BCEAO releases $ 6 billion for West African economies

The BCEAO has just made a liquidity injection of 3350 billion FCFA ($ 6 billion) at a fixed rate of 2% in favor of several banks of the UMOA. A total of 87 financial institutions participated in the operation. The Central Bank of West African States (BCEAO) made a further injection of liquidity to its member countries last week. In total, 3350 billion FCFA ($ 6 billion) were disbursed by the institution.

During the auction on September 14, 87 banks in the sub-region obtained an injection of liquidity at a fixed rate of 2%. With more than 1000 billion FCFA ($ 1.8 billion), it is the Ivory Coast which obtained the most important financing, ie 31% of the funds injected.

It is followed by Senegal with more than 580 billion FCFA ($ 1 billion), Mali with 466 billion FCFA (835 million $), Benin with 434.5 billion FCFA (777 million $) and Burkina Faso with 318 billion FCFA. ($ 569 million). Niger with 241.6 billion FCFA ($ 432 million), Togo with 219 billion FCFA (…

Why is Wall Street smiling when the economy collapses?

The pandemic has knocked out the US economy, brutally destroying more than 20 million jobs and destroying corporate profits. However, after a slump in March, the New York Stock Exchange has returned to an insolent form.

Why is Wall Street smiling when the economy collapses?

Its flagship index, the Dow Jones Industrial Average, has already recovered more than 30% from its lowest level on March 23, when hospitals were panicking over the influx of serious cases of COVID-19 and when US states were imposing drastic restrictions paralyzing the activity of businesses of all sizes.

Employment figures for the next few months or companies' second quarter results "will get worse," but "Wall Street is staring at the horizon," said Sam Stovall, chief investment officer at CFRA.

In this regard, investors are encouraged by the gradual resumption of economic activity, both in Asia, in Europe and in certain American states.

Even with reduced capacity, the reopening of Disneyland Park in Shanghai on Monday has particularly marked the spirits.

Wall Street brokers, on the other hand, "think the worse-than-expected economic numbers will generate even more aid from the Fed," the US central bank, which has already injected billions of billions of dollars. dollars to make sure markets function normally, notes Stovall. The US government also spent astronomical sums to try to ease the economic shock.

Above all, notes the specialist, investors expect a dynamic rebound in corporate profits from 2021.




And then where to put his money when the Fed lowered its interest rates around 0%? Buying American debt in the markets is not paying much anymore at the moment.

Offset

Companies listed on the stock market are far from faithfully representing the real economy.

They are on average larger, older and more international than private companies. They are probably better able to weather the storm without too much damage than the multitude of restaurants, shops and small businesses that had to close for several weeks.

Some technology stars, who particularly benefit from teleworking and free time for confined people, have also taken a huge place in the indices: Microsoft, Apple, Amazon, Alphabet and Facebook now account for around 20% of the S&P 500, l index that represents the 500 largest companies on Wall Street.

"Investors are reallocating their money in favor of these companies" because they favor the best margins and, "de facto their weight is reinforced," notes Guilhem Savry, head of macroeconomic research at Unigestion.

Another gap, according to this specialist, "services are poorly represented in the financial markets" even though "this scope is very important in terms of jobs".

More generally, even if it may seem “counter-intuitive”, “long-term economic growth is not correlated with returns on investments in the equity market,” says Jay Ritter, who studies the link between these two variables for many years.




The Chinese economy, for example, saw its per capita income grow by 9% per year between 1993 and 2018, but the total return on publicly traded stocks fell by 1.9% per year.

Conversely, the South African stock market has been attracting investors for decades thanks to the payment of high dividends even though the country's per capita growth is not spectacular.

"In the long run, what counts are dividends and growth in earnings per share," says Ritter.

In the short term, market reactions can also sometimes seem surprising.

The publication of a good job report, for example, can cause Wall Street indices to stumble, because if unemployment goes down, wages, and therefore inflation, can go up.

This, the brokers reason, can prompt the central bank to raise interest rates and make borrowing higher for listed companies and investors.

Finally, just because the stock market rises does not make all Americans happily get rich: according to a study by the Fed, just over half of them own stocks, and these are mostly concentrated in the hands of the richest 10%.