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Market Gains N52bn Despite 21 Stocks’ Loss

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The Nigerian Stock Exchange’s market capitalisation advanced by N52bn at the close of trading on the Exchange’s floor on Wednesday after recording losses of various degree on 21 stocks.

The market capitalisation appreciated to N9.418tn from N9.366tn recorded on Tuesday; the NSE All-Share Index also rose to 27,421.83 basis points from 27,272.14 basis points.

A total of 391.374 million shares worth N3.395bn were traded in 3,103 deals.

The market, in the course of trading, realised a maximum index point of 27,751.34 basis points, while the lowest and average index points recorded were 27,272.14 and 27,453.23 basis points, respectively.

The market recorded gains in 19 stocks.

Ikeja Hotel Plc, UAC Property Development Company Plc, International Breweries Plc, Dangote Flour Plc and Wema Bank Plc emerged as the top five gainers.

The shares of Ikeja Hotel appreciated by N0.09 (five per cent) to close at N1.89 from N1.80, while those of UAC Property closed at N3.90 from N3.72, gaining N0.18 (4.84 [per cent).

Similarly, the share price of International Breweries Plc closed at N18.08 from N18.05, gaining N0.83 (4.6 per cent), while that of Dangote Flour rose to N4.17 from N3.99, appreciating by N0.18 (4.51 per cent).

Wema Bank shares closed at N0.70 from N0.68, gaining N0.02 (2.94 per cent).

Other gainers were Okomu Oil Palm Plc, Glaxo SmithKline Consumer Nigeria Plc, Custodian and Allied Plc, Nigerian Breweries Plc, Access Bank Plc, Total Nigeria Plc, Stanbic IBTC Holdings Plc, Ecobank Transnational Incorporated Plc, United Capital Plc, Guaranty Trust Bank Plc, Continental Reinsurance Plc, United Bank for Africa Plc, Nestle Nigeria Plc and Dangote Cement Plc.

On the other hand, 7UP Bottling Company Plc, Cap Plc, Fidson Healthcare Plc, May and Baker Nigeria Plc and Livestock Feeds Plc were the top five losers at the close of trading.

7UP share price depreciated by N11.64 (9.74 per cent) to close at N107.86 from N119.50; while that of Cap closed at N33.40 from N37, losing N3.60 (9.73 per cent).

Fidson Healthcare recorded a drop of N0.09 (4.84 per cent) on its share price to close at N1.77 from N1.86; while May and Baker shares slid to N1.09 from N1.14, losing N0.05 (4.39 per cent).

The share price of Livestock Feeds also fell to N0.93 from N0.97, losing N0.04 (4.12 per cent).

Other losers were Aiico Insurance Plc, Diamond Bank Plc, Skye Bank Plc, PZ Cussons Nigeria Plc, Transnational Corporation of Nigeria Plc, NEM Insurance Company Nigeria Plc, Dangote Sugar Refinery Plc, Sterling Bank Plc, FCMB Group Plc, Fidelity Bank Plc, Eterna Plc, Nascon Allied Industries Plc and Honeywell Flour Mill Plc.

Flour Mills Nigeria Plc, Airline Services and Logistics Plc and Vitafoam Nigeria Plc also recorded losses on their share prices.

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.

Gold

Gold Advances to Three-Month High on Virus Woes, Inflation

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Gold - Investors King

Gold rose to the highest in more than three months as concerns over the pace of a global recovery crept back in following a flareup in coronavirus cases in parts of Asia.

The pandemic is wiping out “entire families” in villages in India, where more people are saying the scale of the crisis is much bigger than official numbers reveal. The World Economic Forum is canceling the annual meeting it was planning to hold this August in Singapore, while cases in Thailand have surged.

Investors will turn to the minutes from the Federal Reserve’s April meeting due Wednesday for potential clues to officials’ views on the recovery and how they define “transitory” when it comes to inflation. Fed Vice Chair Richard Clarida said Monday that the weaker-than-expected U.S. jobs report for April showed the economy had not yet reached the threshold to warrant scaling back the central bank’s massive bond purchases. Meanwhile, Fed Bank of Dallas President Robert Kaplan said supply and demand imbalances and base effects will contribute to elevated inflation this year, but he expects price pressures to ease in 2022.

Gold’s rebound puts it close to erasing this year’s declines, with recent inflows into bullion-backed exchange-traded funds signaling a boost to investor sentiment. Expectations for further increases in consumer prices could start to bolster demand for gold as a hedge.

“It seems inflation fears are finally translating into higher precious metals prices,” said John Feeney, business development manager at Sydney-based bullion dealer Guardian Gold Australia. “ETF investors are starting to swing into net-buyers again, after the recent consolidation, and it makes sense for the metals to play catch up to the recent moves higher in other commodities. We also have a lot of uncertainty with Covid-19 strains and mutations in the Asia-Pacific region that would be leading to safe haven buying.”

Spot gold rose as much as 0.4% to $1,873.82 an ounce, the highest since Jan. 29, and was at $1,868.01 by 12:16 p.m. in Singapore. Silver and palladium gained, while platinum steadied. The Bloomberg Dollar Spot Index fell 0.1%.

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Energy

Hamburg’s German African Energy Forum to jumpstart Africa’s Economic Transformation

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The African energy sector continues to solidify partnerships with German investors and technology with the aim of leading energy businesses from Germany, Europe and across the African continent. From upstream to downstream, Africa’s energy sector must accelerate its transition to net-zero, continue to adopt new technologies and start to embrace digitization and decentralization over the next decade.

The 14th German African Energy Forum in Hamburg hosted by Afrika Verein continues this dialogue and pushes for investment with a clear focus on highlighting the entire African energy mix, together with economic cooperation between Germany and Africa.

