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Economy

Nigerian Exchange Hits Highest Level Since 2008 Financial Crisis

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Nigerian Exchange

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited crossed the 51,000 psychological points on Monday after gaining 1.90 per cent following a sustained buying pressure from investors.

The All-Share Index (ASI) climbed by 967.45 points to 51,902.48 points from 50,935.03 points. It was the highest point reached by the exchange since the 2008 global meltdown.

Also during the trading session, the market capitalisation, which measures the total value of stocks on the bourse, appreciated by N521 billion to settle at N27.981 trillion from 27.460 trillion.

It was observed that buying interest in consumer goods and a few others contributed to the growth achieved yesterday amid profit-taking in the financial services sector.

The consumer goods index rose by 2.15 per cent, the energy counter gained 0.47 per cent, the industrial goods sector appreciated by 0.21 per cent, while the insurance and banking counters depreciated by 1.27 per cent and 0.28 per cent respectively.

Business Post reports that the market breadth remained positive with 21 depreciating stocks and 37 appreciating stocks led by Nigerian Breweries, which gained 10.00 per cent to trade at N77.00.

Cadbury Nigeria rose by 9.96 per cent to N14.90, Royal Exchange grew by 9.90 per cent to N1.11, Champion Breweries improved by 9.88 per cent to N3.67, while International Breweries gained 9.63 per cent to sell for N7.40.

Transcorp Hotels ended the session as the worst-performing stock after its price dropped 10.00 per cent to N4.05, Guinness Nigeria fell by 9.59 per cent to N99.45, Multiverse depreciated by 9.09 per cent to 20 kobo, Coronation Insurance dropped 6.67 per cent to 42 kobo, while Sunu Assurances declined by 6.06 per cent to 31 kobo.

At the market on Monday, a total of 337.6 million shares worth N5.6 billion exchanged hands in 7,684 deals compared with the 466.3 million shares worth N5.3 billion traded in 7,442 deals last Friday, implying a decline in the trading volume by 27.60 per cent, an increase in the trading value by 4.63 per cent and growth in the number of deals by 3.25 per cent.

Transcorp recorded the highest volume of trades with a turnover of 37.8 million units worth N45.0 million, GTCO traded 24.8 million shares valued at N580.6 million, Zenith Bank exchanged 21.2 million equities worth N521.7 million, Access Holdings transacted 19.4 million stocks for N185.5 million, while FBN Holdings traded 15.9 million shares worth N190.3 million.

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 dipo.olowookere@businesspost.ng

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Economy

JUST IN: CBN Raises Benchmark Interest Rate to 13%

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killing interest rate

By Dipo Olowookere

For the first time in two years, the Monetary Policy Rate (MPR) has been raised by the Central Bank of Nigeria (CBN) to 13.0 per cent from 11.5 per cent.

Mr Godwin Emefiele, the Governor of the CBN, who announced this development on Tuesday in Abuja, explained that the decision to increase the benchmark interest rate was taken at the Monetary Policy Committee (MPC) meeting held yesterday and today.

While addressing financial reporters this afternoon, Mr Emefiele said members of the committee were unanimous with the decision to hike the rates as it was the best thing to do after holding them for about two years.

According to the central bank chief, one of the reasons for raising the rate is to control liquidity ahead of the 2023 general elections as politicians would be expected to flood the system with cash in a bid to woo voters.

However, the other parameters were left unchanged by members at the gathering as the Asymmetric corridor remained around the MPR at +100/-700bps, the Cash Reserve Ratio (CRR) at 27.5 per cent and the Liquidity Ratio (LR) at 30.0 per cent.

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Economy

Nigeria’s GDP Grows by 3.11% in Q1, What Next?

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GDP

By Lukman Otunuga

There are two ways one could interpret Nigeria’s latest Gross Domestic Product (GDP) figure of 3.11% in Q1 of 2022.

