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Investors Gain N2.2tr in Bullish Run

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  • Stock Market H1 ’17: Investors Gain N2.2tr in Bullish Run

Reflecting uptick in economic activities buoyed by improved foreign exchange inflow courtesy of oil price rebound and increased foreign investment inflow occasioned by new foreign exchange policy of the Central Bank of Nigeria, CBN, investors’ fortunes on the Nigeria Stock Exchange (NSE) soared by whopping N2.2 trillion in the first half of the year (H1’17).

Specifically, the NSE market capitalisation, which represents total value of shares on the Exchange, went up by 23.8 per cent or N2.205 trillion to N11.5 trillion at the close of trading on Friday June 30th, 2017, against N9.246 trillion at the end of December 2016.

Also when compared with the corresponding period in 2016 (H1’16) the improved return on investment for investors represented 12.7 per cent growth from N10.165 trillion at the end of June 2016.

Analysis of the current NSE data shows the impressive H1’17 performance in the following sector indices: NSE All Share Index, which measures the price movement of stocks traded on the Exchange, surged by 23.2 per cent or 6,242.86 points to 33,117.48 points at the close of business on Friday from 26,874.62 points at the beginning of the year; the NSE 30 Banking Index surged by 448.5 per cent to 1,504.44 points from 274 points; NSE Industrial Index appreciated by 21.1 points to close at 1,932.20 points from 1,595.33 points; NSE Consumer Goods Index rose by 11.6 per cent to 795 .40 points from 712.65; NSE Insurance Index rose by 9.2 per cent to 137.86 points from 126.29 points; while NSE Oil and Gas index inched up by 3.4 per cent to 323.16 points from 321.68 points.

Further review of the market for H1’17 shows that the top 10 price gainers are: May & Baker Nigeria Plc, Fidson Healthcare Plc, United Bank for Africa, UBA Plc, Cement Company of Northern Nigeria, CCNN, First Bank Nigeria, FBN Holding Plc, Presco Plc. Others include: Beta Glass, International Breweries Plc, Access Bank Plc, and PZ Cussons Nigeria Plc.

Conversely, the top ten price losers are: Forte Oil Plc, 7up Bottling Company Plc, Meyer Plc, Trans-nationwide Express Plc, Tripple Gee Plc, University Press Plc. Others include: Union Dicon Salt Plc, Guinness Nigeria Plc, John Holt Plc, and AG Leventis Plc.

Analysts’ projections

The impressive growth aligns with projections by market operators and analysts at the beginning of the year. They had projected that 2017 would be better because the economy has recovered to levels last seen in 2015/16.

For example Ayo Teriba, an economist, in his projections for 2017, said: “The brighter outlook will be premised on government holding up some of the monetary and economic policies throughout 2017. But it is reasonable to expect that they would. If they do, Nigeria can expect a resumption of growth, a moderation of inflation, a return of stability to the foreign exchange market, a convergence of exchange rates, and a sustained strengthening of the inter-bank rate.”

Also analysts at ARM Research had stated: “In our H1 17 Nigeria Strategy Report, we projected a nuanced outlook for naira equities against the backdrop of subsisting reticence of foreign and local investors towards naira equities as well as weak fundamentals. Pertinently, US interest rate normalisation, rising political concerns on the global front and FX worries in the domestic market, continue to drive foreign apathy while local support continues to dissipate as rising yields which aside from raising discount rate for equity valuations provided a significantly compelling investment outlet in the fixed income market.

“Over the second quarter of 2017, political uncertainty in Europe, swelling predictions of geo-political crisis, prospects of further rate hike by the US Federal Reserve should continue to drive cautious approach to EM/frontier market investing. Whilst domestic FX markets have seen improved liquidity since March 2017, we expect Foreign Portfolio Investment, FPI participation to be gradual with more allocation in the FI market. Complicating the outlook for equities is the elevated domestic yield environment which works to dilute local investor interest in equities.”

Meanwhile, market operators and financial analysts have expressed optimism of better market performance in their projection for the third quarter of 2017 (Q3’17). They stressed that improvement in the monetary and fiscal policies, among other factors such as global oil prices will determine the sustainability of the bullish run witnessed in the just ended H1’17.

Top five stock price gainers

Details of the stock price movement showed that May & Baker Nigeria Plc, led the cream of price gainers in H1’17, appreciating by 312.8 per cent to close last Friday at N3.88 per share from 94 kobo per share on January 3rd, 2017. It was followed by Fidson Healthcare Plc, which went up by 117.2 per cent to close at N2.28 per share from N1.28 per share. UBA Plc came third on the H1’17 price gainers’ chart, rising by 94.7 per cent to close at N7.50 per share from N4.50 per share, followed by Cement Company of Northern Nigeria, CCNN, which surged by 94 per cent to close at N9.70 per share, while FBNH gained 90.45 per cent to close at N6.38 per share from N3.35 per share.

