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Nigerian Breweries and Diamond Bank top volume chart as ASI drops

The Nigerian Stock Exchange fell sharply in today’s trading session. The All Share Index closed at 31,678.70 basis points, down 0.95%.

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The Nigerian Stock Exchange fell sharply in today’s trading session. The All Share Index closed at 31,678.70 basis points, down 0.95%. Year to date, the index is down 17.17%.

Top Gainers and Losers 

Honeywell Flour Mills was the best performing stock today. The stock closed at N1.11, up 9.90%. PZ Cussons Nigeria was next with a 9.79% appreciation, closing at N10.65. CAP rounds up the top three gainers, with a 9.77% appreciation to close at N29.20.

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On the flip side, Ikeja Hotel was the worst performing stock today. The stock declined by 9.73%, to close at N1.67. Union Diagnostics and Clinical Services was next with a 7.41% drop, closing at N0.25. Cement giant, Lafarge Wapco rounds up the top three losers with a 6.67% decline, closing at N14.

Top Trades by Volume  

Diamond Bank was the most actively traded stock today. 113 million shares valued at N102 million were traded in 60 deals. Nigerian Breweries was next with 15.2 million shares valued at N1.2 billion traded in 80 deals. Zenith Bank rounds up the top three most actively traded stocks with 13.8 million shares valued at N331 million traded in 208 deals.

Corporate Actions

Unity Bank Plc 

Unity Bank Plc will hold its 12th AGM on the 17th of December 2018. Venue is the Ibom Hotel and Golf resort, Nwaniba, Akwa Ibom State.

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11 Plc 

11 Plc (formerly known as Mobil Oil Nigeria) has gone into partnership with Air BP for the sale of aviation fuel. Prior to this, the company’s aviation fuel segment had been shut down for five years.

Cornerstone Insurance

Cornerstone Insurance has announced the appointment of  Chidiebere Nwokeocha as an Executive-Director.

UAC of Nigeria Plc 

UAC of Nigeria Plc has appointed Odunsi as a Non-Executive Director. He replaces Mrs Funke Ighodaro, who recently resigned from the board to take up an executive position in South Africa.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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Markets

Gold future drops to $1727.80 as America, China tension deepens

Gold futures dropped by 0.47% at $1,7278.23 by 14.00 pm local time, with the commodity unable to hold most of its gains from the previous session.

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Nigeria Mining Sector shows growth prospect despite low bank credit provision, Gold hits eight-year high as global recession sentiments strengthened, Gold hits three weeks high, Investors rush to gold, Gold Future Drops to $1727.80 as Tensions Escalate between America and China

Gold was down in London’s trading session on Monday morning, burdened by the rising U.S.-China tensions that have continued to weaken demand for even the safe-haven asset.

Gold futures dropped by 0.47% at $1,728.23 on Monday by 14.00 pm local time, with the commodity unable to hold most of its gains from the previous session.

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READ ALSO: Reports: China may defer loans owed by Nigeria and others

Why is gold so important?: Gold has unique physical properties that make it very valuable. It is the most ductile and malleable of all metals. Consequently, investors use it to hedge against paper money (inflationary fundamentals).

In addition, the friendship between the Americans and Chinese has soured, since the outbreak of the Covid-19 pandemic. President Trump and President Jinping of China have traded words against each other as a result of issues surrounding the pandemic. These include accusations of lack of transparency as well as claims of cover-ups.

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(READ MORE: Gold prices surge by 17.4% in 2 months due to global economic crisis)

There have also been fears over rising tensions between America and China over Beijing’s plans to begin security laws on Hong Kong, and America’s planned sanction against China.

Gold prices surge by 17.4% in 2 months due to global economic crisis, Gold Future Drops to $1727.80 as Tensions Escalate between America and China

Towards China’s plan to impose national security laws on Hong Kong, protests had sprung up leading to the use of cannons and tear gas yesterday by the Hong Kong police to disperse its citizens.

“The HK security legislation packs on a hefty amount (of) trade war risk premium,” said Stephen Innes, chief market strategist at AxiCorp, noting that it added to market worries last week about the level of Chinese policy stimulus.

