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SEC faults 2017 budget appropriation, analyses negative impact on capital market

By Jide Ajia

Despite delay that characterized passage of 2017 budget, the Security and Exchange Commission (SEC) has picked holes in appropriation of the yearly spending plan that, it has harmful effects in operation of the Capital Market.

SEC, the apex regulator of Nigerian Stock Exchange (NSE), disclosed the economic undesirable effects while briefing finance and investment journalists after at its quarterly Capital Market Committee Meeting (CMC) held on Wednesday in Lagos.

The Director General, SEC, Munir Gwarzo, said indirect effects of budgets on the capital market could be negative when the federal government put upward pressures on inflation and interest rates, or cause uncertainties in the foreign exchange market.

He hinted further that inflation spiral could be a cause and consequence of exchange rate bubbles and the net effect of such pressures could be negative on the stock market, if urgent attention was not paid to correct it.

Gwarzo stressed the commission has looked at the theoretical links between the capital market and budget with the aid of historical microeconomic data for Nigeria, adding that expenditure has correlated with the nation’s Gross Domestic Product (GDP) growth.

He, however, recommended the federal government to keep a tab on deficit financing, adding that high budget deficits tends to increase cost of borrowing for any given country.

The SEC boss also canvassed that investor education efforts particularly on the role of capital market in economic development should be strengthened and widened to include targeting the policy makers, practitioners and academics.

In addition, Gwarzo averred that the National Pension Commission and Pension Funds Administrators (PFAs), should take active steps to encourage creation of pension investments portfolios that were more diversified by exposing younger workers to take a greater percentage of equities since they have a longer time horizon to invest.

The Head, Vertical Market Group, Nigerian Inter-Bank Settlement System (NIBSS), Samuel Goriola Oluyemi, on e-dividend mandate, stated that registrants stood at 2.1 million, while investors captured through NIBSS account currently stands at 838.68 million and total unique investors identified through Bank Verification Number (BVN) moved to 433.16 million.

While given further analyses of active investors in Nigerian capital market through e-dividend mandate, Oluyemi explained the ratio of male to female investors in the country was approximated at 2 to 1, while male investors constituted 65 per cent, the female counterpart contributed 35 per cent.

Oluyemi also disclosed to the financial press that investment statistics based on states of residence showed that investors in Lagos contributed 38 per cent, followed with Abuja based investors with eight percent and Rivers (6 per cent), Ogun and Oyo State (5 per cent) respectively.

Other investment statistics based on state of origin included investors who hailed from Anambra (10 percent), Imo (9 per cent); Ogun (9 percent); Delta (7 per cent) and Edo State contributed six per cent to the investment window.

Based on nationality, the NIBSS expert stated that investors in Nigeria, based on figures, were put at 421.37 million; Indian (146m); British (142m); Ghanaians (109); Lebanese (46m) and American investors in Nigeria capital market were 32 million.

Zenith Bank declares N75.32bn profit in 6 months

By Jide Ajia

Zenith International Bank has declared a profit after tax of N75.32 billion for the half year ended June 30, as the financial result released by the Nigerian Stock Exchange (NSE) on weekend showed that the profit-after-tax increased by 112.35 per cent when compared with N35.47 billion posted in the preceding period of 2016.

Its profit-before-tax rose to N92.18 billion, compared with N53.91 billion in 2016.

The bank also recorded gross earnings of N380.4 billion against N214.8 billion achieved in the comparative period of 2016, indicating a growth of 77 per cent.

However, Net interest income stood at N138.962 billion, as against N127 billion in 2016, while impairment charges increased by 196 per cent from N14.2 billion to N42 billion.

The bank’s trading income, realised from foreign exchange, jumped from negative N864 million to positive N65.318 billion; other operating income soared from N3.57 billion to N15.11 billion in 2017.

The bank also announced an interim dividend of N7.8 billion, which translated to 25 kobo per share, same amount paid in the corresponding period of 2016.

The Chairman, Zenith Bank, Jim Ovia, told the shareholders in March that the bank would continue to reward them accordingly.

Ovia stated that in line with its commitment to delivering superior returns to its shareholders, the bank ensured that a good chunk of the profit was set aside for shareholders.

