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Investors Lose N432bn as Stocks Value Drops

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Nigerian Exchange Limited - Investors King
  • Investors Lose N432bn as Stocks Value Drops

The value of shares held by investors in the Nigerian capital market (equities category) fell by N432bn in the third quarter of 2016 when compared with the performance of the market in the second quarter.

Within the space of three months, investors in the Nigerian capital market have lost N432bn, statistics from the Nigerian Stock Exchange have indicated.

The data specifically showed that the NSE’s market capitalisation slid from N10.165tn to N9.733tn in the third quarter of 2016.

Experts said the continued drop in the value of most equities in the nation’s capital market must have dampened the spirits of investors.

Between September 28, 2015 and September 28, 2016, the NSE’s market capitalisation dropped by N873bn from N10.572tn to N9.699tn. The All-Share Index also fell to 28,236.23 basis points from 30,762.29 basis points.

There was also a significant drop in the volume of transactions in the market, as this dropped to 159.046 million from 266.652 million.

In the same vein, the value of market transactions and deals plummeted; compared to last year’s figures. In 2015, while the value of transactions and market deals stood at N3.179bn and 3,366, respectively, the figures dropped to N1.454bn and 3,237, respectively in the third quarter of 2016.

Experts noted that the fall of the nation’s capital market indices had persisted for some period.

For instance, between August and September this year, the stock market recorded a drop in liquidity to the tune of N0.411bn.

The drop reflected on the volume and value of shares traded in the period under review, which also plummeted.

The NSE ASI as of June 30, 2016 was 29,597.79 basis points; but at the close of the third quarter (September 30), the NSE ASI stood at 28,335.40.

There was a slide in the turnover of shares traded on the floor of the NSE during the period under review. For instance, the third quarter report showed that a total of 1.183 billion shares worth N10.300bn in 16,522 deals were traded in September 2016 by investors.

This, however, was in contrast with a turnover of 1.361 billion shares worth N10.711bn in 16,070 deals traded in August 2016 by investors on the Exchange’s floor.

Share turnover is a measure of stock liquidity calculated by dividing the total number of shares traded over a period by the average number of shares outstanding for the period. Thus, the lower the share turnover, the less liquid the shares of companies quoted on the Exchange, vice versa.

The National Bureau of Statistics had in the second quarter of this year said the country recorded its lowest investment inflow in nine years.

The participation of foreign investors in the NSE fell by 15 per cent between January and February this year, according to data from the bourse.

The NSE had put the level of participation by the foreigners at 51.57 per cent for January 2016. But in February 2016, the number dropped to 36.48 per cent.

Investors in the country’s capital market (equities category) lost over N1.053tn in the first quarter of 2016.

Within three months (January to March), the equities market had depreciated by 10.79 per cent, according to the NSE data.

As of the first day of trading this year (January 4), the NSE’s market capitalisation stood at N9.757tn, while the ASI was 28,370.32 basis points.

But as of the last day of trading in the first quarter of 2016 (March 31), the market capitalisation and ASI had crashed to N8.704tn and 25,306.22 basis points, respectively.

In the light of these developments, the Chartered Institute of Stockbrokers said although Nigeria had been an attractive domain for investment, there was the need for well-thought-out policies to drive businesses and the economy at large.

The institute said foreign investors would be further encouraged if the country could be consistent with its monetary policies in line with the global best practices.

It noted that the participation of local investors remained very critical to the growth of the market, adding that they (local investors) were the people that would bring stability to the equity market.

Commenting on the current market situation, the Chief Executive Officer, Alpha African Advisory, Sanyade Okoli, said the Nigerian equities market lacked the needed depth.

According to her, the market needs a significant inflow of funds to make it relatively stable to withstand traditional shocks that will always confront it.

She stressed that the market had yet to recover from the global financial crisis of 2007/2008 given its current value.

A former Managing Director, Asset Management Corporation of Nigeria, Mustafa Chike-Obi, in an interview, said the value of most equities in the country’s capital market had significantly been eroded, leaving most investors with little or nothing in terms of investment worth.

This development, he noted, had given rise to investor scepticism as far as the Nigerian equity market was concerned.

He described the situation as pathetic and grave, saying all stakeholders must come together to decide the way forward and redirect the trends in the market.

Chike-Obi said the beating the stock market had received would be better understood if the stock market value could be graded in dollar terms, considering the current foreign exchange rate.

“There is the need to encourage investors. Nobody is going to put their money in a place where they will lose the money. This is one thing that must be changed for us to move forward,” he added.

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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Loans

Increase in Banks’ Bad Loans Caused by Construction Sector

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The banking industry saw a 13.6 percent MoM (month on month) increase in bad loans to N2.76 trillion in August 2021, and the Central Bank of Nigeria attributed the increase to the rising loan defaults in the country’s construction sector.

The construction industry is touted to be under intense pressure due to the rise in the prices of building materials.

The Central Bank of Nigeria said this in its August Economic Report, stating that the NPL (Non-Performing Loans) ratio of the banking industry went up to six percent in August, one percentage point more than the five percent regulatory limit.

