The equities market on Wednesday depreciated by 0.79 per cent, causing the market capitalisation of the Nigerian Stock Exchange to fall by N71bn at the close of trading.
This aggravated the poor performance since the beginning of the week, dragging down the year-to-date return on equities to -10.44 per cent.
A total of 145.744 million shares worth N1.35bn were traded in 2,421 deals.
The NSE capitalisation dropped to N8.83tn from N8.901tn, while the All-Share Index closed at 25,653.14 basis points from 25,857.06 basis points recorded on Tuesday.
Similarly, the volume of transactions declined by 23.18 per cent; while the value of transactions advanced by 49.17 per cent.
The market breadth was negative as only six gainers emerged while 33 declined.
Fidson Healthcare Plc, International Breweries Plc, Union Bank of Nigeria Plc, Ecobank Transnational Incorporated Plc and Africa Prudential Registrars Plc were the top gainers for the day, appreciating by 4.88 per cent, 4.68 per cent, 3.37 per cent, two per cent and 1.15 per cent, respectively.
On the other hand, 7UP Bottling Company Plc led the decliners, having shed 9.74 per cent to close at N129.36.
This is followed by Transcorp Hotel Plc, Paint Company Plc, Transnational Corporation of Nigeria Plc and Forte Oil Plc, which share prices depreciated by 9.66 per cent, 9.52 per cent, 7.59 per cent and 7.43 per cent, respectively.
Sector performance as measured by the NSE sector indices revealed that all sector indices trended southward save for the industrial sector, which appreciated marginally by 0.08 per cent.
The oil and gas sector dropped by 1.79 per cent; financial services sector dipped by 1.23 per cent; the food and beverages sector declined by 0.95 per cent; while the insurance sector depreciated by 0.31 per cent.
Commenting on the market performance, analysts at Meristem Securities Limited said, “The equities market has traded negative thus far in the week, and we do not anticipate a significant change in the prevailing mood in the remaining days of the week.
“This outlook is based on sustained investors’ apprehension towards the equities market, given the weak economic fundamentals and the dearth of market moving news to boost confidence.”
Meanwhile, the interbank call rate moderated 16 basis points to 25.17 per cent amid relatively unchanged system liquidity.
At the foreign exchange interbank market, the naira depreciated by N0.25 against the dollar to close at N305.50 in the spot market whilst the one year forward remained unchanged at N355.
At Wednesday’s Treasury bills Primary Market Auction, the Central Bank of Nigeria sold N37bn, N34bn, and N87bn on the 91-day, 182-day, and 364-day bills at respective stop rates of 13.99 per cent, 17.40 per cent, and 18.70 per cent (effective yields: 14.50 per cent, 19.05 per cent, and 22.99 per cent).
Also, the Debt Management Office conducted its monthly bond auction with N95bn on offer across five-year, 10-year, and 20-year bonds. Eventually, the DMO sold N5bn, N14bn, and N20bn each on the five-year, 10-year, and 20-year notes at respective marginal rates of 15.48 per cent 15.98 per cent and 15.95 per cent.
The Federal Ministry of Finance on Tuesday announced the constitution of a committee to recover about N450bn unremitted operating surpluses from some agencies of the government.
The committee headed by the Accountant-General of the Federation, Alhaji Ahmed Idris, is to reconcile the operating surpluses of 31 revenue-generating agencies of government for the period 2010-2015.
The findings of the committee have so far shown under-remittance of over N450bn, which accrued within the period.
The Finance ministry explained in a statement that the Office of the Accountant-General of the Federation had critically reviewed the accounting statements of the affected agencies.
The agencies include the Central Bank of Nigeria, Petroleum Technology Development Fund, National Agency for Food and Drug Administration and Control, Nigerian Television Authority, and the Securities and Exchange Commission, among others.
The statement read in part, “The Federal Ministry of Finance has announced the constitution of a committee to recover unremitted operating surpluses of agencies of government running into N450bn.
