Prof. Uche Uwaleke of Nasarawa State University Keffi, has expressed optimism that the Nigerian stock market will experience a rebound in the third quarter of 2019, urging investors to take advantage of low equities pricing.
Uwaleke made this known on Wednesday in Lagos, at the Capital Market Correspondents Association of Nigeria (CAMCAN) quarterly forum with the theme: ‘Stock Market in the first quarter of 2019 and post-election prospects”.
He said that investors embrace the stock market by taking advantage of the prevailing low price of equities in order to partake in the opportunities of market reversal that would commence by end of second quarter.
Uwaleke, now a research fellow at the Securities and Exchange Commission (SEC), said “unfolding internal and external factors such as swearing of President Muhammadu Buhari for second term and early constitution of his cabinet would impact the equities positively.
“The Nigerian market which ranked as the world’s third most rewarding market in 2017, ranking only after Turkey and Argentina, and became bearish subsequently, is poised to enter into another bullish era by third quarter,” he said.
He said that lowering Monetary Policy Rate (MPR) by the Monetary Policy Committee (MPC), increase in minimum wage, increase in oil price and continued stability in Foreign Exchange (FX) would impact on the market.
Uwaleke added that continued moderation in inflation, steady growth in Nigeria’s Gross Domestic Product (GDP), early signing of 2019 budget and implementation, improved growth in non oil sector among others, would affect the market positively.
He said the planned introduction of derivative instruments in the market by SEC which preparations had reached advanced stage at both SEC and the Nigerian Stock Exchange (NSE), would help both foreign and indigenous investors to hedge their investments.
“The NSE is really waiting for SEC to finalise the rule for the derivatives to be introduced, it will give investors room to hedge risks”, Uwaleke said.
He said that the Cenral Bank of Nigeria’s (CBN) MPC triggered the market supportive move in March, by bringing down MPR by 50bps, after 33 successive months to 13.50 per cent from 14 per cent.
According to Uwaleke, he sees prospects of further reduction in the MPR soon.
“Lower MPR will free funds for investments or lending to firms for expansion which will improve their earnings and deliver more value to investors. It has a way of attracting investors, opening the market and hedging risks”, he stated.
According to him, the expected listing on the NSE by MTN, is expected to boost market liquidity, diversify offerings as the company will become the second most capitalised company in the market, after Dangote Cement Plc.
He added that Nigerian Pension Commission (PENCOM)’s six multi-fold structure rules was expected to boost PENCOM’s investment in the equity market.
The research fellow said the margin lending rule presently being worked on by SEC and efforts at deepening domestic investors’ participation in the market were some of the measures expected to deliver early market reversal in the third quarter.
Speaking on how minimum wage increase would impact positively on the market, he said “this is the time to take position, the minimum wage will be positive for the capital market, inflation is caused by weak aggregate demand.
” But the new minimum wage will rather boost aggregate demand, driven by greater number of people having more disposable income and also money to save.”
He, however, disagreed that there would be another economic recession in Nigeria, saying thatnthe factors that contributed to the recession in 2016, were presently none existent.
“Crude oil price is not bad today, external reserve is healthy, inflation rate at 11 per cent is healthy.” he said.
Uwaleke listed crude oil price, declining trend of yield in the U.S., easing Brexit tension and easing U.S.-China trade tension as some external factors that would likely drive market reversal in the third quarter.
He noted that the market closed the Q1 2019 bearish caused by what he termed as systemic risk and non-systemic risk.
“The non-systemic risks are risks associated with the operations of the companies, a risk that is particular to a company and doesn’t affect other companies.
“Non-systemic risk contrasts with systemic risk, which is risk that applies to all companies in a market or industry and doesn’t affect other companies, while systemic risk, affects all companies in a market or industry,” he said.
He attributed the Q1 2019 market decline to be partly caused by rebalancing of portfolio, movement form equities to fixed income, herding behavious of investors, flight for safety by foreign investors and panic by investors, among others.
NSE All-Share Index bows to profit booking, down by 0.60%
The Nigerian Stock Exchange (NSE) opened trading for the week on Monday with a loss of 0.60 per cent, amid profit taking as predicted by some market analysts.
Speficially, the All Share Index shed 160.59 or 0.60 per cent to close at 26,691.09 compared with 26,851.68 achieved on Friday.
Similarly, the market capitalisation which opened at N13.071 trillion shed lost N188 billion to close at N12.883 trillion.
The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Okomu Oil, Access Bank, Ecobank Transnational Incorporated (ETI), United Bank for Africa (UBA) and Caverton Offshore Support Group.
Commenting on the market performance, analysts at United Capital said “this week, we expect investors to continue to lock in gains in stocks with strong fundamentals, as the system remains awash with liquidity.”
Also, analysts at Imperial Asset Managers expect “more liquidity inflows into the equity market as investors continue to search for alternative asset to deploy idle fund”.
