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South African Stocks Lower as Zuma’s Exit Looms

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President Jacob Zuma
  • South African Stocks Lower as Zuma’s Exit Looms

South Africa’s stocks fell on Thursday as the continuing stalemate over President Jacob Zuma’s future prevailed.

The rand edged firmer but remained above the crucial 12.00 mark against the dollar future as demand capped, Reuters reported.

The fall in stocks was led by mining firm Gold Fields after the firm flagged lower earnings.

At 1440 GMT the rand was 0.04 per cent firmer at 12.0600 per dollar compared to an overnight close at 12.0650.

Early trading locally saw low volumes and the unit drifting around 12.10 before buying interest, as traders in London and later New York came online, spurred the currency towards resistance level around 12.02.

The unit this week has struggled to push beyond last week’s rally to 11.8500, a touch off its 2-1/2 year best, with optimism over the speedy removal of Zuma from office waning, leaving the currency open to profit-taking.

On Thursday leaked comments from ruling African National Congress’s Paul Mashatile revealed the party had been preparing to fire Zuma at the weekend, but a negotiated exit was now more likely as the incumbent dug in.

“As long as the optimism about a fresh start in politics does not fade the rand is likely to trend stronger against the dollar,” said analyst at Germany-based Commerzbank, Alexandra Bechtel, in a note.

Bonds weakened, with the yield for the benchmark government bond due in 2026 was up three basis points to 8.43 per cent.

The country’s dollar bonds fell across the curve on with the 2041 issue down 1.7 cents to a near two-month low as the political deadlock over Zuma’s future continued.

On the bourse, the benchmark Top-40 index fell 0.49 per cent to 49,935 points while the All-Share index lowered 0.44 per cent to 56,636 points.

“It was a big miss, they (the market) expected better results from Gold Fields,” said BP Bernstein trader, Vasili Girasis.

Gold Fields closed down 4.06 percent to 47.76 rand after falling more than five per cent in intra-day trade after the firm warned that profits could be down as much as 12 per cent.

Further losses came from the resource sector which came under pressure amid a stronger dollar, with Lonmin 3.95 percent lower to 11.20 rand and AngloGold Ashanti dropping 2.73 per cent to 121.15 rand.

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

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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