He stated that the bank had maintained a culture of outstanding performance and industry leadership even in the face of a very challenging operating environment.

“As a bank, we are monitoring developments both in the local and global economy and applying pragmatism and dynamism as appropriate. Our strategy and approach to the pursuit of financial inclusion and sustainability gives us a lot of competitive advantage to explore even new frontiers in the market”, he said.

Stock market reverts gaining streak, dips at 0.11 pct

By Jide Ajia

Equities trading on the floor of Nigerian Stock Exchange (NSE), ended a seven session positive run on Thursday, with a 0.11 per cent decline of lead market indices.

In specific terms, the All-Share Index fell by 41.17 points to close at 38,102.85 basis points while the market capitalization dropped N14.2 billion to close at N13.133 trillion.

At the close of trading for the day, Forte Oil led the day’s 27 losers with a loss of 9.71 percent to close at N53.76 per share.

It was trailed by Oando, which dropped by five per cent to close at N7.22 per share while NASCON depreciated 4.99 per cent to close at N12.57 per share; Morison Industries and Dangote Sugar declined 4.85 per cent and 4.84 per cent to close at 98 kobo and N13.56 per share respectively.

On the flip side, Unilever led the day’s 20 gainers with an appreciation of five percent to close at N43.05 per share.

BOC Gases came second on the gainers list after adding 4.94 per cent to close at N3.61 per share and Conoil gained 4.38 per cent to close at N34.30 per share; Guinness and Wema Bank also added 4 per cent and 3.92 per cent respectively to close at N91 and 53 kobo per share.

Further checks on the trading statistics showed that Access Bank topped activity chart as investors traded a total of 69.8 million units valued at N712.4 million; Zenith Bank sold 58.8 million shares worth N1.4 billion, while FCMB exchanged 47.2 million units valued at N57.3 million.

Diamond Bank transacted 33.2 million shares at N43.2 million, and Guaranty Trust Bank exchanged 26.8 million shares worth N1.1 billion.

Investors in 4,055 deals moved a total of 362.7 million units of shares valued at N5.597 billion, compared to 328.7 million shares worth N6.1billion traded in 4,983 deals on Wednesday.

Investment expert predicts mixed performance for Nigerian stock market

By Jide Ajia

The Chief Operating Officer, InvestData, Ambrose Omordion, has predicted that activities at the nation’s exchange market in current week would be trailed with profit taking following fund managers window dressing.

Omordion added that the  market would witness profit taking after month-end dressing by fund managers and experience mixed performance due to expected account rebalancing by fund managers which would lead to profit taking in preparation for the month of August.

The investment expert, who spoke to journalists in a short interview on Monday, stated that the mixed performance would not last for longtime due to investors’ anticipation of more improved half year earnings yet to be released in the market.

He attributed recent market growth to investors’ last minute positioning for earnings expectations, adding that most of the earnings released last week beat market and analysts expectations.

He noted that positive economic data released by the National Bureau of Statistics (NBS), contributed to the market growth; Omordion, however, called for quick implementation of the 2017 budget to sustain the market and economic growth.

Meanwhile, at the close of first trading day for the week, a turnover of 2.21 billion shares worth N30.64 billion exchanged in 26,287 deals as against 3.63 billion shares valued at N34.89 billion were transacted in 19,834 deals.

Checks on daily trading statistical data showed that Financial Services industry led the activity chart with 1.74 billion shares worth N19.04 billion traded in 14,626 deals and contributed 78.45 per cent and 62.16 per cent to the total equity turnover volume and value respectively during the review period.

The Conglomerates sector followed with a turnover of 165.39 million shares worth N454.24 million achieved in 1,400 deals, while third place was occupied by Consumer Goods Industry with a turnover of 135.80 million shares valued at N6.68 billion exchanged in 4,143 deals.

As a result, the All-Share Index during the review period rose by 2,844.34 points or 8.36 per cent to close at 36,864,71, when compared with 34,020.37 posted in the previous week due to massive gains.

Also, the market capitalisation which opened at N11.725 trillion appreciated by N980 billion or 8.36 per cent to close at N12.705 trillion.

