By Cordros Capital Research
According to the Central Bank of Nigeria’s (CBN) Purchasing Managers’ Index (PMI) report for the month of April, manufacturing activities, during the month, expanded after three consecutive months of contraction. The report also shows that the non-manufacturing sector came within a whisker of exiting its 16-month streak of decline.
Specifically, the manufacturing PMI grew to 51.1, from 47.7, while the non-manufacturing PMI came in at 49.5 (vs. 47.1 in March).
Indeed, the notable improvement in April’s PMI came to us as no surprise, as it validated our expectation for the month. Suffice to say that business owners and manufacturers are positively responding to a number of encouraging developments in the broader macroeconomic space.
Here, we highlight (1) the CBN’s recent and sustained commitment to forex stability, particularly narrowing the spread between the official and parallel segments of the currency market rates, (2) government effort at improving the ease of doing business in Nigeria, as the Presidential Enabling Business Environment Council (PEBEC) rolled out fresh reforms to consolidate and deepen the impact of its previous plan, (3) the recent approval, by the FGN, of the reduction of documentation requirements and timeline for import and export trade transactions to 48 hours (4) the launch of the nation’s Economic Recovery and Growth Plan (ERGP), (5) the soon-to-bepassed 2017 appropriation bill, which will herald the establishment of Satellite Industrial Centres (SICs) across the six geo-political zones of the country, (6) an extension of the tenure of the 2016 budget’s capital spending projects until 5th May, 2017 amid a total sum of N1 trillion released from the same budget, thus far, for capex, and (7) a reported rebound in Nigeria’s business confidence, according to the latest edition of the Global Economic Conditions Survey.
Manufacturing PMI Bucks Declining Trend
The manufacturing PMI commenced the second quarter of the year on an impressive note, bucking its 3-month contraction trajectory, expanding by 3.4 percentage points, from 47.7 in March, to 51.1 in April. The notable improvement was supported by considerable expansions in production level (58.5, previously 50.8), new orders (50.1, previously 45.6), and inventories (50.6, previously 49.1), which we believe was in response to the relative stability – amid the apex bank’s renewed commitment to improve FX liquidity – of the NGN exchange rate (particularly at the parallel market) during the period under review. Clearly, this, in addition to improved power generation (close to 5,000MW), further strengthened manufacturers’ confidence, supported by the slower pace of contraction in employment level (46.6 vs. 43.6) during the month.
Ten of the sixteen sub-sectors reported growth in the review month, in the following order: appliances & components; food, beverage & tobacco products; textile, apparel, leather & footwear; chemical & pharmaceutical products; cement; nonmetallic mineral products; printing & related support activities; furniture & related products; electrical equipment and plastics & rubber products. The paper products; primary metal; computer & electronic products; fabricated metal products; petroleum & coal products, and transportation equipment sub sectors reported decline in the review period.
Non-Manufacturing PMI Misses Expansion by a Whisker
The non-manufacturing PMI showed further signs of improvement, with the index, at 49.5, marginally shy of the 50 point expansion threshold. This marks the highest point of the index in its 16-month contraction spree.
Primarily, in April, the non-manufacturing PMI benefitted from the growth of 3.5 percentage points and 4.1 percentage points in business activity (53.3, from 49.8) and new orders (50.5, from 46.4). Also, the slower rate of contraction in employment level (45.5, previously 44.0) and inventories (48.6, previously 48.0) was positive for the overall nonmanufacturing index.
Of the eighteen non-manufacturing sub-sectors, eight recorded declines in the following order: management of companies; construction; professional, scientific & technical services; arts, entertainment & recreation; wholesale trade; health care & social assistance; repair, maintenance/washing of motor vehicles and accommodation & food services.
The remaining ten sub-sectors: agriculture; utilities; educational services; transportation & warehousing; finance & insurance; electricity, gas, steam & air conditioning supply; real estate, rental & leasing; information & communication; public administration and water supply, sewage & waste management reported growth in the review month.
Clearly, April 2017 PMI figures speak to the fact that, manufacturing and non-manufacturing activities improved over the one month period. We look for the level of improvement achieved thus far being consolidated, going forward, as the impact of the positive drivers supporting the encouraging figures deepens. We highlight the (1) CBN’s sustained commitment to forex stability, (2) possibility of the 2017 appropriation bill being passed early this month, following which the establishment of the FGN Satellite Industrial Centres (SICs) across the six geo-political zones of the country will commence, (3) potential gains from the recently launched Economic Recovery and Growth Plan (ERGP), (4) full implementation of the Presidential Enabling Business Environment Council (PEBEC) fresh plans on the ease of doing business, and (5) sustained improvement in power generation, on the back of cessation of hostilities by militants in the Niger Delta, and the rise in water level at the various dams in the country.
NDEP, Geo-Fluids Lift OTC Bourse by 0.06%
By Adedapo Adesanya
The NASD Over-the-counter (OTC) Securities Exchange recorded a 0.06 per cent appreciation on Tuesday, January 31, spurred by higher buying interests.
In the session, the bourse, which admits unlisted securities, saw improvement in the prices of Niger Delta Exploration and Production (NDEP) Plc and Geo Fluids Plc.
NDEP Plc gained N13.00 yesterday to sell at N200.00 per unit versus Monday’s closing price of N187.00 per unit, while Geo-Fluids grew by 6 Kobo to settle at N1.04 per share compared with the previous day’s 98 Kobo per share.
The gains reported by the duo reined in on the N1.07 loss posted by FrieslandCampina Wamco Nigeria Plc, as it closed at N65.00 per unit, in contrast to the preceding session’s N66.07 per unit.
