The Association of Bureaux De Change Operators of Nigeria (ABCON) has said the federal government’s plan to open talks with JPMorgan Chase & Co. for their reinstatement in the local-currency emerging-market bond index will bring great benefits to the economy.
ABCON President, Alhaji Aminu Gwadabe, explained in a statement at the weekend that JP Morgan’s return to the Nigerian market would strengthen the inflow of foreign exchange (forex) in the country and also boost the Central Bank of Nigeria’s (CBN’s) chances of achieving its $60 billion foreign reserves target in 2018 in spite of any shock that may arise in the economy.
The ABCON boss said such return would also enable Nigeria benefit from the $20 billion overseas investment planned by the US bank which will see it raise wages, hire more, and open new branches in emerging market countries.
Gwadabe added: “I want to use this opportunity to congratulate the CBN and the Federal Government on the good news of JP Morgan renewed interest on Nigerian bond market which will enhance investors’ confidence on our economy.
“The CBN has brought stability in the forex market by making dollar available to genuine forex users especially at the retail-end of the market. That has ended volatility in the market and boosted the confidence of foreign investors in the local economy.”
He also praised the CBN for introducing the Investor’ and Exporters’ (I&E) Forex Window which has since April 2017 attracted over $27.8 billion in turnover into the economy and brought about transparency as well as stability in the forex market.
The ABCON boss said the US Bank’s return to Nigeria would enable the government access needed funds for infrastructural developments in the economy and urged the CBN to explore the opportunity in reducing the multiple exchange rates and create more confidence for foreign investors.
“It will create more opportunity for a genuine and transparent competition among forex operators and boost employment opportunities in the country as well as deepen the forex, naira and the equities markets,” Gwadabe said.
The federal government is presently selling more foreign debt to help reduce the financing burden from paying double-digit yields on local-currency bonds. That would help free up funds to increase investment in infrastructure and spur economic growth.
“We would like to get back into the JP Morgan Index,” the Director-General of Debt Management Office (DMO) Ms. Patience Oniha, had said.
Daily trading volumes for the naira have risen to about $200 million from as little as $20 million three years ago, according to Standard Chartered Plc. That bodes well for discussions on returning to the index, according to Oniha. “The securities trading was never the problem, it was always the foreign-currency liquidity which has now improved,” she said.
The bullish trading that has characterised the equities market since the beginning of 2018 was halted last week as investors locked in profits. Having recovered in 2017, the rally was sustained in the first weeks of 2018 with the market hitting 10- year high the previous week. However, most investors moved in to realise some of the gains posted in the past weeks.
Consequently, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell by 2.9 per cent to close at 43,773.76, while market capitalisation shed N462.9 billion to close lower at N15.692 trillion last Friday.
Similarly, all other indices finished lower during the week with the exception of the NSE Consumer Goods and NSE Oil/Gas Indices that appreciated by 2.15 per cent and 0.08 per cent respectively while the NSE ASeM Index closed flat.
The NSE Banking Index, which had recommended the highest growth this year, topped the losers chart last week falling by down 6.4 per cent. The NSE Insurance Index trailed, declining 3.3 per cent.
The market recorded a mixed performance on the first day of the week with the index falling by 0.40 per cent, while volume and value of trading surged.
Market analysts attributed the decline to sell offs across board with GTBank Plc, Nestle Nigeria Plc and Unilever Nigeria Plc. However, Transcorp Plc led the price losers’ table with 9.2 per cent, trailed by Unilever Nigeria Plc with 5.9 per cent. Sterling Bank Plc went down by 4.7 per cent.
Diamond Bank Plc , Honeywell Flour Mills Plc and Champion Breweries Plc shed 4.7 per cent, just as NPF Microfinance Bank Plc, May and Baker Nigeria Plc and Eterna Plc fell by 4.6 per cent among others.
On the other hand, Caverton led the price gainers with 9.9 per cent, trailed by Wema Bank Plc with 9.4 per cent. Skye Bank Plc and Unity Bank Plc appreciated by 9.3 per cent and 6.5 per cent, just as Cadbury Nigeria Plc and Jaiz Bank Plc chalked up 6.2 per cent and 5.1 per cent. Meanwhile, investors traded 4.436 billion shares worth N15.927 billion in 8,572 deals.
Profit taking at the stock market continued on Tuesday as more stocks shed value under sell pressure. A total of 43 equities depreciated while only 14 appreciated. The NSE ASI fell by 1.16 per cent to close at 44,389.85, while market capitalisation shed N187 billion to close at N15.9 trillion.
