Business
Stock market set to bounce back after August losses
Stock market set to bounce back after August losses
Investors lost a total of N36 billion in the month of August 2024 reflecting the bearish market that pervaded in the first three weeks, with the Nigerian Exchange, Limited, NGX, major market indicator, All Share Index, declining by 1.2% Month-on-Month, MoM, to close at 96,579.54 points as against 97,774.22 points in July 2024.
The market capitalization measured as the total value of investors’ assets on the Exchange closed the month of August at N55.477 trillion from N55.513 trillion the previous month.
Meanwhile, analysis of the equities market showed that NGX Mainboard Index closed higher in the month under review at 4,790.05 points from 4,744.96 points the previous month, but the NGX 30 Index went down to 3,589.85 points from 3,614.26 points, just as Banking Index declined to 857.21 points from 801.43 points.
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However, the market bounced back last week with Week-on-Week, WoW, trading showing the All-Share index advanced by 0.6% WoW to 96,580.01 points, driven by strong investors’ interest in OANDO which gained 6.7 % following the completion of the acquisition of the Nigerian Agip Oil Company (NAOC) as well as bargain hunting activities in BUA Foods that went up 5.7%. As a result, the Year-to-Date returns close at 29.2%.
Sectoral performance was broadly positive, as the Oil and Gas Index up 8.5%, Insurance Index 5.8%, Consumer Goods Index 3.5%, Banking 2.0% and Industrial Goods Index 0.1%.
Commenting on the market performance, analysts at Cordros Research stated : “In the near term, we believe the absence of a near-term catalyst will likely tilt overall market sentiment toward the negative, and likely drive negative performances consequently. In the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income market.”
In their own reactions, analysts at InvestData Consulting Limited stated: “ We expect mixed sentiment as August set for losses on profit taking and sector rotation as market remain on oversold region. Portfolio repositioning is however continuing, with investors taking advantage of pullbacks to buy into value. This is amid the volatility and pullbacks that add more strength to upside potential. Consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.”
Stock market set to bounce back after August losses
Business
Fresh trouble over supply volume in Dangote refinery petrol
Fresh trouble over supply volume in Dangote refinery petrol
LAGOS — More controversy has emerged in the execution of a sale-purchase deal on premium motor spirit, otherwise known as petrol, between the Nigerian National Petroleum Company Limited, NNPCL, and Dangote Refinery.
NNPCL last weekend said Dangote could only deliver 16.8 million litres out of the 25 million litres it initially agreed with NNPC.
A source at the NNPCL also told Vanguard, yesterday that the refinery is struggling to deliver the 16.8 million litres it promised.
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But with the latest delivery figure it disclosed, Dangote must have significantly surpassed its promised delivery as well as the national demand put at over 40 million litres per day.
This also means that Dangote can make further petrol importation unnecessary.
But against the backdrop of this latest development, Vanguard learned that importation by NNPCL may have intensified with several consignments, totalling over 135 million litres, within three weeks from September 27, 2024, with the latest import arriving Friday.
This also implies a sudden excess supply of petrol barely a few days after the country was suffocated by acute shortage of the product, resulting in a sharp rise in the price.
Speaking to Vanguard on the development, the Group Chief Branding and Communications Officer of Dangote Refinery, Anthony Chiejina, stated: “We have already loaded 111 million litres of petrol and the exercise is ongoing.
“We are refining and have no reason not to load. So, loading is ongoing and we would continue to provide the product to the market.”
Fresh trouble over supply volume in Dangote refinery petrol
Business
$900m FG bond: United Capital leads with 180% subscription
$900m FG bond: United Capital leads with 180% subscription
United Capital Group has successfully led the issuance of Nigeria’s first-ever Domestic FGN US Dollar Bond, securing more than $900 million in funding with over 180 per cent subscription. The bond program, with a 9.75 per cent yield, attracted significant interest from local and international investors, including Nigerians in the diaspora, institutional investors, and non-resident Nigerians, highlighting confidence in Nigeria’s economic growth potential and financial markets.
