FOREIGN portfolio transactions totaled N696.5 billion in the first seven months of this year as foreign investors continued to dominate transactions at the Nigerian capital market.
The latest report on foreign portfolio investment (FPI) in Nigeria showed that speculative foreign portfolio transactions might have contributed significantly to the sustained recession at the Nigerian stock market.
The seven-month report for the period ended July 31, 2015 indicated that foreign investors accounted for 54.21 per cent of total transaction value during the period but the larger proportion of foreign portfolio transactions were outflows rather than inflows. The preponderance of sale transactions to buy transactions by the foreign investors left Nigeria with a deficit FPI position of N28.38 billion.
Total foreign portfolio outflow stood at N362.42 billion over the seven-month period, representing 52.04 per cent of the total foreign portfolio transactions of N696.46 billion. Total foreign inflow totaled N334.04 billion, 47.96 per cent of total foreign flow. Domestic investors accounted for N588.36 billion, 45.79 per cent of the market’s total transaction of N1.28 trillion during the seven-month period.
the stock market in July, foreign portfolio outflow-inflow analysis showed considerable increase in FPI, but the transactions were more of sales than purchases. Total transactions in July stood at N170.83 billion, consisting of N107.47 billion from foreign investors’ transactions and N63.36 billion from domestic investors, a ratio of 62.91 per cent to 37.09 per cent. Foreign transactions however included N58.83 billion outflow and N48.64 billion inflow, indicating a deficit of N10.19 billion.
In July, the benchmark index for the Nigerian stock market indicated average month-on-month decline of 9.79 per cent. This extended the seven-month return at the market to -13 per cent. The All Share Index (ASI), the common value-based index that tracks prices of all quoted companies on the NSE, which also serves as Nigeria’s sovereign equity index, closed July at 30,180.27 points as against 34,657.15 points recorded at the beginning of this year, representing a decline of 4,476.88 basis points or 12.92 per cent. Aggregate market value of all quoted companies also followed the same downtrend; dropping from its year’s opening value of N11.478 trillion to close July at N10.344 trillion, indicating capital gain loss of N1.13 trillion.
The seven-month FPI report is broadly in line with the half-year report, which had shown that about 52 per cent of total foreign transaction value were divestments. Foreign investors, who dominated the Nigerian capital market, had taken out more funds than they invested in the first half as investors waited for the political transition and clear macroeconomic and monetary policy direction of the new government.
Total foreign portfolio investment outflow in the first half stood at N303.59 billion as against inflow of N285.40 billion, representing a deficit of N18.2 billion. The half-year deficit represents a relatively larger value given the significant undervaluation of the Nigerian equities and the extended deficit Nigeria had suffered since 2013.
Nigeria had recorded a net foreign portfolio deficit of N154.14 billion in 2014, overriding a modest positive net flow of N20.48 billion recorded in 2013. The 12-month foreign portfolio investment report for 2014 had shown that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014. In 2013, total foreign inflow stood at N531.26 billion compared with outflow of N510.78 billion.
The six-month report for the period ended June 30, 2015 showed that foreign portfolio investors accounted for about 53 per cent of total transaction value during the period while domestic investors accounted for 47 per cent. Total transactions stood at N1.114 trillion, with domestic investors accounting for N525 billion.
The report however showed a month-on-month recovery in June. Total foreign inflow stood at N42.67 billion as against outflow of N26.98 billion in June, totaling N69.65 billion. Total transactions stood at N203.45 billion, with domestic investors contributing N133.80 billion. The foreign-domestic ratio stood at 34.24 per cent/65.76 per cent in June.
In May, total foreign inflow had stood at N38 billion as against outflow of N41.77 billion, totaling N79.77 billion. Total transactions thus stood at N145.45 billion, with domestic investors accounting for N65.68 billion. Foreign investors accounted for 54.84 per cent while domestic investors accounted for 45.16 per cent.
The market had recorded its first positive flow in April, after successive declines throughout the first quarter. Total foreign inflow rose to N54.20 billion in April as against outflow of N49.75 billion, representing a modest positive net inflow of about N4.45 billion. Total foreign transactions thus stood at N103.95 billion as against total domestic transactions of N102.91 billion during the month.
