The Nigerian Stock Exchange continued its decline in the month of April. The All Share Index opened at 29,616,38 basis points, and closed at 29,560.47 basis points, down 0.19%. Year to date, the index is down 5.95%.
35 equities appreciated in price during the week, higher than 14 in the previous week. 31 equities depreciated in price, lower than 55 equities of the previous week. 101 equities remained unchanged, higher than 98 equities recorded in the preceding week.
Learn Africa Plc
Learn Africa Plc was the best performing stock this week, appreciating by 18.70%. It opened at N1.23 and closed at N1.46, up N0.23. Year to date, the stock is up 7.35%.
May and Baker Plc
May and Baker Plc gained 17.39% this week. The stock opened at N2.30 and closed at N2.70, up N0.40. Year to date, the stock is up 10.20%.
Chams Plc has continued to rally, albeit at a much slower pace. The stock opened the week at N0.24 and closed at N0.28, up N0.04 or 16.67%. Year to date, the stock is up 40%.
Regency Alliance Insurance Plc
Regency Alliance Insurance appreciated by 13.64%. The stock opened at N0.22 and closed at N0.25, up N0.03. Year to date, the stock is up 19.05%.
The company this week released its audited 2018 financial statement.
Gross premium written increased slightly from N5.5 billion in 2017 to N5.7 billion in 2018. Profit before tax and profit after tax however declined. Profit before tax dipped from N412 million in 2017 to N373 million in 2018. Profit after tax also dipped from N275 million in 2017 to N273 million in 2018.
The company will be holding a board meeting on the 25th of April, 2019. On the agenda is consideration of Regency’s Q1 2019 results and future corporate structure of the company.
A dividend of N0.03 was declared.
Mutual Benefits Assurance Plc
Mutual Benefits Assurance appreciated by 10% this week. The stock opened at N0.20 and closed at N0.22, up N0.02 or 10%. Year to date, the stock is up 4.76%
Niger Insurance Plc
Niger Insurance also rose by the same percentage margin, gaining 10%. The stock opened at N0.20 and closed at N0.22, up N0.02 or 10%. Year to date, the stock is down 8.33%.
Veritas Kapital Assurance
Veritas rounds up the triumvirate of stocks that gained 10%. The stock opened at N0.20 and closed at N0.22, up N0.02. Year to date, the stock is down 4.35%.
Neimeth International Pharmaceuticals
Neimeth International Pharmaceuticals opened at N0.51 and closed at N0.56, up N0.05 or 9.80%. Year to date, the stock is down 28.21%.
Meyer Plc gained 9.20% this week. The stock opened at N0.54 and closed at N0.59, up N0.05. Year to date, the stock is flat.
Trans–Nationwide Express Plc
Trans–Nationwide Express rounds up the top 10 gainers on the NSE this week. The stock appreciated by 8.70%, opening at N0.69 and closing at N0.75, up N0.06. Year to date, the stock is up 15.38%.
Ikeja Hotels Plc
Ikeja Hotels Plc was the worst performing stock on the NSE this week, declining by 26.11%. The stock opened at N2.26 and closed at N167, down N0.59, Year to date, the stock is up 9.15%.
ABC Transport Plc
ABC Transport Plc opened the week at N0.48 and closed at N0.40, down N0.08 or 16.67%. Year to date, the stock is up 37.93%.
MC Nichols Plc
Mc Nichols Plc shed 14.71% this week. The stock opened at N0.68 and closed at N0.58, down N0.10. Year to date, the stock is up 23.40%.
Royal Exchange Plc
Royal Exchange Plc opened the week at N0.29 and closed at N0.25, down N0.03 or 13.79%. Year to date, the stock is up 13.64%.
NEM Insurance declined by 13.73% this week. The stock opened at N2.33 and closed at N2.01, down N0.32. Year to date, the stock is down 25.56%.
Consolidated Hallmark Insurance Plc
Consolidated Hallmark Insurance opened the week at N0.27 and closed at N0.24, down 11.11%. Year to date, the stock is down 36.84%.
Cutix Plc shed 10.56% this week. The stock opened at N1.80 and closed at N1.61, down N0.19.
Year to date, the stock is down 1.83%.
PZ Cussons Nigeria Plc
FMCG giant, PZ Cussons Nigeria, fell by 9.69% this week. The stock opened at N9.80 and closed at N8.85, down N0.95. Year to date, the stock is down 26.86%.
The stock is also trading at a 10 year low.
Tripple Gee Plc
Tripple Gee opened at N0.77 and closed at N0.70, down N0.07. Year to date, the stock is down 9.09%, and is trading at a year low.
