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Capital Market: Stock Market Investments Crashed by N1.93trn

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Nigerian Exchange Limited - Investors King
  • Capital Market: Stock Market Investments Crashed by N1.93trn

The Nigerian capital market has recorded abysmal performance in the last two years of President Muhammadu Buhari’s administration as investors in the nation’s stock market lost N1.93 trillion worth of their investments in companies quoted on the Nigerian Stock Exchange, NSE.

Specifically, data from the NSE showed that the stock market capitalisation, which represents total value of stocks, traded on the Exchange declined by N1.93 trillion or 16.6 percent to N9.718 trillion at the close of trading on Friday, May 19, 2017 from N11.658 trillion it closed on May 28, 2015. Similarly, another stock market gauge, the NSE All-Share Index declined by 6,196.93 points or 18.1 per cent to close on Friday May 19, 2017 at 28,113.44 points from 34,310.37 points it closed on May 28, 2015.

Since Buhari took over on May 29, 2015, the market has been on bearish trend, until after the first quarter this year that the market started witnessing bullish run; though it has not been steady as both the bulls and bears continue to interface.

A breakdown of the market performance, according to Vanguard’s investigation, for the past two years showed that in the first year of President Buhari’s administration, the market lost N1.732 trillion as the NSE market capitalisation on May 27, 2016 closed at N9.926 trillion from N11.658 trillion on May 28,2015. In the same vein, All Share Index dropped by 5,408.12 points or 15.8 per cent to close at 28,902.25 points on May 27, 2016 from 34,310.37 points it closed on May 27, 2016.

In the second year of President Buhari’s administration, the market lost over N208 billion, as the market capitalisation closed on May 19, 2017 at N9.718 trillion fromN9.926 trillion it closed on May 27, 2016. The market for the first one year of this administration was largely dominated by cautious and speculative tendencies despite cheap valuations of equities across the sub sectors on the Exchange on the backdrop of weak investors’ confidence, which was driven mainly by decline in economic activities.

Market initiative and development: Meanwhile, in 2016 the market began to see some initiatives from the apex body of the capital market, Securities and Exchange Commission, SEC, who assured that it will get the federal government to key into the 10 year Capital Market Master plan.

The Master Plan was developed by three committees inaugurated for that purpose in September 2013. The core objective of the Master Plan was to map out strategies for the improvement of the Nigerian capital market in key areas such as investor protection and education, professionalism, and product innovation, and for the expansion of the capital market’s role in Nigeria’s economy.

The SEC, in 2016 introduced the e-dividend portal in collaboration with Nigeria Inter Bank Settlement System, NIBSS, in a bid to solve the problem of rising unclaimed dividend which hit over N80 billion. According to SEC, through the e-dividend mandate, the unclaimed dividend has reduce by N30 billion.

SEC had championed the proposed amendments to laws affecting investment in Nigeria. Further to the resolution passed at the Capital Market Committee, CMC to review extant laws which affect the investment climate in Nigeria, three Committees were constituted by the Commission in June 2016 to review some market legislation. But not much has come out of these laudable efforts till date.

The new issues market has been dead since 2015 as only a few rights issues happened while just two new listings by introduction was recorded. However, the NSE witnessed the listing of Nigeria’s first FX denominated bonds as it partnered the Debt Management office (DMO) to list Nigeria’s $1billion FGN Eurobond which is the first foreign currency denominated security to be listed and traded in the Nigerian capital market. The NSE also listed the recently introduced federal government savings bond on the Exchange.

Looming recovery: Given the recent monetary and foreign exchange (forex) policy changes, such as the Investors & Exporters (I & E) Forex Window introduced by the Central Bank of Nigeria, CBN, Economy Recovery Growth Plan, ERGP, passage of budget, among others, the stock market has started to record some improvement as some level of confidence by foreign investors has started manifesting in the market given the recent rally recorded in recent time.

Analysts and market operators believe that the sustainability of Investors & Exporters window to bring about availability of forex, proper management of policies to stimulate economic growth and favorable developments from these economic indicators will determine the stock market performance in this year and beyond.

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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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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