The Nigerian equities market advanced by N70bn at the close of trading on the floor of the Nigerian Stock Exchange on Thursday notwithstanding depreciation in 22 stocks.
The market recorded 15 gainers as 128.312 million shares valued at N2.728bn exchanged hands in 3,241 deals.
At the end of the day’s trade, the All-Share Index closed positive, gaining 55 basis points while the year-to-date return improved to 32.7 per cent.
“The major drivers of today’s performance were Dangote Cement Plc, Nestle Nigeria Plc and Nigerian Breweries Plc, which appreciated by 2.4 per cent, 1.3 per cent and 0.3 per cent, respectively. Ex-Dangote Cemen), the market would have shed 17 basis points,” analysts at Afrinvest Securities said in a post.
Investors gained N70.0bn as market capitalisation advanced to N12.293tn from N12.223tn. Likewise, activity level rose as volume and value traded climbed 11.9 by per cent and 73.1 per cent to N128.3m units and N2.7bn, respectively.
The NSE industrial goods index led gainers, up by 1.1 per cent due to an uptick in Dangote Cement. The insurance index followed suit, closing 0.4 per cent higher on account of price appreciation in Continental Reinsurance Plc and NEN Insurance (Nigeria) Plc, which recorded respective gains of 2.1 per cent and 3.6 per cent.
The NSE consumer goods index marginally rose by 0.2 per cent following positive sentiment towards Nestle Nigeria and Nigerian Breweries.
On the other hand, the NSE oil/gas index fell by one per cent on the back of losses in Oando Plc, which plummeted by five per cent, while the NSE banking index dropped by 0.6 per cent, dragged by declines in Zenith Bank Plc and Guaranty Trust Bank Plc, which shed 2.4 per cent and 0.2 per cent, respectively.
At the top of gainers’ chart were Okomu Oil Palm Plc, C & I Leasing Plc and Airline Services and Logistics Plc , which appreciated by 5.7 per cent, 4.4 per cent and four per cent, accordingly.
Neimeth International Pharmaceuticals Plc, Conoil Plc and Unilever Nigeria Plc topped the losers’ chart, shedding 8.4 per cent, five per cent and five per cent, respectively.
“In line with our expectation, the day’s market performance was largely driven by bargain hunting in market bellwethers. Hence, we expect the market to trade in similar trend on Friday,” the analysts noted.
One of the leading financial advisory firms in the world, UBS Wealth Management’s Chief Investment Office (CIO), has predicted that the Gross Domestic Product (GDP) of some economies in Africa, such as Egypt, Kenya and Nigeria, can comfortably grow at five per cent or more in the years ahead.
The firm stated this in its latest report titled: ‘Africa – Cradle of diversity’. It noted that the region’s young and growing population and its prospering middle class would be the key to sustaining such high growth rates.
For Nigeria, figures from the National Bureau of Statistics (NBS) last week showed that the economy exited recession by expanding marginally in the second quarter (Q2) of the year. The NBS figures showed that the economy grew by 0.55 per cent (year-on-year) in Q2 2017.
However, the UBS-CIO report stated that achieving sustainable economic growth would require necessary economic reforms, infrastructure investment and measures to encourage a more diversified economy continue and expand, especially in countries that are the least diversified, especially Nigeria.
It further stated that fostering economic integration within the region and nurturing its role as a global manufacturing hub were two of the many exciting trends that would help shape Africa’s future. For Nigeria, it held the view that Africa’s largest economy offers significant potential but it must widen its tax base and broaden its activities away from oil.
It also argued that liberalisation of naira exchange rates will be crucial in attracting foreign investment. The report highlighted 64 nations the International Monetary Fund had projected to have average real GDP growth of more than four per cent in the next five years, stating that more than half are in Africa. According to the report, as Africa’s largest country both in terms of GDP and population, Nigeria offers enormous potential for the nation’s domestic market.
The UN expects Nigeria’s population to reach up to one billion people by 2100, offering unusual potential for growth. At the same time, population growth presents a significant challenge in terms of job creation for new labor market entrants and the nation’s geographic limitations, considering Nigeria’s territory is approximately the size of Texas.
