Economy
Investors Lose N281b In 8 Months
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/
By Adedapo Adesanya
Seplat Energy Plc will revive hundreds of Nigerian oil wells laying fallow after completing the acquisition of Mobil Producing Nigeria Unlimited (MPNU) from ExxonMobil.
The company said it aims to lift oil output to about 200,000 barrels a day, a move that will help boost Nigeria’s oil production levels, as it aims to reach 2 million barrels per day next year.
The transaction, according to Seplat, “is transformative for Seplat Energy, more than doubling production and positioning the company to drive growth and profitability, whilst contributing significantly to Nigeria’s future prosperity.”
The completion of the Seplat-ExxonMobil deal has created Nigeria’s leading independent energy company, with the enlarged company having equity in 11 blocks (onshore and shallow water Nigeria); 48 producing oil and gas fields; 5 gas processing facilities; and 3 export terminals.
Recall that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in October approved the deal as part of a series of approvals, while it blocked Shell’s asset sale of up to $2.4 billion to the Renaissance consortium.
The acquisition of the entire issued share capital of MPNU adds the following assets to the Seplat Group: 40 per cent operated interest in OML 67, 68, 70 and 104; 40 per cent operated interest in the Qua Iboe export terminal and the Yoho FSO; 51 per cent operated interest in the Bonny River Terminal (‘BRT’) NGL recovery plant; 9.6 per cent participating interest in the Aneman-Kpono field; and approximately 1,000 staff and 500 contractors will transition to the Seplat Group.
MPNU adds substantial reserves and production to Seplat Energy; 409 million barrels of oil equivalent (MMboe) 2P reserves and 670 MMboe 2P + 2C reserves and resources as at 30 June 2024 and 6M 2024 average daily production of 71.4 kboepd (thousand barrels of oil equivalent).
Business Post reports that Seplat will be part of the payment this year, and will defer some to next year,
Speaking on the transaction, the Chairman of Seplat Energy, Mr Udoma Udo Udoma commended President Bola Tinubu for supporting this transaction and appreciated the support and diligence of the various ministries and regulators for all the work to reach a successful conclusion.
“We are delighted to welcome the MPNU employees to Seplat Energy. We are excited to begin our journey in a new region of the country, and we look forward to replicating the positive impacts we have achieved within our communities in our current areas of operations.
“Seplat’s mission is to deliver value to all our stakeholders, and we treasure the good relationships we have developed with the government, regulators, communities and our staff.”
On his part, the chief executive of Seplat Energy, Mr Roger Brown, described the acquisition as a major milestone, adding, “I extend my thanks to the entire Seplat team for their hard work and perseverance to complete this transaction.
“MPNU’s employees and contractors have a strong reputation for safety and operational excellence, and I welcome them to the Seplat Energy Group.
“We have acquired a company with one of the best portfolios of assets and related infrastructure in a world-class basin, providing enormous potential for the Seplat Group. Our commitment is to invest to increase oil and gas production while reducing costs and emissions, maximising value for all our stakeholders.
“MPNU is a perfect fit with our strategy to build a sustainable business that can deliver affordable, accessible and reliable energy for Nigeria alongside attractive returns to our shareholders”.
By Adedapo Adesanya
The National Pension Commission (PenCom) is projected to close the year with over N22 trillion in pension assets impacted by challenges like inflation and monetary policies.
This is according to PenCom Director-General, Mrs Omolola Oloworaran, at a press conference in Abuja on Thursday.
She said as of October 2024, the Contributory Pension Scheme (CPS) had 10.53 million registered contributors and pension fund assets worth N21.92 trillion.
Speaking at the conference-themed Tech-driven Transformation Shaping the Pension Landscape, which showcased PenCom’s strategic commitment to innovation, she said that the numbers reflected the agency’s unwavering commitment to fund safety, prudent management, and sustainable growth.
She explained that the pension environment was impacted by the wider economic challenges facing the country, noting that the sector battled multi-year high inflation, Naira devaluation, and the lingering effects of unorthodox monetary policies by the Central Bank of Nigeria (CBN).
Business Post reports that the apex bank hiked interest rates by 875 basis points this year alone to tackle persistent inflation which peaked at 33.8 per cent as of October.
She said that these challenges eroded the real value of pension funds and impacted contributors’ purchasing power.
“To address these issues, the commission has initiated a comprehensive review of its investment regulations.
“It is focusing on diversifying pension fund investments into inflation-protected instruments, alternative assets, and foreign currency-denominated investments.
“The goal is to safeguard contributor savings and ensure resilience against future economic volatility,” she said.
She restated the commission’s commitment to expanding pension coverage, particularly through the advanced micro-pension plan designed to encourage participation from the informal sector using technology.
“This initiative will make it easier for everyday Nigerians to save for retirement, aligning with our vision of inclusive growth and financial stability for all.
“The backlog in retirement benefits for retirees of the Federal Government’s Ministries, Departments, and Agencies (MDAs) will soon be settled.
“The federal government recently disbursed N44 billion under the 2024 budget to settle approved pension rights.
“We are collaborating with the Federal Government to institutionalise a sustainable solution to ensure retirees receive their benefits promptly, eliminating delays,” Mrs Oloworaran said.
She said that PenCom’s technology-driven transformation aimed to make the CPS more accessible, reliable, and sustainable.
“From data management to seamless contributions and regulatory supervision, we are paving the way for a future where the pension industry serves all Nigerians effectively,” she said,
Mrs Oloworaran also said that the e-application portal for pension clearance certificates has replaced the manual processes and enhanced the ease of doing business in the sector.
“Since its deployment, 38,528 pension clearance certificates have been issued. This initiative ensures compliance and secures the future of Nigerians working in organisations that interact with the government,” she said.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Thursday, December 12 after it ended the trading session with no single price gainer or loser.
As a result, the market capitalisation remained unchanged at N1.055 trillion as the NASD Unlisted Security Index (NSI) followed the same route, remaining at 3,012.50 points like the previous trading session.
However, the activity chart witnessed changes as the volume of securities traded at the bourse went down by 92.5 per cent to 447,905 units from the 5.9 million units transacted a day earlier.
In the same vein, the value of securities bought and sold by investors declined by 86.6 per cent to N3.02 million from the N22.5 million recorded in the preceding trading day.
But the number of deals carried out during the session remained unchanged at 21 deals, according to data obtained by Business Post.
When trading activities ended for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third place with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
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