Economic uncertainties and slowdown of market activities have continued to weaken investors’ appetite for equities on the floor of the Nigerian Stock Exchange (NSE) as the All-Share Index and market capitalisation depreciated further by 0.6%. Specifically, at the close of transactions last week, the market capitalistaion, which stood at N13.637 trillion when the market reopened for transactions on July 9, lost N94 billion or 0.6 per cent, to close at N13.545 trillion at the weekend. Also, the ASI depreciated by 255.16 points from 37,647.93 to 37,392.77.
Furthermore, turnover of 1.219 billion shares worth N17.333 billion were recorded in in 17,362 deals by investors on the floor of the Exchange lower than 1.842 billion shares valued at N16.594 billion that changed hands in 18,941 deals during the preceding week.
Similarly, all other indices finished lower with the exception of the NSE oil/gas and the NSE Lotus II Indices that appreciated by 0.71 per cent and 0.37 per cent respectively.
Analysts attributed the downturn to the impact of 2019 elections and ongoing security challenges that have bedeviled the nation’s political space.
For instance, the Chief Reseatch Officer of Investdata Consulting Limited, Ambrose Omodion, said: “The unfolding events regarding weekend’s Ekiti State governorship election confirm the fears among investors and analyst.
“For many, happenings around the July 14, 2018, election continue to feed the polity with unnecessary wrong signals that none of the regulators or government is doing much to play down, ahead of general election in 2019. “We expect a slowdown in the decline that leads to reversal soon as Q2 earnings season kicks off any moment from now, since equities remain undervalued with higher yields. Investors should review their position in line with their investment goals and act as events unfolds in the global and domestic environment.
“However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were Q2 interim dividend payment are expected in the market arena very soon.” Analyst at Codros Capital Limited said the continued selloffs and the absence of a near term one-off positive catalyst dampen the outlook for equities in the short-to-medium term, adding that strengthened macroeconomic fundamentals remain supportive of gains in the long term.
Vetiva Research Limited said: ”With market sentiments staying negative after a week of bearish trading, we expect the tepid sentiments to filter into the market at week’s opening.” Further breakdown of last week’s trading showed that the financial services Industry led the activity chart with 842.823 million shares valued at N9.587 billion, traded in 9,231 deals; thus contributing 69.15 per cent to the total equity turnover volume. The consumer goods industry followed with 113.667 million shares worth N4.657 billion in 3,120 deals, while the services industry ranked third with a turnover of 105.623 million shares worth N519.813 million in 593 deals. Trading in the top three equities- Access Bank Plc, Zenith International Bank Plc and Nigerian Aviation Handling Company Plc accounted for 497.482 million shares worth N6.619 billion in 2,251 deals, contributing 40.82 per cent to the total equity turnover volume.
Also traded during the week were 79,304 units of Exchange Traded Products (ETPs) valued at N1.491 million and executed in 18 deals, compared with 25,220 units valued at N454,438.90 that were transacted last week in four deals. A total of 13,517 units of Federal Government valued at N14.899 million was traded this week in 30 deals, compared with a total of 2,359 units valued at N2.188 million transacted last week in 24 deals.
Credit: The Guardian
The Federal Government of Nigeria received N3.211 trillion as Petroleum Profits Tax (PPT) and Royalties from the third quarter of 2015 to third quarter of 2017, according to the Economic Report of the Central Bank of Nigeria (CBN).
Breakdown of the revenue to the government showed that the country received N495.39 billion as PPT/royalties in third quarter of 2015; N388.66 billion, in fourth quarter of 2015; and N314.04 billion during first quarter of 2016.The revenue from PPT/royalties declined in second quarter of 2016 to N212.78 billion; later increased to N392.38 billion in third quarter of 2016; and decreased to N273.13 billion in fourth quarters of 2016.
There was a rebound of revenue to N325.38 billion in first quarter of 2017; N320.49 billion in second quarter and N489.41 billion during the third quarter of 2017. The CBN report for the third quarter of 2017 released recently, revealed that N103.46 billion was allocated to the 13 per cent Derivation Fund for distribution among the oil producing states.
analysing the report, CBN disclosed that oil receipt at N1.27 trillion during the quarter under review was lower than the proportionate quarterly budget estimate by 6.2 per cent, but was above the receipts in the preceding quarter by 59.7 per cent. According to the CBN, the decline in oil revenue relative to the proportionate quarterly budget estimate was due to the shortfall in receipts from crude oil/gas exports, owing to the decline in crude oil production, arising from leakages and shut-ins/shut-downs at some NNPC terminals.
