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Four Best-Performing Equity Mutual Funds of Q1 2018

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By Quantitative Financial Analytics Ltd

Nigeria’s equity market witnessed some calmness and subdued volatility in the first quarter of the year.

Quantitative Financial Analytics Realized Volatility index (NSErealVol) stood at 12.98, as at March 29, 2018 down from 15.68 recorded by the end of the previous year.

In addition, inflation in Nigeria moderated while the Dollar exchange rate stabilized around the N360 range within the quarter even as yields continued to fall along all maturities. All those had some positive effect on equity market which got translated into the equity mutual funds.

How Did Energy Sector Perform in Q1?

During the Q1 of 2018, the Nigeria All Share Index (ASI) increased by 3,261.32 points representing a positive performance of 8.53 percent. The market grew by 15 percent in Jan, 2018, losing marginally by 2 percent and 4 percent in February and March to end the quarter with a positive return.

In spite of the market performance within the quarter, we have identified four mutual funds that did much better in the quarter. Here they are:

Meristem Equity Mutual Fund

Meristem Equity Market fund seeks capital appreciation for the long run by investing in a basket of high quality equity securities in Nigeria. The fund gained about N95 million or 46 percent in 2017 and has gained about 52.7 million or 17 percent in Q1, 2018, according to our analysts. In Q1, 2018, it attracted an estimated 8.5 million of inflows to leave its net asset value at N364 million by the end of the first quarter.

Stanbic IBTC Aggressive Fund

Stanbic IBTC Aggressive fund seeks to provide liquidity whilst maintaining low to medium volatility of return over the long-run. The fund invests a minimum of 60 percent of its assets in the equity market and the other 40 percent in fixed income market according to its fact sheet. Stanbic IBTC Aggressive fund gained about N95 million or 48 percent in 2017 and has gained about N43.6 million or 12.58 percent in Q1, 2018, according to our analysts.

In 2017, it suffered a net outflow of about N10 million but in Q1, 2018, it attracted an estimated N169 million of inflows to leave its net asset value at N502 million by the end of the first quarter

Frontier Fund

The Frontier Fund has the primary objective of achieving long-term capital appreciation to unit holders by investing in carefully selected money and capital market instruments.

The Fund gained about N42 million or 22 percent in 2017 and has gained about N27 million or 10.55 percent in Q1, 2018, according to our analysts.

In 2017, it suffered a net outflow of about N3 million but has attracted net inflow of N5 million in Q1, 2018 to leave its net asset value at N286 million by the end of the first quarter

UBA Equity Fund

The United Capital Equity Fund Invests in quoted equities that are traded on the Floor of the Nigerian Stock Exchange (NSE). Its objective is to achieve high returns over a medium to long-term period by investing in select portfolio of equity securities according to its fact sheet.

The Fund which is suitable for investors with a long-term outlook gained about N420 million or 45.8 percent in 2017 and has gained about N145 million or 10.45 percent in Q1, 2018, according to our analysts.

In 2017, it suffered a net outflow of about N122 million and has also suffered about N15 million net outflow in Q1, 2018 to leave its net asset value at N1.5 billion by the end of the first quarter.

Though these funds have been stellar in their performance, it is worthy of note to state that past performance is not a guarantee of future performance.

Aduragbemi Omiyale is a journalist with Business Post Nigeria, who has passion for news writing. In her leisure time, she loves to read.

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Economy

Investors Count N11.92bn Loss in One Week at NASD Exchange

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NASD Exchange bullish

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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Economy

Nestle, Nigerian Breweries Stocks Get Sell Rating

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Trading of Stocks

By Dipo Olowookere

Analysts at Greenwich Merchant Bank have placed sell rating on the shares of Nestle Nigeria and Nigerian Breweries.

However, they put a buy rating on Ecobank, Zenith Bank, FBN Holdings and UBA, while GTBank, Cadbury Nigeria, PZ Cussons, Guinness Nigeria and Unilever Nigeria all have hold rating.

In a report released over the weekend, the firm said Nestle, which has traded as low as N764.90 per unit in the last one year and as high as N1,505.00 per unit, can be sold by holders at the present value of N1,350 because it has surpassed the target price of N963.87.

The company further said Nigerian Breweries, which had a target price of N43.57, can be offloaded now that it is selling at N49.50.

For Ecobank, it said investors can buy at the current value of N5 because it has a 12-month target price of N14.51, while Zenith Bank could reach N31.26, higher than the present N25.30.

It further said FBN Holdings and UBA have the tendency to reach N13.06 and N12.55 respectively, higher than the current respective price of N7.10 and N7.95.

Greenwich also said investors with GTBank could still hold the stocks because it has the tendency to sell at N32.75, while Cadbury Nigeria, PZ Cussons, Guinness Nigeria and Unilever Nigeria could sell for N9.26, %.77, N21.19 and N13.60 respectively.

Meanwhile, the company said the dampened sentiments may likely continue as a result of “the rising yields in the fixed income space.”