“The committee, led by the Accountant-General of the Federation, Alhaji Ahmed Idris, is to reconcile the operating surpluses of 31 revenue-generating agencies of government for the period 2010-2015.
“The findings of the committee so far have shown under-remittance of over N450bn, which has accrued within the period.”
The statement further stated that some of the agencies had incurred huge expenses on overseas training and medicals, and on behalf of the supervising ministries and other organs of government involved in oversight or regulatory functions without appropriate approval.
It listed other infractions to include payment of salaries and allowances to staff and board members, governing council members, and commissions outside or above the amount approved by the Revenue Mobilisation and Fiscal Allocation Commission and the National Salaries, Income and Wages Commission.
Persistent weak investors’ sentiments kept the stock market in red zone for the second consecutive day with the Nigerian Stock Exchange (NSE) All-Share Index (ASI) shed 0.50 per cent to close at 25,857.06 yesterday.
Similarly, market capitalisation shed N44.7 billion to close lower at N8.9 trillion. Sell pressure on large cap stocks like Dangote Cement Plc and Zenith Bank Plc among others dragged the market to close weaker.
Market analysts attributed the negative trading to sell pressure by investors who are exiting the market to prepare for end-of-year spending. At the close of trading 19 stocks lost value compared with nine equities that appreciated.
Lafarge Africa Plc recorded the highest loss with 8.3 per cent to close at N44.00, trailed by Conoil Plc which shed N4.9 per cent to close at N34.11 per share. Oando Plc and Transcorp Plc went down 4.8 per cent apiece.
On the positive side, Custodian and Allied Plc led with 4.96 per cent to close at N3.81, followed by Airline Services and Logistics Plc with 4.93 per cent appreciation. NAHCO Plc and NASCON Allied Industries Plc rose by 4.8 apiece, just as Guaranty Trust Bank Plc garnered 4.2 per cent. Mobil Oil Nigeria Plc and Access Bank Plc closed 2.6 per cent each.
Analysts at Meristem Securities Limited said in spite of the price recovery witnessed by some large-cap tickers, the equities market was awash with weak sentiments which were further pressed by the price depreciation on Dangote Cement.
“We expect the rest of the week to be swayed by mixed investor sentiment, possibly skewed more towards bargain-hunting,” they said.
In terms of sectoral performance, two indices gained while three declined. The NSE Banking Index went up 1.3 p cent on the back of gains in GTBank Plc and Access Bank Plc. Similarly, the NSE Consumer Goods Index rose 0.02 per cent following gains by Dangote Sugar Refinery Plc (+0.8%) and Nigerian Breweries Plc (+0.2 per cent).
Conversely, the NSE Industrial Goods Index led the sector decliners, down 4.1 per cent on account of losses recorded by Dangote Cement Plc (-1.5 per cent) and Lafarge Africa (-8.3 per cent) while the Insurance Index lost 1.0 per cent.
The Central Bank of Nigeria (CBN) yesterday said Heritage Bank Plc is not currently in distress as being falsely insinuated by some online media.
The central bank noted that there had been “false and malicious stories on the social media insinuating that Heritage Bank is under financial distress and therefore unable to discharge its obligations to its depositors.”
But CBN acting Director, Corporate Communication, Mr. Isaac Okorafor explained in a statement that: “We wish to state that Heritage Bank is not in distress and as such its depositors should go about their transactions without fear. For the avoidance of doubt, we wish to further state that no Nigerian bank is in distress.
“The CBN, as the industry regulator, has a duty to depositors, in particular, and the economy, in general, to ensure the soundness of all financial institutions. We therefore wish to assure all depositors of the safety of their deposits.”
The CBN added it will remain alive to its responsibility of ensuring banking system stability and soundness through constant monitoring and supervision of all licensed institutions. “The Central Bank of Nigeria wishes to reiterate that the banking system remains resilient enough to weather the current economic storm,” he added.
