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Stock Market Struggles for Recovery Amid N3.4tn Loss

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Egypt Stocks
  • Stock Market Struggles for Recovery Amid N3.4tn Loss

The nation’s stock market is struggling to rebound as efforts to lure back investors received a boost following the creation of a new foreign-exchange window by the Central Bank of Nigeria.

The stock market, said to be one of best performing frontier markets globally until 2013, has been in the doldrums for the past two years as investor confidence continued to sag.

Many investors who were spooked by the low liquidity levels and currency curbs in the country have yet to return to the market.

Capital market analysts say not a few local investors have exited the stock market in favour of less volatile fixed-income instruments such as government’s Treasury bills with high yields.

The market capitalisation of listed equities on the Nigerian Stock Exchange closed at N8.913tn on Friday, up from N8.716tn last week.

The NSE market capitalisation, which hit a peak of N12.135tn on April 2, 2015, fell to N9.25tn at the end of last year.

Foreign transactions on the NSE plunged to N518bn last year from as high as N1.54tn in 2014, when oil prices peaked at $115 per barrel.

The nation’s currency crisis occasioned by the sharp drop in oil prices since mid-2014 led to equities sell-offs by foreign and local investors.

The value of trading on the NSE dropped by 22.3 per cent to N74.1bn in February from N95.32bn in January, according to the latest Domestic and FPI Report.

Domestic transactions decreased by 22.88 per cent from N51.31bn recorded in January to N39.57bn in February; foreign transactions also decreased by 21.52 per cent from N44.01bn to N34.54bn.

The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said two factors would lead to the stability of the equities market.

He said, “One is the local policy environment. Today, we have yields on the Federal Government’s treasury bills of three to four-day maturity at about 18.9 per cent. So that yield is higher than any dividend yield you expect.

“So, with a yield in fixed income of about 18.9 per cent, local investors will prefer fixed income instruments to equities.”

He said foreign portfolio investors would also prefer fixed-income instruments to equities instrument.

Chukwu said, “But beyond that, foreign portfolio investors need to invest in a market where there is dollar liquidity and then the market is transparent in the pricing of foreign currencies. Both do not currently exist in the Nigerian economy.

He said those factors plus the elevated yield on fixed-income instruments had served as disincentives for investors to invest in equities.

“Until those factors are addressed, we are not going to see a bullish run in or any consistent rally in the equities market,” Chukwu added.

On April 21, the Central Bank of Nigeria established a forex widow for investors and exporters to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

The Acting Managing Director, Afrinvest Securities Limited, Mr. Ayodeji Ebo, said, “It all boils down to investors’ confidence, which is key. If you look at the way the equities market is structured, the participation of foreign portfolio investors cannot be ignored.

“If the new window is effectively implemented, it will help boost confidence because foreign investors are more interested in liquidity and they easily exit the market.”

According to him, a lot of foreign investors’ funds are still trapped in Nigeria waiting for when they will get dollars at the appropriate rate.

“This has dampened the foreign investors’ confidence significantly such that they are not bringing in more; they try as much as possible to take out,” he said.

He said on the domestic front, the direction of the economy had not been very clear although the government was doing a lot to ensure that.

Ebo said, “So, in times of uncertainty, people don’t spend; and once they don’t spend, it will affect the results of quoted companies and participation will also reduce. So, it is more of restoring confidence.”

The Board Chairman, Nigerian Economic Summit Group, Mr. Kyari Bukar, “It is the lack of clarity on the foreign exchange policy that is making them (foreign investors) to stay on the sidelines.

“If they see that clarity, they will begin to bring in their money. With the foreign portfolio investors, there has to be absolute clarity in the sense that they can easily come in and go out at a market-determined rate rather than a rate that someone sets and could change overnight.”

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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Naira

Black Market Dollar to Naira Exchange Rate Today 24th June 2024

As of June 24th, 2024, the black market rate stands at ₦1,510 per USD, reflecting ongoing fluctuations in Nigeria’s forex landscape.

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The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 24th, 2024 stood at 1 USD to ₦1,510.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,480 and sold it at ₦1,470 on Monday, June 18th, 2024.

This indicates a decline in the Naira exchange rate value when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,510
  • Selling Rate: ₦1,500

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

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Forex

Zimbabwe Mandates Partial Tax Payments in New Bullion-Backed Currency

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In a strategic move to reinforce its new bullion-backed currency, Zimbabwe will require businesses to pay a portion of their taxes in Zimbabwe Gold (ZiG), Finance Minister Mthuli Ncube announced on Wednesday.

The regulations, aimed at enhancing the stability and acceptance of the ZiG, are part of broader efforts to strengthen the nation’s fiscal and monetary framework.

“The Treasury is stepping up to complement the fiscal and monetary policy framework aimed at further anchoring the currency, exchange rate, and price stability,” Ncube stated in an emailed announcement.

Since 2020, Zimbabwe has allowed taxes to be settled in the currency businesses predominantly use. However, under the new system, specific ratios will dictate the portions of taxes that must be paid in ZiG and other foreign currencies, alongside those that can solely be settled in the new unit.

The ZiG, introduced on April 5, 2024, replaced the Zimbabwean dollar, which had depreciated by 80% against the US dollar in the official market earlier this year.

Backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank, the ZiG is part of Zimbabwe’s broader strategy to avoid the pitfalls that led to the collapse of its previous six currencies.

“The changes will add to a raft of measures aimed at ensuring the ZiG doesn’t suffer the fate of its predecessors,” Ncube stated.

The finance minister highlighted that the new tax policy is designed to foster greater stability in the ZiG’s value and ensure it becomes a cornerstone of Zimbabwe’s economy. The government hopes that by requiring businesses to transact in ZiG, it will boost demand for the currency, thereby strengthening its position in the market.

Additional measures to bolster the ZiG include urging miners to increase gold production and extending the currency crackdown to include more stringent regulations on companies. These efforts are geared toward ensuring a steady influx of gold to back the currency, thus reinforcing its value and credibility.

Economists have noted that the success of the ZiG will depend heavily on these regulatory measures and the government’s ability to maintain a stable economic environment. The ZiG’s introduction has already shown a “positive impact” on the economy, but sustained confidence in the currency will be crucial.

“Zimbabwe’s new tax policy is a bold step towards economic stability,” said John Mangudya, Governor of the Reserve Bank of Zimbabwe. “By ensuring that a portion of taxes are paid in ZiG, we are creating a consistent demand for the currency, which will help maintain its value and prevent the hyperinflation that plagued our previous currencies.”

The move has received a mixed reaction from the business community. While some see it as a necessary step towards stabilizing the economy, others are concerned about the immediate impact on cash flow and the complexities of adapting to the new system.

“We understand the government’s need to stabilize the currency,” said Takura Mugaga, CEO of the Zimbabwe National Chamber of Commerce. “However, we urge the authorities to consider the implementation challenges businesses might face and provide adequate support during the transition period.”

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Naira

Black Market Dollar to Naira Exchange Rate Today 18th June 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 18th, 2024 stood at 1 USD to ₦1,480.

Published

on

New Naira notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 18th, 2024 stood at 1 USD to ₦1,480.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,510 and sold it at ₦1,500 on Monday, June 17th, 2024.

This indicates an improvement in the Naira exchange rate value when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,480
  • Selling Rate: ₦1,470

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

Continue Reading
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