Commenting on the market analysts at FSDH said: “There was sell pressure in the equity market, a combination of profit taking and price corrections predominantly in the banking sector stocks. The downward trend may likely continue till midweek.”
Fidelity Bank Plc led the price losers with 9.16 per cent, trailed by A.G Leventis Nigeria Plc with 9.0 per cent. Linkage Assurance Plc shed 8.7 per cent, while Transcorp Plc, FBN Holdings Plc and FCMB Group Plc went down by 5.7 per cent, 5.3 per cent and 5.2 per cent in that order.
Diamond Bank Plc, Julius Berger Nigeria Plc, Redstar Express Plc and University Press Plc closed 5.0 per cent lower apiece.
On the other side, Skye Bank Plc led the price gainers with 9.9 per cent, trailed by Caverton with 9.8 per cent. Unity Bank Plc garnered 9.2 per cent, just as UACN Property Development Plc, Unilever Nigeria Plc and Cutix Plc chalked up 5.0 per cent each.In terms of sectoral performance, three sectors declined, while two appreciated.
The NSE Banking Index led the losers with 2.6 per cent as GTBank (-2.8 per cent), Zenith Bank (-2.3 per cent) and UBA (-5.0 per cent) declined. The NSe Insurance Index shed 2.4 per cent, while NSE Goods Index went down by 0.7 per cent.On the flip side, the NSE Consumer Goods Index led the gainers with 0.7 per cent, followed by NSE Oil & Gas Index with 0.1 per cent.
The market extended its negative performance to the third day yesterday as more investors took profit with the benchmark index shedding 0.96 per cent to close at 43,963.40, while market capitalisation shed N143 billion to close at N1576 trillion.
According to analysts at Cordros Capital, the possibility of continued profit taking remains high.
“But that said, our theme on the market remains positive, on the back of favorable macro economic conditions,” they said.
Also commenting on the performance, analysts at FSDH Merchant Bank said market breadth and investor sentiments remained weak as there was continued sell pressure that resulted in a number of stocks on offer
“With the sustained profit taking recorded this week, a rebound in the market is likely as the outlook remains positive,” they added.
In all, 43 stocks declined while 11 appreciated. FCMB Group Plc led the price losers, shedding 9.7 per cent. Diamond Bank Plc trailed with 9.6 per cent, while Fidelity Bank Plc went down by 9.5 per cent. Sterling Bank Plc and Transcorp Plc declined by 9.3 per cent.
On the positive side, May & Baker Nigeria Plc led the price gainers with 4.9 per cent, trailed by Transexpress with 4.0 per cent. WAPIC Insurance Plc chalked up 3.6 per cent, just as Cement Company of Northern Nigeria Plc and Learn Africa Plc garnered 3.4 per cent, 2.1 per cent respectively.
The bears remained in control of the stock market for the fourth consecutive day, pulling the down the index by 0.99 per cent to close at 43,529.06.
However, 21 stocks escaped from the charging bears to close higher. Dangote Sugar Refinery Plc led them with 10.16 per cent. African Prudential Plc and United Bank for Africa Plc followed with 4.1 per cent and 4.1 per cent respectively.
FBN Holdings Plc chalked up 4.0 per cent while Access Bank Plc 3.9 per cent.
Trans-nationwide Express Plc and WAPIC Insurance Plc garnered 3.8 per cent and 3.8 per cent in that order. Other top gainers included: Livestock Feeds Plc (3.1 per cent); Linkage Assurance Plc (2.7 per cent); Flour Mills of Nigeria Plc (2.6 per cent).
Contrarily, Glaxosmithkline Consumers Nigeria Plc led the price losers for the day with 9.6 per cent. Caverton trailed with 9.4 per cent. Diamond Bank Plc and Skye Bank Plc shed 9.2 per cent apiece just as Unity Bank Plc and Wema Bank Plc depreciated by 9.1 per cent and 8.4 per cent respectively.
Other top price losers were: Honeywell Flour Mills Plc (6.2 per cent); Stanbic IBTC Holdings Plc (4.9 per cent); FCMB Group Plc (4.8 per cent) and Eterna Plc (4.7 per cent).
The bulls returned on Friday leading to a recovery of 0.56 per cent in the index to close the week at 43,773.76.
Meanwhile, a total of 7.157 billion shares worth N42.545 billion in 39,037 deals were traded last week by investors compared with 5.011 billion shares valued at N45.816 billion that exchanged hands the previous week in 44,569 deals.
The Conglomerates Industry led the activity chart with 4.110 billion shares valued at N10.016 billion traded in 2,454 deals, thus contributing 57.43 per cent and 23.54 per cent to the total equity turnover volume and value respectively.
