Concerns about inflation that are rattling global stock markets on Tuesday should be used as a reality check for investors, says the CEO of one of the world’s largest financial advisory and fintech organizations.
The observation from Nigel Green, chief executive and founder of deVere Group comes as the pan-European Stoxx 600 index dropped 2.3%, with London’s FTSE 100 falling 2.4%.
Losses in Europe follow those in the Asia Pacific region. Hong Kong’s Hang Seng closed more than 2% lower and Japan’s Nikkei 225 ended the Tokyo trading session having shed more than 3%.
Meanwhile, U.S. futures are down across the board ahead of the opening bell in New York.
Mr Green says: “It is to be expected that there would be a jump in prices and supply shortages, in goods like chips and some commodities, as economies re-open and pent-up demand is unleashed by households, businesses and entire industries.
“We’re at a point of major readjustment following an unprecedented economic shock and this is fuelling concerns that rising inflation will trigger central banks to tighten monetary policy which will hit asset prices.
“It is this scenario that is rattling markets and triggering a global sell-off.”
He continues: “Tech shares are bearing the brunt of the sell-off, but this will also be used as an opportunity.
“With our daily lives becoming ever more digitalized – and at a staggering pace – tech will remain one of the mega-trends for investors for the foreseeable future.
“Savvy investors will be drawn to the massive growth that tech offers and this sell-off will used as a buying opportunity. Nobody seriously believes the future isn’t online.”
Therefore, says Mr Green, investors would be wise to be “selective” about the sell-off.
“With some of the heat being taken out of the markets, with some stocks way too high, they are likely to – perhaps more judiciously than before – move to capitalize on this dip.”
The deVere CEO concludes: “Of course, I don’t have a crystal ball, but history shows that stock markets typically rise over the longer-term.
“Therefore, in the near future, I predict many investors will be seeking out the buying opportunities that exist.”
Nigerian Stock Investors Lose N595 Billion Last Week
The Nigerian Exchange Limited (NGX) sustained its downward trend last week as investors continue to sell their holdings and hold off for the remaining days of the year to reassess global uncertainty amid Omicron concerns.
Investors traded a total of 1.278 billion shares worth N17.340 billion in 21,052 deals last week, in contrast to a total of 3.435 billion shares valued at N30.915 billion that exchanged hands in 21,109 transactions in the previous week.
During the week, the Financial Services Industry led the activity chart with 984.543 million shares valued at N10.247 billion traded in 11,029 deals. Therefore, contributing 77.01 percent and 59.09 percent to the total equity turnover volume and value respectively.
Consumer Goods Industry followed with 78.724 million shares worth N2.328 billion in 3,137 deals. In third place was The Conglomerates Industry, with a turnover of 48.730 million shares worth N69.840 million in 647 deals.
FBN Holdings Plc, Guaranty Trust Holding Company Plc and Access Bank Plc were the three most traded equities, accounting for 470.731 million shares worth N6.571 billion in 3,887 deals. The three contributed a combined 36.82 percent and 37.90 percent to the total equity turnover volume and value, respectively.
The market value of all listed equities declined by 2.63 percent or N595 billion from N22.598 trillion recorded in the previous week to N22.003 trillion last week. While the NGX All-Share Index depreciated by 2.63 percent 0r 1,140.38 index points to 42,167.91 index points, down from 43,308.29 index points.
Similarly, all other indices finished lower with the exception of NGX Insurance index which appreciated by 2.97 percent, while the NGX ASeM, NGX Growth and NGX Sovereign Bond Indices closed flat.
Eighteen equities appreciated in price during the week, lower than Twenty-nine equities in the previous week. Forty-nine equities depreciated in price, higher than Thirty-six equities in the previous week, while eighty-nine equities remained unchanged lower than ninety-one equities recorded in the previous week. See the top gainers and losers below.
Dangote Cement, MTN lead Top Paying Dividend Companies of the Year
In total, Nigerian companies paid about N989 billion as dividends in the first 9 months of the year. Dangote Cement was responsible for N272 billion of that amount, with MTN paying N212.7 billion.
