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Markets

Bears claw at bank stocks, as CBN cuts interest rate

Market turnover finished lower compared to the previous trading session, as total volume and values dipped by 40.13% and 38.60% respectively, to 348.21 million units and N3.43 billion.

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market's, Bears clawing down on the naira, hits N425 to $1

The bears clawed down prices in the local bourse today as the All Share Index and market capitalization shed 0.22% each, to 25,166.01 index points and N13.115 trillion respectively.

Market turnover finished lower compared to the previous trading session, as total volume and values dipped by 40.13% and 38.60% respectively, to 348.21 million units and N3.43 billion.

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FBNH was the most traded stock by volume at 47.3 million units while GUARANTY topped by value at N576.2 million.

Market sentiment, as measured by market breadth, finished flat as 19 tickers gained, while 18 lost. MAYBAKER (+9.71%) recorded the highest price gain to close at N3.39 per share, as ETI topped the losers chart shedding -9.92% to close at N5.45k per share.

The ASI slipped as significant losses in the Banking (-2.79%), Oil & Gas (-0.36%) and Consumer Goods Indexes (-0.07%) overshadowed moderate appreciations in the Insurance (+1.16) and Industrial Index (+0.23%).

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Price depreciations in bellwethers overweighed the Banking Index as ETI (-9.92%), UBA (-6.25%) and ZENITHBANK (-2.51%) all declined. OANDO (-5.71%) and FLOURMILL (-4.76%) drove the Oil & Gas / Industrial Index southwards.

Conversely, the Insurance Index rose by +1.16% as MANSARD and CUSTODIAN gained +8.19% and +7.69% respectively, while GLAXOSMITH (+7.64%) and GUINNESS (+4.17%) buoyed the Consumer Goods Index.

Top gainers

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CUSTODIAN up 7.69% to close at N6.3; GLAXOSMITH up 7.64% to close at N8.45; GUINNESS up 4.17% to close at N20; DANGCEM up 0.87% to close at N138.5; and MTNN up 0.87% to close at N116.

Top losers

ETI down 9.92% to close at N5.45; UBA down 6.25% to close at N6.75; FLOURMILL down 4.76% to close at N20; ZENITHBANK down 2.51% to close at N17.45; GUARANTY down 1.81% to close at N24.4.

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Outlook

Most Nigerian bank stocks finished negative, partly due to the reduction of interest rate by the Monetary policy committee of Nigeria’s Central Bank from 13.5% to 12.5%. This probably will affect Nigerian banks profit margin negatively, as banks generally borrow short term to lend long term.

Nairametrics envisages cautious buying in the short term, as the present macro fundamentals doesn’t favor financial stocks.

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Patricia

Olumide Adesina is a French-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading. A member of the Chartered Financial Analyst Society. Financial Market; Yale University, Behavioral Finance; Duke University. You can follow Olumide on twitter @tokunboadesina or email [email protected]

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Commodities

Gold rises above $1,800 amid COVID-19 surge, weaker dollar

Gold still targets $1,831, as it has broken a resistance at $1,796 per ounce.

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Gold Up as U.S. hits Record Number of COVID-19 Cases, Gold stands firm above $1,800 over increasing virus fears and weaker dollar , Gold stands firm above $1,800 over increasing virus fears and weaker dollar

Gold prices rose on Monday, standing firm above the major level of $1,800 per ounce, as increasing COVID-19 cases across the world, as well as a weaker dollar, underpinned the safe-haven metal.

Gold futures increased by 0.52% at $1,811.52 per ounce by 08.21GMT while the U.S dollar index that tracks the greenback against major currencies fell by 0.2%, making gold less expensive for holders of other currencies.

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Stephen Innes, chief market strategist at financial services firm AxiCorp explained that “The COVID-19 narrative is not going away and we don’t think the U.S. Federal Reserve is going to change course on the rates anytime soon, which should support gold prices. The medium-term outlook for the economic recovery still looks very uncertain and this continues to provide ample room for gold to float higher.”

Over 12.83 million people have reportedly been infected by the pandemic globally and 565,626 people have also died. COVID-19 cases in the U.S. have continually increased as well; Florida reported a record increase of more than 15,000 new cases within 24 hours on Sunday.

