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Markets

The Japaul bullrun continues

Japaul Oil and Maritime was the best performing stock on the @nsecontact this week appreciating by 39.29%

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NSE, Gainers and Losers, Nigerian Stock exchange

The Nigerian Stock Exchange ended the first trading week in the month of May on a negative note. The All Share Index closed at 29,212 basis points, down 1.78%. Year to date, the index is down 7.06%.  

32 equities appreciated in price during the week, higher than 30 in the previous week. 44 equities depreciated in price, higher than 40 equities in the previous week, while 92 equities remained unchanged, lower than 97 equities recorded in the preceding week. 

Gainers 

Japaul Oil & Gas Services Plc  

Japaul Oil and Maritime Services was the best performing stock of the week, continuing a bull run that started last month. The stock gained 39.29%, opening at N0.28 and closing at N0.39, up N0.11.  

Year to date, the stock is up 85.71%. 

Julius Berger Nigeria Plc 

Julius Berger opened the week at N22.50 and closed at N26.95, up N4.45 or 19.78%. Year to date, the stock is up 34.08%. 

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Forte Oil Plc 

Forte Oil gained 19.69% this week. The stock opened at N29.20 and closed at N34.95, up N5.75. Year to date, the stock is up 21.71%. 

The company this week released its results for the first quarter ended March 2019. Revenue increased from N28.3 billion in 2018 to N42.5 billion in 2019. Profit for the period (including discontinued operations) rose from N2.9 billion in 2018 to N3.3 billion in 2019.  

The company has proposed a special dividend of N1.15 from the proceeds of the divestment of its subsidiaries, which resulted in an overall net gain of N2.67 billion.  

While the sale of AP Oil and Gas Ghana to Cobalt International Services (Ghana) has been concluded, the sale of Forte upstream and Amperion power are subject to relevant regulatory and contractual approvals.  

The company has entered into sale and purchase agreements for Amperion Power and Forte upstream with Calvados Global Services and Gbonka Oil and Gas Limited respectively.  

Jaiz Bank Plc 

Jaiz Bank makes a surprise entry into the gainers chart today. The stock opened at N0.48 and closed at N0.54, up N0.06 or 12.50%. 

This week, the bank released its results for the first quarter ended March 2019. Total income increased from N1.6 billion in 2018 to N2.3 billion in 2019. Profit before tax rose from N146 million in 2018 to N476 million in 2019. Profit after tax also increased from N124 million in 2018 to N424 million in 2019.  

Year to date, the stock is up 8%. 

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UACN Property Development Company Plc  

UPDC appreciated by 12% this week. The stock opened at N1.50 and closed at N1.68, up N0.18. Year to date, the stock is down 12.04%. 

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The company released its results for the first quarter ended March 2019, this week. Revenue dipped from N591 million in 2018 to N507 million in 2019. The company’s losses for the period also rose from N899 million in 2018 to N1 billion in 2019.  

Transcorp Plc  

Transcorp Plc opened the week at N1.12 and closed at N1.25, up N0.13. Year to date, the stock is down 5.3% 

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This week, the company announced that a consortium (comprising itself and Transcorp Power) had won a bid for the Afam Power station). The consortium bid N105.3 billion.  

Caverton Offshore Support Group Plc  

Caverton appreciated by 11.52% this week. The stock opened at N2.69 and closed at N3.00, up N0.31 or 11.52%. Year to date, the stock is up 56.2%. 

The company released its Q1 2019 results. Revenue jumped from N4.5 billion in 2018 to N8.3 billion in 2019. Profit before tax also surged from 476 million to N1.2 billion in 2019. Profit after tax also increased from N293 million in 2018 to N793 million in 2019.  

Courteville Business Solutions Plc 

Courteville opened the week at N0.20 and closed at N0.22, up N0.02 or 10%. Year to date, the stock is up 10%. 

This week, the company released its results for the first quarter ended March 2019. Revenue declined by 12% from N308 million in 2018 to N270 million in 2019. Profit before tax however increased from N30.8 million in 2018 to N39.5 million in 2019. Profit after tax also rose from N23.9 million in 2018 to N30 million in 2019.  

Veritas Kapital Assurance Plc  

Veritas Kapital also gained 10% this week. The stock opened at N0.20 and closed at N0.22, up N0.10. Year to date, the stock is down 4.35%. 

Dangote Flour Mills  

Dangote Flour Mills rounds up the top 10 gainers for the week. The stock appreciated by 9.97%, opening at N15.55 and closing at N17.10. Year to date, the stock is up 149.64%. 

