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Market Rebounds, eTranzact, Learn Africa, Unilever, Others Appreciate

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  • Market Rebounds, eTranzact, Learn Africa, Unilever, Others Appreciate

The Nigerian Stock Exchange All-Share Index turned slightly positive in Wednesday’s session, halting a three-day loss as most key sectors closed positive.

The NSE ASI rose by 0.08 per cent as 20 stocks appreciated amid 17 losers.

A total of 159.989 million shares worth N1.741bn exchanged hands in 2,396 deals.

The NSE market capitalisation rose to N9.315tn from N9.307tn, while the ASI closed at 27,120.39 basis points from 27,098.52 basis points.

The consumer goods sector added the most points to the ASI following gains in Unilever Nigeria Plc by 4.6 per cent, Nigerian Breweries Plc by 0.34 per cent and Dangote Sugar Refinery Plc by 4.5 per cent.

The financial services sector inched 0.14 per cent higher amid advances in United Bank of Africa Plc by 1.67 per cent, Diamond Bank Plc by 2.73 per cent and Union Bank of Nigeria Plc by 0.44 per cent.

However, the industrial sector stocks closed flat, while the oil and gas sector dropped by o.65 per cent owing to a slide in Forte Oil Plc by 2.99 per cent.

Global markets traded mostly lower amidst a raft of disappointing earnings. Notably, Apple Incorporated posted its first full year revenue decline since 2001.

On what would shape the next trading session, analysts at Vetiva Capital Management Plc said, “We highlight that a couple of earnings of key stocks were released after the session close, and believe the market will open to investor reaction to these results in the session ahead.”

Meanwhile, the Central Bank of Nigeria held an Open Market Operation auction for a third successive day, selling N4.8bn and N49bn on the 183-day and 358-day bills (N30bn on offer for each) at respective stop rates of 18 per cent and 18.5 per cent (effective yields: 19.78 per cent and 22.60 per cent).

Despite this, the interbank call rate moderated a marginal 17 basis point to 10.50 per cent. At the foreign exchange interbank market, the naira depreciated N1.78 against the dollar to settle at N306.78 at the spot market whilst the one year forward rate remained unchanged at N348.14.

Bearish sentiment persisted in the Treasury bills space as yields climbed 22 basis points on average. Sell pressure was concentrated on the short-mid dated maturities with yields on the 22 day-to-maturity, 113DTM, and 148DTM bills rising to 16.12 per cent, 18.64 per cent, and 18.64 per cent, respectively.

The bond market also traded mildly bearish, with yields on benchmark bonds up two basis points on average. The largest advances were recorded on the 15.54 per cent FGN February 2020 and 14.20 per cent FGN March 2024 bonds, which rose four basis points each to settle at 14.99 per cent and 15 per cent, respectively.

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 long experience in the global financial market.

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Investment

Barclays Tell High Net Worth Investors to Shun Africa and Other Emerging Economies

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Barclays to High Net Worth Clients, Stay Off Africa and Other Emerging Economies

Barclays, one of the world’s largest investment banks, has started advising high net worth clients to stay off Africa and other emerging economies.

According to Barclays, despite the recent recovery noticed in emerging-market stocks, investors are better off avoiding the risks that still abound in emerging nations. Barclays Plc, however, advised high net worth clients to focus on U.S equities despite the S&P’s breakneck rally.

The investment bank said emerging economies do not have enough fiscal buffers to spend their way out of the COVID-19 pandemic and will likely continue to struggle in the near-time compared to the US with 12 percent of gross domestic product fiscal-support.

It said the huge US stimulus may halt rebound in emerging-markets stocks as more money is expected to flow into the world’s largest economy and its European counterparts.

“Compared to the U.S., emerging-market economies appear more vulnerable,” said Haider, the London-based managing director and head of global growth markets. “Their central banks have less room to maneuver, their governments may not be able to provide unlimited support and equity markets, given their sector mix, can be more challenged by an economic slowdown.”

Barclays added that even after 33 percent rebound in stocks of emerging markets since the panic selloff subsided in March, stocks are still down by 9 percent from year-to-date while the US S&P 500 stocks are up by 45 percent. Presently, their stocks trading at a 36 percent discount to US stocks, up from 25 percent three months ago.

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Economy

Crude Oil Rises to $43.1 Per Barrel on Production Cuts Extension

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  • Crude Oil Hits $43.1 Per Barrel Following OPEC’s Production Cuts Extension

Brent crude oil, against which Nigerian oil price is measured, rose by 1.25 percent on Monday during the Asian trading session following OPEC and allies’ agreement to extend crude oil cuts to the end of July.

OPEC and allies, known as OPEC plus, agreed to extend production cuts of 9.7 million barrels per day reached in April to July on Saturday.

In the virtual conference, delegates agreed that members, including Nigeria and Iraq presently struggling to attain a 100 percent compliance level must keep to the agreement or be forced to do so in subsequent months.

Nigeria, Iraq and others failed to keep to the cartel’s agreement in May after reports show that Nigeria only managed to attain a 19 percent compliance level during the month while Iraq struggled to attain just 38 percent in the same month.

Russia and Saudi Arabia, the two largest producers of the group, warned members to stick to the agreed quota if they want to rebalance the global oil market.

While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.

The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.

Earlier on Monday, Brent crude oil hits $43.1 per barrel, more than a month record-high, before pulling back slightly to $42.83 per barrel.

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Economy

Gold Dips by 2 Percent on Better Than Expected Job Report

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  • Gold Dips by 2 Percent on Better Than Expected Job Report

Gold prices declined by 2 percent on Friday following a better than expected US non-farm payroll report.

The report showed an increase of 2.5 million payroll numbers against a decline of 7.5 million predicted by many experts.

The surprise number boosted investors’ confidence in US recovery as many dumped their haven investment (gold) for the stock market.

“We had significantly stronger-than-expected U.S. payroll numbers – an increase of 2.5 million versus an expectation of a decline of 7.5 million – that 10-million swing has brought forward expectations of the economic recovery in the United States,” said Bart Melek, head of commodity strategies at TD Securities.

Spot gold immediately declined by 1.9 percent per ounce to $1,678.81 while the U.S. gold futures slid 2.6 percent to settle at $1,683.

Gold was also being pressured by stronger yields and a slightly firmer dollar, “meaning the opportunity cost to hold gold in the portfolio has gone up,” Melek added.

The surprise didn’t stop there, US Dow Jones was up 614 points despite the protest going on the US and US-China tension.

Also, NASDAQ rose by 29 points while the S&P index added 50 points increase.

Note: Investors generally increase their investments in gold and other haven assets during a crisis to avert risk exposure and do the opposite once they sense a better economy.

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