Stock Exchange

Stocks shed N245bn: Investors go for attractive yields

by with No Comment Businessfinance

Investors in Nigeria’s equities market became worse off in the trading week ended March 5 after booking about N245billion loss as funds moved out of equities due to impressive yields in the fixed income (FI) market.

READ ALSO: AfDB provides $400,000 grant for Nigeria’s SEC

Investors are now battling with the decision to either buy into the recent dip or to stay out of the market pending when there are major positives capable of reversing the negative trend.

The market disappointed despite significant increase in prices of crude oil –Nigeria’s major source of dollar revenue, coupled with the attractive dividend yields of a number of dividend-paying counters.

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation moved from week-open highs of 39,799.89 points and N20.823 trillion respectively to close the review week at 39,331.61 points and N20.578trillion.

The NSE ASI closed negative in four out of the five-day trading week, causing the benchmark performance indicator of the Bourse to decrease by 1.18percent week-on-week (WoW).

This negative was fueled mostly by remarkable losses in consumer goods, insurance and oil & gas stocks as evidenced in their sectoral indices.

NSE-30 Index which tracks the top 30 companies in terms of market capitalisation and liquidity decreased by 1.46percent in the review trading week.

Except NSE Industrial index which rose by 1.39percent, other sectoral indices closed in red –NSE Consumer goods index (-6.30percent), NSE Insurance index (-4.99percent), NSE Oil & Gas (-2.16percent), NSE Pension (-2.83percent), and NSE Banking (-1.94percent).

The stock market of Africa’s largest economy had bullish run in 2020 with a record-breaking return of +50percent amid unattractive yields in the fixed income space, placing it as world’s best.

Likewise, the market kicked off 2021 with similar trend, gaining 5.3percent in January, but since February (-5.6percent) it has maintained a southward direction. As at close of trading on Friday, the market has lost 2.33percent of its year-open value.

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FUGAZ INVESTORS

FUGAZ investors lose N34.68 billion in trading

by with No Comment News

Market capitalization of the top five banks dropped to N2.52 trillion as at close of business on the 4th of March 2021.

READ ALSO: CBN extends forbearance for intervention loans by another 12 months

Investors in the elite banks in Nigeria- FBNH, UBA, GTB, Access and Zenith have lost a total of N34.68 billion in a single trading session, amid sell-offs.

According to data from the Nigerian Stock Exchange (NSE), the market capitalization of the top five banks dropped to N2.52 trillion as at close of business on the 4th of March 2021, shedding about 1.6% in a single trading session.

The loss is due to downward pressure on the share prices of the elite banks, evident by the sell-off witnessed in the market. A snapshot of how much each bank lost and the impact is succinctly captured below;

UBA

The United Bank for Africa investors lost a total of N10.26 billion after its market capitalization dropped from N282.15 billion to N271.9 billion as at close of business yesterday.

The drop is due to a sharp decline in its share price which closed at N7.95, shedding about 3.64% in a day.

Investors cashed in on the decline to trade about 26,782,197 units of the Bank’s shares valued at N211, 571,939.35, placing the bank as the fourth most traded stock at the NSE. The volume of shares traded by the bank rose astronomically by 201.9%, when compared to 8.87 million units traded the previous day.

On the other hand, it is pertinent to note that the United Bank for Africa (UBA) is yet to release its audited FY 2020 result.

Access Bank

Access Bank Nigeria Plc lost a total of N8.89 billion after its market capitalization dropped from N286.14 billion to N277.25 billion. The loss is due to a decline in its share price from N8.05 to N7.80, indicating a dip of 3.11%.

Just like UBA, Access Bank investors traded a total of 21,586,491 units valued at N168, 090,266.60, placing it as the fifth most traded stock at the NSE today. In lieu of this, Access Bank stock volume appreciated by 229.1%, from 6.56 million traded yesterday.

Access Bank is yet to release its audited financial statements for FY 2020.

Zenith Bank

Zenith Bank investors lost a total of N7.85 billion after market capitalization dropped to N794.3 billion today. The marginal drop is due to a slight dip in the firm’s share price, from N25.5 traded yesterday to N25.30 as at close of business, indicating a decline of 0.98%.

Investors reacted to this drop by trading 38,647,711 units of the bank’s shares valued at N983, 251,467.75, placing the firm as the second most traded stock at the NSE market.

