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Business News

Global Market Summary on Tuesday

These are certainly bad times for Nigeria’s equity market, as its stock Index lost about 4.9% when it closed at 24,388.66 points by the close of trading on Tuesday, the sharpest fall in a day since March 2010

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Global stocks tumble on "corona" sell off, BLOODY WEEKS: Coronavirus cost investors N1 trillion, triggers devaluation fears, Global Market Summary on Tuesday, Analysis: The economy is crashing, avoid falling knives,, Debt crisis looms in emerging markets,Debt crisis looms in emerging markets

 

These are certainly bad times for Nigeria’s equity market, as its stock Index lost about 4.9% when it closed at 24,388.66 points by the close of trading on Tuesday, the sharpest fall in a day since March 2010.

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The banking sector, most liquid sector, saw the worst of the sell-off, losing about 13% on Tuesday. The major decliners are Stanbic IBTC Holdings Plc, MTN Nigeria, Fidelity Bank, and Dangote Sugar Refinery Plc all fell by 10%. Guaranty Trust Bank, Nigerian Breweries Plc were among stocks to close 9.9% lower.

In Asian trading session, Japanese stocks settled higher on Tuesday after a volatile session that saw shares fall on worries over the economic impact of the coronavirus epidemic and an oil price crash before a surge as investors bought undervalued stocks.
The Nikkei average finished 0.9% higher at 19,867.12, having earlier fallen to a three-year low of 18,891.77. It moved as much as 1,078.23 points in intraday trade, marking its largest daily swing since February 2018.

In Europe, the pan-European STOXX 600 index closed 1.1% down, slipping further into bear territory after marking its worst day since the 2008 financial crisis on Monday.

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In America’s trading session its three major indexes rebounded on Tuesday as investors pinned their hopes on policy easing by major central banks after global markets plummeted in the previous session on fears of a coronavirus-driven recession.

Global Market Summary on Tuesday, March 11 2020

At 6:36 p.m. Nigerian local time, the Dow 30 Index was up 61.56 points, or 0.26%, at 23,912.58, and the S&P 500 was up 14.19 points, or 0.52%, at 2,760.75. The Nasdaq 100 Index was also up 80.02 points, or 1.01%, at 8,030.7

READ MORE: Flee from stocks not found on this list

In the cryptocurrency market Bitcoin is struggling to stay above $8,000, after just two weeks ago the asset was trading above the psychological level of $10,000.The cryptocurrency had been up by over 50% year-to-date before growing concerns over the rapid spread of the coronavirus caused widespread fears to spill into financial markets.
In the commodities market, Oil prices clawed back some of the losses from Monday’s epic drop as Wall Street put in a modest rebound as well on the Trump administration’s pledge to cut taxes and provide another stimulus as a balm for those affected by Covid-19.

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Brent oil, the London-traded benchmark for crude, gained $2.08, or 6.1%, to $36.44. Gold spot price settled lower on Tuesday, following gains in each of the last three sessions, stock indexes in Asia and the U.S. strengthened. it was trading $1,655 losing % about 1.48

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Olumide Adesina a French-born Nigerian, is an Investment Professional at Nairametrics Financial Advocates, owners of Nairametrics.com. Olumide Adesina is a certified Investment trader, with more than 14 years of working experience. His work experience covers trading commodity derivatives and analysis of global equities, currencies, commodities, cryptocurrencies, and Fixed Income instruments. A member of the Chartered Financial Analyst Society. You can follow Olumide on twitter @tokunboadesina and email via olumide.adesina@nairametrics.com.

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Economy & Politics

BREAKING: CBN reduces MPR to 12.50%, holds other metrics

Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50% and retains CRR at 27.5%, Liquidity ratio at 30%.

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The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50%.

Governor, CBN, Godwin Emefiele, disclosed this while reading the communique at the end of the MPC meeting on Thursday in Abuja.  Meanwhile, other parameters such as the Cash Reserve Ratio  (CRR) remained at 27.5%, Liquidity ratio at 30%.

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Economy & Politics

Just in: Buhari seeks approval from green chamber to borrow fresh $5.5billion

FG also seek approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.

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President Muhammadu Buhari is seeking the approval of the House of Representatives to borrow fund to finance capital projects at the federal and state (to support state governors) levels in the 2020 budget.

This request was disclosed via the official twitter handle of the House of Representatives.

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The president’s letter, which indicated that the fund would be sourced locally and internationally, was read on the floor of the House of Representatives by the Speaker, Femi Gbajabiamila, during plenary on Thursday, May 28, 2020.

In the letter to the lower chamber, Buhari, is also seeking the approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.

Although the tweet did not contain the total amount of loan that is being requested, reports suggests that the President is seeking approval to borrow the sum of $5.513 billion from external sources to finance 2020 budget deficit and support state governments to meet challenges caused by the coronavirus pandemic.

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Business News

CBN’s MPC unlikely to cut rates, as Nigeria’s foreign reserves hit $36.16 billion

Note that Nigeria’s inflation could potentially rise to 14% by the end of the year due to a higher VAT and a weakened naira.

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The CBN’s Monetary Policy Committee (MPC) is expected to leave the interest rate of 13.5% unchanged during its meeting later today.

The projection is coming on the heels of macroeconomic fundamentals released by the National Bureau of Statistics (NBS), which showed that inflation rose to 12.34%; its seventh consecutive monthly rise and highest level since April 2018.

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Note that Nigeria’s inflation could potentially rise to 14% by the end of the year due to a higher VAT and a weakened naira. Therefore, in order to minimise the risk of exacerbating inflationary pressures, the CBN is unlikely to further cut rates. This possible outcome from the MPC meeting will help stimulate economic growth, just like it did in 2019.

Meanwhile, despite the foreign exchange liquidity crisis being experienced in the currency spot market, data obtained from CBN revealed that the country’s foreign exchange reserves have further increased to $36.16 billion (Gross Estimate) as of 28th of May, 2020.

(READ MORE: Naira depreciates to N460/$1 at the parallel market, despite improved liquidity)

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The surge in Nigeria’s external reserves is due to the fact that the price of crude had gained more than 40% since the deadly COVID-19 pandemic started, coupled with reports that foreign investors are returning to Nigeria. The disbursement of $3.4 billion emergency facility by the International Monetary Fund (IMF) to CBN has also been a contributing factor.

Nigeria’s foreign exchange reserves hit $36.16 billion, Nigeria’s Central Bank MPC meet today

Recall that the CBN Governor, Godwin Emefiele, had promised more liquidity in the currency market, assuring that all genuine dollar demands would be met.

However, an Interest rate expert, Ola Oladele, during a phone chat with Nairametrics, advised that the CBN should keep its word by boosting Nigeria’s Forex supply as the persistent downtrend in the currency black market continues. She said:

“The depreciation of the naira in the parallel market as a result of low supply of FX from official sources and less optimistic outlook on the economy due to falling oil prices.

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“The BDCs haven’t received supply from official sources since our borders were closed and the crash in oil prices has made natural sellers of FX more cautious.

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“We hope that the recent statements by the regulator will restore confidence and subsequently, supply to the market.”

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