Economy
Nigerian Stocks to Further Succumb to External Shocks This Week
By Modupe Gbadeyanka
The Nigerian Stock Exchange (NSE) will further experience sell offs this week, as uncertainty in the global market weigh on the local market.
This is the view of some financial analysts, who said more foreign portfolio investors will exit the local bourse for better yields outside.
The Nigerian stock market, which was one of the best performers in 2017, having recorded a growth of over 40 percent, is presenting at -17.20 percent.
The local bourse has struggled in most parts of this year as a result of low investor confidence, especially with the political tensions in the land.
Another factor that has contributed to this is the raising of rates by the United States Federal Reserve System this year, which has made investors to exit emerging markets in droves. Another increase is expected to happen next month when they meet on December 18 and 19, 2018.
The decline in the prices of crude oil in the global market has also had an effect on the Nigerian market, which is fuelling speculations that the local authorities may likely devalue the Naira, with the external reserves facing south lately.
Last Friday, the Brent crude oil price went below $60 for the first time since October 2017 to $59 per barrel at the international market, which Nigeria’s foreign reserves depreciated to $41.5 billion on Thursday.
With fears of a possible devaluation, some investors are already selling off their Naira investments, stocks inclusive, to buy up some Dollars in order not to render their money worthless when the unexpected eventually happens.
Analysts at Business Post believe that with above fears in the psyche of investors, the Nigerian stock market will further be under selling pressure this week.
“We do not expect the market to return to the green territory at the close of this trading week. This is because some external factors will continue to weigh on the local bourse.
“We are of the view that the political tensions in the country, as the 2019 campaigns pick up gradually, will also continue to have a negative impact on the market,” Business Post analysts opined.
Last week, the All Share Index (ASI) went down by 1.2 percent week-on-week to settle at 31,678.70 points, while the market capitalisation reduced by N138.6 billion week-on-week to finish at N11.565 trillion.
According to analysts at Cowry Asset, “We expect the local bourse to close negatively (this week) as bearish activity is sustained.
“Speculators are expected to continue scrapping the market for short term gains amid attractive valuations and dividend yields.”
For those at Afrinvest, “We expect an undulating trend in market performance as the impact of bargain hunting in fundamentally sound stocks is expected to be countered by subsequent sell offs.
“However, we maintain our bearish outlook on the market over the near-term.”
“In the short to medium term, we expect the negative performance for the equities market to persist, amidst growing political concerns ahead 2019 elections, and absence of a positive market trigger.
“However, positive macroeconomic fundamentals remain supportive of recovery in the long term,” analysts at Cordros Research said.
By Adedapo Adesanya
The National Pension Commission (PenCom) has defended its decision to allow Pension Fund Administrators (PFAs) to invest in the parent companies of their custodians, insisting that adequate safeguards are in place to protect contributors’ funds.
The director-general of the pension regulator, Ms Omolola Oloworaran, speaking on Tuesday during the Meet the Press Briefing at the Presidential Villa, Abuja, said the commission’s decision to relax the investment restriction followed a comprehensive risk assessment that found minimal conflict of interest.
She explained that under PenCom’s investment regulations, PFAs are only permitted to invest pension assets in carefully selected instruments that meet stringent criteria, including profitability, strong credit ratings and proven track records.
According to her, the commission regularly reviews its investment regulations, conducts routine examinations and spot checks on PFAs to ensure strict compliance with established risk management guidelines.
“PFAs cannot just go into the stock market and buy any kind of stock. There are strict guidelines. Companies must demonstrate profitability, have a proven track record and satisfy other criteria before pension funds can invest,” she said.
Ms Oloworaran noted that each PFA also operates under the oversight of a board, an investment committee and a risk management committee, providing additional layers of governance to safeguard contributors’ funds.
She said PenCom recently issued a circular allowing PFAs to invest in the parent companies of their custodians after determining that the potential conflict of interest was negligible.
The PenCom boss explained that the parent companies involved are largely Tier-1 banks, including First Bank, United Bank for Africa (UBA) and Zenith Bank, which she described as A-rated institutions with strong financial foundations.
She said the policy was intended to widen investment opportunities for pension funds without compromising safety.
Using Stanbic IBTC as an example, Ms Oloworaran explained that if its custodian is Zenith Bank, the previous restriction prevented the pension administrator from investing in Zenith Bank shares despite the bank’s strong performance.
“We reviewed the risks and any potential conflict of interest and found the risks to be very low. That is why we opened that investment window,” she said.
By Aduragbemi Omiyale
Analysts at Meristem Research have predicted that the inflation rate for June 2026 in Nigeria should marginally rise to 15.95 per cent on a year-on-year basis from the 15.93 per cent reported in May 2026.
The National Bureau of Statistics (NBS) is expected to release inflation numbers for last month later today, Wednesday, July 15, 2026.
In its report sighted by Business Post, Meristem Research said it expects inflationary pressures to re-emerge across key economies in the near term, as the re-escalation of the US-Iran conflict has reignited upward pressure on global oil prices.
It disclosed that this marks a sharp reversal from most of June, when the ceasefire between the two countries helped drive oil prices lower, raising expectations of some relief on the inflation front.
With conflicts now flaring up again, oil prices are likely to increase again, and the anticipated easing in energy-driven inflation may not materialise as broadly as earlier envisaged.
“Nonetheless, some relief is likely from the food segment, where robust supply conditions across major producing regions and softening demand should continue to ease food price pressures,” it stated.
The team also explained that it projected a 15.95 per cent inflation rate because of the lingering effects of persistent food price pressures.
“However, we expect core inflation to moderate as the sharp reversal in energy prices begins to filter through to transportation, distribution, and other energy-related costs, easing underlying price pressures.
“On a month-on-month basis, the combined effect of lower petrol prices, a relatively stable Naira, and the gradual pass-through of reduced energy costs across the supply chain should exert further downward pressure on inflation.
“Based on our assessment, food inflation is expected to remain the key swing factor, as seasonal pre-harvest supply constraints are likely to offset some of the gains from lower logistics costs,” it said.
By Adedapo Adesanya
The duo of Central Securities Clearing System (CSCS) Plc and Afriland Properties Plc weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.61 per cent on Tuesday, July 14.
CSCS Plc saw its stock value drop N9.08 to close at N82.40 per share compared with the preceding session’s N91.48 per share, and Afriland Properties Plc slid by 17 Kobo to sell at N15.00 per unit versus N15.70 per unit.
The losses recorded by the two securities pulled back the market capitalisation by N41.64 billion to N2.546 trillion from N2.587 trillion, and cracked the NASD Security Index (NSI) by 69.36 points to 4,242.31 points from 4,311.67 points.
It was observed that the exchange witnessed two price advancers during the session, led by FrieslandCampina Wamco Nigeria Plc, which gained N1.37 to end at N151.37 per share compared with the previous day’s N150.00 per share, and Food Concepts Plc chalked up 5 Kobo to settle at N2.50 per unit versus N2.45 per unit.
The volume of securities traded by market participants surged by 50.7 per cent to 13.7 million units from the previous 9.1 million units, while the value of securities went down by 79.7 per cent to N65.2 million from N320.4 million, and the number of deals crashed by 3.6 per cent to 27 deals from the previous session’s 28 deals.
At the close of transactions, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with the sale of 3.4 billion units for N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc, which exchanged 2.3 billion units valued at N6.5 billion, and CSCS Plc with 73.9 million units transacted for N5.2 billion.
GNI Plc also closed the trading day as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
