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Possible Consequence of Greece ‘No’ Vote

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Greece future

Early in 2015, Alexis Tsipras, the Prime Minister of Greece engaged creditors to a game of chicken consequently damaging the rally of European stock that has added over $ 2.17 trillion in share prices in the first quarter of the year. According to equity managers familiar with the situation the situation shouldn’t have gotten to this point of almost parity with U.S dollar.

David Joy, the Principal Market strategist with Ameriprise Financial Inc., which oversees $ 815 billion, said “that at the moment, there is no possibility of having a ‘no’ priced vote. He added that in case one is obtained, there will be another row of downhill instability more than what was obtained”.

On 29th June, the 50 index Euro Stock went downhill by 4.2 % and at the same time, the 500 Standard Index got its largest fall. This was more than one year following the sudden referendum which was called by Tsipras regarding the proposed austerity measures imposed by Greek creditors. Concerning the vote, the nation will now be a step nearer to euro’s exit, the possibility that pushed equity volatility to a three years peak.

On Friday, a poll that was commissioned by the news at Bloomberg revealed that more than 43 % of Citizens in Greek are expected to vote against severe conditions whereas 42.5 % will support the affirmation. Even while the rejection support declined by 52 % just a week ago, the Greece crisis enhanced the efforts of Central Bank of Europe to raising the currency’s confidence.

75% Chance

The AG at Credit Suisse Group estimated that 75 % is the possibility of Greece leaving the euro with a ‘no’ vote. The biggest hits were taken by Italy and Spain after the announcement of the referendum dropping the most in the developed markets to more than 5% losses. In just 5 days, stock swings jumped by 21%. Today, the 50 Euro Stoxx is down by 10% from a high of 7 years in April.

The reaction in the market has not been as bad as it was in 2010 when the first bail out was received by Greece. In less than 6 weeks, the 50 blue chip companies in euro went to a 17 % low during that year.

Short Lived

According to the Goldman Sachs Group Inc. on 2nd July, there will be a short lived volatility of equity due to rejection of terms of bail out. According to them, this scenario may trigger investors to purchase equities in Spain, Italy and German.

Many Mistakes

In the views of David Kelly of JP Morgan Funds that manages $800 billion, the situation went out of hand due to mistakes from both sides. Kelly added that “by forcing the Greek people to an austerity level of managing in difficulty, Europeans are not only unfair but also unkind”.

If the bailout terms are rejected by voters, it would be impossible for Greece to immediately leave the euro. To keep afloat its financial system, it would start printing its own currency. The country may run out of cash and be forced to make a 3.5 billion euros bond payment to the ECB.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Business

Online Shopping Skyrockets Amidst COVID-19 Pandemic

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NIBSS

Lagos, Tuesday 30 November 2020 – As we experience the first-ever Black Friday promotional phenomenon under lockdown, the dominance of online shopping platforms has become crystal clear.

To keep track of this development Nielsen Global Connect has conducted extensive research that includes an overarching view of the massive increase in online FMCG  shopping and just how rapidly it evolved over the first six months of lockdown.

Nielsen Connect, Global Intelligence Unit, Executive Director Ailsa Wingfield comments; “Amidst the COVID-19 pandemic, online FMCG shopping usage has advanced by up to five years in just six short months. As a result, there has been a rapid increase in online shopping and usage with new users, frequency and preference having skyrocketed.

Preference of online as the most-used channel has also more than doubled.

Evidence of this results from the Nielsen New Shopper Normal Study which was conducted in May 2020 allowing for powerful insight into the effect of the COVID-19 lockdown on consumers, during an unprecedented time in our history.

The Nielsen study found that in terms of new Nigerian FMCG online shoppers, 29% had never shopped online. Sixty-seven per cent recently shopped online during the past week and 12% shopped most often online during the past week versus only 7% pre COVID-19. In terms of Frequency, 23% said they shopped online multiple times a week and 44% shopped once a week.

The best of both worlds

 Nielsen’s consumer and retail measurement evidence therefore clearly shows a massive and ongoing move to online, but it must be pointed out that this is not in isolation when considering the overall shopping journey. In Nigeria, two-thirds of consumers (67%) say they are now using both online and offline channels with fewer exclusive brick & mortar shoppers at 33%.

Wingfield elaborates; “Overall, consumers are shopping and buying in a mixed reality. In many instances, online shopping options are a new addition to their existing store repertoire but most consumers indicate that they will maintain a combination of online and offline – which will lead to the rise of more omnichannel shopping journeys and experiences.”

