Traders’ Voice…Desperate Love

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It’s the season of love again! The era of “My View,” “His/Her View,” “Our View” and “God When.” Whatever situation you find yourself in on Valentine’s day, remember that we at Comercio Partners Limited Love you unconditionally.

At the first edition of our Valentine’s series, we talked about my desperate move to keep a dying relationship and how it ended in premium tears, and how we felt the Apex Bank was doing the same thing at the time; trying to maintain a relationship with a lot of fundamental issues that can come at a huge cost.

It’s been a year and it seems we are back to the same position with the Covid-19 pandemic putting us in an even worse off situation. 

Before I go on, I would like to congratulate the Tampa Bay Buccaneers (The Bucs) on winning the Super Bowl 55 on Sunday. It was quite an impressive and convincing win over the defending champions, Kansas City Chiefs.

It is important to note that the last time the Bucs won a Super Bowl was in 2002 and they had not made the playoffs since 2007. However, the addition of a six-time Champion in Tom Brady saw the team win its second championship since 200in his first year with the team.

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I say this to emphasize the importance of leadership in any organization, and as always, we at Comercio Partners Limited are ready to “lead you into the future” so please come journey with us.

Traders' Voice…Desperate Love Brandspurng
Comercio Research, NBS

I am no relationship expert, but one thing I know for sure is when a relationship is built on a shaky foundation, it is bound to fall apart when faced with challenges. This was the case last year, as we witnessed a significant drop in capital importation on the back of the covid-19 global disruption coupled with FX illiquidity concerns.

Total Capital importation declined by 71% from $5.85 billion in Q4 2019 to $1.07 billion in Q4 2020. The Major drag was FPIs, which declined by 98% from $4.3 billion in Q4 2019 to $35.15 million.

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With foreign flows expected to rise in Emerging and Frontier markets due to the relatively less attractive yields in the developed nations on the back of the unprecedented amount of stimulus, I think it is safe to say that the Apex Bank is ready to give the relationship another go. You cannot blame them, especially when a country like Ghana is getting significant FPI interests.  

Valentine is coming, where is your other half?

You are sitting at home.

Your peers are getting inflows.

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You are so lonely... Valentine is coming. 

Speaking of Ghana, despite the growing concern of a widening gap in their fiscal deficit and increased borrowings, the local fixed income market has gained significant interest from FPIs this year.

This has helped to grow their external reserves. From the latest economic and financial data, gross FX reserve grew by $206 million y/y to $8.62 billion, therefore keeping the Ghana Cedis relatively stable. In the case of Nigeria vs.

Ghana Jollof rice, I think we can all agree that ‘Naija Jollof’ beats Ghana Jollof, but clearly from the table below, it is obvious that Ghana remains more attractive to investors than Nigeria right now.  

Ghana vs Nigeria

GDP

-3.2

-1.1

External Reserves ($’Billion)

36.11

8.62

Exchange Rate ($/LC)

394

5.82

Interest Rate (%)

11.5

14.5

Tbill Rate (%)

2

16.96

5-year Bond (%)

8.74

18.75

Inflation (%)

15.75

10.4

Real Rate of Return (TB rate minus Inflation)

-13.75

6.56

Real Rate of Return (MPR rate minus Inflation)

-4.25

4.1

Comercio Research, Bloomberg

Ghana’s first cedi-denominated medium-term debt sale in 2021 was oversubscribed 2.5 times the offer as foreign investors’ participation grows stronger.

The nation received a demand for 2.87 billion cedis ($492 million) of its new six-year notes, compared with the 800 million cedis on offer. All bids were accepted at a coupon of 19.25%. This leaves us with the question, “can Nigeria level up?”

OMO AUCTION RESULT…. (massive shocker)

The OMO auction held last week closed relatively weak with a bid to cover ratio of 0.81x as the Apex Bank sold N71.66 billion as against N100 billion offered. We also witnessed a significant spike in stop rates, the highest levels since April 2020.

The 89-day, 180-day & 362-day notes were allotted at 7.00%, 8.50%, & 10.10% respectively. This is significantly higher when compared to the previous auction, were the 89-day, 180-day & 362-day notes were allotted at 1.51%, 4.34%, & 5.74% respectively. 

The Spike rate in rates at the OMO auction had a ripple effect on the financial market, with the bond market witnessing a kneejerk reaction across board and the equities market sustaining its sell interest. Nevertheless, we expect the Nigeria financial markets to trade cautiously this week as market direction remains unclear.

War against bitcoin… 

While market participants were still trying to get a full grasp of the impact of the OMO auction on market and a possible direction of the Apex bank in near term, the CBN released a circular on Friday last week, instructing financial institutions to immediately close the accounts of persons or entities transacting in or operating cryptocurrency exchanges noting that such activities were prohibited.

