DEVELOPMENTS IN THE NIGERIAN CAPITAL MARKET IN THE MONTH OF MAY

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Developments in The Nigerian stock market (NSE)

I. YTD plunges to -0.35% in the month of May as NSEASI enters the Negative territory

The NSE All-Share Index which is a measure of the performance of the Nigerian Stock market in the month of May, declined by a whopping 7.67% causing the Year-to-date performance to decline to -0.36% closing in the negative territory. The Nigerian bourse witnessed 17 downtrends in this period amounting to a loss of ₦1.2 trillion due to massive sell-off by foreign investors and eventually, domestic investors.

The sell-off was triggered by political uncertainty as preparations for the elections in 2019 had begun. Also, the effect of Strong Dollar (Dollar appreciation in Foreign Exchange market) also contributed to the mass selloff by foreign investors.

  YTD 02/01/2018 to 04/28/2018 May 1st-31st
NSE ASI (%) -0.35 7.91 -7.67
NSE ASI (absolute points) 38,104.54 41,268.56 38,104.54
Market capitalization (billions ₦) 13,802.61 14,948.71 13,802.61

Source: NSE, GTI Research 2018

II. Nigerian Stock Exchange holds e-IPO training

The Nigerian Stock Exchange held a training on the use of e-IPO. The e-IPOs facilitate online offerings of a private company’s stock to the public. The eIPOs
provide an efficient, easy and hassle-free mechanism for making applications for subscription of stocks of companies offered for sale. As an investor, you get to track your order status and also modify your bids online. The e-IPOs also have the potential to expand the outreach of IPOs through a web-based portal that’s available 24 hours a day, 7 days a week. It also allows instant handling of public offerings via an automated system. A driver for this development is the MTN IPO which is expected to be conducted through an e-IPO like it was in Ghana.

Developments in The FMDQ (Debt and Money market)

I. Nigeria, China seal the currency-swap deal

After two years of painstaking negotiations to provide local currency liquidity for both Nigerian and Chinese businessmen by both banks, Nigeria and China Central bank governors concluded and signed off on a of $2.5 billion (RMB 16 billion) currency swap deal. The deal, which is purely an exchange of currencies, will make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain enough Naira from banks in China to pay for their imports from
Nigeria.

The transaction was aimed to provide adequate local currency liquidity to both country industrialists and other businesses so as to reduce difficulties and demand encountered in search of third currencies such as the US dollar by Nigerian importers to import goods from China, improving CBN’s management of the country’s FX reserves. So far, unfortunately, the currency swap has not yielded this desired effect on the dollar as hoped as the dollar has recently begun to strengthen.
Limitations of the currency swap deal include that it will not be covered on 41 banned items by CBN from Nigeria FX Market on June 23, 2015. The aim is to encourage local production of these items, conserve foreign reserves, resuscitate domestic industries and improve employment.

II. CBN Increases frequency of weekly FX sales

The Central Bank of Nigeria on Monday, May 29th, 2018 announced the increase in the sale of foreign exchange to licensed Bureau de Change operators. The frequency of sales to licensed BDCs was increased to three times weekly, with consequent purchase of forex by the BDCs set on Mondays, Wednesdays and Fridays.
The increase in sales is part of efforts to enhance the accessibility of forex to the BDC segment of the market, ensure supply of forex into the FX market due to the growing billion demand of dollars (up to $1 billion) in the Investors and Exporters FX window all to curb the strengthening of the dollar.

III. T-Bill rates and Bond rates continue to nosedive in May 2018

Treasury bills rate for the month of May continued their descent from the previous month with 91 days being offered at a low rate of 10.00% and 364 days being offered for a rate as low as 11.10%. The same was the case for the FGN Savings bond. The two years Savings Bond Subscription was offered at 9.48%
declining from 10.75% offered the previous month and the three years Savings Bond Subscription was offered at 10.48% declining from 11.75% offered the previous month. The declining rates show that the Federal government is not really desperate for money. It is also a strategy to reduce their domestic borrowing costs.