According to data from the apex bank, the total credit to the domestic economy went up by 2.2 percent to reach N46 trillion in August, from the N44.99 trillion recorded in July. This suggests that the NPL (bad loans) went up to N2.76 trillion in August from N2.43 trillion seen in July, a N330 billion or 13.6 percent increase.

The big rise in NPLs was explained by the CBN as a result of increased loan defaults in the construction sector, which accounted for about 4.7 percent or N905 billion of credit owed to other sectors in August, going up from 4.6 percent of N879 billion back in July.

The apex bank said the increase in the construction sector’s non-performing loans was due to the increase in process of building materials, which made it more difficult for contractors to meet their debt obligations.

Regarding this development, the Managing Director of Built2Suit Limited – a firm of architects – Ibukun Odu, said that apart from the increase in loan defaults, construction firms may have to turn to layoffs in order to reduce overhead cost.

Odu lauded the correctness of the CBN report, stating that a lot of contractors were finding the period extremely difficult. Odu stated that all the main components have witnessed increases of between 75 – 90 percent. He mentioned cement, which used to be sold at N2500 but is now sold between N4000 and N4200.

 

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Banking Sector

FirstBank DecemberIssaVybe: Showing Kindness as You Vybe

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The roof is already getting raised with #FirstBankIssaVybe, #DecemberIssaVybe campaigns. With FirstBank, it is always a total experience of being woven into the fabric of society from banking at its finest, to music, fashion, arts, and sports. Across the spectrum of human endeavour, FirstBank stands tall behind its over 32 million customers and counting. 

As FirstBank makes every day a vybe every December, it is also passionate about ensuring that everyone vybes with kindness. This is in sync with the words of Maurice Elias, Professor of Psychology, “without kindness, our communities, families, schools, and classrooms become places of incivility.” As we get the blast of the season, the 127 years strong banking brand in furtherance of its kindness campaign has created a simple calendar to ease your ability to create a SPARK in the lives of people around you.

At FirstBank, SPARK stands for Start Performing Acts of Random Kindness. The SPARK initiative was launched 4 years ago to make a difference in the nation by seeking to inspire and institutionalize kindness. By encouraging kindness, empathy and consideration for others, SPARK is placing FirstBank at the forefront of the social impact space. The unique way FirstBank is amplifying kindness is through its different directorates and departments. This way the Bank is reaching more communities, touching more lives, and spreading kindness.

The FirstBank kindness drive stands on three (3) pillars of compassion, civility, and charity. Compassion and charity readily come tops when we think about kindness, and FirstBank is championing the cause to also promote civility through the SPARK initiative. Civility covers the aspects of kindness that does not cost you anything to use in igniting the world around you. Imagine as you get to the venue of the next FirstBank’s DecemberIssaVybe show, and you give up a parking lot closer to the event hall to the car behind you?

The global head of marketing and corporate communication of FirstBank, Folake Ani-Mumuney says “At FirstBank, we spend every waking moment working to create meaning in the lives of our customers and publics. We are inspiring kindness because it brings meaning to lives and creates a happier society. So, as you vybe this Yuletide, vybe with kindness.”

Kindness does not have to cost you a kobo, so click here to download and share your kindness calendar for those simple tips to start performing acts of random kindness every day this December.

The need to promote kindness in our homes, schools, fun places, and the society at large cannot be over-emphasized especially with the increased incidence of bullying prevalent around us. In promoting the need for kindness in education and ‘cyber kindness’, FirstBank sponsored two impactful webinars during its corporate responsibility & sustainability week in July 2021. You can click here to access the Zoom recordings of the webinars.

Kindness should be a way of life, and FirstBank is at the forefront. Join the kindness train, vybe with kindness this Yuletide and always!

 

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Banking Sector

Stanbic IBTC Emerges Most Outstanding Commercial Bank Brand in Nigeria

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Stanbic IBTC Bank PLC, a subsidiary of Stanbic IBTC Holdings PLC, was named the “Most Outstanding Commercial Bank Brand in Nigeria” at the 2021 edition of the BrandCom Awards which was held recently.

The awards, organised by Brand Communicator Magazine recognised brands, organisations and personalities. It took cognisance of their outstanding contributions to the growth and development of the Nigerian economy.

Wole Adeniyi, Chief Executive, Stanbic IBTC Bank, appreciated the organisers for the award, and noted that Stanbic IBTC Bank has over the years provided unparalleled services and designed products tailored explicitly towards meeting the needs of its customers. 

Wole noted that the award would spur the organisation to continue providing excellent services to its clients. The awards reaffirm the organisation’s commitment to providing world-class financial services to its network of clients.

The Stanbic IBTC Bank Chief Executive said: “We are delighted to have emerged the Most Outstanding Commercial Bank Brand” at the BrandCom Awards. This award confirms that we prioritise our customers’ interests because they are the reason we are in business. We pledge to continue developing innovative products and services that are customer-centric, just as we are committed in our quest to continue fulfilling the financial needs of our customers at all times.”

Wole added that Stanbic IBTC would strive to continue exceeding its customers’ expectations.

Stanbic IBTC remains committed to providing a simplified customer-friendly experience that enhances customer satisfaction and exposes them to new trends in the financial services industry.

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