In March, foreign portfolio outflows of N52.41 billion outpaced inflows of N50.15 billion. The first quarter had seen steady foreign portfolio deficits as investors weighed macroeconomic and political risks. Foreign outflows totaled N81.60 billion in February 2015 as against inflow of N52.35 billion, indicating a significant increase on the downtrend that started the year when foreign portfolio outflow was N51.08 billion against inflow of N48.03 billion.
The 12-month foreign portfolio investment report for 2014 had shown that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014, representing a net deficit of N154.14 billion. In 2013, total foreign inflow stood at N531.26 trillion compared with outflow of N510.78 trillion, leaving a positive balance of N20.48 billion.
Market analysts attributed the largely negative topsy-turvy situation at the capital market to pre-election concerns and existing concerns over the macroeconomic and monetary policy direction of the new government.
Insecurity, poor infrastructure and inclement operating environment had also combined to shave corporate earnings, which dampened investors’ appetite.
Category: Equities
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Foreign portfolio flow hits N696.5 billion
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Visa expands with new merchants, issuers
VISA Incorporated has announced the continued global success of Visa Checkout, its online check out service that allows shoppers to pay with their cards online and on any device, with just a few clicks.
Visa recently announced that no less than 33 new merchants in the United States (US), Australia, Canada and Colombia have signed on to offer Visa Checkout; ranging from Best Buy, Student Universe, The Roses Only Group and Ticketek, Grand & Toy, Exito.com, Falabella.com, Under Armour to Barnes & Noble and Taco Bell.
The rapidly expanding list of merchants will continue to make it easier for consumers to buy everything they need online on any device, using Visa Checkout.
Speaking about the global announcement, Ade Ashaye, Country Manager for Visa in Nigeria said: “Visa Checkout is the platform that has been developed to help provide ease of access during the online purchasing process.
“In addition to the range of new global merchants, more issuers around the world are also offering Visa Checkout to their customers to enable fast, secure online shopping from anywhere. This is especially true in China and United Arab Emirates, where consumer demands for overseas goods continue to grow, and issuer partners now included.
“It’s great to see banks like CMB and SPDB bringing best-in-class enrollment experiences to their customers in China, who are eager to shop overseas,” said Senior Vice President of Visa’s Digital Solutions, Sam Shrauger, who recently outlined Visa’s Checkout strategy.
He added: “As more merchants and issuers integrate Visa Checkout, the number of consumers seeing the benefit of a faster online checkout experience also grows. We’re starting to see the network effect kick-in.” -
Fed Govt to raise N814b in TBs by year-end
THE Central Bank of Nigeria (CBN) has disclosed Federal Government plan to borrow N814.78 billion ($4 billion) in Treasury bills between September 17 to December 3, this year. The bank said it would auction N215.14 billion worth of the three-month paper, N193.64 billion in the six-month debt and N406 billion worth of one-year paper.
The total debt proposed for the fourth quarter is 6.66 per cent short of the N872.96 billion raised in the second quarter of the year, the data released by the bank at the weekend showed.
Meanwhile, more investors could exit Nigeria’s bond market on concerns that new foreign exchange policy would hinder capital repatriation.
The CBN restricted access to forex by importers in its bid to protect its reserves, but dealers say the measure is threatening the future of Nigeria’s bonds on JP Morgan government Bond Index. The rules curb access to forex to fund purchase of foreign shares and bonds, among others.
Yields rose across maturities last week, spurred by the sell-off by some offshore investors cutting their risk in emerging markets and lack of interest from local pensions. “We have seen a number of offshore investors exiting their positions in the debt market in reaction to the new central bank foreign exchange measures and this trend will continue until we have a clear policy direction from the new government,” a dealer said.
Traders said some banks are also exiting their positions in the long tenor debt market and switching to short-dated paper because of the fore control measures by the central bank. JP Morgan has threatened to eject Nigeria from its Government Bond Index (GBI-EM) by the end of the year unless it restores liquidity to currency markets in a way that allows foreign investors tracking the benchmark to conduct transactions with minimal hurdles. -
‘Why Fidelity Bank changes brand identity’
FIDELITY Bank Plc’s newly unveiled corporate brand identity is aimed at strengthening its operations and deliver superior customer satisfaction.
