Economy
Investors Panic as Lack of Quorum May Stall 2018 MPC Meeting
By Dipo Olowookere
There is anxiety in the Nigerian business space as the first Monetary Policy Committee (MPC) meeting for 2018, scheduled for the third week of January, may not hold due to lack of quorum.
The MPC is a body set up to maintain price stability and support the economic policies of the federal government by formulating monetary and credit policies.
The committee has the Central Bank of Nigeria (CBN) Governor as Chairman; the four deputy governors of the apex bank; two members of the board of directors of the CBN; three members appointed by the President; and two members appointed by the Governor.
By the end of this year, eight positions in the 12-member committee would have become vacant, making it impossible for it to form the quorum required for it to meet.
In October 2017, President Muhammadu Buhari nominated Mrs Aisha Ahmad as a Deputy Governor of the CBN to replace Mrs Sarah Alade, who retired from the bank in June.
He also nominated Professor Adeola Festus Adenikinju, Dr Aliyu Rafindadi Sanusi, Dr Robert Chikwendu Asogwa and Dr Asheikh A. Maidugu as members to fill the positions of four others whose tenure would expire at the end of the year.
Meanwhile, Alhaji Suleiman Barau, another deputy governor of the central bank, who is also a member of the committee, retired recently. The President is yet to name a replacement for him.
But the President’s nominees sent to the Senate for confirmation have not been considered at all. The upper parliament has refused to consider the President’s nominees because of its resolution to suspend all executive confirmation requests for positions not listed in the 1999 Constitution as amended until the Acting Chairman of the Economic and Financial Crimes Commission (EFCC), Mr Ibrahim Magu, was removed.
The Senate last week adjourned to January 9 for its Christmas/New Year recess, while plenary session would begin on January 16.
This development has made uncertain the January meeting of the committee, which has operational independence in setting interest rate as well as designing monetary policy for the country.
Speaking in a chat with THISDAY, the Director General of the West African Institute for Financial and Economic Management (WAIFEM), Prof. Akpan Ekpo, expressed concern over the development.
According to Mr Ekpo, it would create uncertainty among investors.
He said: “There might not be an MPC meeting because they would not be able to form a quorum and if the MPC does not meet it would send a wrong signal to the international investors because it means that there is still uncertainty in the system.
“The way it is now, we are in a limbo and if MPC does not meet, it means that there won’t be decisive actions on monetary policy. The MPC is the engine room for monetary policy and so if they cannot meet to deliberate on the economy and relevant issues, you increase uncertainty in the system.
“The central bank’s mandate is price stability and it is very crucial in any economy. We have always argued that such delays would always cause problem for us.
“So, my advice is that they should stop this delay because it has adverse effect on the economy. So, even if they have to come back from recess and confirm the MPC members, they should do so.”
However, in his reaction, the chief executive of the Financial Derivatives Company Limited, Mr Bismarck Rewane, said there was no need for panic.
Mr Rewane expressed optimism that the new MPC members would be confirmed before the next meeting.
He said: “I don’t think that is a problem. There is still time between now and then. The meeting is not until third week in January for the MPC and I believe the Senate would be able to deal with it before then.”
Nevertheless, when reminded that the Senate would resume fully on January 16, Mr Rewane said: “They would postpone the MPC by one or two weeks! I don’t think it is something to panic about.
“In any case, what does the MPC do? Most of the changes in policy instruments have taken place outside the MPC meeting. So, the MPC has become a ritual. So, there is no need to panic.”
By Dipo Olowookere
About 0.04 per cent was recovered on Friday from the loss recorded by the Nigerian Exchange (NGX) the previous due to profit-taking.
Yesterday, investors were in the market with renewed vigour, mopping up stocks trading at relatively cheaper prices.
According to data, the insurance counter gained 0.41 per cent, the banking sector appreciated by 0.38 per cent, and the consumer goods index grew by 0.14 per cent.
The gains achieved by these three sectors were enough to lift Customs Street at the close of business despite the 0.26 per cent decline printed by the industrial goods segment and the 0.14 per cent loss suffered by the energy industry. The commodity counter was flat during the session.
A total of 43 equities gained weight on the last trading day of this week, while 26 equities shed weight, indicating a positive market breadth index and strong investor sentiment.
Red Star Express increased its share price by 10.00 per cent to N13.20, NCR Nigeria grew by 9.97 per cent to N128.55, SCOA Nigeria inflated by 9.96 per cent to N14.90, Omatek appreciated by 9.94 per cent to N1.77, and Deap Capital expanded by 9.85 per cent to N4.46.
On the flip side, McNichols decreased by 8.81 per cent to N6.00, Legend Internet crumbled by 7.56 per cent to N5.50, Cornerstone Insurance crashed by 6.48 per cent to N6.35, C&I Leasing contracted by 6.29 per cent to N8.20, and Austin Laz slipped by 5.78 per cent to N3.75.
