The Nation Newspaper

Category: Equities

  • Equities lose N462b amidst profit-taking

    Nigerian equities came under intense profit-taking pressure last week as investors turned round to monetise capital gains that had accrued in three consecutive weeks of strong rally. As most investors opened up sell orders to attract deals in the buyer’s market, most transactions at the Nigerian Stock Exchange (NSE) were closed at a discount.

    Benchmark indices at the Exchange indicated a week-on-week decline of 2.93 per cent, equivalent to net capital loss of N462 billion for the five-day trading week. With a modest recovery of 0.56 per cent at the last trading session, the average year-to-date return moderated to 14.46 per cent.

    Aggregate market value of all quoted equities closed weekend at N15.692 trillion as against its week’s opening value of N16.154 trillion, representing a loss of N462 billion. The All Share Index (ASI)-the main index that doubles as Nigeria’s sovereign equities index, also declined from its week’s opening index of 45,092.83 points to close the week at 43,773.76 points.

    Most sectoral indices also closed negative, underlining the widespread profit-taking trend that dominated transactions across the sectors. The NSE 30 Index, which tracks the 30 most capitalised stocks, dropped by 2.94 per cent. The NSE Banking Index recorded the highest depreciation of 6.40 per cent. The NSE Insurance Index declined by 3.33 per cent while the NSE Industrial Goods Index slipped by 2.03 per cent. However, consumer goods and oil and gas stocks played the contrarian stocks during the week. The NSE Consumer Goods Index appreciated by 2.15 per cent while the NSE Oil and Gas Index inched up by 0.08 per cent.

    Low-priced stocks that had been at the top of the bullish in the previous weeks were expectedly atop the profit-taking trend last week. Diamond Bank recorded the highest loss of 26.05 per cent to close at N2.64. Champion Breweries followed with a drop of 20.69 per cent to close at N2.53. Transnational Corporation of Nigeria dropped by 18.0 per cent to close at N2.05. Sterling Bank lost 16.59 per cent to close at N1.91. Honeywell Flour Mill dropped by 15.5 per cent to close at N2.67. NPF Microfinance Bank declined by 13.45 per cent to close at N1.48 while FCMB Group depreciated by 12.3 per cent to close at N3.06 per share.

    On the upside, Wapic Insurance led the contrarian stocks with a gain of 10.9 per cent to close at 61 kobo. Dangote Sugar Refinery followed with a gain of 9.8 per cent to close at N21.96. Nascon Allied Industries appreciated by 9.63 per cent to close at N20.83. Trans-Nationwide Express rose by 8.0 per cent to close at 81 kobo. P Z Cussons Nigeria posted a gain of 6.8 per to close at N23.50 while Nigerian Breweries appreciated by 6.7 per cent to close at N151.75 per share.

    Altogether, there were 30 gainers against 44 losers last week compared with 40 gainers and 32 losers recorded in the previous week. A total of 98 equities remained unchanged last week, lower than 100 equities recorded in the previous week.

    Total turnover stood at 7.16 billion shares worth N42.55 billion in 39,037 deals last week compared with 5.01 billion shares valued at N45.82 billion traded in 44,569 deals in the previous week. The conglomerates sector led the activity chart with 4.11 billion shares valued at N10.02 billion in 2,454 deals; representing 57.4 per cent and 23.5 per cent of the total equity turnover volume and value respectively. The financial services sector followed with 2.76 billion shares worth N25.40 billion in 25,853 deals. The consumer goods sector ranked third with 156.22 million shares worth N5.30 billion in 5,875 deals.

    The three most active stocks were Transnational Corporation of Nigeria, FCMB Group and Skye Bank, which altogether accounted for 4.79 billion shares worth N11.34 billion in 5,216 deals, contributing 66.9 per cent and 26.7 per cent to the total equity turnover volume and value respectively.

    Also traded during the week were a total of 153,755 units of Exchange Traded Products (ETPs) valued at N1.88 million in 11 deals, compared with a total of 1.947 million units valued at N105.57 million traded in 15 deals in the previous week.

