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23 Stocks Lose, Equities Market Sheds N33bn

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BRITAIN-EU-STOCKS-BREXIT-POLITICS
  • 23 Stocks Lose, Equities Market Sheds N33bn

The Nigerian equities market, on Tuesday, depreciated by N33bn as 33 stocks recorded losses at the close of trading.

The Nigerian Stock Exchange market capitalisation dropped to N9.041tn from N9.074tn, while the All-Share Index closed at 26,278.20 basis points from 26,373.83 basis points.

A total of 371.867 million shares worth N1.714bn exchanged hands in 3,522 deals.

The stock market reverted the previous day’s positive outing as the NSE returned negative at the close of trading on Tuesday. The NSE-All Share Index pared by 0.36 per cent, settling the year-to-date return at -2.22 per cent.

However, volume of shares traded and market value of transactions appreciated by 113.71 per cent and 45.82 per cent, accordingly.

The market breadth reflected 18 gainers as Unity Bank Plc emerged as the outperformer, after appreciating by 5.08 per cent to close at N0.62.

Diamond Bank Plc, Vitafoam Nigeria Plc, Cement Company of Northern Nigeria Plc and FCMB Group Plc recorded 5.04 per cent, 4.89 per cent, 4.82 per cent and 4.76 per cent gains, respectively.

However, the shares of 7UP Bottling Company Plc, NEM Insurance Plc, AG Leventiz Nigeria Plc, NPF Microfinance Bank Plc and Forte Oil Plc depreciated by five per cent, 4.71 per cent, 4.55 per cent, 4.55 per cent and 4.46 per cent, respectively, with respective closing prices of N101.65, N0.81, N0.84, N1.05 and N70.30.

Measuring market performances by the NSE sector indices, the banking sector appreciated by 0.02 per cent; the insurance sector rose by 0.38 per cent; and the industrial sector progressed by 0.04 per cent; while the food/beverage sector and oil/gas sector depreciated by 1.52 per cent and 0.32 per cent, respectively.

“Tuesday’s performance may be attributed to profit taking activities on certain counters that rallied in the previous week. For the remaining days of the week, we expect the seesaw mood to persist,” Meristem Securities Limited’s analysts said in a post.

Meanwhile, amid relatively unchanged liquidity, the interbank call rate declined marginally to 10.60 per cent (previous: 10.67 per cent). At the foreign exchange interbank market, the naira spot and one year forward rate remained stable at N305.25 and N378, respectively.

Yields in Treasury bills space extended the upward trend, rising 19 basis points on the average.

Notably, the 16 day-to-maturity, 37DTM and the 65DTM bills recorded the most significant advances with their respective yields closing at 13.62 per cent, 16.75 per cent and 12;.87 per cent.

Bearish trading resurfaced in the bonds market as yields advanced by three basis points on the average across the benchmark notes.

Particularly, yields on the 15.54 per cent FGN February 2020, 16.39 per cent FGN January 2022 and 12.40 per cent FGN March 2036 bonds rose four basis points, six basis points and seven basis points, respectively, to close at 16.41 per cent, 16.14 per cent and 16.58 per cent in that order.

To this end, the analysts at Vetiva Capital Management Plc said, “Given the liquidity constraint (following recent mop appreciations), we expect the bearish trading to persist in the Treasury bills market.

“Meanwhile, the Debt Management Office will conduct its monthly bond auction today (Wednesday), offering N40bn apiece on the 14.50 per cent FGN July 2021 and 12.40 per cent FGN March 2036 bonds and N50bn on the 12.50 per cent FGN January 2026 bond. Hence, we anticipate a slightly tepid trading session for the bonds.”

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.

Finance

Global Credit Rating Affirms Sovereign Trust Insurance A Rating

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insurance

Global Credit Rating Affirms Sovereign Trust Insurance A Rating

Global Credit Rating, an international rating agency based in South Africa, has affirmed Sovereign Trust Insurance Plc A rating in its latest report released for the month of December 2020.

In a statement released through the Nigerian Stock Exchange (NSE), Global Credit Rating noted “that the Company has shown a great deal of consistency in her claims paying obligations to her numerous customers spread all over the country.

The Report further stated that “the listing of the Rights Issue in 2019 helped in increasing the Shareholders’ funds of the Company by 33.8%, to N7.8b by the end of the Financial year in 2019 as against the figure of N5.8b in 2018.

“Subsequently, by the third quarter of 2020, the Shareholders’ funds had increased to N8.2b which also translated to a 31% increase in the corresponding period of 2019 with a figure of N6.3b. In the Rating Agency’s opinion, Sovereign Trust Insurance Plc is strong in liquidity with more than adequate claims coverage that compares well to industry averages.

“The capital adequacy of the Underwriting Firm is considered strong according to the rating report and this is underpinned by the sizeable capital base catering for the quantum of insurance and market risks assumed. In this regard, the ratio of Shareholders’ funds to NEP, (Net Earned Premium) improved to 189.2% in the Q3 of 2020 as against 130.9% in the corresponding quarter of 2019.

In terms of peer-to-peer performance comparison, “Sovereign Trust Insurance Plc did very well when compared with other selected insurers in terms of Capital, Total Assets, Gross Premium Income (GPI) and Net Premium Income (NPI).”

