Finance

Equities Close Lower Despite Halting Seven-day Losing Streak

Published

6 years ago

February 19, 2018

Nigerian Exchange Limited - Investors King

Equities Close Lower Despite Halting Seven-day Losing Streak

The Nigerian equities market recorded its second consecutive week of decline as the Nigerian Stock Exchange (NSE) All-Share Index fell 1.13 per cent to close at 42,638.83. Similarly, market capitalisation ended lower at N15.302 trillion.

Despite rebounding from a seven-day losing streak on Wednesday, the market closed the week on a negative note as losses recorded in the first two days outweighed the gains of three days.

As a result, the NSE ASI fell by 1.13 per cent to further reduce the year-to-date growth of the market to 11.5 per cent. Apart from the ASI that decline , all other indices finished lower with the exception of the NSE Pension Index that appreciated by 0.08 per cent while the NSE ASeM Index closed flat.

Analysts at Cordros Capital Limited said: “Given two consecutive weeks of profit taking, we expect investors to hunt bargains while also taking position ahead of Q4-17 corporate earnings releases.”

Daily Performance

Still in the bearish mood, the market opened on with a decline of 0.9 per cent on the first day of the week to close at 42,737.89. Similarly, the market capitalisation fell by same margin to close at N15.34 trillion.

The depreciation recorded in the share prices of GTBank, FBN Holdings, Zenith Bank, Dangote Sugar, and Transcorp were mainly responsible for the decline recorded.

According analysts at FSDH Research, the on-going sell sentiment may continue till midweek albeit on a milder scale than in the previous trading sessions

“Profit taking and bargain hunting may likely characterise subsequent trading sessions,” they added.

In all, 36 stocks depreciated, while only 13 appreciated. Eternal Plc led the price losers with 9.6 per cent, trailed by Equity Assurance Plc with 8.3 per cent. AIICO Insurance Plc shed 8.2 per cent, while Consolidated Hallmark Insurance Plc lost 5.7 per cent.

FBN Holdings Plc, GTBank Plc and Multiverse depreciated by 5.0 per cent apiece. May & Baker Nigeria Plc and Fidelity Bank Plc shed 4.9 per cent each.

On the positive side, PZ Cussons Nigeria Plc led the price gainers with 5.8 per cent, trailed by Beta Glass Plc, Glaxosmithkline Consumer Nigeria Plc and Unity Bank Plc with 4.9 per cent apiece.

UAC of Nigeria Plc chalked up 4.1 per cent, just as Jaiz Bank Plc, Linkage Assurance Plc garnered 3.8 per cent and 3.5 per cent respectively. C & I Leasing Plc, ABC Transport Plc and Wema Bank Plc advanced by 2.7 per cent, 2.5 per cent and 2.3 per cent in that order.

All the sectoral indices trended southwards. They were led by the NSE Banking Index , shedding 3.8 per cent following losses in bellwether banking stocks – GTBank (-5.0 per cent) and Zenith Bank (-4.9 per cent). The NSE Insurance Index followed with 1.1 per cent slide while the NSE Consumer Goods Index closed 0.9 per cent lower due to downtick in Nigerian Breweries Plc (-2.9 per cent) and Dangote Sugar Refinery Plc (-4.8 per cent). The NSE Industrial Goods Index and NSE Oil & Gas Index shed 0.4 per cent and 0.2 per cent respectively.

The market recorded its highest decline on Tuesday with capitalisation falling to a new low of N14.97 trillion, while the index closed below the 42,000 threshold at 41,708.15.

Specifically, the index fell 2.41 per cent, the highest decline since the beginning of the year. Similarly, the market capitalisation shed N369.5 billion, propelled by a decline in the shares of bellwether such as Dangote Cement, UBA, Nestle Nigeria Plc, FBN Holdings, and Nigerian Breweries Plc.

