The Nigerian Stock Exchange (NSE) today recovered from yesterday’s bearish session as the All Share Index closed at 32,381 basis points, up 0.56%. Year to date, the market is down 15.33%.
Top Gainers and Losers
First Aluminum Plc was the best performing stock in today’s trading session. The stock closed at N0.33, up 10%. Prestige Assurance closed at N0.57, up 9.62%. Royal Exchange Plc rounds the top three gainers with a 9.52% gain to close at N0.23.
Redstar Express Plc had the biggest decline closing at N4.50, down 9.09%. Cornerstone Insurance Plc closed at N0.21, down 8.70%. Standard Alliance Insurance also closed at N0.21, down 8.70%
Top trades by Volume
Access Bank was the highest traded stock by volume as 84.9 million shares valued at N679 million were traded in 124 deals. Zenith Bank was next with 16.4 million shares valued at N338 million traded in 330 deals. International Breweries rounds up the top 3 most traded stocks with 10.2 million shares valued at N300 million traded in 9 deals.
Guinness Nigeria Plc
Guinness Nigeria Plc announced the appointment of Yemisi Ayeni as a Non-Executive Director and member of the company’s Board of Directors. Ayeni’s appointment at the company took effect from Saturday, September 1, 2018.
The company also announced the retirement of Prof. Joe Irukwu as its Non-Executive Director which has taken effect from August 28, 2018.
Greenback gains ground as global investors turn to safe haven assets
The U.S. Dollar Index gained 0.19% to 96.858 by 5.56 am local time on Friday.
The greenback gained some ground at London’s trading session, as currency traders and many global investors turned to the safe-haven asset. Earlier on Thursday, the world’s largest economy reported over 60,000 COVID-19 cases, thus weakening hopes of accelerated economic recovery.
The U.S. Dollar Index, which tracks the American dollar against a basket of major currencies, gained 0.19% to 96.858 by 5.56 am local time on Friday.
“The market was in a mild risk-off mood, following pretty bad [COVD-19] figures from Florida,” Kyosuke Suzuki, director of currencies at Societe Generale told Reuters.
Why tracking the U.S dollar Index helps: Individuals hoping to meet foreign exchange payment obligations, and process transactions via the dollar to countries like England, France, or Japan, will need to pay fewer dollars for such transactions.
The American Dollar Index tracks the dollar’s strength relatively against a bouquet of other major currencies around the world, such as Japanese yen, Euro, British pounds sterling, Swedish krona, Canadian dollar, Swiss Franc, etc.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained why the odds on the greenback seem to be gaining traction. He said:
“What was interesting in Asia and UK trades yesterday was ‘Risk on’ currencies held on but were reluctant to punch higher despite the better tone in equity markets led by continued gains in China and the tech sector.
“This suggests that there were some doubts if the time was now for a good old-fashioned reflation trade driven by government spending, central bank liquidity, moral suasion (China telling citizens to buy stocks), and some quirky supply issues in copper and lumber.
“Despite the Forex market fickleness and risk on risk-off proclivities, I still see this is a textbook USD down environment, and I see no reason to stand in the way.”
In addition, America is presently responsible for over 3.1 million COVID-19 cases. There are still over 12.2 million cases and 550,000 deaths globally as of July 10, according to John Hopkins University data. Some states reported a record number of new cases on Thursday.
Nigeria’s excess crude account falls to $72 million
Nigeria’s excess crude account has now fallen by a whopping 98% in just 5 years.
Nigeria’s Excess Crude Account (ECA) now stands at $72 million as the country continues to grapple with an unprecedented revenue crisis not seen since the early eighties. The ECA account has now fallen by about 98% within the last 5 years.
The information on the excess crude account was revealed by the Minister of Finance, Zainab Ahmed in a National Economic Council Meeting during the week. The ECA is a savings account retained by the Federal Government and is funded by the difference between the market price of crude oil and the budgeted price of crude oil as contained in the appropriation bill.
There were major concerns last November when it was reported that the ECA balances held just $324.5 million one of the lowest balances recorded at the time. At $72 million the ECA is in low territory highlighting the effect of the fall in crude oil prices this year. Crude oil prices have crashed to sub-zero in March and have risen back o just over $40/barrel in recent weeks. However, it still remains low from Nigeria’s previous budget benchmark.