The CBN had last month also allayed concerns over the soundness of Nigerian banks, and had assured members of the public that they are sound and have strong capital buffers.
The CBN had however, admitted that just like in other oil and commodity-dependent economies, banks in the country were also feeling the headwinds in the economy.
The Director, Banking Supervision, CBN, Mrs. Tokunbo Martins had stressed that to say “seven banks are undercapitalised is absolutely not true”.
She added: “That is not to say that the banking sector is not feeling the economic headwinds, they are. Just like every other jurisdiction. It is not strange.
“Non-performing loans (NPLs) at 11 per cent is not what we need to focus on. What we need to focus on is if the banks have the capacity to absorb losses that may arise from those NPLs? And the answer is yes. They have very strong capital buffers.
“Another thing that is important is that Nigerian banks have very huge capacity to generate income to also absorb those losses, if they do arise. And then the loans that are non-performing, can they re-perform? Yes they will because the underlying assets are still there and they are good. “The fact that the country has NPLs at a period like this should be expected and is not a thing that any jurisdiction should be demonised about.
“Other jurisdictions going through what we are also going through are experiencing the same thing. There are countries that have NPLs as high as 15 per cent, some 30 per cent, and some countries in Europe have NPLs as high as 80 per cent.”
Hopes that the country’s inflation rate would moderate as a result of the various intervention programmes of the government were on Monday dashed as the National Bureau of Statistics on Monday announced that the Consumer Price Index, which measures inflation rate, rose to a 94-month high of 18.3 per cent in October.
The 18.3 per cent inflation rate, which is about 0.48 per cent higher than the 17.9 per cent recorded in September, is the highest since January 2009 when the NBS started publishing the revised version of the CPI.
The bureau attributed the increase in inflation rate to pressures recorded in some sub-indexes such as housing, electricity, gas, water, lubricants for personal transport and education.
It explained that while the prices of food items such as bread, cereals, fish and meat also recorded significant increases, those of fruit items moderated during the period.
The report read in part, “The CPI, which measures inflation, increased by 18.3 per cent (year-on-year) in October 2016, 0.48 per cent points higher from the rate recorded in September.
“Increases were recorded across almost all major divisions, which contribute to the headline index. Communication and restaurants and hotels recorded the slowest pace of growth in October, growing at 5.7 per cent and 9.4 per cent year-on-year, respectively.
“The food index rose by 17.1 per cent (year-on-year) in October, up by 0.47 per cent points from 16.6 per cent recorded in September. During the month, the highest increases were seen in housing, water, electricity, gas and other fuels, as well as fuels and lubricants for personal transport equipment and education.”
The report added that the least growth pace recorded in October was experienced in communication (5.7 per cent), restaurants and hotels (9.4 per cent), and recreation and culture (10.3 per cent).
The NBS noted that the urban index rose by 19.9 per cent (year-on-year) in October from 19.5 per cent recorded in September, while the rural index increased by 16.95 per cent in October from 16.4 per cent in the previous month.
Trading at the stock market resumed for the week, sustaining the negative trend. The Nigerian Stock Exchange (NSE) All-Share Index fell by 0.70 per cent to close at 25,986.81, while market capitalisation dipped below N9 trillion to N8.945 trillion. Year-to-date, the market has declined by 9.2 per cent on the continuing bearish trend in the past weeks.
The market had dipped by 3.0 per cent last week due to depreciation recorded in the shares of high-capped stocks across consumer goods, cement and banking sectors was responsible for the huge loss.
“Continued downward valuation revisions following the announcement of the widely unimpressive July-September corporate earnings — and exacerbated by the weak prospect of a recovery in the near term — may have contributed to the selloffs in the latter sectors,” analysts at Cordros Capital had said.
