Connect with us

Capital Market

Market Remain Cautious, NSE All-Share Index Green  

Published

on

ForexTime Limited

Market Remain Cautious, NSE All Share Index Green  

Written on 27/04/2022 by Lukman Otunuga, Senior Research Analyst at FXTM 

Global stocks were wrapped in caution on Tuesday as investors nursed the nasty hangover from the previous day’s rout as fears over the impact of China’s new lockdowns lingered in the air.  

Yesterday, Wall Street was thrown a lifeline later in the session after Twitter agreed to be bought by billionaire Elon Musk. In the currency space, the mighty dollar climbed to its highest level since March 2020 thanks to risk aversion and expectations over the Fed raising rates by 50 basis points next month. There was no love for gold despite the risk-off mood, with the precious metal securing a daily close below $1900, while oil tumbled below $100 amid worries about the global energy demand outlook. Interestingly, Nigerian Stock markets remain in the green with the NSE All-Share Index up over 13% since the start of 2022. The economic calendar remains relatively quiet over the next few weeks but in May, much attention will be on the inflation report, latest GDP, and CBN meeting which will all be on the same day – Tuesday 24th of May according to Bloomberg. 

Caution is likely to remain the name of the game this week with sentiment fragile as strict lockdowns in China, concerns around a global slowdown, Fed rate hike fears, and geopolitical risks leave investors on edge. On the data front, there are a couple of key economic data releases from major economies, especially in the United States. Tech titans will be publishing their earnings this week with Microsoft and Google’s parent company Alphabet announcing their results on Tuesday after the market close. With so much going on, this promises to be another eventful and potentially volatile week for financial markets. Yesterday’s wild movements across the FX, commodity, and equity space are testament to this. 

Oil wobbles at around $100 

Oil benchmarks pushed back above $100 today after experiencing a sharp selloff in the previous session, due to fears that lockdowns in China will hit energy demand in the world’s second-largest economy. On top of this, an appreciating dollar is adding extra pressure on the global commodity with Brent shedding roughly 1.5% this month. That said, geopolitical risks may limit downside losses, especially if the United States and its allies consider expanding sanctions on Russian oil imports. It is worth keeping in mind that the International Monetary Fund (IMF) raised Nigeria’s growth forecast on the back of higher oil prices. However, if oil bulls fail to deliver and the commodity continues to weaken, expectations may fail to match reality.  

On the data front, it may be wise to keep a close eye on the Energy Information Administration (EIA) report published on Wednesday. Another weekly drawdown in crude inventories could lend oil bulls a helping hand.  

Dollar bulls charge on… 

The dollar kicked off the week by appreciating against almost every single G10 currency as concerns over the economic impact of China’s strict lockdown sent investors rushing towards safety.  

Market expectations over the Federal Reserve aggressively raising interest rates also empowered dollar bulls, propelling the dollar index (DXY) to a fresh two-year high. There are several key economic data points over the next few days which are likely to inject the currency with renewed vigor. US consumer confidence, Q1 GDP, and the PCE deflator will all be published, ahead of the key FOMC meeting next week. Should the data further reinforce market expectations over the Fed aggressively raising interest rates, the dollar could be set to appreciate further? 

Commodity spotlight – Gold  

After trading within a range for many weeks, gold finally experienced a solid breakdown below $1920 support with bears securing a daily close beneath the psychological $1900 level. The precious metal struggled to shine against a mighty dollar and aggressive Fed rate hike bets. With the greenback on a tear and potentially receiving further support in the week ahead, this could spell more trouble for gold despite the market caution and risk aversion.  

Looking at the technical picture, sustained weakness below $1920 could signal a decline towards $1880 and $1850. Should $1900 prove to be reliable support, prices could retest $1920. A move back above this level will send prices into the prior range with the first level of resistance at $1960. 

Capital Market

We’ll Continue To Provide An Efficient Market To Enhance Securities Lending – NGX

Published

on

We'll Continue To Provide An Efficient Market To Enhance Securities Lending – NGX

Olushola Okunlade Writes

Consistent with its commitment to contribute to the growth and development of the capital market in Nigeria and Africa, Nigerian Exchange Limited (NGX) says it will continue to collaborate with market stakeholders to enhance securities lending transactions and provide an efficient and liquid market for investors.

