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Zenith Bank, Ecobank, dampen Nigerian stocks rally

CAP led 19 Gainers as against 21 Losers topped by LIVESTOCK at the end of today’s session.

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Nigerian Stock Exchange
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Nigeria stocks ended Tuesday’s trading session on a slightly bearish note. The All Share Index dropped by -0.05% to close at 38,704.97 index points as against the +0.89% gain recorded on Monday. Its Year-to-Date (YTD) returns currently stand at -3.89%.

  • Nigerian Stock Exchange market value currently stands at N20.251 trillion.
  • Nigerian bourse trading turnover printed positive as volume ticked up by +48.03% as against the -4.60% downtick recorded on Monday.
  • The market breadth closed negative as CAP led 19 Gainers as against 21 Losers topped by LIVESTOCK at the end of today’s session – an unimproved performance when compared with the previous outlook.

Top gainers

  1. WAPIC up 10.00% to close at N0.55
  2. CAP up 10.00% to close at N22
  3. NPFMCRFBK up 9.94% to close at N1.77
  4. JBERGER up 9.89% to close at N20.55
  5. FTNCOCOA up 9.30% to close at N0.47

Top losers

  1. LIVESTOCK down 9.52% to close at N1.9
  2. CHAMS down 8.70% to close at N0.21
  3. CORNERST down 6.67% to close at N0.56
  4. CHAMPION down 6.25% to close at N2.1
  5. ETI down 5.88% to close at N4.8

Outlook

Nigerian Stocks ended the second session on a near stalemate, amid falling oil prices. The Nigerian ASI moderated by 5 bps in today’s session as investors stepped up selling pressure in lenders – ZENITHBANK and ETI.

  • Shares of ETI notably declined by 5.88% as investors took profits following the 5.15% jump the previous session.
  • Nairametrics envisages cautious buying, on the sentiments that recent price actions hint at further market correction in the near term.

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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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Debt Securities

MTN invests N121 billion in fixed deposits, treasury bills, etc

MTN Nigeria invested a whopping N121.5 billion in bonds, treasury bills and foreign currency deposits in 2020.

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UACN appoints Toriola as new Director 
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Nigeria’s largest telecommunications company, MTN Nigeria invested a whopping N121.5 billion in bonds, treasury bills and foreign currency deposits in 2020. This compares to just N9 billion in 2019 suggesting the GSM giant had challenges deploying the capital raised during the year.

MTN raised N143.96 billion in several syndicated facilities during the year which was to be utilized for its network expansion plans. However, the Covid-19 induced lockdowns affected capex activities forcing most companies to freeze spending on anything that is capital intensive. Effective Interest Rates for most of the loans obtained by MTN range between 3.5% and N5.8% per annum.

From the breakdown seen by Nairametrics, MTN invested N93 billion in naira denominated fixed deposits, equivalent of N19 billion in US dollar deposits and another N34.8 billion in treasury bills. The total amount invested earned MTN about N15.84 billion in income which it used to offset its finance cost of over N129 billion.

Why it matters

Interest rates for risk-free government securities fell drastically in 2020 as investment outlets dried up locally. This triggered a massive influx of money into the stock market helping it to close above 50%, one of the best performing in the world last year.

  • For companies like MTN with a significant cash hoard, treasury operations are a significant part of the activities of its finance department.
  • The investments in risk-free treasury bills despite the negative real return (when interest rate is adjusted for inflation) suggest corporates will rather fix their money in treasury bills than leave it idle in commercial banks.
  • It also suggests corporates like MTN are more favourably disposed to lending to the government despite Nigeria’s ballooning public debt and its attendant risk to its credit ratings.
  • Despite the investments, MTN still closed the year with about N275 billion cash in its balance sheet.

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Business News

NNPC, SEEPCO sign gas development agreement for domestic market

The execution of the deal is to help reduce gas flaring in the country and a show of NNPC’s commitment to facilitating the country’s transformation into a gas-powered economy.

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The Nigerian National Petroleum Corporation (NNPC) and an indigenous oil exploration and production firm, Sterling Exploration and Energy Production Company (SEEPCO), both partners in the Oil Mining Lease (OML) 143, have signed a Gas Development Agreement (GDA).

The execution of the deal is to help reduce gas flaring in the country and a show of NNPC’s commitment to facilitating the country’s transformation into a gas-powered economy.

According to a tweet post from NNPC on their official Twitter handle, the agreement between both parties was signed at NNPC’s head office, NNPC towers, on Thursday, April 22, 2021.

The statement says that this latest milestone provides the terms for the development of OML 143 Gas, providing gas for the domestic market which aligns perfectly with the Federal Government’s National Gas Expansion Programme (NGEP).

What this means

The execution of this project will not only help to support the Federal Government’s effort in reducing gas flaring by monetizing it but will also play its part in the government’s effort in the expansion of gas utilization in the country as a cleaner, cheaper and more reliable alternative form of energy.

This is coming at a time when the Federal Government is shifting focus to gas utilization as an alternative source of energy especially with the increase in the retail pump price of petrol. This is one of the various initiatives by the government as represented by the NNPC towards providing alternative sources of energy.

 

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