The drop in the market value of Zenith shares is in contrast to what was obtained last week, when investors gained a total of N37.7 billion, the highest recorded by the bank since the famous circuit breaker. The gains were sequel to an impressive financial performance by the firm for FY 2020, after it recorded a PAT of N230.6 billion and declared a final dividend of N2.70 per share.

FBNH

FBNH investors lost N1.8 billion after its market capitalization declined to N253.06 billion as at the close of business. The drop was due to a 0.7% decline in its share price from N7.1 traded earlier to N7.05.

In lieu of this, a total of 31,253,644 units of the bank’s shares valued at N983, 251,467.75 were traded, placing the firm’s stock as the third most traded stock at NSE. The total volume traded surged by 88.9%, from a total of 16.54 million traded a day earlier.

FBNH had earlier declared a Profit After Tax figures of N79.71 billion for FY 2020, indicating an increase of 8.2% YoY.

GTB

GTB investors lost a total of N5.89 billion, following a drop in its market capitalization from N932.97 billion to N927.08 billion. The drop was due to a 0.63% decline in share price which closed at N31.50.

It is pertinent to note that GTB is yet to release its audited financial statement for FY 2020.

What you should know

  • The Nigerian Stock Exchange ended on a bearish note on Wednesday, March 4, 2021 after the ASI declined by 0.40% to close at 39,364.67 index points.
  • On a general note, investors lost a total of N82.35 billion, with FUGAZ accounting for 42.11% of the loss.

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Amonia

$1.4bn deal, sealed to produce ammonia

by with No Comment News

The Nigeria Sovereign Investment Authority (NSIA) has sealed a $1.4bn deal with the OCP of Morocco as well as the Akwa Ibom State government to develop a plant where ammonia and diammonium phosphate will be produced.

Partners in the deal also include the Nigerian National Petroleum Corporation (NNPC), Nigerian Content Development & Monitoring Board (NCDMB), Gas Aggregation Company Nigeria Limited (GACN), and Fertilizer Producers & Suppliers Association of Nigeria (FEPSAN).

Read Also: How NON-profits can manage their fund raising

The new deal comes under NSIA Gas Industrialization Strategy and will drive implementation of the Multipurpose Industrial Platform project, a backward integration initiative which builds on the successes of the Presidential Fertilizer Initiative (PFI) and other sovereign bilateral initiatives between Nigeria and Morocco.

The project is structured to commercialize Nigeria’s vast natural gas resources and satisfy Morocco’s demand for cost-competitive ammonia.

Five crucial agreements were signed under the deal designed to create a clear path for the second phase of the Presidential Fertiliser Initiative as well as the creation and operationalization of a Multipurpose Industrial Platform (MPI) in Nigeria. The MOUs were signed Tuesday at the Mohamed VI Polytechnic University (UM6P) in Benguerir, Morocco.

The first phase of the project will produce 1.5 million tons per annum of ammonia in two phases. Up to 70 percent of the ammonia produced will be allocated for export to Morocco and the balance will be routed to the production of 1 million tons per annum of di-ammonium phosphate (DAP) and NPK fertilizers to feed domestic demand.

“It is expected that project construction will commence no later than Q3, 2021,” NSIA noted in a statement.

“US$1.4 billion will be invested in building out the plant and its supporting infrastructure with a target operations-commencement date of 2025.”

The project will be sited in the gas-rich Akwa Ibom State. Land availability and accessibility; gas adequacy; sufficiency of marine draft; and other environmental and social considerations informed the decision to site the plant in Akwa Ibom.

At completion, the integrated ammonia and fertilizer plant will house – within its battery limits – the process plants for ammonia and fertilizer production, administrative buildings, fertilizer bagging units, water purification units, storage for raw materials and finished goods, onsite power plant and other ancillary facilities.

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Investment Optimism

Optimism rises for investment in Nigeria

by with No Comment Businessfinance

Seyi Fadipe, a chief executive officer in one of Nigeria’s leading investment financial advisory firms, was dismayed after receiving a call from one of his foreign clients.

The client gave her a sorry call, informing her to put on hold an ongoing investment deal, as he and his entourage will not be able to fly into Nigeria for proper inspection due to the imposition of restriction measures in his country, which restricted the movement flow of persons, goods and capital.

READ ALSO: Business owners recount tales one year after COVID

The deal was a multi-million-dollar investment in a local agricultural producing firm in the Middle Belt region of Nigeria, which Fadipe had been on since 2019, hoping to bolster her firm’s balance sheet and reward shareholders when it finally fell through in 2020.

