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Equities Market Sheds 5.1% in First Quarter

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  • Equities Market Sheds 5.1% in First Quarter

The equities market rebounded last week as the Nigerian Stock Exchange (NSE) All-Share Index rose by 0.24 per cent to close at 25,516.34 due to bargain hunting by investors following some impressive corporate results. Some of the companies that reported their 2016 full year results announced dividends for investors, a development that bolstered confidence in the market.

Consequently, the negative performance in the market the previous week was reversed last week. However, the 0.24 per cent was not enough to lift the market from decline in the first quarter. Consequently, the NSE ASI declined by 5.1 per cent in the Q1. Analysis of the market in the last week of the quarter showed that it gained two out of the five trading sessions.

Daily Market performance

Trading at nation’s stock market resumed on a positive note on Monday following investors’ reactions to some improved earnings results reported by companies.

The NSE ASI appreciated 0.12 per cent to close at 25,485.17 as buy interest in Unilever Nigeria, United Bank for Africa (UBA) Plc and Stanbic IBTC Holdings Plc boosted the performance. The three companies had previous week released their audited results for the year ended December 31, 2016, showing improved bottom-lines.

For instance, Stanbic IBTC’s profit after tax (PAT) jumped by 51 per cent to N28.5 billion, fromN18.9 billion in 2015. UBA grew its PAT by 21 per cent from N59.6 billion to N72.6 billion, while Unilever’s PAT soared by 157 per cent from N1.19 billion to N3.07 billion in 2016. Besides, the companies recommended dividends for their various shareholders.

Apparently reacting to the improved performance, investors increased demand for the equities at the stock market, leading to growth in their prices. Unilever appreciated by 5.0 per cent, while UBA and Stanbic IBTC garnered 2.0 per cent and 1.6 per cent respectively. In all, 17 stocks advanced compared to 12 stocks that declined.

However, Lafarge Africa Plc, which rode on the back of its 2016 results to gain 13 per cent the preceding week, began last week on bearish note as some investors moved in to lock in part of the gains. As a result, Lafarge Africa went down by 2.7 per cent and contributed to the fall in NSE Industrial Goods Index, which shed 1.1 per cent.

All other sectors closed in the green led by the NSE Consumer Goods Index with 0.5 per cent on the back of gains in Seven-Up Bottling Company Plc (+5.3 per cent) and Unilever (+5.0 per cent). In the same vein, the NSE Insurance Index and NSE Banking Index appreciated by 0.2 per cent and 0.1 per cent in that order. The NSE Oil & Gas Index recorded a marginal gain of 0.01 per cent.

The positive momentum could not sustain on Tuesday as the price decline suffered by the highest capitalised company in the market, Dangote Cement plc sent the market back to the bears’ territory. Consequently, the Nigerian Stock Exchange All-Share Index fell 0.31 per cent to close at 25, 406.72.

However, the 1.8 per cent decline recorded by Dangote Cement contributed to the bearish close of the market. Ex-Dangote Cement, the index would have appreciated by 0.40 per cent.

In all 22 stocks appreciated compared with 14 that shed value. Seplat Petroleum rode to the top of gainers chart with 10.2 per cent, trailed by Custodian and Allied Plc and International Breweries Plc that chalked up 5 per cent apiece. Fidelity Bank Plc and Seven-Up Bottling Company went up by 3.9 per cent and 3.7 per cent respectively.

Ecobank Transnational Incorporated and Law Union and Rock Insurance Plc led the losers with five per cent each. Total Nigeria trailed with 4.7 per cent, just as Livestock Feeds Plc and Continental Reinsurance Plc shed 4.4 and 4.3 per cent in that order.

Investors traded 916 million shares worth N2.4 billion in 3,342 deals, with Niger Insurance Plc accounting for 724 million shares. In terms of sectoral performance, three indices gained while two declined. The NSE Oil & Gas Index led with 2.7 per cent as a result of price appreciation in Seplat (+10.3 per cent). Similarly, the NSE Banking and the NSE Consumer Goods Indices grew 0.7 per cent and 0.2 per cent on account of gains in GTBank (+1.7 per cent) and International Breweries Plc(+5.0 per cent) respectively.