The Financial Services Industry, which is known for its leading position on the activity chart, occupied the second place with 2.757 billion shares worth N25.398 billion in 25,853 deals. The third place was occupied by Consumer Goods Industry with a turnover of 156.224 million shares worth N5.304 billion in 5,875 deals.
Trading in the top three equities namely, Transnational Corporation of Nigeria Plc, FCMB Group Plc and Skye Bank Plc, accounted for 4.786 billion shares worth N11.341 billion in 5,216 deals, contributing 66.86 per cent and 26.66 per cent to the total equity turnover volume and value respectively.
Price Gainers and Losers
A look at the price movement table showed that 30 stocks appreciated lower than 40 of the previous week, while 44 equities depreciated in price, higher than 32 equities of the previous week.
WAPIC Insurance Plc led the price gainers with 10.9 per cent, trailed by Dangote Sugar Refinery Plc that appreciated by 9.8 per cent. NASCON Allied Industries Plc advanced 9.6 per cent, while Trans-Nationwide Express Plc and PZ Cussons Nigeria Plc added 8.0 per cent and 6.8 per cent respectively.
Other top price gainers included: Nigerian Breweries Plc (6.7 per cent); UACN Property Development Company Plc (6.6 per cent); Dangote Flour Mills Plc ( 6.5 per cent); Cutix Plc (5.7 per cent).
The price losers were led by Diamond Bank Plc with 26.1 per cent, trailed by Champion Breweries Plc with 20.6 per cent, while Transnational Corporation of Nigeria Plc shed 18 per cent. Sterling Bank Plc went down by 16.6 per cent, just as Honeywell Four Mills Plc and NPF Microfinance Bank Plc lost 13.4 per cent. FCMB Group Plc shed 12.3 per cent, while AXA Mansard Insurance Plc closed 11.2 per cent lower. GTBank Plc and Eterna Plc fell by 10.4 per cent and 9.6 per cent in that order.
The Nigerian Stock Exchange (NSE) has introduced a new pricing methodology and par value rule, which have been approved by the Securities and Exchange Commission (SEC).
The rules, which became effective today (Monday, January 29), specified the revised price limit, price movements and tick sizes that the price floor, minimum pricing increments and minimum quantity to be traded that will change the published price. The Rules also classify equity securities into different price groups in order to achieve the pricing methodology.
Head, Market Surveillance and Investigations Department, NSE, Mr. Abimbola Babalola said: ”The amended stratification of price movements, price limits and tick sizes aims at improving liquidity, narrowing spreads, and ensuring that all price improving (up/down) transactions are material, making the market more efficient for all participants.”
According to him, in order to achieve the aforementioned aims of improved liquidity, narrowed spreads, material price improvements, and market efficiency, the amendments to the Pricing Methodology Rule included the introduction of a new price group – “Group C.”
“It should be noted that the new Group “C” consists of equity securities that are priced below N5.00 per share, for at least four of the last six months, or new security listings that are priced below N5.00 per share at the time of listing on the NSE,” he added.
The minimum pricing increments and minimum quantity traded for equity securities will no longer be the one-size-fits-all of One Kobo (N0.01k) which has been used in the market for all equity securities.
According to the new rule, a trade of at 10, 000 units, is required to move the price of equities trading at N100 or above (Group A) by 10kobo. A trade of at least 50,000 units is required to move the price of equities trading at N5 or above but lower than N100 (Group B) by five kobo, while a trade of at least 100,000 units shall be required to move the price of equities trading at N0.01k or higher but below N5 (Group C) by one kobo.
Meanwhile, the new par value rule specifies that the price of every share listed on the exchange shall be determined by the market forces and equities may now trade below the erstwhile price floor of fifty Kobo (N0.50) per unit.
Analysts at FSDH Merchant Bank have estimated a real Gross Domestic Product (GDP) growth rate of 3.16 per cent for Nigeria in 2018. In addition, the Lagos-based firm also projected an ambitious growth rate of 4.09 per cent for the country in 2019. FSDH Merchant Bank made the forecasts in its 2018 economic projection that was obtained on Monday.
Although the fourth quarter 2017 GDP figures are yet to be released by the National Bureau of Statistics (NBS), the Nigerian economy had grown by 1.4 per cent in the third quarter (Q3) of 2017, effectively doubling the revised growth rate of 0.72 per cent recorded in the second quarter of the year.
