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



Nigerian Exchange Limited - Investors King
  • 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.

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Africa Renewable Energy Fund II Secures €125 Million First Close With SEFA and CTF Investments



Solar energy - Investors King

The Africa Renewable Energy Fund II has achieved its first close at €125 million, following a joint investment of €17.5 million from The Sustainable Energy Fund for Africa and the Climate Technology Fund through the African Development Bank.

AREF II, a successor to the original Fund, is a 10-year closed-ended renewable energy Private Equity Fund with a $300 million target capitalization. The Africa Renewable Energy Fund II, managed by Berkeley Energy, invests in early-stage renewable energy projects, thereby not only de-risking the most uncertain phase of power projects, but also promoting increased green baseload in Africa’s generation mix.

The Sustainable Energy Fund for Africa and the Climate Technology Fund will each contribute roughly €8.7 million to mobilize private-sector investment into Africa’s renewable energy sector. The Sustainable Energy Fund for Africa will also contribute financing to the AREF II Project Support Facility, which funds technical assistance and early-stage project support to improve bankability.

Other investors include the U.K’s CDC Group, Italy’s CDP, the Netherlands Development Finance Company (FMO) and SwedFund.

“We are proud to be associated with Berkeley Energy and other like-minded investors, and look forward to AREF’s continued success and leadership in promoting sustainable power development on the continent,” said Dr. Kevin Kariuki, the African Development Bank’s Vice President for Power, Energy, Climate and Green Growth.

In 2012, the African Development Bank selected Berkeley Energy, a seasoned fund manager of clean energy projects in global emerging markets to set up AREF. AREF II has a sharper strategic focus than its predecessor on “green baseload” projects that will deliver firm and dispatchable power to African power systems through hydro, solar, wind and battery storage technologies.

Luka Buljan, Berkeley Energy’s Managing Director, said: “We are very excited to have reached this milestone with strong support from our backers. The catalytic tranche from the Sustainable Energy Fund for Africa and the Climate Technology Fund will assist in mobilising private institutional investors up to full fund size of €300 million. We now look forward to concluding the fundraising and delivering projects that will provide clean, reliable and affordable energy across African markets.”

“AREF is intertwined with the Sustainable Energy Fund for Africa’s history and success, and we have worked closely over the last decade to create precedents in difficult markets and challenging technologies. We look forward to continued collaboration to accelerate the energy transition in Africa,” said Joao Duarte Cunha, Manager for Renewable Energy Initiatives at the African Development Bank and Coordinator of the Sustainable Energy Fund for Africa.

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Crude Oil

FG Earned $34.22B From Crude Oil and Gas in 2019 – NEITI



Crude oil - Investors King

The Nigeria Extractive Industries Transparency Initiative (NEITI) on Thursday released its 2019 oil and gas industry audit report, which shows that Nigeria earned N34.22 billion from the oil and gas industry in 2019.

The audit, conducted by Adeshile Adedeji & Co. (Chartered Accountants), an indigenous accounting and auditing firm, reconciled payments from 98 entities. They include 88 oil and gas companies, nine government agencies and the Nigerian Liquefied Natural Gas (NLNG).

The 2019 figure is an increase of 4.88 percent over the $32.63billion revenue realised from the sector in 2018. A breakdown of the earnings showed that payments by companies accounted for $18.90billion, while flows from federation sales of crude oil and gas accounted for $15.32billion.

The report further showed that 10 years (2010-2019) aggregate financial flows from the oil and gas sector to government amounted to $418.544billion, with the highest revenue flow of $68.442 recorded in 2011, while the lowest revenue flow of $17.055 was recorded in 2016.

According to NEITI, the total crude oil production in 2019 was 735.244mmbbls, representing an increase of 4.87 percent over the 701.101mmbbls recorded in 2018. Production sharing contracts (PSCs) contributed the highest volumes of 312.042mmbbls followed by Joint Venture (JV) and Sole Risk (SR) which recorded 310,284mmbbls and 89.824mmbbls respectively. Others are Marginal Fields (MFs) and Service Contracts (SCs) which accounted for 21,762mmbbls and 1,330mmbbls respectively.

The report also showed that total crude oil lifted in 2019 was 735.661mmbbls, indicating a 4.93 percent increase to the 701.090 mmbbls recorded in 2018, with companies lifting 469.010mmbbls, while 266.650mmbbls was lifted by the Nigeria National Petroleum Corporation (NNPC) on behalf of the federation.

Analysis of crude oil lifted by NNPC showed that 159.411mmbbls was for export, while 107.239mmbbls was for domestic refining. 97 percent of the volumes for domestic refining (104.475mmbbls) was utilised for the Direct Sale Direct Purchase (DSDP) programme while the remaining 3 percent (2.764mmbbls) was delivered to the refineries.

NEITI reported that the value of the 2019 domestic crude oil earnings was N2.722 trillion. Of this figure, N518.074billion was deducted for Petroleum Motor Spirit (PMS) under-recovery by the NNPC.

This figure was N213.074billon above the approved sum of N305billion for under-recovery in 2019. Similarly, the sum of N126.664billion was incurred by the Corporation as costs for pipeline repairs and maintenances which showed a difference of N96.378billion from the approved sum of N30.287billion for that purpose.

The report also pointed out that N31.844billion was also deducted for crude and product losses due to theft.

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Crude Oil

Oil Prices Drop on Stronger U.S Dollar



Crude oil - Investors King

The strong U.S Dollar pressured global crude oil prices on Thursday despite the big drop in U.S crude oil inventories.

The Brent crude oil, against which Nigerian oil is priced, dropped by 74 cents or 1 percent to settle at $73.65 a barrel at 4.03 am Nigerian time on Thursday.

The U.S West Texas Intermediate crude oil depreciated by 69 cents or 1 percent to $71.46 a barrel after reaching its highest since October 2018 on Wednesday.

Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed’s hawkish surprise,” said Edward Moya, senior market analyst at OANDA.

The Fed was expected to be on hold and punt this meeting, but they sent a clear message they are ready to start talking about tapering and that means the dollar is ripe for a rebound which should be a headwind for all commodities.

The U.S. dollar boasted its strongest single day gain in 15 months after the Federal Reserve signaled it might raise interest rates at a much faster pace than assumed.

A firmer greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.

Still, oil price losses were limited as data from the Energy Information Administration showed that U.S. crude oil stockpiles dropped sharply last week as refineries boosted operations to their highest since January 2020, signaling continued improvement in demand.

Also boosting prices, refinery throughput in China, the world’s second largest oil consumer, rose 4.4% in May from the same month a year ago to a record high.

This pullback in oil prices should be temporary as the fundamentals on both the supply and demand side should easily be able to compensate for a rebounding dollar,” Moya said.


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