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Investors Lose N432bn as Stocks Value Drops

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  • Investors Lose N432bn as Stocks Value Drops

The value of shares held by investors in the Nigerian capital market (equities category) fell by N432bn in the third quarter of 2016 when compared with the performance of the market in the second quarter.

Within the space of three months, investors in the Nigerian capital market have lost N432bn, statistics from the Nigerian Stock Exchange have indicated.

The data specifically showed that the NSE’s market capitalisation slid from N10.165tn to N9.733tn in the third quarter of 2016.

Experts said the continued drop in the value of most equities in the nation’s capital market must have dampened the spirits of investors.

Between September 28, 2015 and September 28, 2016, the NSE’s market capitalisation dropped by N873bn from N10.572tn to N9.699tn. The All-Share Index also fell to 28,236.23 basis points from 30,762.29 basis points.

There was also a significant drop in the volume of transactions in the market, as this dropped to 159.046 million from 266.652 million.

In the same vein, the value of market transactions and deals plummeted; compared to last year’s figures. In 2015, while the value of transactions and market deals stood at N3.179bn and 3,366, respectively, the figures dropped to N1.454bn and 3,237, respectively in the third quarter of 2016.

Experts noted that the fall of the nation’s capital market indices had persisted for some period.

For instance, between August and September this year, the stock market recorded a drop in liquidity to the tune of N0.411bn.

The drop reflected on the volume and value of shares traded in the period under review, which also plummeted.

The NSE ASI as of June 30, 2016 was 29,597.79 basis points; but at the close of the third quarter (September 30), the NSE ASI stood at 28,335.40.

There was a slide in the turnover of shares traded on the floor of the NSE during the period under review. For instance, the third quarter report showed that a total of 1.183 billion shares worth N10.300bn in 16,522 deals were traded in September 2016 by investors.

This, however, was in contrast with a turnover of 1.361 billion shares worth N10.711bn in 16,070 deals traded in August 2016 by investors on the Exchange’s floor.

Share turnover is a measure of stock liquidity calculated by dividing the total number of shares traded over a period by the average number of shares outstanding for the period. Thus, the lower the share turnover, the less liquid the shares of companies quoted on the Exchange, vice versa.

The National Bureau of Statistics had in the second quarter of this year said the country recorded its lowest investment inflow in nine years.

The participation of foreign investors in the NSE fell by 15 per cent between January and February this year, according to data from the bourse.

The NSE had put the level of participation by the foreigners at 51.57 per cent for January 2016. But in February 2016, the number dropped to 36.48 per cent.

Investors in the country’s capital market (equities category) lost over N1.053tn in the first quarter of 2016.

Within three months (January to March), the equities market had depreciated by 10.79 per cent, according to the NSE data.

As of the first day of trading this year (January 4), the NSE’s market capitalisation stood at N9.757tn, while the ASI was 28,370.32 basis points.

But as of the last day of trading in the first quarter of 2016 (March 31), the market capitalisation and ASI had crashed to N8.704tn and 25,306.22 basis points, respectively.

In the light of these developments, the Chartered Institute of Stockbrokers said although Nigeria had been an attractive domain for investment, there was the need for well-thought-out policies to drive businesses and the economy at large.

The institute said foreign investors would be further encouraged if the country could be consistent with its monetary policies in line with the global best practices.

It noted that the participation of local investors remained very critical to the growth of the market, adding that they (local investors) were the people that would bring stability to the equity market.

Commenting on the current market situation, the Chief Executive Officer, Alpha African Advisory, Sanyade Okoli, said the Nigerian equities market lacked the needed depth.

According to her, the market needs a significant inflow of funds to make it relatively stable to withstand traditional shocks that will always confront it.

She stressed that the market had yet to recover from the global financial crisis of 2007/2008 given its current value.

A former Managing Director, Asset Management Corporation of Nigeria, Mustafa Chike-Obi, in an interview, said the value of most equities in the country’s capital market had significantly been eroded, leaving most investors with little or nothing in terms of investment worth.

This development, he noted, had given rise to investor scepticism as far as the Nigerian equity market was concerned.

He described the situation as pathetic and grave, saying all stakeholders must come together to decide the way forward and redirect the trends in the market.

Chike-Obi said the beating the stock market had received would be better understood if the stock market value could be graded in dollar terms, considering the current foreign exchange rate.

“There is the need to encourage investors. Nobody is going to put their money in a place where they will lose the money. This is one thing that must be changed for us to move forward,” he added.

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

Banks’ Credit to Economy Hits N19.33 Trillion in August

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Godwin Emefile

Deposit Money Banks Credit to Economy Rose to N19.33 Trillion in August

The total credit facility to the economy rose to N19.33 trillion in the month of August.

