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Stock Market Records First Weekly Gain in April

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  • Stock Market Records First Weekly Gain in April

The nation’s stock market recorded its first weekly gain this month as the All Share Index closed at 30,086.31 basis points.

Investors in the market gained N222bn during the week as it recorded gains on three of four trading sessions.

The Nigerian Stock Exchange closed for the week on Thursday due to the public holiday declared by the Federal Government for Easter celebrations.

The stock market commenced the week on a negative note, as the ASI and market capitalisation lost 14bps and N24bn on Monday.

Subsequently, the market recorded gains on the remaining trading days of the week.

On Tuesday, bargain hunting activities drove the ASI and market capitalisation to a positive terrain, with a gain of 0.85 per cent and N94bn. The buying sentiment was sustained on Wednesday as investors gained N84bn and the broad equity market index recorded a gain of 0.76 per cent.

The ASI wrapped up the week with a positive close on Thursday, climbing 0.39 per cent as major sectoral indices closed in the green zone. Investors gained N43bn as the market capitalisation of equities listed on the NSE increased from N11.257tn from N11.300tn.

In the fixed income market, the Central Bank of Nigeria did not conduct any Open Market Operation auction last week. However, the apex bank conducted its bi-weekly primary market auction on Wednesday, selling the full offer of N57.8bn at stop rates of 10.15 per cent and 12.74 per cent across the 91-day and 182-day tenors.

The open buy-back rate moderated by 10 per cent week-on-week to 9.86 per cent.

Trading in the secondary Treasury bills and bond markets, supported by system liquidity, was largely positive last week, with some pockets of sell pressure on select days.

Overall, average yields declined by nine basis points week-on-week in the Treasury bills space and 21 bps week-on-week on benchmark bonds.

The naira appreciated by one kobo week-on-week at the Importers’ and Exporters’ foreign exchange window to settle at N360.32 and remained flat week-on-week at N359 against the dollar in the parallel market.

The bond market was scantily traded, with yields relatively unchanged on the day, as market players wound up activities ahead of the Easter break.

Slight interest on the 2028 maturity was witnessed, which compressed marginally by about five bps, having traded lower at 14.47 per cent.

Analysts at Zedcrest Capital said, “Upon resumption from the break, we expect the market to open on a slightly weaker note, as market players shift focus to the FGN Bond auction scheduled to hold the following day, with about N100bn of the five-, 10 and 30-year bonds to be offered by the DMO.”

“Barring a renewed OMO auction by the CBN, we expect yields to be relatively stable opening the new session, as demand interests persist, especially on the mid to long end of the curve.”

Analysts at Vetiva Capital Management Limited said with system liquidity still buoyant, it was expected that demand would remain decent in the T-bills market after the Easter break and domestic demand would further sustain activity in the bond market on Tuesday.

They said, “We expect the naira to remain largely stable across the various windows of the currency space as the CBN maintains interventions in the FX market.”

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.

Finance

FG Borrowed $5.9B To Fight COVID-19 and Implement Budget – Minister of Finance

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Zainab Ahmed

The federal government borrowed about $5.9 billion in 2020, to tackle the COVID-19 pandemic and implement its budget. The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, revealed this yesterday.

A statement issued by her Special Adviser, Media and Communications, Mr. Yunusa Abdullahi, yesterday, indicated that the minister told the Collaborative Africa Budget Reform Initiative (CABRI) General Assembly during a webinar, that the federal government had to move quickly to save the economy.

Speaking on Nigeria’s fiscal response – short term interventions and impact on public finances, as an immediate fiscal response, Mrs. Ahmed said: “We did the following: Procured a $3.4 billion loan from the International Monetary Fund (IMF) and about $2.5 billion in local currency from the domestic capital market to support the 2020 budget implementation), among others.”

She noted that the government then packaged a N500 billion for COVID-19 Crisis Intervention Fund in the 2020 revised budget, as part of a N2.3 trillion Economic Sustainability Plan.

Mrs. Ahmed said that the government had begun the process of moving the economy away from its primary dependence on oil for revenues and foreign exchange, and making steady gains in addressing infrastructure and human capital challenges before the pandemic hit the global economy.