    At the sovereign bond market, a total of 6,715 units of Federal Government bonds valued at N5.32 million were traded in 15 deals compared with a total of 4,437 units valued at N4.26 million traded in nine deals two weeks ago.

    “We anticipate further sell-offs as investors continue to book profits in stocks that had rallied,” Afrinvest Securities stated.

    Analysts at Afrinvest Securities noted that the ASI’s 14-Day Relative Strength Index (RSI) of 67.7 points is close to the overbought region of 70.

    Nigerian equities came under intense profit-taking pressure last week as investors turned round to monetise capital gains that had accrued in three consecutive weeks of strong rally. As most investors opened up sell orders to attract deals in the buyer’s market, most transactions at the Nigerian Stock Exchange (NSE) were closed at a discount.

    Benchmark indices at the Exchange indicated a week-on-week decline of 2.93 per cent, equivalent to net capital loss of N462 billion for the five-day trading week.

  • Nigerian Breweries lists 67.8m scrip shares

    Nigerian Breweries has listed 67.8 million ordinary shares of 50 kobo each, increasing its outstanding issued shares from 7.929 billion ordinary shares to 7.997 billion ordinary shares. The additional shares further strengthened Nigerian Breweries’ position as the third most capitalised company at the Nigerian Stock market.

    Nigerian Breweries closed at the weekend with a market capitalisation of N1.214 trillion, coming behind Dangote Cement’s N4.43 trillion and Guaranty Trust Bank’s N1.442 trillion.

    The supplementary shares were due to the scrip dividend scheme offered by the company to eligible shareholders, who elected to receive new ordinary shares in lieu of cash dividends.

    The additional shares arose as a result of the scrip dividend scheme offered to eligible shareholders of the company, who elected to receive new ordinary shares in lieu of cash dividends with respect to the N2.58 final dividend declared for the year ended December 31, 2017.

    Nigerian Breweries had distributed N28.4 billion to shareholders as cash dividend for the 2016 business. Breakdown of the dividend recommendation showed a total dividend per share of N3.58. A final dividend of N20.46 billion was distributed to shareholders on the basis of N2.58 per share. The company had earlier paid interim dividend of N7.9 billion to shareholders, equivalent to N1 per share.

    The board of Nigerian Breweries had then recommended an option for qualifying shareholders to receive new ordinary shares in the company instead of the cash final dividend, on terms and conditions as the board may determine based on prevailing market conditions.  Shareholders subsequently voted for the cash-for-share dividend option at the company’s annual general meeting in May 2017.

  • UBA bullish as directors meet over dividend payment

    The board of director of United Bank for Africa (UBA) Plc will be meeting today to approve the audited financial statement and accounts for the year ended December 31, 2017. The meeting will among others consider dividend recommendation to be made to shareholders.

    UBA’s share price appreciated by 2.48 per cent at the weekend, 343 per cent above equities market’s average gain of 0.56 per cent. As the equities market staged its first rally in five days on Friday, UBA chalked up 31 kobo to close at N12.80 per share. The All Share Index (ASI)-the benchmark index at the Nigerian Stock Exchange (NSE) recorded average gain of 0.56 per cent on Friday.

    UBA’s share price rose by 129 per cent in 2017 while it has performed above average so far in 2018 with average year-to-date return of 24.3 per cent at the opening of the stock market today.

    UBA had earlier paid an interim dividend of 20 kobo per share, after the audit of its 2017 half-year results.

    UBA had declared a final dividend of 55 kobo per share, in addition to an interim dividend of 20 kobo for the 2016 business year. With the bank’s improved performance in 2017, market analysts expected the bank to increase its payout, an expectation that has seen bullish trading on the stock.

    As a mark of its sound corporate governance and in line with NSE Rule Book and the Amendments to the Listing Rules, UBA had announced commencement of its closed period on Friday, January 12, 2018, implying that directors, persons discharging managerial responsibility, employees with sensitive information, advisers and consultants of the bank and their connected persons may not directly or indirectly deal in the securities of the bank until 24 hours after the publication of its audited full year reports and accounts for 2017.