The bank at the unveiling of its new brand architecture last Thursday, said the exercise was to bring about convergence in its services to suit both the old and new generation of customers.
The Group Managing Director/Chief Executive Officer, Fidelity Bank, Nnamdi Okonkwo, said while the financial institution’s commitment towards customer service is unflinching, the bank is also focusing on the youth population.
He said with the new brand identity’s properties such as the deep blue colour, the banks is reminded of its “rich, solid background as a bank”, adding: “It holds that there is an accommodative path, which inspires us to go into the future.”
Okonkwo said the green colour stands for fertility, growth and progress to the future, while the white line at the middle stands for safety, purity and a guiding light.
According to the bank chief, the new identity took the bank months of strategising, planning and execution, saying that it needed the rebranding to be in touch with the changing realities of the modern time.
“Our business environment is changing and we realise that to remain true to the customers we serve, it is imperative that we stay in tune with the times. We are not just giving our brand a new look, more importantly, we are actively changing the way we do business; becoming more focused on our customers’ needs and exceeding their expectations from us. Rebranding, therefore, makes this contract visible to our stakeholders. “
“Like any other global brand that is constantly evolving, we must make sure that our brand means something to every stakeholder,” Okonkwo said.
While banking on about 43 per cent of Nigeria’s population made up of youths, Okonkwo said any institution, which fails “to connect with the youths today will lose tomorrow”. -
Cross River lists N8b bond on Stock Exchange
THE Cross River State Government at the weekend listed the state’s recent bond issue on the Nigerian Stock Exchange (NSE), paving the way for investors in the bond to trade on their investments.
Cross River’s N8 Billion 17% Series 1 Fixed Rate Development Bonds due 2022 was admitted to trade at the NSE at the weekend. The bond issue was a tranche under the state’s N40 Billion debt Issuance programme.
The listing of the Cross River’s bond brought the number of sub-national bonds on the NSE to 23. The Cross River’s bond is within the highest coupon rate in the market, at par with the Kwara Government Bond 2022, which also carried a coupon of 17 per cent.
The Nation had in May named Cross River State as one of the six state governments and four companies that had initiated plans to raise about N350 billion through bond issues as governments increasingly turn to the capital market to bridge shortfall in national allocations.
The state governments planned to raise between N5 billion and N40 billion in medium term revenue bonds.
The states included Zamfara State, Cross Rivers State, Plateau State, Benue State, Kogi State and Oyo State. Zamfara State and Plateau planned to raise N30 billion each through medium-term fixed rate debt issues. Cross Rivers State was eyeing N40 billion while Benue State had filed application for N11 billion debt issue. Both Oyo State and Kogi State planned to raise N5 billion each.
Total debts by the Federal Government and State Governments were then over N12 trillion. Official records by the Debt Management Office (DMO), the national agency that oversees debt issues by governments and state governments, had shown that total public debts by the Federal and State Governments closed the first quarter at about N12.1 trillion.
According to the report for the period ended March 31, 2015, external debts by the Federal and State Governments stood at N1.86 trillion. Domestic borrowings by the Federal Government totaled N8.51 trillion while domestic debts by state governments stood at N1.69 trillion.
SEC had earlier approved about N45 billion for four states including Bauchi, N15 billion; Kaduna, N8.5 billion; Ebonyi, N9.34 billion and Gombe State, N10 billion.
Reacting to controversy over the approval of the Gombe State bond, SEC had said bond applications by sub-national governments usually follow due process in line with the rules and regulations of the Commission and extant laws guiding such issuance.
According to the Commission, SEC is unique among other capital market regulators around the world in carrying out pre-offer and post-offer inspections to ensure that funds raised from the capital market are not misappropriated but applied for the purposes stated in the issuance prospectus.
The Commission noted that its inspectorate department usually carries out on-site verification inspection of the projects completed from the proceeds of any previous issuance before granting approval for subsequent issue. -
Ecobank advocates regional integration
THE Managing Director, Ecobank Nigeria Limited, Jibril Aku has said achieving rapid development in Africa requires improved trade relations, share data and harmonise financial services.
He said “development, harmonisation and integrating of national and regional financial markets, including elimination of barriers and reducing risks affecting the free movement of labour and capital across-borders would fast track development.
