Covid pushed nearly 5 million more in Southeast Asia into extreme poverty, says Asian Development Bank

Southeast Asia is grappling with high poverty levels as recurring waves of Covid-19 have dealt a blow to the region’s labor market, said the Asian Development Bank.

Last year, the pandemic pushed 4.7 million more people in Southeast Asia into extreme poverty — which is defined as those living on less than $1.90 per day — and erased 9.3 million jobs in the region, the ADB said in a report published on Wednesday.

“The pandemic has led to widespread unemployment, worsening inequality, and rising poverty levels, especially among women, younger workers, and the elderly in Southeast Asia,” said ADB President Masatsugu Asakawa.

Many countries in Southeast Asia have lost their hard-won economic and development gains as they continue to struggle with the spread of the omicron Covid variant.

Though ADB expects growth of 5.1% in 2022 as higher vaccination rates prompt economies to reopen, it warned that the new variant could cut growth by as much as 0.8%.

The countries with the highest number of reported Covid-19 cases in the region since the pandemic began are Vietnam (6.55 million), Indonesia (5.91 million), and Malaysia (3.87 million) — all developing ones — online publication Our World In Data showed.

“The pandemic’s impact on poverty and unemployment will likely persist as inactive workers become de-skilled and poor people’s access to opportunities further deteriorates,” ADB said. “When this happens, the deterioration in inequality will transfer across generations.”

Signs of recovery in tourism

Despite the volatility the pandemic has created, ADB is optimistic that Southeast Asian economies are beginning to recover.

Southeast Asian countries have mostly been “taking care of their own house” since the Asian financial crisis, and that has put them in a better position to “weather the storm” of the pandemic, said ADB Vice President Ahmed Saeed.WATCH NOWVIDEO03:04Southeast Asia is ‘broadly in good economic health’ despite Covid, says ADB

The region, which relies heavily on its tourism industry for growth, expects to see the sector gradually pick up as travel borders begin to open, providing more opportunities for economic growth and jobs.

“Tourism tends to bounce back and to be more robust through the cycle than we expected,” Saeed told CNBC’s “Squawk Box Asia” on Wednesday.

“Would additional waves of the Covid virus and variants set that back? Yes. But I think … once the clouds clear … we will ultimately get back past our 2019 tourism numbers across the region and beyond those,” he added.

But Southeast Asia still has a long way to go.

Although overall international tourist arrivals increased by 58% in July to September 2021 compared with the same period in 2020, it remained 64% below 2019 levels, the report stated.

“At present, tourism related goods and services including transport, accommodation, recreation, and other personal services will likely remain weak while travel remains curtailed and social distancing is enforced,” ADB said.

Investing in health care

To expedite the region’s economic recovery, ADB urged Southeast Asian governments to invest more in their health-care systems.

While the virus could cause long-term damage to economies by causing severe disruptions to supply chains and labor markets, a lack of investment in health care is also worsening inequality, the bank said.

Allocating more resources would “help health systems deliver care, improve disease surveillance, and respond to future pandemics,” the bank said.

ADB said Southeast Asia’s economic growth could increase by 1.5% if health spending in the region reaches about 5% of gross domestic product, compared with 3% in 2021.

“Countries that had greater internal health care capacity, greater levels of wealth … managed to come through this process better than” middle- and low-income countries that lack health-care systems and infrastructure, Saeed said.

Oil adds to gains on lack of progress in Russia-Ukraine talks

It marks the third volatile week of trade as there was slim progress in peace talks between Russia and Ukraine.

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This volatility is raising concerns about a prolonged disruption to oil supply, according to Reuters.

FILE PHOTO: Pump Jacks are seen at sunrise near Bakersfield, California. ( REUTERS/Lucy Nicholson/File Photo / Reuters Photos)

U.S. West Texas Intermediate (WTI) crude futures climbed $2.96, or 2.9%, to $106.00 a barrel, adding to an 8% jump on Thursday.

Brent crude futures jumped $2.77, or 2.6%, to $109.41 a barrel, after surging nearly 9% on Thursday in the largest percentage gain since mid-2020.https://flo.uri.sh/visualisation/8927714/embed

Even with the rebound, both benchmark prices were set to end the week down about 4%. Prices have dropped from 14-year highs hit nearly two weeks ago.

