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Regulators Must Keep Tabs on Capital Market Dynamics—Yuguda

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capital market dynamics

By Aduragbemi Omiyale

The Director-General of the Securities and Exchange Commission (SEC), Mr Lamido Yuguda, has tasked regulators in the West African region to keep pace with capital market dynamics by carrying out a regular assessment of policies and programmes to fit current realities and address the region’s peculiar challenges.

Speaking at the West African Capital Markets Conference with the theme Deepening and Strengthening the Capital Markets Across West Africa through Effective Regulation, he said the need for regular assessment necessitated the revision of the WASRA/WACMIC (West African Capital Markets Integration Council) Road Map to reflect current developments and include specific initiatives that will further improve the successful implementation of integration and other efforts.

At the event organised by the West Africa Securities Regulators Association (WASRA) and held in Accra, Ghana, Mr Yuguda said WACMaC periodically presents members with an opportunity to explore the role that financial markets should play in supporting the growth of the real sector of the respective economies and indeed the sub-region in general.

The SEC chief, who doubles as WASRA Chairman, stated that, “We are not unaware that in some member states, capital markets activities are still in their nascent stage.”

“In collaboration with ECOWAS, efforts are being made to encourage these jurisdictions to join WASRA. We intend to engage and partner with them to build capital markets that will support the growth and development of their respective countries while advancing our regional market integration efforts,” he added.

“As the region continues to expand in market size and influence, it becomes increasingly more important to focus our attention on developing world-class markets by looking at innovative ways to address critical issues such as systemic risk, market integrity, investor protection, fintechs and disruptive technologies.

“We must also be steadfast in our collective efforts to close the geographic distance between our markets through ways and means that facilitate regional integration,” the Nigerian stated further.

Mr Yuguda expressed delight at the high level of participation at the meeting emphasizing that the biennial conference is geared toward promoting robust discussions on how to harness resources and effectively optimize collective efforts towards the integration of markets in the region.

This, he stated, will no doubt lead to the realization of a key outcome, namely, an increase in capital markets’ contribution to the economic growth and development of the region.

“You will recall that at our inaugural conference in Abidjan, Cote d’Ivoire, we resolved to continually strive to create an environment that facilitates cross-border securities transactions; strengthen investor protection; build capacity; be more innovative with our processes, among others.

“To this end, we have made significant progress by adopting strategic initiatives aimed at boosting the economy, generating wealth, improving infrastructure development and growing trust and confidence as we strive for a deeper and more resilient capital market” he added.

In his address, the DG of the Securities and Exchange Commission, Ghana, Mr Daniel Ogbarmey Tetteh, said the journey to achieve an integrated capital market in the West Africa sub-region began some nine years ago with the overarching goal of creating a regional capital market that would create the platform for various issuers including corporates, governments, regional development bodies, agencies and multilateral to raise relatively cheap capital to fund regional infrastructural projects, corporate expansion and private sector development, cross-border trade and overall economic development of the sub-region.

According to him, “everyone who is participating in this conference has a sense of an appreciation of the important role capital markets play in the mobilization of long term capital in the financing mix of any economy so there is no need to preach to the choir here. The focus of this conference, and rightly so, is on how effective regulation can enable the deepening and strengthening of the capital markets in the sub-region.”

“Any weak link in the regulatory regime in an integrated market can spell doom and hence the need for a lot of effort to be channelled into developing a harmonized set of rules and regulations, the application of best practice in the regulation of securities markets and pursuit of robust cooperation to avoid regulatory arbitrage, protect investors as well as the integrity of the capital markets,” he added.

Mr Tetteh, therefore, called on all the member states of ECOWAS, to get on board as they pursue this noble path to achieve an integrated market in the sub-region.

“No one would do it for us so we owe it to ourselves to assume the responsibility. The good news is that we can do it so let’s go for it. Your very strong participation in this conference says something about commitment to the cause so there’s hope that the dream would become reality,” he stated.

14 Comments

14 Comments

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Economy

Naira Falls at Official Market, Gains at Unofficial FX Windows

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Official FX Market

By Adedapo Adesanya

The Naira continued its roller coaster ride at the foreign exchange (FX) segments in Nigeria on Thursday, depreciating at the Investors and Exporters (I&E) window and appreciating at the Peer-to-Peer (P2P) and parallel market windows.

In the official market, the Naira lost 53 Kobo or 0.12 per cent against the United States Dollar to settle at N445.83/$1 compared with the previous day’s value of N445.83/$1.

The local currency reported the fall despite the value of FX transactions going down during the session. Data showed that the turnover for the day stood at $99.50 million, 43.9 per cent or $77.94 million lower than the $177.44 million published on Wednesday.

In the interbank segment of the forex market, the domestic currency closed flat against the Pound Sterling and the Euro yesterday at N534.67/£1 and N461.79/€1, respectively.

However, in the P2P window, the Nigerian currency appreciated against its American counterpart by N4 to close at N762/$1, in contrast to the N766/$1 it was traded on Wednesday.

In the black market, which is an unofficial FX segment just like the P2P, the Nigerian Naira appreciated against the US Dollar yesterday by N5 to trade at N745/$1.

As for the digital currency market, there was a negative movement across the 10 tokens tracked by Business Post, with Dogecoin (DOGE) recording the heaviest fall, 4.1 per cent, to sell at $0.0990.

