Economy
Trapped Foreign Investors Invest in Nigerian Stocks, OMO Bills
By Dipo Olowookere
Some foreign portfolio investors, who sold off their Naira investments before and shortly after the lockdown in Nigeria in high hopes of repatriating their funds, but got trapped, are already re-investing their money in local investment tools, an investigation by Business Post has revealed.
In March 2020, the Central Bank of Nigeria (CBN) practically stopped the sale of foreign exchange (forex) to authorised traders.
Since the lockdown in Lagos, Abuja and Ogun State, Dollar sales at the Investors and Exporters (I&E) window have reduced drastically.
The I&E segment of the forex platform was created by the apex bank about three years ago for the exchange of Naira to Dollar by FPIs and business corporations.
Before the movement cessation on March 30, the average daily trading value at the investors’ segment was within $400 million to $500 million, but since the lockdown, it has broadly dropped to $30 million to $40 million. This has largely eased the pressure on the domestic currency and there have been huge drop in demand for forex at the market as well as supply.
Business Post reports that on Friday, the total value of transactions at the I&E segment was $62.45 million, higher than the $25.43 million recorded on Thursday.
Nigeria has been battling with Dollar inflows due to fall in the prices of crude oil, which contributes over 80 percent to its foreign earnings, causing the nation’s external reserves, where the CBN takes forex to defend the Naira, to deplete.
Business Post observed that some FPIs, who sold their Naira investments last month, have been unable to repatriate their proceeds weeks after. This has forced some of them to reconsider putting the funds back into the capital market.
In the past two to three weeks, the Nigerian equity market has suddenly experienced surge in the trading volume and value. It has also regained its strength despite the threats posed by the coronavirus disease, which has plunged the global economy into a recession, according to the International Monetary Fund (IMF).
Last week, the stock market appreciated by 7.19 percent week-on-week. This was after it moved up by 1.37 percent the previous week. This week, the market receded by 1.41 percent as a result of profit taking, though there was a 0.57 percent growth recorded yesterday (Friday).
Investigations by Business Post showed that non-resident investors, who could not get their funds out of the country, chose to turnover the money and wait until the restrictions are lifted and Dollar supply to the I&E is resumed by the CBN.
At the treasury bills market, in the last two weeks, there have been upsurge in transactions at the Open Market Operations (OMO).
Last year, the CBN restricted local retail and institutional investors from buying its OMO bills and only allowed FPIs to invest in the liquidity management tool.
Since the lockdown commenced late last month, the OMO auctions had been snubbed by offshore investors, but when they could not repatriate their funds, they began to look the way of the exercise about two weeks ago.
At the last exercise held on Thursday, OMO bills worth N100 billion were auctioned across 89-day, 180-day and 341-day tenor, but the bank received subscriptions worth N323.8 billion from investors.
According to the analysis, N10 billion worth of the short-dated bill were offered for sale, another N10 billion worth of 180-day instrument were auctioned, while N80 billion worth of 341-day maturity were offered.
But when the bids were analysed, investors staked N64.10 billion on the short-dated bill, N33.50 billion was staked on the mid-dated bill, while N226.16 billion was staked on the long-dated bill.
A day earlier, the Debt Management Office (DMO) auctioned local bonds worth N60 billion to investors, but when the bids were analysed, the papers were oversubscribed by 459 percent, with the debt office getting subscriptions valued at N275.67 billion.
Next Monday, President Muhammadu Buhari has a huge task to carry out. Nigerians would be expecting to hear his verdict on the present lockdown, which is currently in its fourth week.
Nigeria has continued to witness rise in the cases of COVID-19. As at Friday, a total of 1,095 cases of the virus have been confirmed in the country.
The Nigeria Centre for Disease Control (NCDC) last night announced 114 new cases, with 80 in Lagos, 21 in Gombe State, 5 in Abuja, 2 each in Zamfara and Edo States, and one each in Ogun, Oyo, Kaduna and Sokoto States.
Lagos has the highest number of cases, 657 cases, followed by Abuja with 138 cases.
If the lockdown is extended by another two weeks or one, the capital market may continue to benefit from it because it means more liquidity at the market, which is enough to keep the positive momentum at the stock market on.
However, most Nigerians, who are daily income earners will continue to groan as some of them claimed they have not received palliatives from government to encourage them to stay home any longer.
By Modupe Gbadeyanka
The federal government has been asked by the Nigerian Bar Association (NBA) to suspend the implementation of the controversial tax laws.
In a reaction to the tax reform acts, the president of the group, Mr Afam Osigwe (SAN), the suspension of the laws would allow for a proper investigation into allegations of alterations in the gazetted and harmonised copies.
A member of the House of Representatives, Mr Abdussamad Dasuki, alleged that some parts of the laws passed by the parliament were different from the gazetted copy.
To address the issues raised, the NBA said it is “imperative that a comprehensive, open, and transparent investigation be conducted to clarify the circumstances surrounding the enactment of the laws and to restore public confidence in the legislative process.”
