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Market Gains N267bn amidst Profit Taking

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Nigerian Exchange Limited - Investors King
  • Market Gains N267bn amidst Profit Taking

The Nigerian equities market ended last week on bullish note for the fifth consecutive time despite moves by some investors to take profit. While investors have been taking booking profits on some stocks as a result of unprecedented price rise in the past weeks, the growth was sustained as other investors increased demand for consumer and industrial goods following impressive half year financial performance.

As a results, the Nigerian Stock Exchange (NSE) All-Share Index appreciated by 2.07 per cent to close at 38,198.60 to bring the year-to-date growth to 42.1 per cent. Similarly, the market capitalisation added N266.6 billion to close at N13.17 trillion.

Daily Market Performance

The equity market resumed on Monday on a positive noted with the index appreciating by 0.27 per cent to close at 37,525.38 , while the ,market capitalisation ended at N12.90 trillion. The appreciation recorded in the share prices of Nestle, Mobil, Nigerian Breweries, Lafarge Africa, and GTBank was bolstered the gain recorded in the index. Investors committed N5.80 billion to 254.48 million shares in 4,600 deals the first day, which was however lower than the N6.30 billion invested the previous day.

The three most actively traded sectors were: Financial Services (176.74 million shares), Consumer Goods (40.26 million shares), and Conglomerates (11.09 million shares), while the the three most actively traded stocks were: Access Bank (46.28 million shares), Zenith Bank (29.57 million shares) and GT Bank (25.54 million shares).

Only two sectors appreciated, while three depreciated. The NSE Consumer Goods Index led sector led with a 2.2per cent appreciation, following gains in Nestle (+3.3 per cent) and Nigerian Breweries (+3.1 per cent). Similarly, the NSE Industrial Goods Index trailed with 0.6 per cent growth as a result of uptick in Lafarge Africa (+1.7 per cent).

Conversely, losses in AXA Mansard Insurance Plc and Continental Reinsurance Plc dragged the NSE Insurance Index 2.0 per cent lower. In the same vein, the NSE Banking and NSE Oil & Gas indices fell by 0.2 per cent apiece.

Tuesday was another positive day as the market hit a 34-month high. The market capitalisation crossed the N13 trillion mark, closing at N13.1 trillion, just as the index stood at 37,999.56 to record a year-to-date growth of 41.4 per cent.

The positive momentum was sustained due to high demand for consumer goods bellwethers and mid-cap banking stocks. Despite the positive performance by the benchmark index, performance across sectors was bearish as all indices closed in the red except for the NSE Consumer Goods Index that rose by 5.4 per cent. The NSE Oil & Gas Index led the bears, falling by 0.8 per cent, trailed by the NSE Insurance Index, which shed 0.6 per cent. The NSE Industrial Goods Index closed 0.2 per cent lower as a result of weak demand for Dangote Cement, and Cement Company of Northern Nigeria, just as the NSE Banking Index shed 0.1 per cent.

The Nigerian stock market maintained its gaining streak on Wednesday surging further to record a year-to-date growth of 41.9 per cent. The index The Nigerian advanced by 0.38 per cent to close higher at 38,144.02, while market capitalisation added N49.8 billion to close at N13.147 trillion.

The bullish trend was driven by sustained interest in consumer goods and banking stocks such as Nestle Nigeria Plc, Guinness Nigeria Plc and Guaranty Trust Bank Plc.

In all, 21 stocks appreciated compared with 23 stocks that depreciated. However, volume and value traded rose 50.6 per cent and 20.3 per cent to 328.7 million shares and N6.1 billion respectively.

According to analysts at Meristem Securities Limited, “despite the profit taking activities on some stocks, the market’s gain recorded at the close of trades may be attributed to the sustained rally on some large cap tickers in the consumer goods space.”

Guinness Nigeria Plc led the price gainers, rising by 10.2 per cent to close at N87.50 per share, trailed by Jaiz Bank Plc, which advanced by 10 per cent.

Nigerian Aviation Handling Company Plc closed as the third highest price gainer, chalking up 9.9 per cent. Dangote Flour Mills Plc appreciated by 9.5 per cent, while Vitafoam Nigeria Plc garnered 5.02 per cent.

Conversely, Champion Breweries Plc led the price losers with 9.3 per cent, trailed by Livestock Feeds Plc with 5.0 per cent. Conoil Plc and Continental Reinsurance Plc went down by 4.5 per cent apiece among others.

The equities market bucked a seven-day gaining streak on Thursday as investors moved in for profit taking on blue-chip stocks. Consequently, the index fell by 0.11 per cent to close at 38,102.85 points while the YTD return moderated to 41.8per cent. The bearish performance was largely dragged by sell-offs in Tier-1 banking stocks including Zenith Bank and GTBank Plc that offset gains recorded by Stanbic IBTC, Nestle and Unilever.

The market recovered on Friday, rising by 0.25 per cent, hence the closing the week with a gain of 2.07 per cent.