“The suspended deal disrupted our business operations last year,” she told BusinessDay.

Whether it was the fear of contracting the virus, or the pandemic-induced global lockdown, business leaders, and fund managers had a fair share of the unprecedented year 2020, not just in Nigeria alone, but across the globe.

Total foreign inflows (direct investments + portfolio investments + other investment) into Nigeria plunged to $9.7 billion in 2020, the lowest in three years, according to data from the National Bureau of Statistics. And the huge collapse is not unconnected with the elevated risk in the global investment environment occasioned by the pandemic.

READ ALSO: World Bank: Nigeria’s road to economic recovery

“The COVID-19 pandemic had several far-reaching effects on Nigeria’s investment landscape,” according to Toyin Sanni, an investment expert and CEO of Emerging Africa Capital.

Some of these, Sanni noted, include a reduction in disposable income, resulting in reduced demand for investment instruments, and a loss of jobs due to massive layoffs.

“Others include rising food inflation due to supply chain disruptions, among other factors, increased taxes on VAT from 5 percent to 7.5 percent during the year, and the decline in yields following the implementation of expansionary monetary policies by central banks across the world including Nigeria,” Sanni said.

Ijeoma Agboti, managing director/CEO, FBNQuest Fund, told BusinessDay that at the initial stages of COVID-19, investors were generally inclined to avoid aggressive new investment activity and took a wait-and-hold approach. “This, coupled with a dip in interest rates, was followed by a flight to yield and renewed interest in diversification and alternative approaches,” she said.

But it was not just about the coronavirus induced-lockdown alone, a host of factors including Nigeria’s poor FX management made an already bad situation worse.

Africa’s biggest economy resorted to rationing dollar sales after the pandemic and an oil war between Saudi Arabia and Russia, two of the world’s biggest oil exporters, sent prices tanking to as low as $12 per barrel.

Being that oil accounts for a significant share of Nigeria’s dollar revenue, the fall in oil prices squeezed dollar inflows, sending Nigeria’s external reserve to as low as $33 billion, and limited the central bank’s intervention capacity in the currency market.

The naira ran into troubled waters last year, suffering a two-time 19 percent devaluation, with rates weakening to N379/$ at the official window and N383/$ at the I&E window, which further eroded investors’ wealth.

It was undoubtedly a difficult time for foreign investors, importers and manufacturers. A large number of portfolio investors were unable to access the greenback as they sought to repatriate their profit out; while manufacturers found it increasingly difficult to obtain dollars for critical inputs.

The aforementioned scenario alongside negative real interest rates following spiralling commodity prices sent a red flag to the investing public and scared fresh capital from coming, particularly hot money.

NBS data show that not one single foreigner invested in Nigeria’s bond between April and December 2020.

Although Africa’s biggest economy recorded a handful of foreign participation in equities and other money market instruments to the tune of $755.12 million and $4.2 billion in 2020, respectively, the combined amount was the lowest since 2016, and they were funds from maturing bonds, rolled into these assets.

READ MORE: BUSINESS DAY

LNG vessel

Nigeria gasps for new LNG investments.

by with No Comment Businessfinance

Stakeholders have urged the Federal Government and others to invest more in the Liquefied Natural Gas, LNG, as it becomes obvious that other nations have left the nation behind with its 22 million tonnes, MT, yearly capacity.

Investigation by Energy Vanguard showed that this is based on the awareness that the expansion of the nation’s output to 30MT yearly through the ongoing Train 7 would not make much difference in the global ranking of Nigeria.

READ ALSO: Loans: Why its difficult for SMEs to get from  banks.

Available data showed that Australia, Qatar and Malaysia are currently the world’s top three exporters with 77.5MT, 77.MT and 24MT respectively.

These are followed by Nigeria, Indonesia and Algeria, with 22MT, 16.6MT and 11.5MT respectively. The nations are further followed by Russia, Trinidad & Tobago, Oman and Papua New Guinea with 10.8MT, 10MT, 8.1MT, and 7.1MT respectively.

However, in its presentation at the just-concluded 12th biennial International Conference themed, “Powering Forward: Enabling Nigeria’s Industrialisation via Gas” obtained by Energy Vanguard, the Managing Director, Nigeria LNG Limited, Mr. Tony Attah, MD/CEO, stated: “Nigeria LNG, the biggest LNG plant in Africa produces 22 million tonnes despite our 200 TCF, and that’s partly why we are saying it’s really a time to take advantage of this resource and start to monetize it.”