The circular got a lot of mixed reactions, with the younger population seeing the policy as a deliberate attempt by the government to impoverish young Nigerians who have been able to create wealth for themselves through crypto trading. Well, you can’t blame them, especially given the significant growth of bitcoin transactions in the past 5 years. 

In the past five years, Nigerians has traded 60,215 bitcoins, valued at more than $566 million which, apart from the US, is the largest volume worldwide on Paxful, a leading peer-to-peer bitcoin marketplace.

Bitcoin trades had its highest spike of 30% this year during the national lockdown in the country and the highest volume traded during the peak of the pandemic. Between January and September, Paxful reported a 137% increase in new registrations in Nigeria. 

The Apex Bank provided further clarity on a press released on Sunday stating that they did not place any new restrictions on cryptocurrencies, given that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies.

The increased number of fintech exchanges providing bitcoin transaction have been badly hit by the circular. While a lot of regulators in different countries have struggled to find a way to properly regulate cryptocurrency, we have seen significant increase and appetite in that space.

There is also a growing consensus that virtual money is the future and is here to stay, after all just as the human mind constantly evolves, what is known to us all as money and currency has also evolved over time.

It started from Commodity money, which is also known as trade by barter, then moved on to Metallic money (Gold), then to Paper money (Currency), then to Credit money and Plastic money (Cards). I guess the next phase will be virtual money (Cryptocurrency) and rather than restricting banks, it may be in the best interest of the regulators to start to draw a tight and favorable regulatory framework to support Cryptocurrency.

Shutting down the exchange will just fuel the crypto peer to peer anonymous market, which is the last thing Nigeria wants. However, we would like to hear your thoughts on this too, feel free to reach out to us with your response.

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Latest News

Hong Kong Productivity Council Theme of the Year 2021: “Make Smart Smarter”

  • Smarter Era of Intelligent Manufacturing Launch Ceremony
  • Witnesses New Milestone for Reindustrialisation in Hong Kong


HONG KONG SAR - Media OutReach - 26 February 2021 - The Hong Kong Productivity Council (HKPC) launches a series of activities in 2021 themed "Make Smart Smarter". The campaign with "Smarter Era of Intelligent Manufacturing Launch Ceremony" was kicked off today, revolving around the theme of "reindustrialisation".


Traders' Voice…Desperate Love - Brand Spur

The "Smarter Era of Intelligent Manufacturing Launch Ceremony" was officiated together by Dr David Chung, Under Secretary for Innovation and Technology, HKSAR Government (fourth from left); Mr Clemente Contestabile, Consul General of Italy in Hong Kong (third from right); Ms Rebecca Pun, Commissioner for Innovation and Technology, HKSAR Government (second from right); Dr Daniel Yip, Chairman of the Federation of Hong Kong Industries (third from left); Mr Roberto Leone, Managing Director of NiRoTech Limited (first from right); Mr Willy Lin, Chairman of HKPC (fourth from right); Mr Mohamed Butt, Executive Director of HKPC (second from left) and Mr Edmond Lai, Chief Digital Officer of HKPC (first from left).


Co-organised by the Federation of the Hong Kong Industries (FHKI), this spotlight event exhibited and introduced an excellent example of reindustrialisation whose research and development were undertaken by HKPC. Gaining support from the Innovation and Technology Bureau and funding support from the R&D Cash Rebate Scheme of the Innovation Technology Commission of the HKSAR Government, production has been successfully commenced in NiRoTech Limited (NiRoTech), a local intelligent security product manufacturer.


This smart production line, named the "OWL" intelligent production line, gives into full play the characteristics of an owl's wisdom, piercing eyes, flexible body, soft neck (360o vision) and agile movement. These perfectly echo the key features of this intelligent production line which has high flexibility, excellent agility to cater for different production needs, stringent and precise production capacity, as well as non-stop operation. Five key "S.M.A.R.T" elements: Speed, Multi-function, Accuracy, Reliability and Traceability, can be seen in this production line offering edges of intelligence and efficiency enhancement.


In order to effectively respond to Hong Kong manufacturers' demands on production space, the "OWL" production line adopts a U-shape compact layout design and incorporates the beauty of the "Industry 4.0" (i4.0) lean manufacturing "vision", significantly reducing the factory area to meet the unique land constraints of Hong Kong. NiRoTech's smart factory only occupies 10,000 square feet, saving 50% of the land. It is also equipped with 12 robots and large amount of customised intelligent automation systems and digital technologies. Compared with traditional manual production, the overall production capacity increases by 1.5 times.