Market Turnover

The market recorded a turnover of 1.518 billion shares worth N28.868 billion in 23,053 deals were traded by investors on the floor of the exchange in contrast to a total of 2.518 billion shares valued at N114.117 billion that exchanged hands in 23,546 deals the previous week.

The Financial Services Industry led the activity chart with 1.178 billion shares valued at N14.445 billion traded in 11,520 deals, thus contributing 77.63 per cent and 50.04 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 183.850 million shares worth N12.508 billion in 5,807 deals. The third place was occupied by Conglomerates Industry with a turnover of 53.758 million shares worth N126.669 million in 819 deals.

Trading in the top three equities namely – Access Bank Plc, Zenith Bank Plc and Guaranty Trust Bank Plc, accounted for 500.113 million shares worth N11.910 billion in 3,870 deals, contributing 32.95per cent and 41.26 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 2,461 units of Exchange Traded Products (ETPs) valued at N296,837.94 executed in nine deals compared with a total of 1.166 million units valued at N16.169 million transacted the previous week in 17 deals.

Similarly, total of 9,615 units of Federal Government Bonds valued at N8.301million were traded in 21 deals, compared with a total of 5,850 units valued at N5.702 million transacted two weeks ago.

Price Gainers and Losers

Meanwhile, 32 equities appreciated during the review week as against 38 equities of the previous week, while 37 equities depreciated in price, compared with 28 equities of the previous week.

Guinness Nigeria Plc led with 27.1 per cent trailed by Nigerian Aviation Handling Company Plc with 20.2 per cent. Dangote Flour Mills Plc garnered 18.3 per cent, just as Nestle Nigeria Plc, while Jaiz Bank Plc, Unilever Nigeria Plc and Union Bank of Nigeria Plc chalked up 13.5 per cent, 10.3 per cent, and 10.1 per cent respectively. B.O.C Gases Plc, Stanbic IBTC Holdings Plc, Cement Company of Northern Nigeria Plc advanced by 10 per cent, 9.3 per cent and 8.8 in that order.

Conversely, N.E.M Insurance Plc led the price losers with 18.5 per cent, followed by Morison Industries Plc with 13.2 per cent. Dangote Sugar Refinery Plc and Caverton Offshore Support Group Plc went down by 12.5 per cent, just as Continental Reinsurance Plc, Forte Oil Plc, and Conoil Plc shed 12.2 per cent, 10.5 per cent and 10.4 per cent respectively.

Other top price losers included: African Prudential Plc (8.0 per cent); Unity Bank Plc(7.9 per cent) and Champion Breweries Plc (7.7 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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Banking Sector

CBN Reports 136% Increase in Q1 Forex Inflows Over 2023 Total

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Dr. Olayemi Michael Cardoso

The Governor of the Central Bank of Nigeria (CBN), Dr. Olayemi Cardoso, announced that foreign exchange (forex) inflows in the first quarter of 2024 were 136% higher than the total inflows recorded in 2023.

This remarkable increase is attributed to recent economic reforms and market liberalization efforts.

Dr. Cardoso made this announcement at the Vanguard Economic Discourse in Lagos on Thursday, an event themed “Reforms in The Era of Global Economic Uncertainties: Whither Nigeria.”

Represented by Blaise Ijebor, Director of Risk at CBN, Cardoso highlighted the bank’s commitment to utilizing all orthodox monetary policy tools to address inflation and enhance market transparency.

“We remain committed to using all the orthodox monetary policy tools available to us to address inflation,” Cardoso stated.

“We have also embarked on major reforms to liberalize the foreign exchange market, which has enhanced transparency, reduced arbitrage opportunities, promoted stability, and improved liquidity.”

One of the pivotal reforms included the settlement of all valid FX forwards, which Cardoso identified as a crucial factor in boosting stakeholder confidence.

This settlement has been instrumental in increasing forex flows into the country. The governor emphasized that the substantial growth in Q1 2024 forex inflows is a direct result of these reforms.

The CBN has taken proactive steps to sanitize and stabilize the forex market. This includes issuing multiple circulars to streamline operations and recently licensing 14 new International Money Transfer Operators (IMTOs) to bolster remittance inflows.

These measures aim to double remittance flows within the year, a target set by the CBN Governor.

“Our target, of course, is to double remittance flows within the year,” Cardoso remarked. “We have started that process to ensure that it happens.”

Cardoso also addressed the broader economic challenges posed by global uncertainties. He noted that global financial tightening has led to increased risk aversion, impacting investment flows into developing economies like Nigeria.

These challenges, coupled with domestic issues such as food inflation driven by rising transport costs, infrastructure constraints, and security concerns, have compounded economic pressures.

“The financial tightening that we have seen globally has been a result of monetary authorities taking steps to rein in inflation,” Cardoso explained. “This has had an impact on developing economies as investments shift to safer markets amidst uncertainties.”

The CBN Governor reaffirmed his commitment to repositioning the bank to deliver sustainable, data-driven solutions aimed at stabilizing the Nigerian economy. He emphasized the importance of collaboration between monetary and fiscal authorities to address the nation’s economic challenges.