In addition, the UBS CIO research showed that indicators relating to governance and ease of doing business were clearly weaker than for peers, thus underpinning the need for reforms as foreseen in Nigeria’s Economic Recovery and Growth Plan. Decisive factors outlined in the report included efforts to broaden the country’s tax base and to diversify its economy. Nigeria’s revenue base heavily relies on oil-related activities, which exposes the nation’s fiscal balance to energy price shocks and volatility risks.
Nigeria is Africa’s largest oil exporter and while commodity exports remain a major growth driver in many African countries, their importance is slowly declining as domestic demand plays an expanding role in sustaining growth. Some of the continent’s fastest growing economies are concentrated in non-resource-rich countries like Côte d’Ivoire, Senegal, Kenya and Ethiopia, which are expected to grow between seven per cent and eight per cent in the next few years.
The report pointed out that the manufacturing industry was probably one of the most overlooked sectors in Africa, despite the continent’s potential to become the world’s next low-cost manufacturing hub and a leading global player in resource-intensive manufacturing.
“Competitive labor costs, abundance of raw materials, convenient transit locations for export and large markets for local consumption position many African countries well to replace Asian competitors as attractive locations to produce goods and draw manufacturing foreign direct investment.
In the short term, further progress toward the liberalisation of the Nigerian currency’s exchange rate will have a decisive impact on the inflow of such investment,” it added.
The Head of Central and Eastern Europe, Middle East and Africa, France and Belgium International at UBS Wealth Management, Ali Janoudi, said: “We see tremendous potential for Nigeria’s economy, which is Africa’s largest, but in order to achieve its potential, current reform programs must be implemented and in some instances, accelerated. The current climate of higher energy prices and relative domestic stability indicate now is the right time to act.” On his part, the Head of Emerging Market Asset Allocation at UBS Wealth Management’s CIO, Michael Bolliger, said: “In the near term, oil will remain an important source of income for Nigeria. However, the impressive growth rates of non-resource-rich countries in Africa clearly indicate that development beyond oil is the way forward.” The report stated further that Africa’s glass half-empty, half-full perception of the opportunities on offer hinges on whether one believes the region’s significant potential for development can be realised.
The successful conduct of the 40th annual general meeting (AGM) of Oando Plc on Monday has been described as a good development that would impact positively on the operations of the company going forward.
The founding National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), Sir Sunday Nwosu, stated that he was excited at the outcome of the meeting.
While the meeting was going on in Ibom Hall, Uyo, AkwaIbom State, there was a protest outside the venue by some aggrieved shareholders, under the aegis of Oando Shareholders Solidarity Group. However, Oando Plc had said in a statement that all shareholders were allowed access to the venue to raise their legitimate concerns to management and the Board.
According to the company, the protest lost steam after 15 minutes as the protesters quietly dispersed without causing any disruption to the AGM.
“However before dispersing key representatives of the shareholder associations addressed the protestors asking that they raise their concerns the legitimate way either via writing to the company or by attending the AGM,” the company said..
Expressing excitement on the successful AGM, Nwosusaid: “The AGM was very successful, nothing more. We discussed all the issues that needed to be discussed and we voted to keep the management and the Board. The protest that happened outside the venue was carried out by non-shareholders who did not have any business being there in the first place. I went out and spoke with the protesters. I told them that if they were shareholders, they would have known that the right way to raise their concerns about Oando is to officially write to the company secretary. The protest did not disrupt the meeting in anyway.”
The Group Chief Executive Officer of Oando, Mr. Wale Tinubu, at the AGM thanked the shareholders for their continued support of the company in the challenging times and assured them that the management team would focus on sustaining the company’s profitability and ensuring returns to shareholders.
“As your management team, we assure you that our main focus will continue to be geared towards sustaining your company’s profitability and ensuring adequate return for you our esteemed shareholders,” he said.
Speaking on the attempts to stop the AGM through petitions, Tinubu said: “The petitioners requested a postponement of our AGM, but we provided the Securities and Exchange Commission (SEC) with all the information required and we were cleared to hold the AGM.”
Investors last week renewed demand for the shares of Caverton Offshore Support Group Plc (COSG), following the news of award of a contract to it by Chevron Nigeria Limited (CNL).
