- Nigeria Recorded N104Billion Negative Trade Balance in Q3
The National Bureau of Statistics (NBS) has disclosed that Nigeria recorded a negative trade balance of N104 billion in third quarter of this year.
NBS, which newly released the data in its ‘3rd Quarter 2016 External Trade News: Trade Intensity Index/Re-Exports Analysis’, put the total value of Nigeria’s external trade in the third quarter at N 4.721.9 trillion. It pointed out that the figures consisted of exports worth N2.309 trillion and imports worth N2.413 trillion, indicating a slight negative trade balance of N104 billion.
Giving a breakdown, it noted that, “As in previous quarters, the sector, which contributed the most to total trade was crude oil, which was all for exports,” stating that, “In total this sector accounted for N1,944 billion, or 41.2per cent of the total trade in the third quarter of 2016.”
“The manufacturing sector had the second largest share of total trade, accounting for N1,218.3 billion or 25.8per cent of the total, but in contrast to Crude Oil, was dominated by imports. Other Oil products was also a prominent sector, and accounted for N1,029.4 billion, or 21.8per cent of the total. The remaining sectors were a relatively small proportion of total trade. Raw Materials accounted for 6.37per cent of the total, Agriculture accounted for 4.43per cent, Solid minerals accounted for 0.43per cent, and trade in Energy goods was negligible at N0.1 billion,” it added.
On the export intensity index with major trading partners, the statistical agency explained that, the index “compares the share of exports to each country in Nigeria’s total exports, with the share of world exports going to that country, and therefore gives a measure of the importance of that country to Nigeria as an export destination.”
Accordingly, it noted that, “A higher number denotes a stronger relationship, and an index of one indicates that exports to that country are what would be expected given global trade patterns. In quarter three, Nigeria had a particularly strong export relationship with India, with export intensities of 5.6, 8.3 and 3.9 July, August and September respectively.
“Spain was also a key export market with intensities of 3.6, 4.4 and 1.9 during the same months. Despite more exports going to the US than Spain, this was due to the importance of the US as a global market, and the country nevertheless had lower intensities, of 1.2, 0.7 and 0.9 . France and the Netherlands were the other two largest export destinations, and recorded intensities of 0.8, 3.6 and 0.6 for France, and 1.1, 1.8 and 0.9 for the Netherlands.
As for the import intensity index with major trading partners, the NBS noted that, “This index mirrors the export intensity index, and measures the importance of Nigeria as an export destination for other countries. “
According to the agency, “Nigeria’s major trading partners in terms of import were China, Belgium, Netherlands, United States and India. During the quarter, the import intensity of Nigeria with China was 1.09, for July 1.08 for August and 0.65 for September.
These figures, it explained, were around one, and therefore indicated that China’s exports to Nigeria reflected the global share of imports accounted for by Nigeria.
“By contrast, Belgium – the next leading consumer of Nigeria’s products – showed high import intensities with Nigeria, of 4.35, 3.54 and 2.19 for the months July to September, denoting a stronger relationship. The Country’s import intensities were also high with India (2.57, 2.49 and 1.28) and the Netherlands (4.38, 2.57 and 1.04) during the same months.
“However, the import intensity of Nigeria with United States and Spain were lower, with indices less than one other than for Spain in August. This is possibly a result of the mix of products imported from these countries, which may have been affected more by the CBN import regulations,” it added.
Besides, in terms of the major import partners, NBS stated that, “As in previous quarters, the country that Nigeria imported the most goods from in the third quarter of 2016 was China. In total, China accounted for N478.7 billion, or 19.8 per cent of total imports.”
Nevertheless, it added, “this is a lower share of total imports than the country accounted for in the previous quarter.”
“Belgium and the Netherlands were the next most important import partners, and accounted for N331.1 billion (13.7 per cent) and N299.7 billion (12.4 per cent) respectively. They were followed by USA, India and France, which recorded N165.5 billion (6.86 per cent), N121.3 billion (5.03 per cent) and N91.3 (3.78 per cent) respectively,” it pointed out.
Finances of International Oil Companies Suffered in the Second Quarter
Finances of IOCs Plunged Amid COVID-19 Pandemic in the Second Quarter
Global leading oil companies suffered substantial losses in the second quarter, according to their various financial statements published in recent weeks.
On Thursday, Royal Dutch Shell posted $18.9 billion loss in the second quarter of 2020, far below the profit of $3.5 billion posted in the same quarter of 2019.
This, the company attributed to the plunge in global oil prices in 2020 due to the COVID-19 pandemic. Shell warned that oil demand remained uncertain, adding that it had cut its exploration plans for this year from about 77 wells to just 22.
This was after the price of Brent crude oil plunged to $15 per barrel during the peak of COVID-19 pandemic while the price of West Texas Intermediate crude oil dipped to -$37 per barrel, the lowest on record.
Also, the company said it has reduced its capital expenditure for the year from the initial $25 billion to $20 billion amid a plunge in revenue and demand for the commodity.
Similarly, ExxonMobil reported a $1.1 billion loss, its biggest decline on record. The oil company also announced it would be lowing spending by 30 percent in 2020 to about $23 billion.
Among the various oil companies posting negative financial statements for the quarter was Chevron Corporation, the company reported $8.3 billion decline in the second quarter of the year. The lowest ever posted by the oil giant in almost three decades.
Chevron, therefore, warned that the havoc caused by COVID-19 pandemic in the energy sector might continue to weigh on earnings.
“While demand and commodity prices have shown signs of recovery, they are not back to pre-pandemic levels, and financial results may continue to be depressed into the third quarter of 2020,” Chevron’s Chairman and Chief Executive Officer, Michael Wirth, said.