As a result, the market capitalisation of the OTC bourse appreciated yesterday by N520 million to N932.15 billion from N931.63 billion, and the NASD Unlisted Securities Index (NSI) swelled by 0.40 points to 709.39 points from the 708.99 points reported on Monday.
Tuesday’s market data revealed that there was a jump in units of securities exchanged as investors bought 20.4 million units of stocks which is 531.2 per cent higher than the 3.2 million units traded previously.
However, the value of securities traded amounted to N29.5 million, 15.3 per cent lower than the N4.9 million achieved a day earlier, as the number of deals went down by 17.7 per cent to 14 deals from 17 deals.
Geo-Fluids Plc remained the most traded stock by volume on a year-to-date basis for selling 321.2 million units worth N317.2 million, UBN Property Plc stood in second place with 35.7 million units valued at N25.7 million, while FrieslandCampina Wamco Nigeria Plc was in third place with 2.0 million units valued at N133.0 million.
Also, Geo-Fluids Plc was the most traded stock by value on a year-to-date basis with a turnover of 321.2 million units valued at N317.2 million, VFD Group slid to second with 561,810 units sold for N137.0 million, while FrieslandCampina Wamco Group Plc was in third place with 2.0 units valued at N133.0 million.
Tinubu Lambasts Buhari Over Fall in Naira Value at Forex Market
By Aduragbemi Omiyale
The presidential candidate of the ruling All Progressives Congress (APC) in the February 25, 2023, election, Mr Bola Tinubu, has again criticised President Muhammadu Buhari for weakening the Naira in the foreign exchange (FX) market.
Speaking on Tuesday in Cross River State for his campaign, the former Governor of Lagos State said Mr Buhari’s administration had bastardised the Naira’s value from N200 to a Dollar he met the rate in 2015 to nearly N800/$1 at the moment in the parallel market.
“They (the government of Mr Buhari) moved the exchange rate from N200 to N800 (in the black market).
“If they had repaired it, if they have arrested this, we won’t be where we are today. We will have been greater.
“They don’t know the way, they don’t know how to think, they don’t know how to do [it],” Mr Tinubu, who clinched the party’s ticket for the exercise, said.
This is not the first time the seasoned politician has slammed President Buhari openly.
Recall that a few days before the APC presidential primary in Abuja, he claimed to have helped Mr Buhari chase the opposition Peoples Democratic Party (PDP) from Aso Rock in 2015 after past attempts without success.
He said this in Abeokuta, Ogun State, where he also returned to some days ago to accuse the government of working to frustrate his success at the polls later this month through anti-people policies.
“We will use our PVCs to take over government from them. If they like, let them create a fuel crisis; even if they say there is no fuel, we will trek to vote.
“They are full of mischief, they could say there is no fuel. They have been scheming to create a fuel crisis but forget about it. Relax, I, Asiwaju, have told you that the issue of fuel supply will be permanently addressed,” he said at the campaign rally.
“Whoever wants to eat the honey embedded in a mountain won’t worry about the axe. Is that not so? And if you want to eat palm kernel, you would bring a stone and use it to break it; then the kernel will come out. It’s not easy to…
“Let them increase the price of fuel, let them continue to hoard fuel, only them know where they have hoarded fuel, they hoarded money, they hoarded naira; we will go and vote, and we will win even if they changed the ink on Naira notes. Whatever their plans, it will come to nought,” he said.
MTN, NGX Partnership Has Attracted Younger Investors to Capital Market—Popoola
By Aduragbemi Omiyale
The chief executive of the Nigerian Exchange (NGX) Limited, Mr Temi Popoola, has described the deal signed between the bourse and MTN Nigeria in 2022 as a game-changer, saying it has successfully attracted younger investors to the capital market.
Recall that in February 2022, both parties sealed a partnership aimed at using technology to offer financial securities to retail investors who had stayed away from the capital market.
The two-year deal was sealed to promote financial literacy further and enhance retail participation in the Nigerian capital market. It was made to develop capital market solutions collaboratively, leverage technology to support data dissemination and technology-as-a-service, promote capacity development and eliminate barriers to retail participation in the capital market.
Yesterday, to mark the first anniversary of the collaboration, the chief executive of MTN Group, the parent firm of MTN Nigeria, Mr Ralph Mupita, was hosted to a closing gong ceremony.
At the event, he said within a year of signing the MOU, a lot has been achieved due to the hard work invested on both sides in forging and sustaining a productive partnership:
“At MTN, we believe we have a responsibility to ensure that our customers not only stay connected but can access increasing value and better services through our network, deepening their participation in the digital economy.
“Our collaboration with NGX gave us the opportunity to empower our customer base with the tools and knowledge to engage effectively with the capital market and meet their financial and investment objectives.
“For this, NGX deserves to be commended for democratising access to financial securities and thereby empowering more Nigerians,” he stated.
Also, the chief executive of MTN Nigeria, Mr Karl Toriola, said, “We will continue to identify other areas of cooperation with NGX, and we look forward to a continued mutually beneficial partnership that will contribute to the inclusive growth of the Nigerian economy.”
On his part, Mr Popoola commended MTN for its unwavering efforts in advancing Nigeria’s technology landscape through substantial investments in infrastructure and digital transformation.
“We are proud to acknowledge the advancements made through the successful public offering in 2021 and the MoU signed last year. These initiatives have successfully attracted a notable portion of the younger generation to the capital market, aligning with our goal to increase retail participation.
“I would also like to specially acknowledge the efforts of the financial advisers on the landmark offering led by Chapel Hill Denham.
“We are optimistic about the prospects of a mutually beneficial partnership with MTN that will reinforce the Nigerian economy and foster sustainable growth for the African continent,” he stated.
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