The Q3 GDP figures was the second consecutive growth since the economy exited the recession in the second quarter of 2017. The growth rate then was 3.74 percentage points higher than the rate recorded in the corresponding quarter of 2016 (-2.34 per cent) and higher by 0.68 percentage points than the GDP growth rate recorded in the preceding quarter (Q2 2017), having been revised by the statistical agency to 0.72 per cent, from 0.55 per cent. The FSDH Merchant Bank forecast for 2018 was slightly higher than the forecast of the World Bank and International Monetary Fund (IMF) of 2.5 per cent and 2.1 per cent respectively.
However, the firm explained in its latest report that with the population growing at 2.75 per cent, the country requires growth rate in excess of five per cent to substantially improve the well-being of Nigerians. “Agriculture, Trade, and Mining & Quarrying sectors, with forecast growth rates of four per cent, two per cent and 3.2 per cent would drive the 3.16 per cent growth rate in 2018. Other leading sectors of the economy that would contribute to the growth are: Information and Communication (I&C): 2.2 per cent; Real Estate: 2.5 per cent; Construction: four per cent and Manufacturing: one per cent.
“Agriculture, with a growth of 3.06 per cent; Mining and Quarrying: 25.44 per cent and Other Services: 1.72 per cent were the three leading sectors that contributed to the growth rate of 1.40 per cent recorded in Q3 2017,” it added. It noted that the increase in the supply of foreign exchange has improved economic activities across other sectors of the Nigerian economy.
FSDH Research stated that it had observed increased activities in Agriculture, Mining and Quarrying (oil and gas), manufacturing, Trade, Real Estate and I&C in the last few months, adding that thegrowth in the equity market has created additional wealth that would stimulate effective demand in the economy.
“Some light manufacturing activities are also taking place – stimulating demand for raw materials from Agriculture. The current oil price will encourage investment activities in the oil and gas sector. Trade sector would also benefit from the increase in consumer purchasing power
“FSDH Research notes that there are downside risks to the forecast growth. The rising social unrest in some parts of the country may affect economic activities and lead to escalating inflation rate. A significant drop in oil price may also have negative impact on the growth prospect. “FSDH Research will highlight the implications of the GDP growth forecast on businesses and financial market in our next week article,”
The IMF had explained in its World Economic Outlook released Monday that the pick up of growth Africa (from 2.7 percent in 2017 to 3.3 percent in 2018 and 3.5 percent in 2019) was broadly as anticipated, with a modest upgrade to the growth forecast for Nigeria but more subdued growth prospects in South Africa, where growth was expected to remain below one per cent in 2018–19, as increased political uncertainty weighs on confidence and investment.
Also, the IMF stated that fiscal policy was generally constrained by the need to gradually rebuild buffers, especially in commodity-dependent emerging market and developing economies. With the recent respite provided by the cyclical rebound in commodity prices, it urged policymakers to guard against the temptation to defer reforms and budgetary adjustments for later.
“The policy challenges for low-income countries are particularly complex, as they involve multiple, sometimes conflicting goals. These include supporting near-term activity; diversifying their economies and lifting potential output to maintain progress toward their Sustainable Development Goals; building buffers to enhance resilience, especially in commodity-dependent economies grappling with a subdued outlook,” it stated.
Profit taking at the stock market continued yesterday as more stocks shed value under sell pressure. A total of 43 equities depreciated while only 14 appreciated. As a result, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell by 1.16 per cent to close at 44,389.85, while market capitalisation shed N187 billion to close at N15.9 trillion.
The market had recorded an unprecedented rally since the beginning of the year lifting share prices to new high before profit taking set in on Monday.
The bears strengthened their hold on the market as more investors moved to lock in profits.
Before now, analysts had said: “Although the market had sustained a three-week long bullish momentum on the back of increased investor participation following the uptrend in global oil prices and in expectation of improved earnings at the commencement of fourth quarter earnings season, we expect some slight profit taking in the coming week.”
The decline of yesterday partly resulted from depreciation recorded in the share prices of GTBank, FBN Holdings, Dangote Cement, Zenith Bank and Transcorp Plc.
Commenting on the market, analysts at FSDH said: “There was sell pressure in the equity market, a combination of profit taking and price corrections predominantly in the banking sector stocks. The downward trend may likely continue till midweek.”
Meanwhile, Fidelity Bank Plc led the price losers with 9.16 per cent, trailed by A.G Leventis Nigeria Plc with 9.0 per cent. Linkage Assurance Plc shed 8.7 per cent, while Transcorp Plc, FBN Holdings Plc and FCMB Group Plc went down by 5.7 per cent, 5.3 per cent and 5.2 per cent in that order.