    Key extracts of the interim report and accounts of UBA for the nine-month period ended September 30, 2017 showed that gross earnings rose by 26 per cent while pre and post tax profits grew by 33.2 per cent and 23 per cent respectively.

    UBA’s gross earnings rose to N333.9 billion in third quarter 2017 as against N265.5 billion reported in corresponding period of 2016. Group’s operating income stood at N236.9 billion in 2017 compared with N183.3 billion recorded in the corresponding period of 2016, representing a 29.3 percent growth.  Profit before tax jumped to N78.3 billion in 2017 as against N58.8 billion recorded in the similar period of 2016. Profit after tax grew from N49.5 billion in 2016 to N60.9 billion in 2017.

    The balance sheet showed that while the group closed the third quarter with total assets of N3.77 trillion, a year-to-date growth of 7.6 per cent, the bank prudently grew net loans to N1.6 trillion, a 6.0 per cent year-to-date growth in the loan book. Group’s shareholders’ fund grew by 13.3 per cent to N507.6 billion in 2017 while the annualized return on average equity stood at 18 per cent.

  • Nigeria to begin domestic vaccines production

    Nigeria is to begin domestic production of vaccines with the inauguration of Biovaccines Nigeria Limited, a private-public partnership between the Federal Government of Nigeria and May & Baker Nigeria Plc-the majority shareholder in Nigeria’s indigenous vaccine-producing company.

    Minister of Health, Prof. Isaac Adewole inaugurated Biovaccines board in Abuja.  Members of the board included Prof Oyewole Tomori, a renowned virologist and former Vice Chancellor of the Redeemers University as Chairman; Dr. Faisal Shuaib, Executive Director and Chief Executive Officer, National Primary Health Care Development Agency and Pharm. M.  Lawal, Director, Food & Drugs, Federal Ministry of Health.

    Other members of the board included Pharm Nnamdi Okafor,  Managing Director, May & Baker Nigeria Plc; Dr. EdugieAbebe, a former Permanent Secretary and Director of May & Baker Nigeria and Mr. AyodejiAboderin, Director of Finance , May & Baker Nigeria. The Managing Director of Biovaccines Nigeria Limited, who will be announced soon, is also expected to join the board.

    May & Baker Nigeria had in 2005 entered into a joint venture with the Federal Government to take over the facilities of the Federal Vaccine Production Laboratory (FVPL) in Yaba for the purpose of resuming vaccine production, which had stopped due to the inability of the FVPL to cope with operational challenges. The project was, however, delayed due to the non ratification of the agreement by successive governments.

    May & Baker Nigeria holds the majority equity of 51 per cent while the government holds 49 per cent in Biovaccines Nigeria Limited, the company set up for the purpose of May and Baker Nigeria-government partnership.

    The Federal Executive Council had at its sitting on May 31, 2017 ratified a joint venture agreement (JVA) between the Federal Government and May & Baker for the formation of a private company, Biovaccines Nigeria Limited to serve as a special purpose vehicle for the production of vaccines in Nigeria.

    Speaking at the inauguration ceremony, Managing Director, May & Baker Nigeria Plc, Pharm Nnamdi Okafor said the board of Biovaccines Nigeria Limited will immediately begin business to prepare the ground for the eventual production of vaccines in Nigeria.

    “The business plan of Biovaccines is ready. One of the first tasks of the board just inaugurated will be to approve the plan for immediate kick off of operations,” Okafor said.

    According to Okafor, between May 31, 2017 when the Federal Executive Council ratified the JVA and now so much has happened, albeit below the lines.

    “We have successfully engaged all stakeholder groups to align their plans and activities to the task of providing Nigeria a sustainable programme of immunisation through local production of vaccines. I can say that Nigerians are now clearly joining forces on this healthcare initiative and the way to the future is very clear and bright. We have equally engaged international organisations such as GAVI, MSF, PATH, Melinda and Bill Gate Foundation among others for collaboration,” Okafor said.

    He assured that Biovaccines Nigeria Limited will strive to commence local production as soon as practicable, noting that the strategy is to shorten the gestation period to achieve the shortest possible time line for production.