MAJOR TRANSACTIONS IN MONTH OF MAY

I. Significant share acquisition by Stanbic Africa Holdings Limited (a wholly owned subsidiary of Standard Bank Group Limited) and parent company of Stanbic IBTC Holdings PLC. Stanbic Africa Holdings Limited (a wholly owned subsidiary of Standard Bank Group Limited) and parent company of Stanbic IBTC Holdings PLC (“Stanbic IBTC”), recently acquired an additional 1,141,191,943 ordinary shares in Stanbic IBTC Holdings PLC in an “Off-Market” transaction. With this acquisition, the total percentage shareholding of Stanbic Africa Holdings Limited in Stanbic IBTC has increased by 11.35% from 53.09% to 64.44%post this transaction.

II. Prestige Assurance Plc: Placing of Full Suspension on its Ordinary Shares from Trading on the Floor of The Exchange:

The ordinary shares of Prestige Assurance Plc (‘’the Company’’) was suspended from trading on The Floor of The Exchange effective Wednesday, 23 May 2018 to Wednesday, 6 June 2018. This exercise is to enable its Registrar complete the Share Capital Reconstruction exercise.

CAPITAL GAINS IN EACH SECTOR IN MAY 2018.

NSE sectorial performance for MAY 2018 (%)
NSEBNK – NSE Banking Index -10.31
NSECNSMRGDS – NSE Consumer Goods Index -11.61
NSEOILGAS – NSE Oil/Gas Index -6.41
NSEINS – NSE Insurance Index -2.04
NSEINDUSTR – NSE Industrial Index -8.61
ASI – NSE All-Share Index -7.67

CORPORATE ACTIONS PAID IN MAY 2018

Security Name Dividend paid Payment date
Nestle Nigeria Plc ₦27.50 23rd May 2018
NASCON Allied Industries Plc ₦1.50 8th May 2018
GlaxoSmithKline Consumer Nig. Plc (Special Dividend) ₦7.10, (Normal

Dividend): ₦0.40

25th May 2018
AXA-Mansard Insurance Plc ₦0.06 10th May 2018
Pharma-Deko Plc ₦0.05 23rd May 2018
Law Union & Rock Insurance Plc ₦0.04 5th May 2018
Lafarge Africa Plc (Dividend from Pioneer

Profit) ₦1.50

16th May 2018
Transnational Corporation of Nig Plc ₦0.02 2nd May 2018

 

AIICO Insurance Plc ₦0.05 25th May 2018
Unilever Nig. Plc ₦0.50 11th May 2018
Regency Alliance Insurance Plc ₦0.03 25th May 2018
Sterling Bank Plc ₦0.02 17th May 2018
Caverton Offshore Support Group Plc ₦0.15 8th May 2018
Consolidated Hallmark Insurance Plc ₦0.02 22nd May 2018
FBN Holdings Plc ₦0.25 16th May 2018
Infinity Trust Mortgage Bank Plc ₦0.02 30th May 2018
Vetiva S & P Nig. Sovereign Bond ETF ₦12.50 4th May 2018
Fidelity Bank Plc ₦0.11 25th May 2018
Vetiva Griffin 30 ETF ₦0.25 4th May 2018

Bond

A total of 8,905,003 units of 13.53% FGN MAR 2025 Bond was admitted on the Daily Official List of The Exchange on the 3rdof May 2018. The 8,905,003 units were offered at ₦1,000 per unit with the total amount of ₦8,905,003,000 realized.

A total volume of 38,289,277 units of 12.75% FGN APR 2023 Bond was admitted on the  Daily Official  List of The Exchange on Tuesday, 8 May 2018. The 38,289,277 units were offered at ₦1000 per unit with the total amount of ₦38,289,277,000 realized.

An additional volume of 63,960,722 and 37,750,001 units were added to13.98% FGN Feb 2028 and 13.53% FGN MAR 2025 respectively on the 22nd of May, 2018.

 

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