Top five stock price losers’ movement

On the other hand, Forte Oil led the bunch of losers, dropping by 40.7 per cent to close at N50.7 per share from N84.43 per share; it was followed by 7up Bottling Company Plc, which declined by 33 per cent to close at N86.45 per share from N129.00 per share. Meyer Plc dipped by 19.5 per cent to close at N0.70 per share from N0.87 per share; followed by Trans-Nationwide Express Plc, which nosedived by 17 per cent to N0.83 per share to close at N1.00 per share, while Tripple Gee Plc lost 16.2 per cent to close at N1.14 per share from N1.36 per share.

Market Operators/Analysts reactions

Commenting on the market performance, Managing Director/CEO, APT Securities & Funds Limited, Mallam Kasimu Kurfi, said “Second quarter performance is excellent with a gain of over 30 per cent in the three months; this is really exceptional. It is the longest ever gain that we achieved in a quarter.

For the Q3 performance, it will really depend on the global price of Crude oil, as it currently trade at $46, which is seventh months lowest. The ability of the Central Bank of Nigeria, CBN to continue with Foreign Exchange, FX policy, the performance of the companies for second quarter 2017, the behaviour of foreign investor as regard to our market as well as our institutional investors particularly Pension Fund Administrators, will determine the success of Q3.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Banking Sector

CBN to Extend Credit Risk Management System to OFIs

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In an effort to curb growing bad debt, the Central Bank of Nigeria has said it will extend its Credit Risk Management System to Other Financial Institutions (OFIs) operating in Nigeria to protect them from bad debtors.

According to the apex bank, this is important following the successful implementation of the credit risk system in other lending institutions operating in Nigeria.

The bank disclosed this in a circular titled ‘Credit Risk Management System: Commencement of enrolment of all Development Finance Institutions, Microfinance Banks, Primary Mortgage Banks and Finance Companies’ and signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, on Monday.

In part, the circular read, “As part of efforts to promote a safe and sound financial system in Nigeria, the CBN introduced the CRMS to improve credit risk management in commercial, merchant and non-interest banks as well as to prevent predatory borrowers from undermining the banking system.

“With the successful implementation of the CRMS in deposit money banks, it has become expedient to commence the enrolment of Other Financial Institutions on the CTMS platform.

“Accordingly, all DFIs, MfBs, PMBs and FCs are required to report all credit facilities (principal and interest) to the CRMs and to update same on monthly basis.

“OFIs shall note the Bank Verification Numbers and Tax Identification Numbers are the only basis for regulatory renditions”.

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Banking Sector

BoI Grows Assets by 78.8% to N1.86 Trillion

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The Bank of Industry Group concluded the 2020 financial year with a 78.8 per cent growth of assets from N1.04tn to N1.86tn between 2019 and 2020.

A statement by the bank on Monday said the increase was driven to a large extent by the successful debt syndication of €1bn and $1bn that were concluded in March and December 2020 respectively.

BoI stated that the group’s financial statement demonstrated resilience and strength, noting that the period had significant challenges in the operating environment on account of the impact of COVID-19 pandemic on the economy.

“It also indicates synergy with the various interventions developed by the Federal Government, the Central Bank as well as other strategic partners towards ameliorating the impact of the pandemic on Nigerian enterprises,” the statement said.

The group’s total equity increased by 14.8 per cent from N293.08bn in the previous year to N336.48bn in 2020.

It added that as a reflection of the adverse impact of the challenging operating environment on growth of new facilities, loans and advances grew marginally in 2020 by 1.3 per cent to N749.84bn from the 2019 position.

The bank explained that this was largely due to the economic slowdown in the year as well as the various interventions and support initiated by the bank for its customers.

“The bank reviewed and restructured all its managed projects under the CBN intervention programme with interest rate reduction from nine to five per cent per annum for a period of one year and moratorium extension of three months (with a possible extension up to 12 months),” it said.

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Banking Sector

TAJBank Deploys NQR Solution To Ease Customer Transactions

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TAJBank, Nigeria’s non-interest bank, has announced the deployment of the NQR Payment solution, an indigenous Quick Response Code (QRC) by the Nigeria Interbank Settlement Scheme (NIBSS), for merchants and customers as the newest addition to its innovative e-business channels.

The NQR Payment solution is a secure QR-code-based payments and collections platform developed for merchants and customers to receive and make payments for goods and services in a quick, easy, contactless and secure manner.

A statement signed by the Founder/Chief Operating Officer of the bank, Mr. Hamid Joda, indicated that the ingenious solution would further drive TAJBank’s culture of innovation and create a seamless payment experience for its rapidly growing individual and corporate customers in their banking transactions.

“We are excited to have this payment channel introduced into the nation’s financial system as an addition to other innovative solutions we have deployed over the past few months.

This is a proof that, as we have said in our communications signature line, TAJBank’s interest is always in our customers”, Joda enthused.

In his remarks, the non-interest lender’s Chief Marketing Officer/Co-Founder, Mr. Sherif Idi, also maintained that the deployment of the NQR payment solution would revolutionize the e-payment experience and open new frontiers for small, medium and large scale businesses who are major stakeholders of the bank.

Since it commenced operations in the non-interest banking segment of the financial services industry, TAJBank is noted for its impeccable track record of growth and innovation, rendering exceptional quality services to customers.

The lender’s NQR solution is open to all customers of the bank, both merchants and individuals, across all its branches and digital channels globally.

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