The U.S dollar dropped on Monday morning at London’s trading session, as global investors and currency traders got more optimistic about the global economic recovery from COVID-19 picking up leading investors to short (sell) the safe-haven asset even as the caseloads of COVID-19 keep increasing.
The U.S. Dollar Index that tracks the American dollar against a bouquet of other major currencies (like the Japanese yen, British pound sterling, Swedish Krona, Euro), dropped lower to about 0.34% to trade at 98.275 after global investors retreated from the safe-haven asset.
What it means for Nigerians: Nigerians hoping to meet foreign exchange payment obligations, via dollar transactions to countries like Europe, and Japan, will need to pay more dollars to fulfill such transactions.
“Market participants believe that the worst of the health and financial and economic crises are now behind us. That’s supportive of commodity prices…and if we’re past the worst of it, then commodity currencies tend to do well and the U.S. dollar tends to do poorly in the early stages of a recovery,” Commonwealth Bank of Australia, FX analyst Joe Capurso told CNBC.
Meanwhile, U.S. President Donald Trump did not distort one of its trade deal with it arch-rival China when he laid out his reactions towards China’s national security law for Hong Kong and Macau on Friday.
“It’s tough to be a bear at the moment and the path of least resistance for risk remains to the upside in my opinion. We’ve moved past Trump’s China speech without the market hearing anything that will upset China too greatly and promote an immediate reaction,” Chris Weston, head of research at Melbourne brokerage Pepperstone, told CNBC.
Nigerian crude grades yet to rally because of U.S Shale
Bonny light sold for $43.33, far below the price Nigeria sold its crude months ago.
Crude oil prices for lighter Nigerian grades have not experienced the rally its category is presently having, despite significant draws on stockpiles in Europe, as cheaper substitutes like U.S Shale continue to be more attractive to importers, according to a report released by Reuters.
Bonny light, according to oilprice.com, sold for $43.33, far below the price Nigeria sold its crude months ago, at a discounted rate to attract buyers. However, consistent Indian buying continued to buoy Nigerian differentials, especially for some medium grades.
Quick fact: Brent crude is the leading global benchmark for Atlantic basin crude oils. The international benchmark is used to set the price of crude oil of about of two-thirds of the world’s traded crude oil, including Nigeria’s crude.
Africa’s largest producer of crude oil and gas, Nigeria, gets most of its oil from the Niger Delta area, and its relatively classified under two specification based on its lightness and gravity, the heavier grade with a specification of, 20–25 gravity. The lighter grade with a specification of 36 gravity and both Nigerian grade types are low in sulfur and paraffinic.
Examples of Nigerian grades include Bonny light, Brass River and Qua Iboe.
Recall that three months ago the price of Bonny Light, one of Nigeria’s crude grades, had dropped to about $12–$13 a barrel because the major market for Nigerian Crude, had experienced economic depression triggered by the COVID-19 pandemic.
Also, it went so bad that even with lower oil prices, long-haul buyers from Asia did not want Nigerian oil cargoes because of shipping costs to pay and no real need for the oil barrels since demand has plunged.
NSIA records total comprehensive income of N36.15 billion in 2019
The NSIA recorded an increase in total assets to N649.84 billion at the end of the financial year.
The Executive Director, Nigeria Sovereign Investment Authority (NSIA), Stella Ojekwe-Onyejeli, announced in a virtual briefing to newsmen on Friday that the NSIA recorded a Total Comprehensive Income (TCI) of N36.1 5 billion in 2019.
She revealed that the 2019 income was less than the TCI for 2018, which was N44.34 billion. However, the NSIA recorded an increase in total assets to N649.84 billion at the end of the financial year, as opposed to that of 2018 which closed at N617.70 billion.
Ms Ojekwe-Onyejeli said that TCI income for 2019 included foreign exchange gains at N1.26 billion compared to N18.05 billion in 2018, noting that the gain in forex was due to changes in Nigeria’s official exchange rate from N305 to a dollar to N325.