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Central banks digital currencies pose a threat against the U.S dollar

In general, digital currencies could weaken the power of U.S. sanctions and the ability of the U.S. Treasury to watch illicit financial flows.

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Central banks digital currencies pose a threat against the U.S dollar.

A new report by America’s biggest bank, JP Morgan Chase, said the U.S dollar is being faced with a major threat as many  central banks’ digital currencies continue to gain traction.

Analysts, including Josh Younger, the head of U.S. interest-rate derivatives strategy and Michael Feroli, the chief U.S. economist, wrote in a report saying this:

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“There is no country with more to lose from the disruptive potential of digital currency than the United States.

This revolves primarily around U.S. dollar hegemony. Issuing the global reserve currency and the medium of exchange for international trade in commodities, goods, and services convey immense advantages.” 

Aditi Kumar and Eric Rosenbach also recently penned an opinion piece for Foreign Affairs in which they noted that “Just recently, America’s arch-rival China became the first major economy to carry a real test of a national digital currency.”

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(READ MORE: Why the strong dollar is giving Nigeria headache)

In general, electronic currencies could weaken the power of U.S. sanctions and the ability of the U.S. Treasury to watch illicit financial flows. A digital Chinese currency (yuan) combined with China’s developed electronic payment systems may give China more future influence than it ever bargained for.  

What Nigerians should know about Digital currencies

A digital currency is a cash balance recorded electronically on a store value card or other physical devices, which could someday replace the physical notes of the naira, for instance.

Digital currencies can be decentralized, that is where the control over the cash supply can come from diverse sources. Digital  currencies can also be centralized, where there is a midway point of control over cash supply, just like the way central banks work.

Central banks digital currencies pose a threat against the U.S dollar.

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Although JP Morgan does not see the U.S dollar being overthrown as the world’s reserve currency anytime soon, experts warned that the U.S dollar dominance could weaken. This is because its processing trade settlement and the SWIFT system could make it more vulnerable.

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The American bank continued by saying:

“Offering a cross-border payment solution built on top of a digital dollar would, particularly if designed to be minimally disruptive to the structure of the domestic financial system, be a very modest investment to protect a key means to project power in the global economy,

“For high-income countries and the U.S. in particular, digital currency is an exercise in geopolitical risk management.” 

Federal Reserve Chairman Jerome Powell said months ago that the Federal Reserve was taking a critical view on the issues regarding a digital currency.

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Dollar gains against major currencies

U.S dollar stood firm against major currencies on Monday as fears over rising tensions between America and China over Beijing’s plans to begin

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The US dollar remains king, U.S dollar gains against major currencies, America threatens China with sanctions.

The U.S dollar was up on Monday morning during London’s trading session after protests in Hong Kong yesterday escalated U.S-China tensions.

US dollar stood firm against major currencies on Monday as fears over rising tensions between America and China heightened.

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The American Dollar Index that monitors the U.S dollar against a basket of other major currencies was slightly up 0.02% to 99.945 by 11.10 am Nigerian local time.

What it means: Nigerians hoping to meet a foreign exchange payment obligation, transactions via the dollar to countries like Europe, Japan, would have the need to pay fewer dollars to fulfill such transactions.

(READ MORE:Reports: China may defer loans owed by Nigeria and others)

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Meanwhile, the friendship between the Americans and Chinese has soured lately since the outbreak of the COVID-19 pandemic. US President Trump and President Jinping of China have traded words against each other issues surrounding COVID-19, including accusations of lack of transparency and cover-ups. 

 

American Dollar remains king as stimulus fails to stop global financial market panic,Demand for “Inflow dollars” drive exchange rate to as high as $N420/$1 compared to “Cash dollars”, U.S dollar drops against major currencies, tension rises between America and China, U.S dollar gains against major currencies, America threatens China with sanctions.

Consequently, the U.S. Commerce Department added 33 Chinese businesses to a blacklist on Friday, and some U.S. Senators proposed sanctions on those businesses.

“The biggest concern is the tension between the United States and China, things were already bad, and it is likely to get worse because of the Hong Kong security law. This supports risk-off trades, which is positive for the dollar and the yen,” Tekuya Kanda, the general manager of research at Gaitame.com Research Institute, told Reuters.

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