The Nigerian Stock Exchange (NSE) fell sharply in this week’s trading session. The All Share Index opened the week at 31,041.42 basis points, and closed at 29,616.38 basis points, down 4.59%. The index is also below the 30,000 psychological floor.
14 equities appreciated in price during the week, lower than 21 in the previous week. 55 equities depreciated in price, higher than 36 equities of the previous week, while 98 equities remained unchanged, lower than one hundred and eleven (111) equities recorded in the preceding week.
Ikeja Hotels Plc
Ikeja Hotels Plc was the best performing stock on the NSE this week. The stock gained 20.21%, opening at N1.88 and closing at N2.26, up N0.38. Year to date, the stock is up 47.71%.
CHAMS opened the week at N0.20 and closed at N0.24, up N0.04 or 20%. Year to date, the stock is up by the same margin.
The stock has been on a rebound since the firm declared a dividend of N0.03 per share.
Sovereign Trust Insurance Plc
Sovereign Trust Insurance appreciated by 15% this week. The stock opened at N0.20 and closed at N0.23, up N0.03. Year to date, the stock is up 9.52%.
First Aluminum Plc
First Aluminum Plc opened the week at N0.30 and closed at N0.33, up N0.03 or 10%. Year to date, the stock is down 8.33%.
The company this week announced that it had been unable to file its audited 2018 results on the due date of March 31st 2019, as the audit process was yet to be completed. It however expects to do so on or before the April 30th, 2019.
Berger Paints Plc
Berger Paints gained 9.70% this week. The stock opened at N8.25 and closed at N9.05, up N0.80. Year to date, the stock is up 5.23%.
Thomas Wyatt Plc
Thomas Wyatt Plc opened the week at N0.20 and closed at N0.23, up N0.03, or 8.70%. Year to date, the stock is up by the same margin.
Sterling Bank Plc
Tier two lender Sterling Bank Plc gained 8.33% this week. The stock opened at N2.40 and closed at N2.60, up N0.20. Year to date, the stock is up 36.84%.
Union Bank Plc
Union Bank Plc gained 5.26% this week. The stock opened at N6.65 and closed at N7, up N0.35. Year to date, the stock is up 25%.
Cadbury Nigeria Plc
Cadbury Nigeria Plc gained 5% this week. The stock opened at N10 and closed at N10.50, up N0.50. Year to date, the stock is up 5%.
NEM Insurance Plc
NEM Insurance Plc rounds up the top 10 gainers for this week. The stock opened at N2.22 and closed at N2.33, up N0.11 or 4.95%. Year to date, the stock is down 13.70%.
Eterna Plc was the worst performing stock this week. The stock shed 24.53%, opening at N5.30 and closing at N4.00. Year to date, the stock is down 14.89%.
Union Diagnostic and Clinical Services Plc
Union Diagnostic and Clinical Services Plc opened the week at N0.30 and closed at N0.23, down N0.07 or 23.33%. Year to date, the stock is down 8%.
UBA Plc declined by 19.48% this week. The stock opened at N7.70 and closed at N6.20, down N1.50. Year to date, the stock is down by the same margin.
Beta Glass Plc
Beta Glass opened at N71.95 and closed at N58.35, down N13.60 or 18.90%. Year to date, the stock is down 14.57%.
Neimeth International Pharmaceuticals
Neimeth International Pharmaceuticals opened at N0.62 and closed at N0.51, down N0.11 or 17.74%. Year to date, the stock is down 34.62% and is trading at a year low.
Dangote Flour Mills Plc
Dangote Flour Mills declined by 16.18% this week. The stock opened at N10.20 and closed at N8.55, down N1.65. Year to date, the stock is up 24.82%.
Livestock Feeds dropped by 15.87%. The stock opened at N0.63 and closed at N0.53, down N0.10. Year to date, the stock is up 8.16%.