The bears were virtually on rampage as 40 stocks depreciated compared with 15 stocks that appreciated. Prestige Assurance Plc led the price losers with 7.1 per cent, followed by Skye Bank Plc with a decline of 6.5 per cent. Consolidated Hallmark Insurance Plc, FCMB Group Plc and United Bank for Africa Plc went down by 6.1 per cent, 5.9 per cent and 5.5 per cent in that order.

Japaul Oil and Maritime Services Plc, Royal Exchange Plc and Union Bank of Nigeria Plc shed 5.0 per cent each. Forte Oil Plc declined by 4.9 per cent, just as Fidson Healthcare Plc, Dangote Cement Plc and Sterling Bank Plc lost 4.8 per cent apiece.

The stocks that escaped the bear run were led by A.G Leventis Nigeria Plc with 7.0 per cent, trailed by Berger Nigeria Plc with 5.0 per cent, just as Etarna Plc appreciated by 4.9 per cent.

Other top price gainers included: NAHCO Plc (4.8 per cent); Linkage Assurance Plc (4.5 per cent); Access Bank Plc (3.9 per cent); African Prudential Plc (3.8 per cent); May & Baker Nigeria Plc(3.3 per cent).

However, the equities market rebounded on Wednesday after a seven-day losing streak. Bargain hunting in banking and consumer goods sectors lifted the index by 1.1 per cent to close at 42,171.80 while market capitalisation added N166.4 billion to close at N15.1 trillion.

The rebound could largely be attributed to buying interest in Banking and Consumer counters with Zenith Bank (+5.0 per cent), United Bank for Africa (+6.3 per cent ) and Nestle (+1.9 per cent) weighing the most on performance.

But Skye Bank Plc led the gainers chart with 10 per cent trailed by FCMB Group Plc that garnered 9.8 per cent. Conversely, First Aluminum led the price losers with 9.1 per cent, trailed by LASACO Assurance Plc with a decline of 5.8 per cent.

Volume and value of trading also rose by 10.7 per cent and 28.1 per cent to 520.7 million shares and N4.7 billion respectively.

Commenting on the performance, analysts at Cordros Capital Limited said: “We expect appetite to remain strong, as investors continue to hunt bargains and take position ahead of Q4-17 earnings, amidst generally improving macroeconomic conditions.”

Also commenting, analysts at Meristem Securities Limited said: “The bullish charge in the market was led by gains recorded on counters in the banking and consumer goods sectors, which offset the loss on the market’s heavyweight, Dangote Cement Plc. We expect a continuation of the bargain hunting activities in the market and an improvement in the market mood to sustain the recovery in the near term.”

The market sustained the positive performance on Thursday with the index rising by 1.0 per cent to 42,604.40 , while market capitalisation added N155.2 billion to close at N15.3 trillion. The performance was majorly driven by price appreciation in FBN Holdings Plc (+8.2 per cent), GTBank (+2.0 per cent) and Dangote Cement Plc (+0.6 per cent).

Sectorally, it was largely bullish as four of five indices closed in the green while one closed flat. The NSE Banking Index led gainers, rising 1.3 per cent. The NSE Industrial and NSE Consumer Goods indices trailed, rising 0.9 per cent and 0.8 per cent respectively. The NSE Oil & Gas Index appreciated marginally by 0.01 per cent, while the NSE Insurance Index however closed the day flat.

Market Turnover

Meanwhile, a total turnover of 2.940 billion shares worth N27.924 billion was recorded in 28,570 deals during the review week, compared with a total of 4.426 billion shares valued at N24.236 billion that exchanged hands in 29,573 deals the previous week.

The Financial Services Industry led the activity chart with 2.174 billion shares valued at N17.033 billion traded in 19,013 deals, thus contributing 73.96 per cent and 61 per cent to the total equity turnover volume and value respectively. The Services Industry followed with 232.482 million shares worth N216.990 million in 734 deals.