    He pointed out that ideally, a Greenfield production will require five to eight years for the first batch of products as vaccine production is a high-tech, complex and painstaking process, adding that Nigeria is determined to achieve international standards of production.

  • Equities lose N187b as profit-taking continues

    The profit-taking trend at the Nigerian stock market worsened yesterday as investors stepped up the rush to take profits. With more than three losers for every gainer, equities lost N187 billion at the end of the five-hour trading session at the Nigerian Stock Exchange (NSE).

    The All Share Index (ASI)-the benchmark index for the Nigerian equities market, showed average decline of 1.16 per cent to close at 44,389.85 points as against its opening index of 44,912.53 points. Aggregate market value of all quoted equities dropped from its opening value of N16.090 trillion to close at N15.903 trillion.

    With the second consecutive negative trading session, the average year-to-date return moderated to 16.07 points.

    Most sectoral indices also closed negative while the momentum of activities slowed down considerably. The NSE Banking Index dropped by 2.6 per cent. The NSE Insurance Index declined by 2.4 per cent while the NSE Industrial Goods Index depreciated by 0.7 per cent. Meanwhile, the NSE Consumer Goods Index appreciated by 0.7 per cent while the NSE Oil & Gas Index inched up by 0.1 per cent.

    Total turnover slowed down to 737.86 million shares valued at N7.67 billion in 8,927 deals. Low-priced stocks continued to dominate activities chart. Skye Bank was the most active stock with a turnover of 150.37 million shares valued at N226.77 million. FBN Holdings followed with 104.17 million shares valued at N1.36 billion while Wema Bank placed third with 64.09 million shares worth N87.36 million.

    “There was sell pressure in the equity market today, a combination of profit taking and price corrections predominantly in the banking sector stocks. The downward trend may likely continue till midweek,” FSDH Securities, a subsidiary of FSDH Merchant Bank, stated in post-trading notes.

    There were 43 losers against 14 gainers. 11, formerly Mobil Oil Nigeria, led the losers with a loss of N7 to close at N209. Dangote Cement followed with a loss of N4 to close at N269. Julius Berger Nigeria declined by n1.60 to close at N30.40. Guaranty Trust Bank dropped by N1.51 to close at N52. Zenith Bank declined by 75 kobo to close at N32 while FBN Holdings lost 73 kobo to close at N13.02 per share.

    On the positive side, Seplat Petroleum Development Company led the gainers with a gain of N9.99 to close at N685. Unilever Nigeria followed with a gain of N2.21 to close at N46.41. Nigerian Breweries added N2 to close at N145. Presco rose by N1.31 to close at N70 while Nestle Nigeria gathered N1.11 to close at N1, 471.11 per share.

    “Despite losses recorded since the start of the week, we expect sell-offs across sectors to continue in subsequent trading sessions as investors look to book profits following weeks of sustained gains,” Afrinvest Securities stated.

  • NSE, CBi award corporate governance rating to 33 companies, 435 directors

    NSE, CBi award corporate governance rating to 33 companies, 435 directors

    The Nigerian Stock Exchange (NSE) and Convention on Business Integrity (CBi) have awarded high corporate governance rating to 33 companies and 435 directors under the Corporate Governance Rating System (CGRS) initiative.

    At a media briefing yesterday in Lagos, Chairman, Steering Board of the Corporate Governance Rating System (CGRS), Ms Tinuade Awe said 25 companies successfully passed the rating test, having scored the required pass mark of 70 per cent while 87 other companies are at various stages of completion of the process.

    These 25 successful companies joined eight companies that retained their rating from the CGRS pilot in 2014, bringing the total number of companies rated now to 33. Also, 435 directors passed their certification test. The CGRS was introduced into the capital market in 2012 and was launched in 2014 with a number of volunteer companies including those listed on the Exchange premium board.

    Awe, who is also Executive Director, Regulation at the NSE, the aim of the CGRS rating is to improve the level of corporate governance of listed companies noting that the rating is a developmental index that will help to boost the company’s image and better cooperation when it needs to transact with foreign partner.