ECA in the news
About a year ago Nairametrics reported Nigeria’s Excess Crude Account has dropped to $480 million. This is as controversy continues to trail the $1 billion military spendings which were withdrawn from Nigeria’s Excess Crude. According to the Central Bank of Nigeria’s annual report for 2018, Nigeria’s crude excess account fell from $2.45 billion in 2017 to $480 million as of December 2018.
Just 5 years ago (Augst 2015) the ECA stood at $2.2 billion. This was the early days of the Buhari administration. It was $3.6 billion in February 2014 one of the highest balances on record. That same month, at its monthly FAAC, the government agreed to remove fuel subsidy from its books. Fuel subsidy is currently being borne by the NNPC.
The Controversies: Last year, the federal government under President Muhammadu Buhari was accused of mismanaging the country’s Excess Crude Account especially the $1 billion reportedly spent on military equipment.
- The National Security Adviser (NSA) retired Major General Babagana Monguno Gen. Babagana was quoted to have disclosed that he was not aware of the whereabouts or disbursement of the $1billion drawn from the ECA by the Buhari presidency in 2017 for security purposes.
- While controversies trail the statement credited to the NSA, with many describing it as diversion of public funds, the Presidency provided some explanations.
- Responding to the allegations, Senior Special Assistant on Media and Publicity, Garba Shehu, disclosed that various procurements had been made for the purchase of critical equipment for the Nigerian Army, the Nigerian Navy, and the Air Force, contrary to the allegations.
Nigeria’s ECA in retrospect: In Nigeria, there are two Sovereign Wealth Funds: the Excess Crude Account and the Nigeria Sovereign Investment Authority (NSIA). Note that these two are funded by the savings earned when oil prices are at peak.
- Hence, as a larger chunk of revenue is appropriated for ECA and NSIA, the country’s external reserves are likely to fall.
- Note that the sovereign wealth fund was established to address the controversies surrounding the Excess Crude Account.
- The fund is usually expected to generate revenue to meet budget shortfalls in the future, provide dedicated funding for the development of infrastructure and saves for future generations.
ECA depleted by 98% in 5 years: A closer look at the various annual reports of the Central Bank of Nigeria shows that Nigeria’s excess crude account has now fallen by a whopping 98% in just 5 years.
Ripple payment now operational in U.S, 22 geopolitical regions
Ripple (XRP) plays dual roles as a payment platform and a currency.
The infusion of Ripple by global banks has gained traction lately, as Spanish biggest bank by total asset and market capitalization, Santander, designed a Ripple enabled payment app called Pay FX that offers a borderless blockchain-based payment channel.
Santander recently just added 19 geopolitical regions to its One Pay FX international payments app offering in collaboration with blockchain and crypto payment powerhouse Ripple.
Before now, the blockchain payment app was available only in Poland, Spain, Brazil, and the United Kingdom; One Pay FX now enables users from the world’s biggest economy, United States, and emerging markets that include Chile to sit among others on the list of added countries, totaling the number of countries on its offering to 22.
Quick fact: Ripple (XRP) plays dual roles as a payment platform and a currency. It has an open-source platform that is created to allow quick and cheap transactions.
Unlike its crypto rival, Bitcoin, which was never intended to be a simple payment system, Ripple has gained the attention of major global banks, like Standard Chartered, and Barclays for international transactions worldwide.
“Customers told us that the international payments process could be better so we partnered with Ripple to explore how BTC could make transactions faster, cheaper and more transparent,” Ed Metzger, CTO of One Pay FX said in the statement.
Metzger described feedback from customers, noting difficulties with transaction exchange rate clarity and timing confusion.
“Ripple helps us directly address the issues raised by our customers […] Whether they are putting down a deposit on a holiday rental or paying a foreign supplier, they see exactly how much will arrive when they’re making the payment and have certainty about when it will get there.”
What this means ; The Ripple enabled app will allows customers to see exactly how much will arrive when they’re making international payments, while the low-cost transactions happen instantly or on the same day, instead of the traditional 3-5 timeframe.