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Markets

Naira strenghtens further at the parallel market

Naira appreciated to N453 to a dollar on Thursday, May 28, 2020, which represents a N2 gain when compared to the N455 to a dollar that it exchanged at the end of Wednesday trading.

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Naira, Unify exchange rates to foster economic growth – NISER , OFFICIAL: Banks charge N368 per dollar for debit card transactions

The rally of the naira at the parallel market, popularly called the black market, continued as the currency was marginally strengthened 2 days in a row against the dollar.

Information from Abokifx shows that the naira appreciated to N453 to a dollar on Thursday, May 28, 2020. This represents a N2 gain when compared to the N455 to a dollar that it exchanged at the end of Wednesday trading.

This could be attributed to lower demand for foreign exchange at the parallel market.

In another development, the local currency moved slightly in the opposite direction at the Investors and Exporters (I&E) window as it depreciated to N386.33 to a dollar.

READ ALSO: CBN pumps funds into FOREX market through Wholesale SMIS

This shows a loss of N0.39 when compared to the N385.94 to a dollar that was recorded yesterday, Wednesday, May 27, 2020.

This is coming against the backdrop of a decline in the daily turnover to $22.65 million at the I&E window. This represents a drop of $8.73 million when compared to the $31.38 million that was recorded the previous day.

The performance of the naira in the 2 forex markets is coming on a day that the Central Bank of Nigeria against expectations reduced the Monetary Policy Rate (MPR) to 12.5% from 13.5%. This decision was taken after today’s monetary policy committee meeting and that is the lowest rate in the last 4 years.

READ MORE: Nigerian artistes now surviving on digital shows after losing gig money to Coronavirus

In a bid to create more confidence in the forex market, the CBN Governor Godwin Emefiele had assured foreign investor of the safety of their investments despite a drop in foreign exchange earnings due to low oil prices.

However, the future outlook appears more positive following, the rebound of crude oil prices above the revised $25 per barrel benchmark and more foreign exchange earnings for the country.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

1 Comment

1 Comment

  1. Oroko olufemi

    May 30, 2020 at 4:39 am

    Thanks Mr Chike for been here,Good we r having d economy picking up gradually n naira gaining more strength.
    My just question is that can still CBN reverse d exchange rate back to 305 per dollar WC resulted to 360 to a $ at d parallel or black market or even lower than 360 b4 CBN devalue d baira,bsc d devaluation by d CBN already taking its toll on d economy n d commoners are st d receiving end.thanks

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Stock Market

Nestle Nigeria’s parent company to earn N32 billion in dividend from subsidiary

Nestlé S.A, the parent company of Nestlé Nigeria looks set to earn a mega dividend.

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The parent company of Nestlé Nigeria Plc, Nestlé S.A, is set to earn a whopping sum of N32 billion in dividend for the financial year ended December 2020.

The multinational food and drink processing conglomerate corporation, headquartered in Switzerland is the single majority shareholder of Nestlé Nigeria Plc, with 527,080,970 units of the total issued shares of its subsidiary.

This puts the ownership stake of the Swiss multinational at 66.5%, ahead of Stanbic IBTC Nominees Limited with 6.28% ownership stake.

Recall that the Board of Directors of Nestlé Nigeria in a statement released via the Nigerian Stock Exchange proposed a final dividend of N35.5 per share. This puts the total dividend payout of the company at N60.5 per share for the financial year 2020 (interim: N25.0).

When converted to dollars, the dividend amounts to about $78 million based on an exchange rate of N410/$1.

This proposal reflects the resilience of Nestlé despite the disruption occasioned by the pandemic. As the FMCG company was able to maintain its tradition of dividend payment to shareholders in 2020, despite taking a major shock in its profit during the year (-14%).

  • Nestlé delivered a consistent result in terms of revenue, amidst the ongoing COVID-19 pandemic which disrupted supply chains globally.
  • The revenue of the FMCG company increased by 1% in 2020 (N287 billion), compared to FY’19 figures (N284 billion).
  • However, the increase in the prices of materials, foreign exchange restrictions, and a spike in finance costs placed pressure on the company’s profitability in 2020.
  • At the back of these pressures, Nestlé’s PAT declined by 14% in 2020 (N39.2 billion) compared to FY’19 figures (N45.7 billion).

What you should know

Nestlé S.A is one of the largest food companies in the world in terms of revenue. The Switzerland-based consumer goods behemoth is the parent company of Nestlé Nigeria PLC – a leading food and beverage company in Africa.

Nestlé has grown its operation in Nigeria, as well as its presence in the Central and West Africa region over the years.
Its factory in Nigeria has grown from one – with the establishment of the Agbara Manufacturing Complex which commenced operation in 1981 – to three in recent times, following the inauguration of the Flowergate factory, a factory initially dedicated to the production of MAGGI products, and the set-up of the Abaji factory complex in 2016.

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Market Views

Bears take Nigerian stocks hostage, investors lose N82.4 billion

Investor sentiment as measured by the market breadth closed negative with 12 advancers and 47 decliners.

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Bears

Nigeria’s all-share index fell further at the close of trading today, down by -0.40% to 39,364.67 points. Investors losses today stood at N82.35 billion.

  • Year-to-date return and market capitalization settled at -2.26% and N20.5 trillion, respectively.
  • Investor sentiment as measured by the market breadth closed negative with 12 advancers and 47 decliners.
  • Across coverage sectors, the performance was bearish. The NSE insurance, banking, consumer goods, and oil & gas sectors dipped 4.04%, 1.54%, 1.47%, 64 basis points, and 0.65%, respectively.
  • The flip side saw only the industrials improved marginally by 0.19%.

Top gainers

  1. UPL up 9.91% to close at N1.22
  2. MORISON up 9.09% to close at N0.6
  3. CAP up 5.26% to close at N20
  4. WAPCO up 3.59% to close at N20.2
  5. LIVESTOCK up 3.17% to close at N2.28

Top losers

  1. FIDSON down 10.00% to close at N4.41
  2. NNFM down 9.97% to close at N6.32
  3. ENAMELWA down 9.95% to close at N19.9
  4. NEM down 9.95% to close at N1.72
  5. NCR down 9.91% to close at N3.09

Outlook

Nigerian stocks ended the fourth trading session on a weaker note amid soaring oil prices prevailing at the U.S trading session.

  • Today’s bearish trading session was inclined by sell pressure on consumer ticker, DANGSUGAR which lost -6.25%. JBERGER, ARDOVA, and UBA also declined by -7.88%, 9.85%, and -3.64%, respectively.
  • Nairametrics expects intending buyers to seek the advice of certified stockbrokers.

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