Mr Willy Lin, Chairman of HKPC, and Dr Daniel Yip, Chairman of FHKI, were joined by Mr Clemente Contestabile, Consul General of Italy in Hong Kong; Dr David Chung, Under Secretary for Innovation and Technology, Ms Rebecca Pun, Commissioner for Innovation and Technology; Mr Roberto Leone, Managing Director of NiRoTech; as well as Mr Mohamed Butt, Executive Director of HKPC and Mr Edmond Lai, Chief Digital Officer of HKPC, for the launch of the ceremony.


In his welcoming address, Mr Willy Lin, Chairman of HKPC, said, "HKPC is committed to offering staunch support for Hong Kong SMEs in technology R&D and technical aspects, with the aim of creating value for the industrial development of enterprises with state-of-the-art technologies. The 'OWL' intelligent production line is an excellent example of applying innovative technologies that also fits perfectly with HKPC's theme of this year 'Make Smart Smarter'. As owl represents wisdom, by being smarter and using innovative technologies such as IoT, AI, big data, intelligent robots and smart production processes to unleash production opportunities of i4.0, it will certainly scale up productivity and contribute to successful reindustrialisation in Hong Kong, thus achieving the goal of 'Make Smart Smarter'".


He continued, "It is really encouraging to see this 'reindustrialisation' example witnessing the concerted efforts of the Government, industries, business chambers and HKPC to promote reindustrialisation in Hong Kong! HKPC sincerely urges various sectors to work together to accelerate reindustrialisation for the swift recovery of Hong Kong economy and to ensure the "Made-in-Hong Kong" brand to continue to shine bright in the international arena -- Make Smart Smarter".


Dr David Chung, Under Secretary for Innovation and Technology, said, "the Government has been actively promoting 'reindustrialisation' in recent years by providing support in infrastructure, finance, technology and talents in order to create new area of growth and great job opportunities which would help alleviate Hong Kong's competitiveness. I wish to see more enterprises 'Make Smart Smarter', and make good use of these opportunities provided by I&T, as well as the support from the Government, to work and contribute together in turning Hong Kong into an international I&T hub".


Dr Daniel Yip, Chairman of FHKI said, "This collaboration of HKPC and NiRoTech serves as a valuable reference for industrialists on how to integrate i4.0 into production lines to enhance efficiency, elevating their confidence to set up high value-added manufacturing facilities in Hong Kong. With comprehensive policy support and HKPC's professional consultative service, FHKI believes that more Hong Kong manufacturers will join the force of 'reindustrialisation' by pursuing technological advancement and setting up smart manufacturing plants locally, taking the Hong Kong industries into a new era".


The "OWL" intelligent production line integrates the smart adoption of advanced robots with machine vision, smart electrical and mechanical devices, laser processing and sensor technologies. Also, by incorporating AI, IoT, human machine interface, real-time data collection and data analytic technologies, it ensures the full automation and digitalisation of production, assembly and monitoring to achieve big data analytics. Apart from three technologies whose patents are soon to be applied, the project also assists NiRoTech's business planning in exploring the emerging markets and grasping new opportunities.


Mr Roberto Leone, Managing Director of NiRoTech, said, "Mechatronic Manufacturing in Hong Kong: our strategy was clear from the start when we sought HKPC's assistance for help to realise intelligent production. For some, this goal was still immature and very difficult to achieve, especially with Hong Kong being chosen as our operation hub. Today we can proudly say we have achieved it with the system in Hong Kong operating satisfactorily as schedule. Despite there are challenges as the COVID-19 pandemic was affecting all in 2020, the result is now vividly in front of us, and we can touch it. Yet this is only the first step of a long journey".


For more details about "Make Smart Smarter", please visit the dedicated website: https://smarter.hkpc.org/en/index.html


About Hong Kong Productivity Council

The Hong Kong Productivity Council (HKPC) is a multi-disciplinary organisation established by statute in 1967, to promote productivity excellence through integrated advanced technologies and innovative service offerings to support Hong Kong enterprises. HKPC is the champion and expert in facilitating Hong Kong's reindustrialisation empowered by i4.0 and e4.0 -- focusing on R&D, IoT, big data analytics, AI and Robotic technology development, digital manufacturing, etc., to help enterprises and industries upgrade their business performance, lower operating costs, increase productivity and enhance competitiveness.


The Council is a trusted partner with comprehensive innovative solutions for Hong Kong industries and enterprises, enabling them to achieve resources and productivity utilisation, effectiveness and cost reduction, and enhanced competitiveness in both local and international marketplace. It offers SMEs and startups immediate and timely assistance in coping with the ever-changing business environment, accompanying them on their innovation and transformation journey.


In addition, HKPC partners and collaborates with local industries and enterprises to develop applied technology solutions for value creation. It also benefits a variety of sectors through product innovation and technology transfer, with commercialisation of multiple market-driven patents and technologies, bringing enormous opportunities abound for licensing and technology transfer, both locally and internationally.

For more information, please visit HKPC's website: www.hkpc.org.


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