European shares flat as investors assess Saudi attack

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European shares steadied on Tuesday as investors sought refuge in oil stocks and defensive sectors after attacks on Saudi Arabian oil facilities over the weekend heightened political tensions.

Trading in Europe’s main indexes was light after starting the week on a sluggish note following the attacks. Investors were also on the fence ahead of a U.S. Federal Reserve policy meeting, where it is expected to cut interest rates for the second time this year.

“Markets definitely have calmed down from yesterday’s shock and will now focus on central banks again and await decisions there,” said Teeuwe Mevissen, senior market economist at Rabobank.

Central banks of the world are expected to roll out stimulus measures to prop up slowing economic growth. Last week, the European Central Bank cut rates deeper into negative territory and relaunched bond purchases with no scheduled end-date.

The European healthcare .SXDP, utilities .SX6P, real estate .SX86P and food and beverage .SX3P indexes – commonly considered the defensive sectors – posted some of the biggest gains on STOXX 600 .

The pan-European index was trading flat at 0845 GMT after scaling six-week highs last week. The index has gained 15% so far this year.

Oil and gas stocks .SXEP retreated from Monday’s gains as crude prices pulled back after the United States hinted at the possible release of crude reserves.

Shares in Zalando (ZALG.DE) fell 10% after a share placement by top investor Kinnevik in the e-commerce retailer. The broader retail index .SXRP fell 0.3%.

Among other stocks, Husqvarna (HUSQb.ST) fell 6.5% after the Garden equipment maker set new financial goals starting from 2020.

British clothing retailer French Connection (FCCN.L) slid 12.6% after it said it expects sale process to be concluded by the end of the year, and reported a smaller first-half operating loss on growth in its wholesale business in the United States.

Investors were also looking to ZEW economic sentiment surveys from Germany, due at 0900 GMT. The data will provide a clearer view of the economic impact of a prolonged trade dispute between China and the United States.

Expert urges EAC to tackle leakages to increase revenue

An Economic expert, Dr John Isemede, has urged the new Economic Advisory Council (EAC) to urgently tackle leakages in the various sectors of the economy to increase Nigeria’s revenue.

Isemede, ex-Director-General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), gave the advice in Abuja.

He said that the country generated sufficient revenue to tackle its needs but most of the funds went into private pockets.

The former National Consultant on Organised Private Sector (OPS) matters to United Nations Industrial Development Organisation (UNIDO), also spoke on increment in Value Added Tax (VAT).

He said that increasing VAT from five per cent to 7.2 per cent would generate little to the economy if the leakages persisted.

According to him, how would one explain a situation in an agency of government where N20,000 is paid for services and N5,000 is receipted.

“What this means is that faceless Nigerians are enriching themselves to the detriment of the economy they are employed to salvage,” he said.

NAN reports that on Monday, President Buhari constituted a new Economic Advisory Council to be headed by Prof. Doyin Salami.

Other members are Dr Mohammed Sagagi (Vice-Chairman); Prof Ode Ojowu; Dr Shehu Yahaya; Dr Iyabo Masha; Prof. Chukwuma Soludo; Mr Bismark Rewane; and Dr Mohammed Adaya Salisu (Secretary).

The announcement, which was contained in a statement by Mr Femi Adesina, the Special Adviser to the President on Media and Publicity, said the council would replace the current Economic Management Team and will be reporting directly to the President.

“The Economic Advisory Council (EAC) will advise the President on economic policy matters, including fiscal analysis, economic growth and a range of internal and global economic issues, working with the relevant cabinet members and heads of monetary and fiscal agencies,” Adesina said.

Isemede, a former United Bank for Africa Plc staff on International Trade, said that the government needed to look inward and check leakages in its agencies in order to generate sufficient revenue.

On foreign exchange restriction on 43 items by the CBN, the sales, export, agribusiness and marketing expert, said that the forex restriction on the items was in order.

He, however, said that the consequence of the ban had led to a shortfall in revenue from import duties, VAT and other levies to the government.

“The Ministry of Finance will find it difficult to draw up the national budget and finance it because another round of borrowing will lead to uncertainty in the economy.

“The N30,000 new minimum wage to workers has to be fulfilled, hence the need by the government to shore up its revenue to meet the challenges.

“More revenue would come from the agric business, solid minerals, petroleum sector if the refineries work, paper mills, infrastructure like the national carriers, Ajaokuta steel complex, power, among others, are fixed and harnessed,” he said.

The former member, Nigeria’s Trade Policy Review Committee in 2011, advised all tiers of government to create jobs.

Isemede noted that a country with an estimated population of 200 million to foreign reserves of 43 billion dollars was not too good.

“We must close the gap between the Monetary (CBN) and the Fiscal side of the equation, because we cannot run a country where we can produce wheat and we are importing wheat with over N650 billion and rice with over N360 billion annually.

“The Ajaokuta Steel Complex; the refineries, paper mills, should be revived to generate additional revenues,” he said.

Isemede said that no government would sign all sorts of agreements, open its borders and encourage importation without a balance of trade with others.