Yesterday, 539.9 million shares valued at N16.7 billion were transacted in 48,023 deals versus the 1.0 billion shares worth N31.6 billion executed in 51,227 deals in the preceding day, implying a shrink in the trading volume, value, and number of deals by 46.01 per cent, 47.15 per cent, and 6.26 per cent apiece.
Zenith Bank was the most active for the day with 54.6 million stocks sold for N3.8 billion, Jaiz Bank traded 41.5 million units worth N359.4 million, Secure Electronic Technology transacted 37.7 million units valued at N39.2 million, Access Holdings exchanged 30.5 million units for N699.2 million, and Lasaco Assurance transacted 27.2 million units worth N68.3 million.
When the market closed for the day, the All-Share Index (ASI) went up by 72.21 points to 166,129.50 points from 166,057.29 points and the market capitalisation gained N31 billion to N106.354 trillion from N106.323 trillion.
By Adedapo Adesanya
It was a positive ending for the Naira this week after it further appreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, January 16 by N1.33 or 0.09 per cent to sell for N1,417.95/$1 compared with the previous day’s N1,419.28/$1.
The domestic currency also gained N2.41 against the Euro in the official market to close at N1,647.51/€1 versus the preceding session’s closing price of N1,649.92/€1, however, it suffered a N7.97 loss against the Pound Sterling in the same market window to trade at N1,901.32/£1, in contrast to Thursday’s closing price of N1,893.35/£1.
In the same vein, the Nigerian Naira depleted against the Dollar at the GTBank FX counter by N2 to quote at N1,427/$1 compared with the previous day’s N1,425/$1, but strengthened against the greenback at the black market yesterday by N5 to settle at N1,485/$1 versus the N1,490/$1 it was exchanged a day earlier.
Improved supply conditions helped keep the market within range as exporters’ and importers’ inflows in addition to non-bank corporate supply enhanced liquidity as the Central Bank of Nigeria (CBN) made no visible intervention.
Stronger external inflows from foreign portfolio investors (FPIs) and improving current account dynamics, continue to align with structural support in the wider economy.
Nigeria has seen projections of a stronger economic or gross domestic product (GDP) growth and lower inflation in 2026, with these forecasts citing improved macroeconomic fundamentals and reform impacts.
As for the cryptocurrency market, it was mixed following selloff in precious metals and lower US stocks appeared to be denting crypto sentiment.
Gold and silver, both of which also enjoyed big rallies earlier this week, tumbled 1.2 per cent and 5 per cent, respectively while key US stock indexes — the Nasdaq, S&P 500 and Dow Jones Industrial Average — all reversed from early gains to modest losses in Friday trade.
Dogecoin (DOGE) shrank by 2.2 per cent to $0.1370, Ripple (XRP) slipped by 0.8 per cent to $2.05, Ethereum (ETH) went down by 0.7 per cent to $3,228.56, and Bitcoin (BTC) slumped by 0.6 per cent to $95,086.80.
Conversely, Litecoin (LTC) appreciated by 3.2 per cent to $74.48, Solana (SOL) rose by 0.4 per cent to $143.70, Cardano (ADA) jumped by 0.2 per cent to $0.3942, and Binance Coin (BNB) increased by 0.1 per cent to $935.88, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
Oil prices settled higher amid lingering worries about a possible US military strike against Iran, a decision that may still occur over the weekend.
Brent crude settled at $64.13 a barrel after going up by 37 cents or 0.58 per cent and the US West Texas Intermediate (WTI) crude finished at $59.44 a barrel after it gained 25 cents or 0.42 per cent.
The US Navy’s aircraft carrier USS Abraham Lincoln was expected to arrive in the Persian Gulf next week after operating in the South China Sea.
Market analysts noted that it doesn’t seem likely anything will happen soon. However, the weekends have become the perfect time for actions so as not offset the markets.
The market had risen after protests flared up in Iran and US President Donald Trump signalled the potential for military strikes, but lost over 4 per cent on Thursday as the American president said Iran’s crackdown on the protesters was easing, allaying concerns of possible military action that could disrupt oil supplies.
Iran produces approximately 3.2 million barrels per day, accounting for roughly 4 per cent of global crude production, so it was not a coincidence that markets rallied sharply through Tuesday and Wednesday as President Trump canceled meetings with Iranian officials and posted that “help is on its way” to Iranian protesters, raising fears of potential US military strikes that sent prices surging toward multi-month highs.
Weighing against those fears are potential supply increases from Venezuela.
The Trump administration is exploring plans to swap heavy Venezuelan crude for US medium sour barrels that can actually go straight into Strategic Petroleum Reserve (SPR) caverns, since not all all oil belongs in the reserve.
According to Reuters, the Department of Energy is considering moving Venezuelan heavy crude into commercial storage at the Louisiana Offshore Oil Port, while US producers deliver medium sour crude into the SPR in exchange.
Analysts expect higher supply this year, potentially creating a ceiling for the geopolitical risk premium on prices.
Some investors covered short positions ahead of the three-day Martin Luther King holiday weekend in the US.
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