Stock Market

Stocks Tumble as China Services Data Disappoints, Australian Dollar Weighed Down by Unchanged Interest Rates

Published

4 weeks ago

September 5, 2023

Global markets experienced a downward trend as disappointing China services data added to concerns over the nation’s fragile economic recovery.

Australia’s dollar continued its losses after the central bank decided to keep interest rates unchanged.

The MSCI Asia Pacific Index is on track for its first decline in seven days, with Hong Kong shares leading the way with a dip of more than 1%.

According to an industry survey, China’s services sector saw the slowest growth this year in August, further reinforcing the notion that the economic recovery is losing steam.

Hebe Chen, an analyst at IG Markets Ltd. in Melbourne, stated, “It’s the typical post-party reality check that’s cooling down China’s rally today, as the services PMI notably missed expectations, suggesting further economic downturn ahead.”

During Asian trading, futures for European and US stocks also fell while South Korean stocks joined the decline as August inflation accelerated faster than economists had predicted, driven by rising energy costs.

This development supports the argument for the central bank to remain open to further policy tightening.

Australian equities remained relatively stable, while the Australian dollar continued its earlier decline following the central bank’s decision to keep rates on hold for the third consecutive month.

Although officials indicated that further tightening might be necessary, they also acknowledged that inflation had peaked, and Australia’s bonds recovered some of their earlier losses.

In contrast, the US dollar gained strength against most of its Group-of-10 peers, while Treasuries slipped as cash trading resumed following a US holiday on Monday. The offshore yuan weakened in response to the PMI data.

Later in the day, traders will shift their focus to August PMI data from the euro area amid concerns about stagflation in the region. European Central Bank President Christine Lagarde refrained from signaling whether policymakers would raise or maintain interest rates in her speech on Monday.

In other market developments, oil prices remained near their highest levels since November due to supply cuts from OPEC+. Gold, on the other hand, experienced a decline.

In a more positive development, Country Garden Holdings Co. informed creditors that it had paid coupons of two dollar bonds within the grace periods. The developer is also proposing to extend principal payments for eight yuan bonds, as reported by holders briefed by company advisers.

Meanwhile, Goldman Sachs Group Inc. reduced its estimate of the probability of a US recession.

Chief economist Jan Hatzius noted, “Continued positive inflation and labor market news has led us to cut our estimated 12-month US recession probability further to 15%, down 5pp from our prior estimate.”

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Nigerian Exchange Limited

Bearish Sentiment Persists: Investors Lose N112 Billion on NGX

Published

2 days ago

September 29, 2023

Samed Olukoya

Nigerian Exchange Limited - Investors King

A somber week for Nigerian investors continued as sustained bearish trading on the Nigerian Exchange Limited (NGX) on Thursday resulted in a loss of N112 billion.

This marked the fourth consecutive day of declines following a N242 billion hit on Monday and a N126 billion loss on Tuesday. Wednesday provided no respite due to a public holiday.

The primary catalyst behind this downturn was the market’s reaction to the Senate’s confirmation of Yemi Cardoso as the governor of the Central Bank of Nigeria, which added to the prevailing downbeat sentiment.

By the close of trading on Thursday, the NGX All-Share Index had dipped by 0.31% to settle at 66,448.63 points, while market capitalization stood at N36.367 trillion.

The bearish trend also led to subdued market activity with total deals decreasing by 2.74% to 6,826 trades. Trading volume and value depreciated by 24.78% and 24.67%, respectively, with 273.80 million units exchanged for N3.41 billion.

Among the top value losers were Vitafoam (-9.92%), FTNCocoa (-9.88%), Oando (-9.84%), John Holt (-9.39%), and United Capital (-7.20%).

In contrast, the insurance sector emerged as the biggest winner, posting a 0.83% increase, while the banking and consumer goods sectors recorded losses of 1.01% and 0.68%, respectively.

Accesscorp led in trading volume on Thursday, with 45.87 million units valued at N710.63 million, followed by Zenith Bank with 21.12 million units worth N657.22 million. Unity Bank, United Bank for Africa, and Transcorp also featured among the top five traded stocks.

The persistent bearish sentiment highlights the need for investors to closely monitor the evolving market dynamics and economic policies, as uncertainty continues to cloud the Nigerian financial landscape.

