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NSE All-Share Index Falls Below 30,000 as Market Hits New Low

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  • NSE All-Share Index Falls Below 30,000 as Market Hits New Low

The persistent sell-offs in bellwether stocks pushed the nation’s equities market to 20 months low as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell below 30,000 mark to close at 29,830.70 last week.

After losing 1.2 per cent the first week of 2019, the market declined further in the second week, going down by 2.6 per cent following weak sentiments among investors. The political tension has continued to keep investors away as they wait for the outcome of the general elections coming up in February and March.

The market hit a new low last seen in May 2017, on January 9, before a rebound on Thursday and Friday helped it to recover some losses. Save for the rebound in the two days, the loss recorded last week would have been higher than the 2.6 per cent. The market capitalisation went down by N301.4 billion to close a N11.1 trillion.

Apart from the NSE ASI that depreciated by 2.6 per cent, other sectoral indicators also closed in the red except the NSE Industrial Goods Index that appreciated 1.0 per cent. The NSE Insurance Index was the biggest loser, down 7.0 per cent, it was followed by the NSE Oil & Gas Index with 6.3 per cent. The NSE Consumer Goods Index dipped by 3.6 per cent decline. The NSE Banking Index closed 0.9 per cent lower.

Despite the bearish performance, some positive news hit the market last week. For instance, ABRAAJ, managers of the Aureos Africa Fund, said they would convert the $10 million loan stock in C & I Leasing Plc to equity. The $10 million was an unsecured, redeemable, convertible loan stock that matured at the end of 2018.

Commenting, the Managing Director/CEO of C & I Leasing, Mr. Andrew Otike-Odibi said: “This development is positive for our business as it improves the capital structure of the company and helps position it favorably for additional capital raise from the market in first quarter of 2019.”

Also, last week, Chairman of Cement Company of Northern Nigeria (CCNN), Alhaji Abdul Samad Rabiu said more companies from BAU Group will be listed on the NSE. CCNN, which is a member of the BUA Group, recently had a successful merger with Kalambaina Cement Company(KCC).

And Rabiu, who is also Chairman of BUA Group said the group was in discussion with the NSE so as to list other companies from the BUA Group.

“As you know BUA Group has other companies apart from CCNN that is already listed. We are discussing with the NSE so that we can list some of the companies on the exchange as well,” he said.

Rabiu thanked the management of the NSE and stockbrokers for their support during merger of CCNN with KCC, saying the new entity is now stronger to produce more products and deliver better returns to investors.

The merger has increased CCNN’s total issued and fully paid shares from 1.257 billion shares to 13.144 billion shares.

Similarly, in a bid to improve the fortunes of MRS Oil Nigeria Plc, the company appointed Mrs. Priscilla Thorpe Apezteguia as Acting managing director(MD) following the resignation of Mr. Adnrew Gbodume.

Although no reason was given for Gbodume’s resignation, it was gathered that he has returned to the head office of MRS African Holdings, which owns 60 per cent of MRS Oil Nigeria Plc.

The petroleum market company recorded a loss N425 million for the nine months ended September 30, 2018, fuelling apprehension the company may end the financial year. The nine months results showed that revenue fell from N81.9 billion in 2017 to N76 billion in 2018. Net financing cost jumped by 484 per cent from N66 million to N386 million. It ended the period with loss after tax of N425 million as against a profit of N809 million in the corresponding period of 2017. MRS Oil Nigeria would have recorded a loss last year but for an income tax credit of N2.3 billion.

It is believed that changed in management is a strategy to rescue the firm from weak performance.

The acting MD, Apezteguia holds a Bachelors of Arts degree in International Studies and Business from University of Coventry, United Kingdom. She has over 17 years’ experience in the oil and gas sector and has held high-level positions in reputable organisations.

Market Turnover

Meanwhile, investors traded 1.265 billion shares worth N14.074 billion in 19,278 deals last week compared with 1.647 billion shares valued at N8.413 billion that exchanged hands in 14,773 deals the previous week.

However, the Financial Services Industry remained the most active, leading others with 1.072 billion shares valued at N8.795 billion traded in 12,287 deals. With this, the sector contributed 84.73 per cent and 62.49 per cent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 83.595 million shares worth N155.485 million in 750 deals. The third place was Consumer Goods Industry with a turnover of 50.537 million shares worth N3.432 billion in 2,576 deals.

Trading in the top three equities namely, Diamond Bank Plc, FBN Holdings Plc and Custodian Investment Plc accounted for 465.000 million shares worth N 2.044 billion in 2,448 deals, contributing 36.75 per cent and 14.53 per cent to the total equity turnover volume and value respectively.

Also traded during the review week were a total of 15,288 units of Exchange Traded Products (ETPs) valued at N236,445.40 executed in four deals compared with a total of 395 units valued at N816,344.70 that was transacted in 13 deals the previous week.

