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Equities Market Defies Profit Taking, Gains N188bn

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Nigerian Exchange Limited - Investors King
  • Equities Market Defies Profit Taking, Gains N188bn

The Nigerian equities market remained bullish last week on continuing positive investor sentiments, which lifted the market capitalisation by N188 billion or 1.63 per cent to close higher at N11.692 trillion.

Similarly, the Nigerian Stock Exchange (NSE) All-Share Index appreciated by 1.60 per cent to be at 33,810.56 amidst profit taking activities. Although some investors moved in to lock in profits recorded in the past weeks, the bulls had the upper hand, making the market to close the week higher for the fourth consecutive week. Apart from the index and market capitalisation ending the week positively, the value of stocks traded equally rose to N32.042 billion invested in 2.737 billion.

All other Indices finished higher during the week with the exception of the NSE ASeM, NSE Oil/Gas, NSE Lotus II and NSE Industrial Goods Indices that depreciated by 0.32 per cent, 4.20 per cent, 0.71 per cent, and 0.28 per cent respectively.

Daily Market performance

As expected, the trading resumed at the stock market on Monday with investors taking profit. Consequently, the benchmark index fell by 0.12 per cent to close at 33,235.28, while market capitalisation shed N14.3 billion to close at N11.49 trillion.

The decline was influenced by profit-taking in Nestle, International Breweries Plc and Total Nigeria Plc among others. According to analysts at Meristem Securities Limited, “while we observed that the positive sentiments towards a number of counters were still maintained, we attribute the day’s marginal decline to profit-taking activities on counters that had rallied in recent weeks.”

International Breweries Plc led the price losers, depreciating by 8.6 per cent to close at 29.45 per share. The stock had surged by 33.2 per cent last week on the news of its planned merger with two other breweries. UAC of Nigeria Plc shed 5.8 per cent, while AIICO Insurance Plc went down by 5.3 per cent. Fidelity Bank Plc and University Press Plc depreciated by 4.9 per cent apiece.

Seven-Up Bottling Company Plc, Learn Africa Plc and United Capital Plc closed 4.8 per cent, 4.7 per cent and 4.4 per cent lower respectively. Similarly, Nestle Nigeria Plc, NEM Insurance Plc and Total Nigeria Plc shed 4.1 per cent, 4.0pe cent and 3.9 per cent respectively.

Total Nigeria had in the previous week assured shareholders of its commitment to grow its business in Nigeria in particular and Africa at large. According to the Chairman of Total Nigeria Mr. Stanislas, the company has no intention to withdraw it business from Nigeria or Africa.

The equity market depreciated further on Tuesday as profit taking continued, leading to a decline of 0.28 per cent in the index to close at 33,141.85. The depreciation recorded in the share prices of Nestle, Forte Oil, UBA, FBN Holdings and Dangote Cement was mainly responsible for the loss recorded in the Index

The total value of stocks traded on that day was N5.55 billion, down by 9.26 per cent from N6.11 billion recorded on Monday. The most actively traded sectors were: Financial Services (309.56 million share), Conglomerates (50.57 million shares) and Consumer Goods (21.60 million shares), while the three most actively traded stocks were: Zenith Bank (62.30 million shares), Transcorp (49.20 million shares) and FCMB (41.45 million shares).

However, after two days of slide, the market recorded a rebound and appreciated by 1.38 per cent to close at 33,598.20.

Gains in Nigerian Breweries, GTBank, UBA, FBN Holdings and Zenith Bank boasted the rebound. Investors recouped N157.8 billion as market capitalisation expanded to N11.6 trillion. Also, activity level improved as volume and value traded grew 85.0 per cent and 13.5 per cent to 759.0 million shares units and N6.3 billion respectively.