“We have embarked on tightening the bank’s monetary policy to address inflationary pressure on the economy,” Cardoso noted. “I believe that the results will become evident in the near term, as we are already seeing a deceleration in inflation.”

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Labour Proposes N497,000 Minimum Wage, Rejects Government’s N57,000 Offer

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Nigeria Labour Congress - Investors King

The tripartite committee tasked with reaching a consensus faced a deadlock as labour representatives rejected the government’s proposed offer of N57,000.

Instead, labour unions put forth a counterproposal of N497,000, further complicating the negotiation process.

The meeting, which took place in Abuja on Wednesday, May 22nd, concluded without a resolution, prompting the committee to adjourn until the following Tuesday, May 28th.

Sources privy to the discussions revealed that initial deliberations saw the government maintain its stance on a proposed N54,000 minimum wage, citing financial constraints.

However, following a brief recess, both government officials and representatives from the organised private sector (OPS) revised their offer to N57,000.

Despite this adjustment, labour unions stood firm on their demand for a significantly higher minimum wage, expressing discontent with the proposed figure.

In a surprising move, they presented a counteroffer of N497,000, signaling a wide gap between the two parties’ positions. As a result, the meeting ended without consensus.

Key figures in the negotiations, including Governors Obaseki and Uzodinma as well as Governor Soludo, who participated remotely via Zoom, emphasized the need for the government to demonstrate seriousness in addressing the labour unions’ concerns.

The failure to bridge the divide between labour’s expectations and the government’s offer highlights the complexity of the issue and the urgency of finding a mutually acceptable solution.

Responding to the outcome of the meeting, a senior official from the Nigeria Labour Congress (NLC) expressed disappointment, describing the negotiation process as discouraging.

Despite the government’s modest increase from N54,000 to N57,000, labour unions found the proposal inadequate, resulting in the impasse witnessed during the meeting.

The adjournment of further deliberations to the following week underscores the need for both parties to reassess their positions and explore avenues for compromise.

The minimum wage negotiation process, initiated by President Tinubu through Vice President Kashim Shettima, commenced in January 2024 with the inauguration of the tripartite committee.

Charged with recommending a new minimum wage ahead of the expiration of the current N30,000 wage, the committee comprises representatives from the federal and state governments, the private sector, and organised labour.

Despite early optimism surrounding the committee’s formation, the divergence in proposed minimum wage figures highlights the challenges of addressing the diverse economic realities across different regions of Nigeria.

As the negotiation process enters a critical phase, stakeholders are urged to approach the discussions with openness and flexibility to facilitate a mutually beneficial outcome.

The adjournment of the committee’s meeting underscores the need for constructive dialogue and collaborative efforts to reach a consensus that addresses the concerns of all parties involved.

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Banking Sector

Fidelity Bank Sets N60m Compensation for Chairman, N40m for Non-Executive Directors

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fidelity bank - Investors King

Fidelity Bank’s shareholders have approved a substantial compensation package for its chairman and non-executive directors.

The decision, disclosed in a document filed with the Nigeria Exchange Group titled ‘Resolutions from the 36th annual general meeting on Monday,’ outlines the bank’s plans for remuneration for the fiscal year 2024.

According to the resolution, Fidelity Bank’s chairman is set to receive a compensation package of N60 million annually.

Also, each non-executive director is slated to earn N40 million per annum.

The resolution further stipulates that these compensation figures will remain in effect for succeeding years until reviewed by the company during its annual general meeting.

This provision underscores the bank’s commitment to regular evaluation and adjustment of its compensation policies to align with evolving market dynamics and shareholder expectations.

The decision comes amidst Fidelity Bank’s proposal for a final dividend payout of 60 kobo per share to shareholders for the 2023 financial year.

This announcement reflects the bank’s robust financial performance and its commitment to delivering value to shareholders.

Fidelity Bank’s financial report for the year 2023 reveals impressive growth, with profit before income tax soaring by 131.49% to N124.26 billion from N53.68 billion in 2022.

This remarkable performance underscores the bank’s resilience and agility in navigating challenging economic conditions while capitalizing on emerging opportunities in the financial sector.

While the decision to allocate such substantial compensation packages to its leadership team may raise eyebrows among some stakeholders, proponents argue that it is essential to attract and retain top talent in a competitive industry landscape.

They contend that adequately remunerating key personnel is crucial for driving sustainable growth, fostering innovation, and maintaining stakeholder confidence.

However, critics may question the optics of such generous compensation packages, particularly in light of the broader socioeconomic challenges facing the country. With concerns over income inequality and calls for greater corporate accountability, Fidelity Bank may face scrutiny over its executive compensation practices and their alignment with broader societal interests.

As Fidelity Bank forges ahead with its ambitious growth agenda, navigating the delicate balance between rewarding leadership and addressing stakeholder concerns will remain a key priority for the institution.

As the banking industry continues to evolve, ensuring transparency, accountability, and fairness in compensation practices will be essential for maintaining trust and credibility in the eyes of shareholders and the public alike.

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