A breakdown of the price movement table showed Conoil led the gainers’ table in percentage terms, gaining 21.41 per cent or N6.42 to close at N36.40 per share, Presco followed with a gain of 20 per cent or N12.20 to close at N73.20, while Dangote Sugar Refinery increased by 19.34 per cent or N1.76 to close at N10.85 per share.

Conversely, Cadbury topped the losers’ chart for the week in percentage terms, dropping by 18.17 per cent or N2.32 to close at N10.45 per share.

Morrison Industries trailed with a loss of 17.58 per cent or 29 kobo to close at N1.36 and Livestock Feeds declined by 13.33 per cent or 12 kobo to close at 78 kobo per share.

Stock market index crosses 36,000 mark, hits N577bn value addition

By Jide Ajia

Trading activities on Nigerian Stock Exchange (NSE) for third consecutive day on Wednesday, sustained bullish run with the All-Share Index rising by 4.88 per cent to cross 36,000 mark.

In specific terms, the index inched 1,675.30 points or 4.88 per cent to close at 36,740.77 compared to 35,065.47 posted yesterday.

Of the development, the market capitalisation rose by N577 billion or 4.77 per cent to close at N12.662 trillion against N12.085 trillion achieved a day before following gains by some highly capitalised equities.

A breakdown of the price movement table indicated that Dangote Cement led gainers table, growing by N11.50 to close at N245 per share.

It was followed by Total with a gain of N11.01 to close at N268 and Nigeria Breweries appreciated by N7.90 to close at N165.90 per share, Presco increased by N4.45 to close at N68.50, while Okomu Oil gained N3.67 to close at N70.87 per share.

On the other hand, Mobil topped the losers’ chart, declining by N1.50 to close at N253 per share.

The United Bank for Africa (UBA) trailed with a loss of 33 kobo to close at N10.08 and   Union Bank of Nigeria (UBN) was down by 26 kobo to close at N5.43 per share.

Also, an analysis of the activity chart indicated that FBN Holdings emerged the most traded equity, accounting for 42.16 million shares worth N257.92 million, followed by UBA followed with an exchange of 33.94 million shares valued at N345.81 million and Zenith Bank sold 33.29 million shares worth N838.35 million.

Access Bank transacted 30.86 million shares worth N324.38 million, while Fidelity Bank sold 28.87 million shares valued at N39.29 million.

In all, the volume of shares traded closed higher as investors bought and sold 335.34 million shares worth N4.64 billion achieved in 5,385 deals in contrast to 288.58 million shares valued at N2.46 billion exchanged in 2,578 deals on Tuesday.

SEC to sanction companies, capital market operations over tax default

By Jide Ajia

The Securities and Exchange Commission (SEC) has issued a note of warning to all companies listed on the main-board of Nigerian Stock Exchange (NSE) and other stock market operators to adhere strictly to the latest regulation on tax compliance or face the full wrath of law if turned a deaf ear.

SEC, the apex regulatory body to all capital market operations in a statement made available to The Guild on Tuesday, stated that warning to the effect was informed by the executive order given by the Federal Government for all to comply with the new rule of Taxpayers on Voluntary Assets and Income Declaration Scheme (VAIDS) or face penalty.

The Head of Corporate Communications and External Affairs, SEC, Naif Abdussalam, in the statement said to this end, the SEC was encouraging all taxpayers in the capital market to include Capital Market Operators (CMOs) and Public Limited Companies (PLCs) to comply with the new executive order ‘No. 004 on VAIDS’ before the expiration of the 9 month grace period as specified by the federal government.

It should be recalled that the executive order on VAID was signed by the Acting President Osinbajo on June 29, and it stated that, taxpayers who were under all relevant federal and state tax laws were advised to regularize their tax status by honestly declaring their assets and incomes from sources within and outside Nigeria.

Furthermore, the SEC wishes to state that commencing from March 31, 2018, all CMO’s and PLC’s shall be required to show evidence of compliance with VAIDS or a clean tax status as part of their mandatory submissions to the Commission and failure to comply with the public notice shall result in appropriate sanctions in accordance with the provision of law.

However, the decree of limitations for a tax investigation for honest returns was limited to six (6) years; there was no limit where a fraudulent return has been submitted for assessment.

“In a nutshell, all CMO’s and PLC’s are hereby duly advised to comply with the Executive Order by taking advantage of the nine (9) months grace period to rectify their tax status in complying with the order”, SEC statement stressed.

