality improvement. We must all prepare for growing extreme weather events,” she said.
In this connection, she suggested looking into Bangladesh’s experience in disaster risk reduction.
“We appreciate UN-ESCAP’s support in improving our early warning capabilities,” she added.
Briefly describing various development programmes and achievements of her govebrment, the prime minister said that much of the development gains are affected by climate impacts.
“As a low-lying delta, Bangladesh has no option but to invest heavily in climate resilience,” she said.
She mentioned that Bangladesh is already recognised as a global leader in climate adaptation.
“We are happy to share our traditional and innovative solutions with other vulnerable countries,” she said.
She said that Bangladesh has urged developed and emerging economies in the region to raise their time-bound emission reduction targets.
“For economies in transition, it is important to have a just energy transition.”
In Bangladesh, she said, “we are working on long-term energy security with a sound mix of clean and renewable energy.”
“We shall continue to do our part in pursuing a circular and low-carbon economic growth pathway.”
She underscored the need for increased and easy access to financing and technology from both the public and private sectors.
“I invite UN-ESCAP to help build the capacity of climate-vulnerable countries to mobilise adequate international climate financing.”
PM Hasina said that Bangladesh now provides critical links to the Trans-Asian Highway and Railway networks.
“Our physical and digital infrastructures are being developed to foster regional trade and connectivity.”
She said Bangladesh offers access to the Bay of Bengal for land-locked territories in its neighbourhood.
“We stand ready to work together with all regional partners through mutual understanding and cooperation,” said the prime minister.
The ongoing internet disruption, which began last night due to a cut in the country’s second submarine cable near Singapore, is expected to persist for at least 4-5 days, according to Mirza Kamal Ahmed, managing director (additional charge) of the Bangladesh Submarine Cables PLC.
Ahmed, the official of the state-owned bandwidth provider, informed The Business Standard that the international consortium is in search of a special purpose ship necessary for restoring the undersea cable.
“The exact duration cannot be specified,” he stated, adding, “Based on past instances, it is likely to take a minimum of 4-5 days.”
Internet users are experiencing significant disruption as the accidental cut in Bangladesh’s second submarine cable, South East Asia–Middle East–Western Europe 5 (SEA-ME-WE 5), is blocking Singapore-Kuakata traffic, the source of 1700 GBPS bandwidth.
“We are serving all our users with the help of other sources of bandwidth – the international terrestrial cable (ITC) and the first submarine cable,” informed Nazmul Karim Bhuiyan, secretary general of the ISP Association of Bangladesh.
However, he mentioned that users are encountering some lag on Saturday afternoon.
“As the main broadband usage peaks during the night, we could learn about the full extent of the disruption and any resulting delays tonight,” he added.
The Bangladesh Submarine Cables PLC (BSCPLC) has issued sincere apologies for the temporary inconvenience to its customers.
Efforts are underway to repair the cable through the SEA-ME-WE 5 and restore connectivity promptly, stated the BSCPLC in a statement released today (April 19).
Currently, Bangladesh requires around 5,200 GBPS of internet bandwidth, with half of the demand being met by ITC companies importing bandwidth from India.
For the remaining half of the demand, the country relies on the state-owned Bangladesh Submarine Cable Company.
The first submarine cable SEA-ME-WE 4, located in Cox’s Bazar, is presently supplying approximately 850 GBPS bandwidth.
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