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FTSE 100 Gains as Fed Hints at Rate Cut

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  • FTSE 100 Gains as Fed Hints at Rate Cut

London’s main index inched higher on Wednesday as comments from the United States’ central bank, seen hinting at a rate cut, soothed investor nerves.

The FTSE 100 rose by 0.1 per cent, up for the third straight session, while the mid-cap FTSE 250 rose by 0.3 per cent, according to Reuters.

“Markets are in a state of flux right now, so we are seeing broader swings without a directional shift. I’d be cautious about any rally like this when it seems to be on nothing but fumes,” Markets.com analyst Neil Wilson said.

Following comments by St Louis colleague James Bullard, US Federal Reserve Chairman Jerome Powell said on Tuesday the bank would react “as appropriate” to the fallout from an intensifying Sino-US trade dispute.

Global markets gained in response, interpreting the comments as an indication that the prospect of a rate cut was rising and a shift from the more patient stance the Fed has taken in recent months.

“Not an explicit reference to a cut but enough for this market to latch on to,” Wilson said. “Those betting the farm on the Fed cutting rates this year may be left with a small harvest.”

Housebuilders, seen as particularly vulnerable to any fallout from Brexit, gained after a business survey showed a modest expansion among services firms in May.

However, the bigger picture remained murky as the data also showed almost stagnant British economic growth on Brexit jitters and global growth worries.

Money manager Hargreaves Lansdown fell another 6.8 per cent, pushing this week’s losses to over 11 per cent after well-known money manager Neil Woodford suspended trading in one of his funds on Tuesday.

Following on from the suspension, Woodford said that orders to trade in his flagship fund placed after 1100 GMT last Friday had been rejected, leaving investors unsure of when they would get their money back.

Mid-cap Woodford Patient Capital Trust also shed 6.9 per cent.

Subprime lender Provident Financial soared 16.1 per cent on its best day in more than three months as it succeeded in fending off a hostile 1.3 billion pound bid from smaller rival Non-Standard Finance.

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.

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Central Bank to Promote Zero Balance Account Opening to Drive Financial Inclusion

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Central Bank

Banks Now Accept Zero Balance Account Opening to Deepen Financial Inclusion

In an effort to boost financial inclusion in the country, the Central Bank of Nigeria has said it would start promoting zero balance account opening to encourage and lure the unbanked into the banking system.

The apex bank disclosed this in its report titled ‘Monetary, credit, foreign trade and exchange policy guidelines for fiscal years 2020/2021’.

The report read in part, “As part of its effort towards promoting greater financial inclusion in the country, the bank shall continue to encourage banks to intensify deposit mobilisation during the 2020/2021 fiscal years.

“Accordingly, banks shall allow zero balances for opening new bank accounts and simplify their account opening processes, while adhering to Know-Your-Customer requirements.

“Banks are also encouraged to develop new products that would provide greater access to credit.”

The apex bank said the Shared Agency Network Expansion Facility, launched to deepen provision of financial services in under-served and unserved locations and drive financial inclusion through agent banking, would continue in the 2020/2021 fiscal years.

Banks, mobile money operators and super-agents would also continue to render returns in the prescribed formats and frequency to the CBN.

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Investors Oversubscribed for FGN Bonds by N205.87 Billion in October

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bonds

FG October Bonds Oversubscribed by N205.87 Billion

The Debt Management Office (DMO) has said investors oversubscribed for the Federal Government’s October bonds by N205.87 billion.

The DMO stated this after concluding the monthly FGN bonds auction on Wednesday.

Two instruments of 12.5 per cent FGN March 2035 re-opening 15-year bond and 9.8 per cent FGN July 2045 re-opening 25-year bond were auctioned.

The two bonds of N15bn each with a total auction figure of N30bn received a subscription of N235.87bn.

The 15-year tenor and 25-year tenor bonds received 99 and 67 bids but recorded 21 and 26 successful bids respectively.

The amounts allotted for each of the bids were N20bn and N25bn respectively.

According to the DMO, successful bids for the 15-year tenor bond and 25-year tenor bonds were allotted at the marginal rates of 4.97 per cent and six per cent respectively.

However, it added, the original coupon rates of 12.5 per cent for the 12.5 per cent FGN March 2035 bond and the 9.8 per cent for the 9.8 per cent FGN July 2045 bonds would be maintained.

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Lafarge Africa Sustains Growth in Third Quarter, Reports N53.3bn Revenue

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Lafarge Africa

Lafarge Africa Grows Revenue by 31.4 Percent to N53.3bn Revenue in Q3 2020

Lafarge Africa Plc, a cement manufacturer headquartered in Lagos, sustained its strong growth in the third quarter (Q3) ended September 30, 2020.

In the company’s financial results released on the Nigerian Stock Exchange on Friday, the cement manufacturer’s revenue rose by 31.4 percent from N45.172 billion posted in the third quarter of 2019 to N59.337 billion in the third quarter of 2020.

Similarly, operating profit grew by 7.2 percent from N7.746 billion in the corresponding quarter to N8.302 billion in the quarter under review. This strong performance continues across the board as net income expanded by 2.8 percent to N4.867 billion, up from N4.734 billion posted in the third quarter of 2019.

Lafarge earnings per share rose by 2.8 percent to 30 kobo in the third quarter, again up from the 29 kobo posted in the same period of 2019.

On the outlook for the company going forward, the company said:

 Market demand is expected to remain strong in Q4.
 Naira devaluation and inflation remain a concern in Q4.
 The implementation of our “HEALTH, COST & CASH” initiatives would continue to deliver
improvement in our performance.
 We will maintain a healthy balance sheet.

Speaking on the company’s performance, Khaled El Dokani, CEO, Lafarge Africa Plc, said “Our robust results for the first 9 months reflect the strong recovery of the demand in Q3 and the successful implementation of our “HEALTH, COST & CASH” initiatives. Both have delivered considerable improvement in recurring EBIT, net income and free cash flow, despite the impact of the COVID-19 pandemic and Naira devaluation, particularly in Q3.

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