A total of 17,996 units of Federal Government Bonds valued at N18.426 million were traded in 10 deals compared with a total of 7,209 units valued at N6.958 million transacted the preceding week in eight deals.

Price Gainers and Losers

The price movement chart showed that 22 equities appreciated in price last week the same number of losers the previous week, while 44 equities depreciated in price, lower than 45 of the previous week.

Julius Berger Nigeria Plc led the price gainers with 22.1 per cent, trailed by Diamond Bank Plc with 12.2 per cent. Transcorp Plc chalked up 11.2 per cent, while WAPIC Insurance Plc and Cornerstone Insurance Plc garnered 10 per cent each.

Other top price gainers included: John Holt Plc (9.0 per cent); Lafarge Africa Plc (8.4 per cent); CCNN (8.4 per cent); A.G Leventis Nigeria Plc (7.4 per cent) and FCMB Group Plc (4.9 per cent).

Conversely, NEM Insurance Plc led the price losers with 33.4 per cent, trailed by Resort Savings & Loans Plc with 26 per cent. Unity Bank Plc shed 17 per cent, just as Custodian Investment Plc and Flour Mills of Nigeria Plc shed 13.1 per cent and 11.6 per cent respectively.

Neimeth International Pharmaceuticals Plc and Seplat went down by 10.2 per cent and 10 per cent in that order. Other top price losers included: MRS Oil Nigeria Plc (9.9 per cent); Champion Breweries Plc and UPDC Real Estate (9.8 per cent apiece).

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.

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Banking Sector

FirstBank Expands Its International Money Transfer Network, Reinforces its Commitment to Customer Service

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FirstBank Headquarter - Investors King

In furtherance of the need to expand diaspora remittance inflow into the country, First Bank of Nigeria Limited has increased its network of International Money Transfer Operators (IMTOs), targeted at easing the accessibility of its customers to receive money from close to 100 countries across the world in a safe and secured manner. With over 750 branches across the country, customers can receive money from the nearest FirstBank branch closest to them.

Over the years, FirstBank has been in partnership with Western UnionMoneyGram, Ria, Transfast, and WorldRemit. The bank is also in partnership with other IMTOs which include Wari, Smallworld, Sendwave, Flutherwave, Funtech, Thunes and Venture Garden Group to promote remittance inflow into the country, thereby putting Nigerians and residents at an advantage in receiving money from their families, friends and loved ones across the world.

Beneficiaries can receive remittance in US dollars in any of our over 750 branches spread across the country. Customers without an existing domiciliary account can have dollar account automatically created for their remittances. You can also receive inflow directly into your account through Western Union.

In addition, FirstBank has launched its wholly owned remittance platform named First Global Transfer product to promote the international transfer of funds across its subsidiaries in sub-Saharan Africa. These subsidiaries include FBNBank DRC, FBNBank Ghana, FBNBank Gambia, FBNBank Guinea, FBNBank Sierra-Leone, FBNBank Senegal.

Reiterating the Bank’s resolve in promoting diaspora remittances, regardless of where one is across the globe, the Deputy Managing Director, Mr Gbenga Shobo said “at FirstBank, expanding our network of International Money Transfer Operators is in recognition of the significant roles diaspora remittances play in driving economic growth such as helping recipients meet basic needs, fund cash and non-cash investments, finance education, foster new businesses and debt servicing.

We are excited about these partnerships, as it is essential to ensure our customers are at an advantage to receive money from their loved ones and business associates, anywhere they are, across the world.”

FirstBank pioneered international funds transfer and remittances over 25 years ago and has been at the forefront of promoting cross border payments in the country, having started the journey with Western Union Money Transfer. The Bank’s wealth of experience and operation in over 750 locations nationwide gives it the edge in the market.

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Finance

Private Sector Seeks FG’s Directive on VAT Payment

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Value added tax - Investors King

The Organised Private Sector of Nigeria (OPSN) on Sunday in Lagos called on the Federal Government to urgently make a pronouncement on the ongoing controversy over VAT payment so that businesses will know what to do.

OPSN chairman, Mr Taiwo Adeniyi, made the call at a news conference and said delays in addressing the issue could cause negative effects on businesses, most especially in the collection and remittances of VAT.

“We are aware that by Sept. 21 we get penalised if we do not pay or remit the VAT for the month of August.

“We are also aware that laws are not made in retrospect. It then means that even if those laws have been enacted, particularly the Lagos State law which came into effect in September, it will not affect the payment by businesses in the state.

“Due to our remittances, we have issues with the fact that the law for Rivers was made in August and the majority of the businesses in Lagos usually will have a relationship with the Rivers State Inland Revenue too.

