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How Coronation Merchant Bank sees Nigerian economy in 2020

Coronation Merchant Bank is optimistic that there are investment opportunities in Nigeria’s economy in 2020.

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How Coronation Merchant Bank sees Nigerian economy in 2020

Despite the uncertainties in economic indices and parameters, exchange and interest rates, Coronation Merchant Bank is optimistic that there are investment opportunities in Nigeria’s economy in 2020. This was disclosed by the Acting Managing Director of the bank at the Coronation Breakfast Session, tagged “Re-risking the financial system” in Lagos.

At the Breakfast session, which was covered by Nairametrics, the Coronation Merchant Bank boss explained that despite the uncertainties, there are opportunities in the investment horizon and that the recent introduction of the Over-the-Counter – Non-Deliverable Forwards (OTC-NDF) by the CBN and the FMDQ Group is expected to boost the growth of foreign direct investment (FDIs).

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The CBN on February 13 introduced the much-awaited long-dated FX Futures, extending the maximum contract tenor to up to five years.

In an interview with the Nairametrics’ team, Adegbohungbe added that the introduction of the OTC-NDF by the apex bank was an opportunity FDIs to grow.

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He said, “It was critical for a country like Nigeria to experience a shift from foreign portfolio investment (FPIs) to FDIs. We think that this initiative from the CBN will in the long term encourage foreign direct investment.

“FDIs are important to GDP growth, to address unemployment, create jobs amongst others. When FDIs are talked about, we are competing with other emerging markets and those other markets are coming up with initiatives as to how to attract FDIs and we think that this is a good initiative that has come up and in the long term will attract FDIs.”

(READ MORE: Coronation Merchant Bank appoints Banjo Adegbohungbe as Acting Managing Director)

Oil prices in 2020

Head, Research, Coronation Asset Management, Guy Czartoryski, is optimistic that oil prices can hold at or above $60 for most of the year and pointed to three factors:

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  • Although Organisation of the Petroleum Exporting Countries (OPEC) global market share is falling, it nevertheless remains influential, and it has proven capable of removing much of the price volatility, which was observed during 2016 and 2017.
  • Partly as the result of production cuts, the forward curve in oil prices (Brent) is showing values above $60 for all of 2020, as indeed it was one year ago, which gave us comfort at that time.
  • The new year began with a significant deterioration in relations between the United States of America and Iran, and such tensions in the Gulf region have a habit of driving prices upwards (though not always for long- last September’s bombing of a Saudi Arabian oil facility only prompted a brief spike in prices.)

“Our view is that there could be further episodes of tension in the Gulf region in the year ahead and that the risk premium may again become elevated at some point, or point, during 2020,” he added.

(READ MORE: CBN’s forex intervention is counter-productive – Manufacturers)

Devaluation in 2020?

Adegbohungbe expressed his optimism that the naira would not be devalued in 2020, as he believed there are policies put in place by the CBN to ensure exchange rate stability.

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He said, “Although foreign exchange reserves fell steeply during the second half of 2019, we believe there will be sufficient sources of US dollars in 2020 for the CBN to support foreign exchange reserves.”

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Czartoryski supported Adegbohungbe when he explained that the CBN would keep the exchange rate at close to N362.50 per dollar for most of 2020.

“The recent history of the Naira/US dollar exchange rate shows that 20% over-valuation of the Naira, in terms of fair value, is associated with devaluation. Such a level may be reached during 2021, but the risks of this happening in 2020 are low.”

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On interest rate, the research expert anticipated downward pressure on Treasury Bill (T-bill) and government bond rates to continue as domestic funds rotate from high-yielding CBN OMO bills into government securities.

“Bank earnings may suffer somewhat from the CBN’s initiative to limit the scope of card charges. This will likely be offset by balance sheet expansion and a degree of interest rate protection from high-yielding securities,” he added.

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper.The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference.The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

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Cryptocurrency

Ex-Real Madrid Striker, David Barral becomes first-ever footballer to be bought with Bitcoin

Former Real Madrid Striker, David Barral has become the first-ever footballer to be bought with Bitcoin.

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Former Real Madrid striker, David Barral, makes transfer history as he became the first-ever professional player to be bought solely with virtual currency, Bitcoin.

Spanish third division side, DUX Internacional de Madrid, simply known as Inter Madrid, has officially signed the 37-year-old after teaming up with their new sponsors, Criptan that deals in cryptocurrency, The SUN reports.

Inter Madrid who are part of DUX gaming, eSports club owned by footballers Borja Iglesias and Real Madrid star, Thibaut Courtois, is yet to disclose the total value of the deal.

The Segunda Division B club went to Twitter to welcome their new signing and thank their sponsor.

“David Barral new player of DUX Internacional de Madrid, welcome to the infinite club! He becomes the first signing in history in cryptocurrencies. Thanks to Criptan, our new sponsor, for making it possible,” the club tweeted.

