By Investors Hub
Asian stocks ended Thursday’s session mostly lower as comments by U.S. Trade Representative Robert Lighthizer dampened recent optimism about the U.S.-China trade talks.
Investor sentiment was also dented by weak data from China and news that U.S. President Donald Trump and North Korean leader Kim Jong Un abruptly ended summit talks earlier than scheduled.
Chinese shares fell as weak data reinforced fears that the world’s second-largest economy is losing momentum.
The benchmark Shanghai Composite Index dropped 12.87 points or 0.4 percent to 2,940.95, while Hong Kong’s Hang Seng Index fell 124.26 points or 0.4 percent to 28,633.18.
Activity in China’s vast manufacturing sector continued to contract in February, and at a faster rate, the latest survey from the National Bureau of Statistics revealed with a manufacturing PMI score of 49.2.
That missed expectations for a score of 49.5, which would have been unchanged from the previous month.
The non-manufacturing PMI came in with a score of 54.3 in February – shy of expectations for 54.5 and down from 54.7 in the previous month.
Japanese shares fell as hopes for progress in U.S-China trade talks faded and a historic summit ended without agreement on the denuclearization of the Korean Peninsula. Weak industrial output and retail sales data also weighed on markets.
The Nikkei 225 Index slid 171.35 points or 0.8 percent to 21,385.16, while the broader Topix closed 0.8 percent lower at 1,607.66.
Machinery and shipping stocks fell the most, with Fanuc, Mitsui OSK Lines and Komatsu falling 2-3 percent. Gaming firm Nexon Co. soared 4.7 percent on buzz that its holding firm NXC Corp. is up for grabs.
In economic news, industrial production in Japan plunged a seasonally adjusted 3.7 percent in January, a government report showed. That missed expectations for a decline of 2.5 percent following the 0.1 percent dip in December.
The total value of retail sales in Japan was down a seasonally adjusted 2.3 percent sequentially in the month, missing expectations for a decrease of 0.8 percent following the 0.9 percent increase in December.
Meanwhile, Australian markets eked out modest gains, with financials and healthcare companies leading the surge.
The benchmark S&P/ASX 200 Index rose 18.70 points or 0.3 percent to 6,169, taking the monthly gain to over 5 percent, its biggest monthly gain since July 2016. The broader All Ordinaries Index ended up 19.10 points or 0.3 percent at 6,252.70.
The big four banks rose between 0.4 percent and 1.3 percent in light of a less harsh outcome from a bank inquiry into financial misconduct. Healthcare stocks witnessed defensive buying, with CSL jumping 3.1 percent.
Ramsay Health Care surged up 5.9 percent as it reported a nearly 10 percent increase in first-half profits and reaffirmed its outlook for full-year earnings.
Mining stocks ended mixed after the release of weaker Chinese factory data. BHP fell 1.2 percent and Fortescue Metals Group tumbled 5.2 percent, while Rio Tinto rose over 1 percent.
On the data front, reports on private capital spending and private sector credit proved to be a mixed bag.
Seoul stocks closed sharply lower as the U.S.-North Korea summit ended abruptly with no deal. The benchmark Kospi plunged 39.35 points or 1.8 percent to 2,195.44 ahead of a long holiday weekend.
The local markets will be closed Friday to commemorate the March 1 Independence Movement, which took place in 1919.
Tech stocks succumbed to heavy selling pressure, with LG Electronics, Samsung Electronics and SK Hynix losing 2-5 percent.
Investors ignored positive industrial output data showing that production in South Korea climbed a seasonally adjusted 0.5 percent in January, rebounding from the 0.8 percent contraction in December.
Rewane Explains Implications of CBN Naira 4 Dollar Scheme
By Adedapo Adesanya
Last week, the Central Bank of Nigeria (CBN) shocked Nigerians when it launched a new initiative tagged Naira 4 Dollar Scheme.
The scheme was part of efforts to incentivize senders and recipients of international money transfer. Under the campaign, all recipients of diaspora remittances through licensed International Money Transfer Operators (IMTOs) will be paid N5 for every $1 received as remittance inflows.
This has sent many Nigerians wondering what the new policy meant for the Nigerian currency, which has faced headwinds in the last few months.
Speaking on the likely implications of the currency promo, a renowned economist and the Chief Executive Officer of Financial Derivatives Company, Mr Bismarck Rewane, during a chat with Business Morning on Channels TV on Monday, explained that the initiative from the CBN was a promo designed to increase the country’s awareness and the inflows of Nigeria’s diaspora into the country’s financial system.