Bonds

Drastic Decline in FGN Bond Listings Raises Concerns Over Government Borrowing

Published

5 days ago

September 26, 2023

Investors King

Data from the Nigerian Exchange Limited (NGX) has shown that the value of listed Federal Government of Nigeria (FGN) Bonds on the exchange experienced a decline of 99.9% in the eight months ending on August 31, 2023.

Plummeting from N1.6 trillion recorded during the corresponding period in 2022 to a mere N148.2 billion.

The stark contrast in FGN Bond listings between the two years has raised eyebrows and prompted experts to delve into the implications of this significant shift.

Analysis of NGX data revealed that the bonds listed this year primarily consisted of the FGN Savings Bond and Sukuk, whereas the previous year featured a combination of both Federal Government Bonds and Savings Bonds.

Among the listings, the FGN Sukuk stood out with the highest recorded value of N130 billion for the period under review.

Analysts have identified several factors contributing to the stark decline in FGN Bond listings.

David Adonri, an analyst and Vice Executive Chairman at HighCap Securities Limited, commented on this development, and said, “The reduction of FGN Bond listing could be an indication that the government borrowed less in the domestic market, and its implication is that it could affect liquidity in the secondary market.”

He continued, “The decline could also be that the FGN Bonds were not listed on the Exchange during the period under review as only the Savings Bonds were captured as well as Sukuk.”

Adonri highlighted concerns about the country’s debt profile, both domestically and internationally, saying, “Both externally and internally, the immediate past government had taken more debt. This is increasing the risk of sovereign default and economic nightmares.” He also noted the adverse effects on the real sector, explaining that “the borrowing has now reached the alarming point of crowding out the productive real sector.”

Tajudeen Olayinka, an Investment Banker and Stockbroker, echoed similar sentiments, saying, “If there was an increase in debt listings in the market, it brings about increased liquidity and trading activities in the market, but the drop in the eight-month period could be largely as a result of higher yields in other competing instruments.”

Olayinka also speculated that “the drop in the FGN Bond listing could also be that there was less borrowing by the government in the primary market so not much to offer for listing in the secondary market.”

Stock Market

NGX Chairman Urges Federal Government to Boost Listings Attractiveness

Published

5 days ago

September 26, 2023

Investors King

The Chairman of NGX GROUP, Dr. Umaru Kwairanga, has made a fervent appeal to the Federal Government of Nigeria, urging them to spearhead legislative adjustments and reforms aimed at enhancing the appeal of listings on the Nigerian Exchange Limited (NGX).

This call comes against the backdrop of a recent wave of delistings from the NGX, which has raised concerns about the competitiveness of the Nigerian capital market.

Dr. Kwairanga made this significant statement during the prestigious Closing Bell ceremony held at NASDAQ in New York.

The event was jointly organized by the United States Chamber of Commerce, Nigerian Exchange Group Plc (NGX GROUP), and the Nigerian Investment Promotion Council (NIPC).

The ceremony was a highlight of the NGX Roadshow, generously supported by Stanbic IBTC, CardinalStone Partners, and Chapel Hill Denham.

During his address, Dr. Kwairanga also extended an invitation to the U.S. business community to explore greater partnership opportunities with Nigeria.

He emphasized that these partnerships could be pivotal in ushering in a new era of prosperity for both nations.

Highlighting the urgency of the situation, Dr. Kwairanga underlined the need for comprehensive reforms within the Nigerian capital market.

He stated, “The capital market is in need of reforms that can unlock increased prosperity for the Nigerian economy.”

These reforms, he suggested, should encompass a wide range of areas, including the pension sector and amendments to government free zones, to facilitate easier access to the capital market through listings.

One of the most notable developments Dr. Kwairanga pointed out was the recent removal of fuel subsidies and the liberalization of the foreign exchange market in Nigeria. He credited these moves for boosting confidence in the capital market, leading to remarkable results.

According to him, “The Nigerian Exchange Limited’s All-Share Index has surged by 29.04% since President Bola Tinubu’s inauguration.”

This call for reform and enhanced attractiveness of listings on the NGX echoes the concerns of market stakeholders who have seen several companies opt for delisting in recent times.

Dr. Kwairanga’s plea for government action is seen as a positive step towards revitalizing the Nigerian capital market and ensuring that it remains a competitive destination for investors.

As Nigeria continues to position itself as a key player in the global economic landscape, the appeal for legislative adjustments and reforms, as articulated by Dr. Kwairanga, could be a pivotal moment in shaping the future of the nation’s capital market.

Investors and stakeholders alike will be keenly watching for any developments in response to this call to action.