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Investors Seek Government’s Intervention as Indices Plunge by N100 Billion



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  • Investors Seek Government’s Intervention as Indices Plunge by N100 Billion

Investors, at the weekend, renewed the call for Federal Government to make deliberate pronouncements that would stimulate economic activities and accelerate sustainable stock market recovery.

The shareholders, who lamented the free fall of equities’ prices, argued that since the economic meltdown that hit the local investors, the market has not recorded any significant level of improvement, rather, retail investors have continued to lose their investment in equities.

The free fall of equities is a major disincentive to prospective local and foreign investors, and further erodes confidence in the Nigerian market.Indeed, it is important for the government to take decisive steps towards improving the lot of the market to enable the country take its rightful position as an investment destination.

Furthermore, the equities market of any economy is beneficial to the economy because it assists in creating wealth and employment.

With over N100 billion losses already incurred by investors from Tuesday, January 3rd, when the market reopened for the year to last week Friday, they noted that concerted efforts geared at forestalling further loss of investment in the market must be made.

Specifically, the market capitalisation of the Nigerian Stock Exchange, which opened the year at N9,158 trillion on January 3, 2017, depreciated by N100 billion or 1.1 per cent, to close at N9.058 trillion on Friday. The All-share index suffered the same fate, as it declined by 290.96 points from 26,616.89 to 26,325.93.

While the equities market has been in decline, financial assets have continued to migrate massively to the debt (fixed income) marketWith low yield on equities and abnormally high yield on debt securities, the financial market has been thrown into a state of imbalance.

Reacting to the development, an independent investor, Amaechi Egbo, said the market would not record any reasonable improvement this year unless government tackled some market impediments; especially the issue of infrastructure, which he said, is vital to economic growth.

Egbo, who spoke in a telephone interview with The Guardian, pointed out that the problem of insecurity, should be addressed, noting that Nigeria cannot witness the inflow of foreign direct investment if security of lives and properties are not guaranteed.

“Government should resolve the myriad of security related problems and reassure portfolio managers on safety of lives and investment. Government should improve the state of infrastructure.

“This would help both listed companies and others achieve healthier bottom-line. Critical to improving the stock market is for economic managers to remove distortions in the forex market and prioritise companies’ access to forex for production.

He added: “The market can improve in 2017 if the regulators would create more incentives and reward for performance while government agencies would strive to eliminate multiple taxation.”

The Managing Director of Crane Securities, Mike Ezeh, attributed the persistent lull in the market to investors’ apathy and loss of confidence. “Massive enlightenment seminars and conferences should be embarked on by regulators to enlighten the investors on the rudiment of stock investment.

He however lamented neglect on the market, stressing the need for government to support and participate on the market.“Government particularly which should be the biggest participant pretends to be ignorant of the enormous importance on of bourse to economic development.”

The National President, Constance Shareholders Association of Nigeria, Shehu Mallam Mikail, affirmed that the market would not make any significant improvement this year if pragmatic decisions and actions that would stimulate the economy are not taken.

“The market since May 2015, has not made any significant improvement because federal government has failed to act, while economic activities are still zero. Lack of liquidity, no money in the economy and there is no money for savings. No economic activities to even bring foreign investors.

“Federal Government should come out and stimulate the economy to stir market activities and put liquidity into the economy so that people can have extra income. There are no buyers for even those that wanted to sell off their shares,” he said.

At the close of transactions on Friday, 20 stocks appreciated in price, against 24 others that constituted the losers’ chart.Precisely, Mobil Oil emerged the day’s highest price loser with five per cent to close at N249.86 per share, while Julius Berger followed with 4.99 per cent to close at N4.99 per share.

Cutix and UAC-Property lost 4.91 per cent to close at N1.55 and N2.71 per share respectively. Presco shed 4.59 per cent to close at N42.16 per share. Nigerian Aviation Handling Company depreciated by 4.29 per cent to close at N2.68 per share.

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

Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus



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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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Crude Oil

OPEC Says Uncertainties Remain High in 2021



Nigeria's economic Productivity

OPEC Says Uncertainties Remain High in 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday said global uncertainties remained high going forward in 2021 but kept its oil demand forecast unchanged.

In the cartel’s latest oil outlook for 2021, oil demand is expected to increase by 5.9 million barrels per day year on year to 95.9 million barrels per day. The prediction was unchanged from December’s assessment.

However, OPEC and allies, said: “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.

Crude oil rose to $57 per barrel this week after incoming US President Joe Biden announced it would inject $1.9 trillion stimulus into the world’s largest economy.

But the recent rally in the commodity and stimulus announcement is expected to boost US crude oil output and disrupt OPEC+ production cuts strategy for the year.

The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.

Still, OPEC, in its forecast “assumes a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said.

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Crude Oil

Brent Crude Oil Rose to $56.25 Per Barrel




Brent Crude Oil Rose to $56.25 Per Barrel

Oil price surged following the declaration of Joe Biden as the President-elect of the United States of America last week after Trump’s mob invaded Capitol to disrupt a joint Senate session.

Also, the large drop in US crude inventories helped support crude oil price to over 11 months despite the second wave of COVID-19 crushing the world from Asia to Europe to America.

Brent crude oil, against which Nigerian Crude oil is priced, rose to $56.25 per barrel on Friday before pulling back to $55.422 per barrel on Monday during the London trading session.

Experts attributed the pullback to the rising number of COVID-19 cases in Asia with about 11 million people already locked down in Hebei province in China.

Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday.

China, the world’s largest importer of crude oil, has joined the United Kingdom and others declaring full or partial lockdown to curb the second wave of COVID-19.

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