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Investors Lose N281b In 8 Months

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By Modupe Gbadeyanka

According to a report by Vanguard, investors in Nigeria’s stock market lost about N281 billion of their investment value in the past eight months as the ongoing economic recession continues to hit the financial market.

This is just as stockbrokers continued to lament over difficult operating environment which has placed their businesses in difficulties.

Vanguard findings showed that the Nigerian Stock Exchange (NSE) market capitalisation, which represents the value of total investment in the stock market by investors, dropped by N281 billion or 2.9 per cent from N9.850 trillion it opened in the first trading day of January this year to close at N9.569 trillion last week Friday.

Another stock market gauge, the NSE All share index dropped by 2.7 per cent or 783.77 points from 28, 642.25 points it opened in January to close last week at 27,599.03 points.

Meanwhile, stockbrokers have said that the on-going economic recession continues to affect the financial market with dire consequences on the income streams of the capital market operators and has given them concern for their continued existence.

According to stockbrokers, “There is a deep concern that the current operating environment characterised by high interest rate, weak purchasing power, poor corporate earnings, unstable exchange rate , high inflation rate and investors’ apathy among others are fast eroding our dwindling income fuelling speculation that many of   us may be pushed   completely out of the business.

“So, if the government does not intervene appropriately we may be forced to go out of business and this will affect our employees and put them in the unemployment market.”

Painting the gloomy picture of the stockbrokers’ weak financial situation, the Managing Director and Chief Executive Officer, Standard Union Securities, Mr Sehinde Adenagbe said it would be difficult for stockbrokers to break even under the current climate.

“Overhead cost is rising steadily and workers are clamouring for higher pay to cope with the high cost of living. Office rent, epileptic power supply and transport costs are of great concerns to us and there are other contending issues that are eating deeply into the incomes of stockbrokers,” Mr Adenagbe posited.

Speaking on the survival strategy, the President and Chairman of Governing Council, Chartered Institute of Stockbrokers (CIS), Mr Oluwaseyi Abe advocated personal development on the part of the stockbrokers in order to expand their income streams.

“Recession is a time to take a breath. Invest on knowledge this time and be moderate. Stockbrokers should be multitasking to be relevant on all platforms and Exchanges.

“Also, they should not forget the age-long advice of an investment expert, Warren Buffet whose ideals covered risk taking, savings, expectation and earnings among others as survival strategy,” Mr Abe said.

Agreeing with Mr Abe’s submission, the Registrar and Chief Executive, CIS, Mr Adedeji Ajadi    advised stockbrokers to be more creative and ready for diversification in order to remain in business. “This is not the time to limit business opportunities to trading listed securities. What about bonds, unlisted equities and foreign exchange?

“Stockbrokers are also investment advisers. This is the right time to work with governments at various levels as consultants and advisers on how to create alternative sources of revenue, and better manage scarce resources to ride through the challenges of the economy at this time,” Mr Ajadi said.

Managing Director and Chief Executive Officer, Network Capital Limited, Mr Oluropo Dada said there is the need for stockbrokers to leverage their wide professional latitude to go into money market instruments by way of portfolio switching in favour of money market instruments such as Treasury bills.

Mr Dada described money market instruments as very attractive at present as the federal government is deploying them to attract foreign investors.

“This possibly accounts for massive sell-offs of some stocks in the market. Stockbrokers are now buying instruments with strong fundamentals like Nestle Foods and Nigeria Breweries for proprietary trading to remain in business in this period of recession,” Mr Dada said.

The Chief Executive Officer, NASD OTC Exchange, Mr Bola Ajomale simply urged stockbrokers to wear their investment banking cap and work on buy-outs, mergers and growth of Small and Medium Scale Enterprises (SMEs) in order to cope with the current realities.

The Chief Executive Officer, Finawell Capital Limited, Mr Tunde Oyekunle advised stockbrokers to consider alternative income streams such as setting up of a strong fixed income desk to trade bonds and forex. He also recommended commodity trading and Derivatives such as forward contracts to boost income in the wake of recession.