READ MORE: Gold shines on as investors rush to safe haven assets

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Reuters’ technical analyst, Wang Tao, explained that spot gold still targets $1,831, as it has broken a resistance at $1,796 per ounce.

Further worsening the economic worries, U.S. President Donald Trump on Friday mentioned that he was not currently thinking about negotiating a “Phase 2” trade deal with China. With gold being a safe-haven asset particularly to mitigate risks of economic uncertainty, investors and speculators have increased their bullish positions on it, causing the price to rise.

 

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Best Mutual Funds in Nigeria

These are the best mutual funds in Nigeria to invest in based on performance.

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Best Mutual Funds in Nigeria

Mutual Funds are a great form of investing especially if you are a passive investor. According to data from the Security and Exchange Commission, Nigeria has about 107 Mutual Funds cut across several Fund Types. Here is a breakdown of the Fund Types available for investors according to SEC.

TYPES Number
BOND FUNDS 9
EQUITY BASED FUNDS 13
ETHICAL FUNDS 6
EXCHANGE TRADED FUNDS 10
FIXED INCOME FUNDS 21
INFRASTRUCTURE FUND 1
MIXED FUNDS 21
MONEY MARKET FUNDS 23
REAL ESTATE FUNDS 3
TOTAL 107

To determine the best performing Funds, we looked at the Fund Prices as of the last business day in December 2019 and compared to the fund prices as of the last trading day of June 2020. These are the top 5. We also included profiles of the funds as described in their websites.

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Explore useful research data from Nairametrics on Nairalytics


New Gold ETF

Vetiva’s The NewGold Exchange Traded Fund (NewGold) is an Exchange Traded Fund that was listed on The Nigerian Stock Exchange (NSE) in December 2011. It tracks the price of gold and offers institutional and retail investors the opportunity to invest in a listed instrument (structured as a debenture) that is fully backed by gold bullion. Each NewGold security is equivalent to approximately 1/100 ounces of real gold bullion held in a secured stockpile of gold bullion. All gold is kept in the form of London Gold Delivery Bars and Good Delivery Standards are prescribed by LBMA.

December 27th

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Fund Price – N5,220

June 26th

Fund Price – N8,000

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Return –  53.3%

Ranking – First

Commentary: Gold prices have been on the up since the Covid-19 pandemic took hold of the global economy. Investors are uncertain and as history shows gold prices are always up during market uncertainty. If you are looking for protective investment in times of uncertainty then this is the best performing fund so far.

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READ ALSO: FOCUS: These companies aren’t generating wealth for shareholders


FBN Nigeria Smart Beta Equity Fund

FBNH owned The FBN Nigeria Smart Beta Equity Fund is a pure equity fund that invests money predominantly in a portfolio of Nigerian companies, using a rigorous, research-based and tested evaluation system.

The fund provides long-term capital preservation by investing at least 75% of the fund’s assets (excluding cash and cash equivalents) in a diversified portfolio of high-quality companies listed on the Nigerian Stock Exchange. In order to manage liquidity, the fund may also invest up to 25% in short-term money market instruments and deposits with financial institutions.

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December 27th

Fund Price – N129.17

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June 26th

Fund Price – N197.29

Return –  52.7%

Ranking – Second

Commentary: For a fund that is predominantly focused on equities, this a pretty much impressive performance by all standards. For example, the NSE All-Share Index is down 9.8% year to date. If you are worried about investing in stocks and don’t have the heart for it and you are looking for a mutual fund, then this is the best performing fund out there.

READ ALSO: How to build a portfolio fit for 22nd Century


Vantage Balanced Fund

Investment One’s Vantage Balance Fund (launched in 2002) is a fund focused on long term capital appreciation, which is achieved by maintaining a flexible diversified portfolio of equities, fixed income, money market, and real estate investments. Assets are high-quality equity instruments quoted on The NSE while the bond issuers have an investment-grade rating from a credit rating agency registered by SEC.

December 27th

Fund Price – N2.21

June 26th

Fund Price – N2.87

Return –  29.9%

Ranking – Third

Commentary: This is a Mixed fund as it invests in a diverse pool of assets. Interesting to note that the managers of this fund also have an Equity-Based Fund, a Dollar Fund, and a Fixed Income Fund. But none of them come close to the Balanced Fund. If you are looking for a portfolio with a good mix of investment assets then this is the best performing as of June 2020.