The Central Bank of Nigeria-led monetary committee disclosed on Tuesday after the nation’s monetary policy committee meeting.

The committee attributed the improvement to the 65 percent loan-to-deposit ratio policy implemented to compel the nation’s deposit money banks to join central bank efforts at growing the real sector of the economy.

Godwin Emefiele, the Governor of the Central Bank of Nigeria, who spoke during the meeting said “The bank’s policy on Loan to Deposit ratio also resulted in a significant growth in credit to various sectors from N15.57tn to N19.33tn between end-May 2019 and end-August 2020, an increase of N3.77tn.

“This growth in credit was mainly to manufacturing (N866.27bn), consumer credit (N527.65bn), oil and gas (N477.65bn), agriculture (N287.11bn) and construction (N270.97bn).”

On monetary aggregates, broad money supply (M3) rose to 6.93 per cent (year-to-date) in August 2020 from 5.23 per cent in July 2020, reflecting the increase in both Net Foreign Assets and Net Domestic Assets.

He said total domestic credit grew by 6.94 percent in August 2020, lower than the 9.43 percent recorded in July 2020.

The committee reduced the nation’s benchmark interest rate by 100 basis points to 11.5 percent, down from the previous 12.5 percent.

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Finance

Emerging Cities Take on Established Hubs for Graduates Seeking a Career in Finance

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Graduates Seeking a Career in Finance Prefer Dubai to Start Their Career

Dubai is the number one global destination for graduates who successfully complete the flagship graduate programme at one of the world’s largest independent financial advisory organisations.

On passing the intensive scheme, deVere Group routinely asks graduates in which location within the Group’s global network of offices they would like to start their international financial services career. This year, 36% have responded with Dubai.

The second most popular is London (25%); Hong Kong is third (14 %); Mexico City is fourth (13%) and Moscow is fifth (6%).

The remaining 6% is made up of other destinations including Shanghai, Geneva, Paris, and Abu Dhabi.

deVere Group CEO and founder Nigel Green comments: “This survey highlights that the next generation of financial services professionals are open to look beyond the traditional and more established global financial hubs.

“The order of the top destinations changes with each group of grads we take on, but Dubai, London, and Hong Kong are typically in the top five somewhere.

“This is because, quite understandably, these global hubs of finance, commerce and technology represent centres of enormous possibilities for ambitious individuals about to embark on careers as international wealth-advisory and fintech professionals.

“There are some common traits amongst these cities, including that English is commonly spoken, they are politically and economically stable, there is a high level of internationally-minded high net worth individuals, and by relocating to these places one can usually expect comparatively high financial rewards.”

He continues: “What is different this year is that for the first time emerging financial hub cities are making the top five. Mexico City and Moscow are now actively competing for top talent with well-established international financial centres like Shanghai, Geneva and Tokyo.

“All these global destinations are unique and differ from each other in terms of the lifestyle they offer and in terms of clients’ expectations, economic environments and regulatory conditions.

“With each of the top five cities offering unique opportunities and challenges, each one attracts grads who have often quite markedly different strengths and weaknesses, skill sets and aspirations,” notes Mr Green.

“The results of this survey suggest that despite the pandemic, talented young people seeking a rewarding career are keen to look for opportunities internationally.”

The deVere CEO concludes: “With a globally-focused outlook from the wealth advisers and fintech professionals of the future, we can expect this trend of emerging hub cities to take on stalwart destinations to continue for the foreseeable future.”

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Finance

Adesina, Godwin Emefiele, Others to Deliver Keynote Address at ASA 2020

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Akinwumi Adesina

Adesina and Godwin Emefiele to Deliver Keynote Speech at Agriculture Summit Africa (ASA) 2020

The President of the African Development Bank (AfDB), President Dr. Akinwunmi Adesina, is expected to deliver the keynote address at the 2020 Agriculture Summit Africa (ASA) holding this week.

The yearly summit organised by Sterling Bank is titled ‘Fast forward agriculture: Exploiting the Next Revolution’ this year.

According to the organisers, participants were expected to log in online while a few others would be in Lagos and Abuja studios.

In a statement released on Tuesday, Yemi Odubiyi, the Executive Director of Corporate and Investment Banking, Sterling Bank said other dignitaries were expected to deliver goodwill messages at the summit.

Some of the names mentioned were the governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele; Minister of Agriculture and Rural Development, Alhaji Muhammad Sabo Nanono; Cross River State Governor, Prof. Ben Ayade; his Kebbi counterpart, Senator Atiku Bagudu; and the Oniru of Iru Kingdom, Oba Abdulwasiu Omogbolahan Lawal.

Director, Advocacy and Country Alignment Function (ACAF), Director-General’s Office, International Institute of Tropical Agriculture (IITA), Dr. Kwasi Attah-Krah, is expected to deliver another keynote address on the second day.

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