Performance across sectors was bullish as all indices appreciated. The NSE Banking Index led with 2.9 per cent on the back of gains in GTBank (+5.0 per cent) and Zenith Bank (+5.0 per cent) while appreciation in AXA Mansard (+3.3 per cent) and Continental Reinsurance Plc (+2.7 per cent) drove the NSE Insurance Index 1.5 per cent northwards. Similarly, the NSE Oil & Gas Index appreciated 1.3 per cent as a result of gains in Oando (+8.1 per cent) and Seplat (+1.2 per cent), just as the NSE Consumer Index appreciated by 1.0 per cent boosted by gain in Nigerian Breweries Plc. The NSE Industrial Goods Index rose 0.8 percent following gain by Lafarge Africa.

The market sustained the positive momentum for the second day on Thursday, lifting the index by 0.59 per cent. The positive performance resulted from sustained buying interest in blue-chip banking and consumer goods stocks. Specifically, the day’s performance was driven by gains in Zenith, Nigerian Breweries, GTBank, and Unilever.

However, contrary to the previous trading session, performance across sectors was mixed with three of the five indices closing in the green. The NSE Banking index gained the most, appreciating by 1.8 per cent on the back of gains in GTBank (+1.7 per cent) and Zenith Bank (+4.6 per cent) while price rally in AXA Mansard (+4.8 percent) lifted the NSE Insurance Index by 1.4 per cent.

Also, similarly, the NSE Consumer Goods Index appreciated 1.1 per cent following gains in Nigerian Breweries (+2.3 per cent). Conversely, the NSE Oil & Gas Index and the NSE Industrial Goods Index fell 1.1per cent apiece as investors booked profit in Mobil Oil, Seplat and Lafarge Africa.

The market ended the last day of the week with a marginal growth as the index grew by 0.04 per cent propelled by gains in Nigerian Breweries Plc, Nestle Nigeria Plc, Presco, Ecobank Transnational Incorporated and Zenith Bank Plc.

Market turnover

Meanwhile, investors exchanged 2.737 billion shares worth N32.042 billion in 32,217 deals last week, compared with 3.100 billion shares valued at N29.180 billion that exchanged hands the previous week. The Financial Services Industry remained the most traded, accounting for 2.189 billion shares valued at N21.792 billion traded in 18,832 deals, thus contributing 79.98 per cent and 68.01 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 287.945 million shares worth N621.772 million in 2,031deals. The third place was occupied by Consumer Goods Industry with a turnover of 114.832 million shares worth N5.370 billion in 5,040 deals.

Trading in the top three equities namely, Access Bank Plc, Zenith Bank Plc and Transnational Corporation of Nigeria Plc accounted for 918.046 million shares worth N10.324 billion in 5,809 deals, contributing 33.53 per cent and 32.22 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 16,300 units of Exchange Traded Products (ETPs) valued at N973,376.00 executed in three deals compared with a total of 40.317 million units valued at N178.841 million transacted in the preceding week in 12 deals.

Similarly, a total of 12,193 units of Federal Government Bonds valued at N12.440 million were traded last week in 14 deals, compared with a total of 10,860 units valued at N10.196 million transacted the previous week in 10 deals.

Price Gainers and Losers

A look at the price movement chart showed 38 stocks appreciated, while 42 others depreciated. May & Baker Nigeria Plc led the bulls, surging 60.5 per cent. Skye Bank Plc trailed with a gain of 41.5 per cent, while Cement Company of Northern Nigeria Plc chalked up 33.6 per cent.

Transcorp Plc garnered 22.3 per cent, just as Ashaka Cement Plc, Unilever Nigeria Plc and Okomu Oil Palm Plc appreciated by 21.2 per cent, 20.9 per cent and 15.7 per cent respectively. Presco Plc, Unity Bank Plc and Fidson Healthcare Plc added 15.7 per cent, 15.4 per cent and 15.3 per cent in that order.

On the downside, International Breweries Plc led the price losers with 19.1 per cent, followed by Forte Oil Plc with 13.5 per cent. Learn Africa Plc and Champion Breweries Plc shed 12.6 per cent and 8.5 per cent respectively. Custodian and Allied Plc went down by 8.4 per cent, just as Diamond Bank Plc and Mobil Oil Nigeria Plc depreciated by 7.6 per cent respectively.