With COVID-19, Nigeria’s Bonny Light crude oil price fell from a peak of US$72.2 per barrel on January 7, 2020 to below US$20 by April 2020.

She said, “In effect, the US$57 crude oil price benchmark approved in the 2020 budget became unrealistic triggering the need to adjust the following variables: reduction of crude oil benchmark price from US$57 per barrel to US$28 per barrel; reduction of daily crude oil production benchmark from 2.18 million barrels per day (mbpd) to 1.9 mbpd; adjustment of the official exchange rate to N360/US$1 from N305/$.”

Mrs. Ahmed revealed that part of the federal government Supplementary Budget on COVID-19 would be spent on the procurement of 29. 588 million doses of the Johnson & Johnson vaccine.

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Banking Sector

Union Bank CEO, Godson Chukwuemeka Okonkwo Acquires 2.4 Million Shares in the Bank Ahead of Acquisition

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Union bank - Investors King

The Chief Executive Officer, Union Bank Plc, Godson Chukwuemeka Okonkwo, has purchased 2,431,917 ordinary shares of the bank, according to the latest disclosure filing from the lender.

The CEO acquired the 2,431,917 shares of Union Bank at N4.90 per share on Thursday 6th May 2021 from the floor of the Nigerian Exchange Ltd.

Okonkwo’s N11.916 million investment was after Investors King reported a possible acquisition of the bank by Zenith Bank or Access Bank following sources cited by Bloomberg.

Bloomberg said, “Atlas Mara Limited, the London Stock Exchange-listed pan-African banking group started by Mr. Bob Diamond has received a number of approaches for its 49.97 per cent holding in Lagos-based Union Bank of Nigeria.”

It also stated that Atlas Mara received interests from Nigerian and Middle Eastern lenders for its remaining assets on the continent, according to Bloomberg sources.

The sources claimed the banks in talks with Atlas Mara asked not to be identified as talks are private. But they mentioned Nigeria’s Zenith Bank Plc, Access Bank Plc and Morocco’s Attijariwafa Bank as some of the banks that have so far expressed interests in acquiring Union Bank.

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Banking Sector

Zenith Bank, Access Bank, Others Express Interest in Acquiring Union Bank

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Atlas Mara - Investors King

Zenith Bank and Access Bank are some of the financial institutions in talks to acquire Atlas Mara Ltd.’s 49.97 percent stake in Union Bank Plc.

Bloomberg said, “Atlas Mara Limited, the London Stock Exchange-listed pan-African banking group started by Mr. Bob Diamond has received a number of approaches for its 49.97 per cent holding in Lagos-based Union Bank of Nigeria.”

It also stated that Atlas Mara received interests from Nigerian and Middle Eastern lenders for its remaining assets on the continent, according to Bloomberg sources.

The sources claimed the banks in talks with Atlas Mara asked not to be identified as talks are private. But they mentioned Nigeria’s Zenith Bank Plc, Access Bank Plc and Morocco’s Attijariwafa Bank as some of the banks that have so far expressed interests in acquiring Union Bank.

Middle Eastern banks and private equity suitors have also shown interest, according to the people. Some potential buyers have indicated they may acquire all of Atlas Mara’s remaining assets in Africa, which would include its Zimbabwe unit, the people said.

Atlas Mara has been working with Rothschild & Co. to consider options for its Union Bank stake. No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction, the people said.

Representatives for Atlas Mara and Zenith Bank didn’t immediately respond to requests for comment. Attijariwafa Bank Managing Director Ismail Douiri and a representative for Access Bank declined to comment.

Speaking on the matter, Frontier and Sub-saharan Africa Banks’ Analyst, Renaissance Capital, Adesoji Solanke, on Thursday said this is good for Atlas Mara.

He said “Good for Atlas Mara if they’re able to exit successfully, as they’ve been selling a bunch of assets over the past year, to KCB and Access Bank respectively across different markets. Whether they get a good valuation for Union Bank is another thing.

“We don’t think it’ll be a transformational deal for Access or Zenith (Return-on-Equity dilutive for both), but could be a good way for the Middle Eastern banks to get a decent foothold in the market. We suspect getting the other private equity investor block to sell will be critical as we wouldn’t expect a strategic bank investor to desire a minority shareholding.”

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