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Capital Market Experts Caution on Equities Investment



  • Capital Market Experts Caution on Equities Investment

Experts in the nation’s capital market have stressed that the positive rally witnessed in the nation’s equities market last week , following the launch of the Investors’ and Exporters’ FX windows, may not be sustained, unless government implemented policies that would stimulate the macroeconomic environment and improve liquidity in the market.

Indeed, the market performance for last week was one of the best recorded in the last two years, as market indices appreciated by 7.68 percent. The last time the stock market recorded such improved performance was in the week ending April 2, 2015, when the index closed with a week to date gain of 18 per cent, valued at a whopping N2 trillion.

The 2015 gain was due to expectations that followed the election of President Muhammadu Buhari, but some experts who spoke in an interview with The Guardian on the development said the renewed investors’ interest in the market currently was optimism that foreign investors are taking position hoping that the country is working towards stabilising the FX market.

Others attributed it to dividend payout from listed firms for the 2016 year end, noting that such appreciation is not sustainable.

However, they maintained that without favourable monetary and fiscal policies from government and other positive macroeconomic variables, the positive sentiments may not continue and the market will not achieve sustainable rebound.

Specifically, at the close of transactions last week, the All Share Index appreciated by 1,956.83 points or 7.46 per cent to 28,192.46 points, while year-to-date gain increased to 4.90 per cent. Also, the market capitalisation increased by N676 billion to close at N9.746 trillion.

On whether the positive sentiments would be sustained, an independent investor, Amaechi Egbo, in an interview with The Guardian expressed delight over the week on week rally in the market, but stressed the need for investors to be cautious while taking position.

“Appreciation in the market numbers week on week is good for the entire market players but we have to remain optimistic cautiously going forward as the closing are a prudent of mix sentiments and positive macro economic variables and outlook.

“We expect the market to experience some slowing down declines depending whether players see value on prices of equities and Q2 and Q3 performance of listed firms. Ultimately, sustainability will depend on reassuring mix of government monetary and fiscal policies positive in macroeconomic aggregate and action of the regulators,” he added.

The President, Proactive Shareholders Association, Taiwo Oderinde, said the appreciation recorded in the market last week may not be sustained.

“ I believe this is as a result of companies declaring dividend for 2016. Even international rating agencies predicted that it cannot be sustained. When quarterly results are coming out for 2017, and the result of 2nd quarter and others cannot surpass that of 2016, the phenomenal growth will not be sustained. The best we can have is linear growth. “

Agreeing, the President Association For Advancement of Rights of Shareholders, Faruk Umar, maintained that the positive sentiment cannot be sustained, while investment analyst and Managing Director of InvestData Limited, Gabriel Omodion, said sustenance is dependent on the strength of low valuation, improving companies and market fundamentals being propel by recovery macroeconomic environment. It also depends on “improving liquidly in the fx market and also expected impact of budget implementation,” he added.

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.

Banking Sector

COVID-19: CBN Extends Loan Repayment by Another One Year




Central Bank Extends One-Year Moratorium by 12 Months

The Central Bank of Nigeria (CBN) has extended the repayment of its discounted interest rate on intervention facility by another one-year following the expiration of the first 12 months moratorium approved on March 1, 2020.

The apex bank stated in a circular titled ‘Re: Regulatory forbearance for the restructuring of credit facilities of other financial institutions impacted by COVID-19’ and released on Wednesday to all financial institutions.

In the circular signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, CBN, the apex bank said the role-over of the moratorium on the facilities would be considered on a case by case basis.

The circular read, “The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from nine per cent to five per cent per annum for one year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy.

“Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

“Following the expiration of the above timelines, the CBN hereby approves as follows:

“The extension by another 12 months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities.

“The role-over of the moratorium on the above facilities shall be considered on a case by case basis.”

It would be recalled that the apex bank reduced the interest rate on its intervention facility from nine percent to five percent and approved a 12-month moratorium in March 2020 to ease the negative impact of COVID-19 on businesses.

To further deepen economic recovery and stimulate growth, the apex bank has extended the one year-moratorium until February 28, 2022.

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MTN Nigeria Generates N1.35 Trillion in Revenue in 2020




MTN Nigeria Grows Revenue by 15.1 Percent from N1.169 Trillion in 2019 to N1.35 Trillion in 2020

Despite the COVID-19 pandemic and challenging business environment, MTN Nigeria realised N1.346 trillion in revenue in the financial year ended December 31, 2020.

The leading telecommunications giant grew revenue by 15.1 percent from N1.169 trillion posted in the same period of 2019.

Operating profit surprisingly jumped by 8.5 percent from N393.225 billion in 2019 to N426.713 billion in 2020.

This, the telecom giant attributed to the surge in finance costs due to increased borrowings from N413 billion in 2019 to N521 billion in 2020.

MTN Nigeria further stated that the increase in finance costs was the reason for the decline in growth of profit before tax to 2.6 percent.

MTN Nigeria grew profit before tax by 2.6 percent to N298.874 billion, up from N291.277 billion filed in the corresponding period of 2019.

The company posted N205.214 billion profit for the year, a 0.9 percent increase from N203.283 billion recorded in the 2019 financial year.

Share capital remained unchanged at N407 million. While Total equity increased by 22.3 percent from N145.857 billion in 2019 to N178.386 billion in 2020.

MTN Nigeria’s market price per share increased by 61.8 percent from N105 to N169.90.

While market capitalisation as at year-end also expanded by 61.8 percent to N3.458 trillion, up from N2.137 trillion.

The number of shares issued and fully paid as at year-end stood at 20.354 million.

MTN Nigeria margins were affected by Naira devaluations and capital expenditure due to the new 4G network coverage roll-out.

Margins were adversely affected by the effect of naira devaluation and expenses associated with new sites’ roll-out to boost 4G network coverage in FY’20.

“On the former, we note that MTNN expanded the scope of its service agreement with IHS Holding Limited and changed the reference rate for converting USD tower expenses to NAFEX (vs CBN’s official rate previously). Thus, over the full-year period, the company’s operating margin contracted by 1.9 ppts YoY to 31.7%,” CardinalStone stated in its latest report.

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Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020




Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

Nestle Nigeria, a leading food and beverage company, has declared a final dividend of N35.50k per 50 kobo ordinary share for the year ended December 31, 2020.

The beverage company said N24.50k of the amount declared was from the after-tax profit of 2020 and N5 and N6 were from the after-tax retained earnings of the years ended December 2019 and 2018, respectively.

Nestle Nigeria stated that the amount declared is subject to appropriate withholding tax and approval at the Annual General Meeting of shareholders.

It also noted that payment will be made only to shareholders whose names appear in the Register of Members as at the close of business on 21 May 2021.

Dividends will be paid electronically to shareholders whose names appear on the Register of Members as at 21 May 2021, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts.

Shareholders who are yet to complete the e-dividend registration are advised to download the Registrar’s E-Dividend Mandate Activation Form, which is also available on their website:, complete and submit to the Registrar or their respective Banks.

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