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Banking Sector

Sub Saharan Africa Mergers and Acquisition Transactions Totalled US$ 25.7 Billion in 2020

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Sub Saharan Africa Mergers and Acquisition Transactions Totalled US$ 25.7 Billion in 2020

South Africa – Refinitiv today released the 2020 investment banking analysis for the Sub-Saharan African. According to the report, an estimated US$523.7 million worth of investment banking fees were earned in Sub-Saharan Africa during 2020, down 15% from 2019 and the lowest annual total in six years.

Fee declines were recorded across M&A advisory, debt capital markets underwriting, and syndicated lending.  Advisory fees earned from completed M&A transactions generated US$108.3 million, down 55% year-on-year to the lowest level since 2013.  Debt capital markets underwriting fees declined 13% to US$64.9 million, a four-year low, while syndicated lending fees fell 3% to US$263.0 million. Equity capital markets underwriting fees totalled US$87.5 million, almost three-times the value recorded during 2019.

Fees generated in the energy & power sector account for 26% of total investment banking fees earned in the region during 2020, up from 10% during the same period last year, while the financial and technology sectors account for 17% and 13% respectively.  South Africa generated the most fees in the region, a total of US$279.9 million accounting for 53%, followed by Mozambique with 14%. Boosted by lending fees, Sumitomo Mitsui Financial Group earned the most investment banking fees in the region during 2020, a total of US$57.3 million or an 11% share of the total fee pool.

MERGERS & ACQUISITIONS

The value of announced M&A transactions with any Sub-Saharan African involvement reached US$25.7 billion during 2020, 62% less than the value recorded during 2019 when Naspers’ US$35.9 billion internet assets spin-off boosted merger activity to an all-time high.  The value of deals recorded during 2020 is the lowest annually since 2012.  The number of deals declined 5% from last year to a seven-year low.

The value of deals with a Sub-Saharan African target declined 39% to a sixteen-year low of US$12.5 billion as domestic M&A within the region declined 44% from last year and the combined value of inbound deals reached just US$7.1 billion, the lowest annual total since 2009.

Chemicals company Sasol agreed to sell a US$2.0 billion stake in LyondellBasell in October, the largest deal in the region during 2020.  Boosted by this deal, materials was the most active sector for deal making during 2020, accounting for 23% of Sub-Saharan African target M&A activity, followed by energy & power (19%) and technology (17%).  South Africa was the most targeted nation, followed by Uganda. Outbound M&A reached a three-year high of US$6.0 billion during 2020, 13% more than the value recorded during 2019.  The value was boosted by Angolan state-owned Sonangol’s purchase of PT Ventures from Africatel Holdings for US$1.0 billion and Templar Investments’ US$1.0 billion offer for Jindal Steel’s Oman unit. With advisory work on twenty deals worth a combined U$4.4 billion, JP Morgan holds to the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during 2020.

EQUITY CAPITAL MARKETS

Sub-Saharan African equity and equity-related issuance reached US$2.5 billion during 2020, 54% more than the value recorded during the previous year, but lower than every other annual total since 2005.  The number of deals recorded increased 19% from 2019 but was lower than any other yearly tally since 2012.  One initial public offering was recorded during 2020, compared to three in 2019.  Malawian telecoms company, Airtel Malawi, raised US$28.7 million on the Malawi Stock Exchange in February. JP Morgan took first place in the Sub-Saharan African ECM underwriting league table during 2020.

DEBT CAPITAL MARKETS

The African Development Bank raised $3 billion in a “Fight Covid-19” social bond at the end of March to help alleviate the economic and social impact the Coronavirus pandemic will have on livelihoods and economies in the region.  With this deal, and Ghana’s US$3 billion Eurobond in February, Sub-Saharan African debt issuance totalled US$8.9 billion during the first quarter of 2020, the second-highest first quarter DCM total in the region of all-time.  Only US$1.9 billion was raised during the second quarter, the lowest quarterly total in eight years, followed by US$4.0 billion during the third quarter.  Prosus raised US$2.2 billion in December, boosting fourth quarter bond issuance in the region to US$4.3 billion.  The total proceeds raised during 2020 is US$19.0 billion, down 30% from last year and a four-year low.

Deutsche Bank took the top spot in the Sub-Saharan African bond underwriter ranking during 2020 with US$2.6 billion of related proceeds, or a 13% market share.

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Finance

DF Holdings Limited Purchases 474,603,596 Shares of AIICO

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AIICO insurance

DF Holdings Limited Purchases 474,603,596 Shares of AIICO

A majority shareholder in AIICO Insurance Plc, DF Holdings Limited, has increased its stake in the company by purchasing additional shares of 474,603,596.

In a disclosure statement published through the Nigerian Stock Exchange (NSE) and signed by Donald Kanu, the Company Secretary, AIICO, DF Holdings Limited purchased the shares on 31, December 2020 from the Nigerian Stock Exchange in Lagos Nigeria.

The 474,603,596 shares were purchased at N1.17k per share. Meaning, DF Holdings Limited invested N555.286 million in AIICO Insurance. See the details below.

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