Asian shares skidded Friday after rising bond yields triggered a broad sell-off on Wall Street that erased the markets gain for the week and handed the Nasdaq composite index its steepest loss since October.
Tokyo, Hong Kong and Sydney all fell 2% or more in early trading Friday.
The tech-heavy Nasdaq shed 3.5% on Thursday while the S&P 500 dropped 2.4%, led lower by heavy selling in technology and communications companies.
The sell-off gained momentum when the yield on the 10-year U.S. Treasury note moved above 1.5%, a level not seen in more than a year and far above the 0.92% it was trading at only two months ago. That move raised the alarm on Wall Street that yields, and the interest rates they influence, will move higher from here.
Early Friday, the yield on the 10-year U.S. Treasury note was 1.47%.
Tokyo’s Nikkei 225 lost 2.4% to 29,446.17, while the Hang Seng in Hong Kong lost 2.2% to 29,412.50. The Shanghai Composite index lost 1.5% to 3,530.08. South Korea’s Kospi declined 2.8% to 3,012.11. The S&P/ASX 200 slipped 2% to 6,695.60.
Shares fell in all other regional markets apart from Malaysia.
Bond yields have been rising this month, reflecting growing confidence among investors that the economy is on the path to recovery, but also expectations that inflation is headed higher, which might prompt central banks eventually to raise interest rates to cool price hikes. Rising yields can make stocks look less attractive relative to bonds to some investors, which is why every tick up in yields has corresponded with a tick down in stock prices.
In the past, such situations have triggered sell-offs in what has been called a “taper tantrum,” referring to a possible tapering off of monetary stimulus.
“This feels like a washout of ‘safe’ positions, and ultimately the market will continue to test the Fed’s resolve to keep a lid on rates. We’re in a precarious spot where any additional easing might be misinterpreted as the Fed losing faith in its own ability to control the market, which would be self-reinforcing,” Stephen Innes of Axi said in a commentary.
The S&P 500 index fell 96.09 points to 3,829.34. The Dow Jones Industrial Average lost 1.8%, to 31,402.01. The Nasdaq slid 478.54 points to 13,119.43.
Smaller company stocks fared worse than the rest of the market. The Russell 2000 index of smaller company stocks lost 84.21 points, or 3.7%, to 2,200.17. The index has been far outpacing larger indexes, a signal that investors expect broader growth to continue.
The U.S. economy grew at an annual pace of 4.1% in the final three months of 2020, slightly faster than first estimated, the government reported. Higher government spending and accelerated vaccine distribution could lift growth in the current quarter, ending in March, to 5% or even higher, economists believe.
Economies in Asia are also on the mend, though rollouts of vaccines lag behind the U.S. effort and pandemic-related travel restrictions and quarantine requirements are still in effect for many countries.
Technology stocks, which tend to have higher valuations, have been one of the victims of the rise in bond yields. As bond yields climb, more investors shift money into those higher yielding assets, which tends to negatively impact stocks that are priced for growth.
Apple, Amazon, Facebook and Microsoft — all companies that pushed the stock market higher last year — fell 2.4% or more.
Global stock markets have soared over the past six months on optimism about coronavirus vaccines and central bank promises of abundant credit to support struggling economies. Those sentiments have faltered due to warnings the rally might be too early and that inflation might rise.
Federal Reserve Chair Jerome Powell has affirmed the Fed’s commitment to low interest rates in testimony to legislators in Washington this week.
The central bank earlier indicated it would allow the economy to run hot to make sure a recovery is well-established following its deepest slump since the 1930s. Powell said it might take more than three years to hit the Fed’s target of 2% inflation.
Investors also are looking for Congress to approve President Joe Biden’s proposed economic aid plan. That includes $1,400 checks to most Americans. However, the plan faces staunch opposition from Republicans and is still subject to negotiations. Democrats have chosen to use the legislative process known as reconciliation that would allow them to pass the bill without GOP support.
In other trading Friday, U.S. benchmark crude oil shed 36 cents to $63.17 per barrel in electronic trading on the New York Mercantile Exchange. It gained 31 cents to $53.22 per barrel on Thursday. Brent crude, the international standard, gave up 29 cents to $65.82 per barrel.
The dollar fell to 105.98 Japanese yen from 106.20 yen on Thursday. The euro slipped to $1.2171 from $1.2177.
Foreign Direct Investment, or FDI, remains a critical enabler for Bangladesh to attain its aspirations of becoming a developed country by 2041, as well as to secure positive development outcomes including more and better jobs, and economic diversification.
Bangladesh, however, will need to strengthen its competitiveness, including implementing the necessary regulatory reforms, fostering international cooperation, and grooming the skills to be more productive and respond to the opportunities of the future.
The insights and suggestions emerged at a policy roundtable organized by the Foreign Investors’ Chamber of Commerce and Industries, with technical support of Policy Exchange Bangladesh.
Chaired by FICCI President and Berger Managing Director Rupali Chowdhury, the program was attended by Mr. Salman F Rahman, Adviser to the PM on Private Industry and Investment as the chief guest. Kedar Lele, Vice President of FICCI and Chairman & Managing Director of Unilever Bangladesh summarized the discussion and provided vote of thanks while FICCI Executive Director T I M Nurul Kabir moderated the session.
FICCI President Rupali Chowdhury mentioned in her speech, the aim of FICCI is to facilitate technological transformation processes and develop entrepreneurial power houses operating on best business practices conducive to sustained economic growth and prosperity of the nation.
Dr. Masrur Reaz, Chairman Policy Exchange Bangladesh, presented the keynote where highlighted how the FDI space is evolving due to COVID, what it implies for Bangladesh with regard to realities and opportunities, and priority strategy and policy reform opportunities.
