Economy
Experts Seek Reorganization of Nigeria’s Financial Market Structure
By Modupe Gbadeyanka
The urgent need for the reorganisation of the present structure of the financial market in Nigeria has been stressed by stakeholders in the Nigerian capital market, asset management and banking sectors.
One of the experts, Mr Gbenga Adigun, the Business Head of Zimvest, noted that investors are gravely concerned with investment returns in light of the current low yield environment, while financial institutions are thinking of how their product development and service delivery should evolve with the changing needs of investors.
Mr Adigun gave this submission at the Zimvest Economy Conversations, a thought-leadership series of Digital Private Wealth and Investment Management Firm, Zimvest (Zedcrest Investment Managers), held on Saturday, June 20, 2020.
He and others agreed that there was an urgent need for a rethink of the nation’s economic philosophy and a reset of the financial market architecture.
The CEO of FMDQ Group, Mr Bola Onadele Koko, while delivering the keynote speech on the event theme The Economic Landscape and Investor Preferences in Post-pandemic Africa, highlighted the impact of the growing pandemic on African markets.
He laid emphasis on the slowdown in key segments of the economy including the financial markets, tourism, remittances and foreign direct investments. He called for a rethink of Nigeria’s economic philosophy with clarity from the fiscal policymakers which will be critical for gaining investors’ confidence.
“Now is the time to develop new and ingenious ways to develop and drive the Nigerian financial market and in the continent at large.
Private capital will especially be more essential as recent shocks have shown the limits of Governments’ abilities particularly in developing countries,” he said.
The capital market leader also stated that FX reforms will be critical for the Nigerian economy at this point, noting that trading activity in the Nigerian Fixed-Income and Interbank Currencies market was down by 55 percent due to economic slowdown linked to the COVID-19 pandemic.
All panellists in this first episode of the thought-leadership series pointed out that most investors were affected by the pandemic and are looking for further ways to diversify their portfolios that may end the year on a negative real return.
Speaking during the panel session, Ms Abiola Adekoya, a wealth expert and former CEO of RMB Securities, stated that one of the key things that investors are concerned about in this era is the need for diversification, more liquidity and higher investment returns.
“A lot of investors have been focused on one product and this pandemic has shown that that is not enough. The nascent interest in alternative assets have shown that there is strong liquidity in the overlooked retail space and investment managers should pay keen attention and develop alternative assets products, and reduce the reliance on the traditional fixed income, money markets and equities offerings,” she said.
Echoing Ms Adekoya’s thoughts on alternative assets was Ms Esiri Agbeyi, a partner and Head Private Wealth Services at PwC Nigeria, who emphasised the need for investors to take a keen interest in private equity and other alternative assets investments.
She shared a PWC survey on Family Offices. The survey revealed that 63 percent of family businesses leaned towards private equity as an investment portfolio. Local pools of private capital are important to drive economic development
On her part, the Divisional Head of Central Securities Clearing System (CSCS), Ms Onome Komolafe, stated the need for improved product development and differentiation, clear market segmentation and smart communication as tools that financial services firms can deploy in evolving with the changing consumer behaviour.
She also pointed to premium service delivery and technological innovation as crucial to democratization of investment opportunities in Africa.
The Group Executive, Treasury & Financial Institutions at First Bank, Mr Ini Ebong, pointed out the present opportunity available for investors, regulators, institutions, market practitioners to reset Nigerian financial market architecture. He noted that this opportunity presents itself mostly around periods of crisis.
According to him, as markets develop, the investing public becomes more able to embrace risk and go for higher return instruments outside traditional bank-based deposits.
“If you want high returns on investment, you must be willing to take on more risky investment products”, said Adetoun Dosunmu, Treasurer at FBN Merchant Bank. “Giving the highly specialized nature of investing, working with a regulated fund manager will be most beneficial to the investor in the long run and would protect against fraud and sharp practices from the teeming number of platforms offering untested investment opportunities”.
