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.”
Investors Gain N1.09bn as NASD Share Price Rises 9.1%
By Adedapo Adesanya
The unlisted securities market closed the last trading session of the week on a positive note after it appreciated by 0.18 per cent on the back of growth in the share price of NASD Plc.
Business Post reports that the NASD Over-the-Counter (OTC) Securities Exchange returned to the bulls’ territory on Friday after it closed flat on Thursday.
NASD Plc was the major driver of the return of the bourse to the green region as its value went up during the session by N2.45 or 9.1 per cent to close at N26.99 per unit in contrast to N24.54 per unit it closed at the previous session.
As a result of this, the NASD unlisted security index (NSI) moved up by 1.32 points to 745.44 points from 744.12 points, while the market capitalisation gained N1.09 billion to wrap the day at N615.86 billion in contrast to the previous day’s N614.77 billion.
On the activity chart, there was an improvement as the trading volume surged by 34,985.6 per cent because of the 2.3 million units of shares exchanged by market participants compared with the 6,688 units transacted at the previous session.
In the same vein, the trading value rose by 17,680.6 per cent to N63.4 million from the previous day’s N356,563.60, while the number of deals witnessed a 100 per cent rise as investors carried out 12 deals compared to the six deals executed at the previous session.
At the close of trades, Food Concepts Plc was the most traded stock by volume (year-to-date) with 11.4 billion units of its shares worth N14.4 billion, Lighthouse Financial Service Plc followed with 1.1 billion units valued at N546.2 million, while Geo Fluids Plc was in third place with 1.0 billion units worth N700.1 million.
Food Concepts Plc was also the most traded stock by value on a year-to-date basis with 11.4 billion units worth N14.4 billion, trailed by Nigerian Exchange (NGX) Group Plc with 456.4 million units valued at N9.2 billion, VFD Group Plc with 10.4 million units valued at N3.5 billion.
Naira Trades N414.73/$1 as Cryptos Bleed Heavily
By Adedapo Adesanya
The Naira appreciated against the US Dollar at the Investors and Exporters (I&E) window of the foreign exchange (forex) market by 0.02 per cent or 7 kobo on Friday, December 4.
Data showed that the local currency was sold for N414.73/$1 at the investors’ window yesterday compared with the N414.80/$1 it traded on Thursday.
At the final trading session of the week, the turnover was $103.01 million as against $139.67 million achieved at the preceding session, indicating a $36.66 million or 26.62 per cent decline.
Also, the exchange rate of the Naira to the United States currency recorded a movement on Friday, though downward as the Nigerian currency depreciated by 4 kobo as it closed at N411.74/$1 versus the preceding day’s N411.70/$1.
The local currency, however, appreciated by N2.17 against the British Pound Sterling to settle at N546.26/£1 compared to N548.43/£1 it traded at the previous trading session and 57 kobo against the Euro to trade at N465.68/€1 compared to the preceding day’s N466.25/€1.
At the cryptocurrency market, investors counted a heavy loss as the new variant of the coronavirus called Omicron and hawkish comments by the US Federal Reserve that it could raise interest rates have raised serious concerns, causing cryptos to bleed heavily.
The heaviest loss was suffered by Dash (DASH), which plunged by 35.3 per cent to sell for N66,595.85. Ripple (XRP) depreciated 30.6 per cent to trade at N381.85, while Litecoin (LTC) sold for N66,595.85 after declining by 24.1 per cent.
Dogecoin (DOGE) went down by 22.7 per cent to sell at N90.29, Cardano (ADA) depreciated by 20.8 per cent to N652.82, Bitcoin (BTC) depleted by 16.9 per cent to quote at N26,800,504.20, Ethereum (ETH) equally saw a 16.9 per cent depreciation to trade at N2,100,100.39, Binance Coin (BNB) recorded a 12.9 per cent depreciation to trade at N218,577.24, Tron (TRX) went down by 12.7 per cent to trade at N48.00, while the US Dollar Tether (USDT) recorded a 0.1 per cent marginal loss to sell for N554.76.
Crude Mixed as Market Remains Unsettled by Omicron Jitters
By Adedapo Adesanya
Crude prices closed mixed on Friday, December 3 after erasing earlier big gains on growing worries that rising coronavirus cases and a new variant could reduce global oil demand.
Brent crude gained 21 cents or 0.3 per cent to trade at $69.88 per barrel while on the other hand, the United States West Texas Intermediate (WTI) crude lost 24 cents or 0.36 per cent to sell at $66.26 per barrel.
Both benchmarks declined for a sixth week in a row for the first time since November 2018.
Oil prices had witnessed one of the most troubled weeks as the market reeled from the fear brought about by the Omicron variant of the coronavirus with speculations that it could spark new lockdowns and dent fuel demand.
The World Health Organization (WHO) urged countries to vaccinate their people to fight the virus, saying travel curbs were not the answer.
Even with this, the Organisation of the Petroleum Exporting Countries and allies (OPEC+) surprised the market on Thursday when it stuck to its plans to add 400,000 barrels per day supply in January.
However, it said it will continue to monitor the market and this could make it change course if demand suffered from measures to contain the spread of the Omicron coronavirus variant.
The alliance said they could meet again before their next scheduled meeting on January 4.
Analysts noted that with the coronavirus cases rising, the US jobs report for November also didn’t help demand outlook even as the unemployment rate plunged to a 21-month low of 4.2 per cent, suggesting the country’s labour market was rapidly tightening.
US employment growth slowed considerably in November amid job losses at retailers and in local government education.
Meanwhile, in Vienna, diplomats attempting to restore the nuclear deal between Iran and world powers face substantial challenges that need urgent solutions, the top European envoy said Friday. Talks are set to resume next week.
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- Investors Gain N1.09bn as NASD Share Price Rises 9.1% December 4, 2021
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