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Equities Market Opens Year on Bearish Note

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Nigerian-Stock-Exchange

The Nigerian stock market opened 2016 on negative note as investors took profit on the gains recorded in the last two trading days of 2015.

Although the market had ended 2015 with a dip of 17.36 per cent, some blue chip stocks had recorded an unprecedented rally as portfolio managers and institutional adjusted their portfolio for the year. However, the two-day rally could not be sustained yesterday when the market opened for the New Year.

At the close of the market in the first trading day of the year, the Nigerian Stock Exchange All-Share Index (ASI) dipped by 1.0 per cent to be at 28, 370.32.

Similarly, market capitalisation of equities declined N297.3 billion to close at N9.8 trillion. The decline stemmed from losses some bellwether counters such as Nigerian Breweries Plc, FBN Holdings Plc and Nestle Nigeria Plc, which fell by 5.0 per cent, 4.9 per cent and 3.5 per cent respectively.

However, Skye Bank Plc led the overall price losers’ table with 5.1 per cent, trailed by Nigerian Breweries Plc, Glaxosmithkline Consumer Nigeria Plc and Transcorp Hotel Plc with 5.0 per cent apiece. Eterna Plc, NAHCO Plc and Champion Breweries Plc shed 4.8 per cent, 4.5 per cent and 4.4 per cent in that order among others.

On the positive side, Learn Africa Plc led with a gain of 8.5 per cent, trailed by Vono Products Plc with 4.9 per cent. Okomu Oil Palm Plc appreciated by 4.8 per cent, just as Trans Nationwide Express Plc and AIICO Insurance went up by4.4 per cent each.

Investors traded only 98.9 million shares valued at N701 million in 2,307 deals, showing a decrease of 61 per cent in volume terms from 252 million shares worth N3.834 billion exchanged in 2,160 deals last day of 2015.

Analysts at Meristem Securities Limited, a Lagos based investment banking firm, had said last week that participation in the Nigerian equities market is likely to remain tempered in the short-term given the impact of foreign investors and their wariness to participate given their perception that the naira is ‘unfairly’ valued.

This, we anticipate will cause a drag to market returns, provided that the apex authority maintains its stoic stance regarding management of the forex market.”

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.

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Crude Oil

Oil Prices Hit Multi-year Highs on Monday

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Crude oil - Investors King

Oil prices hit multi-year highs on Monday buoyed by recovering demand and high natural gas and coal prices encouraging users to switch to fuel oil and diesel for power generation.

Brent crude oil futures were up 59 cents, or 0.7%, to $85.45 a barrel by 0900 GMT, after hitting $86.04, their highest level since October 2018.

U.S. West Texas Intermediate (WTI) crude futures climbed 90 cents, or 1.1%, to $83.18 a barrel, after hitting a $83.73, their highest since October 2014.

Both contracts rose by at least 3% last week.

“Easing restrictions around the world are likely to help the recovery in fuel consumption,” analysts at ANZ bank said in a note, adding that gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.

Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit, said Edward Moya, senior analyst at OANDA.

“The oil market deficit seems poised to get worse as the energy crunch will intensify as the weather in the north has already started to get colder,” he said.

“As coal, electricity, and natural gas shortages lead to additional demand for crude, it appears that won’t be accompanied by significantly extra barrels from OPEC+ or the U.S.,” he said.

Prime Minister Fumio Kishida said on Monday that Japan would urge oil producers to increase output and take steps to cushion the impact of surging energy costs on industry.

Chinese data showed third-quarter economic growth fell to its lowest level in a year hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks.

China’s daily crude processing rate in September also fell its lowest level since May 2020 as a feedstock shortage and environmental inspections crippled operations at refineries, while independent refiners faced tightening crude import quotas.

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Crude Oil

Oil and Gas Companies in Nigeria

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Oil - Investors King

Nigeria is an oil reach nation with several oil and gas companies operating in Africa’s largest economy.  However, only ten oil and gas companies are listed on the Nigerian Exchange Limited (NGX).

Before we discuss in detail each of the listed oil and gas companies in Nigeria. A short background on Africa’s largest economy will help throw more light on the significance of the oil and gas companies or the entire oil sector to the Nigerian economy.

Nigeria is a petrol-dollar economy, which means Africa’s most populous nation, sells crude oil and use its proceed to service the economy. In fact, the Nigerian Naira is backed by crude oil like Canadian Dollar and other commodity-dependent economies.

But because the Central Bank of Nigeria (CBN) pegged the Naira against its global counterparts, the local currency does not reflect succinctly the fluctuation in global oil prices like other crude oil-dependent currencies.

Since global oil prices rebounded with the gradual reopening of economies, the oil and gas companies in Nigeria have also rebounded from the 2020 record low of $15 per barrel. The oil and gas sector has gained 62.76 percent from the year to date, according to the NGX Oil and Gas Index.

The index gauge price movements in 10 listed oil and gas companies in Nigeria.  However, there are several oil and gas companies in Nigeria not listed on the Nigerian Exchange Limited.

Oil and Gas Companies Listed on the Nigerian Exchange Limited (NGX)

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Crude Oil

Oil Prices Extend Gains on Friday After Saudis Dismiss Supply Concerns

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Oil

Oil prices extended gains on Friday after Prince Abdulaziz bin Salman, Saudi Energy Minister dismissed calls for more crude oil supply on Thursday.

Brent crude oil, against which Nigerian oil is priced, rose to $84.92 per barrel at around 8:31 am Nigerian time. The U.S West Texas Intermediate crude oil also responded positively to the comment, rising to $81.56 per barrel on Friday.

Prince Abdulaziz had stated on Thursday that OPEC plus efforts were enough to protect the oil market from wild price volatility seen in coal and natural gas markets.

“What we see in the oil market today is an incremental (price) increase of 29%, vis-à-vis 500% increases in (natural) gas prices, 300% increases in coal prices, 200% increases in NGLs (natural gas liquids) ….”

He further stated that the Organization of the Petroleum Exporting Countries and allies led by Russia, have done a “remarkable” job acting as “so-called regulator of the oil market,” he said.

“Gas markets, coal markets, other sources of energy need a regulator. This situation is telling us that people need to copy and paste what OPEC+ has done and what it has achieved.”

Prince Abdulaziz explained that OPEC plus will add 400,000 barrels per day in November and do the same in December and subsequent months. The increase will be gradual he said.

“We want to make sure that we reduce those excess capacities that we have developed as a result of COVID,” he said, adding that OPEC+ wanted to do it “in a gradual, phased-in approach”.

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