 

Research firm recommends Forte Oil shares to Investors

By Jide Ajia

A finance and investment solution firm, Meristem Securities, has placed buy recommendation for equity investors to take position in current shares of an indigenous oil and gas firm, Forte Oil.

The leading investment adviser stressed that the upgraded recommendation was a target price of N77.41 from N64.09, implying a 68 percent increase from the last close, matching a consensus average of N77.41.

It would be recalled that Meristem Securities recently advised investors in the equities market to hold shares of Forte Oil, following its prospects on the floors of Nigerian Stock Exchange (NSE).

However, one of the major global provider of financial news and analysis, said that investors who followed Meristem Securitas’s recommendation would have received a 58 percent return in the past year before today, compared with the negative 78 percent return on the shares.

Three years ago, Meristem Securities has rated Forte Oil hold once, buy once and sell once, even when the shares fell 23 percent in the period rated hold, it further fell 11 percent in the period rated buy and rose 146 percent in the period rated sell.

Analysts raised their consensus one-year target price for the stock by 4.8 percent in the past three months with forecasts range from N61.44 to N202.87.

Meristem Securities covers 21 companies; 10 were rated under review, 6 were rated hold, 3 were rated buy and 2 were rated sell. Also, foremost ratings and research agencies, Agusto and Co. and Global Credit Rating Co. (GCR), had recently affirmed Forte Oil investment grade rating.

Both agencies stated that the long term outlook for the oil and gas company remained stable and accorded to Forte Oil based on the company’s top-tier position in the Nigerian downstream sector, underpinned by a strong and visible brand, significant assets across the energy value chain, and strong relationships with suppliers, strong corporate governance framework, and an experienced and stable management team.

The stock closed flat on Friday at N57.96 per share with an EPS of N2.93 and PE ratio of N19.76.

Stock market resumes optimistic trading, indicators record 0.12 pct growth

By Jide Ajia

Equity trading on floor of Nigeria  Stock Exchange (NSE), commenced the week on positive note with major market indicators recording marginal growth of 0.12 per cent at close of trading for the day.

Although, investors mood remained cautious in spite of continued drop in inflation rate with June figure eased at 16.1 per cent as against 16.25 per cent in previous month, the fifth straight drop.

Specifically, the market capitalisation grew by N14 billion or 0.12 per cent to close at N11.477 trillion compared with N11.463 trillion achieved at close of work last week.

In the same vein, trading opened with an All-Share Index of 33,261.66 before it rose by 39.77 points or 0.12 per cent to close at 33,301.43.

An analysis of the price movement table showed that 7UP recorded the highest price gain to lead the gainers’ table for the day, gaining N5.72 to close at N94.95 per share.

It was trailed by Forte Oil with N4.33 to close at N60.50 and Unilever shares appreciated by N3.38 to close at N36.38 per share, Nigerian Breweries gained N3.36 to close at N157.38, while Flour Mills added N1.25 to end the market at N26.25 per share.

Conversely, International Breweries topped the losers’ chart, dropping by N1.46 to close at N30 per share. Also on the losing chart were PZ with a loss of 85k to close at N20.65 and Oando was down by 75k to end the market at N6.83 per share, NASCON shed 47k to close at N9.03 , while Dangote Sugar declined by 34k to close at N8.66 per share.

Similarly, the volume of shares traded on the floor of stock exchange closed on a higher note as investors bought and sold 322.81 million shares valued at N2.73 billion exchanged in 3,830 deals as against 311.61 million shares worth N3.27 billion transacted in 3,113 deals on at close of trade last week.

At the close of trading for the day, Niger Insurance recorded the highest volume of shares, trading 150.05 million shares worth N75.03 million; FBN Holdings came second with a total of 35.97 million shares valued at N213.76 million, while FCMB Group exchanged 14.85 million shares worth N17.95 million, United Bank for Africa sold 14.18 million shares valued at N125.23 million and Flour Mills traded 12.26 million shares worth N320.38 million.

Stock market halts loss streak, rebounds by 0.16 pct

By Jide Ajia

Equities trading on floor of Nigerian Stock Exchange (NSE) ended a four day negative trend on Thursday as the All Share Index rose by 0.16 per cent to settle at 32,354.78 points.

