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Equities market opens holiday-shortened week with N2bn gain.

Nigeria’s equities market opened this holiday-shortened week with a slight gain of about N2billion. Stocks like Eterna Plc, University Press Plc, Cutix Plc, Regency Alliance and Learn Africa contributed to the record close in the green zone on Monday July 19.
The stock market closes for two days (Tuesday and Wednesday) as Muslim faithful and Nigerians mark this year’s Eid-el-Kabir celebration. In the three-day trading week, the market is expected to be largely influenced by half-year (H1) corporate earnings release as investors position in fundamentally sound counters ahead of more H1 earnings releases.


Except for NGX banking index (-0.37percent), all other key sectoral indices of the Nigerian Exchange Limited (NGX) closed in green –NGX consumer goods index (+.010percent), NGX industrial index (+0.01percent), NGX Insurance (+1.18percent), NGX Oil & Gas (+0.29percent) and NGX Pension (+0.05percent).

Eterna Plc share price increased most from N6.50 to N7.15, gaining 65kobo or 10percent; it was followed by that of University Press Plc which increased from N1.41 to N1.55, adding 14kobo or 9.93percent, while Cutix Plc increased from N3.63 to N3.99, after adding 36kobo or 9.92percent.

The Nigerian Exchange Limited All-Share Index (ASI) and Market Capitalisation which opened the new week at 37,947.18 points and N19.771trillion respectively increased slightly to 37,952.65 points and N19.773trillion. The NGX ASI increased slightly by 0.01 percent at the close of trading session.
The record negative returns from Nigeria’s equities market seen year-to-date (YtD) stood at -5.76percent on Monday July 19.
Meristem research analysts still expect the bearish sentiment in the market to linger this week, which will drive the Index to a negative close.
“The equities market has remained entrenched in the negative region for two consecutive weeks signaling dampened investors’ sentiment despite low stock prices.


“While we acknowledge some bargain hunting activities on account of corporate disclosures and earnings releases for half-year (H1) 2021, we expect this to have a muted effect on stocks direction this week as investors’ sentiment remains largely bearish”, Meristem research analysts said in their July 19 note to investors.


Jaiz Bank Plc, Sterling Bank Plc, Wema Bank Plc, Sovereign Trust Plc and Universal Insurance were most traded stocks Monday on the NGX. In 3,610 deals, investors exchanged 462,808,980 units valued at N1.199billion

Only 20bn barrels of Nigeria’s oil reserves technically recoverable – study

Africa’s biggest oil producer is on course to recover only 20 billion barrels of crude oil from its reserve of over a 37billion barrels before the world transition away from oil, energy research firm Rystad has found. According to the study based on resources modelled at well level rather than field level, Rystad said the…

Oando enters into settlement with Nigeria’s SEC
Oando Plc has entered into a settlement with the Securities and Exchange Commission (SEC) in the overriding interest of the shareholders of the Company and the capital market.
The company has reached a settlement with the Commission on the following terms among others: Immediate withdrawal of all legal actions filed by the Company and all affected directors; Payment of all monetary penalties stipulated in the Commission’s letter of May 31, 2019; and an undertaking by the Company to implement corporate governance improvements.
Part of the terms also requires the submission by the Company of quarterly reports on its compliance with the terms of the Settlement Agreement; the Investments and Securities Act, 2007; the SEC Rules and Regulations; the National Code of Corporate Governance and the SEC Guidelines to the Code of Corporate Governance.
This was contained in a Circular released by the SEC in Abuja Monday and signed by the Management of the Commission.
According to the SEC, “Pursuant to the powers conferred on the Securities and Exchange Commission (the Commission) by the Investments and Securities Act 2007, and the Rules and Regulations made pursuant thereto, the Commission on Thursday, July 15, 2021, entered into a Settlement with Oando Plc (the Company).
“The Commission in its letter to the Company dated May 31, 2019, gave certain directives and imposed sanctions on the Company, following investigations conducted pursuant to two petitions filed with the Commission in 2017.
“The Company and some of its affected directors had challenged the said directives in a series of suits commenced at the Federal High Court. However, the Company subsequently approached the Commission for a settlement of the matter, and both parties have now agreed to settle in consideration of the impact that a further prolonged period of litigation would have on the Company’s shareholders and the value of their investments as well as remedial measures to be put in place by the Company in enhancing its corporate governance practices and strengthening its internal control environment.
The Commission further reiterates its commitment to ensuring the fairness, transparency and integrity of the capital market, while upholding its mandate to protect investors.