Solana (SOL) recorded a 2.9 per cent slump to trade at $13.56, Ripple (XRP) dipped by 2.6 per cent to quote at $0.3892, and Binance Coin (BNB) slid by 2.5 per cent to settle at $288.59.

Further, Bitcoin (BTC) fell by 0.9 per cent to close at $16,941.89, Cardano (ADA) depreciated by 0.7 per cent to finish at $0.3135, Ethereum (ETH) saw a 0.6 per cent depreciation to trade at $1,273.75, and Litecoin (LTC) went down by 0.4 per cent to close at $76.50.

However, the value of the US Dollar Tether (USDT) and the Binance USD (BUSD) remained unchanged during the session at $1.00 each.

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Economy

Oil Trades Mixed on Weaker Dollar, China COVID-19 Curbs

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Worsening Oil Demand

By Adedapo Adesanya

The crude oil market traded mixed on Thursday, retreating from an early rally built on weakness in the US Dollar and hopes for improved fuel demand in China after COVID-19 curbs were eased in two major Chinese cities.

Brent crude futures settled 9 cents lower at $86.88 a barrel, while the US West Texas Intermediate (WTI) crude futures settled 67 cents higher at $81.22 a barrel.

The shift in China’s zero-COVID strategy raised optimism about a recovery in oil demand there. The cities of Guangzhou and Chongqing announced an easing of COVID curbs on Wednesday.

Demonstrations in the world’s largest oil importer, which spread over the weekend to Shanghai, Beijing and elsewhere, have become a show of public defiance unprecedented since President Xi Jinping came to power in 2012.

The southwestern city of Chongqing will allow close contact with people with COVID-19 who meet certain conditions to quarantine at home.

Guangzhou, near Hong Kong, also announced an easing of curbs, but with record numbers of cases nationwide, there seems little prospect of a major reversal in the zero-COVID policy.

Oil was however supported through most of Thursday’s session by a slump in the dollar index to its lowest since August after the US Federal Reserve Chair Jerome Powell said rate hikes could slow this month.

A weaker dollar makes oil cheaper for other currency holders.

The greenback dipped to 16-week lows against a basket of major currencies on Thursday after data showed that US consumer spending increased solidly in October while inflation moderated, adding to expectations that the Federal Reserve is closer to reaching a peak in interest rates.

Mr Powell said on Wednesday that it was time to slow rate hikes, noting that slowing down at this point is a good way to balance the risks.

The prospect of a lower price cap on Russian oil is also lending support, analysts said. European Union governments tentatively agreed on Thursday on a $60 cap on Russian sea-borne oil.

Meanwhile, the market will await what the meeting of the Organisation of the Petroleum Exporting Countries (OPEC) and allies, OPEC+, will bring come December 4, although a policy change is seen as unlikely.

“OPEC+ would rather sit on the bench at this time and assess the outcome of what happens on Monday,” an unnamed source told the news agency, Reuters, this week.

OPEC also made a meeting of its ministers planned for Saturday a virtual gathering, and OPEC+ cancelled a meeting of oil market experts, the Joint Technical Committee, that had been scheduled for Friday.

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Economy

Honeywell Flour, MTN, Others Pull Market Back by 0.01%

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Honeywell Flour

By Dipo Olowookere

The depreciation printed by the shares of Honeywell Flour, MTN Nigeria, Ecobank and 10 others pulled back the Nigerian Exchange (NGX) Limited from the bulls’ territory into the danger zone by 0.01 per cent on Thursday.

It was the first trading session in December, and the stock market could not sustain the positive moment it recorded on the last day of the previous month due to the selling pressure on the equities mentioned above, though investor sentiment remained strong.

According to data from the bourse, the market breadth was positive yesterday as there were 15 price advancers and 13 price decliners led by Honeywell Flour, which dropped 7.89 per cent to trade at N2.10. RT Briscoe went down by 7.41 per cent to 25 Kobo, Wema Bank declined by 5.45 per cent to N3.12, FCMB contracted by 4.18 per cent to N3.21, and Cutix retreated by 2.84 per cent to N2.05.

On top of the gainers’ log was UPDC REIT, which improved its share value by 9.09 per cent to N3.00, McNichols rose by 8.93 per cent to 61 Kobo, Japaul jumped by 7.41 per cent to 29 Kobo, Nigerian Breweries 7.14 per cent to N45.00, and Royal Exchange grew by 4.76 per cent to 66 Kobo.

Yesterday, investors transacted 172.9 million shares valued at N2.8 billion in 3,073 deals compared with the 107.0 million shares valued at N1.3 billion traded in 3,227 deals in the midweek session, representing a decline in the number of deals by 4.77 per cent, an increase in the trading volume by 61.55 per cent, and a surge in the trading value by 115.63 per cent.

The increase in the market turnover was driven by the 49.8 million shares of FCMB traded by investors during the session. Courteville traded 16.9 million stocks, Access Holdings sold 12.0 million equities, UBA traded 10.8 million shares, and Zenith Bank exchanged 9.8 million shares.

Business Post reports that the insurance and energy counters went down by 0.12 per cent and 0.08 per cent, respectively, while the banking and consumer goods sectors went up by 2.16 per cent and 0.77 per cent apiece, with the industrial goods space closing flat.

At the close of trades, the All-Share Index (ASI) receded by 3.40 points to 47,656.64 points from 47,660.04 points, and the market capitalisation retreated by N2 billion to N25.957 trillion from N25.959 trillion.

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