READ ALSO: Why interest rates on treasury bills, bonds crashed


Legacy USD Bond Fund

FCMB Asset Management Owned Legacy USD Bond Fund (launched in 2018) is a SEC-registered US Dollar-denominated Collective Investment Scheme, structured as a high-yield mutual fund. The Fund seeks to generate stable income over the long-term. Legacy USD Bond Fund invests in credit-rated US Dollar-denominated fixed income securities issued by the Nigerian Government, Supranational bodies, and Corporate entities.

December 27th

Fund Price – N306.5

June 26th

Fund Price – N360.5

Return –  24.4%

Ranking – Fourth

Commentary: The Legacy Bond Fund is the best performing mutual fund if you are looking for dollar-denominated fixed-income debt securities like Eurobonds. At 24.4% they seem to be holding bonds with good yields and market values respectively. Apart from the Bond Fund, managers of the Legacy Bond Fund also manage a Fixed Income Fund, a Money Market Fund and an Equity Fund. If you are looking to invest in Eurobonds then this mutual fund is the best performing.


Vantage Dollar Fund

Investment One’s Vantage Dollar Fund (launched in 2018) is a SEC registered open-ended Unit Trust Scheme in Nigeria. The Fund seeks to provide investors with a bias for Dollar-denominated securities access to such securities, which ordinarily would be inaccessible to them by virtue of the minimum amount typically required to make such investments. It will invest primarily in Corporate and Sovereign Eurobonds.

December 27th

Fund Price – N401.02

June 26th

Fund Price – N469.2

Return –  17.0%

Ranking – Fifth

Commentary: This is the second dollar mutual fund on the list and the second from Investment One to make the list of best 5. It appears they have a hang on fund management. Dollar Mutual funds are a great source of investments and it is great to see another in the top 5. Thus, if you want another option, then this is one you can also go for. 


Bubbling Under: The following funds make up the rest of the top 5 on our list and in descending order.

6. AIICO Balanced Fund
7. VI ETF
8. Coronation Fixed Income Fund
9. CEAT Fixed Income Fund
10. United Capital Euro Bond Fund

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Commodities

Crude oil prices fall lower, oil traders focus on OPEC meeting

Brent Crude lost about 0.62% to trade at $42.94 a barrel, at 6.05 am Nigerian time.

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Crude oil prices dropped on Monday morning at London’s trading session, as oil traders placed their focus on an OPEC technical meeting scheduled to hold on Wednesday. The meeting is expected to recommend an easing in the curb on oil production that has helped rally crude oil prices in recent months.

Brent Crude lost about 0.62% to trade at $42.94 a barrel, at 6.05 am Nigerian time, also the American benchmark for crude, WTI, lost about 0.72% to trade at $40.26.

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Crude oil prices remained relatively unchanged in the previous week as the resurgence of COVID-19 caseloads soared in the world’s largest oil-consuming economy, and the plan to impose travel restrictions in some global economies. These factors could most likely trigger a decline in the demand for oil.

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Quick Fact: Brent crude is the leading global benchmark for Atlantic basin crude oil. The international benchmark is used to set the price of about two-thirds of the world’s traded crude oil including Nigeria’s crude.

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The importance of crude can’t be ignored; it is used mainly in fueling aircraft, vehicles, and trucks that facilitate economic lifestyles and activities in the modern world. Derivatives from refined crude are used in the production of polymers, as well as the production of waxes, tars asphalts, and lubricants.

READ ALSO: The odds against Bitcoin- Goldman Sachs

Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics explained the macros, which oil traders are presently monitoring. He said:

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“The recent surge in coronavirus infection numbers in the US and elsewhere have brought demand risk back into focus.

“The planned easing of OPEC+ production cuts next month after a one-month extension of the initial phase of the production cut plan and a potential rebound in US production could add pressure on the supply side of the equation.

“And factor in Libya lifting the force majeure, it adds another unwanted level of supply-side uncertainty at an extremely critical point in the oil price recovery phase.

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READ ALSO: Global oil prices drop after reports of unexpected inventory build

“While the evidence suggests we are past the trough for oil and that supply and demand are rebalancing, near-term headwinds remain as the short-term fundamentals are about as muddy as possible.”

However, crude oil prices rallied more than 2% on Friday after an upward forecast by the IEA in its 2020 oil demand by 400,000 barrels per day.

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