On the negative side, the NSE Industrial Goods Index declined the most, shedding 2.0 per cent on the back of losses in Lafarge (-2.6 per cent) and Dangote Cement (-1.5 per cent) while the NSE Insurance Index went down by 0.7 per cent.

The equity market declined further on Wednesday, the NSE ASI fell by 0.55 per cent to close at 25,267.68 points. The depreciation recorded in the share prices of Unilever, FBN Holdings, Diamond Bank, Oando and Continental Reinsurance were mainly responsible for the loss.

The total value of stocks traded was N2.62 billion, up by 8.42 per cent from N2.41 billion recorded the previous day. The total volume of stocks traded was 771.65 million in 2, 703 deals. The most actively traded sectors were: Financial Services (296.44 million), Consumer Goods (32.82 million) and, Conglomerates (4.48 million) while the three most actively traded stocks were: Custodian and Allied (284.53 million), Continental Insurance (250.71 million) and Diamond Bank (127.27 million).

After two days of loses, the market recovered on Thursday with the NSE ASI appreciating by 1.05 per cent to close at 25,533.82, while market capitalisation rose to N8.84 trillion.

Market turnover

Meanwhile, investors traded 3.195 billion shares worth N104.217 billion in 14,674 deals last week un from 1.309 billion shares valued at N10.323 billion that exchanged hands in 13,042 deals the previous week. The Financial Services Industry remained the most active in volume terms recording 2.784 billion shares valued at N7.932 billion traded in 9,129 deals; thus contributing 87.12 per cent and 7.61 per cent to the total equity turnover volume and value respectively. The Oil and Gas Industry followed with 233.982 million shares

worth N92.545 billion in 1,410 deals. The third place was occupied by Consumer Goods Industry with a turnover of 80.623 million shares worth N1.957 billion in 2,138 deals.

Also traded during the week were a total of 52,885 units of Exchange Traded Products (ETPs) valued at N425,464.25 executed in 19 deals compared with a total of 11,585 units valued at N144,678.50 transacted the preceding week in five deals.

Similarly, a total of 2,870 units of Federal Government Bonds valued at N2.638million were traded this week in seven deals, compared with a total of 18,144 units valued at N17.555 million transacted the previous week in 12 deals.

Price Gainers and Losers

A look at the price movement chart showed that 36 equities appreciated in price higher than the 16 equities of the previous week, while 24 equities depreciated in price, lower compared with 35 equities of the previous week. Newrest ASL Nigeria Plc led the price gainers with 14.8 per cent, trailed by Cadbury Nigeria Plc which shed 11.7 per cent.

Seplat Petroleum Development Company Plc added 10.2 per cent, just as Transcorp Hotels Plc and Seven-Up Bottling Company Plc appreciated by 10 per cent and 9.2 per cent respectively.

Trans-Nationwide Express Plc garnered 8.7 per cent, while Unilever Nigeria Plc and United Bank for Africa Plc chalked up 8.3 per cent and 7.1 per cent in that order. International Breweries Plc and Forte Oil Plc went up by 6.6 per cent and 6.2 per cent respectively.

Conversely, Livestock Feeds Plc led the bears with 16.9 per cent trailed by UACN Property Development Company Plc with 6.3 per cent. Guaranty Trust Bank Plc and Ecobank Transnational Incorporated shed 6.0 per cent and 5.2 per cent in that order. Other top price losers were: Law Union and Rock Insurance Plc, May & Baker Nigeria Plc (5.0 per cent apiece). Cement Company of Northern Nigeria Plc (4.8 per cent), Jaiz Bank Plc (4.7 per cent), Unity Bank Plc (4.4 per cent) and Transcorp Plc (4.0 per cent).

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

Finance

Leaked Documents Reveal Money Laundering Scam Worth $2tn

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Several leaked documents have revealed how the world’s biggest banks enable criminals to launder money around the world.

The documents showing about $2tn of transactions are popularly called FinCEN files.

The BBC reports that the FinCEN files are more than 2,500 documents, most of which were files that banks sent to the US authorities between 2000 and 2017. They raise concerns about what their clients might be doing.