The third place was occupied by Conglomerates Industry with a turnover of 170.422 million shares worth N499.400 million in 1,578 deals. Trading in the top three equities namely – Linkage Assurance Plc, Skye Bank Plc and FCMB Group Plc accounted for 809.798 million shares worth N1.130 billion in 2,551 deals, contributing 27.5 per cent and 4.04 per cent to the total equity turnover volume and value respectively.

Price Gainers and Losers

A look at the price movement chat showed that 48) equities depreciated in price, lower than 64 equities of the previous week, while 30 equities appreciated in price during the week, higher than 23 equities recorded in the preceding week.

Consolidated Hallmark Insurance Plc led the price losers with 22.8 per cent, trailed by First Aluminium Nigeria Plc with 19.5 per cent.

Courtville Business Solutions Plc shed 17.3 per cent, just as Japaul Oil & Maritime Services Plc and Prestige Assurance Plc went down by 14.2 apiece.

Other top price losers included: Unity Kapital Assurance Plc (13.6 per cent); Multiverse Mining and Exploration Plc (12.5 per cent); Equity Assurance Plc (12.5 per cent); Caverton Offshore Support Group Plc (11.6 per cent);and Sterling Bank Plc (11.4 per cent).

Berger Paints Nigeria Plc led the price gainers with 11.4 per cent, followed by Beta Glass Plc with 10.2 per cent. Access Bank Plc appreciated by 5.4 per cent, just as A.G Leventis Nigeria Plc and GSK Nigeria Plc chalked up 5.2 per cent and 4.9 per cent in that order.

Top price gainers include: Transcorp Hotels Plc (4.8 per cent); WAPIC Insurance Plc (4.6 per cent); African Prudential Plc, PZ Cussons Nigeria Plc (4.1 per cent); and Zenith Bank Plc (3.5 per cent).

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Loans

Federal Government Spends $1.12 Billion on Foreign Debt Servicing in Q1 2024

Published

2 days ago

May 10, 2024

Samed Olukoya

The Federal Government has disclosed that it pays $1.12 billion to service foreign debts in the first quarter of 2024 alone.

This amount shows the escalating burden of external debt on the nation’s fiscal health.

Data gleaned from the international payment segment of the Central Bank of Nigeria website reveals a steady upward trajectory in debt service payments, both over the past few years and within the first quarter of 2024.

When this is compared to the same period in 2023, debt servicing rose by 39.7 percent in Q1, 2024.

The breakdown of the debt service payments paints a picture of fluctuating yet consistently high expenditure.

January 2024 commenced with an imposing debt servicing obligation of $560.52 million, a stark contrast to the $112.35 million recorded in January 2023.

While February 2024 witnessed a moderation in debt servicing payments to $283.22 million and March 2024 saw a further decrease to $276.17 million.

Alarmingly, approximately 70 percent of Nigeria’s dollar payments were allocated to service external debts during the first quarter of 2024.

Out of the total outflows amounting to $1.61 billion, a substantial $1.12 billion was directed towards debt servicing, significantly surpassing the corresponding figure of 49 percent in Q1 2023.

The depletion of foreign exchange reserves, which experienced a recent one-month dip streak has been attributed primarily to debt repayments and other financial obligations rather than efforts to defend the naira, according to CBN Governor Yemi Cardoso.

The World Bank has expressed profound concern over the escalating debt service burdens facing developing countries globally, emphasizing the urgent need for coordinated action to avert a widespread financial crisis.

With record-level debt and soaring interest rates, many developing nations, including Nigeria, face an increasingly precarious economic path, fraught with challenges regarding resource allocation and financial stability.

The Debt Management Office (DMO) has previously disclosed that Nigeria incurred a debt service of $3.5 billion for its external loans in 2023, marking a 55 percent increase from the previous year.

This worrisome trend underscores the pressing need for robust fiscal management and prudent debt repayment strategies to safeguard Nigeria’s financial stability and foster sustainable economic growth.