Ecobank Trans International
Ecobank Trans International rounds up the top ten losers for the week. The stock declined by 7.7%, opening at N11.6 and closing at N10.7.
Why exchange rate disparity remains high despite CBN’s intervention
Despite the intervention measures by the CBN, why does the disparity between the official and black-market rates remain high?
The Nigerian economy has been faced with serious foreign exchange crisis since the first quarter of the year, with severe pressure on the nation’s foreign exchange market and external reserve. The local currency is under the grip of tough external pressure, characterized by internal foreign exchange shortages and consistently high black-market rates. This has led to a high disparity between the official exchange rate and black-market rate.
The undesired situation is attributable to the crash in crude oil prices, triggered by the coronavirus pandemic that has impacted negatively on the global economy. The plunging oil prices have increased the pressure on the naira, as about 90% of Nigeria’s foreign exchange earnings is from crude oil exports.
Bank of Africa analysts, Rukayat Yusuf and Andrew MacFarlane, in its Global Bank’s latest report on Nigeria’s forex unification and shortages, said that Nigeria’s current foreign exchange pressure is likely to gain momentum in 2021, as the economy and imports recovery will trigger a future adjustment of the nation’s currency to N430/$1 next year.
Recall that despite several initial denials by the Central Bank of Nigeria (CBN), in response to the devastating impact of the coronavirus pandemic and oil shocks; the apex bank on March 20, 2020, devalued the exchange rate from N307/$1 to N360/$1. This was followed with the suspension of sales of foreign currency to the Bureau De Change operators on March 27, 2020, in the face of depleting external reserves.
In a move viewed as attempts by the CBN to unify the exchange rate, the apex bank further devalued the naira on August 6, 2020, from N360/$1 to N380/$1 on the official window and closed the gap with the parallel market – which is the unofficial market. The huge exchange rate gap has made round-tripping very lucrative and encouraged hoarding amongst forex dealers.
Goldman Sachs analysts had earlier predicted that the exchange rate will dip to N500 to $1 in the face of rising inflation and declining external reserves. The wide gap between the official and unofficial rates is seen by analysts as an indication of increasing pressure on the forex market and dollar shortages, which the CBN is trying to contain with several policies targeted at reducing the demand for the greenback, conserve the scarce foreign exchange, and help boost dollar supply in the market.
Some of these policies include:
- Resumption of sales of dollars to the Bureau De Change Operators and mandating them to sell at not more than N386 to a dollar.
- Removal of third parties from buying forex routed through Form M.
- Clampdown on exporters who refuse to repatriate their export proceeds to Nigeria.
- Restriction on forex allocation to importers of maize by the Deposit Money Banks (DMBs).
However, despite some of these measures by the CBN, the disparity between the official and black-market rates still remain as high as almost N70. So, the question is why the huge gap? Especially, with the resumption of dollar sales to the BDCs.
Some analysts and stakeholders have complained that the measures are hurting business operations and pushed more demands to the parallel market. They believe it has encouraged hoarding and speculations to continue thriving; thereby, making it difficult to reduce the black-market rate.
What they are saying
While expressing his view on why the exchange rate disparity is still high, despite the resumption of dollar sales to BDCs; the President of Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, said the impact of the resumption of sales of foreign exchange to BDCs is expected to be gradual.
Gwadebe said, “Firstly, the impact is gradual. You know there was a time when the dollar reached N500/$1. N474, N480 to a dollar was when there were other interventions in the market. As soon as the news of the resumption of sales to Bureau De Change broke, we witnessed the dollar going for as low as N420, N430 to a dollar. However, after taking off, the rate is now N460, which is the parallel market rate.
“Don’t forget there is a huge backlog and every other buyer – authorized or unauthorized, queued in the parallel market. So, the pressure is on the parallel market from manufacturers and existing investors. In fact, the most unfortunate behavior is hoarding and speculation.’’
The ABCON President noted that people hoard and speculate when liquidity is low in the retail sector of the market. He pointed out that, although the liquidity is gradual, the rebound is expected to continue gradually.
Gwadebe said the role of the BDCs is to provide liquidity in the retail end of the market, which is what the CBN is empowering the BDCs to do and a key reason the rate has improved from the record high of about N480/$1.
He noted that the resumption of sales of dollars to BDCs is discouraging frivolous demands, adding liquidity into the system, aiding return of confidence and stability in the market.
He reiterated that the BDCs remain the only threat to hoarding and speculation, while expressing satisfaction that the reserve is growing and will increase the confidence of investors.