“Until these issues are fully examined and resolved, all plans for the implementation of the Tax Reform Acts should be immediately suspended,” the association declared.
It noted that the controversies “raise grave concerns about the integrity, transparency, and credibility of Nigeria’s legislative process.”
“These developments strike at the very heart of constitutional governance and call into question the procedural sanctity that must attend lawmaking in a democratic society,” it noted.
“Legal and policy uncertainty of this magnitude has far-reaching consequences. It unsettles the business environment, erodes investor confidence, and creates unpredictability for individuals, businesses, and institutions required to comply with the law. Such uncertainty is inimical to economic stability and should have no place in a system governed by the rule of law.
“Nigeria’s constitutional democracy demands that laws, especially those with profound economic and social implications, emerge from processes that are transparent, accountable, and beyond reproach. Anything short of this undermines public trust and weakens the foundation upon which lawful governance rests.
“We therefore call on all relevant authorities to act swiftly and responsibly in addressing this controversy, in the overriding interest of constitutional order, economic stability, and the preservation of the rule of law,” the organisation stated.
By Adedapo Adesanya
Demand for hot stocks, including MRS Oil Plc, buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.52 per cent on Tuesday, December 23.
The energy company was one of the three price gainers for the session as it chalked up N19.69 to sell at N216.59 per share versus the previous day’s value of N196.90 per share.
Further, FrieslandCampina Wamco Nigeria Plc gained N2.95 to close at N56.75 per unit versus N53.80 per unit and Golden Capital Plc appreciated by 84 Kobo to N9.29 per share from Monday’s N8.45 per share.
Consequently, the market capitalisation went up by N10.95 billion to N2.125 trillion from N2.125 trillion and the NASD Unlisted Security Index (NSI) rose by 18.31 points to 3,570.37 points from 3,552.06 points.
Yesterday, the NASD bourse recorded a price loser, the Central Securities Clearing System Plc (CSCS), which gave up 17 Kobo to close at N33.70 per unit against the previous trading value of N33.87 per unit.
The volume of securities traded at the session went down by 97.6 per cent to 297,902 units from the previous day’s 12.6 million units, the value of securities decreased by 98.5 per cent to N10.5 million from N713.6 million, and the number of deals remained flat at 32 deals.
By value, Infrastructure Credit Guarantee Company (InfraCredit) Plc ended as the most actively traded stock on a year-to-date basis with 5.8 billion units exchanged for N16.4 billion. This was followed by Okitipupa Plc, which traded 178.9 million units valued at N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.
In terms of volume, also on a year-to-date basis, InfraCredit Plc led the chart with a turnover of 5.8 billion units traded for N16.4 billion. Industrial and General Insurance (IGI) Plc ranked second with 1.2 billion units sold for N420.7 million, while Impresit Bakolori Plc followed with the sale of 536.9 million units valued at N524.9 million.
By Dipo Olowookere
It was another bullish trading session for the Nigerian Exchange (NGX) Limited as it closed higher by 0.59 per cent on Tuesday.
The market further rallied due to continued interest in large and mid-cap stocks on the exchange by investors rebalancing their portfolios for the year-end.
Yesterday, Aluminium Extrusion sustained its upward trajectory after it further appreciated by 9.96 per cent to N14.90, as Austin Laz gained 9.81 per cent to close at N2.91, Custodian Investment improved by 9.69 per cent to N38.50, and First Holdco soared by 9.35 per cent to N50.30.
Conversely, Royal Exchange declined by 7.22 per cent to N1.80, Champion Breweries shrank by 6.57 per cent to N15.65, NASCON lost 5.36 per cent to trade at N105.05, Sovereign Trust Insurance depreciated by 5.28 per cent to N3.77, and Japaul went down by 4.51 per cent to N2.33.
At the close of business, 29 shares ended on the gainers’ table and 27 shares finished on the losers’ log, representing a positive market breadth index and bullish investor sentiment.
This raised the All-Share Index (ASI) by 895.06 points to 153,354.13 points from 152,459.07 points and lifted the market capitalisation by N579 billion to N97.772 trillion from the previous day’s N97.193 trillion.
VFD Group finished the day as the busiest stock after it recorded a turnover of 192.0 million units worth N2.1 billion, GTCO exchanged 63.5 million units valued at N5.6 billion, Access Holdings traded 49.8 million units for N1.0 billion, First Holdco sold 45.8 million units valued at N2.3 billion, and Secure Electronic Technology transacted 38.3 million units worth N28.4 million.
In all, market participants bought and sold 677.4 million units valued at N20.8 billion in 27,589 deals compared with the 451.5 million units worth N13.0 billion traded in 33,327 deals on Monday, showing an improvement in the trading volume and value by 50.03 per cent and 60.00 per cent apiece, and a shortfall in the number of deals by 17.22 per cent.
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