    She explained that the self assessment is in three stages which is corporate compliance with its component indicator covering five categories, business ethics and anti corruption, internal and external audit and control, shareholder and stakeholder rights, board structure and responsibilities, transparency and disclosure.

    The companies that have attained the rating during the first roll out phase are Africa Prudential Plc, Continental Reinsurance Plc, Cornerstone Reinsurance Plc, custodian and Allied Plc, Dangote Sugar Refinery Plc, eTranzact International Plc, Flour Mills of Nigeria Plc, Forte Oil Plc, GlaxoSmithKline Consumer Nigeria plc, Guaranty Trust bank Plc, Guiness Nigeria plc, Honeywell Flour Mills, Lafarge Africa plc, NEM insurance plc, Nestlé Nigeria plc, Nigerian Breweries Plc, Pz Cussons plc, Red Star Express Plc, Stanbic IBTC Holdings Plc, Transcorp Hotels Plc, Unilever Nigeria Plc, United Capital Plc, WAPIC insurance plc and Wema Bank. Others that started during the pilot stage in 2014 included Access Bank, Dangote Cement, Diamond Bank, FBN holdings, AXA mansard Insurance, Nigerian Aviation Handling Company, United Bank for Africa and Zenith Bank.

    Chief Executive Officer, Convention on Business Integrity (CBi), Mr Soji Apampa, said the success rate and increased participation in the CGRS initiative is a testament to the rising acclaim that corporate governance is receiving in corporate Nigeria.

    “It is important to celebrate companies and directors who are leading the renewed charge while encouraging others to participate. We continue to celebrate companies where we notice that corporate governance is evolving nicely,” Apampa.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, noted that as the Exchange make surefooted steps to globalise its market, the CGRS rating will bolster the confidence to invest in the Nigerian market especially from international investors.

    “Increasingly, our listed companies are meeting their compliance and requirements and we will continue to protect investors in our market through a robust regulatory regime,” Onyema said.

  • UACN appoints five new MDs, DMD

    Nigeria’s largest conglomerate and oldest surviving business, UAC of Nigeria (UACN) Plc has appointed four new managing directors and a deputy managing director for five of its subsidiaries.

    In a group-wide management changes, the conglomerate has appointed new heads for its paints and chemical, logistics and agricultural businesses. Mrs Oluwakemi Ogunnubi takes over as Managing Director, Chemical and Allied Products (CAP ). Mr. Taiwo Ajibola is the new Managing Director, MDS Logistics Limited. Mr. Adedamola Olusunmade has assumed office as Managing Director of Portland Paints & Products Nigeria Plc while Mr. Solomon Aigbavboa, previously Managing Director of MDS Logistics Limited, has been appointed Managing Director of Livestock Feeds Plc.

    Mr. Mukhtar Yakasai, former Managing Director of Portland Paints and Products Nigeria is now the Deputy Managing Director of Grand Cereals Limited, a Jos-based agricultural subsidiary of the group. Mrs. Modupe Asanmo, erstwhile Managing Director of Livestock Feeds has retired from the company after 10 years of service. All the appointments took effect from January 1, 2018.

    Ogunnubi, a Chartered Accountant (ACA), attended The Polytechnic, Ibadan where she obtained a Higher National Diploma (HND) in Accountancy in 1992.  Until her appointment, she was the Head, Financial Services of UACN. She is an alumnus of Ashridge Business School and a member of the Institute of Risk Management, United Kingdom (UK).

    Olusunmade, a graduate of Chemical Engineering from the University of Benin started his career as an Assistant Production Manager with CAP in 1999. He worked in different capacities including plant manager, marketing manager, corporate responsibility and strategy manager and technical operations manager. He has attended local and international training courses including the Lagos Business School’s Advance Management Programme and was in 2007 appointed to the International Labour Organisation’s Committee of Experts on Safe Handling of Hazardous Chemicals.

