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Economy

Price Declines in Penny Stocks Crumble NGX Index by 0.15%

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By Dipo Olowookere

The first trading session of the new week on the floor of the Nigerian Exchange (NGX) Limited ended on a negative note on Monday with a 0.15 per cent decline.

Sell-offs in penny stocks and others were the major drivers of the poor performance of the local bourse yesterday as investors were trying to be cautious with politicians already focusing on the 2023 general elections.

Business Post reports that the market breadth was at equilibrium on Monday as the stock exchange ended the session with 18 price gainers and 18 price losers.

Learn Africa was the worst-performing stock, losing 9.68 per cent to settle at N1.96, followed by Unity Bank, which depreciated by 8.16 per cent to 45 kobo.

Caverton went down by 7.09 per cent to trade at N1.18, FCMB depleted by 6.89 per cent to sell for N3.11, while Transcorp decreased by 6.54 per cent to quote at N1.00.

On the flip side, Beta Glass ended the trading session as the best-performing stock as it gained 9.92 per cent to settle at N58.20, PZ Cussons rose by 9.68 per cent to close at N10.20, Livestock Feeds grew by 9.03 per cent to N1.69, Linkage Assurance improved by 8.00 per cent to 54 kobo, while Jaiz Bank appreciated by 6.06 per cent to 70 kobo.

At the market yesterday, investors transacted 359.9 million stocks valued at N2.6 billion in 5,163 deals in contrast to the 177.1 million stocks valued at N4.2 billion exchanged last Friday in 3,873, showing an increase in the trading volume by 103.22 per cent, a decrease in the trading value by 37.54 per cent and an increase in the number of deals by 33.31 per cent.

Transcorp ended the day as the most active stock with the sale of 92.0 million units valued at N92.8 million, Sterling Bank transacted 50.7 million units worth N76.6 million, Fidelity Bank exchanged 46.7 million units for N153.6 million, Linkage Assurance sold 30.5 million units for N15.3 million, while Access Holdings traded 15.5 million units worth N156.4 million.

During the session, the consumer goods and industrial goods sectors closed higher by 0.18 per cent and 0.06 per cent respectively, while the banking, insurance and energy counters closed lower by 4.42 per cent, 0.30 per cent and 0.12 per cent apiece.

Due to the significant profit-taking in financial and energy stocks yesterday, the All-Share Index (ASI) crumbled by 70.37 points to 46,893.86 points from 46,964.23 points, while the market capitalisation depreciated by N38 billion to N25.273 trillion from N25.311 trillion.

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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