As stated by Afrika-Verein, “the economic impacts of the COVID-19 pandemic, climate change and the ongoing digital transformation of economies need a green, smart and quick response from the energy sector. Power generation is still one of the main enablers for inclusive economic growth in Africa.” With this said, the African Energy Chamber strongly endorses and supports the 14th German African Energy Forum in Hamburg in its efforts to do so.

In the same manner, there is a strong need for German and African businesses and policymakers to support policies that create an enabling environment for investment in a fair and evolving industry. Germany’s march to net-zero transition can’t be met if Africa is behind. The African energy sector’s ability to support the rapidly increasing demands for electricity, the deployment of smart infrastructure to manage energy more effectively, gas monetization, combating energy poverty and the approach we take to financing Africa’s clean energy transitions in a post Covid era makes this forum more important than ever.

The 14th German African Energy Forum is set to provide key market insights, trends and opportunities over the next decade as the energy sector prepares to support a global green economy.

“Year after year, Afrika Verein has been consistent in keeping Africa at the center of German foreign policy and energy policy. Their ability to bring together key stakeholders from Africa and Germany to work on energy matters including Germany and Africa is inspiring” stated NJ Ayuk, Executive Chairman of the African Energy Chamber.

“We are going to need a real net-zero transition that takes into consideration policy, regulation, innovation, technology and investment in Africa. A disorderly transition creates a stronger impulse for job losses, geographic inequity and a deterioration in inequality. In return, economic disenfranchisement can reduce public support for environmental policies over time Germans and Africans need to work together to avoid it.” Concluded Ayuk.

The Africa Energy Chamber believes Hamburg will be a great place for energy investors, project developers, policy makers and innovators to share insights and expertise on key transition trends and opportunities in Africa.

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Crude Oil

NNPC Closes Direct Sale and Direct Purchase Deals With 26 Firms

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The Nigerian National Petroleum Corporation (NNPC) has picked 26 foreign and local companies as well as 12 countries to lift the country’s crude oil for the next two years.

The crude term contracts, expected to run from 2021 through 2023, would see the firms and the selected nations, which would operate on a Government-to-Government (G2G) basis to purchase the commodity from the national oil company.

The deal is coming less than a week after the corporation chose 16 oil and gas consortia for its new crude-for-fuel swap contracts for one year starting in August.

The contracts, known as Direct Sale, Direct Purchase (DSDP) are high-stakes agreements used to supply nearly all of Nigeria’s petrol needs as well as cover some of its diesel and jet fuel consumption.

However, in the fresh crude oil term agreements, it was observed that the names of majority of the companies involved in the DSDP deal also appeared in the list of those picked by the national oil company for the crude term contracts.

The list sighted by the media showed that the preferred companies included Sahara Energy Resources Limited, Oando, Duke oil (an NNPC subsidiary), Petrogas, AA Rano, MRS, Mercuria and Vitol.

Other oil and gas concerns which scaled the NNPC selection hurdle were Oceanbed Trading Limited, Levene Energy, Bono Energy , Mocoh Energy, BP Oil, West Africa Gas Limited, Litasco SA, Emadeb, Hyde, Matrix and Brittania-U.

Other names listed by the NNPC as having qualified for the contracts included Masters, AMG, Casiva, Barbedos, Trafigura, Hindustan and Patermina.

NNPC has its own equity share of crude oil from its Joint Ventures (JVs), usually shared on a 60 to 40 basis and thereafter appoints companies and issues licences to lift its share of the oil on a Free on Board (FOB) basis.

The companies and countries nominate ships that transport the crude which is sold in the international market. Sometimes, the NNPC also awards contracts to governments to carry out the business.

In the document approving the qualified countries, China, Niger, Cote D’voire, Ghana, India, Togo, South Africa came tops, while Sierra Leone, Liberia, Turkey, Senegal, and Fujaira also made the cut.

Typically, entities qualified to take part in the contract bid are divided into four categories, namely a bonafide end user who owns a refinery and or retail outlets that can process Nigerian crude oil grades.

For the government to government contracts, or what is termed “bilateral relationships”, with what the corporation terms “high energy consuming nations”, bidding nations must provide proof that the entity is wholly owned by the relevant country or provide evidence of a bilateral agreement with the designated nation.

The third category is the internationally established and globally recognised large volume crude oil traders, while the fourth classification are indigenous companies engaged in Nigeria oil and gas downstream business activities.

In addition, qualifying foreign companies must demonstrate a minimum annual turnover of $500 million or the naira equivalent and a net worth of not less than $250 million or the naira equivalent for the previous financial year.

For indigenous firms, they are required to have a minimum turnover of $200 million or the naira equivalent and a net worth of $100 million for the preceding financial year ending.

Bidders are also to show their ability to handle supplies of crude and must list facilities and products processed or sold over the last three years, in addition to disclosing links to NNPC or the Bureau of Public Procurement (BPE) and confirming that directors have not been convicted of fraud or financial impropriety.

As with all Nigerian tenders, NNPC also highlights that the local content law must be strictly adhered to in terms of, among others, the use of Nigerian shipping companies, insurance and banks where possible.

In the past, Civil Society Organisations (CSOs) in the country’s oil and gas space had argued that G2G contracts with smaller, non-refining countries have high governance risks and low policy benefits for Nigeria.

For instance the Nigeria Natural Resource Charter (NNRC) has asked that term contracts should be carried out through a transparent and competitive tender process that includes robust pre-qualification standards and an end of sales to smaller non-refining countries unless NNPC can publicly explain the deals’ policy benefits.

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