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Analysts Predict Weak Start for Capital Market

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Egypt Stocks
  • Analysts Predict Weak Start for Capital Market

Financial analysts say the capital market is likely to start the week on negative note following the bearish trend that trailed the market last week.

Bearish sentiments pervaded the equities market last week, as the Nigerian Stock Exchange All-Share Index declined by 1.15 per cent week-on-week to peg the year-to-date return at -5.80 per cent.

The market closed negative on four out of the five trading days of the week.

“This week, we expect the current market mood to persist in the absence of positive news flow to sway investors’ sentiments. Therefore, we advise value-seeking investors to trade with caution,” analysts at Meristem Securities Limited said in the firm’s weekly report.

Third quarter 2016 earnings, releases flooded the market on Monday last week, being the deadline for result submission by listed companies. The results were mixed across board, thus generating varied reactions from investors.

However, the volume traded and value of transactions advanced by 2.29 per cent and 12.45 per cent week-on-week, respectively.

The naira depreciated against the United States dollar by 7.42 per cent week-on-week at the inter-bank segment of the market, as the spot rate settled at N328.90/dollar. However, at the parallel market, the currency traded flat week-on-week to close at N470/dollar at the end of the week.

There was net Open Market Operation sales of N31bn, arising from repayment and auction of N138bn and N169bn, respectively. Consequently, system liquidity declined, resulting to an increase in the Open-by-Back and Overnight rates by 3.83 per cent and 2.75 per cent week-on-week accordingly, to settle the average money market rate at 13.25 per cent at the end of last week.

On what will shape the markets this week, analysts at Vetiva Capital Management Limited said, “On the equity market, save for some late session spikes during Friday’s session, we note that the NSE ASI was on a downward trend over the final hour of trade amid sell pressure across board. This points to a weak open this week.

“Although the demand for Treasury bills remained resilient at the week’s close despite consistent Central Bank of Nigeria’s mop up, we anticipate a relatively tepid trading session at the week open across the fixed income space.

“Given the significant weakness recorded at the week close, we expect the CBN intervention at the week open.”

Investors’ demand for Treasury bond instruments was quite strong last week, with a noticeable bias for shorter-termed instruments. Consequently, the average bond yield trended southward to settle at 19.58 per cent as of November 3, 2016, reflecting a 0.14 per cent week-to-date decline.

Also, the result of T-bills auction held last week showed that rates were slightly higher than at the previous action. The stop rates for the 91-day, 182-day and 364-day instruments were 14 per cent, 17.50 per cent and 18.50 per cent, respectively.

In the Treasury bond space, there were mixed reactions, as the average yield remained flat at 16.16 per cent with investors’ sentiments tilting towards the shorter end of the curve.

“We expect this trend to continue in the short term,” the Meristem analysts said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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