The documents are utilised by the banks to report suspicious behaviour. However, they may not be proof of wrongdoing or crime, the report said.

The Financial Crimes Enforcement Network, a bureau of the United States Department of the Treasury is saddled with the task of analysing information about financial transactions to combat domestic and international money laundering, terrorist financing, and other financial crimes.

The FinCEN files revealed how top tier banks such as HSBC, JP Morgan, Barclays Bank, Deutsche Bank, Standard Chartered amongst others helped highly connected individuals move money round several accounts in the world.

JP Morgan allowed a company to move more than $1bn through a London account without knowing who owned it.

One of Russian President Vladimir Putin’s closest associates used Barclays Bank in London to avoid sanctions which were meant to stop him using financial services in the West.

Some of the cash was invested in works of art, the report added.

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Finance

UK Banks to Ditch Clients Across Europe

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UK banks are “outrageously failing” many tens of thousands of expat clients across Europe as they plot to shut their accounts and cancel credit cards within weeks due to post-Brexit rules.

This is the damning assessment of Nigel Green, the CEO and founder of deVere Group, one of the world’s largest financial advisory and fintech organisations, as most of Britain’s biggest banks send letters to customers in the EU warning them that all services are to be scrapped unless they have a UK address.

Mr Green says: “Most of the UK’s high street banks are plotting to unceremoniously abandon their customers across Europe within weeks.

“Accounts will be shut and debit and credit cards voided – regardless of how much or how little you have in those accounts or how long you have been a client – as it becomes illegal for UK banks to service British customers living in the EU without applying for new banking licences.”

He continues: “Once again, traditional banks are outrageously failing their clients who now need to take urgent steps to continue to be able to access, use, and manage their money.

“The move by these banks will be a major inconvenience to many tens of thousands of Brits living in the EU.”

Before post-Brexit rules come into effect, those affected are being urged to find alternatives to avoid potentially serious financial disruption.

“I would urge expats to now seek a financial services provider that already operates under pan-European rules,” says the deVere Group CEO.

In 2017 the firm launched deVere Vault. deVere Vault provides borderless global services with a ground-breaking e-money app and a single card, multi currency service designed with those with an international lifestyle in mind.

“You’re able to open a deVere Vault account in around five minutes, withdraw money from any cash machine worldwide, get real-time notifications with all your transactions, spend money on the card wherever Mastercard is accepted, and send and receive money in most major currencies,” notes Mr Green.

He concludes: “deVere Vault meets a growing need in an increasingly globalised world for our clients to have borderless access to and use of their money.

“Agile, tech-driven challenger banks and fintech firms are ready to fill the void left by traditional banks who are now having to routinely ditch their customers.”

 

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NNPC Says Private Investors Will Finance Rehabilitation of Downstream Assets

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Private Investors to Finance NNPC Rehabilitation of Downstream Assets

The Nigerian National Petroleum Corporation (NNPC) during the weekend said a group of private investors would finance the proposed rehabilitation and replacement of its aging downstream assets, especially petroleum pipelines, across the nation.

In a statement released in Abuja, the Group Managing Director, Mallam Mele Kyari, said some of the assets to be replaced were as old as 40 years and long overdue for replacement.

The managing director explained that the investors to be engaged would be doing the financing under the Finance, Build, Operate and Transfer, BOT, Model, adding that the model became imperative given the state of the nation’s downstream infrastructure.

He said: “Some of these assets are as old as 40 years and they are due for replacement; and when you want to do a replacement of this scale, you do need a lot of resources.

“And we know that we require these assets so we decided that we bring in private partners who will fund these pipelines, they will construct it, they will operate it with us and then ultimately they will fully recover their investment from the tariff which we will pay for using these pipelines. And as soon as they recover their cost and their margin, they will hand over these assets back to us.”

According to the NNPC boss, no fewer than 78 firms have already submitted virtual bids indicating their willingness to undertake the rehabilitation of the downstream pipelines, associated depots and terminal infrastructure of the NNPC through the financing model.

He added that the final partners would be selected by the end of the first quarter of 2021.

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