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Telecom stocks reach record high, Nigerian stock market value hit N22 trillion

Nigerian Stock Exchange Year-to-Date Return stood at 4.08% to print market capitalization at N21.934 trillion

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Value of shares traded by top 10 stockbrokers up 133% despite COVID-19, investors, Raging Bulls lift Brent Crude price by 10%

Nigerian bourse sustains the bulls today as the All-Share Index advanced further by 0.83% to close the day’s trading at 41,930.73 index points.

Consequently, the Nigerian Stock Exchange Year-to-Date Return stood at 4.08% to print market capitalization at N21.934 trillion.

  • Activity level was impressive as volume and value of trades increased. A total of 543 million units of shares valued at N7.321 billion exchanged hands in 6,770 deals.
  • Transnational Corporations continued to trend as the most traded stock with regards to volume with 57.2 million shares, while ZENITHBANK topped by value at N1.24 billion.
  • With 35 gainers to 21 losers, sectoral indices were mostly positive.

Top gainers

  • WAPCO up 7.27% to close at N29.5
  • JBERGER up 5.64% to close at N20.6
  • DANGSUGAR up 2.49% to close at N20.6
  • MTNN up 2.40% to close at N175
  • AIRTELAFRI up 1.09% to close at N930

Top losers

  1. SKYAVN down 10.00% to close at N2.88
  2. CAVERTON down 9.41% to close at N1.83
  3. ARDOVA down 2.44% to close at N18
  4. UBN down 3.39% to close at N5.7
  5. ETI down 2.29% to close at N6.4

Outlook

Nigerian Stocks kept the bullish run ongoing amid significant buying pressure sighted in leading telecom stocks that include MTN Nigeria and Airtel Africa.

  • The NSE Insurance Index led the gainers’ chart with 1.54%. The Industrial, Consumer Goods, and Banking Indexes trailed by +0.52%, +0.21%, and +0.13% respectively. Conversely, the Oil & Gas indices closed as the lone loser, down by -0.12%
  • Nairametrics however, envisages cautious buying, amid improved market conditions in Nigeria’s financial market.

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Message Olumide on Twitter @tokunboadesina. He is a Member of the Chartered Financial Analyst Society.

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Billionaire Watch

How young Elon Musk started and sold 3 businesses for $1.9bn before Tesla

We look at the 3 successful businesses Elon Musk founded and sold for a collective $1.9bn before starting Tesla.

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Elon Musk needs $20 billion wealth gain to clinch world's richest man title

Success is never an accident. It is most times the result of many years of hard work and consistent effort. Elon Musk is popular today for his electric car company Tesla and his space project SPACE X. But long before these, he was already a multi-millionaire and had founded 3 successful companies which he sold for a collective $1.9bn.

The purpose of this article is to paint a clear picture of what it takes to be among the top 1% of any field. It takes years of consistent hard work to get there. Elon Musk is the perfect example of an individual with a very strong work ethic. His story below will prove that to you.

This article will briefly look at the 3 successful businesses Elon Musk founded and sold for a collective $1.9bn before starting Tesla. Let’s go!

READ: Blue Origin Vs Space X: Bezos and Musk’s subtle battle for supremacy

Blaster ($500)

A 12-year-old Elon Musk facing bullying in high school and a not so friendly dad taught himself how to code. According to the Inc. Magazine, he mastered BASIC a general-purpose coding language making use of a commodore PC he acquired himself. He later that year, sold the code for his PC game Blastar to a PC magazine for approximately $500.

This was his first business endeavour which he started and sold.

READ: Tesla investor sues Elon Musk for causing problems with his tweets

ZIP 2 ($340m)

After the sale of Blastar for $500, Elon Musk and his brother Kimbal took a $28,000 seed money from their dad and started another internet venture, Zip 2. They rented an office and slept in it because they couldn’t afford a house.

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Zip 2 was a web software startup that created online city guides for newspapers. The software was patronized by the New York Times and other notable media companies.
Elon Musk and his brother Kimbal sold Zip 2 to PC giants Compaq for $340m. The year was 1999 and Elon Musk was 28 years old.

READ: Reinvestment: The powerful strategy used by the 2 richest men in the world

X.com/PayPal ($1.5bn)

Elon Musk continued on his journey of starting companies and selling them. He took $10m out of his earnings from the Zip 2 deal and joined the internet boom.

He founded x.com an online platform he envisioned to be the future of internet banking. In 2000 X.com merged with a Fintech startup, Confinity, founded by Peter Thiel, another would-be billionaire. Both companies combined to become what we know as PayPal today. Elon musk was named CEO of PayPal and had the highest number of shares in the company.
In 2002 PayPal was acquired by eBay for a whopping $1.5bn.

READ: Elon Musk gains $25 billion in a day, as Tesla surges by 20%

Stanbic 728 x 90

What you should know

Elon Musk has often stressed the need to be consistent and have strong work ethics. In a graduation ceremony by the USC Marshall School Of Business, Elon Musk shared his opinion on work ethics according to CNBC.

You need to work super-hard. Work hard every waking hour,” Musk said in 2014.

“If you do the simple math, and say if somebody else is working 50 hours [a week] and you’re working 100, you’ll get twice [as much] done in the course of a year as the other company.”

We hope this Monday article will inspire you to work harder and strive to get more work done in record time.

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Market Views

With rising bond yields and foreign reserves, will the CBN finally tackle inflation?