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Prices have been on a rollercoaster ride due to the supply crunch from sanctions on Russia, stuttering nuclear talks with Iran, dwindling oil stockpiles and worries about a surge of COVID-19 cases in China, according to Reuters.

India has not imposed sanctions against buying oil from Russia

NEW DELHI — The state-run Indian Oil Corp. bought 3 million barrels of crude oil from Russia earlier this week to secure its energy needs, resisting Western pressure to avoid such purchases, an Indian government official said Friday.

The official said India has not imposed sanctions against buying oil and will be looking to purchase more from Russia despite calls not to from the U.S. and other countries.

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The official spoke on condition of anonymity as he was not authorized to talk to reporters.

A man fills his car at a gasoline station in Gauhati, India, Sunday, Sept. 22, 2019.  (AP Photo/Anupam Nath, File / AP Newsroom)

The United States, Britain and other western countries are urging India to avoid buying Russian oil and gas. Indian media reports said Russia was offering a discount on oil purchases of 20% below global benchmark prices.

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Such prices have surged in recent weeks, posing a huge burden for countries like India, which imports 85% of the oil it consumes. Its demand is projected to jump 8.2% this year to 5.15 million barrels per day as the economy recovers from the devastation caused by the pandemic.

FILE PHOTO: Pump Jacks are seen at sunrise near Bakersfield, California, October 14, 2014. ( REUTERS/Lucy Nicholson/File Photo / Reuters Photos)

White House press secretary Jennifer Psaki said earlier this week that Indian purchases of Russian oil wouldn’t violate U.S. sanctions, but urged India to “think about where you want to stand when history books are written.”

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Asked by reporters about India buying oil from Russia, the spokesman for the External Affairs Ministry, Arindam Bagchi, said many European countries import Russian oil and gas.

Russian President Vladimir Putin listens to a journalist’s question during a joint news conference with Hungary’s Prime Minister Viktor Orban following their talks in the Kremlin in Moscow, Russia, Tuesday, Feb. 1, 2022. (Yuri Kochetkov/Pool Photo vi (Yuri Kochetkov/Pool Photo via AP / AP Newsroom)

“India imports most of its oil requirements. We are exploring all possibilities in the global energy market. I don’t think Russia has been a major oil supplier to India,” Bagchi said.

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Iraq is India’s top supplier with a 27% share. Saudi Arabia is second at around 17%, followed by the United Arab Emirates with 13% and the U.S. at 9%, the Press Trust of India news agency reported.

Oil prices climbed on Thursday after the International Energy Agency (IEA) said markets could lose three million barrels per day (bpd) of Russian crude and refined products from April.

The supply loss would be far greater than an expected one million bpd per day drop in demand triggered by higher fuel prices, the IEA said in a report on Wednesday.

Benchmark Brent crude futures gained $1.8, or 1.9%, to $99.86 a barrel by 0408 GMT, after falling for three consecutive trading sessions.

U.S. West Texas Intermediate (WTI) crude was up $1.6, or 1.7%, to $96.67 a barrel.

Both contracts settled lower the previous day, following an unexpected jump in U.S. crude stockpiles and signs of progress in Russia-Ukraine peace talks.

“The enthusiasm of the market to trade the geopolitical fallout is easing, which helps to squeeze out some premium bubbles out of oil prices. It’s a time to re-assess different factors,” said Wang Xiao, lead researcher at Guotai Junan Futures Co.

Prices had sagged in the previous session on news that oil inventories in the United States climbed by 4.3 million barrels in the week to March 11 to 415.9 million barrels, according to the U.S. Energy Information Administration, surpassing analysts’ expectations for a decline of 1.4 million barrels.

“Questions about how much Russian oil will continue to swing and uncertainty in how bad crude demand destruction will get will keep energy markets jittery,” Edward Moya, a senior market analyst for OANDA, wrote in a note.

The oil market largely shrugged off a move by the U.S. Federal Reserve on Wednesday to raise interest rates by one-quarter of a percentage point, as anticipated.

Market sentiment was also somewhat boosted after China pledged policies to boost financial markets and economic growth, while a decline in new COVID-19 cases in China spurred hopes that authorities could lift travel bans and allow factories to resume production in cities under lockdowns.

Hong Kong’s Hang Seng index soars 7% as tech, property stocks surge; Japan’s Nikkei up more than 3%

SINGAPORE — Shares in Asia-Pacific rose in Thursday trade as the Chinese markets continue to extend gains from a rebound, while the U.S. Federal Reserve announced its first rate hike in more than three years.