Aku, who was Guest Lecturer at the Hallmark Newspaper’s Public Policy Dialogue in Lagos, expressed optimism that economic realities would force African countries to integrate despite several failed attempts to unite the continent politically. “I am very optimistic it will happen. Economic realities will happen. Economic realities will drive it. If political realities don’t bring it together, Economic realities will drive it,” he said.
Aku, whose paper was titled: “Regional Integration and Sustainable Development”, said the current degree of African regional integration remains highly superficial. He listed constraints as membership of bilateral organisations; slow ratification of protocols and reluctant implementation of agreed plans; socio-economic policy divergence; limited national and regional capacities; lack of full private sector involvement at both planning and implementation; weak infrastructure; corruption and poor policy support, amongst others as hindrance to Africa’s competitiveness.
The top banker is optimistic that current global economic trends would force African countries to integrate, stressing that the modest success of pan African bank, that is Ecobank Transnational Incorporated (ETI) should serve as a beacon in African’s path to socio-economic integration. -
Stockbrokers to partner AfDB on national, continental devt
STOCKBROKERS, who form the bulk of operators and the main link at the capital market, have outlined areas of mutual interests for collaboration with the new management of the African Development Bank (AfDB).
Stockbrokers, under the aegis of the Chartered Institute of Stockbrokers (CIS), said the partnership between the CIS and the AfDB could provide much-needed linchpin for the development of the continent, especially Nigerian agricultural sector.
Under the new plan, the two institutions are to work together in ensuring the viability of the commodities market and listing of agro-allied companies to boost activities in agriculture in line with the Federal government’s plan to diversify income base by shifting attention from oil.
Addressing capital market correspondents at the weekend, acting president, Chartered Institute of Stockbrokers (CIS), Mr. Oluwaseyi Abe congratulated the newly appointed president of AfDB, Dr. Akinwumi Adesina, noting that the CIS had been working closely with Adesina during his tenure as Nigeria’s Minister of Agriculture.
He pointed out that both the CIS and AfDB had many things in common, especially in the areas of creating awareness on the benefits of promoting active commodities exchange and the listing of companies in the agro allied industry.
“We need active and transparent commodities exchange in order to develop our agricultural sector as a huge source of income rather than depend on crude oil. This is in tandem with the Federal Government Policy of diversification of the economy. The agro allied companies require standardization of products and effective pricing mechanism to thrive. The CIS trains manpower in this regard,” Abe said.
According to him, other areas of partnership with AfDB include listing of power related institutions to access capital through the various relevant market platforms, and partnership with CIS for empowerment on its Diploma Programme to create employment and support financial inclusion programme of the government, especially into the rural communities.
“The CIS is willing to engage AfDB on how we can harmonise our Diploma Programme. The ultimate is to empower the holders of our Diploma to create employment and enhance the government’s financial inclusion programme especially into the rural communities,” Abe said.
He noted that the focus of the institute’s professional diploma was not only to grow membership but develop a new generation of entrepreneurs who would become foot solders in the various sectors of the financial market.
Abe announced that the Institute’s 2015 Annual Conference of Stockbrokers would hold on October 29 and 30 with the theme: “Entrepreneurship and the Capital Market: Fast Tracking a New Economy for Africa.”
In his remarks, second vice president, Chartered Institute of Stockbrokers (CIS), Mr. Dapo Adekoje reiterated the plan to deepen the market through effective operation of the commodities exchange.
Registrar and Chief Executive, Chartered Institute of Stockbrokers (CIS), Mr. Adedeji Ajadi added that the professional diploma was already generating interest in the public as many youths are now writing the examination. -
UBA declares N7.2b interim dividend in first half
Shareholders of United Bank for Africa (UBA) Plc would share a total of N7.2 billion as interim cash dividends as the bank’s net profit rose by 40 per cent in the first half.
The board of directors of UBA yesterday announced that shareholders would receive a dividend per share of 20 kobo on September 16. The dividend recommendation was part of the highlights of the bank’s earnings report for the half-year ended June 30, 2015.
UBA’s share price rose by 4.85 per cent at the Nigerian Stock Exchange (NSE).
The six-month earnings report showed strong growth in earnings and profits, as the bank continued to optimize its pan-African African network, which now contributing to over 23 per cent of profit after tax.