A flurry of large corporate debt sales is also underway led by MTN and Dangote Cement which could take out NGN200billion.

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Inflation: Headline Inflation sustains uptrend

Bond yields revved up over the last one week driven by sell-offs on auction bonds (in particular the 25-year) where yields crossed 13%. Though the Q2 2021 bond auction calendar points to a modest increase in borrowings by the DMO, the underlying driver of the sell-off appears to be forced liquidations of excess short-money positions from the March 2021 bond auction, amid another short-lived strain in the banking sector liquidity.

Liquidity squeeze across money markets drive money market rates higher: The step-down in OMO maturities over April implied that money markets were heading into a tight liquidity period. Unlike the usual NGN200-300billion weekly maturities, April opened to only NGN49billion in OMO maturities which implied tight funding positions across. Accordingly, interbank lending rates spiked to 30%, and though this subsequently receded, it remained in double digits. Placement rates for large institutions have moved to 7-8% from 0-1% levels at the start of 2021.

READ: OPEC, NSE, MTN, other developments and how they affect your pocket

‘Margin calls’ trigger sell-offs on the 25-year, resets curve to December 2019 levels:  The steepening along the Naira yield curve resumed last week with an average increase of 41bps (YTD: +439bps) driven by over 120bps jump in the 25-year bond (2045). As I noted in my review following the bond auction, the DMO overallotment meant that everyone who needed a bond got on including speculative bids from short-money accounts (brokers). The overallotment resulted in these short-money winners having more bonds than their leverage financed positions could have permitted implying these excess positions needed to be sold off. Unfortunately, the over-allotment meant limited secondary market demand at current yield levels. Compounding the situation was the funding squeeze across the banks, who now applied pressure on these short-money positions to exit these auction bond positions (a sort of margin call). As consequence, these 2045 bond auction winners soon turned into desperate sellers and flooded the market with offers seeking to hit the bids. Above 13%, demand predictably returned and helped calm markets. Beyond the 2045, there were limited desperate offers on the other tenors which has resulted in a mispricing that should adjust in the coming days. The lesson here is in a tight liquidity environment as we are moving towards, bond auction over-allotments hold the risk of sell-offs by short-money traders.

READ: Stock Market end first quarter in deep red

Figure 2: NGN Yield Curve

Source: FMDQ, NBS

Q2 2021 Bond calendar: The Debt Management Office (DMO) released the Q2 issuance calendar wherein it will seek to borrow between NGN450-540billion with the upper end pointing to an extra NGN90billion worth of sales. In my opinion, the bond calendars are not indicative of the evolution of actual borrowings as the DMO has shown a pattern of being highly sensitive to market liquidity conditions (with overallotments in coupon heavy months and under allotments during tight spells) while making maximum use of non-competitive bids. For evidence look no further than in Q1 2021 when the DMO sold bonds with face value of NGN637billion well above target of NGN450billion. Perhaps surprising is the planned re-opening of the 2049s at the May auction which looks odd but could indicate the existence of a large non-competitive bidder who wants the tenor.

READ: NSE-30 companies lose N1.13 trillion in market capitalisation year-to-date

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FX reserves continue to track higher, Eurobond conversations get underway: Foreign reserves continued to rise, up 0.6% w/w to USD34.9billion which suggests the impact of higher oil prices is starting to feed through. This comes just as news of parties being appointed for a Eurobond sale gathers steam. Depending on the size, and I expect a record sale, near term foreign reserve outlook appears positive. Throw in the upward adjustments in interest rates and moves to cultivate remittance inflows, Naira outlook appears on less shaky footing than in recent times. On this wise, the currency continues to hold around the NGN410/$ handle in the NAFEX window (Friday: NGN409/$) and NGN482/$ at the parallel market.

The Week ahead (April 12-April 16, 2021)

In the week ahead, system inflows are thin comprising OMO bills (NGN10billion) and NTB maturities (NGN70billion). As such there will be an NTB auction on Wednesday and possibly an OMO sale on Thursday. In keeping with the trend in recent auctions, the 1yr will likely take another step closer to parity with the OMO bill with a potential stop rate of 8.5-9%. A flurry of large corporate debt sales is also underway led by MTN and Dangote Cement which could take out NGN200billion. Funding pressures will continue to force banks to reduce trading positions but on a lesser scale than in the prior week. In terms of data releases, the NBS should announce the March inflation numbers.

READ: Naira gains at NAFEX window despite 26.2% drop in dollar supply

Inflation likely accelerated in March to over 18%:  The National Bureau of Statistics (NBS) looks set to publish the March 2021 inflation numbers. Though fuel prices have stabilized after Nigerian authorities elected to continue working out a resolution with labour unions, food prices have continued to accelerate over the lean season. Though monthly trends likely remained sticky, the year-on-year comparison still points to over 20% increases in food prices which cover over half of the CPI basket. With this in my mind, my expectation is for the headline print to come in at 18-18.2% with the monthly print at 1.55-1.58%.

Stanbic 728 x 90

Term premiums have started to moderate reflecting the NTB re-pricing but the next big move on interest rates is the May 2021 MPC with the key data point of Q1 2021 GDP. In the event, Nigeria consolidates on the exit from recession with a positive growth read, then I expect the CBN to hike monetary policy rates by 200bps accompanied by an upward adjustment in the 1-year OMO and May 2021 SPEB maturities to at least over 12-13% levels as a first step towards managing inflation expectations.

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