Other top price losers were: Cutix Plc (7.4 per cent); Dangote Sugar Refinery Plc (7.1 per cent0 and N.E.M Insurance Plc (7.0 per cent).

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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Finance

Nigeria’s Public Debt Hits ₦121.67 Trillion as Borrowings Surge – DMO

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The Debt Management Office (DMO) of Nigeria has announced that the country’s total public debt has risen to ₦121.67 trillion ($91.46 billion) as of March 31, 2024.

This represents an increase of ₦24.33 trillion from the ₦97.34 trillion ($108.23 billion) recorded at the end of December 2023.

The surge in debt is attributed to both domestic and external borrowings by the Federal Government, the 36 state governments, and the Federal Capital Territory (FCT).

The DMO’s report reveals that Nigeria’s domestic debt now stands at ₦65.65 trillion ($46.29 billion), while the external debt is ₦56.02 trillion ($42.12 billion).

The DMO noted that the rapid increase in public debt is largely due to new borrowing to partially finance the 2024 Budget deficit and the securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria (CBN).

“The increase was from new borrowing to part-finance the 2024 Budget deficit and securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria,” the DMO stated.

Despite the rising debt, the DMO remains optimistic about future debt sustainability, contingent on improvements in government revenue.

“Whilst borrowing, as provided in the 2024 Appropriation Act, will continue, we expect improvements in the Government’s Revenue to enhance debt sustainability,” the DMO added.

The increase in debt comes at a time when President Bola Tinubu is preparing to present the 2024 Supplementary Budget to the National Assembly.

This follows the President’s approval of the ₦28.7 trillion 2024 Appropriation Bill on January 1, 2024, which was ₦1.2 trillion higher than the budget originally proposed in November 2023.

The 2024 budget, dubbed the “Budget of Renewed Hope,” set ambitious targets, including pegging the oil price at $77.96 per barrel and estimating daily oil production at 1.78 million barrels.

However, the naira has faced severe depreciation, plunging to nearly ₦2,000/$1 in February, before stabilizing around ₦1,500/$1.

Economic analysts warn that the escalating debt and currency depreciation could pose significant challenges to Nigeria’s economic stability.

The government’s ability to manage its borrowing and stimulate revenue generation will be critical in navigating these fiscal pressures.

As Nigeria grapples with these economic realities, the focus remains on finding sustainable solutions to manage the growing debt burden while fostering economic growth and stability.

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Banking Sector

Federal High Court Sets Date for Contempt Hearing in GTB vs. AFEX Loan Case

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The Federal High Court in Lagos has scheduled June 27, 2024, for the next hearing in the ongoing contempt suit filed by Guaranty Trust Bank Plc (GTB) against directors of AFEX Exchange Commodities Limited.

The case revolves around a disputed N17.81 billion loan obtained under the Central Bank of Nigeria’s Anchor Borrowers’ Programme.

Presiding over the court, Justice Chukwujekwu Aneke set the date following a session where arguments were presented by the plaintiff’s lead counsel, Mr. Ade Adedeji (SAN), and the respondent’s counsel, Prof. Olawoyin (SAN).

The core issue pertains to the alleged disobedience of a court order by the directors of AFEX Exchange Commodities Limited.

GTB, through its counsel Ajibola Aribisala (SAN), has accused AFEX and its directors—Ayodele Balogun, Jendayi Fraaser, Justin Topilow, Mobolaji Adeoye, and Koonal Ghandi—of contempt for failing to comply with a court directive.

The bank alleges that these directors did not appear in court as mandated, which led to the initiation of contempt proceedings.

During the latest session, Adedeji emphasized the necessity for the directors to appear in person, stating, “My lord, the parties in contempt are not in court. The contemnors cannot sit in the comfort of their homes and send a lawyer to court in contempt proceedings. The law is trite that they must appear before the court.”

In response, Olawoyin argued that he had only recently been briefed on the matter and was not fully aware of the prior developments.

He noted that some of the individuals listed as directors were no longer with the company, adding that one current director, Mr. Akinyinka, was present in court, while another was on pilgrimage.