Energy Transition He said: “As the world is transiting, the risk is incumbent on us that we potentially could get to a point where even the gas, just like oil, will not be as relevant in the future because if technology, which I believe is the biggest disruption takes centre stage to make hydrogen more available and easier to access, then we have a big issue.

“As we say, there is still coal in Enugu, for those who are from the 50s, you can imagine the biggest economy at the time was underpinned by coal. “The locomotives, everything was about coal, power was about coal.

But today no one talks about Enugu with respect to energy. “So energy is in full transition. And we believe it’s time to monetise Nigeria’s gas today. We just touched on a quick case study of Qatar.

“Someone mentioned Qatar already from a proficient country to a gas giant, and it took just 10 years, which is why we as Nigeria LNG firmly believe in the conversation and the narrative about the declaration of the decade of gas. We believe it is possible.” Case of Qatar Speaking further, he said: “If you look at Qatar from 1995. When they really went into gas development, we were just two years behind Qatar.

“So Qatar’s first gas LNG was in 1997. Nigeria’s first LNG was in 1999, just two years behind. But then within 10 years because of the deliberateness of the government and focus on gas, they have gone to 77 million tonnes and we are at best 22 million tonnes. ““We’ve made major in-roads with the support of the Minister of State for Petroleum, the Group Managing Director of NNPC, the Executive Secretary of NCDMB, and our shareholders NNPC, Shell, Total, and Eni, taking the ultimate decision for Train-7.

“But Train 7 is only going to add about eight million tonnes to take us to 30 million tonnes and just recently to establish Qatar’s dominance and deliberateness and focus on gas, they have taken an FID for 30million tonnes. “We celebrated Train-7 on the back of eight million tonnes to take us to 30 million.

“They have taken FID for 30 million tonnes. Essentially, our overall existence as a country is their increment. And for me, that is about how deliberate you can be. Look at how much they have made it count in Qatar.

But for Nigeria LNG, we continue to deliver value to the nation.” In an interview with Energy Vanguard, Victoria Ibezim-Ohaeri, Executive Director, Spaces for Change, said: “As a major gas destination, Nigeria deserves to stake more of its resources in the development of its LNG in order to get much value from natural gas.

“As the world considers shifting from dependence on one form of energy to another, we should consider making massive investment in the sector, apparently because of much benefit the nation is currently getting from LNG.”

Report Nevertheless, in a document obtained from its website, the NLNG, stated: “NLNG has over the years paid dividends of about USD18 billion to the Federal Government of Nigeria courtesy of its shareholding in the company, via Nigerian National Petroleum Corporation, NNPC.

As a good corporate citizen, NLNG also contributes to national wealth and the economic wellbeing of states in which it operates, by paying all applicable taxes and tariffs. The company has paid about USD9 billion in taxes to the Federal Government of Nigeria.

“Payment to the Federal Government of Nigeria via its shareholding in Nigerian National Petroleum Corporation, NNPC, for feedgas from inception till date is about USD15 billion.

With its plant construction, the company generated considerable Foreign Direct Investment, FDI, for the country. NLNG has assets (i.e. property, plant and equipment) worth about USD17.5 billion with 51 per cent stake by international oil companies and 49 per cent belonging to the country through the Nigerian National Petroleum Corporation, NNPC.” The report, added:

“The Company, since 2008, has contributed about four per cent of Nigeria’s annual Gross Domestic Product, GDP. With rebasing of the GDP in 2014, NLNG’s contribution to the GDP is estimated at about one per cent. NLNG provided more than 12,000 jobs at the peak of construction of each plant. Overall, the major sub-contractors employed over 18,000 Nigerians in technical jobs in the Base Project (Trains 1 and 2). Through each Nigerian Content plan for its contracts, NLNG has promoted the development and employment of Nigerian manpower.

Over 12,000 direct jobs will be generated during the construction phase of Train 7.” Time, running out However, time seems to be running out as some emerging oil and gas nations have also ventured into commercial NLG production. Take Mozambique as an example.

In its latest report, African Oil and Gas, stated: “Mozambique at Forefront of Global Gas Development. “Driven by new discoveries and progressive gas-focused policies, Africa’s LNG consumption and production is set to become one of the fastest-growing sub-sectors globally through 2040.”

Read more at: Vanguard News Nigeria