Diamond Bank Plc, Julius Berger Nigeria Plc, Redstar Express Plc and University Press Plc closed 5.0 per cent lower apiece.
On the other side, Skye Bank Plc led the price gainers with 9.9 per cent, trailed by Caverton with 9.8 per cent. Unity Bank Plc garnered 9.2 per cent, just as UACN Property Development Plc, Unilever Nigeria Plc and Cutix Plc chalked up 5.0 per cent each.
In terms of sectoral performance, three sectors declined, while two appreciated.
The NSE Banking Index led the losers with 2.6 per cent as GTBank (-2.8 per cent), Zenith Bank (-2.3 per cent) and UBA (-5.0 per cent) declined. The NSe Insurance Index shed 2.4 per cent, while NSE Goods Index went down by 0.7 per cent.
On the flip side, the NSE Consumer Goods Index led the gainers with 0.7 per cent, followed by NSE Oil & Gas Index with 0.1 per cent.
The UAC of Nigeria Plc has announced the appointment of new Heads for some of its subsidiaries.
According to a statement from one of the leading conglomerates in the country, the new appointees are Mrs. Oluwakemi Ogunnubi, as Managing Director, Chemical and Allied Products Plc (CAP Plc); Mr. Taiwo Ajibola who takes over as the Managing Director, MDS Logistics Limited; and Mr. Adedamola Olusunmade asManaging Director of Portland Paints & Products Nigeria Plc.
Also, Mr. Mukhtar Yakasai, who was formerly the Managing Director of Portland Paints and Products Nigeria Plc is now the Deputy Managing Director of Grand Cereals Limited, a UAC subsidiary located in Jos; while Mr. Solomon Aigbavboa, previously Managing Director of MDS Logistics Limited has been appointed Managing Director of Livestock Feeds Plc (LSF).
Similarly, UAC announced the retirement of Mrs. Modupe Asanmo, the erstwhile Managing Director of Livestock Feeds Plc,after 10 years of service.
All the appointments became effective from January 1, 2018.
Ogunnubi, a Chartered Accountant, attended The Polytechnic, Ibadan where she obtained a Higher National Diploma (HND) in Accountancy in 1992. Until her appointment, she was the Head, Financial Services of UAC. She has worked variously within the Group as the Head, Risk and Compliance of UAC, Lead Internal Auditor (Lagos/West) – UAC Audit, Business Efficiency Manager – CAP Plc, Supply Chain Manager – CAP PLC and National Customer Service Manager – CAP Plc; National Sales Manager and the GM Sales of UAC Foods Limited. She is an alumna of Ashridge Business School and a member of the Institute of Risk Management, UK.
Also, Olusunmade, a graduate of Chemical Engineering from the University of Benin started his career as an Assistant Production Manager with CAP PLC in 1999. He worked in different capacities including Plant Manager, Marketing Manager, Corporate Responsibility and Strategy Manager and Technical Operations Manager.
In the same vein, Yakasai is a graduate of Agriculture with Agricultural Economics option from Ahmadu Bello University Zaria and holds an MBA from the same University. He joined Chemical and Allied Products Plc, a subsidiary of UAC in July 1985. He held various roles as National Sales Coordinator (2001), Business Manager Flame Guard and CAP Decorators (2002), General Manager Business Development and General Manager Paints (2003).
Aigbavboa, a Pharmacist, was educated at the University of Benin (B.Pharm & M.Sc) and Federal University of Technology, Owerri (MBA). He joined UAC in June 1997 as Personal Products Manager in the then GBO – MDS Division.
Also, Ajibola, a graduate of Industrial Mathematics from the Federal University of Technology, Akure, started his career in UAC as an Assistant programmer in Management & Computer Services before his deployment to CAP PLC as the Tetra CS3 ERP project.
Activities in the secondary market arm of the treasury bills market were low all through last week as investors appeared to be taking refuge in the stock market which has continued to display stellar performance since this year.
In all, in just 14 trading sessions, the Nigerian Stock Exchange’s market capitalisation has appreciated by a whopping 18.6 per cent or N2.537 trillion to N16.154 trillion on Friday, as against the N13.617 trillion it was as of January 2, this year. Also, the NSE’s All-Share Index has climbed from 38,264.79 basis points as of January 2, to 45,092.83 basis points last Friday. This, how no doubt resulted to reduced appetite for fixed income securities.