Hong Kong’s Hang Seng index led gains among the region’s major markets, surging 7.04% to close at 21,501.23 and erasing heavy losses from earlier in the week. On Wednesday, the benchmark index saw its best day since October 2008 as it rocketed 9%.

The Hang Seng Tech index soared 7.76% to 4,572.79, with Tencent up 6.27%, Alibaba jumping 12.46% and JD.com surging 15.85%.

Mainland Chinese stocks finished the trading day higher, with the Shanghai composite up 1.4% to 3,215.04 while the Shenzhen component gained 2.408% to 12,289.97.

On Wednesday, China markets bounced after a Chinese state media report signaled support for Chinese stocks. U.S.-listed Chinese stocks followed suit. The report said regulators from both countries are working toward a cooperation plan on U.S.-listed Chinese stocks.

It also said authorities would work toward stability in the struggling real estate sector. China’s Ministry of Finance also announced there were no plans to expand a test of property tax this year.

Chinese real estate stocks in Hong Kong soared on Thursday, with Country Garden up 28.41%, Sunac rocketing 59.03% and China Evergrande Group popping 17.83%. The Hang Seng Properties index climbed 9.46% to 29,555.58.

Russia moves to seize hundreds of planes from foreign owners

New York (CNN Business)Russia is seizing hundreds of commercial jets owned by US and European leasing companies, a further sign of the challenges the country’s airline industry faces due to sanctions following its invasion of Ukraine.President Vladimir Putin signed a law Monday as part of the government’s anti-sanction measures that will allow Russian airlines to register planes leased from foreign companies in Russia, where they will be issued local certificates of airworthiness, according to a statement from the Kremlin.The bill will make it possible for Russian airlines to keep their foreign leased aircraft and operate the planes on domestic routes, while making it harder for foreign companies to reclaim their jets without Russian government approval.

US and European sanctions imposed on Russia require leasing companies to repossess all planes they leased to Russian airlines by the end of the month.

Western aircraft makers such as Airbus (EADSF) and Boeing (BA) have already cut off Russian airlines’ access to the spare parts they need to maintain and safely fly their jets. Russian airlines operate 305 Airbus jets and 332 Boeing jets, according to data provided by aviation analytics firm Cirium.

Russia also has 83 regional jets made by Western manufacturers such as Bombardier, Embraer and ATR. Only 144 planes in the active fleets of Russian airlines were built in Russia.Cirium data shows that 85% of those foreign-made planes are owned by leasing companies, and puts their combined value at $12.4 billion.It was unclear how the leasing companies could have taken possession of these planes while they remain on Russian soil. Additional sanctions prohibiting Russian aircraft from flying to most other countries has restricted its airline industry essentially to domestic flights.Leasing companies have not responded to a request for comment on Russia’s actions, and it is unclear if they’ll even want those planes back. The planes will not have access to replacement parts and won’t have valid airworthiness certificates that would be accepted by western airlines.”These jets won’t be supported with parts and maintenance any longer,” said Richard Aboulafia, managing director of AeroDynamic Advisory. “It’s a real issue if they lose their certificates of airworthiness, which can happen if proper records aren’t kept, or especially if they’re cannibalized for parts.”Losing access to 85% of its foreign-built planes would be a crippling blow to the country’s economy.Russia is the world’s largest nation by landmass, more than twice the size of the continental United States. It needs a viable airline industry to keep its economy working, said Charles Lichfield, the deputy director of the GeoEconomics Center at the Atlantic Council, an international think tank.”It is an important part of Russia’s economy,” he said. “They want some basic domestic industry to remain in place. Russians don’t fly as much as Americans do. They don’t fly to Siberia for vacation.”Its airline industry is a crucial link for businesses, not only for international flights but also for domestic service for its energy sector, due to the need to transport engineers, other workers and equipment to and from its far flung oil fields.”Aviation is an incredible enabler of economic growth, both domestically and internationally,” said Robert Mann, an airline consultant and analyst. “Without it, you take it back to an almost agrarian economy, trying to operate with a railroad network.”Russia doesn’t need all the planes it is seizing, as the blow to its economy from the sanctions will greatly reduce the need for air travel, said Betsy Snyder, credit analyst covering aircraft leasing companies at Standard & Poor’s.”The Russian economy is tanking,” she said. “No one will be going in and out of Russia, the Russian citizens are losing their money so they don’t have the money to travel going forward. It could be that [airlines] will be a much smaller business.”That raises the possibility that many of the planes being seized would be cannibalized for parts.”If you don’t have parts manufacturing authority, then you shouldn’t be making it yourself,” Mann said. “You don’t know what standards were used. Have you gotten the internal characteristic right? When you put it into a turbine section of an engine, will it perform like it was designed?”

