Headline news – First Ideas Limited

Headline news

Dangote, Nestle, others lift stock market first time in 8 months

Nigerian stocks have turned positive on a year-to-date basis for the first time since February led by gains from Dangote Cement and some of the country’s other large companies. The benchmark stock index improved by 1.18 percent to close at 40,716.66 points at the end of Tuesday’s trading, thereby helping stocks to a year-to-date return of 1.11 percent as market capitalisation increased by N247 billion to close at N21.22 trillion.

“Dangote Cement, Nestle, Airtel and First Bank are among the companies that have helped Nigerian stocks turn the corner on a rout that started in February.”

“The market capitalisation of the companies have increased and that has led to the rare positive increase in the year to date return,” Okunrinboye added.Dangote Cement’s market value has increased by 9.3 percent to N4.7 trillion as at October 6 from N4.3 trillion as at January 3, 2021, according to data compiled by BusinessDay. Nestle’s market value has similarly increased from N1.11 trillion to N1.17 trillion, a 5 percent rise year-to-date.

Although the year-to-date return of Nigerian stocks still trails that of the Johannesburg (+8.6 percent) and Nairobi (+7.9 percent) stock exchanges, the gap has narrowed, with the excess return of the Johannesburg exchange as against the NGX now at just 7.5 percent, down from a high of over 20 percent in the July-August period when the South African stocks reached new highs.

Nigerian stocks have a stellar month of September to thank for closing the gap on peers.The NGX outperformed its rivals in September, with a return of +2.6 percent, compared with a 0.5 percent return for Nairobi and a negative return of -4.7 percent for Joburg.

“The NGX’s favourable performance in September was largely attributable to domestic fund managers’ quarterly portfolio rebalancing, which encouraged buying interest in several bellwether stocks including Dangote Cement and Nestle Nigeria.”

Dangote Cement’s15 percent return for the month, in particular, contributed considerably to the NGX’s return.

“On the domestic front, we expect that the market will continue to be supported by domestic investors, spurred on by corporate actions (buyback announcements) and the broader economic recovery from the worst of the pandemic,” the analysts noted.

The recent rally in oil prices would have helped Nigerian stocks fare better assuming foreign investors were still active in the market.

Nigeria has fallen out of favour with the offshore community largely because of the fx liquidity constraints which has led to a pipeline of delayed external payments and taken a toll on foreign equity investors.

“Those constraints have put other frontier markets ahead of Nigeria at a time when the country could do with extra Foreign Portfolio inflows,” Ebo said.

The offshore community continues to favour other emerging/ frontier markets such as Egypt, Vietnam, and Bangladesh.

Anxiety over Petro Union’s $15bn judgment sum against Nigeria

There is a current unease among major stakeholders in the nation’s energy sector as the Supreme Court prepares to hear a case involving the Central Bank of Nigeria (CBN), Union Bank of Nigeria (UBN) and Petro Union Oil and Gas Company Limited

FG’s infrastructure spend in 6years yields 13,000km of roads – Fashola

In the last six years, the federal government of Nigeria’s spend on infrastructure which is also part of its economic growth and recovery plan (EGRP) has yielded 13,000 kilometres of roads nationwide, Babatunde Fashola, Minister for Works and Housing, has disclosed

Nigeria’s CBN governor says FinTech to drive financial services

The Central Bank of Nigeria (CBN) on Wednesday said that digital revolution will be the focus of financial institutions in the coming months, making Fintechs a major driver of the industry.

Food prices rise on telecoms blackout in Katsina, others

The telecommunication blackout in Katsina, Zamfara, and Sokoto to stop bandits has led to a rise in food prices, crippled economic activities, and estranged families, residents say.



TrustBanc records success in N10bn debt issue

TrustBanc Holdings Limited (TrustBanc), the parent company of three regulated financial services companies, has said it successfully closed its series 3 Commercial Paper (CP) issue for a total amount of N4.2 billion on September 2, 2021.

Nigerian gov’t disqualifies below 18-year olds from owning SIM

The federal government through the Nigerian Communications Commission, NCC has disqualified anyone below the age of 18 from registering and owning a Subscriber Identity Module (SIM) in Nigeria

Dangote Cement, MTN Pay Highest Income Tax to FG in 2020

Dangote Cement Plc has emerged as the highest corporate income taxpayer and biggest employer of labour in the country for the year 2020.

The foremost indigenous cement manufacturer came first among top 100 elite companies listed on the Nigeria Exchange (NGX) posting into the coffer of the federal government a princely sum of N97.24billion in the year, while MTN Communication Nigeria Plc paid N93.6billion and Guaranty Trust Bank came third with an income tax of N36.66billion.

In the same breath, the Cement company with presence in other African countries also emerged as the company with the highest number of employees with a total number of 16,199 staffers on its payroll as at the time of performance review.

In the performance analyses of 100 top elite corporate bodies on the Nigeria Exchange carried out by the reputable business magazine, “Next Money”, Dangote Cement was ranked as the most capitalized company in the country with N4,173.22billion.

A Review of Nigeria’s Q2 2021 Public Debt Stock

According to the Debt Management Office (DMO), Nigeria’s total public debt stood at N35.5tn in Jun-2021. This represents a 7.1% q/q increase compared to N33.1tn recorded in Q1-2021. On a y/y basis, total public debt rose by 14.4% compared to N31.0tn in Q2-2020. The external debt from the international debt market increased by 9.9% q/q to N13.7tn in Q2-2021 (Q1-2021: N12.5tn) while domestic debt from the local debt market rose by 5.4% q/q to N21.8tn from N20.6tn in Q1-2021. In the face of dwindling revenue and devaluations in the Nigerian economy, the country’s debt burden continues to rise.

On a broader perspective, Nigeria’s debt to GDP ratio has risen over the past five years (2015-2020). As at Dec-2020, the ratio stood at 20.0%, up by 70bps compared to 13.0% as at Dec-2015. This reiterates the pressure on the government to depend on borrowings as economic growth has remained stagnated even as the government continues to borrow to finance its budget. According to DMO, the Federal Government of Nigeria (FGN) spent N1.5tn on debt servicing payments for the first half of the year. In Q1-2021, the country spent N1.0tn on both domestic and external debt servicing, while spending a total of N445.5bn in Q2-2021.

Looking forward, we see no respite for the FGN and we ascertain that Nigeria debt stock will continue to spike, given the current fiscal imbalance driven by the revenue shortfall reported in H1-2021 (where only 63% of the budget revenue target was achieved). Also, the continued subsidy programme by the NNPC will also continue to drive the FGN appetite to seek funding via the debt market to solve its liquidity shortages as recent reports from the NNPC showed that the FGN has spent circa N905bn on fuel subsidy in 2021.

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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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