    Yakasai is a graduate of Agriculture with Agricultural Economics option from Ahmadu Bello University Zaria and holds an MBA from the same University.  He joined CAP in July 1985 and held various roles as National Sales Coordinator, Business Manager Flame Guard and CAP Decorators, General Manager Business Development and General Manager Paints. He was at various times the Managing Director of Spring Waters Nigeria Limited (SWAN) and Warm Spring Waters Nigeria Limited (Gossy) and Special Projects Manager, UAC. He was appointed to the Board of Portland Paints in June 2013 as a Non-Executive Director and, subsequently, Managing Director of the company in October 2015. Mukhtar is an alumnus of Ashridge Business School, UK and has attended other local and international training programmes.

    Aigbavboa, a pharmacist, was educated at the University of Benin (B.Pharm & M.Sc) and Federal University of Technology, Owerri (MBA). He joined UACN in June 1997 as Personal Products Manager in the then GBO – MDS Division. He thereafter, occupied various management positions in the UACN Group including National Customer Service Manager, MDS Logistics and General Manager -Franchise Operations, Mr Biggs. In September 2008, he joined Zain Telecoms, Nigeria where he served as General Manager, North West Regional Operations and Director, Regional Support in the Sales Group.  In June 2009, he returned to UACN and was subsequently appointed in January 2010 as the Managing Director of MDS Logistics Limited. He is a fellow of the Chartered Institute of Supply Chain Management

    Ajibola, a graduate of Industrial Mathematics from the Federal University of Technology, Akure, started his career in UACN as an Assistant programmer in management and computer services before his deployment to CAP as the Tetra CS3 ERP project. He was transferred to MDS Logistics in 2001 to work on the implementation of the Enterprise Warehouse Management System deployed to the business. Upon completion of the project, he was appointed the pioneer ICT Manager of MDS Logistics Limited.  He later became the Warehousing and Depot Operations Manager before his appointment as the General Manager, Operations comprising Warehousing, Haulage and Distribution Operations of the business. He has attended numerous training programmes within and outside the country including Lagos Business School, Cranfield University (UK) and Robert Kennedy College (Switzerland).

     

     

  • Expert advises on effective regulation, derivatives market

    As the Nigerian Stock Exchange (NSE) concludes arrangements to introduce Exchange Traded Derivatives (ETDs)with the aim of  widening the domestic derivatives market, former Chairman of the United States Commodities Futures Trading Commission (US CFTC) Mr. James Stone has insisted on the need to institutionalise effective regulation and adopt a gradual approach to the introduction and development of the derivatives.

    Stone said that while derivatives did not cause the 2008 global financial crisis, they contributed to exacerbating the situation as a result of synthetic derivatives; corruption; interconnectedness of financial institutions; flawed models that didn’t flag certain risks opaqueness of the market and sometimes lack of understanding with credit rating agencies.

    According to him, for the derivatives market to be efficient, regulation is key, while everything else will have to be taken slow and learnt through manageable experiments.

    He added that in order to manage apprehension and anxiety about participating in derivatives products, market participants should begin with Exchange Traded Derivatives (ETDs) which offer a reliable platform for price discovery.

    Stone, founder and Chief Executive Officer of Boston-based Plymouth Rock Assurance Corporation and Chief Executive of The Plymouth Rock Company spoke at a special lecture organised by the Nigerian Stock Exchange (NSE) in collaboration with Coronation Merchant Bank Group in Lagos.

    Speaking on: ‘Pluses and Pitfalls of Derivatives Trading,’ Stone advised that market participants should start small on all trading experiments and arm themselves by working for a sophisticated trader as well as spend time with experts.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema said that the Exchange has been planning to launch ETDs to widen the variety of instruments in the Nigerian market adding that the experience shared by Stone will assist in that direction.

    He noted that the NSE was committed to building capacity and enhancing the expertise of operators and other associated parties towards collective efficiency.

    “The lecture on ‘Pluses and Pitfalls of Derivatives’ provided enriching perspectives and strengthen the capacity of capital market operators, who create value for investors through their operations on the floor of the NSE,” Onyema said.

    He commended Coronation Merchant Bank for sponsoring the forum, describing the partnership as one that fits into the quest to introduce ETDs into the Nigerian capital market.