COSG was awarded a five-year logistics support contract by CNL operator of the Nigerian National Petroleum Corporation (NNPC/CNL Joint Venture, for the provision of aviation services with a two- year renewable option. Confident that the contract would boost the bottomline of COSG going forward, investors increased demand for the shares of the company. The high demand led to a growth of 16 per cent in the stock, rising from N1.00 to N1.16 per share last week.
COSG had explained that the contract was awarded following an extended competitive tendering process. “Caverton emerged successful after scaling through both the technical and commercial evaluation ahead of other bidders. Given CNL’s reputation for very high safety and quality standards, it is safe to say that Caverton’s commitment to safety, quality and continuous improvement contributed in no small measure to this successful bid. Caverton will service this contract with 11 Bell manufactured helicopters in line with CNL’s requirement. As part of the contract, Caverton will provide guaranteed medevac response to CNL 24 hours a day, seven days a week, covering their entire area of operations,” the company had said.
Speaking on the development, the Group Chairman of the Caverton, Mr. Remi Makanjuola said: “We are thankful to our clients, the aviation regulators, our shareholders, our staff and many others who have played a role in our development and success as a company. Special recognition to the Access Bank Group that has supported Caverton on various projects over the years. Caverton Helicopters is poised to continue to work on consolidating its vision to be the leading provider of premium aviation services in sub-Saharan Africa to the oil and gas industry.” Over the past decade, Caverton has worked hard to raise the bar in key areas in this specialised sector: helicopter availability, on-time departure, service and maintenance quality; doing all this while pursuing a robust local content strategy. “The positive impact of these efforts is the growing confidence in our services by the international oil companies and others, resulting in an increasing market share,” the company said.
Stock market operators had said the contract was a good development that will boost the financial performance of COSG, noting that the company would deliver improved returns to investors going forward.
THE Nigerian Stock Exchange, NSE, has assured investors in the capital market that despite the current economic recession, investments in the market would not crumble as witnessed during the global economic meltdown. Addressing participants at a two day workshop on ‘Financial Planing: The Stock Market Option’, organized by the Benue State government in conjunction with the NSE, Senior Manager of the Exchange, Mr. Oliver Achugbue, said numerous measures have been put in place to prevent a recurrence of the crash. Achugbue stated: “Our rules have been strengthened, enforcement is assured and compliance is non-negotiable.
We encourage those investors who left the market during the 2008-2010 crisis to return. “I want to assure willing investors that the market has gotten to the level it can no longer fall as a member of the World Federation of Exchanges, WFE, all rules and regulation are strictly adhered to in line with global guiding practices.” Declaring the workshop open, the Benue State Commission of Finance, Mr. David Olofu, said the training was intended to assist Benue State civil servants better appreciate the Nigerian stock market and its investment opportunities.
Olofu assured that despite the current economic challenges, the government is committed to paying the salaries, pensions and gratuities of its serving and retired workers to enable them take advantage of the investment opportunities in the capital market.| “This training will also help them learn how to find the right balance of spending and saving from their hard earnings that could help them grow their money for tomorrow,” he added.
Capital market operators have advised the Debt Management Office (DMO) to embark on more aggressive awareness creation in order to attract more patronage for the Federal Government of Nigeria Savings Bonds (FSB).
The DMO had last March introduced the FSB on behalf of the federal government as part of its efforts to promote savings culture in Nigeria and improve financial inclusion, particularly amongst retail investors.
The bond is expected to also provide additional funding for the government. However, investors’ participation in the FSB has remained poor despite the increase in the coupon rate (interest rate) on the bond.
For instance, the amount allotted dropped consistently from N2.07billion in March 2017 to N400.57million in July 2017, while the total number of investors also dropped from 2,575 in March 2017 to 779 in July 2017.
The coupon rate on the 2-year Bond, which was 13.01 per cent in March 2017 stood at 13.39 per cent in July 2017 while the coupon rate on the 3-year Bond which was 13.79 per cent in April, the first time a 3-year bond was issued, stood at 14.39 per cent in July 2017.
The coupon rates for the August 2017 offer are 13.535 per cent and 14.535 per cent for the 2-year bond and 3-year bond respectively. This means that the August bond issues carried higher coupon rates than the July issues and represent the highest coupon rates since inception.