He, however, noted that it was rare for the government to use such promotional schemes to promote inflows into the country.
“What is challenging here is that it is very unusual for policies to be tied around promos or gimmicks. Usually, promos and gimmicks are used by manufacturers to launch or push products, or airlines when they have low sales. So, they tie this kind of promo to buy one get one free or to revamp stagnant sales. So, it’s very unusual and peculiar for governments to engage in gimmicks or promos,” he noted.
He further said that the apex bank tailored the actions towards reducing the cost of remittances from the current cutthroat rates charged by the IMTOs.
The Governor of the central bank, Mr Godwin Emefiele, had recently explained that the models had been applied in Pakistan and Bangladesh. He said both South Asian countries had introduced reimbursement schemes to support inflows.
In the CBN chief’s words, “In Pakistan, the scheme, which is known as free send, has enabled record amount of inflows of over $2 billion a month even during the COVID-19 pandemic.
“Bangladesh introduced its own scheme in June 2019, which is a two per cent rebate on remittance inflows. Following this action, they have also seen a 20 per cent boost in remittance inflows.”
Breaking it down further, Mr Rewane noted that the current diaspora inflows to Nigeria are estimated between $5 million and $7 million per day and that the central bank aims to increase to $30 million per day.
“In other words, 30 times 20 working days, you will get maybe $600 million. Well, that is not the point. The point is that it is an effective depreciation of 1 per cent of the currency because ever since this year, the Investors and Exporters’ (I&E) window rate had gone from N390 to N411. So, if you add N5, it is another 1 per cent.
“Nominally, the exchange rate is unchanged, but in reality, it is a depreciation of 1 per cent de facto.”
He noted that there a lot of risks associated with the policy because some people will round trip the policy using arbitrage. Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset’s listed price.
“So, people will try to use arbitrage on the system. But the fact is that Nigeria is number six in the world in terms of diaspora and workers remittances. It is estimated at about $20 to $25 billion [annually].
“The current pandemic and unemployment rates in the US, Canada, the European Union and the United Kingdom are also going to affect the ability of Nigeria to remit money in.
“These two trends have actually dropped sharply because of vaccination certificates and all sorts of the pandemic effect. So, basically, in the end, I think it’s a gimmick. It is a promo, the central bank will fully understand in the end that there’s no other way of managing an exchange rate than converging them, having one rate so that people don’t stop exploiting it.
“In any case, you collect cash, and you take it to the parallel market or autonomous sources to sell the Naira, and then come back and you get the N5. What could happen is that you could turn $1,000 back again to your brother, who will bring it back.
“So, what could happen is that there could be what I call playing with neurons, the same money turning around the velocity of separation increasing, whilst the quantity supplied into the market will not increase.
“So, but again, heavy innovation leads to some kind of creativity and will help. But in the end, let me put it this way, the price mechanism, the exchange rate has to be market-determined.
“Policymakers will intervene, to preserve to ensure that we don’t suffer from shocks, but it’s a work in progress, and then we’ll wait and see what happens.”
The promo is expected to run from March 8 through the next two month till May 8.
Linkage Assurance, Ardova Lift Stock Market by 0.17%
By Dipo Olowookere
Trading activities on the floor of the Nigerian Stock Exchange (NSE) turned bullish on Monday as a result of gains posted by Linkage Assurance, Ardova and 23 other equities.
Business Post reports that investor sentiment was positive yesterday as only 14 stocks closed on the losers’ chart.
During the session, which recorded a 0.17 per cent growth, the shares of Linkage Assurance and Ardova rose by 10.00 per cent each to settle at 55 kobo and N14.85 respectively.
Champion Breweries appreciated by 9.52 per cent to sell for N1.84, Oando gained 9.43 per cent to quote at N2.90, while Morison Industries improved by 9.09 per cent to 72 kobo.
At the other end, Meyer lost 10.00 per cent to finish at 45 kobo, Livestock Feeds depreciated by 9.87 per cent to N2.01, SCOA Nigeria lost 9.85 per cent to close at N2.38, Ikeja Hotel fell by 9.48 per cent to N1.05, while NEM Insurance dropped 6.88 per cent to settle at N1.76.
Despite the marginal growth recorded yesterday, the volume of shares, the value of stocks and the number of deals declined by 49.42 per cent, 76.83 per cent and 4.90 per cent respectively.
A total of 297.3 million shares worth N3.2 billion were traded in 4,655 deals compared with the 587.7 million stocks worth N13.6 billion transacted in 4,895 deals at the preceding session.
