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Equities Close Lower Despite Halting Seven-day Losing Streak

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Nigerian Exchange Limited - Investors King
  • Equities Close Lower Despite Halting Seven-day Losing Streak

The Nigerian equities market recorded its second consecutive week of decline as the Nigerian Stock Exchange (NSE) All-Share Index fell 1.13 per cent to close at 42,638.83. Similarly, market capitalisation ended lower at N15.302 trillion.

Despite rebounding from a seven-day losing streak on Wednesday, the market closed the week on a negative note as losses recorded in the first two days outweighed the gains of three days.

As a result, the NSE ASI fell by 1.13 per cent to further reduce the year-to-date growth of the market to 11.5 per cent. Apart from the ASI that decline , all other indices finished lower with the exception of the NSE Pension Index that appreciated by 0.08 per cent while the NSE ASeM Index closed flat.

Analysts at Cordros Capital Limited said: “Given two consecutive weeks of profit taking, we expect investors to hunt bargains while also taking position ahead of Q4-17 corporate earnings releases.”

Daily Performance

Still in the bearish mood, the market opened on with a decline of 0.9 per cent on the first day of the week to close at 42,737.89. Similarly, the market capitalisation fell by same margin to close at N15.34 trillion.

The depreciation recorded in the share prices of GTBank, FBN Holdings, Zenith Bank, Dangote Sugar, and Transcorp were mainly responsible for the decline recorded.

According analysts at FSDH Research, the on-going sell sentiment may continue till midweek albeit on a milder scale than in the previous trading sessions

“Profit taking and bargain hunting may likely characterise subsequent trading sessions,” they added.

In all, 36 stocks depreciated, while only 13 appreciated. Eternal Plc led the price losers with 9.6 per cent, trailed by Equity Assurance Plc with 8.3 per cent. AIICO Insurance Plc shed 8.2 per cent, while Consolidated Hallmark Insurance Plc lost 5.7 per cent.

FBN Holdings Plc, GTBank Plc and Multiverse depreciated by 5.0 per cent apiece. May & Baker Nigeria Plc and Fidelity Bank Plc shed 4.9 per cent each.

On the positive side, PZ Cussons Nigeria Plc led the price gainers with 5.8 per cent, trailed by Beta Glass Plc, Glaxosmithkline Consumer Nigeria Plc and Unity Bank Plc with 4.9 per cent apiece.

UAC of Nigeria Plc chalked up 4.1 per cent, just as Jaiz Bank Plc, Linkage Assurance Plc garnered 3.8 per cent and 3.5 per cent respectively. C & I Leasing Plc, ABC Transport Plc and Wema Bank Plc advanced by 2.7 per cent, 2.5 per cent and 2.3 per cent in that order.

All the sectoral indices trended southwards. They were led by the NSE Banking Index , shedding 3.8 per cent following losses in bellwether banking stocks – GTBank (-5.0 per cent) and Zenith Bank (-4.9 per cent). The NSE Insurance Index followed with 1.1 per cent slide while the NSE Consumer Goods Index closed 0.9 per cent lower due to downtick in Nigerian Breweries Plc (-2.9 per cent) and Dangote Sugar Refinery Plc (-4.8 per cent). The NSE Industrial Goods Index and NSE Oil & Gas Index shed 0.4 per cent and 0.2 per cent respectively.

The market recorded its highest decline on Tuesday with capitalisation falling to a new low of N14.97 trillion, while the index closed below the 42,000 threshold at 41,708.15.

Specifically, the index fell 2.41 per cent, the highest decline since the beginning of the year. Similarly, the market capitalisation shed N369.5 billion, propelled by a decline in the shares of bellwether such as Dangote Cement, UBA, Nestle Nigeria Plc, FBN Holdings, and Nigerian Breweries Plc.

The bears were virtually on rampage as 40 stocks depreciated compared with 15 stocks that appreciated. Prestige Assurance Plc led the price losers with 7.1 per cent, followed by Skye Bank Plc with a decline of 6.5 per cent. Consolidated Hallmark Insurance Plc, FCMB Group Plc and United Bank for Africa Plc went down by 6.1 per cent, 5.9 per cent and 5.5 per cent in that order.

Japaul Oil and Maritime Services Plc, Royal Exchange Plc and Union Bank of Nigeria Plc shed 5.0 per cent each. Forte Oil Plc declined by 4.9 per cent, just as Fidson Healthcare Plc, Dangote Cement Plc and Sterling Bank Plc lost 4.8 per cent apiece.

The stocks that escaped the bear run were led by A.G Leventis Nigeria Plc with 7.0 per cent, trailed by Berger Nigeria Plc with 5.0 per cent, just as Etarna Plc appreciated by 4.9 per cent.