“The confusion in the public space is the reason we are calling on the government to come to our aid as we want to pay.

“It is for the government at the center to make a pronouncement as to what becomes of us,’’ he said.

Adeniyi, who is also the President of, Nigeria’s Employers Consultative Association (NECA), said that the ongoing challenge had the potential to make businesses pay double VAT in view of demands by the FIRS and state governments.

He said that businesses, as the collecting agents, were practically unclear on the authority to remit to and without a clear path, this would further aggravate the pain on businesses.

“It is a popular saying that where two elephants fight, it is the grass that suffers.

“It is no longer news that Nigerian businesses have been battling with myriads of challenges, making the survival of enterprises and ease of doing business in the country among the worst in this part of the world,’’ he said.

There has been controversy over the collection of VAT after a Federal High Court ruled that it was not the duty of the Federal Government to collect the tax.

VAT is normally collected by the Federal Government since the military era and the money is shared by the three tiers of government.

Following the court ruling, however, Lagos and Rivers states passed laws that allowed them to collect VAT.

FIRS, which used to collect the VAT on behalf of the Federal Government, has challenged the court ruling at the appellate court.

OPSN comprises the Manufacturers Association of Nigeria, the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture, NECA, Nigeria Association of Small Scale Industries and the Nigeria Association of Small and Medium Enterprises.

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Banking Sector

Global Banking Sector Grows 40% Reviving Pandemic Losses in Just 12 Months

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European Investment Bank - Investors King

In 2020, the global banking sector took a hit following the economic impact of the coronavirus pandemic, which was reflected in the overall market capitalization. However, with the ongoing global recovery, the banking industry has regained most of the losses incurred during the health crisis. 

According to data acquired by Finbold, in just 12 months between Q2 2020 and Q2 2021, the global banking sector’s market cap has surged 39.62%, adding €2.1 trillion from €5.3 trillion to €7.4 trillion. On the path to recovery, the market cap slightly plunged in 2020 Q3 to €5.2 trillion before gaining 17.3% the next quarter.

Among the Western European banks, Spain’s BBVA bank recorded the highest total shareholder return rate at 19.7% between April 2021 – July 2021, followed by Société Générale from France at 13.8%, while Banco Santander, also from Spain, ranks third at 12.1%. United Kingdom’s Barclays is the worst performer with a TSR of -8%. Data on the global banking sector’s market cap is provided by Banking Hub.

How banking sector sustained growth

The registered market capitalization is supported by the large-scale reopening of economies due to the vaccine rollout. Additionally, the banks, especially from major economies like the United States and Europe, have reaped from policies meant to cushion the economy from the adverse effects of the pandemic. Notably, the decisions by most banks to retain a low-interest-rate environment has been beneficial to banks.

Worth noting is that during the pandemic, banks found themselves in a tight spot. Historically, the banking sector has been considered the custodian of the economy but the pandemic also plunged the banks into a crisis. The banking sector’s profits were adversely affected considering they are bound to the business cycle and interest rates.

At the same time, banks also put in place measures like approaching loans with caution due to uncertainty in repaying which directly impacted profits. However, banks were tapped to facilitate the distribution of stimulus packages boosting their capital reserves in return.

Worth pointing out is that institutions like the European Central Banks allowed banks to continue using their capital buffers flexibly with a planned extension until 2022. With such moves helping banks sustain growth, it eliminates the worry of straining capital buffers while the health crisis is still impacting the banks’ balance sheets.

Furthermore, the crisis highlighted the need for banks to keep huge reserves of capital that can be activated in the wake of economic turmoil. Although most banks have historically relied on assets for future cushion, a crisis like the coronavirus calls for more capital because selling assets in such an environment is challenging.

Besides the policies, the banking sector recovery was partly aided by existing operational risk management arrangements. The pandemic tested all financial market participants and most leading banks successfully invoked business continuity plans. The plans ensured that the financial markets continued to run smoothly and orderly.

The sector’s recovery has also been accelerated by other factors like the increased adoption of pre-pandemic trends like digitalization and sustainability. Digitization of operations has been backed by consumers who are willing to conduct transactions online. At the same time, the digital shift has presented a competitive factor in the sector, with institutions that had established online presence benefiting the most.

Notably, the recovery was at some point under threat during the third quarter of 2020 amid concerns of the pandemic’s second wave. However, the sector sustained the gains with the rollout of the vaccine. Furthermore, moving into 2021, the industry appears not to be bothered by the Delta variant.

The future of the banking sector

By sustaining the market capitalization for two consecutive quarters, it can be assumed that the banking sector response to the health crisis is bearing fruits. However, it is still early to determine if the recovery is sustainable.

The rally will be tested, especially when central banks eliminate all the policies meant to cushion the economy. However, in the long run, banks will have to tailor their operations towards changing consumer behaviour.

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