Five food items driving inflation in Nigeria and why
As essential food items go out of reach of millions of Nigerians, BusinessDay looks at the five food items that have risen the most in the last one year and what is fuelling the rapid rise. Food inflation rose to 21.83 percent in June 2021 from 15.18 percent recorded in June 2020, caused by price
Massive oil theft to cost Nigeria N2.155trn in 2021
The rate at which crude oil is being stolen from pipelines in the creeks of the Niger Delta, Nigeria might as well forget earning a kobo from oil this year. Africa’s biggest oil producer expects to earn N2.01 trillion from oil sales this year but it is on course to losing…
Microfinance banks loan book rises on CBN’s interventions, fintech injection
Amid struggles to meet with the recapitalisation deadline by the Central Bank of Nigeria (CBN), Microfinance Banks (MFBs) grew the most ever loan book in first quarter (Q1) of 2021.
OPEC Plus agrees to boost oil supply after production spat
Nigeria and other major oil producers reached a deal on production increases on Sunday, as the United Arab Emirates and Saudi Arabia resolved a dispute that had blocked an agreement this month
NT-Bills Update: Bullish Turn, as Average Yield Falls 19bps WoW
The Nigerian Treasury Bills (“NT-Bills”) secondary market last week turned bullish on the back of improved system liquidity (N66.14bn long on Friday) with average yield across instruments dipping 19bps W-o-W to close at 6.69%. Precisely, improved buying interest was seen on the mid- and long-dated maturities as yields contracted 54bps and 34bps W-o-W respectively while sell-offs were recorded on short-term bills, as average yield advanced 31bpsW-o-W.

At the Primary Market Auction (“PMA”) last week, the Apex Bank allotted a total of N150.00bn across all tenors with the 91- and 182-Day bills retaining their previous stop rates of 2.50% and 3.50% respectively, while the 364-Day bill declined 48bps to 8.67%.

Please see details below:

Auction Date 14-Jul-21 14-Jul-21 14-Jul-21
Allotment Date 15-Jul-21 15-Jul-21 15-Jul-21
Tenor 91-Day 182-Day 364-Day
Offer (N) 12,459,707,000 25,372,322,000 71,598,126,000
Subscription (N) 6,693,437,000 11,817,979,000 556,164,803,000
Allotment (N) 5,239,058,000 7,459,979,000 137,300,963,000
Range of Bids (%): 2.5000 – 10.0000 3.4900 – 12.0000 8.1500 – 9.7500
Previous Stop rates: 2.5 3.5 9.15
Stop Rates (%): 2.5 3.5 8.67
Bid-to-Cover Ratio 1.3x 1.6x 4.1x
Subscription Ratio 0.5x 0.5x 7.8x
 

In this week’s 3-Day trading session, we expect calm activity in the NT-Bills space as market participants trade cautiously, despite improved system liquidity. Thus, we advise investors to position in relatively attractive yields across the curve. Additionally, qualified investors may take advantage of available Commercial Paper.

Please see the indicative secondary market NT-Bills rates below:
Maturity Tenor (Days) Rate (%) p.a. Yield (%) p.a.
28-Oct-21 101 3.55 3.59
25-Nov-21 129 4.35 4.42
13-Jan-22 178 4.63 4.74
10-Mar-22 234 5.35 5.54
28-Apr-22 283 5.94 6.23
26-May-22 311 6.96 7.40
09-Jun-22 325 7.16 7.65
Rates are valid till 01:45 pm today (19-Jul-21)
*Please note that the minimum subscription for NT-Bills is N100,000.00

 
FGN Bonds Update: PMA Holds Today; Average Yield Inch 9bps Higher W-o-W to 11.66%
 
The FGN bond secondary market closed marginally negative  last week as average yield across all instruments improved 9bps to settle at 12.16% (from 12.07% the previous week). Most buying interests were seen on the JAN-22, MAR-24, and MAR-25 instruments as their respective yields contracted 139bps, 10bps, and 6bps W-o-W.

The Debt Management Office (“DMO”) is slated to conduct a PMA as it re-opens the FEB 2028, MAR 2036, and MAR 2050 instruments.

Please see details of the bonds auction below:
Bond Name 13.98% FGB FEB 2028 (Re-opening) 12.40% FGB MAR 2036 (Re-opening) 12.98% FGN MAR 2050 (Re-opening)
Term-To-Maturity 6 Years, 7 Months 14 Years, 8 Months 28 Year, 8 Months
Range of Amount on Offer (N’Bn) 50 – 60 50 – 60 50 – 60
Original Tenor 10-Year 20-Year 30-Year
 

Please see indicative secondary market bonds rates below:
Bond Tenor (Years) Yield (%) Coupon (%) Implied Price (N)
Apr-23 2 9.50 12.75 105.15
Mar-24 3 10.30 14.20 108.82
Mar-25 4 10.30 13.53 109.64
Jan-26 5 10.80 12.50 105.94
Mar-27 6 11.60 16.29 119.02
Feb-28 7 11.65 13.98 110.50
Jul-34 13 12.00 12.15 100.97
Mar-36 15 12.15 12.40 101.65
Apr-37 16 12.10 16.25 128.84
Apr-49 28 12.20 14.80 120.46
Rates are valid till 01:45 pm today (19-Jul-21) 
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00

This week, we expect to see reduced activity in the FGN bonds secondary market as investors focus on the upcoming PMA. Therefore, we advise investors to take advantage of maturities that advanced along the curve

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First Ideas Limited is an investment and financial advisory company established in 1994 to provide advisory services to high net worth individuals, trust funds, financial institutions and medium sized companies in growth sectors.

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