They said that traders were expected to take marginal profit witnessed last week, noting that buying interest remained strong in most listed equities irrespective of the NSE-ASI loss.
However, market breadth closed positive, with 16 gainers in contrast with14 losers.
Wema Bank led the losers’ chart in percentage terms with a loss of 7.89 per cent, to close at 70k per share.
FCMB Group came second with a decline of 7.50 per cent to close at N1.85, while Caverton Offshore lost 7.41 per cent to close at N2.50 per share.
Access Bank and ETI lost 6.67 per cent each, to close at N9.80 and N7.00, respectively, while Okomu Oil shed 5.57 per cent to close at N50 per share.
Conversely, Neimeth recorded the highest price gain in percentage terms with a gain of 10 per cent to close at 44k per share.
Custodian Investment inched 9.09 per cent to close at N6, while Courteville appreciated by 8.70 per cent to close at 25k per share.
Also, the volume of shares traded closed lower as investors bought and sold 307.96 million shares worth N2.54 billion in 4,609 deals.
This was in contrast with a turnover of 469.99 million shares valued at N5.59 billion transacted in 5,594 deals on Friday.
Transactions in the shares of UACN topped the activity chart with 102.55 million shares valued at N636.15 million.
Zenith Bank followed with 29.44 million shares worth N555.84 million, while UBA traded 20.81 million shares worth N147.44 million.
Access Bank sold 20.24 million shares valued at N195.62 million, while FBN Holdings transacted 14.67 million shares worth N96.65 million.
Edited by Tayo Ikujuni/Oluwole Sogunle
Brown to replace Avuru as Seplat CEO
Seplat Plc on Monday announced the retirement of Mr Austin Avuru, as its Chief Executive Officer, effective July 31, 2020.
The company, in a post listing requirement filing obtained from the Nigerian Stock Exchange (NSE) website, said thay Avuru would be replaced by Mr Roger Brown, its Chief Finance Officer.
The statement said that Avuru was retiring after 10 years of leading the company.
“In these 10 years, Avuru led the development of a strong organisation, the deployment of agile systems, processes and stakeholder relationships that allowed the organisation to grow rapidly.
“The board of SEPLAT is grateful to Avuru for these accomplishments and is looking forward to his continued service at the board level.
“Looking forward, Seplat plans to position itself for a next phase growth ambition which would see the expansion of its footprint in terms of energy business activities, a plan to pursue offshore assets as well as opportunity driven entry into different geographies.
“The company believes that such a corporate transition would require a different kind of organisational structure, people skills set and mentality to compete well in the expanded space.
“In view of this, Seplat will be reviewing its current organisational and systems structure,” it said.
It stated that the board had decided that the CEO designate would lead the restructuring during the transition period between now and final exit date of Avuru on July 31, 2020.
The statement said that Brown joined SEPLAT in 2013 as the CFO and played a key role in the successful dual listing of the company in 2014.
Edited by Wale Ojetimi
Ikpeazu presents N136.6bn budget estimates for 2020
The bill, tagged “Budget of economic repositioning”, has a Capital Expenditure outlay of N69.8 billion, representing 51.1 per cent, and Recurrent Expenditure of N66.8 billion, representing 48.9 per cent.
Ikpeazu said that the budget outlay was less than N140. 9 billion for 2019 because of his administration’s resolve to formulate a realistic budget.
He further said that government would work hard to improve revenue generation and expenditure management approach.
The budget also had an expected Recurrent Revenue of N106.9 billion, which is made of N67.2 billion from the statutory allocation from the Federation Account Allocation Committee (FAAC), representing 63.9 per cent of the revenue.
News of Agency Nigeria reports that it also had a projected Independent Revenue of N39.6 billion, representing 37.1 per cent of the revenue.
The governor said that the draft estimates were intended to strategically strengthen his administration’s achievement, especially in creating conducive environment for local and foreign investors.
According to him, the budget will also provide opportunities for human capital development, revitalising social services as well as building critical infrastructure for sustainable development.
Ikpeazu said: “In 2020, we will work to ensure completion of ongoing projects while re-envisioning new ones that will open new frontiers.
“We will ensure that only projects and programmes provided for in 2020 budget are funded,” Ikpeazu said.
In a speech, the Speaker, Mr Chinedum Orji, commended the governor and his team for early presentation of the bill to the house.
Orji said that such a laudable feat had not been achieved in recent time.
He promised the continued support of the seventh assembly to the governor, assuring him of accelerated hearing and passage of the bill.
He urged the governor to ensure at least 75 per cent implementation of the budget, when finally passed.
“This will fast track the repositioning of Abia economy with improvement in the most critical sectors, such as job creation, development of infrastructure and Small and Medium Enterprises in the state,” he said.