For instance, a report by Afrinvest Securities Limited showed that at opening of trading last Monday, activities remained minimal with sell-offs seen at the shorter end of the curve and rates closing the first session of the week at an average of 13.9 per cent (up 5 basis points). The market maintained the upward trend till week end, closing three basis points higher on Tuesday (13.9 per cent), 10 basis points on Wednesday (14 per cent), 10 basis pointson Thursday (14.1 per cent) and later closed Friday at 14.1per cent, implying a 24 basis points increase week-on-week.
In the primary market, the CBN offered N11.7 billion, N33.49billion and N68.2 billion of the 91-day, 182-day and 364-day instruments. As expected, subscription levels soared with 2.1 times (N24.3 billion) for the 91-day, 1.5 times (N49.9 billion) for the 182-day and a whopping 6.8 times (N465.7 billion) for the 364-day instrument. Notwithstanding, allotment levels remained similar to offer amounts save for the 364-day instrument whereby allotment was N115.8 billion at stop rates of 12.5 per cent, 13.9 per cent and 14.3 per cent for each of these instruments.
“In the coming week, we expect activities to pick up in the secondary market as unmet demand from the primary market moved over to that space. “Also, we expect an open market operations (OMO) maturity of N64.3 billion to impact on liquidity levels while the CBN continues with its unpredictable OMO mop ups,” Afrinvest analysts stated. Meanwhile, money market rates – Open Buy Back (OBB) and the overnight (OVN) rates – trended lower on 3 of 5 sessions. At the start of the week, OBB and OVN rates opened in double digits as the CBN conducted OMO auction and SMIS (Secondary Market Intervention Sales) worth N80billion and US$100 million respectively. Thus, rates on Monday rose 1.9 percentage points apiece to 10.8 per cent and 11.5 per cent from nine per cent and 9.5per cent respective close on Friday. However, in subsequent sessions, money market rates trended lower: Tuesday (7.5% and 8.5% respectively), Wednesday (6.2% and 6.5% respectively) despite treasury bills auction of N229.9billion on Thursday (5.3% and 5.7% respectively) and OMO sales worth N150 billion conducted same day. Rates closed the week higher at 16.7per cent and 17.7per cent.
Bonds Market Contrary to the treasury bills market, activities in the local bonds market was largely positive. The week opened with sell-offs across instruments, save for the FGN Oct-2019 (down 3bps); average bond yield closed Monday seven basis points higher at 13.4per cent. On Tuesday however, sentiment turned positive as buying interest mostly shifted towards short and longer term instruments while on subsequent sessions buying activities picked up on medium term instruments. Consequently, average bond yield closed lower on Tuesday (down 5 basis points to 13.4per cent), Wednesday (down four basis points to 13.3per cent), Thursday (down three basis points to 13.3per cent) and 13.3per cent on Friday, indicating a 0.1 per cent decline week-on-week. Meanwhile, the DMO will be conducting its first FGN Bond auction for the year this week. The JULY 2021 and MAR 2027 instruments will be reopened with offer amounts ranging from N45 billion –N55 billion and N55 billion – N65 billion respectively. From Afrinvest’s analysis, given the moderating yield environment and in line with current realities, they projected a slightly lower issue yield estimated at 13.17 per cent and 13.19 per cent for JULY 2021 and MAR 2027 relative to the Dec-2017 Auction issue yield of 13.19 per cent and 13.21 per cent respectively. On the other hand, after several weeks of positive performance, sentiment was bearish on Sub-Saharan Sovereign Eurobonds last week, as yields closed the week higher with only 8 of 22 instruments, recording price appreciations. Notwithstanding, Nigerian Eurobonds witnessed the most buying interest with yields falling on four of six instruments contrary to other countries; average yield rose 17 basis points, five basis points, three basis points, seven basis points, 14 basis points and eight basis points on the Ghanaian, Gabonese, Ivory Coast, Kenyan, Senegalese and South African instruments. Yields across the Zambian Eurobonds closed flat. The recently issued NIGERIA 2047 and the SOUTH AFRICA 2041 are the best performing YTD, with a return of 1.2per cent apiece.
“It was a positive week for Nigerian corporate Eurobonds as there was noticeable buying interest across board. As a result, across instruments we track, yields closed lower, falling faster on the FBNH 2021 (down 62 basis points to 8%) and DIAMOND 2019 (down 32 basis points to 8.8%) week-on-week. “However, yields on the FIDELITY 2018 and FBNH 2020 rose 10 basis points and two basis points week-on-week to close at 6.9 per cent and 8.3 per cent respectively. “Year-to-date, all corporates remain in good standing with the FBNH 2021 (+2.3%) up the most,” the report added.