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This week, the company released its results for the first quarter ended March, 2019. Revenue fell from N26.5 billion in 2018 to N22.9 billion in 2019. The firm made a N3.5 billion loss before tax in 2019, as against a profit before tax of N2.2 billion in 2019. Loss after tax stood at N2.8 billion in 2019, as against a profit after tax of N1.5 billion in 2018.  

Losers 

Goldlink Insurance Plc 

Goldlink Insurance was the worst performing stock this week. The stock declined by 18.1%, opening at N0.44 and closing at N0.36, down N0.08. Year to date, the stock is down 32.08%

First Aluminum Plc  

First Aluminum Plc shed 12.5% this week. The stock opened at N0.48 and closed at N0.42, down N0.06. Year to date, the stock is  

The company this week announced it the resignation of its Managing Director Elias Igbinakenzua and the appointment of Callistus Udalor, the former Managing Director, as his replacement.  

Royal Exchange Plc   

Royal Exchange Plc shed 11.54%. The stock opened at N0.26 and closed at N0.23, down N0.03. Year to date, the stock is however up 4.5%. 

Total Nigeria Plc  

Total Nigeria Plc opened the week at N182 and closed at N162, down N20 or 10.99%. The stock is trading at its lowest price point this year, and is down 20.2% year to date.  

The decline in the results may be due to the company’s poor Q1 2019 results. While revenue increased from N75.6 billion in 2018 to N77.4 billion in 2019, the firm incurred a loss before tax of N418 million as against a N2.6 billion profit before tax earned in 2019.  

Loss after tax stood at N474 million in 2019 as against a profit before tax of N1.6 billion in 2018.  

Afromedia Plc  

Afromedia Plc declined by 10% this week. The stock opened at N0.50 and closed at N0.45, down N0.05. Year to date, the stock is down by the same margin.  

McNichols Plc 

McNichols Plc opened the week at N0.55 and closed at N0.50, down N0.05 or 9.09%. Year to date, the stock is up 6.38%. 

Academy Press Plc  

Academy Press Plc opened at N0.33 and closed at N0.30, down N0.03 or 9.09%. Year to date, the stock is down 40%.  

NPF Microfinance Bank Plc 

NPF Microfinance Bank declined by 9.03% this week. The stock opened at N1.55 and closed at N1.41, down N0.14. Year to date, the stock is down 14.55%. 

Cutix Plc  

Cutix Plc opened at N2.05 and closed at N1.87, down N0.18 or 8.78%.  

Year to date, the stock is up 14.02%. 

Oando Plc  

Oando Plc rounds up the top 10 losers for the week. The stock opened at N5.30 and closed at N4.85, down N0.45.  

Year to date, the stock is down 3%. 

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 [email protected]

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Funds Management

SEC publishes new Crowd Funding Regulations limiting investment to 10% of income

SEC Nigeria recently published new rules intended to regulate crowdfunding.

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How to build a profitable Mutual Fund Portfolio

The Securities and Exchange Commission, SEC, has issued updated guidelines and rules governing the operation of Crowd Funding activities in Nigeria.

This follows an exposure draft issued in May 2020 as reported by Nairametrics.

Key Highlights of the new SEC regulations

  • SEC introduced Crowd Funding Intermediaries who will facilitate crowdfunding transactions such as offer for sale of securities or instruments through its portal.
  • This means anyone seeking to raise money through a crowdfunding service will have to go through a Crowd Funding Intermediary (CFI).
  • Thus, a fundraiser (the initiator of the fund) will need to go through a CFI web portal to raise capital
  • The new rules also limit the amount retail investors can invest in a crowdfunding transaction to just 10% of their net annual income in a year.
  • This means individuals cannot invest more than 10% of their net salaries in crowdfunding activities. But this excludes High Networth Individuals who do not have limits.

READ: SEC declares the activities of Famzhi Interbiz illegal

Information contained in the regulation highlights 

In summary, this is SEC Nigeria’s attempt to provide a framework around who can participate in crowdfunding issuances, drive increased transparency around Crowdfunding issues AND create more accountability to investors.

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Specifically, the new rules specify the following four (4) participants in a crowdfunding issuance.

  • Fundraiser, Crowd-Funding Intermediary, Investors, and Custodians.
  • There is also a provision for applications for a self-regulatory trade association to facilitate Crowdfunding supervision.