Mr Oyekunle’s view was corroborated by the Chief Dealer, Coo Hedge Securities and Investment, Mr Samuel Ndata who urged his colleagues to diversify whatever little income in stockbroking to agriculture in order to stay afloat.

Mr David Adonri, the Chief Executive Officer, Highcap Securities Limited stated that to remain in business, stockbrokers must embark on austerity measures by cutting cost and patiently awaiting recovery of the economy.

The Relationship Officer, Foresight Securities and Investment Limited, Mr Fakrogba Charles who noted that economy moves in cycles said that stockbrokers should advise investors to invest in value stocks as recession is not a permanent feature.

In his response, the Principal Partner and Chief Executive Officer, Alicorn Consulting Limited, Mr Segun Oye simply explained that, “Recession comes with external factors that can only be managed by aggressive reduction of overhead and option of innovative diversification.

Speaking as well on the economic recession in the country, Managing Director/CEO, B. Adedipe Associates, Dr Biodun Adedipe, said that the recession is bad news for all stakeholders, and it also demands creativity and pragmatism to reverse. He tasked the government to provide leadership by spending more, especially on infrastructure to prevent a full blown depression and push for economic recovery.

Dr Adedipe further charged the government on the need to make business environment more friendly, ensure policy alignment with expansionary necessity and press more into transparency and value for money spending.

According to him, the government needs to revisit the exchange rate policy — the current arrangement is counterproductive for an import dependent economy with weak real sector.”

Also speaking on this development, Managing Director, Cowry Asset Management Limited, Mr Johnson Chukwu, said that with the economy going into a recession, there is the likelihood of more job losses as consumer demand declines further.

“I think that our economic managers at both the fiscal and monetary sides need to evolve coordinated stimulus response to inject liquidity into the System and reverse the economic decline,” he said.”

He, however, urged the nation’s economy managers on why emphasis should be shifted from fighting high rate of inflation to intensifying efforts in restoring economic growth.

In a similar direction, Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr Muda Yusuf, said government should work to rekindle investors’ confidence in the economy because capital and investment flows from investors are needed to complement government’s developmental drives. His words, “government can rekindle investors’ confidence in the economy by the quality and consistency of its policies.”

http://www.vanguardngr.com/2016/09/recession-investors-lose-n281bn-less-9-months/

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via [email protected]

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Economy

Naira Remains Stable at N1,500/$1 at Official Market

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By Adedapo Adesanya

The Naira closed flat against the United States Dollar at N1,500.65/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, February 7, after recording losses in four straight sessions in the trading week.

The recent pressure on the market across majorly regulated channels came despite recent policy moves by the Central Bank of Nigeria (CBN) creating more trading transparency and ethical practices.

However, the domestic currency depreciated against the Pound Sterling in the official market yesterday by N8.78 to trade at N1,868.76/£1 compared with the previous day’s rate of N1,859.98/£1 and against the Euro, it weakened by N1.95 to settle at N1,557.13/€1, in contrast to Thursday’s closing price of N1,555.18/€1.

At the parallel market, the Nigerian currency improved its value further against the US Dollar on Friday by N5 to sell for N1,565/$1 compared with the preceding session’s N1,570/$1.

As for the cryptocurrency market, it slumped yesterday after the US Bureau of Labor Statistics said the country’s economy added 143,000 jobs in January, below the forecast 170,000 and down from 256,000 in December.

Ethereum (ETH) declined by 4.5 per cent to sell at $2,615.76, Cardano slumped 4.3 per cent to trade at $0.6949, Litecoin (LTC) depreciated by 1.9 per cent to settle at $103.35, Dogecoin (DOGE) fell by 1.7 per cent to $0.2476, Solana (SOL) recorded a 1.4 per cent loss to close at $193.39, Bitcoin (BTC) depleted by 1.2 per cent to $96,138.53, and Binance Coin (BNB) went down by 1.1 per cent to quote at $578.78.

On the flip side, Ripple (XRP) gained 1.8 per cent to trade at $2.36, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat $1.00 each.