(Edited by Chidinma Agu/Sam Oditah)
PTAD commences verification of 7,000 retirees in FCT
The Pension Transitional Arrangement Directorate (PTAD) has commenced verification of about 7,000 retirees in the Federal Capital Territory (FCT).
The Executive Secretary of PTAD, Dr Chioma Ejikeme, told the Nigeria News Agency, during the exercise in Abuja on Monday.
Ejikeme said the verification was going on simultaneously in the three various centres in the FCT.
She said that those expected to participate in the exercise were retirees from defunct N, PHCN and universities, which included both academic and non-academics staff among others.
According to her, the exercise will last for six days while those that missed it will participate in the continuous verification in PTAD office.
“We are trying to put together the data we have collated, thereafter we will come out with a statement regarding the result of the verification.
“We have created awareness through various media and pension unions, to inform respective retirees about the exercise.
“We have been getting good response from the awareness we created for the large turnout of concerned retirees for the verification,”she explained.
She said that the directorate was committed to ensuring that the retirees were given required and deserved comforts through out the verification programme.
Edited by Remi Koleoso/Ifeyinwa Omowole
Lagos automobile dealers protest sealing of their businesses by Customs
Automobile dealers under the aegis of Automobile Dealers Friends Association on Monday protested the sealing of their businesses by the Nigerian Customs Service (NCS) as a result of a crackdown on cars suspected to have been smuggled through the land borders.
They stopped at the office of the Federal Operations Unit of the NCS at Mobolaji Bank Anthony Way, Ikeja protesting the crackdown which began on Sep. 30. The protest ended at 2.56pm.
The protesters carried placards with various inscriptions such as “Customs we are not smiling, we are tired since September 30, 2019,” “Enough of the injustice, unseal our shops,” “Customs, come and take the smuggled vehicles you collected duty on.”
At the NCS office, Mr Morgan Ogbede, the Chairman of the Association and other executives engaged in a closed-door meeting with Mr Mohammed Aliyu, the Comptroller, Federal Operations Unit Zone A and other officials of the NCS.
At the end of the meeting, Aliyu addressed the protesters telling them that their grievances will be addressed.
Speaking to NAN, Ogbede gave an insight into his meetings with officials of the House of Assembly and the NCS.
He said the NCS had promised to unseal their shops if the required duties were paid on allegedly smuggled cars.
“The State House of Assembly said that they will bring our petition to the notice of the Nigerian Customs Service and communicate back to us for a lasting resolution of the issues.
“At the Federal Operations Unit of the NCS, the Comptroller, Mr Mohammed Aliyu told us that if we know we have any smuggled cars in our lot, that we should come forward and make payment.
“If we do not have, he will be able to assist us in opening our shops pending when they will resolve the issues with the additional payments from already cleared cars from the Abuja office.”
Ogbede said he was satisfied with the consensus reached by the Association and the NCS.
He said that Aliyu was also informed about other challenges faced by the automobile dealers.
“Apart from the closure of our shops, we told them about the issues of harassment, intimidation and extortion on our customers using the eastern roads outside Lagos.
“Aliyu said when we get to Abuja, we should lay the complaints to the Comptroller-General of the NCS as it will be very risky leaving the road unmanned,” he said.
Ogbede also said that the Association still intended to file a suit in court demanding compensation for the various losses its members had suffered as a result of the closure of their shops two months ago.
Edited by Oluwole Sogunle
Operators forsee profit booking, improved buying interest on NSE
Some capital market operators on Monday expressed optimism that the Nigerian bourse would witness mixed performance to be occasioned by profit booking and improved buying interest.
Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., said that some investors would embark on profit booking to take advantage of gains of the previous week.
Omordion expressed optimism that there would be an improved buying interest on the back of declining yields in the fixed income and rate drop in the money market.
He said that local fund managers would likely extend their positions in undervalued equities with strong fundamentals.
“All eyes are on the domestic economy as macroeconomic indicators look seemingly positive ahead of policy statements and economic reforms,” Omordion said.
He noted that funds were flowing toward equity assets ahead of the last Monetary Policy Committee (MPC) for 2019.
According to him, discerning investors should take advantage of the current low stocks valuation to position for medium to long term.
Omordion stated that the market was selling at a discount considering the current price of equities.
Mr Matthew Chineke, a stockbroker, said that there would be an improvement in the stock market with the Central Bank of Nigeria (CBN) latest restrictions on treasury bills investment.
Chineke said that the restriction of the Open Market Operations to the banks and foreign portfolio investors, thereby shutting out other local market players, would boost liquidity in the stock market.
He explained that the recent decision was part of the series of measures by the apex bank to redirect liquidity to the real sector, boost economic activities, create employment and drive growth.
Chineke said that with the policy there would be an improvement in the equities market due to redirection of funds into the market.
He said that shrewd investors were taking advantage of the policy to increase their investment in the stock market.
Edited by Olawunmi Ashafa/Oluwole Sogunle
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