    “The Exchange is committed to building capacity and enhancing the expertise of operators and investors towards a more efficient market. Therefore, the lecture on ‘Pluses and Pitfalls of Derivatives Trading’ to be delivered by Mr. James Stone will provide enriching perspectives and strengthen the capacity of capital market operators, who create value for investors through their operations on the Nigeria Stock Exchange,” Onyema said.

    He pointed out that the Exchange had in 2017 leveraged its X-Academy platform to conduct two tranches of training on the legal and risk aspects of derivatives and central counterparty clearing, adding that the special lecture will add to the knowledge base that currently exists in preparation for the launch of the ETD later this year.

    In his remarks, Managing Director, Coronation Merchant Bank, Mr. Abubakar Jimoh said that a collaborative approach to capacity building will unlock inherent value on the Exchange.

    According to him, as a wholesale financial institution focused on transforming the face of merchant banking in Africa, Coronation Merchant Bank is not only open to innovative collaborations that will bring development to the African financial landscape, but will serve as a catalyst for revitalizing capital market operations across the continent.

    “We are excited about our collaboration with the NSE on this noteworthy initiative, which will have positive effects on capital market operations in Nigeria,” Jimoh said.

     

  • Nigeria silent as global regulators warn on virtual currencies, coin offerings

    Global securities regulators under the auspices of the International Organisation of Securities Commissions (IOSCO) have warned that virtual currencies and initial coin offerings (ICOs) pose serious risks to investors.

    IOSCO is a global body of securities regulators and its members regulate more than 95 per cent of the world’s securities markets in more than 115 jurisdictions. Nigeria is a member of both the board of IOSCO and its influential Committee on Retail Investors, otherwise known as Committee 8.

    A list of countries and jurisdictions that have issued official warnings, cautions and alerts on cryptocurrencies, ICOs, digital tokens and related issuances provided by the IOSCO did not include Nigeria, despite its position on the board.

    Already, not less than 25 jurisdictions, including most advanced and emerging economies, have issued official notes and cautions on the ICOs including emerging economies such as Slovenia, Macau, Malaysia, Brazil, United Arab Emirates, Isle of Man and Belgium. Most members of IOSCO board have issued official regulatory positions on cryptocurrencies.

    Other countries that have issued codified statements included United States of America, United Kingdom, Germany, France, Thailand, Switzerland, Singapore, New Zealand, Netherlands, Mexico, Japan, Hong Kong, China, Canada, Austria, Australia and Argentina. The European Union (EU) has also issued formal statements for the 28-nation bloc.

    The 28 member-countries of the EU include Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

    ICO, also known as token sales or coin sales, typically involve the creation of digital tokens – using distributed ledger technology – and their sale to investors by auction or through subscription, in return for a crypto-currency such as Bitcoin or Ether or more rarely for government-backed or official fiat currency such as the US Dollar or the Euro.

    The board of IOSCO has formally issued a statement warning that ICOs and related issuances are not standardised, and their legal and regulatory status is likely to depend on the circumstances of the individual ICO.

    “There are clear risks associated with these offerings. ICOs are highly speculative investments in which investors are putting their entire invested capital at risk. While some operators are providing legitimate investment opportunities to fund projects or businesses, the increased targeting of ICOs to retail investors through online distribution channels by parties often located outside an investor’s home jurisdiction — which may not be subject to regulation or may be operating illegally in violation of existing laws — raises investor protection concerns. There have also been instances of fraud, and as a result, investors are reminded to be very careful in deciding whether to invest in ICOs,” IOSCO warned.

    The global body noted that its board had in October 2017 discussed the growing usage of ICOs to raise capital as an area of concern, after which IOSCO issued a statement to its members regarding the risks of ICOs and referenced various approaches to ICOs taken by members and other regulatory bodies.

     

    The IOSCO board has also established an ICO Consultation Network through which members can discuss their experiences and bring their concerns, including any cross-border issues, to the attention of other regulators.

    The members of the IOSCO Board are the securities regulatory authorities of Argentina, Australia, Belgium, Brazil, China, Egypt, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Jamaica, Japan, Kenya, Malaysia, Mexico, Nigeria, Ontario, Pakistan, Peru, Quebec, Saudi Arabia, Singapore, South Korea, Spain, Sweden, Switzerland, the Netherlands, Turkey, the United Kingdom, and the United States of America.

