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European Stocks Rebound as Energy Prices Lift Oil Producers, Natural Gas Soars; Bonds Weaken

European equities climbed back from a one-month low in response to surging energy prices, particularly benefiting oil producers. Meanwhile, natural gas prices experienced a sharp rise, while bond markets exhibited general weakness.

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The trading session across Europe unfolded with a relatively subdued tone, with trading volumes on the Stoxx 600 Index approximately a third lower than the usual average. TotalEnergies SE, Shell Plc, and BP Plc were the three main contributors to the index.

In sync with this upward momentum, US futures contracts indicated an impending recovery for the underlying indices following their weakest performance week since early August.

During this period, the benchmark Dutch front-month gas experienced an astonishing surge of up to 18%, attributed to traders incorporating the potential threat of supply disruptions arising from a prospective strike in Australia. Also, the global benchmark Brent traded above the $85 per barrel mark, marking a rise of over 2% since the previous week’s close on Wednesday.

Yields across various tenors saw an upward trajectory, propelling the 10-year yield towards levels not seen since November 2007, while the 30-year yield approached highs reminiscent of 2011. This trend emerged as a result of the selloff in the Treasury market during the current month, erasing the remaining gains for the year.

The resurgence in stock values follows a period of substantial losses, with the MSCI World Index breaking free from a three-week downward spiral. Investors with a keen eye on the global interest-rate trajectory are set to direct their focus towards the upcoming annual gathering of central bankers in Jackson Hole, Wyoming, later this week.

David Henry, investment manager at Quilter Cheviot, emphasized that markets are gradually normalizing post-profit-taking that triggered last week’s retreat. He underscored the existing divergence in the market, highlighting the excessive valuation of certain assets and the marked undervaluation of others. Henry noted investors’ inclination towards quality stocks in preparation for a potential economic downturn, leading them to pay premiums for robustly growing businesses with solid fundamentals.

Friday is anticipated to hold significance as Federal Reserve Chairman Jerome Powell is expected to adopt “a more balanced tone in Wyoming, hinting at the tightening cycle’s end while underscoring the need to hold rates higher for longer,” as stated by Anna Wong from Bloomberg Economics.

In the realm of corporate earnings, the highlight of the week falls on Wednesday’s report from Nvidia Corp., a leading chipmaker whose impressive revenue forecast played a pivotal role in igniting this year’s surge in AI-related stocks.

Conversely, the mood in Asian markets painted a darker picture. The region’s stock gauge extended its decline for the seventh consecutive day, marking the longest losing streak since June 2022. Simultaneously, mainland Chinese shares saw a decline of 1.4%.

Uncertainty surrounding China’s strategy to address the nation’s property market decline weighed on sentiment. Despite policymakers calling for increased lending, Chinese lenders chose to lower the one-year loan prime rate by 10 basis points while maintaining the five-year prime loan rates unchanged. This decision contradicted traders’ expectations of a 15-basis-point cut on both rates.

In other market movements, a gauge of the dollar’s strength displayed minimal fluctuations, while the offshore yuan faced depreciation against the greenback. The People’s Bank of China had previously established the daily reference rate for the yuan at a level stronger than the consensus estimate from a Bloomberg survey.

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Nigerian Exchange Limited

Dr. Yemi Cardoso’s Nomination Boosts Confidence as Stock Investors Gained N264 Billion

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Dr. Olayemi Michael Cardoso

The bullish momentum in the Nigerian Exchange Limited continued on Tuesday as investors pocketed N264 billion in profit following Monday’s gains of N263 billion.

Both the market capitalization and the All-Share Index, which gauge the movement of share prices for all listed companies surged by 0.71 percent to N37.413 trillion and 68,359.22 points, respectively.

This optimistic trading trend emerges as investors increasingly show confidence in the local market and the broader economy, fueled in part by the news of Dr. Yemi Cardoso’s nomination as the Governor of the Central Bank of Nigeria.

As Tuesday’s session drew to a close, the volume of shares traded experienced a significant uptick of 31.33 percent to 676.74 million. However, the number of deals declined by 8.35 percent to 7,659 while the total trade value decreased by 33.97 percent to N5.89 billion.

Market sentiments also leaned towards the bullish side, with 36 gainers outpacing the 27 losers.

Among the top-performing stocks that caught the attention of investors were:

  • Berger Paints Plc, which surged by 9.95 percent to conclude the trading day at N11.60.
  • Oando Plc, which recently released its audited results for 2021, saw a 9.92 percent increase, closing at N13.30.
  • BUA Foods, which gained 6.32 percent to close at N196.70.
  • PZ’s shares appreciated by 1.45 percent per unit, ending at N20.
  • GTCO Plc stock increased in value by 0.43 percent, closing at N35.40.

On the flip side, the top losers included:

  • SCOA Plc, witnessing a 10 percent depreciation in its shares, closing at N1.24.
  • Unilever’s shares recorded an 8.28 percent drop, concluding at N13.30.
  • United Bank for Africa Plc, which lost 1.96 percent in share value, closing at N17.50.
  • FBN Holdings Plc, suffering a 1.69 percent decline, closing at N17.40.
  • Accesscorp’s shares depreciated by 0.29 percent, closing trading at N17.40.