Key extracts showed that gross earnings rose by 21 per cent to N166.9 billion by June 2015 compared with N138.2 billion in comparable period of June 2014. Profit before tax grew by 35.1 per cent to N39.0 billion as against N28.89 billion recorded in corresponding period of 2014. Profit after tax jumped by 40 per cent to N32 billion in 2015 compared with N22.86 billion posted in comparable period of 2014. Earnings per share increased from 71 kobo to 94 kobo.
Commenting on the results, group managing director, United Bank for Africa (UBA) Plc, Mr. Phillips Oduoza said the results showed the resilience of the bank’s business strategy in the face of the challenging operating environment.
“Our business strategy has proved to be resilient, balancing prudence, with an ability to significantly grow bottom line and continue to focus on operating effectiveness. We look forward to continuing to support our customers and working with them to achieve financial success for them and the wider Nigerian and African economies,” Oduoza said.
He said the bank’s bottom-line reflected better extraction of value across all business segments and ongoing process optimization.
According to him, it was also satisfying to see the bank’s cost-to-income ratio decline further while the bank has maintained a healthy loan book, a tribute to both its risk management and to the robustness of its clients’ businesses, with non-performing ratio at just 1.8 per cent of total loans granted, one of the lowest in the banking industry.
“We understand that many in Nigeria are facing difficult economic circumstances and we are very much shouldering our responsibility to support and grow wealth creation,” Oduoza said.
Speaking on the performance of the bank’s African subsidiaries, group chief financial officer, UBA, Ugo Nwaghodoh said the bank’s businesses in other African countries have started to significantly impact the group’s returns, contributing 23 per cent of profit after tax, with an even stronger outlook.
He said recent initiatives taken by the bank to improve operational efficiencies have been yielding positive results, thus reinforcing optimism on the future of UBA’s African business.
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UPDC outlines new growth plan as shareholders get N859m dividend
UACN Property Development Company (UPDC) Plc plans to source additional capital through a supplementary equity issue and disposal of certain surplus assets as part of a medium-term plan to deleverage the real estate company and boost its liquidity.
Chairman, UACN Property Development Company (UPDC) Plc, Mr. Larry Ettah, outlined the strategic plan of the company at the annual general meeting held at Golden Tulip, Festac, Lagos. Shareholders approved distribution of N N859.4 million as cash dividends for the 2014 business year, representing a dividend per share of 50 kobo.
Ettah said the company is focused on long-term value creation and has put in place strategies to enable it take advantage of emerging opportunities in the market place.
He outlined that the company would be raising new equity funds through a supplementary capital issue while it would also dispose its surplus equity stake in the UPDC Real Estate Investment Trust (UPDC Reit) to reduce its debt overhang and free more earnings for shareholders.
“Our strategy for 2015 and beyond include deleveraging the business through equity capital injection, disposal of the surplus stake currently held in UPDC REIT, about 21.5 per cent, to generate liquidity and re-creating our products portfolio to include more commercial and retail offerings which have proven to be more resilient revenue sources in periods of depression,” Ettah said.
He noted that the Nigerian real estate market remained attractive as there were significant untapped potentials in the residential segment, and numerous opportunities in the hospitality, retail, commercial and industrial segments of the market in the near term.
According to him, in recent years, foreign private equity firms have invested millions of dollars in the Nigerian real estate market due to existing and emerging huge demand which is driven by increasing urban population and changing shopping culture among the expanding middle class.
“The real estate market is gradually rebounding and has experienced reasonable growth and performance in the last few years. This performance is largely driven by the re-emergence of the Nigerian middle-class and the increasing demand for decent residential and commercial accommodation by high net-worth individuals, corporate organizations and key players in the retail segment of the economy,” Ettah pointed out.
He added that the upturn in economic activity which started in the last quarter of 2011 has led to an increase in demand and supply for commercial and high end residential developments, particularly in the key cities of Abuja, Lagos and Port Harcourt.
He said UPDC has continued its ongoing developments in 2014 and commenced some new ones, assuring that the company is on a good footing to sustain good performance.
Ettah however highlighted that challenges being faced by the industry in terms of title uncertainties, high cost of funding, inadequate mortgage financing and poor infrastructure are expected to persist in the medium term and might continue to prevent effective demand in the low to medium residential market segments.