“As of year-end 2019, NSIA’s core capital remained at 1.5 billion dollars.” She said. “The Authority continues to manage 3rd party funds on behalf of some government institutions. We currently manage funds for the Debt Management Office (DMO) and the Ministry of Finance.
“For DMO, the current value of Assets under Management (AuM) is 124.03 million dollars. For 2018, this fund stood at 122.60 million dollars in AuM.
“For the Nigeria Stabilisation Fund, managed on behalf of the Ministry of Finance, the Fund Balance was N33.365 billion. As of 2018, this balance increased to N20.814 billion.”
“However, the National Economic Council voted for an additional capital contribution of 250 million dollars in 2019, which was received on April 8,” she explained.
She added that the group’s strategy to invest in diversified products across the yield curve provided returns and that the Stabilisation Fund (SF), which had been fully invested by the end of 2019, returned 5.81%, outperforming its benchmark by 381 basis points.
She also stated that the Future Generations Fund (FGF), deployed by the NSIA across multiple global equities, hedge funds and other diversifiers, returned 6.45% at the end of 2019, outperforming its benchmark of 6.43%.
“As of year-end 2019, we had deployed over 90 percent of the capital in the Future Generations Fund,” she said.
Royal Rumble at first trading week of Q3 2020, ASI down 1.99% WoW
Trading in the top three equities accounted for 275.099 million shares worth N2.818 billion in 3,497 deals.
The Nigerian stock market ended the week on a bearish note, as the All Share Index (ASI) and Market Capitalization both depreciated by 1.99% to close the week at 24,336.12 and N12.695 trillion respectively.
A total turnover of 961.833 million shares worth N9.181 billion in 20,058 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 739.375 million shares valued at N8.563 billion that exchanged hands last week in 17,248 deals.
The Financial Services industry (measured by volume) led the activity chart, with 618.714 million shares valued at N4.338 billion traded in 9,669 deals, thus contributing 64.33% and 47.25% to the total equity turnover volume and value respectively.
The Consumer Goods industry followed with 91.119 million shares worth N2.227 billion in 3,703 deals. In the third place was the Conglomerates industry, with a turnover of 60.640 million shares worth N62.779 million in 556 deals.
Trading in the top three equities namely FBN Holdings Plc, Guaranty Trust Bank Plc, and United Bank for Africa Plc (measured by volume) accounted for 275.099 million shares worth N2.818 billion in 3,497 deals, contributing 28.60% and 30.69% to the total equity turnover volume and value respectively.
13 equities appreciated in price during the week, lower than 18 equities in the previous week. 59 equities depreciated in price, higher than 43 equities in the previous week, while 91 equities remained unchanged, lower than 102 equities recorded in the previous week.
OKOMU OIL PALM PLC. up 20.94% to close at N77.40
ROYAL EXCHANGE PLC. up 13.04% to close at N0.26
PRESTIGE ASSURANCE PLC up 10.64% to close at N0.52
ACADEMY PRESS PLC. Up 0.30 0.02 to close at 6.67% N0.32
VITAFOAM NIG PLC. up 5.30 0.29 to close at 5.47% N5.59
REGENCY ASSURANCE PLC up 5.00% to close at N0.21
NESTLE NIGERIA PLC. up 4.73% to close at N1256.80
WAPIC INSURANCE PLC up 3.13% to close at N0.33
NEM INSURANCE PLC up 2.50% to close at N2.05
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NIGERIAN AVIATION HANDLING COMPANY Plc. down 24.24% to close at N2.00
LEARN AFRICA Plc. down 21.48% to close at 1.06
UNILEVER NIGERIA Plc. down 18.82% to close at N13.80
GLAXO SMITHKLINE CONSUMER NIG. PLC. down to close at N4.95
UNION BANK NIG. Plc. down 15.08% 6.30 -0.95 -to close at N5.35
NASCON ALLIED INDUSTRIES PLC down 13.79% to close at N10.00
AIICO INSURANCE PLC. down 13.13% to close at N0.86
JAPAUL OIL & MARITIME SERVICES PLC down 12.00% to close at N0.22
STERLING BANK PLC. down 10.85% to close at N1.15
ARDOVA PLC down 10.73% to close at N11.65