Category: Equities

•Stock gains N404.6b in five-hour trading
•Rally lifts Aliko Dangote’s world billionaire status

 

Investors angling to buy shares of Dangote Cement are using highest possible daily premium to entice sellers as scramble for the shares of the cement group continues.

The Nation had on Monday reported that Dangote Cement plans to buy back not less than 10 per cent of its issued share capital, in a transaction valued at more than N406 billion.

Since the report, Dangote Cement has sustained a chart-leading rally at the stock market, notching in most trades the highest possible gain in a day.

At the Nigerian stock market, share prices move within a daily band of 10 per cent, implying that a stock may fall or rise as high as 10 per cent.

Dangote Cement recorded the highest gain of 10 per cent yesterday at the Nigerian Exchange (NGX), equivalent to net capital gain of N405.6 billion for the stock.

Dangote Cement’s share price rose by N23.80 to close at N262.30 per share. The company’s market capitalisation thus rose from its opening value of N4.064 trillion to close yesterday at N4.470 trillion.

Alhaji Aliko Dangote, Africa’s richest man, owns more than three-quarter of the cement group, the flagship of his holding company, Dangote Industries Limited.

Dangote Cement had  filed a regulatory notice that it would be seeking to buy back some 1.704 billion shares from its existing 17.04 billion ordinary shares under the share buyback arrangement that may see the company directly mopping up its shares at the stock market.

The Aliko Dangote-led board of directors of Dangote Cement has already summoned an extraordinary general meeting of shareholders to consider and approve the share buyback.

The company stated that the share buyback was in line with its corporate strategy, an indirect way to increase return on equity and shareholder value.

In a regulatory filing, the company explained that the shares will be repurchased out of its profit and such repurchased shares may be held as treasury shares or cancelled, thus leading to reduction in the share capital.

Key extracts of the audited report and accounts of Dangote Cement for the year ended December 31 2021 showed that turnover rose from N1.03 trillion in 2020 to N1.38 trillion in 2021. Nigeria’s contribution to group sales increased from N719.95 billion in 2020 to N993.3 billion in 2021. Other African operations contributed N397.32 billion in 2021 as against N318.68 billion in 2020.

The group sales volume stood at 29.3 metric tonnes, with Nigeria accounting for 18.61 metric tonnes while operations in other countries contributed 10.86 metric tonnes. Gross profit stood at N538.37 billion while net profit after tax closed 2021 at N364.44 billion.

Dangote Cement is sub-Saharan Africa’s largest cement producer with an installed capacity of 45.6 metric tonnes per annum across 10 African countries. It operates a fully integrated “quarry-to-customer” business with activities covering manufacturing, sales, and distribution of cement.

Dangote Cement has a long-term credit rating of AA+ by GCR and Aa2.ng by Moody’s due to its position, significant operational scale and strong financial profile evidenced by the company’s operating and net profit margins relative to regional and global peers, adequate working capital, satisfactory cash flow and low leverage.

Nigerian equities sustained their bullish rally yesterday as increased bargain-hunting spurred the market to a net capital gain of N710 billion, its highest daily gain in recent period.

Benchmark indices at the Nigerian Exchange (NGX) showed average return of 2.90 per cent yesterday, equivalent to net capital gain of N710 billion.

The All Share Index (ASI)-the value based overall index that tracks all share prices at the Exchange, rose from its opening index of 44,929.33 points to close at 46,232.37 points.

Aggregate market value of all quoted equities also rose simultaneously from its opening value of N24.472 trillion to close at N25.182 trillion.

With nearly three gainers to every loser, the positive overall market situation was driven by widespread positive sentiment, especially within the large-cap stocks in the cement industry.

Dangote Cement led 27 other stocks on the gainers’ chart with a gain of N23.80 to close at N262.30. BUA Cement followed with a gain of N7 to close at N79. Guinness Nigeria rose by N2 to close at N63. Vitafoam Nigeria added N1.35 to close at N21.50 while United Capital chalked up 70 kobo to close at N13 per share.

On the negative side, PZ Cussons Nigeria led 10 other stocks with a drop of 30 kobo to close at N9.50. Eterna declined by 27 kobo to close at N5.40. SCOA Nigeria lost 12 kobo to close at N1.17 while Cutix and Nigerian Aviation Handling Company dropped by 10 kobo each to close at N2.02 and N5.75 respectively.