This is even instructive as the Exchange noted that securities lending presents significant benefits to investors in a bull or bear market – either as lenders or borrowers.

Speaking during the NGX Securities Lending Forum 2022 in collaboration with Stanbic IBTC which was held in Lagos via Zoom, the Divisional Head, Capital Markets at the NGX, Jude Chiemeka, stated that securities lending transactions have become an important element of capital markets all over the globe.

He added that in today’s capital markets, securities seldom lie unutilized, noting that if not being bought and sold in outright market transactions, securities are frequently lent to parties wanting to borrow them, or used as collateral to raise short-term finance.

Quoting a 2021 report done by International Securities Lending Association (ISLA), Chiemeka said the total value of securities made available globally by institutional investors within lending programs stood at $34trillion with about $2.9 trillion on-loan globally across all asset classes; 48 per cent Government Bonds, 39 per cent Equities, 6 per cent, Corporate Debt Securities, 4 per cent, ETFs 3 per cent, Other Fixed Income in December 2021.

He also noted that the global securities lending industry generated $9.28 billion in revenue for lenders in 2021, according to DataLend – a 21.2 per cent increase from 2020, adding that this shows the huge potential available in securities lending transactions.

“Domestically, Nigerian Exchange Limited (NGX), in response to the need for market expansion and development, introduced many products – securities lending being one of them – to give investors (retail and institutional) a wide array of asset classes to choose from. Since the Securities Lending and Borrowing (SLB) services were officially launched in the Nigerian market in December 2015, uptake has steadily risen, though not as robust as envisaged.

According to a report by Nigerian Exchange Limited, in 2020, the market recorded impressive transactions, with about 7.4 million units worth N95.2 million traded. In 2021, while the volume in traded equities fell to about 6.8 million units the value grew to N513 million”, he said.

The Divisional Head explained that from the lender’s point of view, the benefits of securities lending include the ability to earn additional income through the fee charged to the borrower to borrow the security while adding that from the borrower’s point of view, it allows them to take positions like short selling. It also gives investors more options to take different views on the market.

“It is vital in the development of the capital market by providing liquidity, which in turn reduces the cost of trading and promotes price discovery.

The Exchange no doubt remains keen to provide an efficient and liquid market for investors and businesses in Africa, to save and access capital and investments. We promise to continue our collaboration with all market stakeholders, to collectively contribute towards the enhancement of securities lending transactions, and ultimately towards the growth and development of the capital market in Nigeria and Africa at large”, he said.

For his part, the Managing Director of Stanbic IBTC Nominee Limited, Majiyagbe Babatunde while giving a historical breakdown of how securities lending has evolved said the securities lending market which started over 40 years ago has grown, generating about $9.28 billion (N4.2 trillion) in revenue for lenders in 2021 and went up by 21.20 per cent from 2020 globally.

“With Nigeria reporting N600 million in trade value and N5bn assets pledged by lenders, only a few trades have been done in the securities lending universe. Given the size of the capitalization of the equities market and how mature we have now become, the market needs to do more.

“There also needs to be liquidity in the Securities Lending market. Unfortunately, there has been so much reliance on the period when the market goes long without proper planning for when the market goes short. Securities lending will create value for both situations so that even when the market goes short, you borrow and sell off and buy back when the securities have become low. In the end, there are equal benefits for all players in the market with the Securities Lending market”, he added.

Continue Reading

Capital Market

NGX, Stanbic IBTC Set To Hold Securities Lending Forum

Published

on

NGX AND STANBIC IBTC SECURITIES LENDING WEBINAR

Olushola Okunlade Writes

Nigerian Exchange Limited (NGX), in partnership with Stanbic IBTC, is set to host a Securities Lending Forum, on Tuesday, 20th September 2022, at 10:00 am.

The webinar is in line with the Exchange’s mandate to promote investors in the Nigerian capital markets, enhance secondary market liquidity, and facilitate the mobilization of savings to spur economic growth.

