- Market Gains N798bn in Four Days on Continuing Demand
The Nigerian equities market maintained its bullish trend last week with the Nigerian Stock Exchange (NSE) All-share Index crossing the 30,000 mark to hit 31,371.63, while market capitalisation added N797.6 billion to close at N10.845 trillion.
Having hit a 10-month level with a growth of 3.38 per cent the previous week, the market sustained the positive performing rising by 7.94 per cent to close on continuing higher demand by investors last week.
Analysts at Cordros Capital attributed the positive development to improved macro-economic fundamentals, herein we refer to “the improvement in the currency space, especially at the parallel and Importers and exports FX market and data suggesting economic recovery is well underway, in particular, improved Purchasing Managers’ Index (PMI) survey result for the month of May.”
“ Asides that, the federal government continued to make strides in harnessing growth in the economy, supporting this, the acting President Prof. Yemi Osinbajo signed into law two Acts of Parliaments earlier passed by the National Assembly. The New laws focus on increasing access to affordable credit, and will be beneficial to MSMEs in particular,” Cordros Capital said.
At the end of the week, all the sectoral indicators appreciated save for the NSE Oil & Gas Index that went down by4.5 per cent. The NSE Industrial Goods recorded the highest growth of 9.17 per cent trailed by the NSE Consumer Goods Index that grew by 7.68 per cent. The NSE Insurance Index closed 6.08 per cent higher just as the NSE Banking Index appreciated by 4.0 per cent.
Daily Market performance
The market remained upbeat through the four trading days, beginning with a growth of 0.7 per cent on Tuesday to close at 29,276.59. Tuesday’s performance was buoyed by appreciations in banking stocks such as Guaranty Trust Bank Plc, FBN Holdings Plc, Zenith Bank Plc and Ecobank Transnational Incorporated (ETI). The positive performance was across all the sectors except the oil and gas sector that went down by 2.0 per cent. The NSE Banking Index appreciated the most, rising by 2.2 per cent on the back of gains by GTBank (+1.5 per cent) and Zenith Bank (+1.9 per cent). Similarly, gains by AXA Mansard Insurance Plc (+9.5 per cent) and Continental Reinsurance Plc (+0.8 per cent) bolstered the NSE Insurance Index to close up 2.0 per cent higher.
Similarly, the NSE Industrial Goods Index appreciated by 0.7 per cent as a result of uptick in Dangote Cement (+0.2 per cent) and Lafarge Africa (+1.2 per cent), just as the NSE Consumer Goods Index grew by 0.3 per cent.
The market extended its uptrend for the second day and sixth consecutive session with the index appreciating 0.76 per cent to close at 29,498.31,
High demand that pushed the shares of bellwethers such as Dangote Cement Plc, Nigerian Breweries Plc, FBN Holdings Plc and Access Bank Plc Nestle Nigeria Plc were responsible for the gains.
Similarly, the market capitalisation appreciated by 0.76 per cent to close at N10.20 trillion. The total value of stocks traded on that the day stood at N3.34 billion, down by 56.02 per cent from N7.59 billion recorded the previous day, while total volume of stocks traded was 343.19 million in 4,905 deals.
The most actively traded sectors were: Financial Services (274.63million), Consumer Goods (29.01million) and Conglomerates (12.57million), while three most actively traded stocks were: FBN Holdings (61.19million), Diamond Bank (41.86 million) and Fidelity Bank (38.77 million).
Performance across sectors was mixed as three of five indices appreciated. The NSE Insurance Index led sector gainers, appreciating with 2.5 per cent, just the NSE Industrial Index and NSE Consumer Goods Indices rose 1.9 per cent and 1.5 per cent in that order.
Conversely, the NSE Banking Index shed 3.1 per cent, while the NSE Oil & Gas Index closed 2.3 per cent lower.
The Nigerian bourse remained positive on Thursday with the index rising by 2.8 per cent to cross the 30,000 for the first time since last year June to close at 30,314.14
The stocks that were responsible to the growth were: Dangote Cement, Nigerian Breweries, FBN Holdings and Zenith Bank. A further analysis of the performance indicated that four of the five sectors closed positively, save for the NSE Oil & Gas Index shed 0.2 per cent. This followed profit taking in Oando and Seplat that shed 5.3 per cent and 2.4 per cent in that order.
