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Cordros Capital Allays Fear of Capital Market Bubble



Cordros Money Market Fund
  • Cordros Capital Allays Fear of Capital Market Bubble

Cordros Capital says the current rally in the country’s stock market does not, in any way, suggest a bubble scenario.

The company, in its 2018 outlook for the country, said the market was largely driven by fundamentals.

Presenting the outlook to newsmen in Lagos, the firm’s Head, Research and Strategy, Mr. Christian Orajekwe, said the equities gain of 2017 was the market’s first in three years of cumulative 40 per cent loss, adding that in dollar terms, the return was around 25 per cent.

Orajekwe said, “Back-to-back gain of more than 80 per cent total is not a new phenomenon. Bull markets do not die of old age.

“Compared to the last two years, Nigeria’s macro outlook is more favourable to equities”

He said the equities market recorded a strong January start this year like the case of 2007, 2010, and 2013, driven by a moderate improvement in the macro environment, stable to modest corporate earnings growth, modest improvement in portfolio inflows over 2017, marginal moderation of fixed income and treasury yields, and modest election concerns.”

To this end, the Head, Investment Banking, Cordros Capital, Mr. Femi Ademola, urged investors to cherry-pick stocks, and hold 2017 position and watch out for Q4 2017 and Q1 2018 earnings.

He said, “Small cap companies are to benefit from stronger recovery of economic activities, election-related spending, passage of the minimum wage bill into law, and improvement in public sector revenue while raw materials intensive companies are to benefit from the stability of the naira.

“Highly geared companies are to benefit from the expected moderation of interest rates while cement companies are to benefit from the expected improvement in public sector construction activities as well as research/development and capital expenditure-oriented companies.

For consumers goods, the 2018 catalysts, according to Orajekwe, are: improvement in consumer spending (better macro, reduced inflationary pressure, election spending, passage of minimum wage); low interest rate and deleveraged balance sheet; foreign exchange stability; and impressive 2017 performance rubbing off on consumer goods stocks in 2018.”

However, the 2018 risks for consumer goods stocks, he added, included: external pressure (continued modest or lower growth, forex and inflation risks, and constrained government spending); competition (the attractive profits of 2017 and improved access to the United States dollar will encourage mass return of the smaller players and ignite market share war); policy issues (fuel and power tariff hikes); and valuation issues (weak upside, following 2017 bull run).

-Commenting on the 2018 budget, he said early presentation was good albeit the likelihood of an early passage and signing of the budget.

“Oil revenue assumptions are realistic. Non-oil revenue estimates, particularly taxation and Internally-Generated Revenue are very ambitious. Other revenues are also ambitious, although they have strongly supported gross revenue in past years,” he said.

“A 50:50 split between domestic and external borrowing was observed. The risk of deficit exceeding budget is low to moderate. Except on extreme difficult revenue condition, priority will be given to capital expenditure,” Orajekwe added.

Major catalysts for agriculture companies in 2018, he explained, include: supportive macroeconomic environment, energy diversification and expansion drive while the major risks include: policy reversal, unfavourable weather condition and security threat.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


CBN Directs Banks to go After COVID-19 Financial Criminals



Godwin Emefile

Central Bank Asks Banks to Stay Abreast Frauds and Rising COVID-19 Financial Crimes

The Central Bank of Nigeria has directed all financial institutions in Nigeria to update alert protocols in their Anti-Money Laundering/Combating the Financing of Terrorism monitoring tools, in accordance with emerging trends of rising COVID-19 related financial crimes.

In a circular titled, ‘Administrative letters to all banks and other financial institutions’ issued on Monday and signed by J.M. Gana, the Director, Financial Policy and Regulation Department, the apex bank said changes in business activities and financial transactions due to the shift caused by COVID-19 pandemic have led to the surge in financial crimes globally.

Therefore, it said financial institutions must now adapt quickly and keep abreast of the new emerging financial risks and other developments to arrest this new and emerging ML/TF.

According to the circular, this includes strategic investment in data mining and artificial intelligence software to monitor financial transactions effectively and report as quickly as possible.

The central bank said the Nigerian Financial Intelligence Unit, the central repository of suspicious transactions and other financial information, had released a comprehensive report on STRs and others.