The momentum of activities also improved with the exchange of 187.91 million shares worth N1.84 billion in 3,458 deals.

Market analysts attributed the rally to renewed investors’appetite for value stocks.

Most analysts however remained cautious about the market outlook  urging investors to consider operational fundamentals before investing in any stock.

Governor of Central Bank of Nigeria (CBN) , Mr Godwin Emefiele will address stakeholders on the current economic and financial markets development and the economic outlook for 2023.

Emefiele is expected to address more than 500 leading figures in the banking industry, other business leaders and senior government functionaries at the Annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria (CIBN).

The event, christened ‘’The CBN Governors Day’’, will hold on Friday, November 25, 2022 at Eko Hotels & Suites, Victoria Island, Lagos.

A prestigious and highly anticipated occasion, Mr. Babatunde Sanwo-Olu, Governor, Lagos State and Engr. Seyi Makinde, Governor, Oyo State are expected to deliver the goodwill messages while Dr. Ken Opara, President of CIBN will give the welcome address.

Chairman, Organising Committee of the 57th Annual Bankers Dinner, Mr. Ebenezer Onyeagwu, who is also Managing Director, Zenith Bank Plc has assured that this year’s event will be unique and fun -filled as a number of new initiatives would be added to make it a night to remember.

Onyeagwu who also doubles as the Chairman Body of Bank CEOs equally said awards will be presented to honour and recognise deserving individuals who have distinguished themselves in the banking industry.

Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) has urged commodities exchanges to build robust investors’ protection at the centre of their operations in a bid to gain investors’ confidence and attract more investors.

Director General, Securities and Exchange Commission (SEC), Mr. Lamido Yuguda gave the charge during the presentation of Eko Gold Coins to SEC by the Lagos Futures and Commodities Exchange (LCFE) yesterday  in Abuja.

Yuguda urged the LCFE and the entire value chain to always have investor protection at the core of their work because eventually this is what will make the product succeed.

“Now the gold itself has great value, once you put out your money and buy it, you have value that is incontrovertible, but where we need to be careful is the associated investment product, the derivatives products.

“The derivatives products are built around the product itself. We must have investor protection at heart because if it is taken off and investors have confidence that anytime I want to sell this investment am actually likely to get more than I put in which is the true meaning of investment,” Yuguda said.

He noted that when people invest, they are postponing current consumption for future consumption, need to be paid some returns as a price for that postponement of current consumption.

“So when you sell this product in the future and make gain, you are actually being rewarded, but when you sell the product in the future and you make a loss, you are making two losses. One you are postponing current consumption and two you have not recovered your principal in the future. When people do that, as it happened in the stock market in 2008, you find out that the investor confidence wanes.

“So when we do things we have investor protection and investor interest at heart, you find out that you create a product, everything you are doing tells you this is the direction I am going. So when you see that product deviating, you go back to the drawing table and say I must make sure that investors make money out of this. If we do that the sky is the limit for this product, that you have demonstrated today,” Yuguda said.

He commended the LCFE on the demonstration and presentation and assured them of the commission’s support in the development of the product and in the efforts to enlighten both the market participants and the investors who will put in their money.

“I wish you all the best in this market and whatever the SEC can do to support the development of this gold market we will do. This is an important consideration because this is something that has a dual use. You can use gold as store of value, i.e monetary gold or as jewelry.

“When the price of gold moves in Dubai, the people in Zamfara state they know, people in Lagos state they know and ladies who have gold, and every time they take the gold to the market the gold dealers are actually prepared to buy. This is one product that does not get old, the older the better, because you buy at a cheap price and selling at a much higher price. So this is something that we truly want to support,” Yuguda said.

Chairman, Lagos Commodities and Futures Exchange, Chief Onyewenchukwu Ezeagu said that the core vision of setting up LCFE was to provide a viable structure that will transform the Nigerian commodities market and redefine practice standards which would catalyse economic growth in Nigeria.

He said with support of SEC, the novel foundation has been laid and gradually the commodities ecosystem is being reformed and transformed with development of innovative products and fungible Instruments that are being introduced into the Market.