Audited report and accounts for the year ended December 31, 2014 showed group turnover of N11.70 billion in 2014 as against N11.29 billion in 2013. Profit before taxation stood N3.54 billion compared with N3.71 billion in 2013.
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Transcorp on course for greater returns, says CEO
Transnational Corporation of Nigeria (Transcorp) Plc yesterday highlighted key developments across its business segments with an assurance that the conglomerate is on course for sustained growth and greater returns to investors.
Chief executive officer, Transnational Corporation of Nigeria (Transcorp) Plc, Mr. Emmanuel Nnorom, during a visit to the Nigerian Stock Exchange (NSE) yesterday in Lagos, said the conglomerate has continued to witness exciting developments across its business segments.
He said the conglomerate has consolidated its power, agribusiness and hotel and tourism businesses with strategic business partnerships and contracts that should enhance performance in the period ahead.
Transcorp, which is owned by more than 300,000 shareholders, holds a diversified portfolio comprising strategic investments in the power, hospitality, agribusiness and oil and gas sectors. The conglomerate’s notable businesses include Transcorp Hilton Hotel, Abuja; Transcorp Hotels Calabar; Ughelli Power Plc, Teragro Commodities Limited, operator of Teragro Benfruit plant and Transcorp Energy Limited.
Nnorom said The Coca-Cola Company, which is launching a new line of fruit juice made from concentrate, has announced Transcorp as the sole local-concentrate sourcing partner for the line.
Teragro Commodities Limited processes orange, mango and pineapple concentrates for industrial markets at its processing plant in Benue State. The 26,500 metric tonnes capacity Benfruit Plant is the first and only Nigerian-owned and operated juice-concentrate processor of its kind. It first began producing concentrate for Coca-Cola in 2014.
“The partnership reflects Teragro’s ability to deliver a product that meets international quality standards. The company has its ISO 9001 and FSSC22000 and has proven it can compete with concentrates imported from countries such as the United States, Spain and South Africa, among others,” Nnorom said.
He added that Transcorp Hilton Abuja is embarking on a full renovation of its 670 rooms and on- site facilities, the first renovation of its kind for the property since 2003.
According to him, the renovation entails a total overhaul of existing facilities and development of additional facilities. The company plans to refurbish rooms, commission a congress centre, upgrade restaurants and the spa area and use the surrounding territory to commission high-end apartments, offering access to hotel facilities, for wealthy Nigerian individuals.
He pointed out that the Abuja renovation comes alongside other key milestones by the hospitality business including the development of new properties in Lagos this month and Port Harcourt, the addition of a luxury apartment building and the creation of a 5,000 person capacity convention center.
In the power business, Nnorom said the conglomerate has fully achieved its short term post-acquisition operational strategy for the Ughelli power plant as set out in 2013. The strategy was based largely around the recovery of installed capacity at the power plant and included detailed assessment of the turbines on a case-by-case basis to determine the optimal route for return to operations of each of the turbines.
He noted that the development of a sound and executable strategy laid the foundation for the ramping up of generation capacity from 342 megawatts by December 2013 to 610 megawatts by the end of 2014, a 78 per cent increase in available capacity year-over-year and a 300 per cent increase from takeover.
Transcorp recorded a turnover of N41.3 billion for the year ended December 31, 2014, indicating an increase of 120 per cent over N18.8 billion recorded in 2013. Group gross profit also rose by 92 per cent to N27.6 billion as against N14.4 billion in 2013.Group operating profit rose by 33 per cent to N13.6 billion. However, profit before tax declined by 14 per cent to N7.7 billion in 2014 from N9.0 billion in 2013. But total assets for the group grew by 14 per cent from N149.6 billion in 2013 to N170.8 billion in 2014. It declared a dividend per share of 6.0 kobo.
The Nigerian Stock Exchange (NSE) named Transcorp as the most compliant quoted company in 2014. According to the NSE, the most complaint listed firm award is given to the company that demonstrates the highest degree of compliance with the rules and regulations regarding disclosure obligations of listed companies to the Exchange in a particular year. Such a company is also expected to have demonstrated its recognition for the importance of corporate governance.