Google fired up, post strong advertising growth
Google fired up on all cylinders as high as 9% in after-hours trading as it smashed many stock analysts’ predictions.
Google parent company Alphabet was fired up on all cylinders. It gained as much as 9% in after-hours trading, after it smashed many stock analysts’ predictions for both revenue and earnings in its Q3 results, showing strong growth in ad revenue amid the ravaging COVID-19 virus attacks.
What you should know
Highlights of Q3 results
- Earnings per share: $16.40 vs $11.29 expected.
- Revenue: $46.17 billion vs $42.90 billion expected.
- Google Cloud: $3.44 billion vs. $3.32 billion expected.
- YouTube ads: $5.04 billion vs. $4.39 billion expected.
- Traffic acquisition costs (TAC): $8.17 billion vs. $7.66 billion expected.
At the time of drafting this report, the world’s tech powerhouse, Google had a valuation of over a trillion-dollar and was trading at $1,567.24 with its Price/Earning Ratio standing at 32.91.
- However, Google’s parent company disclosed its revenue from “Other Bets,” which includes its subsidiaries outside of Google like the self-driving car company Waymo and Life Sciences business – Verily, brought in $178 million compared to $155 million a year ago.
- Meanwhile, Other Bets showed an operating loss of $1.10 billion, up from $941 million a year ago.
What they are saying
The top brass of Google including its CEO, Sundar Pichai, and Wall street’s Ruth Porat, CFO of Google, gave valuable insights on why the most popular search engine company performed extremely well.
“We had a strong quarter, consistent with the broader online environment,” said Sundar Pichai, Chief Executive Officer of Alphabet and Google.
“It’s also a testament to the deep investments we’ve made in AI and other technologies, to deliver services that people turn to for help, in moments big and small.
Ruth Porat, Chief Financial Officer of Alphabet and Google, said,
“Total revenues of $46.2 billion in the third quarter reflect broad-based growth led by an increase in advertiser spend in Search and YouTube, as well as continued strength in Google Cloud and Play.
“We remain focused on making the right investments to support long-term sustainable value.”
Apple drops 4%, iPhone sales slump
Apple stock dropped over 4% in extended trading – trading at $110.45.
Apple the world’s biggest tech company reported its Q4 earnings, showing its iPhone sales slumped more than 20% year-over-year – coupled with no guidance on future earnings led the stock to drop momentarily after results were released.
Also weighing down on Apple shares is the bias that the lack of fiscal Q1 2021 guidance from the world’s most valuable company, means that stock traders and global investors don’t get a hint at how Apple is performing, as regards sales of its iPhone 12 – which went on sale this month.
What you should know
Here’s how Apple did versus analyst expectations via Refinitiv estimates:
- iPhone revenue: $26.44 billion vs. $27.93 billion estimated, down 20.7% YoY
- EPS: 73 cents vs 70 cents estimated
- Revenue: $64.7 billion vs $63.70 billion estimated, up 1% YoY
- Mac revenue: $9.0 billion vs. $7.93 billion estimated, up 28% YoY
- iPad revenue: $6.8 billion vs. $6.12 billion estimated, up 46% YoY
- Services revenue: $14.55 billion vs. $14.08 billion estimated, up 16.3% YoY
- Other Products revenue: $7.88 billion vs. $7.40 billion estimated, up 20.9% YoY
- Gross margin: 38.2% vs. 38.1% estimated
At the time of writing this report, Apple stock dropped over 4% in extended trading – trading at $110.45. The company has a valuation hovering at about $1.972 trillion, making it the most valuable technology company on this planet.
While Apple shares are falling amid the relatively impressive result, it recorded weak sales earning for Apple’s second most valuable market in China. Sales in greater China – which includes Taiwan, Hong Kong, plunged to $7.95 billion from $11.13 billion.
What they are saying
Apple’s CEO, Tim Cook gave deep insights on his company’s product performance, as the Mac. services and iPad posted impressive gains amid the ravaging COVID-19 virus onslaughts.
“Apple capped off a fiscal year defined by innovation in the face of adversity with a September quarter record, led by all-time records for Mac and Services,” said Tim Cook, Apple’s CEO.
“Despite the ongoing impacts of COVID-19, Apple is in the midst of our most prolific product introduction period ever, and the early response to all our new products, led by our first 5G-enabled iPhone lineup, has been tremendously positive.
“From remote learning to the home office, Apple products have been a window to the world for users as the pandemic continues, and our teams have met the needs of this moment with creativity, passion, and the kinds of big ideas that only Apple can deliver.”