Dr. Reaz said that the country has many new openings and opportunities to gain from but there will have to a re-positioning of the FDI value proposition from labor cost differential to competitiveness-based advantage. This requires Bangladesh to expedite the business climate reforms, ensure application of global standards, ensuring appropriate skills and technology adoption, more efficient cross-border trade, and access to modern industrial and trade infrastructure such as ports.
FICCI EC members including CEO of Standard Chartered Bank Naser Ezaz Bijoy, and CEO of HSBC Mahbub Rahman participated in the open discussion.
Online marketplace Daraz organized a virtual panel discussion on e-commerce ecosystem on Wednesday.
The growth of the e-commerce sector, requirements to instigate further growth, creating a smooth operational process, ensuring compliance in terms of operations and delivery at all levels, protecting customer interest, the role of the e-commerce sector to attract new foreign investment and ensure youth employment along with the development of proper skills and ensuring industry transparency were the key areas of discussion at the seminar.
However, the discussants underscored the necessity of drafting an e-commerce policy to make sure that the sector grows systematically and harmoniously, and people involved in this industry get the chance to tap into the potential of this flourishing sector.
The discussants in the seminar included Commerce Minister Tipu Munshi, State Minister for ICT Zunaid Ahmed Palak, e-Commerce Association of Bangladesh (e-CAB) General Secretary Muhammad Abdul Wahed Tomal, Bangladesh Association of Software and Information Services President Syed Almas Kabir, and Daraz Bangladesh Managing Director Syed Mostahidal Hoq.
Tipu Munshi said, "We have made big progress in the e-commerce sector. The rate is equivalent to the progress that was expected three years later."
Zunaid Ahmed Palak shared, "The government has ensured three things that are prerequisites for the expansion of e-commerce – access to high-speed internet, digital payment system and trust."
Daraz Bangladesh Managing Director Syed Mostahidal Hoq said, “We want the policy to be e-commerce ecosystem-friendly that will help grow the sector."
About 1.80 lakh new clients are joining the network of Nagad every day just by pressing a couple of buttons on their mobile phones, thanks to an innovation that allows them to open the account of a mobile financial service without filling out any documents. This is a record in opening accounts and an example of boosting the financial inclusion using technology.
New clients are joining Nagad, the digital financial service of the postal department, in droves after it introduced the opening of accounts through dialling of *167# and the setting up four-digit PIN. Besides, people can open an account through the app of Nagad after having their national identification number verified.
After introducing the effortless account opening process, recently the second largest MFS carrier has also launched some campaigns, which also rushing users to join the network of Nagad. The download of Nagad app has gone up to such a level that it is in the top chart of the Google Play Store among the apps from Bangladesh.
Recently, Nagad has signed agreements with all mobile phone operators to allow their subscribers to open MFS account by dialling *167#. As mobile phone operators have the information of a NID of a subscriber, whenever a prospective user dials *167# to express his or her interest to open the MFS account, their information is instantly verified against the NID database and the process to open the account is completed. The innovation of Nagad has already caught the attention of many countries and global agencies.
Even in near past, people had to spend a considerable amount of time and money to open an MFS account and had to wait for days and even for weeks. In order to improve the situation, Nagad introduced country’s first digital KYC (know your customer). Later, Nagad took the step to open MFS accounts in just a minute through the Porichoy app of the government of Bangladesh. Now, a mobile phone user can easily become an MFS account-holder by dialling *167# and set the PIN.
Only on February 17, about 1.85 lakh people joined the Nagad platform. A similar pace of client registration was observed before and after the day. On average, 1.5 lakh people registered with Nagad every day in the last two weeks. As a result, the effective number of clients of Nagad has gone past 3 crore, a development that is significantly contributing to the financial inclusion in the country.
Speaking about the unprecedented success Nagad’s Managing Director Tanvir A Mishuk said, “We had wanted from the very beginning that we would take Nagad to the people across the country very easily. Aiming that we have reduced the cost and ease the account opening process and through it we also have ensured liberty of using financial service. We already are observing the result of our endeavour. Hopefully, we will become the most popular MFS operator in the country very soon.”
With this effort Nagad already become the second largest carrier of the country having 30 percent MFS users. Nagad is working to raise it to 50 percent by this year.
Nagad has introduced an attractive mobile recharge offer where user can get Tk 20 in bonus by recharging Tk 20 from their Nagad wallet. Besides, the state owned MFS carrier has also created opportunities for the customers to avail lowest cash-out charge, free send-money and bill payment facilities, the highest interest rate on deposits, and hassle-free payment offers.
Also, Nagad is disbursing the stipend and the allowance for educational accessories among the primary school students. The government will disburse the stipends among 1.40 crore primary-level students this year in the largest-ever digital stipend fund distribution in the world in terms number of primary level students. Besides, 75 percent allowance of the Social Welfare Ministry would be distributed through Nagad. The government is also disbursing the stimulus funds through Nagad among the poultry farmers who have been hit hard by the coronavirus pandemic.
Islami Bank Bangladesh Limited inaugurated its Dhaka Judge Court sub-branch under Sadarghat Branch in the capital on Tuesday.
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Muhammad Qaisar Ali, Additional Managing Director of the Bank inaugurated the sub-branch as the chief guest where Md Iqbal Hossain, President of Dhaka Bar Association was special guest.
Abu Sayed Md Idris, Executive Vice President and Head of Dhaka South Zone of the Bank presided over the programme.
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BM Habibur Rahman, Senior Vice President and Head of Sadarghat Branch addressed welcome speech.
Shaick Farid Ahmed, Senior Vice President and SM Enayet Hossain, Vice President of the Bank were present on the occasion.