The Nigerian Exchange continues to display its resilience and attractiveness to investors, making it an exciting space to watch for potential opportunities and market trends.

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Nigerian Exchange Limited

Nigerian Stock Market Sheds N409 Billion Last Week

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Investors in the Nigerian stock market lost N409 billion last week after weeks of bullish run following President Bola Ahmed Tinubu’s economic restructuring.

During the week, investors traded 2.933 billion shares worth N47.449 billion in 44,654 deals against a total of 2.644 billion shares valued at N45.450 billion that exchanged hands in 44,189 deals in the previous week.

The Financial Services Industry led the activity chart with 1.955 billion shares valued at N26.384 billion that were traded in 21,707 deals. Therefore, contributing 66.67% and 55.61% to the total equity turnover volume and value, respectively.

The Oil and Gas Industry followed with 281.356 million shares worth N5.307 billion that exchanged hands in 4,423 deals. In third place was the Conglomerates Industry, with a turnover of 280.586 million shares worth N1.763 billion in 3,079 deals.

United Bank for Africa Plc, Transnational Corporation Plc and Access Holdings Plc were the three most traded equities in the week. The three accounted for 1.026 billion shares worth N13.649 billion that were transacted in 9,733 deals and contributed 34.98% and 28.77% to the total equity turnover volume and value respectively.

The NGX All-Share Index declined by 1.10% to close the week at 67,395.74 index points from 68,143.34 index points reported in the previous week while market capitalization depreciated by the same 1.10% or N409 billion to close the week at N36.886 trillion.

Similarly, all other indices finished lower with the exception of NGX Insurance, NGX MERI Growth and NGX Growth which appreciated by 0.46%, 0.55% and 4.15% respectively while the NGX ASeM index closed flat.

Thirty-two equities appreciated in price during the week lower than fifty-two equities in the previous week. Fifty-three equities depreciated in price higher than thirty-five in the previous week, while seventy equities remained unchanged, higher than sixtyeight recorded in the previous week.

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Nigerian Exchange Limited

SEC Aims for 50 Shari’ah-Compliant Listings Worth N5 Trillion by 2025

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Securities and Exchange Commission

The Securities and Exchange Commission (SEC) reaffirmed its commitment to achieving a target of 50 listings of Shari’ah-compliant products, with a combined market capitalization estimated at around N5 trillion by 2025.

Mr. Lamido Yuguda, the Director-General of SEC, represented by Mr. Dayo Obisan, the Executive Commissioner of Operations, made this announcement during a capacity-building workshop for local Shariah talent within the non-interest capital market – level II.

The event, held in Abuja, was organized in line with the non-interest capital market (NICM) segment of the revised Capital Market Masterplan (2021 – 2025), which aims to introduce 100 retail Shariah-compliant products and attract over one million direct investors in Shariah-compliant products.

Yuguda explained that in the face of these ambitious targets, the commission is resolved to intensify its developmental efforts, particularly in capacity building.

This initiative aims to nurture competent professionals who can leverage Shariah best practices to facilitate the effective implementation of Shariah-compliant initiatives, ultimately fostering the growth of the NICM sector.

The Director-General noted that the commission would continue to utilize its subsidiary, the Nigerian Capital Market Institute, to develop robust programs related to Non-Interest Finance. These programs are expected to promote capacity-building and enhance the adoption of Shariah-compliant products and processes.

Yuguda highlighted the fundamental distinction between conventional finance and Non-Interest Finance, emphasizing the application of Shariah principles in the latter. He stated, “NICM cannot exist without experts in Islamic commercial jurisprudence (Fiqhul Mu’amalat Al-Maliyya).”

“The objective of this Workshop, therefore, is fast-tracking the development of experts for the Market,” he continued. “We believe this will enhance the development of our local Sharia talent, not only for the Nigerian Capital Market but also for the Nigerian Financial system in general.”

Yuguda underscored the growing interest in NICM products among various investor classes in Nigeria, citing the oversubscription of the FGN and corporate Sukuk issued in previous years as evidence.

He noted that the Level 2 segment of the workshop, which commenced with extensive discussions on Shariah Contracts, is aimed at consolidating participants’ understanding of both theoretical and practical aspects of NICM.

“Armed with this training and subsequent ones to come, the participants would undoubtedly have the potential to provide Shariah advisory services for the Islamic Finance Industry, particularly the Non-Interest Capital Market’s operations as it relates to Shariah principles and rulings,” he added.

Yuguda also highlighted the significant progress made in this area, with Nigerian Islamic Finance ranking 13th on the Global Islamic Finance Development Indicator 2022, surpassing countries like Bangladesh and Turkey.

He concluded by emphasizing the gradual growth of the Non-Interest Finance Sector, which has evolved into a distinct industry within the broader financial landscape. This sector offers viable alternatives to traditional interest-based financial systems.

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