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Economy

Oil Prices up on Fresh Iran Crude Export Sanctions

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Crude Oil Prices

By Adedapo Adesanya

Oil prices went up on Friday after new sanctions were imposed on Iran’s crude exports, with Brent crude futures expanding by 37 cents or 0.5 per cent to $74.66 per barrel, and the US West Texas Intermediate (WTI) crude futures growing by 39 cents or 0.55 per cent to $71.00 a barrel.

However, for the week, prices were down by 2 per cent as investors worried about US President Donald Trump’s renewed trade war with China and threats of tariffs on other countries.

Reports of planned tariffs from the Trump administration reined in gains following the sanctions announced on Thursday.

The American president on Friday said he plans to announce reciprocal tariffs on many countries by Monday or Tuesday of next week.

President Trump did not identify which countries would be hit but suggested it would be a broad effort that could also help solve US budget problems.

However, Mr Trump’s Commerce secretary nominee Howard Lutnick voiced concerns about India’s high tariff rates, while US Trade Representative nominee Jamieson Greer discussed US complaints about Vietnam’s and Brazil’s tariffs and trade barriers.

He had earlier announced a 10 per cent tariff on Chinese imports as part of a broad plan to improve the US trade balance, but suspended plans to impose steep tariffs on Mexico and Canada.

But market analysts noted that this could be a major escalation of his offensive to tear up and reshape global trade relationships in the US favour.

On Thursday, it imposed new sanctions on a few individuals and tankers helping to ship millions of barrels of Iranian crude oil per year to China as it intensified war against Iran.

Iran’s President, Mr Masoud Pezeshkian, called on its fellow members in the Organisation of the Petroleum Exporting Countries (OPEC) to stand united against ‘destabilizing’ US sanctions, meeting with OPEC Secretary General Khaitam al-Ghais as the country assumes the rotating presidency of the organisation.

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Economy

Bulls Tighten Grip on Nigerian Exchange With 0.48% Growth

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Nigerian Exchange

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited appreciated further by 0.48 per cent on Friday after market participants showed no signs of slowing down in their hunt for stocks with sound fundamentals.

During the session, all the key sectors of the bourse witnessed bargain-hunting activities, with the banking counter growing by 1.72 per cent.

Further, the insurance index expanded by 1.64 per cent, the industrial goods sector jumped by 0.77 per cent, the consumer goods industry rose by 0.11 per cent and the energy space also gained 0.11 per cent.

Consequently, the All-Share Index (ASI) increased by 502.88 points to 105,933.03 points from the 105,430.15 points it ended a day earlier, and the market capitalisation gained 0.47 per cent or N305 billion to settle at N65.592 trillion compared with Thursday’s N65.287 trillion.

A total of 37 equities ended on the gainers’ chart yesterday and 17 equities on the losers’ table, implying a strong investor sentiment and positive market breadth index.

Academy Press appreciated by 9.93 per cent to N2.99, Cadbury Nigeria also improved its value by 9.93 per cent to N29.35, Eterna rose by 9.90 per cent to N36.65, Livestock Feeds expanded by 9.85 per cent to N5.80, and UPDC soared by 9.75 per cent to N2.59.

On the flip side, Multiverse lost 9.95 per cent to close at N9.05, MeCure Industries shed 9.71 per cent to N12.55, NPF Microfinance Bank slumped by 7.94 per cent to N1.74, Learn Africa declined by 4.44 per cent to N4.30, and Tantalizers soured by 3.85 per cent to N2.00.

Investors transacted 468.2 million shares worth N13.2 billion in 12,612 deals on the last trading session of the week compared with the 537.2 million shares valued at N23.0 billion traded in 15,450 deals in the preceding session, representing a decline in the trading volume, value and number of deals by 12.84 per cent, 42.61 per cent and 18.37 per cent, respectively.

The busiest stock for the day was Zenith Bank with a turnover of 108.8 million units worth N5.0 billion, Cutix traded 24.3 million units valued at N58.7 million, Access Holdings exchanged 23.6 million units for N657.7 million, Sterling Holdings transacted 22.8 million units valued at N136.0 million, and Fidelity Bank sold 20.4 million units worth N426.3 million.

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