The NSE Consumer Index appreciated by 2.5 per cent on the back of gains in Nigerian Breweries (4.9 per cent). Similarly, the Industrial Goods Index appreciated by 2.4 per cent on the account of price gains recorded by Dangote Cement Plc.
In a similar vein, the NSE Banking Index closed 1.7 per cent higher on the back of positive sentiments in Zenith Bank, UBA, Access Bank and ETI, just as the NSE Insurance Index added 1.5 per cent.
The market recorded an unprecedented growth on Friday as the bulls consolidated their hold on the market. Consequently, the index posted its highest daily growth in the recent times, apreciated by 3.49 per cent to close at 31,371.63.
Gains in FBN Holdings, Nigerian Breweries, Access Bank, Dangote Cement and Zenith Bank were mainly responsible for the gain recorded in the index on the last day of the week.
Meanwhile, trading at the stock market was for four days as the Federal Government of Nigeria declared Monday 29th May, 2017 as Public Holiday to mark the 2017 Democracy Day Celebration.
Investors traded a total of 2.319 billion shares worth N23.813 billion in 22,310 deals, up from 1.877 billion shares valued at N20.055 billion that exchanged hands the previous week in 19,979 deals.
The Financial Services Industry led the activity chart with 1.950 billion shares valued at N15.479 billion traded in 14,381 deals; thus contributing 84.12% and 65.00% to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 156.358 million shares worth N2.875 billion in 2,804 deals. The third place was occupied by Conglomerates Industry with a turnover of 70.452 million shares worth N168.377 million in 739 deals.
Also traded during the week were a total of 52 units of Exchange Traded Products (ETPs) valued at N13,802.70 executed in six deals compared with a total of 65 units valued at N1,967.85 transacted the previous week in seven deals. A total of 3,786 units of Federal Government Bonds valued at N3.806 million were traded in four deals, compared with a total of 50 units valued at N43,719.69 transacted last week in one deals two weeks ago.
Price Gainers and Losers
The price movement chart showed that 61 equities appreciated higher than 44 equities of the previous week, while only 12 equities depreciated, lower than the 25 equities of the previous week. FBN Holdings Plc led the price gainers for the week, rising by 31.2 per cent. UAN Property Development Company Plc trailed with 25.2 per cent, while AXA Mansard Insurance Plc chalked up 24.7 per cent.
May & Baker Nigeria Plc garnered 22.6 per cent, just as Champion Breweries Plc and Diamond Bank Plc rose by 19.9 per cent and 19.3 per cent in that order. Other top price gainers are: Honeywell Flour Mills Plc (18.8 per cent); Fidelity Bank Plc (17.8 per cent); Access Bank Plc (17.6 per cent) and Dangote Cement Plc (15.6 per cent).
Conversely, Seven-Up Bottling Company Plc led the price losers with 14.2 per cent, followed by Linkage Assurance Plc with a decline of 12.7 per cent. Oando Plc went down by 10.3 per cent just as Seplat, Nigerian Enamelware Plc and University Press Plc shed 10.2 per cent, 4.9 per cent, and 4.9 per cent respectively. Other top price losers included: Jaiz Bank Plc (4.2 per cent) Caverton(4. 1 per cent); GTBank Plc (3.6 per cent) and Medview Airline Plc respectively.
African Energy Developments Demand Sustained Investment With New Projects in Mozambique, Tanzania, Uganda, and Senegal
In the past twelve months, the African energy sector has seen several encouraging developments – in the form of both Foreign Direct Investment (FDI) and strategic partnerships – that have advanced the sustainable development of its natural resources. In fact, despite a global downturn in investment in 2020, FDI flows to developing economies accounted for 72% of global FDI, the highest share to date. Given the magnitude of Africa’s oil and gas reserves – not to mention its abundant renewable resource wealth – the continent remains a highly attractive market for inbound investment, which is vital for its growth.
