CAPITALDIGEST 14 JUNE 2021. MARKET REVIEW.
MONDAY 31/5/2021 – NNPC PLEDGES CRUDE SUPPLY TO 20,000BPD LAGOS REFINERY
The Nigerian National Petroleum Corporation has committed to supply crude oil to a refinery project on Tomaro Island in Lagos, with a capacity of 20,000 barrels per day. Integrated Oil & Gas Limited, the promoters of the Eko Petrochem and Refining Company, disclosed this on Saturday, saying it had spent over $20m on the project. The Chairman/Chief Executive Officer, Integrated Oil & Gas Limited, Emmanuel Iheanacho, who noted that the company got a grant of $797,343 in 2017 from the United States Trade and Development Agency for the project, said it would cost $200m to build it. “We have worked very hard; it has been much harder than we thought it could be in terms of the time that it has taken and the resources that we have had to commit to it,” Iheanacho said on Saturday during the visit by a delegation from the Ministry of Petroleum Resources to the project site. The delegation, led by the Director, Upstream at the ministry, Mr Busari Kamoru, visited the company to ascertain the progress made so far on the project and the challenges facing it. Iheanacho said when the company started the project, it articulated bankable feasibility proposal, and then we went ahead to do the front-end engineering, adding that the detailed engineering was done recently. He said, “In terms of licensing, we started with the Licence to Establish, and then we have now got the Authority to Construct. Now, we are at a point where we are talking to potential investors, and we have sent out invitation-to-tender documents to a number of world-class engineering, procurement and construction companies. “We are hoping that sometime in the middle of June, we will get their responses. At that point, we will then sit down and look at who will give us the best mix of price, quality and proposition. Iheanacho said the company applied to the NNPC for crude oil supply when it started the project.
TUESDAY 1/6/2021 – INVESTORS LOSE N812BN IN MAY, AS JUNE LOOKS BLEAK
The rising interest rate in the debt market has forced the equities market to close the month of May, 2021 in an N812 billion loss to investors. This was in spite of the positive sentiment expressed by various equity analysts last month that the local bourse would sustain an uptrend after recording an uptick of 2.02 percent in April. Recall that the activities in the market have been a struggle between the bears and bulls since the beginning of this year. The market had recorded a massive capital appreciation in January, 2021, rising by 5.37 percent after investors gained N1.131 trillion driven by low yields in Treasury Bills (TBs). However, in February, the market went on a full reverse, wiping out all the gains recorded in January following a shift in investors’ preference to fixed income in response to the uptick in TBs yields, leading to a whopping loss of N1.38 trillion or 6.16 percent to the bearish market during the month The market sustained the downward tempo in March, albeit marginally (0.33%) as yields in fixed income continued to trend upwards. However, the two month losing trend was halted in April following the buy interest triggered by the full year 2020 earning reports, but reverted to the red zone in May. Specifically, the market capitalisation of all listed equities, yesterday, dropped to N20.035 trillion from N20.847 trillion in April, showing N812 billion or 3.9 percent decline. The All Share Index (ASI) also declined by 3.51 percent to settle at 38,437.88 points from 39,834.42 points. In his comment, David Adonri, CEO, Highcap Securities, said: “It indicates that investors’ confidence in equities declined in May. Equity’s rebound in April was propelled by impressive full year results which surpassed investors expectations. However, after that re action, interest rates started rising in the primary market for debt which mopped financial assets away from equities. There was also no extraordinary price sensitive information to drive equities in May which the market had not already reacted to in April.” On the outlook, he said: “June is not expected to be different from May because the second quarter results will come in July. The market can also change in June if propelled by yet unknown price sensitive developments.”