The virtual event is slated to take place on Tuesday, 20 September 2022 at 10:00 AM on Zoom.

Interested participants, kindly register for the free webinar at https://bit.ly/ngx-sl-stanbic

The Securities forum will bring together investors (both retail and institutional); Pension Funds Administrators; Fund Managers, ETF Issuers, Trading License Holders, Regulators, and intermediaries in the Nigerian capital market to understand the securities lending landscape, the product features, and benefits for investors and intermediaries as well as the Nigerian capital market ecosystem.

It will provide an overview of the Securities Lending framework in Nigeria; highlight the opportunities and benefits available in Securities Lending; build capacity on Securities lending and its role in creating a more efficient market; enlighten market participants on the operational aspects of securities lending and improve market liquidity by increasing the volume of securities potentially available for trading.

Confirmed speakers at the webinar include, Mr. Jude Chiemeka, Divisional Head, Capital Markets, NGX; Babatunde Majiyagbe, CEO, Stanbic IBTC Nominees, and Oyelade Eigbe, Executive Director Vetiva Fund Management Limited.

Continue Reading

Capital Market

NGX Group Releases Dividend Policy

Published

on

NGX, SEC Strengthen Alliance to Further Market Development

Olushola Okunlade Writes

Nigerian Exchange Group (NGX Group) Plc has released its dividend policy in ensuring that shareholders received returns on their investments. 

The policy document which was approved by the Group’s Board of Directors of NGX Group Plc and published on the company’s website was formulated in accordance with the Laws of the Federal Republic of Nigeria, investment and tax legislations, Codes of Corporate Governance, as well as internationally recognized best practices and principles.

According to the NGX Group Policy document, “NGX Group, through its Dividend Policy, seeks to guarantee shareholder rights especially as it relates to return on investment. The policy is developed to address issues relating to the determination and payment of dividends. The Group shall apply the policy, accordingly to determine any claim by any shareholder, individual or institution, regarding the dividends payouts by NGX Group subject to provisions in the Articles of Association of the Company”. 

In terms of the administration of dividends by The Group, the Policy document added NGX Group will apply the policy on an annual basis to develop a transparent and methodological dividend consideration and payouts. “This approach will ensure that NGX Group has sufficient distributable profits and/or general reserves, as determined by a review of the Company’s audited financial statements as well as consideration of other financial factors, prior to any declaration and/or payment of dividend. To this end, the policy will guide the NGX Group in its approach to distributing surplus funds from its distributable profits and/or general reserves to shareholders, as may be determined by the profit and availability of cash for distribution; operating, and investment needs of the Company; anticipated future growth and earnings of the Company; and provisions of the Company’s Articles of Association among others”, the company added.

The NGX Group Policy document provided guidance on the dividend payable in cash in a year. According to the document, “the range of dividend payable in cash will range between a pay-out ratio 25 per cent and 75 per cent of the distributable profit of same year to which the dividend is applicable. In addition, the policy indicated that the Group’s Board of Directors may recommend a scrip (bonus) issue in any year and in any ratio as it deems fit for any year through the capitalization of any undistributed retained earnings, wherein the Board, in recommending a bonus issue, shall maintain a balance between the paid-up capital and the undistributed retained earnings”.

In keeping with best practices in corporate governance, the policy delegated the responsibility for the decision to pay dividends to the Board of Directors and the Annual General Meeting (AGM). The policy document stated, “The decision to declare and pay dividend, including the procedure for making dividend payments, shall be approved at the Annual General Meeting (AGM) of shareholders, upon the recommendation of the Board of Directors. The Board of Directors may at its discretion declare an interim dividend based on profits arrived at as per quarterly or half-yearly unaudited financial results, noting that where no final dividend is declared, the interim Dividend shall be regarded as the final dividend in the AGM”. The document equally provided guidance on the date for when shareholders should expect to receive dividends will be paid by NGX, stating, “dividend is to be paid on the date in which the AGM holds in the year that dividend is declared or at any other date that the shareholders at AGM shall approve and no interest shall accrue on any unclaimed dividend”.

Continue Reading

Trending