Finance

Emefiele Trial: Witness Details Alleged Extortion by CBN Director Over $400,000

Published

2 days ago

May 10, 2024

Samed Olukoya

In the ongoing trial of Godwin Emefiele, former governor of the Central Bank of Nigeria (CBN), a significant revelation emerged as Victor Onyejiuwa, managing director of The Source Computers Limited, took the stand as the fourth witness.

His testimony shed light on alleged extortion involving a substantial sum of $400,000.

Onyejiuwa recounted his company’s involvement with the CBN from 2014 to 2019, providing technology support and securing multiple contracts, including one for enterprise storage and servers in 2017.

However, post-execution of the contract, he faced pressure from John Ikechukwu Ayoh, a former CBN director, regarding the release of funds.

According to Onyejiuwa’s testimony, Ayoh approached him, indicating that CBN management required a portion of the contract’s funds.

He alleged that Ayoh threatened to withhold payment approval if his demands were not met. Feeling coerced, Onyejiuwa acceded to Ayoh’s request after several discussions.

To ensure the contract’s payment, Onyejiuwa revealed that he organized the sum of $400,000 along with an additional $200,000, yielding a total of $600,000.

This payment, made within two to three weeks, facilitated the release of funds for the contract.

During his testimony, Onyejiuwa disclosed contract amounts, including a significant $1.2 billion contract, along with others valued at $2.1 million, N340,000, and N17 million.

These revelations provide insight into the alleged irregularities surrounding contract payments at the CBN.

Following Onyejiuwa’s testimony, Emefiele’s legal counsel requested an adjournment for cross-examination at the next hearing, which was granted by Justice Rahman Oshodi. The trial is set to resume on May 17.

Loans

IMF Gives Nod as Congo Inches Closer to Historic Loan Program Completion

Published

3 days ago

May 9, 2024

Samed Olukoya

The Democratic Republic of Congo (DRC) received a positive review from the International Monetary Fund (IMF) on Wednesday in a crucial step toward completing its first-ever IMF loan program.

Following the completion of the sixth and final review in the Congolese capital, Kinshasa, IMF staff are set to recommend to the executive board the approval of the last disbursement of Congo’s three-year $1.5 billion extended credit facility.

This development positions Congo on the brink of achieving a milestone in its financial history.

Despite facing fiscal pressures exacerbated by ongoing conflict in the eastern regions and the recent elections in December 2023, the IMF lauded Congo’s overall performance as “generally positive”.

The country’s economy heavily relies on mineral exports, particularly copper and cobalt, essential components in electric vehicle batteries.

According to the IMF, Congo’s economy exhibited robust growth, expanding by 8.3% last year, fueled largely by its ascent to become the world’s second-largest copper producer.

However, persistent insecurity in eastern Congo, attributed to the activities of over 100 armed groups vying for control over resources and political representation, has hindered the nation’s economic progress.

The positive assessment by the IMF underscores Congo’s achievements in enhancing its economic fundamentals, including an increase in reserves, which reached $5.5 billion by the end of 2023, equivalent to approximately two months of imports.

Despite these gains, challenges remain, with high inflation rates hovering around 24% at the close of last year.

The IMF emphasized the necessity of enacting a new budget law following the renegotiation of a minerals-for-infrastructure contract with China. Under the revised terms, Congo is slated to receive $324 million annually in development financing backed by revenue from a copper and cobalt joint venture.

Looking ahead, the IMF’s executive board is anticipated to deliberate on the staff recommendation in July. If approved, the disbursement of approximately $200 million will fortify Congo’s international reserves, providing a crucial buffer against economic volatility.

Also, Congo’s government intends to seek a new Extended Credit Facility (ECF) from the IMF, signaling its commitment to ongoing economic reforms and sustainable growth.

The IMF’s endorsement represents a significant validation of Congo’s economic trajectory and underscores the nation’s efforts to navigate complex challenges while advancing towards financial stability and prosperity.