S&P up +0.11%. Nasdaq up +0.38%
- S&P index is ending the day up 2.56 points or +0.11%
- Nasdaq composite index is ending the day up 22.40 points or 0.38%
- Dow Industrial Average is down -42.18 points or-0.20%
The world’s largest sovereign wealth fund overcame sluggish markets at the start of last year to deliver a return of 6.9 per cent in 2016.
Norway’s $905bn oil fund was boosted by strong stock markets in the second half of the year with equity investments returning 8.7 per cent. Fixed income returned 4.3 per cent in 2016.
Yngve Slyngstad, chief executive of Norges Bank Investment Management, the manager of the fund, said:
The fund had 62.5 per cent of assets invested in equities at the end of the year but is expected this spring to be given permission to increase that to 70 per cent. Fixed income assets accounted for 34.3 per cent and real estate 3.2 per cent.
Japan’s publicly traded companies continue to return more profit to shareholders, with dividends headed toward a record 11.8 trillion yen ($104 billion) for fiscal 2016.
Payouts are on track to rise for a seventh straight year, climbing 7% from fiscal 2015 and doubling from the fiscal 2009 low in the wake of the global financial crisis. More than 600, or roughly 30%, of the companies with March book-closings plan to resume or increase dividends, as overall corporate profit looks set to reach a new high this fiscal year. Figures are based on Nikkei calculations of distributed and planned payouts.
The recovery in the resource market has put trading houses and related companies in a position to raise dividends as well. Mitsubishi Corp. had reported its first-ever net loss in fiscal 2015, hit by impairment charges from resource concessions. But with earnings rebounding sharply, the company plans to hike the full-year payout to 70 yen per share — up 20 yen from the prior year and equal to the previous high.
Advantest is among those boosting its payout ratio, or the portion of profit distributed as dividends. The manufacturer of chip-testing equipment is lifting the minimum ratio to 30% from 20% on a consolidated basis.
“We need to raise shareholder returns in order to retain long-term investors,” President Yoshiaki Yoshida said.
Tokyo Seimitsu, which produces chipmaking equipment, will increase its payout ratio and raise dividends even though net profit is projected to decline.
Retail investors directly hold just under 20% of listed companies’ shares, based on surveys by the Tokyo Stock Exchange and others. This means roughly 2 trillion yen will flow into pocketbooks, helping to underpin consumer spending.
Increased dividends help improve capital efficiency, a factor that can lead share prices higher.
“The ability of Japanese companies to sustain generous shareholder returns will influence the direction of Japan’s stock market,” said Kengo Nishiyama of Nomura Securities.
Global large-and-mid capitalisation stocks have climbed to within easy striking distance of setting a new all-time high for the first time in almost two years, led by a strong performance by US equities.
The MSCI all-world index, which tracks companies in 46 countries that account for 85 per cent of the investable equities market, closed on Monday at 441.14, just 0.35 per cent away from the all-time high it struck in May 2015.
The gauge has climbed by 23.5 per cent over the past 12 months, partly reflecting a sharp rebound from a fall at the start of last year.
Equity bourses around the world have been lifted by a brightening outlook for the world economy, along with a recovery in the price of oil.
World Bank economists reckon global growth will accelerate from 2.3 per cent in 2016, to 2.7 per cent this year, and 2.9 per cent the next year. The optimism has come as central banks in Europe and Asia have loosened monetary policy in a bid to spur faster growth.
In the US, the Federal Reserve has pledged to only “gradually” tighten policy. Some economists have also marked-up their estimates for the rate of expansion for the world’s biggest developed economy on expectations that Donald Trump and a Republican Congress will roll-out business-friendly policies.
Markets regulator Sebi has directed brokers to square off all existing open positions in the equity derivatives segment they hold for Vijay Mallya and the six former officials of United Spirits who were banned from the market last week.
The fresh directive by the capital market regulator has been made through an e-mail to stock exchanges yesterday.
“The trading members are advised to square off existing open positions in the futures and options segment, if any, for the persons/entities mentioned in the above order and also ensure that no fresh positions are created for the said persons/entities,” an NSE circular said quoting the Sebi directive.
However, the regulator has not given them a time-line to do so.
Sebi had last week through an interim order, barred Mallya and six former officials of USL from entering the market, after the CBI charge-sheeted them in a money laundering case involving a loan IDBI Bank.