Forex Market Since the turn of the year, the central bank has sustained its intervention in the forex market, in its bid to maintain the current stability and liquidity in the market. Further bolstered by the sustained rally in oil prices which touched a year high of US$70.26/b last Monday as well the improvement in external reserves which is presently about $40.5 billion, the CBN offered US$100 million via Special Wholesale Interventions for Spot and Forward sales at the start of the week. Against this backdrop, the CBN Spot rate opened the week at N305.80/$ (similar to the prior Friday) but appreciated five kobo by mid-week, before eventually closing the week at N305.70/$1. This translated to a 10 koboweek-on-week appreciation. In the parallel market, the naira traded flat at N365/$1 all week. Similarly, at the Investors’ and Exporters’ (I&E) segment, the domestic currency appreciated as the NAFEX rate improved 10 kobo week-on-week to settle at N360.10/$ on Friday. Analysis of daily trading activity showed the spread between the daily high and low contracted all week, from N4.85/US$1.00 on Monday to N3.50/US$1.00 on Thursday. Total turnover at the segment settled at US$1.392 billion, lower than the US$1.5 billion recorded in the prior week. At the FMDQ OTC Futures market, subscription marginally increased 1.7 per cent (US$56.3 million) week-on-week as total value of contracts settled at US$3.4 billion from US$3.3billion in the preceding week. The improvement in activity was largely due to additional subscription to the NG/US NOV 28 and NGUS DEC 26 2018 instruments which increased US$5 million and US$51.3 million week-on-weekrespectively. The NG/US APR 25 2018 contract remained the most subscribed with total subscription of US$656.9 million. “In the coming week, we expect rates at the various segments of the market to remain at similar levels as the central bankcontinues its liquidity injection into the forex market,” Afrinvest added.
Inflation For the 11th consecutive month, the Consumer Price Index (CPI), which measures inflation, ended 2017 at 15.37 per cent (year-on-year) in the month of December. This was 0.53 percentage points lower than the 15.90 per cent recorded in November – the 11th consecutive slowdown in the inflation rate since January 2017. However, increases were recorded in all Classification of Individual Consumption by Purpose (COICOP) divisions that yield the headline index. In the latest inflation figures released last week, the National Bureau of Statistics (NBS) noted that on-a-month-on-month basis, the headline index increased by 0.59 per cent in December 2017, 0.19 percentage points higher than the 0.78 per cent recorded in November. The percentage change in the average composite CPI for the 12-month period ending in December 2017 over the average of the CPI for the previous 12-month period was 16.50 per cent, indicating a 0.26 percentage point decrease from 16.76 per cent recorded in November. Urban inflation rose by 15.78 per cent (year-on-year) in December, from 16.27 per cent recorded in November, while the rural inflation rate eased to 15.02 per cent in December from 15.59 per cent in November.
Eterna Plc and Conoil Plc are leading the oil and gas sector at the stock market in terms of capital gains in the New Year. Following the recovery of the market from a three-year decline, the market appreciated 42.3 per cent last year. As the rally continued in 2018, the NSE All-Share has appreciated by 17.9 per cent as at last Friday, while the NSE Oil & Gas gained 10.6 per cent. However, an analysis of stocks in the sector showed that Eterna Plc and Conoil Plc have significantly outperformed the NSE ASI and Oil & Gas Index.
Eterna Plc occupies the first position with 48.7 per cent, closely followed by Conoil Plc with a gain of 47.8 per cent. Forte Oil Plc appreciated by 19 per cent, just as Double One Plc garnered 11 per cent. Seplat Petroleum Development Company Plc. Total Nigeria Plc gained 0.46 per cent.
Market operators said investors are bullish on Eterna and Conoil Plc in anticipation likely impressive performance for the full year ended December 31, 2017.
“Particularly, given the progressive dividend payment policy of Conoil Plc, some investors are taking position with the hope that a higher dividend would come at the end of the day,” a broker said.
Conoil Plc had paid a dividend of N2.15 billion to shareholders last year for the 2016 financial year, showing an increase from N2.08 billion paid the previous year. The 2016 dividend translated to N3.10 kobo per share, up from N3.00 in 2015.
The company had reported a profit before tax of N4.28 billion from N3.4 billion in 2015, an increase of 24 per cent, while profit after tax increased from N2.30 billion in 2015 to N2.84 billion, representing a 23 per cent rise.
Shareholders had last year at the annual general meeting (AGM) held in Uyo commended the performance, saying the company had continued to pay dividend to shareholders over the years.
Sir Sunny Nwosu of Independent Shareholders Association of Nigeria (ISAN) said the shareholders would continue to support the board and management to ensure that it maintains it impressive performance going forward.