Cement Company of Northern Nigeria shed 14.57% this week. The stock opened at N19.90 and closed at N17, down N2.90. Year to date, the stock is down 12.37%.
Oando Plc opened the week at N5.65 and closed at N4.95, down N0.70 or 12.39%. Year to date, the stock is down 1%.
The company this week announced it had sold the 25% stake it had held in Axxela Limited (formerly known as Oando Gas and power) to Helios Investment Partners. Helios, in 2016 had bought a 75% stake in the firm.
Ecobank Trans International
Ecobank Trans international was the worst performing stock this week. The stock opened at N13.20 and closed at N11.60 down 12.12%. Year to date, the stock is down 17.14%.
Flour Mills moves to diversify funding sources with N29.8 billion bond listing
Flour Mills Nigeria Plc lists N29.8 billion bonds to diversify funding sources from the Nigerian capital market.
Flour Mills Nigeria Plc’s fresh N29.8 bond listing will help the nation’s leading food business company to explore diversified funding sources from the Nigerian capital market, with the hope of enhancing growth and the development of the company.
This statement was made by the Group Managing Director of FMN, Mr. Omoboyede Olusanya, at the listing of the Tranche A and Tranche B bonds valued at N29.8 billion on the Nigerian Stock Exchange (NSE).
The food and the agro-allied company which has remained Nigeria’s largest and oldest integrated agro-allied business with a broad profile and robust Pan-Africa distribution issued these bonds under its N70 billion Bond Issuance Programme.
Olusanya said that the company would continue to explore funding opportunities inherent in the capital market to ensure business growth and continuity.
While speaking about the Credit Rating of the Programme, he disclosed that FMN’s credit rating, as well as the operational financing of the Group, have improved considerably.
According to him, the bonds floated by Flour Mill will help to strengthen the company’s capital base and provide the needed working capital required by the Company. He added that Flour Mills Group will continue to deleverage and replace short term financing with longer-tenured and lower price funding to optimize capital structure and reduce financing cost.
He noted that Flour Mills will continue to explore opportunities to raise fundings via the capital market as this enables the company to diversify its funding sources and continue to play a role in the capital market as a significant player in it.
What they are saying
The Group Managing Director of FMN, Mr. Omoboyede Olusanya, at the virtual event, said;
- “We are delighted with the response from the market, we are happy to be listed.
- “We are introducing an N29.9 billion listing under an N70 billion bond issuance cover; we will continue to raise funding to diversify our funding sources.
- “The company remains passionate about feeding the nation to improve the quality of living for Nigerians through increased production and investments in backward integration.”
What you should know
- With the successful issuance of the new N29.8bn Tranche A and Bonds, FMN has utilized its bond issuance program registered in 2018.
- It is important to note that the Senior Unsecured bond listing includes an N4.89bn under Series 4 Tranche A of the bond issuance programme, at a 5.5% rate for 5 years, due by 2025, and a 25bn under Series 4 Tranche B of the same program at a 6.25% rate for a tenure of 7 years, due by 2027.
- The bond proceeds will be used to refinance existing debt obligations. It will also help the company take collaborative actions to diversify the company’s financing options beyond expensive short term debt.
Naira gains marginally at NAFEX window, exchange rate to remain stable
The exchange rate between the naira and the dollar appreciated closing at N394/$1 at the NAFEX window.
On January 21, 2021, the exchange rate between the naira and the dollar appreciated closing at N394/$1 at the NAFEX (I&E Window) where forex is traded officially.
However, during intraday trading, the exchange rate traded for as high as N415.76/$1, sustaining yesterday’s figure which is the highest intraday trading tracked by Nairametrics. Forex turnover, however, dropped by about 14% as pressure on the foreign exchange market continues.
According to a report from Reuters, the naira is expected to remain stable in the coming week as currency traders watch for policy details at CBN’s first MPC meeting in 2021.