Apart from the NSE ASI that fell, trading activities declined by 92 per cent and 57.6 in value and volume terms respectively. The total value of stocks traded was N1.12 billion, down by 57.64 per cent from N2.63 billion recorded the previous trading day. Twenty-two stocks declined in value yesterday led by Forte Oil Plc. The oil stocks fell by 9.7 per cent to close at N10.18 per share. Honeywell Flour Mills Plc trailed with a depreciation of 5.0 per cent to be at 1.14 per share. Cadbury Nigeria Plc and NASCON Allied Industries Plc went down by 4.9 per cent in that order. Oando Plc shed 4.8 per cent, just as CAP Plc and Champion Breweries Plc fell by 4.6 per cent apiece. Vitafoam Nigeria Plc and PZ Cussons Nigeria Plc lost 4.4 per cent and 4.3 per cent respectively.
On the other hand, May & Baker Nigeria Plc led the price gainers with 4.7 per cent to close N0.89 per share. WAPIC Insurance Plc appreciated by 4.0 per cent, just as Livestock Feeds Plc and Mansard Insurance Plc gained 2.5 per cent and 1.6 per cent respectively.
Market analysts at Meristem Securities Limited, said: “We attribute the day’s negative outing to continued investors’ apprehension towards the equities market, given the weak economic fundamentals. We expect the mix of profit taking and bargain hunting activities to determine the direction of market sentiments going forward.”
Despite last week’s raid and arrest of some licensed currency dealers who were said to be selling foreign exchange (FX) above the prescribed limit, the naira appreciated on both the interbank and parallel segments of the market.
Precisely, on the interbank FX market, the spot rate of the naira climbed N1.45 to close at N304.75 to the dollar last Friday, stronger than the N306.50 to the dollar the previous day.
Also, on the parallel market, the naira appreciated by N5 to trade at N455 to the dollar at the weekend, compared with the N460 to the dollar the day before.
But on the Bureau De Change (BDC) segment, the nation’s currency depreciated to N405 to the dollar, from about N400.
THISDAY had exclusively reported that security operatives from the DSS had raided the offices of some BDCs in Lagos and Abuja and arrested dealers for selling above the stipulated exchange rate.
Prior to the action of the security operatives, THISDAY reported last week that as part of its efforts to bridge the wide gap in the FX market, the security agencies, BDC operators and the Central Bank of Nigeria (CBN) held a meeting during the week. It was learnt that the meeting was as a result of the concern of wide disparity in FX rates among the three segments of the market.
According to the source, the CBN and the security agencies present at the meeting made the BDC operators to understand that a lot of foreign investors were not comfortable with the wide gap between the three arms of the FX market and would only come in if the situation is addressed.
The President, Association of Bureau De Change Operators of Nigeria (ABCON), Mr. Aminu Gwadabe, who confirmed the meeting pledged to cooperate with the government.
He said the parley was to make the parallel market unattractive.
Commenting on the development in the FX market, analysts at Afrinvest West Africa Limited pointed out that: “In the interim, we expect recent developments to constrain supply at the BDC/parallel segments as operators withhold supplies.
“We imagine the possibility of this also leading to further fragmentation of the FX market, taking the parallel market further underground in view of the close scrutiny by security agencies. Thus, whilst parallel market rate could strengthen in the interim, the medium term outlook points to a more volatile currency.”
Airline Services Plc traded higher at the end of last week transactions on the Nigerian Stock Exchange.It led nine stocks with 19.69 per cent to close at N3.04 per share. Following Airline Services last week was Wema Bank, adding 10.53 per cent to close at N0.63 per share. Other gainers of last week’s transactions are Livestock Feeds, Eternaoil, and Guinness adding 9.59,9.56 and 7.14 per cent to close at N0.80, N3.21 and N90.00 per share.
Redstar Express gained 7.14 per cent to close at N4.50 per share. Pharma Deko added 4.94 per cent to close at N1.70 per share. CAP garnered 4.89 per cent to close at N35.40 per share. Ikeja Hotel appreciated by 4.71 per cent to close at N1.78 per share. International Breweries also gained 4.68 per cent to close at N19.89 per share.