Similarly, Chief Timothy Adesiyan of Nigerian Shareholders’ Solidarity Association(NSSA)said: “The management and board of the company have not only performed excellently well but have also fulfilled their promise of maintaining consistent returns to shareholders.”
“Given the tough operating environment in 2016 characterised by tight liquidity, rising cost of funds and the inability of petroleum marketing companies to import fuel in the face of little or no supply from the domestic refineries, Conoil still braved the odds, recorded profits and is able to pay dividend to its shareholders.”
The stock market closed on a negative note thursday as investors took profit after share prices had climbed to record high on Wednesday. The bullish trading had lifted the Nigerian Stock Exchange (NSE) All-Share Index (ASI) to 44,885. On Wednesday, while market capitalisation hit a record N16.08 trillion.
By Wednesday, the market had recorded a year-to-date (YTD) growth of 17.4 per cent, with some stocks recording more than 50 per cent.
However, the three-day rally was halted yesterday as the NSE ASI fell marginally by 0.08 per cent to close lower at 44,848.74, while market capitalised ended at N16.07 trillion.
The depreciation recorded in the share prices of Lafarge Africa, Transcorp, International Breweries, Zenith Bank and ETI were attributed for the decline.
In all, 31 stocks depreciated while 28 appreciated. Fidson Healthcare Plc led the price losers with 9.2 per cent trailed by NASCON Allied Industries Plc with a loss of 7.2 per cent. Glaxosmithkline Consumer Nigeria Plc shed 5.0 per cent, while Presco Plc, PZ Cussons Nigeria Plc and Transcorp Hotels Plc went down by 4.9 per cent, 4.9 per cent and 4.8 per cent respectively.
Union Bank of Nigeria Plc also shed 4.7 per cent. The bank recently raised N50 billion from a Rights Issue. The Group Managing Director of Union Bank, Mr. Emeka Emuwa had said: “The support of our shareholders has been critical to the rebuilding and transformation of Union Bank over the past five years. With 20 per cent oversubscription of the bank’s Rights Issue, they have once again demonstrated a high level of confidence and support for the bank’s short to medium term strategic priorities. Having successfully raised the required capital, we will accelerate the pace of doing business in 2018 as we begin to deploy this fresh capital across identified business areas which will increase our capacity to serve customers better while also delivering returns to our investors in the short to medium term.”
Meanwhile, Cement Company of Nigeria Plc led the price gainers with 10.1 per cent, trailed by FCMB Group Plc with 10 per cent. Caverton, Diamond Bank Plc and Jaiz Bank Plc advanced 9.8 per cent apiece while Unity Bank Plc and Skye Bank Plc garnered 9.2 per cent and 9.1 per cent respectively.
In terms of sectoral performance, three of the five indices closed southwards. The NSE Industrial Goods index was the biggest loser, down 1.2 per cent. The NSE Consumer Goods Index trailed, shedding 1.1 per cent. In the same vein, the NSE the Oil & Gas Index went down by 0.1 per cent.
On the positive side, the NSE flip Insurance Index led with a gain of 2.0 per cent while the NSE Banking Index closed 0.3 per cent higher.
The apex regulator of the Nigerian capital market, the Securities and Exchange Commission has announced an extension of the period for the free e-Dividend registration exercise till February 28, 2018.
This move is aimed at encouraging more shareholders to mandate their bank accounts.
The SEC said on Thursday that in reviewing the progress of the e-Dividend registration exercise, after the December 31, 2017 deadline, it was noted that there was still a great influx of shareholders desirous of mandating their bank accounts for payment of dividends electronically.
The statement read in part, “In light of the foregoing, the SEC, as part of its developmental role, has extended the period for the free e-dividend registration exercise till February 28, 2018, to encourage more shareholders to mandate their bank accounts.
“Accordingly, shareholders that are yet to register should continue to approach their banks or registrars to mandate their bank accounts for the collection of their dividends electronically, including unclaimed dividends, not exceeding 12 years of issue.”
The SEC had announced that the e-dividend registration exercise would continue seamlessly in spite of the expiration of the initial December 31, 2017 free registration deadline.
The Acting Director-General of SEC, Dr. Abdul Zubair, who made the announcement at a press briefing recently, said that all investors that were yet to enroll, were enjoined to continue with the registration exercise.
He was quoted to have said, “Such investors should continue to approach their banks or registrars, as usual, to seamlessly mandate their bank accounts for the collection of their dividends electronically, including unclaimed dividends, not exceeding 12 years of issue.”