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West African Consumer Confidence Drop Slightly in Q3, 2019

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  • Ghanaian consumer confidence declines by four points
  • Nigerians consumer confidence also subdued

Lagos, 11 December 2019 – Ghana’s latest Nielsen Consumer Confidence Index (CCI) for the third quarter of 2019 shows a slight drop to 114 from the previous quarter’s buoyant 118, while Nigeria’s CCI has also decreased by five points to 122. These two sets of results present a fairly stable, albeit a slightly less positive picture of consumer sentiment across West Africa compared to the previous quarter.

Looking at Ghana’s overall performance, Nielsen Market Lead for West Africa, Yannick Nkembe comments; “The initial optimism experienced at the beginning of the year is waning in Ghana owing to the concerns around the economy. Though inflation levels dropped, these have not shown a meaningful impact at the ground level and Ghanaians continue to feel the pressure. Consumers have become cautious of spending as they are not certain of future prospects.”

This more subdued outlook is reflected by Ghanaian consumers’ curtailed view of their job prospects, with a substantial 12 point decrease to 51% saying job prospects will be excellent or good in the next 12 months. In terms of the state of their personal finances over the next 12 months, 72% say they are excellent or good, down from 74% in the last quarter. The number of Ghanaian consumers who feel now is a good or excellent time to purchase the things they need or want, has also seen an inconsequential drop quarter on quarter, from 46% to 45%.

Looking at whether Ghanaians have spare cash, only 42% say yes, down a substantial 10 points from the previous quarter. Once they meet their essential living expenses, the highest number of consumers (82%) still say they will put their spare cash into savings, followed by 66% on home improvements/decorating and 59% who will invest in stocks and mutual funds.

When looking at the factors that are having a negative impact on Ghanaians outlook, the top concerns over the next six months are increasing food prices (26%) followed by work/life balance at 22%, the economy and tolerance towards different religions, both at 18%, and job security coming in fourth at 16%.

In light of their outlook, more than three quarters (72%) of Ghanaians have changed their spending to save on household expenses compared to the same time in the previous year. The top three actions they have taken to save money are delaying the replacement of major household items (55%), looking for better deals on loans/insurance/credit cards (54%) and spending less on new clothes (53%).

A drop in sentiment in Nigeria

The third quarter also saw a drop in sentiment in Nigeria with consumer confidence decreasing by five points to 122, albeit it is still higher than the same quarter last year (118).

Commenting on the recent decline in consumer sentiment, Nielsen MD for Nigeria, Ged Nooy says; “Nigerians are experiencing a subdued confidence level considering that inflation has started to rise again and the proposed VAT increase bill, which is making people cautious. Furthermore, the rising sovereign debt and the anxiety around further Naira devaluation, continued to impact consumer sentiment in Nigeria in the third quarter.”

Looking at the consumer picture, Nigerians immediate-spending intentions has shown a large decline; with only 41% of consumers (versus 54% in the previous quarter) saying now is a good or excellent time to purchase what they want or need. Their perception around job prospects has also declined, with 55% viewing them as excellent or good – a five point drop from the previous quarter.

In addition, sentiment around the state of personal finances has also shown a decline, with 76% Nigerians agreeing their state of personal finances will be excellent or good over the next year, a six point drop from the previous quarter.

Looking at whether Nigerians have spare cash to spend, 47% said yes, versus 51% in the previous quarter. In terms of their spending priorities once they meet their essential living expenses, 76% would invest in home improvements/decorating, 72% would put their spare cash into savings and 62% say they will invest in shares/mutual funds.

Looking at the top concerns for Nigerians over the next six months, work/life balance tops the list with 28% – a one point increase compared to the previous quarter. This is followed by concerns around increasing food prices at 22% (the same as Q2’19) and tolerance towards different religions (19%) superseding the economy, which is now at 16% – a four point decrease compared to the previous quarter.

Elaborating on these results, Nooy says; “Nigerian consumer sentiment dropped this quarter, however it is still quite high compared to the cut off of 100, where anything above 100 reflects a positive consumer confidence. The key for marketers and retailers is to understand these fluctuating consumer sentiments and quickly adapt to the consumer’s needs.”

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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Finances of International Oil Companies Suffered in the Second Quarter

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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.

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Oil Halts Bullish Run as US Oil Inventories Rises Than Expected Last Week

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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.

UKOilDaily 5

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).

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Sub Saharan Africa Mergers and Acquisition Hits US$10.3bn in Q1 2020

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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.

Africa's equity capital marketOnly 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.

Africa's Debt Capital Market Q1, 2020

Africa's M&A Q1, 2020

Africa’s M&A Q1, 2020

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