However, Cement Company of Northern Nigeria topped the losers’ chart with 14.34 per cemt to close at N4.48 per shar while National Aviation Handling Company followed with 14.18 per cent to close at N2.30 per share.Cadbury lost 14.13 per cent to close at N11.12 per share. Forte oil shed 12.70 per cent to close at N104.50 per share. Lafarge depreciated by 12.54 per cent to close at N48.00 per share. Champion Breweries shed 10.23 per cent to close at N2.37 per share. Okomu oil dropped 9.64 per cent to close at N42.47 per share. Caverton lost 9.01 per cent to close at N1.00 per share. PZ Cussons also dropped 8.39 per cent to close at N16.49 per share.
Consequently, a turnover of 2.847 billion shares worth N7.420 billion were recorded in i16,065 deals by investors on the floor of the Exchange last week, in contrast to a total of 873.838 million shares valued at N8.024 billion that changed hands in 15,944 deals during the preceding week.
The financial services industry (measured by volume) led the activity chart with 2.632 billion shares valued at N4.935 billion traded in 10,882 deals; thus contributing 92.48 per cent and 66.51 per cent to the total equity turnover volume and value respectively.
The ICT industry followed with 105.401 million shares worth N52.702 million in 11 deals. The conglomerates industry ranked third with a turnover of 36.495 million shares worth N44.162 million in 446 deals.
Trading in the top three equities namely – Standard Alliance Insurance Plc, Chams Plc and Guaranty Trust Bank Plc (measured by volume) accounted for 2.310 billion shares worth N3.005 billion in 1,825 deals, contributing 81.16per cent and 40.49 per cent to the total equity turnover volume and value respectively.
Also traded during the week were a total of 5,080 units of Exchange Traded Products (ETPs) valued at N62,550.75 executed in 17 deals, compared with a total of 56,688 units valued at N817,310.72 transacted last week in 31 deals.
A total of 73,694 units of Federal Government Bonds valued at N80.177 million were traded in 9 deals compared to a total of 13,020 units of Federal Government Bonds valued at N12.953 million transacted last week in 14 deals.
The NSE All-share index and market capitalization depreciated by 3.0 per cent to close the week at 26,170.88 and N9.009 trillion respectively.
Similarly, all other Indices finished lower during the week while the NSE ASeM Index closed flat.Also, 18 equities appreciated in price during the week, lower than 24 equities of the previous week. 36 equities depreciated in price, lower than 37 equities of the previous week, while 127 equities remained unchanged higher than 120 equities recorded in the preceding week.
Capital market investors have charged the National Assembly to issue a directive, mandating the Financial Reporting Council of Nigeria (FRCN), to permit Stanbic IBTC’s auditors to release the bank’s 2015 financial statement and present its scorecard to shareholders.
FRCN, had last year, suspended the bank’s chairman, Atedo Peterside, and other senior officials over alleged accounting irregularities in the bank’s 2013 and 2014 financial statements, which, apparently is stalling the release of the 2015 financial statement.
But the shareholders, who spoke in a telephone interview with The Guardian, argued that the 2015 account statement of the bank is not part of the contentious account in question, and therefore, should be presented to investors for a review and subsequent payment of dividend, if any.
According to them, the inability of the bank to conduct its 2015 Annual General Meeting (AGM) to review previous year’s performance is already eroding investors’ confidence in the bank and ultimately affecting its share price in the stock market. The National Cordinator, Progressive Shareholders Association of Nigeria, Boniface Okezie explained that the failure of any bank to present its financial statement to stakeholders can lead to financial instability in the system.
“While the matter is ongoing, FRCN should allow the auditors to do their job. They should allow them to have their AGM and pay dividend.
