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Business News

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

The Nigerian Stock Market ended the first quarter of the year in deep red as the All-Share index fell to a loss of 3.04%.

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Last week was interesting for the economy and markets, despite a shortened week due to the Easter break. Nairametrics tracked a few notable developments that might possibly have significant effects on your money.

OPEC+ April 1st meeting

For Nigerians, the April 1st meeting meant a lot especially those who regularly track the oil market. OPEC+ agreed to gradually ease supply cuts in May by 350K, June 350K and July 450K barrels. Nigerians will generally want high oil prices. It means higher foreign exchange earnings for the country. However, it has its effects on the price of refined petroleum products in Nigeria. So it seems Nigeria is caught in the middle, even for a commodity that accounts for 90% of our export earnings.

Although most analysts agree that Nigeria is better off with higher oil prices, it was no surprise that Nigeria, led by the Minister of State for Petroleum, Timipre Sylva voted to extend the production cuts. Nigeria currently produces 1.4 million BPD due to the OPEC cuts but we have the potential to produce 1.9 million BPD.

Stock Market

The Nigerian Stock Market ended the first quarter of the year in deep red as the All-Share index fell to a loss of 3.04%. Historically, March has always been a tough month for Nigerian stocks. The story remains the same. The rising government securities yield is a major factor for the decline. Other factors outlined are portfolio reallocation, profit-taking, and markdowns.

In the midst of the storm, a few stocks have performed impressively and had double-digit growth for the past month. The likes of Lasaco Assurance Plc, Champion Breweries Plc, Guinness Nigeria Plc and others. You can get the full list of the best-performing stocks for the month of March and also get expert advice and stock recommendations by subscribing to our premium stock select newsletter here.

Fixed Income

The narrative is that Nigerian stocks are tanking because of the rising yield in the bond market, which is largely the case. However, the S&P Nigeria Sovereign Bond Index is currently -16.62% YTD. So what does this mean?

In simple terms, Bond yields have an inverse relationship with bond prices such that rising interest rates implies lower bond prices. After plunging to record lows in 2020 as the CBN sought to support the economy under the COVID-19 recession, interest rates have reversed in 2021 and are moving north. The development reflects the prospect of higher fiscal borrowings, rising inflation and external account imbalances.

The FGN plans to borrow a record NGN2.1 trillion in local debt markets to help finance a record NGN5trillion deficit brought about by the oil price drop. Higher borrowings are associated with an oversupply which means lower prices (i.e higher bond yields). Furthermore, inflation has accelerated to a 17.3% which suggests investors should short fixed income instruments which will drive more sellers and again lower prices (i.e higher bond yields).

A rising interest rate environment is bad for long-only bond traders as this means lower bond prices and mark-to-market losses. For more patient money, rising interest rates allow you improve the yield on your portfolio.

Why does this even matter? The answer depends on what side of the market you are.

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READ: Why there is a massive sell-off of US stocks

General News

Telcom giant, MTN and Nigerian banks have reached an agreement to resolve the dispute between the parties over commission and service charges. It was reported that MTN reduced the percentage it remits to the bank from 4.5% to 2.5%. In response, the banks removed MTN from their platforms on Friday.

It will be interesting to watch how this plays out because there are other alternative platforms subscribers can use for the activity. Many fintech optimists marked the disagreement as a watershed moment for challenger banks and other alternative payment systems.

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Corporate Press Releases

P2P crypto marketplace, Bitzlato (BZ) partners with Lemonade Finance to ease money transfers across Africa

The partnership will enable users on the BZ platform to buy and sell bitcoins and other cryptocurrencies on the marketplace at zero cost.

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Bitzlato (BZ), the latest P2P Crypto Exchange to enter the African market, has added Lemonade.Finance, a borderless payment platform for Africa, as a payment method to its platform.

Lemonade Finance provides 100% digital payment experience for Africans to seamlessly participate in the global economy from anywhere in the world without any hassle or regardless of where they are from.

The partnership will enable users on the BZ platform to buy and sell bitcoins and other cryptocurrencies on the marketplace at zero cost.

Users in Nigeria will now be able to send Nigerian Naira (NGN) to MPESA at 0% transaction fee.

Speaking about this partnership, Ridwan Olarere, CEO, Lemonade Finance, said:

“We are excited to partner with such an innovative company like Bitzlato to connect more Africans through payment. Many Africans living on the continent face many difficulties when making payments as remittance companies charge high fees and are time-consuming. We are now providing our users with a cost-effective way of sending money to Ghana, Kenya, Uk and Europe.”

Commenting on the opportunities this provides to crypto traders on the BZ platform, Mike Lunov, CEO, BZ, said:

“This partnership will provide a much-needed gateway that enables the markets we serve to seamlessly interact with each other in a borderless and open environment. We seek to break the barriers that presently exist for cross border transfers and enable our users to generate value through the opportunities that accrue from cryptocurrencies trading. The innovation exhibited by the Lemonade platform, and the brilliance of its team assures users of top-notch, secure and reliable transfers going forward.”

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According to BZ, during the first month, BZ will refund commissions in manual mode while using Lemonade Finance, but this will be automated at the end of this period.

Following this partnership, BZ is now looking to partner with merchants in the crypto space especially in Nigeria, Ghana, South Africa that have a steady flow of Nigerian Naira (NGN) to increase liquidity on the platform.

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Take advantage of the new Lemonade Finance payment method on BZ, which offers zero transactional fees for money transfers from Nigeria into Kenya. Sign up on BZ and start trading crypto easily today.

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Business News

Senate calls for the liberalization of cement policy to crash the price of the commodity

The Senate also tasked the FG on providing more industrial incentives to bring new players into the cement industry.

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BUA Cement

The Nigerian Senate has called for the liberalization of Nigeria’s cement policy to boost production and subsequently crash the price of the commodity in the country.

This motion was raised by Senator Lola Ashiru at today’s senate plenary, the senator also tasked the Federal Government on providing more industrial incentives to bring new players into the cement industry, in addition to the liberalization of the cement policy in Nigeria.

Ashiru explained that to reduce the price of cement and in extension, other building materials in the country, the Federal Government needs to provide an enabling operating environment that will encourage new entrants in the country.

The Senate in conclusion called on the FG to provide more industrial incentives and protections such as concessionary loans and larger tax incentives to encourage new entrants and expand the national cement production infrastructure, as this boost in production will lead to a downward review of cement price in Nigeria.

What industry leaders are saying

Earlier this year the founder of BUA Group, Abdulsamad Rabiu, called for the liberalization of Nigeria’s cement policy to boost production and reduce the price of the commodity.

The billionaire philanthropist faulted the belief that Nigeria is self-sufficient in terms of cement production, noting that recent statistics and figures on Nigeria’s population and cement production do not support this status of sufficiency in cement production as stated by some individuals.

He attributed the high price of cement products in the country to the supply gap which exists in the country, as the few producers who currently operate in the country are unable able to meet the country’s huge and growing demand.

The Group Executive Director, Strategy, Portfolio Development and Capital Projects, Devakumar Edwin, explained that the demand and consumption of cement in the nation currently outstrips supply, and this can be pegged on the growth in the country’s population, and the strong appetite for real estate investment and construction in the country.

He revealed that a supply gap of about 40% exists in the country’s cement market and that all players in the industry are working hard to level production with the rising demand in the country.

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