The CBI also charge-sheeted and arrested eight IDBI Bank officials, including its former chairman Yogesh Aggrawal in the case for their role in bypassing lending norms to extend Mallya Rs 950 crore loan in 2010.
As we observed in yesterday morning’s market wrap, while US traders took the day off for the MLK holiday, China was busy defending an accelerating selloff across its stock markets.
During Monday trading, having traded quietly lower for the past few days, Chinese stocks tumbled in early trading on the mainland and in Hong Kong’s offshore market amid weakness in Asian equities. The Shanghai Composite Index dropped as much as 2.2% to head for its fifth loss in as many days, its longest losing streak since Aug. 2015.However a sudden bout of late afternoon buying sent the loss down to just -0.3%, on speculation China’s national team was once again back in the markets.
A consortium led by Chinese stock exchanges has obtained approval to buy a 40% stake in the Pakistan Stock Exchange, or PSX, The Nikkei has confirmed with Haroon Askari, the bourse’s deputy managing director.
The deal marks the first time in which a Chinese exchange has become a top shareholder of an overseas bourse.
The bidding took place in late December. The winning group consists of the Shanghai and Shenzhen stock exchanges, the China Financial Futures Exchange and financial institutions in Pakistan. The bid was screened by a committee consisting of existing PSX shareholders.
The consortium will acquire a 40% stake, worth some 9 billion Pakistani rupees ($85.8 million), from some 200 local securities companies — the existing shareholders. The three Chinese exchanges will jointly own a 30% stake and become the largest shareholder of the bourse.
The PSX was founded last January through the integration of the Karachi, Lahore and Islamabad bourses. As the country’s sole stock exchange, it lists some 550 companies. Even before the integration, the PSX was planning to allocate up to a 40% stake to “strategic investors” who could contribute to its operational expansion.
The Bank of Japan revised its economic outlook for the first time in 19 months during the two-day policy meeting that ended Tuesday. But that is apparently the only step the central bank is taking at this time.
“The headwinds seen in the first half of this year have ceased,” BOJ Gov. Haruhiko Kuroda told reporters following the meeting. Markets were riled by heightened concerns directed at emerging economies at the beginning of 2016, only to be shocked in June by Britain’s referendum to exit the European Union. The BOJ was forced to loosen its policy in July, raising its target for exchange-traded fund purchases.
“Japan’s economy has continued its moderate recovery trend,” the BOJ said in a statement published after the meeting. The central bank had previously qualified that view by highlighting sluggish exports and production.
Wednesday’s U.S. rate hike has caused ripples through global markets, as investors began to contemplate the impact of American monetary tightening and beefed-up fiscal spending under a President Donald Trump.
A 25-basis-point increase in the federal funds rate was announced at 2 p.m., following a two-day meeting of the Federal Open Market Committee. The first hike in a year, which lifted the benchmark rate to a range of 0.5% and 0.75%, was largely expected. But Yellen also revealed that the Fed was now looking at raising the rate three times in 2017, instead of the two hikes that had been indicated before.
Yellen also cautioned against guessing President-elect Donald Trump’s intentions regarding fiscal spending. “We’re operating under a cloud of uncertainty at the moment and we have time to wait and see what changes occur and factor those into our decision-making as we gain greater clarity.”
Fed watchers took this as an indication that the pace of rate hikes could hasten to more than the three estimated for 2017 as Trump’s policies are implemented.
Stocks lost steam Friday as the Dow failed in another attempt at topping the 20,000 mark for the first time ever.
The Dow Jones industrial average lost less than 0.1%, down 8 points to finish at 19,843.41. The S&P 500 fell 0.2%, while the Nasdaq composite shed 0.4%.
After an initial jolt from the Fed’s interest rate hike decision this week, markets adjusted to the prospect of more increases that policymakers signaled were in store as they move to “normalize” interest rates. The Fed raised rates for only the second time in a decade and hinted three more hikes are on the way in 2017, rattling markets used to ultralow borrowing costs that have fueled a multiyear stock boom. The Fed’s move now shifts the focus from central bank policy to economic growth as the driver of stock market performance.
Bond yields gave up some of their big gains from the last few days.The yield on the 10-year Treasury fell to 2.58% from 2.60% late Thursday, putting at least a temporary halt to its strong rally since last month’s presidential election.