Flying on Russian planes is about to get much more dangerousMann said that when a part reaches the end of its designed usefulness, known as “green time,” an airline must choose between flying with parts that should have been replaced for safety reasons or robbing parts from other planes.”You can go through that process as long as you have planes that have green time,” he said. ” As you run out of airplanes, your network gets smaller and you can fly fewer hours every day, until you don’t have an airline.”

So even keeping the planes won’t necessarily keep the Russian airline industry operating.”Within a year Russia will cease to have any kind of viable airline industry,” Aboulafia said, adding that the its airline industry could soon find itself somewhere between the heavily sanctioned industries in Iran and North Korea.Can a country as large as Russia live without a modern, viable airline industry? “That’s a thesis that has never been put to the test,” Aboulafia said. “But it’s about to be.”

Hong Kong’s Hang Seng index soars 6%

Hong Kong’s Hang Seng index soars 6% as tech, property stocks surge; Japan’s Nikkei up 3%

SINGAPORE — Shares in Asia-Pacific rose in Thursday morning trade following overnight gains on Wall Street, while the U.S. Federal Reserve announced its first rate hike in more than three years.

Hong Kong’s Hang Seng index led gains among the region’s major markets, surging 6.26% in morning trade and erasing heavy losses from earlier in the week. The benchmark index saw its best day since October 2008 on Wednesday as it rocketed 9%.

The Hang Seng Tech index soared 7.43%, with Tencent up around 6%, Alibaba jumping nearly 11% and JD.com surging more than 11%.

Mainland Chinese stocks rose, with the Shanghai composite up 1.23% while the Shenzhen component gained 1.95%.

China markets bounced on Wednesday after a Chinese state media report signaled support for Chinese stocks. U.S.-listed Chinese stocks soared on Wednesday as well following the report, which said regulators from both countries are working toward a cooperation plan on U.S.-listed Chinese stocks.

The Wednesday report also said authorities would work towards stability in the struggling real estate sector. China’s Ministry of Finance additionally announced on Wednesday that there were no plans to expand a test of property tax this year.

Chinese real estate stocks in Hong Kong bounced on Thursday, with Country Garden up about 23%, Sunac soaring nearly 50% and China Evergrande Group popping about 20%. The Hang Seng Properties index traded 7.7% higher.

Other Asia-Pacific markets also jumped on Thursday. The Nikkei 225 in Japan surged about 3% while the Topix index climbed 1.98%.

South Korea’s Kospi gained 1.71%. Over in Australia, the S&P/ASX 200 advanced 1.11%.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 2.96% higher.

Oil prices were higher in the morning of Asia trading hours, with international benchmark Brent crude futures up 1.82% to $99.8 per barrel. U.S. crude futures climbed 1.8% to $96.75 per barrel.

Fed rate hike

The U.S. Federal Reserve on Wednesday approved a 0.25 percentage point rate hike, the first increase since Dec. 2018.

Officials at the U.S. central bank also signaled an aggressive path ahead, with rate rises coming at the six remaining meetings this year.

“Given our stagflationary baseline which got exacerbated by the Russia/Ukraine war, it appears that the Fed’s focus will weigh more on inflation fighting despite the uncertainty created by the situation in Ukraine based on yesterday’s meeting,” Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, wrote in a Thursday note.

Overnight on Wall Street, the Dow Jones Industrial Average climbed 518.76 points, or 1.55%, to 34,063.10 while the S&P 500 advanced 2.24% to 4,357.86. The tech-heavy Nasdaq Composite surged 3.77% to 13,436.55.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.372 after a recent fall from around the 99 level.

The Japanese yen traded at 118.66 per dollar, weaker than levels below 118 seen against the greenback earlier this week. The Australian dollar changed hands at $0.7311, holding on to gains after yesterday’s jump from below $0.72.