Oil Halts Bullish Run as US Oil Inventories Rises Than Expected Last Week
Oil Caps Gain as US Oil Inventories Rises Than Expected Last Week
Oil prices halted its bullish run on Wednesday after data from a group known as the American Petroleum Institute (API) revealed that U.S. crude inventories expanded by 7.5 million barrels last week, higher than the expected 2.1 million barrels.
This surged in oil inventories damped the recent increase in oil prices brought about by the renewed hope in COVID-19 vaccines and the 750 billion Euro ($859 billion) stimulus announced by the European Central Bank (ECB) to prop up economies – within the region – affected by the COVID-19 pandemic.
Brent crude oil, against which Nigerian crude oil is priced, rose to $44.86 barrel per day on Tuesday before pulling back to $43.80 on Wednesday during the London trading session.
The US West Texas Intermediate (WTI) crude oil rose as high as $42.48 per barrel on Tuesday before hitting $41.31 a barrel on Wednesday following the release of the data.
“Crude’s rally hit a brick wall after the API report showed a sharp rise in stockpiles and on President Trump’s warning that the coronavirus pandemic in the U.S. is likely to worsen,” said Edward Moya, senior market analyst at OANDA in New York.
“The crude demand outlook just got a double whammy with what could be the biggest rise in stockpiles since late May if confirmed by the EIA report tomorrow and on Trump’s downbeat virus briefing,” Moya said.
The official crude oil inventories data would be released on Wednesday by the US Energy Information Administration (EIA).
Sub Saharan Africa Mergers and Acquisition Hits US$10.3bn in Q1 2020
Sub Saharan Africa M&A Hits US$10.3bn in Q1 2020
South Africa – Refinitiv today released the 2020 first-half investment banking analysis for the Sub-Saharan Africa. According to the report, investment banking fees in Sub-Saharan Africa reached an estimated US$64.5 million during the second quarter of 2020, half the value recorded during the first quarter of 2020 and the lowest quarterly total since Q1 2012.
Around US$196.1 million worth of fees were earned in the region during the first half of 2020, down 27% from last year and a six-year low with fee declines recorded across M&A advisory, debt capital markets underwriting, and syndicated lending. Debt capital markets underwriting fees declined 45% to US$26.2 million, marking the lowest first half year total for bond fees in the region since 2016. Advisory fees earned from completed M&A transactions generated US$43.4 million, down 50% year-on-year to the lowest first half level since 2005, while syndicated lending fees fell 36% to a six-year low of US$71.5 million. Equity capital markets underwriting fees increased 164% year-on-year to US$55.1 million.
Government & Agency fees accounted for 26% of total investment banking fees earned in the region during the first half of 2020, up from 14% during the same period last year. South Africa generated the most fees in the region during the first six months of the year, a total of US$108.4 million accounting for 55%, followed by Nigeria with 13%. JP Morgan earned the most investment banking fees in the region during the first six months of 2020, a total of US$23.1 million or an 11.8% share of the total fee pool.
As for Mergers and Acquisitions (M&A), the value of announced M&A transactions with any Sub-Saharan African involvement reached US$10.3 billion during the first six months of 2020, 44% less than the value recorded during the same period in 2019, and a two-year low. The number of deals declined 18% over the same period. After just US$424.5 million worth of deals were recorded in April, marking the lowest monthly M&A total since October 2005, activity increased for two consecutive months to reach US$3.0 billion in June, a nine-month high.
Deals with a Sub-Saharan African target declined 76% by value to an eighteen-year low of US$3.2 billion, as domestic M&A within the region declined 71% from last year and the combined value of inbound M&A deals reached just US$1.2 billion, the lowest first-half level in more than two decades. The largest deal involving a Sub-Saharan African target was announced at the end of May – Afrimat’s US$644.3 million acquisition of South African mine operator Unicorn Capital Partners.
Deals in the materials sector accounted for 46% of Sub-Saharan African target M&A activity during the first six months of 2020. South Africa was the most targeted nation, followed by Uganda and Nigeria. Outbound M&A totalled US$3.6 billion during the first six months of 2020, 67% more than the value recorded during the same period in 2019, despite a 22% decline in the number of deals. With advisory work on eleven deals with a combined value of U$1.7 billion, JP Morgan holds to the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during the first six months of 2020.
In the Equity Capital Market space, Sub-Saharan African equity and equity-related issuance totaled US$1.5 billion during the first half of 2020, 16% more than the value recorded during the same period last year, but lower than every other first half total since 2009. The number of deals recorded declined by 29% to the lowest first half tally since 2009.
Only one initial public offering was recorded during the first six months of the year. Malawian telecoms company, Airtel Malawi, raised US$28.7 million on the Malawi Stock Exchange in February. JP Morgan took first place in the Sub-Saharan African ECM underwriting league table during the first six months of 2020.
As for Debt Capital Markets, the African Development Bank raised $3 billion in a “Fight Covid-19” social bond at the end of March to help alleviate the economic and social impact the Coronavirus pandemic will have on livelihoods and economies in the region. With this deal, and Ghana’s US$3 billion Eurobond in February, Sub-Saharan African debt issuance totalled US$8.9 billion during the first quarter of 2020, the second-highest first quarter DCM total in the region of all-time. Only US$1.9 billion was raised during the second quarter, taking the value raised during the first six months of 2020 to US$10.7 billion, down 14% from last year and a four-year low. Deutsche Bank took the top spot in the Sub-Saharan African bond underwriter ranking during 1H 2020 with US$1.7 billion of related proceeds, or a 16% market share.
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