It disclosed that Nigeria’s crude oil production, including condensates and natural gas liquids, averaged 1.83 million barrels per day (mbd) or 168.36 million barrels (mb) in the review quarter.This, it noted, represented an increase of 0.17 mbd or 10.2 per cent, compared with 1.66 mbd or 151.06 mb recorded in the preceding quarter. The development was due to sustained peace in the oil production region.CBN said that crude oil export stood at 1.38 mbd or 126.96 mb, representing 14.0 per cent increase over 1.21 mbd or 110.11 mb in the preceding quarter.
The development, it hinted, was due, mainly, to reduced activities of vandals in the Niger Delta region.Allocation of crude oil for domestic consumption was maintained at 0.45 mbd or 41.40 million barrels in the review quarter.
Nigerian National Petroleum Corporation (NNPC) Chief Operating Officer, Upstream, Malam Bello Rabiu, proposed some key amendments to the Deep Offshore and Inland Basin Production Sharing Contract (PSC) Act to enable the Federal Government optimize the collection of royalties and other revenue in deep water oil production activities.He noted that it was imperative to effect increment in royalties across all categories to increase government take.
“It is our opinion that the proposal to increase the royalty rate for terrains beyond 1000 metres, from zero per cent to three per cent, is commendable but it is necessary to also make corresponding adjustments in other categories,’’ he said.He argued that in the alternative, the graduated royalty scale as provided in the Act should be removed while the Minister of Petroleum Resources should be empowered to intermittently set royalties payable for acreages located in deep offshore and inland basin production sharing contracts through regulations based on established economic parameters.
“It is our opinion that these incentives have outlived their usefulness and are now impediments to the Federal Government’s revenue collection efforts. The use of such incentives can be terminated by an amendment of section 4 of the Act,’’ the Corporation noted.He called on the National Assembly to seek relevant input from the Federal Inland Revenue Service, to resolve the divergent opinions regarding the methodology for the computation of the taxes which would arise as a result of the proposed royalty regime.
Source: The Guardian
I&E Window transacts $900m, as reserves stagnate at $47.6 billion
There was near excess in the quantity of money in circulation last week, save for the increased mop up exercise by the Central Bank of Nigeria (CBN), following the repayments of N66.7 billion and N377.6 billion worth of Treasury Bills (T-Bills) and Open Market Operations.
The movement in system liquidity during the week had risen in two of the four trading days, resulting to 3.7 per cent rise in the quantity of money in circulation to N842 billion compared to N812.1 billion in the preceding week.Consequently, the two most popular traded instruments among banks- Open Buy Back and the Overnight rates, trended southwards by 0.7 percentage points (ppts) and 0.5ppts to 2.8 per cent and 3.6 per cent respectively.
During the rollover of the instruments, investors showed apathy for short tenored bills, as they asked for higher rates, causing an under-allotment to reduce cost for government, which subsequently left a sizable quantity of money in circulation till the weekend.Analysts at Afrinvest Securities Limited said this week, despite the absence of maturing bills, except N183.3 billion worth of OMO maturities, the apex bank will sustain its trend of liquidity mop ups and money market rates could trend higher.
Similarly, at the foreign exchange market, the naira remained stable, defying the influence of speculations ahead of the biannual meeting of the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, at the weekend, which increased oil production by one million barrels per day.
The decision, which is expected to influence global oil price, would further affect Nigeria’s external reserves that have remained stagnant in weeks at $47.6 billion, as crude oil accounts for a large proportion of the nation’s foreign exchange earnings.
Specifically, the reserves have stagnated in the last three weeks, with an earlier back and forth movement, as reports showed that Nigerian crude oil cargoes from the June programme took long before they were cleared, as demand was not strong enough and differentials were too high to spark much buying of July barrels.During the week, the Central Bank of Nigeria (CBN) continued its weekly intervention, offering $210 million through the Wholesale SMIS window to maintain stability, as well as sustain liquidity in the foreign exchange market.
Consequently, the CBN spot rate appreciated five kobo when measured week-on-week to N305.80 per dollar from N305.85 per dollar in the previous week, while at the parallel market, the naira traded flat for the second consecutive week at N362 per dollar.
In the same vein, the local unit, at the Investors and Exporters’ (I&E) forex Window, appreciated seven kobo week-on-week to N361/$ from N361.07/$ in the previous week.On the activity level, transactions improved by 15.1 per cent at the autonomous window, as investors exchanged about $900 million against $800 million recorded the previous week.
Source: The Guardian