Economy
Equity Market Ready for Recovery
By FSDH Research
There are indications that the Nigerian equity market is ready for a recovery in the year 2017 after three consecutive years of decline. The equity market, as measured by The Nigerian Stock Exchange All Share Index (NSEASI), depreciated by 16.14%, 17.36% and 6.17% in 2014, 2015 and 2016 respectively.
As at April 28, 2017 the NSEASI had lost 4.15% of its value. The major factors responsible for the poor performance of the equity market in the last three years are: weak macroeconomic performance, inconsistent policies, weak corporate earnings and portfolio realignment from equities to fixed income securities.
However, looking at the strong growth in the unaudited results that quoted companies released for the period January – March 2017 and the improvement in the macroeconomic environment, we believe the equity market is ready for a recovery in 2017.
As at April 27, 2017, 62 quoted companies had released their unaudited quarterly results for the period January – March 2017.
The total turnover of these companies increased by 41% from N1,450billion in 2016 to N2,042bilion in 2017.
The Profit Before Tax (PBT) increased by 45% from N257billion in 2016 to N373billion in 2017 while the Profit After Tax increased by 29% from N240billion in 2016 to N310billion in2017.
The recent increase in the crude oil price and production and subsequent increase in the external reserves have helped to stabilise the foreign exchange market – a major concern of the foreign investors. The increase in the supply of foreign exchange to meet the input requirements of manufacturing companies should increase their production activities and revenue in the current financial year.
The fiscal and the monetary authorities are implementing policies that should inspire investors’ confidence in the Nigerian economy and market.
Our survey shows that most investors did a lot of portfolio realignment -moving from equities to fixed income securities. The main reason for this was the lacklustre performance of equities in the face of attractive yields on fixed income securities.
The data from the National Pension Commission (PenCom) on the allocation of the Pension Fund Assets as at February 2017 shows that the weight of the pension fund assets on domestic equity dropped consistently from 2014 to 2017.
The weight stood at 13.7%, 10.4%, 8.6% and 7.5% in February 2014, 2015, 2016 and 2017 respectively. These figures are lower than PenCom’s approved pension fund assets allocation weight to equities, an indication that there is room for pension fund assets to allocate more funds to equities.
PenCom stipulates the maximum weights of equities in the investment portfolio of pension assets as follows: Fund I: 30%; Fund II: 25%, Fund III: 10% and Fund IV: 5%. Any pension contributor can make a formal request to join Fund I. Fund II is for active contributors who are below the age of 49 years. Fund III is for active contributors who are 50 years and above while Fund IV is strictly for retirees.
The analysis of the equity transactions on the NSE in the last three years shows investors’ apathy for equity investment.
According to the NSE, the value of equity transactions from foreign and domestic investors declined between 2014 and 2016.
Foreign transactions were N1.54trillion, N1.03trillion and N0.52trillion in 2014, 2015 and 2016 respectively while Domestic transactions were N1.14trillion, N0.88trillion and N0.63trillion in 2014, 2015 and 2016 respectively.
Although the relative size of foreign investors’ participation in the equity market declined between 2014 and 2016 (58%, 54% and 45% in 2014, 2015 and 2016 respectively), the share of foreign investors’ participation was higher than domestic investors’ participation between 2014 (Foreign: 58% and Domestic: 42%) and 2015 (Foreign: 54% and Domestic: 46%).
The foreign investors’ participation in 2016 at 46% was lower than domestic investors’ participation at 54%.
The uncertainties surrounding the foreign exchange policies and the difficulties to access foreign exchange to repatriate capital and profit led to the withdrawal of foreign investors from the market. The stability in the macroeconomic environment and the strong earnings of quoted companies should attract the needed liquidity into the market. Consequently, the equity market should record a strong recovery in the year 2017.
Source: FSDH Research
By Modupe Gbadeyanka
The federal government, the 36 states of the federation and the 774 local government areas have received N1.727 trillion from the Federal Accounts Allocation Committee (FAAC) for December 2024.
The funds were disbursed to the three tiers of government from the revenue generated by the nation in November 2024.
At the December meeting of FAAC held in Abuja, it was stated that the amount distributed comprised distributable statutory revenue of N455.354 billion, distributable Value Added Tax (VAT) revenue of N585.700 billion, Electronic Money Transfer Levy (EMTL) revenue of N15.046 billion and Exchange Difference revenue of N671.392 billion.
According to a statement signed on Friday by the Director of Press and Public Relations for FAAC, Mr Bawa Mokwa, the money generated last month was about N3.143 trillion, with N103.307 billion used for cost of collection and N1.312 trillion for transfers, interventions and refunds.