Other top price gainers included: NAHCO Plc (4.8 per cent); Linkage Assurance Plc (4.5 per cent); Access Bank Plc (3.9 per cent); African Prudential Plc (3.8 per cent); May & Baker Nigeria Plc(3.3 per cent).

However, the equities market rebounded on Wednesday after a seven-day losing streak. Bargain hunting in banking and consumer goods sectors lifted the index by 1.1 per cent to close at 42,171.80 while market capitalisation added N166.4 billion to close at N15.1 trillion.

The rebound could largely be attributed to buying interest in Banking and Consumer counters with Zenith Bank (+5.0 per cent), United Bank for Africa (+6.3 per cent ) and Nestle (+1.9 per cent) weighing the most on performance.

But Skye Bank Plc led the gainers chart with 10 per cent trailed by FCMB Group Plc that garnered 9.8 per cent. Conversely, First Aluminum led the price losers with 9.1 per cent, trailed by LASACO Assurance Plc with a decline of 5.8 per cent.

Volume and value of trading also rose by 10.7 per cent and 28.1 per cent to 520.7 million shares and N4.7 billion respectively.

Commenting on the performance, analysts at Cordros Capital Limited said: “We expect appetite to remain strong, as investors continue to hunt bargains and take position ahead of Q4-17 earnings, amidst generally improving macroeconomic conditions.”

Also commenting, analysts at Meristem Securities Limited said: “The bullish charge in the market was led by gains recorded on counters in the banking and consumer goods sectors, which offset the loss on the market’s heavyweight, Dangote Cement Plc. We expect a continuation of the bargain hunting activities in the market and an improvement in the market mood to sustain the recovery in the near term.”

The market sustained the positive performance on Thursday with the index rising by 1.0 per cent to 42,604.40 , while market capitalisation added N155.2 billion to close at N15.3 trillion. The performance was majorly driven by price appreciation in FBN Holdings Plc (+8.2 per cent), GTBank (+2.0 per cent) and Dangote Cement Plc (+0.6 per cent).

Sectorally, it was largely bullish as four of five indices closed in the green while one closed flat. The NSE Banking Index led gainers, rising 1.3 per cent. The NSE Industrial and NSE Consumer Goods indices trailed, rising 0.9 per cent and 0.8 per cent respectively. The NSE Oil & Gas Index appreciated marginally by 0.01 per cent, while the NSE Insurance Index however closed the day flat.

Market Turnover

Meanwhile, a total turnover of 2.940 billion shares worth N27.924 billion was recorded in 28,570 deals during the review week, compared with a total of 4.426 billion shares valued at N24.236 billion that exchanged hands in 29,573 deals the previous week.

The Financial Services Industry led the activity chart with 2.174 billion shares valued at N17.033 billion traded in 19,013 deals, thus contributing 73.96 per cent and 61 per cent to the total equity turnover volume and value respectively. The Services Industry followed with 232.482 million shares worth N216.990 million in 734 deals.

The third place was occupied by Conglomerates Industry with a turnover of 170.422 million shares worth N499.400 million in 1,578 deals. Trading in the top three equities namely – Linkage Assurance Plc, Skye Bank Plc and FCMB Group Plc accounted for 809.798 million shares worth N1.130 billion in 2,551 deals, contributing 27.5 per cent and 4.04 per cent to the total equity turnover volume and value respectively.

Price Gainers and Losers

A look at the price movement chat showed that 48) equities depreciated in price, lower than 64 equities of the previous week, while 30 equities appreciated in price during the week, higher than 23 equities recorded in the preceding week.

Consolidated Hallmark Insurance Plc led the price losers with 22.8 per cent, trailed by First Aluminium Nigeria Plc with 19.5 per cent.

Courtville Business Solutions Plc shed 17.3 per cent, just as Japaul Oil & Maritime Services Plc and Prestige Assurance Plc went down by 14.2 apiece.

Other top price losers included: Unity Kapital Assurance Plc (13.6 per cent); Multiverse Mining and Exploration Plc (12.5 per cent); Equity Assurance Plc (12.5 per cent); Caverton Offshore Support Group Plc (11.6 per cent);and Sterling Bank Plc (11.4 per cent).

Berger Paints Nigeria Plc led the price gainers with 11.4 per cent, followed by Beta Glass Plc with 10.2 per cent. Access Bank Plc appreciated by 5.4 per cent, just as A.G Leventis Nigeria Plc and GSK Nigeria Plc chalked up 5.2 per cent and 4.9 per cent in that order.

Top price gainers include: Transcorp Hotels Plc (4.8 per cent); WAPIC Insurance Plc (4.6 per cent); African Prudential Plc, PZ Cussons Nigeria Plc (4.1 per cent); and Zenith Bank Plc (3.5 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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