    Nigeria is a member of the Committee on Retail Investors, which was set up by the IOSCO Board in June 2013. The committee’s primary mandate is to conduct IOSCO’s policy work on retail investor education and financial literacy. Its secondary mandate is to advise the IOSCO Board on emerging retail investor protection matters and conduct investor protection policy work as directed by the IOSCO Board.

    The members of Committee 8 are the securities regulatory authorities of Argentina, Australia, Belgium, Brazil, China, France, Germany, Hong Kong, India, Indonesia, Israel, Italy, Japan, Jersey, Luxembourg, Malaysia, Mexico, the Netherlands, Nigeria, Ontario, Portugal, Quebec, Romania, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sri Lanka, Sweden, Chinese Taipei, Thailand, Turkey, the United Kingdom, and the United States of America.

     

     

  • Investors stake N1.27tr on equities in 2017

    Turnover at the Nigerian equities market rose by 121 per cent to N1.27 trillion as quoted equities rebounded from a three-year consecutive downtrend with average return of 42.3 per cent.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, gave the overview of the market in 2017 and outlook for 2018 at his annual briefing yesterday in Lagos. Onyema used the occasion to brief the stockbroking community, analysts, media and other stakeholders, on the performance of the market in the preceding year and give prognosis for the market for 2018.

    He noted that equity market activity skyrocketed from 2016 levels, as market turnover increased by 121 per cent to N1.27 trillion from N0.58 trillion.

    According to him, the Nigerian equities market recovered from the macroeconomic overhang of the commodity downcycle to become the third best performing market in 2017 globally, with a 42 percent return in the NSE ASI index. However, The Nation’s check indicated that Nigeria was not the third best performing market, as other countries such as Venezuela, Ghana, Turkey, Argentina and Jamaica outperformed the Nigerian market.

    He attributed the impressive performance, in part, to Central Bank of Nigeria (CBN)’s monetary policies that resulted in increased liquidity in the foreign exchange market.

    “IPO activity in the year remained mute, however, there were several other positive indicators including the revival of supplementary listings and the return of new issuances. The value of supplementary listings increased by 27 per cent, bringing the total value of equity issues in 2017 to N408 billion,” Onyema said.

    In the debt market, Onyema noted that the NSE fixed income market recorded mixed performance as new bond issuances increased over the previous year, while bond yields gradually moderated from 2016 levels amidst easing inflation and greater foreign exchange stability.

    He pointed out that yields across various tenors declined between 0.4 per cent and 1.5 per cent, and market turnover declined by 24 per cent in 2017, as investors sought higher returns in alternative product classes. However, supplementary issuances by the Federal Government saw bond market capitalization increase by 34 per cent year-on-year.

    “The NSE’s Exchange Traded Funds (ETF) market witnessed increased activity across key metrics in 2017, recording a 272 per cent year-on-year growth in trade volumes, 33 per cent growth in turnover and a 40 per cent year-on-year increase in market capitalization to close the year at N6.69 billion,” Onyema said.

    He added that the NSE made steady progress on its strategic focus areas set out at the beginning of 2017 pointing out that demutualization remained a key strategic focus in the year under review as the Exchange, through targeted engagement efforts with its members, Securities and Exchange Commission (SEC), the National Assembly (NASS), NSE members including Association of Stockbroking Houses of Nigeria (ASHON), Corporate Affairs Commission (CAC) and other key stakeholders, achieved the broad-based support required to secure approval for demutualization from the Exchange’s members.

    He said the Exchange successfully progressed the Demutualization Bill through the first and second reading and public hearing stages of the law making process.

    “In 2017, we amplified our efforts to establish West Africa’s first derivatives market and achieved a number of key milestones during the year. These include the completion of draft rules; development of product specifications; and market-wide trainings on derivatives and Clearing Counterparty (CCP) transactions. We also worked to create and enhance legal and regulatory frameworks which support derivative instruments, and have made significant progress towards securing approvals to operationalize these frameworks,” Onyema said.