But the persistent increase in the coupon rates, have not attracted enough subscription to the bond despite the steady decrease in the inflation rate in the country since January 2017.
Commenting on the development, analysts at FSDH Research said one of the factors responsible for the poor patronage of FSB is we can attribute is the rally that dominated the equity market in Nigeria.
“The Nigerian Stock Exchange All Share Index (NSE ASI) appreciated by 51.47% between March 01, 2017 and August 9, 2017. Many retail investors diverted funds to the equity market to take advantage of capital appreciation. Other factors are: the low awareness of the benefits and characteristics of the Bond; the low liquidity of the Bond at the secondary market and the high yield on the Nigerian Treasury Bill (NTB),” they said.
Speaking on how to increase investors’ patronage, they said the DMO and the stockbrokers can organise investors’ road shows in various cities and schools across the country.
“This will be an avenue to directly engage retail investors on the need for them to hold the bonds in their investment portfolio. The DMO can work with some identified large corporate organisations that have large number of employees to encourage their employees to invest in the Bonds on a monthly basis. The DMO can also work with government agencies to encourage civil servants to invest in the bond,” the analysts stated.
According to them, these strategies should be able to attract a minimum of one million subscribers on a monthly basis. “If this is achieved and the monthly subscription amount increases, the overall weighted average interest rate on the FGN debt will drop,” they said.
The Nigerian stock market recorded a N294bn decline on Tuesday, nearing its lowest level in two weeks.
The market was dragged down by losses in banking, cement and fast-moving consumer goods sectors, as some investors took profits from previous gains in the market, traders said.
The Nigerian Stock Exchange market capitalisation declined to N12.786tn from N13.080tn recorded on Monday, as the NSE All-Share Index closed at 37,096.60 basis points from 37,950.96 basis points.
A total of 391.625 million shares valued at N5.436bn were traded in 5,285 deals.
The ASI, thus, declined by 2.25 per cent, bringing it down to a level that was last seen on August 3, 2017.
The Nigerian equities market continued its negative trend to settle the year-to-date return at 38.04 per cent. Also, the volume of transaction and market turnover declined by 23.88 per cent and 28.69 per cent, respectively. Eleven stocks made the gainers’ list, while and 36 recorded losses.
The market had rallied for eight consecutive weeks and peaked at a 33-month high last week before profit takers took advantage of the gains to sell their holdings.
“The market was just reflecting global trend in the last few days, which has seen many major stock markets falling,” the Chief Executive Officer, Trust Yields Securities, Rasheed Yussuff, was quoted by Reuters as saying.
He said it was normal for the market to experience some bearish moment having been rising for almost two months.
Low stock valuation and the relative stability in the foreign exchange market over the last few months have helped to draw many offshore investors into the equity market, leading to a surge in the domestic equity market.
The equity market has benefitted from the recovery in liquidity on the currency market with the introduction in April of a new forex window for investors to trade the naira at market-determined rates.
Equally, most of the gains over the last two weeks were driven by increases in profitability announced by many major listed companies.
At the close of trading on Tuesday, Morison Industries Plc, PZ Cussons Plc, Stanbic IBTC Holdings Plc, Cement Company of Northern Nigeria Plc and Nascon Allied Industries Plc emerged as the top losers, shedding 8.16 per cent, five per cent, five per cent, 4.96 per cent and 4.96 per cent, respectively.
Berger Paints Plc, GlaxosmithKline Consumer Nigeria Plc, Golden Guinea Breweries Plc, Conoil Plc and Learn Africa Plc emerged the top five gainers, appreciating by five per cent, five per cent, 4.71 per cent, 3.99 per cent and 3.80 per cent, accordingly.
FMDQ OTC Securities Exchange has launched an Investor Protection Fund, IPF, to boost and sustain investors’ confidence in the Nigerian capital market. Following the establishment, Mrs. Titi Helen Lawani, representing the Pension Fund Operators Association of Nigeria, PenOp, was appointed the Chairperson of Board of Trustees, BoT, while Ms. Tokunbo Ajayi, representing the Association of Corporate Trustees emerged the Vice Chairperson of the Fund.