The bond will be listed on the Nigerian Exchange Limited (NGX) and FMDQ Securities Exchange and proceeds from the issuance will be used to fund key infrastructure projects in critical sectors of the economy.
Commenting on the achievement, Chief Executive Officer of United Capital Group, Peter Ashade, said, “The successful issuance of Nigeria’s inaugural Domestic FGN US Dollar bond is a significant milestone for both the country and United Capital. This transaction aligns perfectly with our vision of transforming the African financial landscape. By providing access to innovative investment opportunities, we are empowering investors and contributing to Nigeria’s economic growth.”
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On his part, the Managing Director of Investment Banking at United Capital Gbadebo Adenrele, described the transaction as a “landmark moment for Nigeria’s capital market.” He added, “As a pioneer in this class of transactions, United Capital has laid the foundation for more significant capital raises by the Nigerian Government, other African sovereigns, and major corporate issuers.”
United Capital was the Lead Issuing House and Coordinator for the transaction, with Africa Finance Corporation serving as the Global Coordinator. Other firms involved include Meristem Capital, Stanbic IBTC Capital, Vetiva Advisory, and several other financial institutions and legal advisers.
This bond issuance reinforces United Capital’s position as a leading player in Africa’s financial markets, following recent successes like the listing of Transcorp Power on the Nigerian Exchange Limited and the issuance of Sierra Leone’s first local currency corporate bond.
$900m FG bond: United Capital leads with 180% subscription
Business
Naira loses N100 to US dollar at official market
Naira loses N100 to US dollar at official market
The Naira lost more than N100 against the U.S. dollar at the official window, despite a slower headline inflation rate in August.
Data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) highlighted that the local currency was sold at N1,656/$1, higher than the N1,546/$1 recorded on Monday.
However, in the parallel market, the Naira appreciated by N5, trading at N1,660/$1 compared to the previous rate of N1,665/$1.
This marks the second consecutive month of lower headline inflation, attributed to reduced food prices during the harvest season.
According to the Nigerian Bureau of Statistics (NBS), headline inflation for August was 32.15%, down from 33.40% in July. Food inflation also decelerated, reaching 37.52% compared to 39.53% in July 2024.
U.S. Dollar Index Gains Momentum Ahead of Fed Meeting
On Tuesday, the U.S. dollar appreciated against most currencies, including the Naira, as higher-than-expected U.S. retail sales data was released, raising the possibility of a less aggressive Federal Reserve.
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The U.S. Dollar Index, which tracks the dollar against a basket of six currencies, showed a slight increase, recovering from earlier lows this year. While some market pricing suggests a 50-basis point rate cut, most analysts predict a more modest 25-basis point cut.
The U.S. labor market continues to strengthen, suggesting that further relaxation of monetary policy could support economic growth. However, this high optimism may indicate that the Federal Reserve might continue raising interest rates, albeit at a slower pace.
The U.S. Commerce Department reported a modest 0.1% rise in retail sales in August, fueling hopes that the economy has stabilized through much of the third quarter.
Investors are now awaiting the Federal Reserve’s decision on interest rates, expected at the conclusion of its policy meeting later today. The last time the Fed cut rates was in response to the COVID-19 pandemic in March 2020.
While Nigeria is expected to see foreign capital inflows later in the year, it is unlikely the Federal Reserve will make aggressive rate cuts, given the current market conditions.
The dollar index, which measures the dollar against major currencies like the yen and euro, increased by 0.199% to 100.90 on Tuesday.
Fed funds futures currently reflect a 63% chance of a 50-basis point rate cut, up from 30% a week ago, while the likelihood of a 25-basis point cut is at 37%. These probabilities have shifted after reports reignited discussions of potential aggressive easing measures.
Other U.S. economic data released on Wednesday suggest that the Federal Reserve may find it challenging to implement aggressive rate cuts. U.S. business inventories increased by 0.3% in July, and factory production rebounded in August.
Present fundamentals indicate that the market is already pricing in some rate cuts over the next several months, though some analysts warn that the market may be moving ahead of itself.
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