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The 37-year-old, who made over 50 appearances playing in the Real Madrid reserve side, expressed his delight at his latest move. Barral has also played for Spanish La Liga clubs Sporting Gijon, Levante, and Racing Santander.

“Glad to join the project of @interdemadrid with eager ambition and responsibility to continue competing and achieve important challenges in my sports career,” he wrote on his official Twitter handle.

What you should know

  • A similar deal was when a Harunustaspor, Turkish amateur side, paid 0.0524 Bitcoin (£385) plus 2,500 Turkish Lira in cash (£841) for Omer Faruk Kıroğlu in 2018.
  • Back in December, Carolina Panthers offensive tackle Russell Okung became the first high-profile athlete in the United States to be paid in bitcoin.
  • Similarly, the Mark Cuban-owned Dallas Mavericks became the second NBA franchise to accept Bitcoin as a means of payment for both game tickets and merchandise.

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Hospitality & Travel

Biden reverses US immigration ban on Nigeria, others

US President, Joe Biden has signed an executive order to repeal the immigrant visa ban on Nigeria and others.

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What would a Joe Biden Presidency mean for Nigeria?

Newly-elected President, Joe Biden has signed his first executive orders as US President including reversing a Donald Trump-administration travel ban on 13 countries which were mainly Muslim and African nations.

Biden’s executive orders, amongst other acts, also returns the US back to the Paris Climate agreement and stopping the construction of the border wall with Mexico.

This was disclosed in a report by Reuters after Biden signed 15 executive actions immediately after his inauguration.

“In the coming days and weeks, we will be announcing additional executive actions that confront these challenges and deliver on the president-elect’s promises to the American people,” Jen Psaki, Biden’s press secretary said.

Other actions by Biden include reversing the Presidential permit for the controversial Keystone XL oil pipeline.

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What you should know

  • Donald’s Trump administration introduced a ban on citizens from countries which was upheld at the US Supreme Court, barring citizens of seven countries — Iran, Libya, Somalia, Syria, Yemen, Venezuela, and North Korea — from obtaining any kind of visas, and largely preventing them from entering the US.
  • Nairametrics reported that the US subsequently added six more countries to its travel ban list. They were Nigeria, Eritrea, Sudan, Tanzania, Kyrgyzstan and Myanmar. The extra ban meant citizens were allowed to visit but were banned from settling permanently in the United States.
  • US government gave conditions to get it to review Nigeria’s status on the ban list, including getting Nigeria to improve on its data intelligence such that it would be easy to investigate any immigrant wishing to visit the United States and meet information-sharing systems.
  • In August 2020, President Muhammadu Buhari disclosed that it will take enormous resources to reverse the ban on immigrant visas for Nigerians by the United States Government. He also noted that the country was making some progress in that regard.

Biden’s reversal of Trump’s policies is part of an aggressive push to roll back some of his predecessor’s strict and controversial immigration policies which have been condemned by world leaders and civil groups in the past.

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Business

Lafarge moves to divest 35% shareholding in CBI Ghana

Lafarge Africa Plc has resolved to sell off its 35% shareholding in Continental Blue Investment Ghana Limited.

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Lafarge Africa provides grant for startups, Lafarge Africa’s latest earnings report reveals 8.5% decline in gross profit , Lafarge Africa gets new CFO one month after resignation of former finance director, Lafarge Plc reveals why it invited Italian man with Coronavirus to Nigeria, Lafarage Africa group Plc posts a revenue of N213 billion in 2019, profit up N17 billion, Lafarge moves to sell 35% shareholding in Continental Blue Investment Ghana Limited

The Board of Lafarge Africa Plc has resolved to sell off its 35% shareholding in Continental Blue Investment Ghana Limited, in order to cut down on costs impacting the Group’s profit.

This disclosure was made in a notification tagged- “Notice of Divestment in Continental Blue Investment Ghana Limited”, which was issued by the Company Secretary, Mrs. Adewunmi Alode.

According to the statement, the Board of Directors of the Group made the decision to divest its 35% shareholding in Continental Blue Investment Ghana Limited (“CBI Ghana”), in line with the resolutions made at the emergency board meeting which held yesterday 20th, January 2020.

This move was made to set off the cement manufacturer on the path of sustainable growth and profitability, as Lafarge’s investment in CBI Ghana has depleted significantly over the years.

What you should know

  • This is not the first time the company has had to sell off an unproductive investment in an effort to cut down on deadweight cost, as key players in the Cement industry like BUA and Dangote Cement continue to show strength and resilience through their effective cost minimization strategy which worked well in 2020.
  • Recall that in August 2019, Lafarge Africa sold off all its stakes in Lafarge South Africa Holdings (LSAH). This move helped the company to cut down costs coming from its South African subsidiary, which had been making billions of naira worth of losses for years.

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