Take Uganda, for instance, which is home to one of the largest onshore discoveries in sub-Saharan Africa. Following multiple petroleum discoveries in Uganda’s Albertine Graben – estimated to contain 6.5 billion barrels of oil, of which 1.4 billion are considered recoverable – foreign investments into the country are expected to reach nearly $20 billion. Last April, Total E&P Uganda B.V. signed a Sale and Purchase Agreement with Tullow Oil PC, through which Total will acquire Tullow’s entire 33.34% interests in Uganda’s Lake Albert development project and the East African Crude Oil Pipeline (EACOP). Five months later, the Ugandan Government and Total signed a host government agreement for EACOP, representing a significant step toward reaching a final investment decision. The deal pushes along an extended development process – slowed by infrastructure issues, tax complications, then COVID-19 – that not only promises to bring first oil by 2022, but also provides a pathway to monetization via associated transport infrastructure.
In addition to developments at Lake Albert, the Ugandan Government has proven its commitment to attracting FDI to its hydrocarbon sector through its second licensing round held last year, as well as its invitation to local and foreign entities to forge joint-venture partnerships with the Government. By prioritizing the establishment of mutually beneficial partnerships, the emerging East African producer aims to facilitate the successful transfer of skills, knowledge and technology, initiating an influx of technical expertise and working capital into the country.
“Those who have been locked out from access to opportunity want the same from the energy sector that the energy sectors want from governments. We must not forget local content, local jobs, local opportunities especially for young people and women” Stated NJ Ayuk Executive Chairman of the African Energy Chamber.
Meanwhile, in West Africa, Senegal has been reaping the rewards of a long-standing partnership with Germany, which has resulted in more than one billion Euros in funding, including significant support for small-scale power plants and renewable energy projects. Holding sizeable potential for solar and wind energy development, Senegal serves as a regional leader in renewable deployment as a means of rural electrification. Indeed, energy is a central component of poverty alleviation across Africa, with electricity access enabling greater independence, clean cooking and potable water, as well as dramatically improving the well-being of individuals, businesses and communities alike. Rural populations are cognizant of the challenges posed by a lack of stable electricity supply – increased urban migration, lack of access to basic services, low economic competitiveness, to name a few – and distributed renewables can represent the fastest and least expensive path to electrification.
European interest in Senegal has shed light on and served as a model for co-operation opportunities between renewable-rich African countries and developed partners, which offer cutting-edge technologies and technical expertise to transform raw resources into viable off-grid and mini-grid solutions.
Furthermore, while the cost of deploying renewable technology has never been lower, the availability of renewable-focused capital has never been higher. Investment in commercial and industrial solar has demonstrated resilience against the pandemic, continuing to be seen as a safe investment in light of rising utility costs and increasing distribution of both solar and financial technologies. Yet resource potential and low costs of equipment are not enough; Senegal and other resource-rich African nations require active investor interest and strong government support to unlock diversified energy mixes. In turn, a lack of investment represents a pointed threat to the achievement of long-term energy security.
“Young people and women have shown their great resilience, and it is our hope we close these deals in the renewable energy sector, Africans can have a sense of some hope that they will be included in the industry contracts and opportunities. It is no longer correct for the African to be the last hired and the first fired” Concluded Ayuk.
Moreover, without sustained levels of FDI continuing to move the needle on oil, gas and renewable developments, energy export revenues run the risk of being stranded and resources left undeveloped. For emerging producers like Uganda – as well as Tanzania, Kenya, Mozambique, among several others – this would mean foregoing critical government revenues that could aid in a much-needed, post-COVID-19 economic recovery. FDI is vital to Africa’s growth, and while it may be challenging to procure capital in a tepid global economy, it is even more difficult not to. Yes, COVID-19 has put emerging producers in a tough spot: new exploration is seen as risky, and new producers lack existing assets or low-cost development of marginal fields on which to fall back. However, it is not an option to slow or postpone time-sensitive developments that promise to harness natural resource wealth and make sustainable improvements in standards of living across the continent. Africa requires a sustained flow of investment and has proven time and again that it offers the scope of projects and magnitude of resources that are worthy of foreign capital.
Saudi Aramco’s Profit Halved in Two Years, Market Cap $210B Below Apple’s
Even before the pandemic, the oil and gas industry was faced with slumping prices. However, with a record collapse in oil demand amid the lockdowns, the COVID-19 crisis has further shaken the market, causing massive revenue and market cap drops for even the largest oil companies.
According to data presented by Finaria.it, the net income of the world’s biggest oil producer and one of the largest publicly listed companies, Saudi Aramco, dropped to $49bn in 2020, a 55% plunge in two years.