Zenith Bank was the most traded stock yesterday with the sale of 66.5 million units valued at N1.7 billion, FBN Holdings exchanged 23.5 million shares for N169.5 million, Axa Mansard Insurance traded 21.4 million equities valued at N20.9 million, Guinness Nigeria sold 20.2 million stocks for N4.0 million, while United Capital exchanged 13.6 million shares for N64.1 million.
A look at the sectoral performance showed that the insurance sector grew by 1.26 per cent, the energy sector appreciated by 1.01 per cent, industrial goods space rose by 0.47 per cent, while the consumer goods and banking counters lost 0.06 per cent and 0.03 per cent respectively.
For the All-Share Index (ASI), it increased on Monday by 64.96 points to 39,396.57 points from 39,331.61 points, while the market capitalisation grew by N34 billion to N20.613 trillion from N20.579 trillion.
Naira Drops to N411.88/$1 at I&E, N482/$1 at Black Market
By Ahmed Rahma, Adedapo Adesanya
The Naira dropped against the US Dollar at both the Investors and Exporters (I&E) and the parallel windows of the foreign exchange market on Monday, March 8.
At the specialised market, the headwinds facing the Naira in recent time continued yesterday as it traded at a new low of N411.88/$1 after losing 88 kobo or 0.21 per cent against the greenback. At the previous session, it was traded at N411/$1.
Data obtained by Business Post showed that the local currency was battered at the session despite a decline in the demand for FX by customers.
Transactions worth $32.58 million were made at the I&E window yesterday versus $83.93 million recorded last Friday, signifying a decline by 61.2 per cent or $51.35 million.
At the black market, where the local currency had recorded stability against the US Dollar recently, things changed as the Naira lost N2 to trade at N482/$1 as against the previous value of N480/$1.
The Nigerian Naira also lost N1 against the Euro at the unregulated segment of the forex market to close at N583/€1 compared to N582/€1 it traded last Friday and closed flat against the Pound Sterling at N675/£1.
At the interbank window, the Central Bank of Nigeria (CBN) maintained its auction rate of the Naira to the Dollar to commercial banks at N379/$1, while at the Bureaux De Change (BDC) window, the exchange rate of the Naira to the Dollar remained unchanged at N395/$1.
At the cryptocurrency market, four out of the seven tokens tracked by Business Post on Quidax closed positive, with the Bitcoin (BTC) gaining 5.1 per cent to trade at N32,998,709.99.
The Ethereum (ETH) recorded a 12.4 per cent surge to sell at N1,150,000, the Dash (DASH) grew by 1.5 per cent to sell at N134,000, while the Tron (TRX) appreciated by 3.0 per cent to sell at N32.49.
However, the US Dollar Tether (USDT) depreciated by 3.1 per cent to sell for N625.00, Litecoin (LTC) lost 1.5 per cent to trade at N114,801.29, while Ripple (XRP) recorded a 0.4 per cent slump to trade at N292.63.
Oil Suffers Significant Fall Amid Attack on Saudi Facilities
By Adedapo Adesanya
The prices of crude oil have fallen significantly as a drone attack on Saudi Arabian oil infrastructure is beginning to have an effect on the market.
The black gold was almost trading at $71 per barrel but the Middle East tensions depressed the value of the commodity and by Monday night, the price of the Brent crude dropped to $67.95 per barrel, while the West Texas Intermediate (WTI) was trading at $64.68 per barrel.
Houthis rebels from Yemen had fired 14 drones and eight ballistic missiles at oil facilities at the Saudi port of Ras Tanura and military targets in three other Saudi cities, and this spurred prices to shoot up more than 2 per cent.
The Saudi Energy Ministry later confirmed a drone hit: the target was an oil tank farm at Ras Tanura. However, a military spokesman for the Kingdom said the attack had not resulted in any property loss.
The news of the attacks comes just days after another announcement by the Houthis that they had hit an Aramco facility in Jeddah. That announcement came a few days after Saudi Arabia said it had intercepted a ballistic missile fired by the Houthis over Riyadh.
Since 2015, the two Gulf states of Saudi Arabia and Iran have been fighting a proxy war in Yemen, where the Saudis lead a military Arab coalition to restore legitimacy in the country, while the Houthi movement, which holds the capital Sanaa, is backed by Iran.
The Houthi rebels have often claimed they have hit oil infrastructure assets in Saudi Arabia and have taken responsibility for several high-profile attacks in the region.
The attacks in Saudi Arabia follow a devastating winter freeze in Texas and other parts of the southern United States last month knocked out production of roughly 4 million barrels per day of U.S. oil, pushing prices above $60 a barrel for the first time in more than a year.