The Exchange, in a statement, said the establishment of the Fund was in compliance with the provisions of Part XIV of the Investments and Securities Act 2007 and represents a major milestone in the achievement of its mandate to provide a secure and credible platform supported by global best practices. “The FMDQ-IPF was established for the purpose of compensating investors who suffer pecuniary losses arising from insolvency, bankruptcy, or negligence of a dealing member of the OTC Exchange, as well as defalcation committed by a dealing member or any of its directors, officers, employees, or representatives in relation to securities, money or any property entrusted to, received, or deemed received by the dealing member in the course of its capital market activities.
“Through this landmark achievement, the OTC Exchange is positioned to support the investor protection mandate of the Securities and Exchange Commission, which guided by the 10-year Nigerian Capital Market Master Plan, launched the National Investor Protection Fund (NIPF) in 2015 for the purpose of compensating investors whose losses are not covered under the Investor Protection Fund administered by securities exchanges,” the Exchange said.
Lafarge Africa is consolidating its operations on the continent to simplify its ownership structure and activities, the Head of Strategy, Wole Adeleke, has said.
He said on Monday that the decision was made three years ago after Lafarge combined its Nigerian business with its South African operations and listed the combined entity, which it renamed Lafarge Africa, on the Nigerian Stock Exchange.
Now seeking approval from the Securities and Exchange Commission to merge the operations of two other wholly-owned units, in a move engineered to consolidate management of the companies with no operational savings, Reuters quoted Adeleke as saying.
In a notice to the stock exchange, Lafarge Africa said its board had asked the company to “undertake a business combination with United Cement Company of Nigeria Limited and Atlas Cement Company Limited.”
“We needed to simply the ownership structure of Unicem. Because Unicem has some significant tax attributes it was decided that Unicem should be merged into Lafarge Africa,” he told Reuters.
Unicem is the third largest cement plant in Nigeria.
Lafarge has been consolidating its businesses in Africa to cut costs and accelerate growth, particularly with arch-rival Dangote Cement, owned by Africa’s richest man Aliko Dangote, expanding aggressively on the continent.
Last month, Holcim Nigeria, now part of Lafarge Africa, said it would pass a resolution in August to dissolve the company after its Swiss-based parent firm merged with French rival, Lafarge in 2015.
It also delisted NSE-listed Ashaka Cement after a buyout of minorities that breached stock exchange’s free float requirement, Adeleke said.
The Nigerian-based business of Franco-Swiss cement group, LafargeHolcim, expects to generate cost saving synergies of N9bn by 2018 in Nigeria, it has said, following the global merger two years ago.
Shares in Lafarge Africa gained 1.69 per cent on Monday, adding to a 44 percent rise so far this year, valuing the cement firm at N329.2bn ($902.3m).
LafargeHolcim Chairman, Beat Hess, said the company was still adjusting its structures in big markets where both Lafarge and Holcim were present following the merger.
Lafarge Africa is raising N140bn in fresh equity and plans to convert some loans into shares as part of a planned rights issue after it reported losses last year.
LafargeHolcim has said it will take part in a capital increase of the Nigerian unit to avoid diluting its nearly 71.4 per cent stake, in a move which would also help simplify the ownership structure in Nigeria.
May & Baker Nigeria Plc said its profit before tax rose by 215 per cent to N139.5m in its half-year financial result of 2017, from N44.2m recorded in the corresponding period of 2016.
According to a statement obtained from the firm on Monday, the firm’s operating profit also rose by 57 per cent.
The firm said, “This margin derives from the 2017 half-year cumulative of N452.2m increase on the N287.8m returned same time last year. The analysis shows that revenue increased by 20.6 per cent from N3.7bn in 2016 to N4.5bn in 2017.
The firm said, figures released to the Nigerian Stock Exchange revealed that its operating expenses from distribution, sales and marketing was N510.83m in June last year.
It added that the statistic for the current period rose to N602.5 with a 17.9 per cent variance, and that its 2017 administrative cost decreased by three per cent to N298.8m from N309.5m in previous year.
In the statement, the company’s earnings per share which trended at 3.07kobo in June 2016, rose to 9.68kobo 12 months after, posting 215 per cent growth.