It stated that the NFIU had identified cybercrimes, frauds, counterfeiting and substandard goods, diversion of public funds and misuse of non-government organisations funds as some of the ongoing crimes that banks across the nation need to stay abreast and report.

Other suspicious transactions and red flags identified in the report were some e-commerce companies with little or zero history or internet presence suddenly receiving multiple payments from unrelated third parties.

Similarly, it said individuals with zero or little history of financial transactions receiving multiple payments from unrelated third parties. It also noted that customers who suddenly start delaying in the supply or purchases of medical supplies and payment of goods linked to known brands, yet the beneficiary is an individual, not a corporate company should be flagged.

The measures, the apex bank said were necessary due to the rising numbers of unusual transactions from banks’ customers and unscrupulous individuals.

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Union Bank Secures US$40 Million Facility from IFC Global Trade Finance



Union Bank Secures US$40 Million Facility from IFC Global Trade Finance

Union Bank of Nigeria Plc said it has secured a US$40,000,000 finance guarantee facility from the IFC, a member of the World Bank Group.

In a note to the Nigerian Stock Exchange, the lender said the facility would help boost access to finance for local businesses and enable increased international trade for Nigeria.

It explained that the facility “will support Union Bank to establish working partnerships with nearly 300 major international banks within the GTFP network, thereby broadening access to finance and reducing cash collateral requirements for Nigerian businesses.

“The facility will enable the continued flow of trade credit into the Nigerian market at a time when imports are critical, and the country’s exports can generate much-needed foreign exchange.

Under the IFC’s Global Trade Finance Program (GTFP) terms of the agreement, GTFP offers benefiting banks partial or full guarantees covering payment risk on Union Bank’s trade-related transactions.

Accordingly, these guarantees are transaction-specific and may vary depending on underlying instruments like letters of credit, trade-related promissory notes, guarantees, bonds, and advance payment guarantees.”

Emeka Emuwa, Chief Executive Officer of Union Bank, said, “Union Bank is pleased to join the IFC’s Global Trade Finance Program. This is a significant achievement as we continue to expand our trade financing offerings to our
customers. Even in these peculiar times, we remain focused on contributing to economic growth by developing tailored solutions that help our customers harness the teeming opportunities that still exist in the Nigerian market.

Eme Essien Lore, IFC’s Country Manager for Nigeria, said, “Keeping trade moving is essential to growth and job creation, especially during the challenging economic times we are living through today. We welcome Union Bank to IFC’s Global Trade Finance Program and value a partnership that will make a positive impact on Nigeria’s economy.

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Apapa Customs Command Generate N367.6bn in Nine Months



Nigeria Customs Service

Customs Command Apapa Realises N367.6bn Between January and September

The Nigeria Customs Service, Apapa Command, said it generated N367.6 billion in the nine-month ended September 2020.

Mohammed Abba-Kura, the Customs Area Controller, disclosed this while speaking with newsmen in Lagos.

He said a total of 328 containers of goods worth N19.5 billion were seized during the period. This, he said represents an increase of 37 containers when compared to the same period of 2019.

Speaking further, Abba-Kura said the N367.6 billion realised in the first nine months of the year, represented a 17 percent or N54.1 billion increase from N313.5 billion it collected during the same period of 2019.

The Apapa Command generated N14.3 billion as revenue in the third quarter from customers’ duty and other charges.

He said “The difference recorded was made possible as a result of resilience of officers in ensuring that importers and agents are made to do proper declarations, adhere strictly to import/export guidelines in tandem with extant laws.”

Commenting on the seizures, Abba-Kura said, “These items were seized mainly because of various forms of infractions which range from false declarations, non-adherence to import/export guidelines and failure to comply with other extant regulations as enshrined in the Customs and Excise Management Act.

“In the area of export trade, the period under review recorded exportation of goods worth N26,273,706,822 exported from the country.”

“These exported goods include mineral resources, steel bars, agricultural products among others with a total tonnage of 378,447 million tonnes free on board value of $85.8m. Similarly, the volume of export from January to September 2020 stood at N78.6bn with FOB $257,003,965.”

He added that the compliance level rose to about 60 percent during the period, highlighting the reason for the surge in the number of seizures made.

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