The threats to the global oil supply are taking place with economists expecting energy demand to surge as nations recover from the pandemic.
Last week, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) chose not to relax supply curbs even as the global economy continues to recover from the collapse brought about by the coronavirus pandemic.
The producer alliance agreed to hold output steady in April, while Saudi Arabia said that it will maintain its 1 million barrel-a-day voluntary production cut.
Friesland Opens Week Bullish on NASD Exchange
By Adedapo Adesanya
The bulls were dominant on the floor of the NASD Over-the-Counter (OTC) Securities Exchange on Monday, leaving the market 1.89 per cent higher.
The growth recorded at the first trading session of the week was influenced by the gains printed by the shares of FrieslandCampina WAMCO Nigeria Plc.
Business Post reports that during the session, the equity price of the milk producer appreciated by N9.66 to close at N130 per share as against the previous N120.34 per share.
As a result, the market capitalisation of the bourse was boosted by N9.43 billion to N509.75 billion from N500.32 billion it closed last Friday.
Similarly, the NASD Unlisted Security Index (NSI) skyrocketed by 13.14 points at the close of transactions yesterday to 710.44 points from 697.30 points.
However, despite the growth recorded at the market on Monday, there was a decrease in the volume of transactions by investors by 36.0 per cent as only 75,500 units of securities were traded in contrast to 117,995 units recorded at the preceding session.
In the same vein, the total value of shares traded by market participants reduced by 30.9 per cent to N9.8 million from N14.2 million.
Also, there was a drop in the total number of deals executed at the market by 50 per cent as only a single deal was carried out in contrast to the two deals executed last Friday and it was on FrieslandCampina WAMCO Nigeria Plc.
At the close of trading activities, UBN Property Plc was the most traded stock by volume (year to date) with 15.5 million units valued at N16.8 billion. Central Securities Clearing Systems (CSCS) Plc followed in second place with 4.7 million units worth N74.6 million, while Friesland held the third position with 2.9 million units worth N356.2 million.
In terms of the most traded stock by value (year-to-date), Friesland maintained its top position for transacting 2.9 million units valued at N356.2 million. Niger Delta Exploration and Production (NDEP) Plc occupied the second spot with 612,249 units of its securities valued at N198.1 million, while CSCS Plc has traded 4.7 million units worth N74.6 million.
Investors Count N11.92bn Loss in One Week at NASD Exchange
By Adedapo Adesanya
Investors at the NASD Over-the-Counter (OTC) Securities Exchange lost N11.92 billion in value last week, marred by losses recorded by a few market bellwethers.
As a result, the total value of unlisted securities on the exchange reduced to N500.32 billion from the previous week’s N512.24 billion.
In the same vein, the NASD Security Index went down by 2.33 per cent or 16.61 points to close the week at 697.3 points as against 713.91 points of the preceding week.
It was observed that Niger Delta Exploration and Production (NDEP) Plc and Central Securities Clearing System (CSCS) Plc were largely responsible for the bearish outcome seen in the ninth trading week of this year on NASD.
The share price of NDEP depreciated by 7.8 per cent to settle at N270.00 per unit in contrast to the previous N292.82 per unit, while CSCS Plc lost 4.7 per cent to close at N15.72 per share versus N16.50 it ended a week earlier.
Despite the poor performance of the market last week, two companies recorded growth in their equity prices.
Friesland Campina WAMCO Plc gained 0.8 per cent to trade at N120.34 in contrast to the previous N119.43, while Acorn Petroleum Plc appreciated by 6.3 per cent to 17 kobo from 16 kobo.
On the activity chart, there was a 106.1 per cent increase in the trading value to N65.2 million from N31.6 million. The trading volume also rose in the week by 561.6 per cent to 2,449,670 units from 370,270 units, while the number of deals appreciated by 34.6 per cent to 35 deals from the previous week’s 26 deals.
Acorn Petroleum Plc was the most traded securities by volume with 1.1 million units. It was followed by Industrial and General Insurance (IGI) Plc (611,050 units); FrieslandCampina WAMCO Plc (509,904 units); Food Concepts Plc (125,000 units) and CSCS Plc (81,650 units).
However, Friesland Campina was the most active by value with N61.4 million; NDEP Plc trailed with N2.2 million; CSCS Plc with N1.3 million; Acorn Petroleum Plc with N188,496, and Food Concepts Plc with N100,000.
On a year-to-date basis, investors have traded 26.7 million units worth N667.2 million in 275 deals.
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