The optimists will say the country’s economy grew for the sixth consecutive quarter in Q1 while pessimists may highlight how economic growth slowed for the third consecutive quarter.

Either way, Nigeria’s economy continues to display resilience against external and domestic risks. With the improvement in the non-oil sector driving growth, this may brighten the growth outlook. But could these be signs of Nigeria breaking away from the chains of oil reliance to derive growth from sustainable sources? It may be too early to come to any meaningful conclusion. However, the report is encouraging and illustrates progress made by the country in reclaiming stability post-Covid-19.

With economic conditions somewhat improving, the Central Bank of Nigeria (CBN) is unlikely to raise interest rates this week. Given how Africa’s largest economy has been able to maintain growth in the past six quarters on the back of loose monetary policies by the CBN, a rate hike could disrupt Nigeria’s economic recovery.

As the global war against inflation rages on, central banks are stepping up.

However, the CBN is likely to remain on the sidelines for now. Nevertheless, inflation is still a cause for concern with consumer prices accelerating for the third straight month to 16.82% in April 2022.

With the general elections around the corner, pre-election spending could translate to rising price pressures. On top of this, the widening policy divergence between the Federal Reserve and the CBN could punish the Naira.

It’s worth keeping in mind that the dollar remains heavily supported by aggressive Fed rate hike bets and is likely to remain strong for the rest of 2022. A powerful dollar is bad news for emerging market currencies including the Naira which continues to depreciate in both the official and unofficial markets.

Lukman Otunuga is the Senior Research Analyst at FXTM

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Economy

NGX All Share Index Weakens Further by 0.13%

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All-Share Index

By Dipo Olowookere

The bearish sentiment on the floor of the Nigerian Exchange (NGX) Limited continued on Monday as the bourse further depreciated by 0.13 per cent.

Sustained profit-taking especially in the industrial goods sector contributed to the decline suffered during the session as the All Share Index (ASI) slumped by 68.45 points to close at 52,911.51 points compared with the previous session’s 52,979.96 points.

As for the market capitalisation, it depreciated by N37 billion amid sell-offs in 24 stocks to settle at N28.525 trillion as against last Friday’s closing value of N28.562 trillion.

On the first trading day of this week, the insurance sector depleted by 2.32 per cent, the industrial goods sector fell by 0.09 per cent, while the energy, banking and consumer goods counters increased by 0.28 per cent, 0.10 per cent and 0.05 per cent respectively.

Presco led the losers’ chart yesterday with a price decline of 10.00 per cent to trade at N180.00, Global Spectrum Energy Services lost 9.97 per cent to finish at N3.07, Neimeth fell by 9.66 per cent to N1.59, UAC Nigeria depreciated by 8.33 per cent to N13.20, while NEM Insurance retreated by 7.74 per cent to N4.05.

The gainers’ log had 22 members on Monday, with Conoil leading after its value improved by 9.95 per cent to N34.25. MRS Oil gained 9.93 per cent to quote at N14.95, McNichols appreciated by 9.86 per cent to N2.34, Academy Press increased its price by 9.76 per cent to N1.35, while NPF Microfinance Bank expanded by 8.02 per cent to N2.02.

On the activity chart, a total of 263.3 million stocks worth N3.6 billion exchanged hands in 4,856 deals during the session compared with 436.6 million stocks worth N3.2 billion bought and sold in 4,716 deals in the preceding session. This implied that the volume of trades depreciated by 39.68 per cent, while the value of trades and the number of deals increased by 10.15 per cent and 2.97 per cent respectively.

Jaiz Bank closed the day as the most active stock with the sale of 114.0 million units valued at N101.8 million, GTCO transacted 12.9 million shares for N302.8 million, Transcorp exchanged 12.8 million stocks worth N16.7 million, Access Holdings traded 11.7 million equities valued at N115.7 million, while Zenith Bank sold 8.6 million shares for N207.0 million.

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