Also, the exchange rate at the black market where forex traded unofficially still remained flat at N475/$1. The exchange rate at the parallel market closed at N475/$1 on the previous trading day of January 20, 2021.
The exchange rate disparity between the parallel market and the official market is about N81, representing a 17% devaluation differential.
The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Thursday, closing at N394/$1. This represents a 17 kobo gain when compared to the N394.17/$1 that it closed on the previous trading day.
- The opening indicative rate was N394.16 to a dollar on Thursday, the same rate that was recorded on Tuesday, January 20, 2021.
- The N415.76 to a dollar was the highest rate during intra-day trading before it closed at N394 to a dollar. It also sold for as low as N390/$1 during intra-day trading.
- Forex turnover at the Investor and Exporters (I&E) window dropped by 13.9% on Thursday, January 21, 2021.
- According to the data tracked by Nairametrics from FMDQ, forex turnover declined from $89.50 million on Wednesday, January 20, 2021, to $77.04 million on Thursday, January 21, 2021.
- The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.
- There are fears that the exchange rate at the black market might be under pressure in the coming weeks as importers scramble for dollars to meet their demands.
Oil price steady rise
Brent crude oil price is at about $56 per barrel on Wednesday, as it moves towards the $60 mark, a strong sign that global demand could sustain price increases in 2021.
- This appears as a boost to Nigeria as the country’s crude oil price benchmark for 2020 was $40 while it projected an oil production output of 1.8 million barrels per day.
- Nigeria has a production capacity of 2.5 million barrels per day but is subject to OPEC’s crude oil production cuts, which are expected to help sustain higher oil prices.
- The higher oil prices and steady production output have positively impacted Nigeria’s external reserves, rising sharply to $36.304 million according to central bank data dated January 14, 2020.
- This is the highest level since July 2020 and a sign that higher oil prices and steady output levels may be contributing significantly to Nigeria’s foreign exchange position.
Nigeria rising external reserves
- The external reserve has risen to $36.464 billion as of January 19, 2021.
- Nairametrics reported on Wednesday that the government may have taken receipt of the $1-1.5 billion World Bank Loan.
- The external reserves have increased by $1.09 billion since December 31, 2020, when it closed the year at $35.3 billion.
- Nigeria also needs the external reserves to hit $40 billion if it is to adequately meet some of the pent up demand that has piled up since 2020 when oil prices crashed and the pandemic caused major economic lockdowns.
Gold prices pull back after hitting highest levels in 2 weeks
Spot gold was down by 0.4% to trade at $1,862 per ounce after hitting its highest since Jan. 8 at $1,874.50 earlier in the session.
Gold prices pulled back a little of its gains recorded on Thursday, as it traded near its highest level in nearly two weeks.
The greenback’s slight rebound at Asia’s trading session on Friday dented the precious metal’s upsides.
Gold prices have been rallying high on reports that President Joe Biden’s administration would push for more quantitative easing programs in order to support the world’s biggest economy.
At the time of drafting this report, Spot gold was down by 0.4% to trade at $1,862 per ounce after hitting its highest since Jan. 8 at $1,874.50 earlier in the session.
What you must know: It’s key to note that the precious metal typically moves in the opposite direction from global stock markets, especially the American and European stock markets.
- Humans are emotionally and physically drawn to gold. It provides a significant store of value.
- Global Investors buy gold mainly to hedge against inflation.
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the recent price movements prevailing at the precious market;
“Gold bears have entered a temporary state of hibernation. The yellow metal seems to be past the lows for the month as the current ” everything but the kitchen sink ” policy backdrop and FX tailwinds for precious metals remain favorable.
“Resistance lies at the 100-day moving average at $1884. But the market needs a few more ounces of policy conviction for a break higher. Treasury yields should dictate the direction of bullion and a rally could quickly ensue if further inflation expectations kick in.”
Bottom line: The yellow metal bugs are still in play, at least for the slightly longer horizon, given that global central banks are likely to stay dovish for an extended period of time.