WEDNESDAY 2/6/2021 – EXTERNAL RESERVES DROPPED BY $640M IN MAY – CBN
The country’s external reserves lost $640m in May, falling to $34.24bn on May 28 from $34.88bn as of April 28. Figures obtained from the Central Bank of Nigeria on Tuesday revealed that the reserves had been fluctuating in recent weeks. Speaking on the decline at the recent Monetary Policy Committee meeting, the CBN Governor, Godwin Emefiele, said, “This reflects sales to the foreign exchange market and third-party payments.” In March, the reserves lost $178m after dropping from $34.99bn as of March 1 to $34.82bn as of the end of March 31. In February, the reserves dropped by $1.1bn, falling from $36.19bn as of February 1 to $35.09bn on February 26. The CBN, in its January economic report, said, “As a consequence of the lower foreign exchange receipts, the official external reserves declined. “External reserves stood at $35.44bn at end-January 2021, a decrease of 2.8 per cent and 3.5 per cent from $36.46bn in December 2020 and $36.73bn in January 2020.”
THURSDAY 3/6/2021 – FOREX: ABCON BANS STREET HAWKING, MOVES TO CUT RATE
The Association of Bureau De Change Operators has said it will commence what it called ‘Operation No Street Trading’ to stop the hawking of foreign exchange by BDC operators. The President, ABCON, Alhaji Aminu Gwadabe, said this was part of the resolutions made unanimously by BDC directors at the meeting of the operators on Tuesday in Lagos. A copy of the resolutions which was obtained by our correspondent on Wednesday said, “All operators to collaborate in bringing down the forex rates in the market; street trading by BDC should be discouraged/banned and ABCON will commence operation ‘no street trading’. “BDCs should improve return rendition to regulatory authorities; margin review to meet operational requirements; widening the scope of transactions; digitalisation of BDC operations. “ABCON to punish errand members; ABCON compliance officer and staff to commence nationwide supervision of BDC operations.” The PUNCH had exclusively reported on Saturday that the BDC operators got the United States dollar from the Central Bank of Nigeria at N393 but sold it for N494 on Friday. Bank sources had disclosed that the CBN was providing $10,000 to each of the BDCs twice in a week. The country’s currency was recently devalued after the CBN adopted the NAFEX rate of N410/$1 as its official exchange rate. ABCON had in a statement on Sunday advised foreign exchange users and the general public to patronise only BDC operators licensed by the CBN in order to get dollars at the approved rate. Gwadabe said the parallel market activities had for years become major drivers of the exchange rates, adding that control over such transactions had become burdensome.
FRIDAY 4/6/2021 – CBN disburses N253bn to households, SMEs
The Central Bank of Nigeria has disbursed N253 billion to 548,345 beneficiaries as part of its response to the COVID-19 pandemic. The acting Director Corporate Communications, Osita Nwanisobi, who disclosed this on Thursday at the bank’s special day at the ongoing 42nd Kaduna International Trade Fair, noted that the beneficiaries comprised 470,969 households and 77,376 Small and Medium Enterprises Nwanisobi who was represented by the Branch Controller, Kaduna, Ahmed Mohammed Wali, added that the bank reduced its interest rate on CBN intervention loans from nine to five per cent to encourage more lending and initially created a N150 billion Targeted Credit Facility (TCF) for affected households and SME’s through the NIRSAL microfinance Bank. He explained that “about 29,026 beneficiaries have accessed N111.7 billion under the Agri-business/Small and Medium Enterprises Investment Scheme (AGSMEIS). Under the National Youth Investment Fund, 7,057 beneficiaries comprising 4,411 individuals and 2,646 SMEs have so far accessed the scheme. The Creativity Industry Financing Initiative (CIFI) has also provided loan facilities for 341 beneficiaries across movie production, movie distribution, music and software development.” Nwanisobi also disclosed that about 3.1 million farmers have benefited from the anchor borrowers programme as of April 2020. He said, “The Anchor Borrowers Programme was able to provide intervention facilities to 3,107,949 small holder farmers who cultivated 3.8 million hectares of land. “We, therefore, enjoin Nigerians, particularly women and youths, to cue into our bouquet of intervention programmes and take advantage of schemes such as the ABP; Targeted Credit Facility (TCF); Commodity Development Initiative (CDI); Creative Industry Financing Initiative (CIFI); Micro Small and Medium Enterprises Development Facility (MSMEDF); and the Agric-business/Small and Medium Enterprises Investment Scheme (AGSMEIS).”