READ: Anti-virus creator, John David McAfee charged for U.S tax evasion

Definitions of the participants per the new rule

  • Fundraiser: refers to the originator, maker, or obligor of the investment instrument to be issued pursuant to these Rules.
  • Crowdfunding Intermediary (CFI): An entity organized and registered as a corporation to facilitate transactions involving the offer or sale of securities or investment instruments through a Crowdfunding Portal (CFP);
  • Investors: As defined by the act; relates to end takers of the instruments and products from the crowdfunding issue. The SEC attempts to differentiate between High-net-worth individuals, Retail Investors, and Qualified Institutional Investors.
  • Custodians are the banks who will hold the funds contributed on behalf of the parties.

READ: SEC to strictly regulate crowdfunding, issues new rules

Requirements

The four categories of participants specified in the rule are required to register with the SEC for purposes of taking part in Crowd Funding activities. Whereby the SEC will approve or reject registration requests depending on the eligibility criteria as outlined in the new rules on Crowdfunding.

The eligibility criteria vary by participant type. As an example,

  • Fundraisers must be entities incorporated in Nigeria and have been in operation for at least two years. Or have technical partners who meet the 2-year operating track record requirement.
  • Crowdfunding Intermediaries have a lot more onerous set of requirements for registration. This is because these intermediaries are the core participants saddled with creating and operating crowdfunding portals (i.e., Platforms/marketplace for the crowdfunding issue).
  • Notably, both the Crowdfunding intermediaries and the actual Crowdfunding platforms need to be registered.
  • Custodians: As the name implies will facilitate the aggregation of funds deposited and only release to the Fundraiser subject to the criteria of each issuance being met.

READ: SEC restrains fintech company, Chaka from advertising or offering for sale shares

Workflow highlights for each Crowd Funding issuance

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  • The workflow highlights for each crowdfunding issue include
  • Fundraisers need to engage a Crowdfunding Intermediary (CFIs) to facilitate the pooling of funds from investors via the approved Crowdfunding Portals (CFPs).
  • These CFIs will ensure that there are sufficient disclosures by Fundraisers to Investors about the purpose and use of funds.

Notably the new rules prohibit misleading information to investors.

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  • The amounts being raised will be safe kept at a Custodian for the duration of the fund-raising window and released to the Fundraiser subject to meeting criteria.
  • Crowdfunding Intermediaries and the Portals are required to provide a plethora of information to both SEC and Investors. The portals also help ensure compliance with approved guidelines (e.g. not exceeding target amounts approved for each issuance)

READ: 94% of Bitcoin investors are making money

In conclusion,

  • The new rule on Crowdfunding is a welcome development. Specifically, the introduction of technology portals to enhance disclosures about funds should bring more transparency into the sector and facilitate investor due diligence.
  • Furthermore, the introduction of eligibility criteria for the various participants should serve to increase accountability whereby Fundraisers will need to provide increased levels of assurance with regards to the use of funds whilst Crowdfunding intermediaries will be keen to facilitate investor due diligence as they seek to protect their reputation and prevent censure from the SEC.
  • One observation however is that the new SEC rule is not explicit about the issue of recovering investor funds in the event of registered entities failing. This may explain why the SEC is keen to differentiate between classes of investors (i.e. High-net-worth, Institutional investor, and Retail investor) and then further require that retail investors, who are arguably the most vulnerable to financial shocks, do not invest more than 10% of their annual income in these schemes.

Download New SEC Nigeria Guidelines for Crowdfunding

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Cryptocurrency

$70 billion lost in Crypto market amid rising U.S dollar

Other leading crypto assets including Ethereum, Cardano, Litcoin, Chainlink, Polkadot, and Stellar lost more than 8% in value.

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The crypto market just lost about $70 billion, as significant selling pressure from crypto sellers pushed the value of cryptocurrencies lower across the market spectrum amid the rising U.S dollar and some profit-taking.

  • The global crypto market value is $930.47 billion, a 5.61% decrease over the last day.
  • The U.S dollar was fired up as it recorded impressive gains at the Tuesday trading session in London taking into account some investors are fast becoming jittery on rising COVID-19 caseloads globally.
  • At press time, the U.S. Dollar Index that tracks the greenback against a basket of major currencies ticked up by 0.20% to 90.555

READ: Currency traders flock to U.S dollars amid COVID-19 drama

At the time of drafting this report, about $70 billion in value was virtually wiped out, taking into account the flagship crypto, Bitcoin, the dominant player in the crypto market, lost as much as $2,000, according to data retrieved from Coin360.