During his closing remark, the founder of Zedcrest Group and the chief host of the event, Mr Saheed Adedayo Amzat, called on the Nigerian capital market stakeholders to unite to further capital formation in the country. He sounded a note of warning to Nigerians on suspicious wealth generation platforms.
“Many unsuspecting investors over the last three decades have lost their funds to unregulated institutions that promised unbelievable returns.
“All stakeholders in the sector need to speak up and inform the unsuspecting public about investment platforms. Our regulators need to do more with the support of all players in the Investment management space,” he opined.
The much-anticipated event lived up to its billings as over 1,150 participants engaged the speakers on investment challenges and opportunities they can tap into post-COVID-19.
Zimvest, the newly launched Investment Management subsidiary of Zedcrest, plans to be at the nexus of a continuing conversation series around Investment management and economic policy landscapes. The second edition of the series is to be announced soon.
A poll conducted during the event also shows that over 60 percent of participants prioritized Capital Preservation when choosing an investment option.
Over 72 percent were concerned about inflation and exchange rate fluctuations and over 81 percent were concerned about Proven Track Record, Regulatory Compliance and Transparency when choosing an investment management partner. The session ended at exactly 1pm on the day.
A replay of this session can be watched via: https://zoom.us/rec/play/upcscbr–z83GtOSuQSDBqcvW9W0e6KsgCVI__dYy0yyWiNQNlShYbAaMLScQgqeV7fIjyl2RsrXPBOZ
By Dipo Olowookere
Investors at the Nigerian Exchange (NGX) Limited have continued to show excitement for the full-year earnings of companies on the exchange so far.
On Friday, Customs Street further appreciated by 1.01 per cent as more organization released their financial statements for the 2025 fiscal year.
During the session, traders continued their selective trading strategy, with the energy sector going up by 2.47 per cent at the close of business despite profit-taking in the banking counter, which saw its index down by 0.11 per cent.
Yesterday, the insurance space grew by 2.16 per cent, the industrial goods segment expanded by 1.70 per cent, and the consumer goods industry jumped by 0.42 per cent.
Consequently, the All-Share Index (ASI) increased by 1,722.13 points to 171,727.49 points from 170,005.36 points, and the market capitalisation soared by N1.106 trillion to N110.235 trillion from the N109.129 trillion it ended on Thursday.
Business Post reports that there were 59 appreciating stocks and 19 depreciating stocks on Friday, representing a positive market breadth index and strong investor sentiment.
The trio of Omatek, Deap Capital, and NAHCO gained 10.00 per cent each to sell for N2.64, N6.82, and N136.40 apiece, as Zichis and Austin Laz appreciated by 9.98 per cent each to close at N6.72 and N5.40, respectively.
Conversely, The Initiates depreciated by 9.74 per cent to N19.45, DAAR Communications slumped by 7.32 per cent to N1.90, United Capital crashed by 6.55 per cent to N18.55, Coronation Insurance lost 5.71 per cent to quote at N3.30, and First Holdco shrank by 5.53 per cent to N47.00.
The activity chart showed an improvement in the activity level, with the trading volume, value, and number of deals up by 33.77 per cent, 93.27 per cent, and 10.63 per cent, respectively.
This was because traders transacted 953.8 million shares worth N43.1 billion in 51,005 deals compared with the 713.0 million shares valued at N22.3 billion traded in 46,104 deals a day earlier.
Fidelity Bank was the most active with 92.4 million units sold for N1.8 billion, Chams transacted 69.2 million units valued at N310.9 million, Deap Capital exchanged 59.1 million units worth N382.7 million, Access Holdings traded 57.2 million units valued at N1.3 billion, and Tantalizers transacted 48.6 million units worth N228.2 million.
By Adedapo Adesanya
The value of the Naira contracted against the United States Dollar on Friday by 13 Kobo or 0.01 per cent to N1,366.19/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) from the previous day’s value of N1,366.06/$1.
According to data from the Central Bank of Nigeria (CBN), the Nigerian currency also depreciated against the Pound Sterling in the same market window yesterday by N2.37 to N1,857.75/£1 from the N1,855.38/£1 it was traded on Thursday, and further depleted against the Euro by 57 Kobo to close at N1,612.52/€1 versus the preceding session’s N1,611.95/€1.