The COVID-19 Crisis and Oil Price War Cut Profits by Almost $40B in a Year
In preparation for its IPO, which took place in December 2019, Saudi Aramco had published 2018 profits. With a net income of $111.1bn, Saudi Arabia’s state-run oil giant ranked as the most profitable publicly listed company in the world.
Global macroeconomic concerns like the US-China trade war and the oil overproduction set significant price drops even before the coronavirus outbreak. In 2019, the company reported a profit of $88.2bn, a 20% drop year-over-year.
However, a standoff between Russia and Saudi Arabia in the first months of 2020 sent prices even lower and caused a massive hit for Saudi Aramco’s profits.
After global oil demand plunged in March, Saudi Arabia proposed a cut in oil production, but Russia refused to cooperate. Saudi Arabia responded by increasing production and cutting prices. Shortly Russia followed by doing the same, causing an over 60% drop in crude oil prices at the beginning of 2020. Although OPEC and Russia agreed to cut oil production levels to stabilize prices a few weeks later, the COVID-19 crisis already hit.
In March, Saudi Aramco announced full-year figures for the second time since going public, and the results revealed huge financial losses. In 2020, Saudi Arabia’s state-run oil company reported a net income of $49bn, almost a $40bn drop in a year.
While Saudi Aramco was the most profitable publicly listed company globally in 2019, the current result puts the company behind Apple, which reported a net income of $57.4bn in 2020.
Saudi Aramco’s Market Cap $210B Below Apple’s
In December 2019, Saudi Arabia’s state-run oil giant completed its long-awaited IPO and hit a staggering $2 trillion valuation on the second day of trading, nearly one trillion higher than the world’s next-largest publicly listed companies Microsoft and Apple. The initial public offering was an essential part of Crown Prince Mohammed bin Salman’s Vision 2030 program to transform the Saudi economy.
However, Saudi Aramco’s stocks were outperformed by Apple in 2020. After plunging to $1.61trn in March last year, the market cap of the Dhahran-based company jumped to $2.15trn in September. By the end of the year, this figure slipped to $2.05trn. Statistics show that Saudi Aramco’s market cap floated around this value for the last three months and then dropped to $1.87trn in April after the company revealed the full-year results.
Although valued one trillion less than Saudi Aramco at the time of its IPO, the world’s largest tech company, Apple’s, has seen its market cap surge last year. In January 2020, the combined value of shares of the US tech giant stood close to $1.4trn. After plunging to $1.1trn in March, Apple’s market cap soared to over $2.3trn in December. Although this figure slipped to $2.08trn last week, it still represents almost a 90% increase in a year.
Oil Inches Higher But Rangebound as COVID-19 Cases Soar
Oil prices edged higher in rangebound trade on Monday on optimism about a rebound in the U.S. economy as vaccinations accelerate, but rising COVID-19 cases in other parts of the world kept a lid on prices.
The prices have remained rangebound in the last three weeks, with Brent between $60 and $65 per barrel and WTI at $57 to $62.
“Oil prices are entering a consolidation phase after swinging wildly last month,” Stephen Brennock of oil broker PVM.
“While there are still plenty of reasons to be bullish, market players have become more cautious as infections have surged in Europe, India and some emerging markets, while vaccine rollouts have proved slower than anticipated,” he added.
India now accounts for one in every six daily infections worldwide, and other parts of Asia are seeing infection rates rise.
Asian oil demand remained weak and some buyers asked for lower volumes in May partly because of refinery maintenance and higher prices.
The United States has fully vaccinated more than 70 million people but U.S. gasoline demand has not picked up as much as expected.
The U.S. economy is at an “inflection point” amid expectations that growth and hiring will accelerate in the months ahead, but faces the risk of reopening too quickly and sparking a resurgence in coronavirus cases, Federal Reserve Chair Jerome Powell said in an interview broadcast on Sunday.
“There really are risks out there. And the principal one just is that we will reopen too quickly, people will too quickly return to their old practices, and we’ll see another spike in cases,” Powell said in a CBS interview, recorded on Wednesday.
On the production side, no new oil drilling rigs were started in the United States in the most recent week, a report published by Baker Hughes showed.
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