“If they allow the bank to present their scorecard, it will not stop you to prosecute and win if the case is in your favour. You cannot hold the bank to ransom. The bank has the right to approve account. FRCN does not have the right to tell the bank not to present its account to shareholders.
“The 2015 account must be presented. Shareholders must discuss the account. FRCN must allow the auditors to do their job. FRCN has told the auditors that if they audit the account, they would not operate as auditors in the market again.
“Is FRCN killing these institutions or promoting their growth? Federal government must call them to order. They should allow the auditors to do their work and present to the account to CBN. It is the bank’s that pays the auditors.
“All these are affecting the bank share price in the stock market. People are insinuating that the bank is not healthy, If not, why is it that they are not holding their AGM and people may not understand that the fault is from FRCN,” he added.
Furthermore, Okezie called for a review of the act that empowers the FRCN, saying that the National Assembly needed to streamline the operations of the council, especially as it relates to the new regulations.
“We can not have two codes. The Securities and Exchange Commission (SEC) Code of Corporate Governance is applicable to all public companies and compliance with its provisions is mandatory.
The World Bank says it has disbursed a total of $7.24bn to Nigeria from 2012 to date.
Statistics obtained from the bank’s web portal on Wednesday also showed that its current portfolio in Nigeria stood at $8.26bn as of July.
However, a total of $4.69bn, which has been approved for the country, has yet to be disbursed. The bank disburses approved loans in accordance with agreed milestones.
According to the statistics, the bank gave the country a total of $1.37bn in 2012 and $1.02bn in 2013. The bank gave Nigeria $2.02bn in 2014; $1.75bn in 2015; and $1.08bn so far in 2016.
The total loan portfolio is made up of concessional loans from the International Development Association and commercial loans from the International Bank for Reconstruction and Development. The IDA and IBRD are members of the World Bank Group.
The undisbursed loan is made up of $4.2bn from the IDA and $496.2m from the IBRD.
The bank also reported that Nigeria, as a member of the organisation, had contributed a total of $41.7m to its coffers since 1999.
The contribution is made up of $50,000 contributed to the IBRD in 2006; $619,954 in 2007; $494,954 in 2009; and $359,959 in 2010.
The contributions to the IDA were $5,400,200 made in 1999; $5,088,493.26 in 2001; $9,080,914 in 2002; $1,439,700 in 2004; $9,963,296.25 in 2010; and $8,756,118.88 in 2011.
The Debt Management Office disclosed in its 2015 Annual Report and Statement of Accounts that the Federal Government signed loan agreements amounting to $3.05bn with the World Bank and other multilateral and bilateral organisations last year.
According to the report, the agreements include $500m with the IBRD for the Development Finance Project; and $200m loan with the African Development Bank for the Urban Water Sector Reform in Port Harcourt, Rivers State.
Another of the projects is the water supply and sanitation project and $400m loan agreement with AfDB to assist in financing of the development of the finance institution, Development Bank of Nigeria Plc.
The loans include another $400m agreement with African Development Fund to assist in financing of the Development Bank of Nigeria Plc; $200m agreement with the IDA for additional financing of the Polio Eradication Support Project; and the 70m IDA financing agreement for the African Higher Education Centres of Excellence Project.
Others are the $140m IDA financing agreement for Additional Financing for Community and Social Development Project; $100m AFD agreement for the Lagos Integrated Urban Development Project; and $33.17m loan agreement with the AFD for the Ogun State Urban Water Supply Project.
Also included are the $70m agreement with the IDA for the African Higher Education Centre of Excellence Project; $140m agreement with the IDA/World Bank for additional finance for the Community and Social Development Project; $500m agreement with the IDA for the Saving One Million Lives project; $200m agreement with the IDA for the Polio Eradication Support Project; and $100m agreement with the IDA for the Nigerian Partnership for Education Project.
Before a state government can access any external loan, the deal needs to be guaranteed by the Federal Government.