The contempt case traces back to a suit marked FHC/L/CS/911/2024, where GTB sought to recover the loan amount through legal measures.

On May 27, Justice Aneke granted an interim Global Standing Instruction (GSI) injunction, which directs over 20 banks to transfer funds credited to AFEX into its account with GTB until the debt is settled.

Also, the court authorized GTB to take possession of AFEX’s 16 warehouses across seven states and sell the commodities stored within, as these were procured using the CBN’s loan facility.

The N17.81 billion loan comprises N15.77 billion in principal and interest outstanding as of April 17, 2024, and an additional N2.04 billion covering recovery costs and incidental expenses.

As the court prepares for the next hearing, the financial and legal communities are closely watching the proceedings.

The outcome will significantly impact not only the involved parties but also set a precedent for handling similar cases in the future.

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Banking Sector

CRC Credit Bureau Celebrates 15 Years with Record 14% Credit Penetration in Nigeria

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Retail Sales

CRC Credit Bureau Limited celebrated its 15th anniversary with a record 14% credit penetration rate.

The occasion was marked with the CRC Finance and Credit Conference 2024 held in Lagos, where key industry stakeholders gathered to reflect on the bureau’s journey and discuss future trends in credit risk management.

Founded in January 2010 and licensed by the Central Bank of Nigeria (CBN), CRC Credit Bureau has played a pivotal role in enhancing access to credit across Nigeria.

Dr. Tunde Popoola, the Group Managing Director/CEO of CRC Credit Bureau Limited, highlighted the bureau’s journey, noting that from its inception with a single product, CRC has expanded its offerings to 18 products covering all aspects of the lending value chain.

Speaking at the conference, Dr. Popoola underscored the bureau’s contribution to Nigeria’s financial sector, stating, “CRC Credit Bureau has been instrumental in transforming access to credit in Nigeria over the past 15 years. We started with a vision to simplify credit access through reliable data and have since grown to serve millions of Nigerians.”

The event focused on the theme “Sustainable Financing Options: Innovations in Credit Risk Management,” emphasizing the importance of sustainable finance amid economic challenges.

The conference provided a platform for stakeholders to discuss strategies for mitigating risks and enhancing the efficiency of credit operations in Nigeria.

Reflecting on the current state of credit penetration, Dr. Popoola noted that while Nigeria has made significant progress, the 14% penetration rate still falls below global benchmarks.

He highlighted that CRC Credit Bureau currently holds credit scores for 33 million Nigerians, facilitating over 29.4 million searches in 2023 alone, with an additional 10 million searches conducted in the first quarter of 2024.

Joel Owoade, Chairman of CRC’s Board of Directors, acknowledged the economic headwinds impacting businesses in Nigeria but stressed the importance of sustainable financing to mitigate risks associated with lending.

“As we navigate economic fluctuations, sustainable financing remains crucial to fostering economic stability and growth,” Owoade remarked.

The conference also featured insights from industry experts on leveraging artificial intelligence (AI) in credit risk management and regulatory frameworks to support AI-driven innovations.

Olaniyi Yusuf, Managing Partner of Verraki, highlighted the potential of AI to create jobs and enhance economic productivity, calling for supportive regulatory environments that balance innovation with risk management.

Representatives from the Central Bank of Nigeria (CBN) emphasized the regulator’s efforts to promote sustainable credit practices.

Dr. Adetona Adedeji, Acting Director of the Banking Supervision Department at CBN, outlined initiatives such as the National Collateral Registry and Global Standing Instruction aimed at enhancing credit access while minimizing risks.

As CRC Credit Bureau looks ahead, Dr. Popoola expressed optimism about the future, stating, “We remain committed to driving greater financial inclusion and expanding credit access in Nigeria. Our focus is on leveraging technology and strategic partnerships to deliver innovative solutions that meet the evolving needs of consumers and lenders.”

The celebration of CRC Credit Bureau’s 15th anniversary underscored its pivotal role in Nigeria’s financial sector, marking a milestone in the nation’s journey towards broader financial inclusion and sustainable economic growth.

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