The N989 billion paid in dividends showed a 27% increase from the same period in 2020. A record of dividends paid by Nigerian companies who have been publicly quoted is maintained by Nairalytics, with the companies including 30 of some of the most capitalized companies on the stock exchange who had paid dividends in 2020 and the current year.
Some companies pay dividends from their full-year profits while others pay twice in the year, first out of their full-year profits and secondly from their half-year profits. Some dividends are also paid out of retained earnings, in the event where companies do not publicly declare their profits.
The data collected for the companies showed that Dangote Cement and MTN were the leading dividend payers in the year, with the companies paying N272 billion and N212.7 billion respectively. Dangote Cement shareholders did not record any significant increase in their dividend payments, while MTN shareholders saw a 23% increase in dividend payments. No other companies paid up to N100 billion in dividends during the year.
Zenith Bank paid N94.2 billion in dividends, coming in as the third highest paying company during the year. GTCO and BUA Cement rounded up the top five, paying N79.5 billion and N70 billion in dividends respectively.
Stanbic IBTC paid N54 billion in dividends to come in as sixth, while Access Bank and Nestle paid N30.2 billion and N27.5 billion respectively, making seventh and eighth. Lafarge and Seplat rounded up the top 10 dividend payers, paying N24.7 billion and N23.1 billion respectively.
In total, the top ten companies paid a combined N888.1 billion in dividends.
A growth in dividend payment, especially in a year heavily hit by the coronavirus pandemic shows resilience in the financials of some of Nigeria’s largest companies.
Jumia Stock Plunges 41.22 Percent on 91 Percent Jump in Operating Loss
In the last one month, the price of Jumia’s stock has dropped by 41.22 percent on growing uncertainty surrounding the future of Africa’s leading eCommerce company shortly after the release of its third-quarter report in November 2021.
The price of Jumia stock dropped by $7.89 or 41.22 percent in the past month to $11.25, suggesting a broad-based selloff amid weak investors’ confidence in a stock that rose to $65.51 per share on Wednesday 10 February 2020 when global investors thought it would replicate the performance of the likes of Amazon and other eCommerce companies that thrived on COVID-19.
This is in spite of the company growing orders by 28 percent to an all-time high of 8.5 million in the third quarter. Even active consumers and Gross Merchandise Volume (GMV) rose 8 percent year-on-year each to 7.3 million and $238 million, respectively.
Still, global investors are not buying into the numbers. In fact, Luke Holbrook, a Morgan Stanley equity research analyst, lowered the bank’s recommendation for Jumia’s stock to underweight from neutral, according to a report by The Motley Fool. Holbrook then advised shareholders to sell their shares at $11 and move on. Indicating he does not have confidence in the company going forward.
Stifel Nicolaus, the only analyst that seems to be positive on Jumia, suggested ‘hold’ with a profit target of $18. Meaning, he is also not sticking his neck out for the once flying stock to hit $65, its COVID-19 peak.
Here is Why Investors Are Abandoning Jumia Stock
Jumia sales and advertising expenses jumped by a shocking 228 percent to $24 million year-on-year but active consumers and GMV only grew by 8.1 percent each. While the 28 percent increase in orders was because the company decided to sell more of everyday consumer items as opposed to its usual higher-value items like electronics. As of the third quarter, the average volume of Jumia sales was $28, down from $41.50 in 2019.
Also, Jumia customers are not returning to the website as much as Amazon and other global eCommerce platforms’ customers. Indicating that customers in Nigeria and other Jumia’s operating nations in Africa are not buying from the website as expected.
Chris Lau, a contributing author at InvestorPlace, put it best, “Jumia will have to spend more on its operations going forward. It needs to bring the right products to its customers. To do so, it must work with its suppliers and sellers. and add international brands to its marketplace, increasing its costs.”
And finally, Jumia operating loss increased by 91.4 percent to $64 million.
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