Market gains over N520bn amid bullish start to new week

 

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and market capitalisation increased remarkably by 1.90 percent or N521billion on Monday May 9, from week-open lows of 50,935.03 points and N27.460 trillion respectively to 51,903.44 points and N27.981trillion.

 

The bullish start to stocks trading in this new week pushed this year’s record positive return to new high of 21.51percent. In 7,684 deals, investors exchanged 337,564,205 units valued at N5.554billion.

 

Nigerian Breweries Plc led the gainers after its share price moved from N70 to N77, adding N7 or 10percent, followed by Cadbury Plc which rose from N13.55 to N14.90, up N1.35 or 9.96percent and International Breweries Plc which rose from N6.75 to N7.40, adding 65kobo or 9.63percent.

 

“Our view is that the odds are more for a possibility of gains. Hence, we expect the market to close positive this week,” according to Lagos-based analysts at Meristem.

 

The analysts had in their May 9 note to investors said that they view the hike in rates in the United States and United Kingdom as global macroeconomic dynamics that might filter into the local market.

 

“Specifically, opportunities for capital repatriation on large-cap stocks that have dual listing (Airtel Africa and Seplat) could drive buying activities. Some stocks still present decent upsides to spur buying interest.

 

“We however note that foreign participation in the Nigerian equities market is not as strong (circa 20percent). There is also some room for profit taking on some tickers on some tickers that have gained appreciably in recent weeks,” Meristem analysts added.

Nigeria, other emerging-market debt at ‘mercy’ of Fed rate hike says JPMorgan

Nigeria and other emerging market sovereign debt are at the “mercy” of the Federal Reserve’s interest rate hike of over 50 basis points, says JPMorgan on Monday. This is according to Reuters.

The investment banking giant downgraded Nigeria’s status as it believes that the country failed to take advantage of the high oil prices. However, the bank recommended that investors consider putting Serbia and Uzbekistan’s sovereign debt in the “overweight” category.

After more than a decade of stability, the Fed, reacting to rising global inflation, especially that of the US hitting a 30-year high, decided to raise the interest rate by 50 basis points. with an attendant effect on driving benefits for higher-yielding emerging markets.

Reuters reported that “JPMorgan’s Emerging Markets Bond Index Global Diversified (EMBIGD) index has fallen 16 percent this year,” “with most of the losses having come from rates” and $4 billion in net outflows from emerging markets since mid-April.”

The lender believes that so many external shocks have made it difficult for many emerging economies’ sovereign debt bonds to remain attractive, especially when taking a look at the impact the ongoing COVID-19 lockdown in China is having on emerging markets.

They observed that with coupon yields at nearly 10.6 percent, the highest they have ever been since the outbreak of COVID-19, the risk of default in payment is very high.

JPMorgan associated Nigeria’s likely default situation to some domestic fundamental issues following reports that the NNPC failed to transfer any revenue to the government from January to March this year, due primarily to fuel subsidies and low production. The low production is a result of the leakages caused by crude oil theft, which is commonplace in the Niger Delta region of the country. A situation that forced the company to remove the country’s debt status from the “overweight” category.

 

Eskom top executive quits amid epileptic power supply in South Africa

 

Amid growing concern over the epileptic electricity situation in South Africa, a senior executive at Eskom Holdings SOC Ltd., has resigned his appointment at the struggling electricity company.

Eskom said in a statement made available on its website that Phillip Dukashe, the group executive in charge of generation who always provides regular updates about the electricity situation via an online briefing, will be leaving the company on May 31, after 26 years of active service.

The company said without providing many details that his resignation is to enable him to achieve a balance for “the benefit of his health, family, and work responsibilities.” Rhulani Mathebula will take over on an interim basis during the recruitment process.

Eskom, which generates nearly 95 percent of the electricity in the country, has been struggling for some time to complete turnaround maintenance. The company has been under pressure to fix the engine of Africa’s most industrialised nation for years.

The company announced nationwide power cuts on Monday.

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China’s sinosteel signs $690 million deal for Cameroon iron mine

As a part of China’s strategic economic plan, China’s Sinosteel Corp. has entered into a $690 million deal to exploit iron ore in southern Cameroon. A move the Chinese Communist Party (CCP) sees as reducing its dependence on Australian and Brazilian ore.

Zheng Zhengao, the company’s Head of Operation in Cameroon, stated that the Lobe mine will produce 10 million tonnes of ore containing 33 percent iron per year. “It will then enrich the output to produce 4 million tonnes of high-grade ore with more than 60 percent iron content,” he added.

A report from Bloomberg states that the Chinese company entered into a 50-year contract with the government of Cameroon to exploit the Lobe deposit, which contains an estimated 632.8 million tons of iron ore.

UK retail sales hit by rising cost of living says BRC

The rising cost of living has so badly affected consumers’ confidence that it has slowed consumer spending in the United Kingdom, says the British Retail Consortium (BRC). The agency, which is a trade association for retail businesses in the UK, said that consumer spending fell 1.7 percent on a like-for-like basis in April 2022 from a year earlier, slowing further from 0.4 percent in the previous month.

BRC CEO Helen Dickinson said in a forum that “big-ticket items have been hit hardest, as consumers reigned in spending on furniture, electricals and other homeware, compounded by delays on goods coming from China.”

Helen believes that with inflation expected to exceed 10%, retailers are concerned that rising commodity prices, transportation costs, labour shortages, and the conflict in Ukraine, among other factors, will make it difficult for customers to maintain their current spending habits.