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Stock Market Drops Slightly as 13 Firms Lose

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The Nigerian Stock Exchange All-Share Index dropped by 0.02 per cent at the close of trading on Wednesday after 13 stocks closed in the red compared to 24 that appreciated.

Profit-taking in large-cap stocks ― International Breweries Plc, FBN Holdings Plc and United Bank for Africa ― was said to have caused the ASI to drop by two basis points to 32,375.12 bps.

The market capitalisation of listed equities fell to N11.819tn from N11.821tn on Tuesday.

A total of 190.353 million shares worth N1.773bn exchanged hands in 2,780 deals on Wednesday.

The equities market continued on its downward trend, after gaining N65bn on Tuesday.

The year-to-date loss settled at 15.3 per cent, with the NSE market value and the volume of transactions declining by 33.2 per cent and 29.6 per cent, respectively.

The highest gainers on Wednesday were Forte Oil Plc, Cement Company of North Nigeria Plc, Regency Assurance Plc, Sovereign Trust Insurance Plc and Prestige Assurance Plc, which appreciated respectively by 10 per cent, 9.73 per cent, 9.09 per cent, 9.09 per cent and 8.77 per cent.

On the other hand, the losers’ chart was topped by AXA Mansard Insurance Plc, Capital Oil Plc, PZ Cussons Nigeria Plc, Consolidated Hallmark Insurance Plc and International Breweries Plc, which declined by 9.65 per cent, eight per cent, 7.41 per cent, 6.25 per cent and 6.25 per cent, respectively.

The NSE sector indices showed that the performance across sectors remained bullish as three of five indices closed positive.

The oil and gas index emerged the highest gainer as bargain hunting in Forte Oil and Oando Plc pulled the index up by 1.1 per cent.

The banking and industrial goods indices gained 0.4 per cent each on the back of price appreciation in Union Bank Nigeria Plc, Guaranty Trust Bank Plc and Cement Company of North Nigeria by 6.4 per cent, 0.9 per cent and 9.7 per cent, respectively.

On the flip side, the insurance index shed the most, declining by 1.3 per cent resulting from sell-offs in AXA Mansard and Cornerstone Insurance Plc, while the consumer goods index fell by 0.4 per cent as a result of sell pressures in International Breweries and PZ.

Commenting on the performance of the market, analysts at Afrinvest Securities Limited said, “We continue to observe improving sentiment in the market, which we opine results from investors positioning in fundamentally sound stocks. Despite the negative performance today, we expect the performance of the market to be uplifted by the close of the week on bargain-hunting activities.”

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

Moniepoint Strengthens Efforts to Broaden Financial Access Through Collaborative Initiatives

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Africa’s fastest growing financial institution according to the Financial Times, Moniepoint Inc has underscored the importance of a collaborative and holistic stakeholder approach in advancing the future of financial and economic inclusion in Nigeria.

In a recent high-level policy dialogue between the Nigerian government and private sector stakeholders held in Washington DC, Moniepoint Inc’s Group CEO and Co-Founder, Tosin Eniolorunda emphasized the importance of public-private collaborations in addressing trust issues that have slowed down the adoption of innovative fintech solutions for economic and financial inclusion.

“Moniepoint has long championed the importance of financial inclusion and financial happiness. Building trust with the public and government, improving business and consumer access to the financial system are critical issues that are aligned to our philosophy. As testament to our commitment, we recently launched a landmark report investigating Nigeria’s informal economy, highlighting opportunities to widen financial inclusion to historically underserved communities. The outputs from this strategic gathering will go a long way in bolstering Nigeria’s economy even as closer linkages are formed from public-private collaboration which will be a huge boost to the overall development and competitiveness of the larger financial services industry,“ Eniolorunda said.

The event, which brought together government officials, regulators, law enforcement agencies, and fintech industry leaders at George Washington University, aimed to leverage innovative approaches to drive a sustainable and inclusive financial system in Nigeria.

Vice President Kashim Shettima, addressing the gathering via video conference, highlighted the urgent need for financial innovation to drive Nigeria’s economic and financial inclusion agenda. This aligns with President Bola Ahmed Tinubu’s administration’s commitment to bringing over 30 million unbanked Nigerians into the formal financial sector as part of the Renewed Hope Agenda.

“We must develop a sustainable collaboration approach that will facilitate the adoption of inclusive payment to achieve our objective of economic and financial inclusion,” Vice President Shettima stated.

The dialogue focused on addressing critical challenges in Nigeria’s fintech ecosystem, including regulatory oversight, security concerns, and trust issues that have hindered the widespread adoption of innovative financial solutions. Participants explored strategies to enhance interagency collaboration and strengthen the overall effectiveness of the financial services sector.

Philip Ikeazor, Deputy Governor of the Central Bank of Nigeria responsible for Financial System Stability, emphasized the need for ongoing collaboration among all stakeholders to meet the goals of the Aso Accord on Economic and Financial Inclusion.

Kashifu Inuwa Abdullahi, Director General of the National Information Technology Development Agency (NITDA), advocated for “a digital-first approach and the fusion of digital literacy with financial literacy to address trust issues affecting the inclusive payment ecosystem.”