Interestingly, this adoption is even more pronounced for ‘Constrained Consumers’ – those who have been impacted by job/income loss. These consumers are less likely to be exclusive Brick & Mortar shoppers as Omni shopping is even more important to help them make better and more frugal choices.

Wingfield adds; “The challenge for retailers is that consumers want equivalent experiences regardless of the environment in which they shop. These are categorised by a seamless experience where the retailer’s online, and bricks and mortar offerings, are connected and offer a similar and familiar shopping experience.”

 Still more work to be done

In terms of the remaining obstacles for retailers to overcome and where online needs to work harder, the biggest concern for Nigerian shoppers is delivery which has emerged as the most important factor to get right. 42% of Nigerian consumers stated they wanted same/next-day delivery while 21% said they don’t want to wait when there are no slots available.

When it comes to Price & Promo perceptions, 57% of respondents said online prices had increased, while 22% perceived less online promotion and 17% said online was more expensive. That said, online price perceptions are currently more favourable than offline (brick and mortar) perceptions. They may also improve even further, following the heavy push by retailers of online-only Black Friday and year end seasonal promotions.

 Looking to the future

 Looking at how consumers’ newfound relationship with online shopping will evolve, Wingfield comments; “We saw that ‘necessity catalysts’ such as safety and precaution considerations and the availability of products initially drew consumers online, but there are still several obstacles to overcome. To sustain online FMCG traction, retailers and brands will need to focus on how they can solve consumers’ changing needs by differentiating their offerings in the Omni shopping journey.”

She goes on to suggest; “They will need to solve for overall satisfaction and experiences in the areas of time, convenience, availability and value based on consumers’ altered circumstances to truly differentiate themselves.”

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Business

Rising Operating Costs, Exchange Rates, Service Charge Increased Airfares by 100%

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air peace

Price of air tickets rose by 100 percent across several routes as rising operating costs, high foreign exchange and surged in service charge forced airline operators to raise airfares.

Airlines attributed the increase to a series of price adjustments and the introduction of new fees by the Federal Airport Authority of Nigeria (FAAN). According to them, airline firms were given special concessions, which will continue to push price up and could hit an average of N100,000 for even the Lagos/Abuja route.

Speaking on the situation, Captain Ado Sanusi, the Managing Director of Aero Contractors, said airline companies could not access forex at the official rate while the FAAN had upped its fees.

He said “We were buying dollars at N360 and it went to N380 but you can’t get it for less than N480.

“We are paying VAT at 7.5 per cent. We are paying 15 per cent duty on our spare parts. The boarding passes, we pay 15 per cent duty on it.

“The passenger service charge has increased by FAAN. So, don’t look at one component but look at the total reason for the increase.

“Yes, there is an increase in demand but it is caused by the lack of aircraft and this lack of aircraft is caused by unavailability of spare parts which is also caused by dollar scarcity.”

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Tony Elumelu Receives Licence to Kick Start Heirs Insurance Limited, Heirs Life Assurance Ltd

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The Chairman of Heirs Holdings, Tony O. Elumelu, on Friday said the company has received operating licences from the National Insurance Commission (NAICOM) for its two new insurance companies, Heirs Insurance Limited (HIL) and Heirs Life Assurance Limited (HLA).

The Chairman disclosed this on his social media page.

In his words, he said “I am proud to announce that the Nigerian Federal Government, through the insurance regulator, the National Insurance Commission (NAICOM), has officially issued the operating licences for our new Group insurance companies – Heirs Insurance Limited (HIL) and Heirs Life Assurance Limited (HLA).

“This represents an important milestone of a long-term strategic journey in providing much needed, quality, & valuable financial services, to a broad demographic in Nigeria. Insurance should not be a luxury, and just as we have democratised other sectors, we will democratise insurance – applying our tried & tested business philosophies.

“Fueled by the determination to improve lives & leave a legacy in the African private sector, we have embarked on this journey to revolutionise the insurance space – deploying technology, customer understanding & operational excellence.

“It has been a five-year journey, but with the optimism & the resilience that have brought us this far, it has been worth the wait.

“I would like to warmly thank our new CEOs—Dr. Adaobi Nwakuche, MD/CEO of Heirs Insurance and Niyi Onifade, MD/CEO of Heirs Life Assurance, our Board members, regulatory partners, those who have believed in this dream, despite the obstacles, & those who have cheered us on.”

This is coming barely two weeks after Mr. Elumelu announced Transcorp has acquired Afam Power for N105 billion.

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