In the same vein, the exchange rate for international transactions on the GTBank Naira card showed that the Naira lost N8 on the greenback yesterday to N1,383/$1 from the previous day’s N1,375/$1 and at the black market, the Nigerian currency maintained stability against the Dollar at N1,450/$1.
FX analysts anticipate this trend to persist, primarily influenced by increasing external reserves, renewed inflows of foreign portfolio investments, and a reduction in speculative demand.
In the short term, stability in the FX market is expected to continue, supported by policy interventions and improving market confidence.
Nigeria’s foreign reserves experienced an upward trajectory, increasing by $632.38 million within the week to $46.91 billion from $46.27 billion in the previous week.
The Dollar appreciation this week appears to be largely technical, serving as a correction to the substantial losses experienced from mid- to late January.
Meanwhile, the cryptocurrency market slightly appreciated, with Bitcoin (BTC) climbing near $68,000, up nearly 5 per cent since hitting $60,000 late on Thursday after investor confidence in crypto’s utility as a store of value, inflation hedge, and digital currency faltered.
The sell-off extended beyond crypto, with silver plunging 15 per cent and gold sliding more than 2 per cent. US stocks also fell.
The latest recoup saw the price of BTC up by 4.7 per cent to $67,978.96, as Ethereum (ETH) appreciated by 6.3 per cent to $2,021.10, and Ripple (XRP) surged by 9.5 per cent to $1.42.
In addition, Solana (SOL) grew by 7.3 per cent to $85.22, Cardano (ADA) added 6.1 per cent to trade at $0.2683, Dogecoin (DOGE) expanded by 5.4 per cent to $0.0958, Litecoin (LTC) rose by 5.2 per cent to $53.50, and Binance Coin (BNB) jumped by 2.3 per cent to $637.79, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Adedapo Adesanya
Oil prices settled higher on Friday as traders worried that this week’s talks between the US and Iran had failed to reduce the risk of a military conflict between the two countries.
Brent crude futures traded at $68.05 a barrel after going up by 50 cents or 0.74 per cent, and the US West Texas Intermediate (WTI) crude futures finished at $63.55 a barrel due to the addition of 26 cents or 0.41 per cent.
Iran and the US held negotiations in Muscat, the capital of Oman, on Friday to overcome sharp differences over Iran’s nuclear programme.
It was reported that the talks had ended with Iran’s foreign minister saying negotiators will return to their capitals for consultations and the talks will continue.
Regardless, the meeting kept investors anxious about geopolitical risk, as Iran wanted to stick to nuclear issues while the US wanted to discuss Iran’s ballistic missiles and support for armed groups in the region.
Any escalation of tension between the two nations could disrupt oil flows, since about a fifth of the world’s total consumption passes through the Strait of Hormuz between Oman and Iran.
Saudi Arabia, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, as does Iran, which is a member of the Organisation of the Petroleum Exporting Countries (OPEC).
According to Reuters, Iran objected to the presence of any US Central Command (CENTCOM) or other regional military officials, saying that would jeopardise the process.
The current confrontation was sparked by more than two weeks of unrest in Iran that saw authorities launch a deadly crackdown that killed thousands of civilians and shocked the world. As reports of the deaths trickled out of Iran, US President Donald Trump threatened to strike Iran if any of the tens of thousands of protesters arrested were executed.
Meanwhile, Kazakhstan’s planned oil exports could fall by as much as 35 per cent this month via its main route through Russia, as the country’s top oil company, Tengiz oilfield, slowly recovers from fires at power facilities in January.
ING analysts have pointed out Iran’s neighbour, Iraq, and a disagreement with the US as another bullish factor for oil prices. It seems Iraqi politicians favour Mr Nouri al-Maliki as the country’s next Prime Minister, but the US thinks Mr al-Maliki is too close to Iran. President Trump has already threatened the oil producer with consequences if he emerges as PM.
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