Dr. Nurudeen Zauro, Technical Advisor to the President on Economic and Financial Inclusion, explained that the gathering aims to evolve into a mechanism providing relevant information to the Office of the Vice President, facilitating effective decision-making for economic and financial inclusion.

The event resulted in various recommendations covering rules, infrastructure, and coordination, with a focus on implementable actions and clear accountabilities. As discussions continue, Moniepoint remains dedicated to leveraging its expertise and technology to support the government’s financial inclusion goals and create a more financially inclusive society for all Nigerians.

Other notable speakers included Inspector General of Police Mr. Kayode Egbetokun, Executive Director of the Center for Curriculum Development and Learning (CCDL) at George Washington University Professor Pape Cisse, Assistant Vice President at Merrill Lynch Wealth Management Mr. Reginald Emordi, Regional Director for Africa at the Center for International Private Enterprise (CIPE) Mr. Lars Benson, and United States Congresswoman representing Florida’s 20th congressional district, The Honorable Sheila Cherfilus-McCormick, Prof Olayinka David-West from the Lagos Business School among others.

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CBN Rate Hikes Raise Borrowing Costs for Banks Seeking FX

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The Central Bank of Nigeria (CBN) has implemented a significant adjustment to its borrowing rates.

The move, which follows the CBN’s recent decision to adjust the asymmetric corridor around the Monetary Policy Rate (MPR), has led to an increase in the cost of borrowing for banks seeking foreign exchange (FX).

This decision comes amid heightened concerns over the Naira’s performance and inflation rates.

According to Bismarck Rewane, Managing Director/CEO of Financial Derivatives Company Limited, the adjustment means that banks now face borrowing costs of nearly 32% from the CBN, a sharp increase from the previous rate of approximately 26%.

This change in borrowing costs is intended to deter banks from relying on the CBN for FX purchases, thereby reducing pressure on the Naira.

Data reveals that in the first five days of July 2024, banks borrowed an unprecedented N5.38 trillion from the CBN, marking a record high.

The increased borrowing costs are expected to reduce this practice, thereby alleviating some of the strain on the Naira.

Despite these efforts, the Naira has continued to struggle. On Tuesday, the Naira depreciated by 3.13% against the US dollar, with the exchange rate falling to N1,548.76.

This decline is attributed to reduced dollar supply and ongoing uncertainty surrounding Nigeria’s foreign reserves.

The black market saw an even sharper drop, with the Naira falling to 1,687 per dollar, reflecting broader concerns about currency stability.

Rewane highlighted that the recent rate hikes are part of a broader strategy by the CBN to manage inflation and stabilize the Naira.

“The increase in borrowing costs is a necessary step to address the carry trade practices where banks use cheap funds from the CBN to buy FX and sell it at higher rates,” he explained.

The CBN’s decision to raise borrowing costs comes amid a backdrop of persistent inflation and rising interest rates.

Over the past three years, the CBN has raised interest rates 12 times, with recent adjustments aimed at managing liquidity and curbing inflation.

As of June 2024, Nigeria’s headline Consumer Price Index (CPI) reached 34.19%, up from 33.95% in May.

The central bank’s policy changes are expected to have mixed effects.

Analysts at FBNQuest anticipate that banks will continue to benefit from the high-interest rate environment, potentially leading to a shift of assets from equities to fixed-income securities as investors seek higher yields.

The CBN remains committed to navigating Nigeria through these challenging economic conditions.

By adjusting borrowing costs and implementing tighter monetary policies, the central bank aims to strike a balance between managing inflation, stabilizing the Naira, and supporting overall economic growth.

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Finance

Senate Passes Bill for 70% Windfall Levy on Banks’ Forex Gains

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Naira Exchange Rates - Investors King

The Nigerian Senate has approved an amendment to the Finance Act of 2023, increasing the windfall levy on banks’ foreign exchange gains from 50% to 70%.

The bill was passed during a plenary session on Tuesday after a thorough review by the Finance Committee.

The Senate’s decision aims to address the significant profits banks have accrued due to recent foreign exchange policy shifts.

This windfall is viewed as a product of government intervention rather than the banks’ strategic efforts, prompting the call for redistribution.

The additional revenue from this levy is expected to contribute to financing the N6.2 trillion Appropriation Amendment Bill.

This funding will support various government projects and initiatives, ensuring that the windfall benefits are reinvested into the economy.

The Senate also approved amendments to the payment timeline, setting the levy to take effect from the start of the new foreign exchange regime through 2025, avoiding retrospective application from January 2024.

Also, the Upper Chamber removed the proposed jail term for principal officers of defaulting banks.

Instead, banks that fail to remit the levy will incur a penalty of 10% per annum on the withheld amount, alongside interest at the prevailing Central Bank of Nigeria (CBN) Minimum Rediscount Rate.

This legislative move aligns with President Tinubu’s broader fiscal strategy, which aims to optimize national revenue through independent sources.

The amendment underscores the Senate’s commitment to leveraging bank profits for national development, especially amid economic challenges.

While some industry stakeholders express concerns about the impact on banking operations, others see this as a necessary step towards equitable wealth distribution and economic stability.

The bill’s passage is anticipated to have significant implications for both the financial sector and the broader economy.

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