“In the new week, we expect the market sentiment to remain weak, although we do not rule out the possibility of an uptick by the end of the week,” it projected.

At the fixed income market, Greenwich said news that the Central Bank of Nigeria (CBN) was planning to phase-out the participation of international players in the OMO-bill market caused some investors to selloffs their holdings.

The CBN, however, debunked the information and the average yield closed flat at 5.6 per cent.

This week, the firm expects “market players to continue to trade cautiously with mixed sentiment across the curve while seeking opportunities to cherry-pick higher-yielding papers across the curve.”

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Economy

Oil Looks Positive as Saudi Terminal Attacks Spur Price Above $70

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oil weak dollar

By Adedapo Adesanya

The Brent crude edged closer to $71 per barrel on Monday morning after oil giant, Saudi Arabia, confirmed that one of its facilities, which is the world’s largest crude terminal, was attacked.

As at the time of this report, the global crude benchmark, which most countries prices their futures against, was trading at $70.50 per barrel, while the United States’ benchmark, the West Texas Intermediate (WTI), was up by 1.66 per cent to sell at $67.19.

Saudi had said a storage tank at Ras Tanura located in the country’s Gulf coast was attacked on Sunday by a drone from the sea but output appeared to be unaffected after the missiles and drones were intercepted.

The terminal is capable of exporting roughly 6.5 million barrels a day, which is nearly 7 per cent of oil demand and is considered as one of the worlds’ most protected installations.

The assault follows a recent escalation of hostilities in the Middle East region after Yemen’s Houthi rebels launched a series of attacks on Saudi Arabia.

The latest attack has been viewed as the most serious in the last two years since a key processing facility and two oil fields came under fire in September 2019, cutting oil production for several days.

Although the Houthi rebels claimed responsibility, the Kingdom pointed its fingers at its Gulf rival, Iran, as the culprit, further adding to tensions in the region.

Notably, the new Joe Biden administration of the US has also carried out airstrikes in Syria last month on sites it said were connected with Iran-backed groups.

Oil climbed last week after the Organisation of the Petroleum Exporting Countries and allies (OPEC+) made a surprise pledge to keep output steady in April, boosting oil prices to their best in more than 13 months.

The move prompted a number of investment banks to raise their price forecasts, with Goldman Sachs Group estimating global benchmark Brent will top $80 a barrel in the third quarter of 2021.

Oil prices are expected to perform at their best this week as President Biden is on the point of his first legislative win with the House ready to pass his $1.9 trillion COVID-19 relief plan, the second-biggest economic stimulus in American history.

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Economy

Morison Manages 20% Weekly Gain in Depressed Stock Market

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By Aduragbemi Omiyale

For those keenly following happenings in the Nigerian stock market, they will observe that things have not been too smooth this year.

The market has been struggling to replicate the sterling performance it put up from the second quarter of last year. Share prices have been depleting, no thanks to rising yields in the fixed income market, causing investors to divert their funds to the environment.

Last week, the Nigerian Stock Exchange (NSE) suffered a weekly loss of 1.18 per cent as the All-Share Index and market capitalisation depreciated to 39,331.61 points and N20.578 trillion respectively.

Similarly, all other indices finished lower with the exception of industrial goods and NSE Sovereign Bond indices, which appreciated by 1.39 per cent and 0.07 per cent while the ASeM index closed flat.

Business Post reports that in the week, only 14 stocks closed on the price gainers’ chart, lower than 20 stocks of the previous week.

Leading the chart was Morison Industries, which appreciated by 20.00 per cent to 66 kobo per share and was distantly followed by SAHCO, which gained 9.54 per cent to settle at N3.33 per share.

Unity Bank grew by 8.96 per cent to 73 kobo per share, BETA Glass gained 8.00 per cent to sell for N54.00 per share, while Lasaco Assurance appreciated by 5.69 per cent to N1.30 per share.

On the losers’ log, there were 71 members last week, higher than 43 in the previous week, with Champion Breweries taking the top spot after a 33.33 per cent decline in its share price to N1.68 per unit.

Japaul lost 28.99 per cent to trade at 49 kobo per share, Ardova declined by 25.21 per cent to N13.50 per share, Oando fell by 23.19 per cent to N2.65 per share, while NASCON dropped 19.00 per cent to trade at N13.00 per share.

Also in the week, a total of 77 equities remained unchanged, lower than 99 equities recorded in the previous week.

A look at the level of trading activities in the week showed that financial stock dominated with the sale of 1.6 billion units worth N10.7 billion executed in 13,269 deals, contributing 78.06 per cent and 36.06 per cent to the total trading volume and value respectively.

Shares in the consumer goods industry followed with 92.0 million units valued at N4.5 billion carried out in 4,168 deals, while the third place was energy equities with a turnover of 91.3 million units worth N10.5 billion transacted in 1,471 deals.

Wema Bank, Axa Mansard Insurance and Zenith Bank were the most active stock by volume with a turnover of 903.6 million units valued at N5.6 billion executed in 4,017 deals, contributing 43.19 per cent and 18.71 per cent to the total trading volume and value respectively.