It was disclosed that gross statutory revenue of N1.827 trillion was received compared with the N1.336 trillion recorded a month earlier.
The statement said gross revenue of N628.972 billion was available from VAT versus N668.291 billion in the preceding month.
The organisation stated that last month, oil and gas royalty and CET levies recorded significant increases, while excise duty, VAT, import duty, Petroleum Profit Tax (PPT), Companies Income Tax (CIT) and EMTL decreased considerably.
As for the sharing, FAAC disclosed that from the N1.727 trillion, the central government got N581.856 billion, the states received N549.792 billion, the councils took N402.553 billion, while the benefiting states got N193.291 billion as 13 per cent derivation revenue.
From the N585.700 billion VAT earnings, the national government got N87.855 billion, the states received N292.850 billion and the local councils were given N204.995 billion.
Also, from the N455.354 billion distributable statutory revenue, the federal government was given N175.690 billion, the states got N89.113 billion, the local governments had N68.702 billion, and the benefiting states received N121.849 billion as 13 per cent derivation revenue.
In addition, from the N15.046 billion EMTL revenue, FAAC shared N2.257 billion to the federal government, disbursed N7.523 billion to the states and transferred N5.266 billion to the local councils.
Further, from the N671.392 billion Exchange Difference earnings, it gave central government N316.054 billion, the states N160.306 billion, the local government areas N123.590 billion, and the oil-producing states N71.442 billion as 13 per cent derivation revenue.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.65 per cent gain on Friday, December 13, boosted by three equities admitted on the trading platform.
On the last trading session of the week, Okitipupa Plc appreciated by N2.70 to settle at N29.74 per share versus Thursday’s closing price of N27.04 per share, FrieslandCampina Wamco Nigeria Plc added N2.49 to end the session at N42.85 per unit compared with the previous day’s N40.36 per unit, and Afriland Properties Plc gained 50 Kobo to close at N16.30 per share, in contrast to the preceding session’s N15.80 per share.
Consequently, the market capitalisation added N6.89 billion to settle at N1.062 trillion compared with the preceding day’s N1.055 trillion and the NASD Unlisted Security Index (NSI) gained 19.66 points to wrap the session at 3,032.16 points compared with 3,012.50 points recorded in the previous session.
Yesterday, the volume of securities traded by investors increased by 171.6 per cent to 1.2 million units from the 447,905 units recorded a day earlier, but the value of shares traded by the market participants declined by 19.3 per cent to N2.4 million from the N3.02 million achieved a day earlier, and the number of deals went down by 14.3 per cent to 18 deals from 21 deals.
At the close of business, Geo-Fluids Plc was the most active stock by volume on a year-to-date basis with a turnover of 1.7 billion units worth N3.9 billion, followed by Okitipupa Plc with the sale of 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 million.
In the same vein, Aradel Holdings Plc remained the most active stock by value on a year-to-date basis with the sale of 108.7 million units for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with a turnover of 297.3 million units worth N5.3 billion.
By Adedapo Adesanya
The Naira appreciated further against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N1.50 or 0.09 per cent to close at N1,533.00/$1 on Friday, December 13 versus the N1,534.50/$1 it was transacted on Thursday.
The local currency has continued to benefit from the Electronic Foreign Exchange Matching System (EFEMS) introduced by the Central Bank of Nigeria (CBN) this month.
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN.
Market analysts say the publication of real-time prices and buy-sell orders data from this system has lent support to the Naira in the official market and tackled speculation.
In the official market yesterday, the domestic currency improved its value against the Pound Sterling by N12.58 to wrap the session at N1,942.19/£1 compared with the previous day’s N1,954.77/£1 and against the Euro, it gained N2.44 to close at N1,612.85/€1 versus Thursday’s closing price of N1,610.41/€1.
At the black market, the Nigerian Naira appreciated against the greenback on Friday by N30 to sell for N1,650/$1 compared with the preceding session’s value of N1,680/$1.
Meanwhile, the cryptocurrency market was largely positive as investors banked on recent signals, including fresh support from US President-elect, Mr Donald Trump, as well as interest rate cuts by the European Central Bank (ECB).
Ripple (XRP) added 7.3 per cent to sell at $2.49, Binance Coin (BNB) rose by 3.5 per cent to $728.28, Cardano (ADA) expanded by 2.4 per cent to trade at $1.11, Litecoin (LTC) increased by 2.3 per cent to $122.56, Bitcoin (BTC) gained 1.9 per cent to settle at $101,766.17, Dogecoin (DOGE) jumped by 1.2 per cent to $0.4064, Solana (SOL) soared by 0.7 per cent to $226.15 and Ethereum (ETH) advanced by 0.6 per cent to $3,925.35, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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