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Financial Services Stocks Boost Market Performance



Stock Investors
  • Financial Services Stocks Boost Market Performance

Trading on the floor of the Nigerian Stock Exchange ended on a positive note on Thursday as financial services stocks boost the NSE All-Share Index significantly, while oil and gas stocks, overall, closed in the red.

The NSE ASI appreciated to 26,559.01 basis points from 26,407.64 basis points, while market capitalisation closed at N9.138tn from N9.086tn recorded on Wednesday.

A total of 199.983 million shares valued at N1.503bn exchanged hands in 3,313 deals.

The financial services sector extended its rally after gains across banking blue chips – Ecobank Transnational Incorporated Plc, United Bank of Africa Plc, Guaranty Trust Bank Plc and Zenith Bank Plc appreciated by 4.99 per cent, 4.85 per cent, 4.45 per cent and 1.59 per cent, respectively.

The consumer goods sector recorded losses following continued pressure on Nigerian Breweries Plc, which posted 0.73 per cent loss.

While the industrial goods sector closed flat, the energy sector retreated as Forte Oil Plc lost 0.25 per cent after it finally bowed to profit taking after notching an impressive return of 140 per cent in a nine session rally. Mobil Oil Nigeria Plc, Oando Plc and Total Nigeria Plc’s shares dropped by fiver per cent, 4.67 per cent and 4.40 per cent, respectively.

Market breadth remained positive with 23 advances and 14 declines.

Speaking on the possible outcome of Friday’s (today) trading, analysts at Vetiva Capital Management Limited said, “We expect the NSE ASI to add more points at week close as investors continue to bid up bellwether stocks.”

Global markets traded mixed after the United States Fed announced a 25 basis points rate increase and revealed a hawkish outlook for 2017. While European markets were higher with banking stocks leading gains, Asian markets were mostly lower save for the Nikkei which rose on the back of a relatively weaker yen.

Meanwhile, the naira stabilised at N305 to a US dollar as increased demand for FGN bonds persisted.

The impact of the net debit to the system following the treasury bond auction which happened on Wednesday was felt in the money market on Thursday, as the open-buy-back and overnight rates advanced to 3.42 per cent and 4.17 per cent, respectively.

The result of the treasury bills Primary Market Auction held on Wednesday showed an oversubscription was recorded for only the 364-day instrument. The stop rates for the instruments were: 91 Day – 14 per cent; 182 Day – 17.50 per cent and 364 Day – 18.68 per cent.

The FGN bonds space was awash with bullish sentiments. However, investors’ appetite for shorter-term instruments waned as the April 2017 bond recorded the highest advancement of 0.48 per cent. Overall, average bond yield fell to 16.51 per cent.

For the third consecutive day, the naira to dollar exchange rate pegged at N305 and N485 in the interbank and parallel foreign exchange markets, respectively.

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.


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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Nigeria’s Foreign Reserves Dip Further to $35.69 Billion



Global debt

Nigeria’s External Reserves Decline by $50.84 Million to $35.69 Billion

Nigeria’s foreign reserves declined by $50.84 million in eleven days to $35.69 billion, according to the latest data from the Central Bank of Nigeria (CBN).

In the data released on the apex bank website, the nation’s foreign reserves stood at $35.75 billion as of October 2, 2020 but depreciated to $35.69 billion on October 13, 2020.

The foreign reserves plunged from $44.25 billion posted on August 19, 2019 to $41.85 billion as of September 30, 2019 before sustaining the downward trend to $36.30 billion on June 19, 2020 despite the Central Bank of Nigeria devaluing the Naira twice to prevent huge capital flight that trailed COVID-19 outbreak.

Weak oil prices amid low demand for the commodity compounded Nigeria’s woes as the central bank continues to struggle to sustain foreign exchange intervention and ease dollar scarcity in a nation that depends on imports for most of its consumption.

However, the plunge in revenue generation alongside low foreign direct investment due to the weak economic outlook and low investment sentiment, negatively impacted the attractiveness of Nigerian assets.

The apex bank, in its monthly report released for May, said “Nigeria’s international reserves decreased marginally from $36.43bn at end-April to $36.19bn at end-May 2020.

“The net decrease in reserves was due to the sales of foreign exchange at the Secondary Market Intervention Sales and Investor and Exporter windows as well as payments to external creditors.

“Thus, the level of import cover for goods and services, decreased from 4.0 months in April to 3.9 months in May 2020, but remained above the IMF threshold of 3.0 months.

“A comparative analysis of reserves per capita in May 2020 showed that Nigeria’s reserves per capita was $176.58, compared to $889.73 for South Africa, $491.10 for Angola, $218.94 for Egypt and $24.10 for Ghana.

It explained that “Sequel to the COVID-19 pandemic, the viability of the external sector in 2020 is expected to deteriorate, given the present worsening current account balance and depletion of external reserves driven, largely, by decelerating export receipts, particularly oil.

“Specifically, the degree of external reserves accumulation is expected to decelerate, as outflows are expected to outweigh inflows.

“As a result, external reserves are expected to lie between $29.9bn and $34.3bn at end-December 2020 (predicated on current declining oil price between $20 and $40).”

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