The day’s performance advanced year-to-date gains to 20.43 per cent and reduced month-to-date loss to 2.34 per cent, while market capitalization improved by N18.1 billion to close at N11.151 trillion against N36.7 billion shed in the previous session.

Trading statistics showed 20 gainers against 23 losers with Oando leading the day’s gainers by 4.97 per cent to close at N7.39 per share, while Axa Mansard followed, with a gain of 4.91 per cent, to close at N2.35 per share, 7up added 4.85 per cent to close at N82 per share, Cutix Plc increased 4.76 per cent to close at N2.20 per share; and FCMB appreciated 4.35 per cent to close at N1.20 per share.

Conversely, May & Baker topped the day’s losers with a decline of 9.40 per cent to close at N3.18 per share, UACN followed with a decline of 4.95 per cent to close at N16.50 per share. Fidson followed, with a loss of 4.93 per cent to close at N2.70, Flourmill dipped 4.93 percent to close at N22 per share and Red Star Express fell 4.89 per cent to close at N5.06 per share.

Guaranty led the day’s activity chart with an exchange of 36.3 million shares worth N1.2 million. Transcorp was next with the sale of 21.3 million shares valued at N28.1 million, while FBN Holdings traded 16.1 million shares worth N97.5 million.

Sterling Bank exchanged 12.1 million shares valued at N12.4 million, and Livestock feeds emerged the fifth most traded stock with 8.4 million shares worth N8.5 million.

In all, investors exchanged a total of 168.5 million shares valued at N3.6 billion in3,536 deals in contrast to 311.4 million shares transacted Wednesday in 4,312 deals at N3 billion.

Stakeholders reiterate enabling business environment, market forces key to telecoms list

By Jide Ajia

A cross section of business, finance and investment pundits have stressed that telecom firms in Nigeria could successfully be listed on Nigerian Stock Exchange (NSE) and thus contribute significantly to socio-economic development of the country, barring challenges confronting operators in the sector.

The Managing Director and Chief Executive Officer, Airtel Nigeria, Segun Ogunsanya, said that an enabling business environment, policies that could ease business and market forces in line with global best practices, were key factors that could encourage telecom to get on Nigerian Stock Exchange.

Ogunsanya, who made the submission while delivering presentation at 2017 Chartered Institute of Stockbrokers (CIS) annual national workshop held in Abuja on Tuesday, reiterated that the sector currently accounts for 10 per cent of the nation’s Gross Domestic Product (GDP) and therefore makes it a critical national infrastructure.

He said that connectivity among Nigerians has been enhanced with  145,350,702 active lines as at May 2017, while investments in the sector as at Q1 2017 stood at $68billion with FDI contribution amounting to $35billion, with over 10,000 direct jobs and 1.3million indirect jobs have been created.

The Airtel boss stressed that telecoms were committed to providing qualitative world class telecommunications services and in turn contribute to the socio-economic development of the country.

However, operators were still facing challenges which stifle growth and inhibit services delivery; he therefore, urged government to address lingering industry issues such as multiple taxation, prohibitive right-of-way fees, broadband spectrum pricing/ availability among others.

According to him, the presentations, which was designed as creating an enabling environment for public listing of the economy’s commanding heights, the case for telecoms sector, focuse more on liberalisation of the telecoms sector in 2001.

Speaking further, the Airtel CEO noted that high interest rates were a major draw-back on use of debt financing, the fluctuation of foreign exchange rate has adversely impacted use of debt financing, while adverse market conditions occasioned by recession have adversely impacted viability of public equity alternatives.

The CIS annual workshop themed transition from recession to global economic power: a working template for Nigeria, was a convergence of stakeholders in the nation’s financial services sector.

Chief Executive Officer of the Nigerian Stock Exchange (NSE), Oscar Onyema; Director General, Securities and Exchange Commission (SEC), Mounir Gwarzo; Minister of Finance, Kemi Adeosun, were among top government functionaries, captains of industry and dignitaries that attended the event.

The workshop was organised in conjunction with the Nigerian Capital Market Institute, a training affiliate of the Securities and Exchange Commission (SEC), the apex regulator of the Nigerian capital market.