At the close of transactions for the week last Friday, investors traded a total of 2.1 billion shares worth N29.7 billion in 24,238 deals as against the 1.9 billion shares worth N20.7 billion transacted in 24,687 deals a week earlier.

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Economy

New FX Policy Will Cut Cost Burden of Remitting Funds—CBN

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CBN MPR 12.5%

By Dipo Olowookere

The Central Bank of Nigeria (CBN) has explained the reason it came up with a new foreign exchange (FX) policy on diaspora remittances.

On Saturday, the apex bank, under the leadership of Mr Godwin Emefiele, announced a new forex promo tagged CBN Naira 4 Dollar Scheme, an incentive for senders and recipients of International Money Transfers.

The campaign, which will last for two months from March 8 to May 8, 2021, will enable “all recipients of diaspora remittances through CBN licensed IMTOs [to] be paid N5 for every $1 received as remittances inflow.”

After the circular was issued, the central bank explained the reason behind the policy, noting that it was to make it possible for Nigeria to tap into the booming remittances industry.

The apex bank said a forecast by PwC suggests that Nigeria’s remittance flows could reach $34.89 billion by 2023 and to meet this target, there must be channels put in place.

“This can only be accomplished if remittance infrastructure improves and if the right policies are put in place,” the central bank explained in a separate post.

It further said this new policy was also in line “with the global trend [as] Nigeria aspires to ensure that remittance flows and diaspora investments become a significant source of external financing.”

The apex bank expressed optimism that the rebate of N5 for every $1 of fund remitted to Nigeria “will help to make the process of sending remittance through formal bank channels cheaper and more convenient for Nigerians in the diaspora.”

It also noted that the “new FX policy will create an easier, more flexible, and more transparent, system of remittance administration, it will greatly enhance the benefits of diaspora remittances in supporting investments and growth in Nigeria.”

“[The] policy on the administration of remittance flows is aimed at increasing the transparency of remittance inflows, reducing rent-seeking activities, and providing Nigerians in the diaspora with cheaper and more convenient ways of sending remittances to Nigeria,” it added.

Concluding, the CBN said, “The use of reimbursements of remittance fees has been critical in supporting improved inflow of remittances to countries in South Asia and in improving their balance of payments position following the COVID-19 pandemic.”

Business Post reports that since the new policy was announced yesterday, some economists have suggested that the apex bank was in desperate need of Dollars.

In recent time, the price of crude oil, Nigeria’s main source of FX earnings, has been on the rise, trading close to $70 per barrel at the global market.

In the 2021 budget signed into law by President Muhammadu Buhari in December 2020, the crude oil benchmark price was $40 per barrel, implying that Nigeria is earning more than it projected.

However, instead of the nation’s external reserves to rise as a result of more FX inflows from oil sales, the account balance is shrinking. The FX reserves currently stand at $34.9 billion as against $35.1 billion on February 26, 2021.

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Economy

SEC Secures $400,000 for Nigerian Capital Market

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SEC new initiatives

By Adedapo Adesanya

A grant worth $400,000 has been granted to the Securities and Exchange Commission (SEC) by the African Development Bank Group (AfDB).

The financing package was approved to allow the apex capital market regulator in Nigeria to strengthen securities market regulation and broaden market instruments.

The funds will go towards strengthening the risk-based supervision framework, regulation of derivatives and green bonds, and build capacity for green finance.

The grant will be sourced from the Capital Markets Development Trust Fund, a multi-donor fund administered by the regional lender.

Speaking on the agreement at the virtual signing, Mr Lamido Yuguda, the Director-General of SEC, said, “This collaboration further underscores our mutual goal to grow our markets and create viable avenues for sustainable economic development for Nigeria and the region.”

The grant is aligned with the priorities of the bank’s country strategy for Nigeria, which envisages measures to stimulate capital market development to unlock financial resources for productive sector investments, infrastructure development and private sector growth.

On his part, Mr Lamin Barrow, Senior Director of the bank’s Nigeria Country Department, noted the urgency of the implementation of the project.

“At a time when countries are striving to build back better from the ravages of the COVID-19 pandemic, improvement of the enabling regulatory and supervision framework will boost domestic resource mobilisation efforts and leverage private sector contributions to achieve a greener, more environmentally sustainable and inclusive post-pandemic recovery,” Mr Barrow said.

Adding his input, Mr Oscar Onyema, the Chief Executive Officer of the Nigerian Stock Exchange (NSE), thanked both the AfDB and SEC “for this historic event and partnership, to build in-house capacity at SEC, the Nigerian Stock Exchange, issuers and investors in the sustainable finance space, which will help to meet climate finance commitments in Nigeria.”

The project is expected to support the implementation of the SEC’s Nigeria Capital Market Master Plan 2015-2025 and its vision to position Nigeria’s capital market as a competitive and attractive destination for portfolio investments.

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