  • The total crypto market volume over the last 24 hours is $131.42 billion, which amounts to a 2.07% increase.
  • The total volume in DeFi is currently $15.68 billion, 11.93% of the total crypto market 24-hour volume.
  • The volume of all stable coins is now $105.17 Billion, which is 80.03% of the total crypto market 24-hour volume.
    Bitcoin’s price is currently $31,398.04.
  • Bitcoin’s dominance is currently 62.74%, a decrease of 0.01% over the day.

READ: Why intelligent investors are secretly buying Bitcoin

Other leading crypto assets including Ethereum, Cardano, Litcoin, Chainlink, Polkadot, and Stellar lost more than 8% in value.

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Crypto experts interviewed by Nairametrics are saying that a market correction was long overdue after the overextended bullish move.

READ: Google threatens to remove its search engine from Australia due to media code

The bearish trend prevailing at the bitcoin market is largely attributed to a significant amount of profit-taking in play, coupled with the strong rebound in the U.S dollar

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Funds Management

Understanding how Mutual Funds and ETFs work in Nigeria

This article sets to answer all your questions about Mutual Funds and Exchange Traded Funds.

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Nine Mutual funds that joined the league of mutual funds in 2019, Nigeria’s best performing mutual funds in 2019, SEC clarifies new rules for mutual funds, sets new deadline for compliance 

Mutual Funds (MF) and Exchange Traded Funds (ETFs) are amongst the fastest growing asset classes in Nigeria. Broadly they are both classified as Collectives Schemes and are similar in many aspects yet are also different in operations.

Mutual Funds (MF) have been in existence for a long time. Mutual Funds are pools of funds created with the intent to pooling funds from various investors and buying assets. MF allows those investors to own the wide range of assets that the MF own, thus achieving diversification with a lower cost.

Dutch merchant, Adriaan van Ketwich is credited with the first investment trust in 1774 under the name “unity creates strength”. The first mutual fund to include bonds and shares was the Wellington Fund which was set up in 1929.

Nigeria’s oldest mutual fund, the Chapel Hill Denham Paramount Equity Fund has been in operation since 1991. The Security and Exchange Commission published the Nigerian Net Asset Valuation (NAV) Summary Report which found that there are 106 mutual funds in Nigeria with a total asset value of $3,714,013,444.

Exchange Traded Funds (ETFs) are a more recent asset class in Nigeria. (ETFs) are securities that track the performance of an index or basket of assets. There are about 12 listed ETFs on the Nigerian Stock Exchange

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What are Mutual Funds and ETFs?

Think of mutual funds as a savings pot where you and your friends save excess cash and subsequently invest that entire savings in a specific way, maybe to buy a cow for Christmas. Imagine if your group of friends decided to allow everyone in your town to join your investing club and contribute to buying cows. The funds then become so larger that you employ an asset manager to oversee the administration of the cows, and you simply create a company that will also offer cows, goats, and lambs. Thus, contributors can join your club and receive goat, lamb, and cow meat without having to buy actual cows or goats.

This is exactly how mutual funds work. A company like Stanbic IBTC creates an investment fund just like those friends, but instead of cows, they invest in bonds, money markets, equity, and other financial instruments. By buying shares in just that StanbicIBTC fund, you own a part of whatever the fund owns. This is s cheaper way for you to participate in the broad market, without having to buy every single investment.

Are Mutual Funds similar to ETFs?

In similarities, both offer investors a low-cost way to diversify holdings by selecting specific sectors, geographical regions, or risk profiles. For example, both MF and ETFs allow investors to buy country-specific investments e.g., the Vertiva Griffin 30 EFT and the Global X MSCI Nigeria ETF that invests in only Nigerian equity.

How do they differ?

In terms of differences, MF cannot be traded during the trading, an investor must wait for the close of business to calculate the Net Asset Value of the mutual fund and then place an order to buy or sell. ETFs on the other hand allow trading during the day.

Why buy collective schemes, why not invest directly?

The collective investment schemes have been embraced by Nigerians because of their greater promise of yield and diversification. These funds have offered retail investors the ability to earn a higher return on mostly money market investment, much higher than placing funds in banks. This preference for collective schemes has also been highlighted by the fall in yields offered by the risk-free Federal Government binds.

About 69% percent of the total assets of mutual funds are invested in money market funds. 9% in Eurobond funds, 7% in bond funds. In simple terms, by investing with others in a fund, the individual investor can access investment management which increases his chances to gain superior returns.

The future for ETFs and Mutual Funds

These asset classes will continue to grow in AuM as investors become more sophisticated and price-conscious. ETFs, especially Index ETFs offer sales commissions at a fraction of the brokerage cost. Also, FinTech’s automation of the asset allocation process has allowed more fund options to match individual choices.

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