“One of such products developed by LCFE, “The Eko Gold Coin” is why we have come to pay the ommission this visit today. On July 28, 2022, the Lagos Commodities and Futures Exchange was commissioned by the Executive Governor of Lagos State, His Excellency, Mr. Babajide Olusola Sanwo-Olu with the momentous launch and unveiling of the first physical gold asset tradeable on a commodities exchange in Nigeria, “The Eko Gold Coin”.

“it is my greatest honour and elation to present the first tranche of this exclusive gold coins which is available for purchase at LCFE to you and your esteemed team at the Commission.  Director General Sir, as the saying goes:  ”No one lights a lamp and put it in a secret place; rather it is set on a lampstand, where it gives light to all in the house” Ezeagu said.

He added that the exchange wishes to propagate the information about this novel achievement market-wide, with the adequate assistance and support of the SEC and commended the SEC Management on its unreserved support adding “together we will build a thriving and enduring commodities ecosystem in Nigeria.

Nigerian equities traded yesterday with an underlying risk-off sentiment as investors remained cautious of returns outlook at the stock market.

Benchmark indices at the Nigerian Exchange (NGX) closed yesterday with average decline of 0.08 per cent, equivalent to net capital depreciation of N19 billion.

The All Share Index (ASI)- the value-based common index that tracks all share prices at the Exchange dropped from its opening index of 44,046.94 points to close at 44,011.22 points. Aggregate market value of all quoted equities also dropped from its opening value of N23.991 trillion to close at N23.972 trillion.

With nearly two decliners for every advancer, the negative overall market position was driven by widespread selloffs across the sectors. There were 21 losers against 13 gainers. Unilever Nigeria led the gainers with a gain of 10 per cent to close at N11 per share. Stanbic IBTC Holdings followed with a gain 9.09 per cent to close at N30. University Press rose by 8.93 per cent to close at N1.83. Sovereign Trust Insurance appreciated by 8.33 per cent to close at 26 kobo while Royal Exchange gained 6.85 per cent  to close at 78 kobo  per share.

On the negative side, Guinness Nigeria led with a drop of 9.97 per cent to close at N60.50 per share. SCOA Nigeria followed with a drop of 9.79 per cent to close at N1.29. Associated Bus Company dipped by 8.0 per cent to close at 23 kobo per share. United Capital lost 5.83 per cent to close at N11.30 while Oando dropped by 5.76 per cent to close at N3.60 per share.

The momentum of activities also dropped considerably as total turnover fell by 38.7 per cent to 97.699 million shares worth N847.882 million in 2,980 deals. Transnational Corporation of Nigeria (Transcorp) topped the activity chart with 10.655 million shares valued at N11.583 million. Access Holdings followed with 8.093 million shares worth N68.743 million. Sterling Bank traded 7.415 million shares valued at N10.432 million. Guaranty Trust Holding Company (GTCO) recorded a turnover of 6.997 million shares valued at N134.003 million while Nigerian Aviation Handling Company (NAHCO) recorded 6.995 million shares worth N37.717 million.

“The consolidation of the market just above 44,000 levels signifies tepid market momentum. A subsequent close above this level may be a confirmation of this level. However, if the market fails to hold above 44,000, it may be a confirmation of its resistance level’s strength; as it may struggle to regain this level.

“Investors should pay close attention to global indicators as well as trends under the current global situation. We would like to reiterate that investors should go for stocks with good fundamentals with regards to their portfolio,” analysts at Arthur Steven Asset Management stated at the end of the trading.

Analysts at Afrinvest Securities said they expected that “the bearish performance would be sustained in the absence of any positive catalyst”.

The International Organisation of Securities Commissions (IOSCO) yesterday stressed the importance of enhanced liquidity risk management for mutual funds.

This came as part of assessment of the implementation of selected recommendations to strengthen the liquidity risk management practices for collective investment schemes (CIS) globally.

Jean Paul Servais, IOSCO Board Chairman and Chairman of the Belgium FSMA, said effective liquidity management is crucial to safeguard the interests of investors, to maintain the orderliness and robustness of collective investment schemes and markets, and to reduce systemic risks.

According to him, effective liquidity management therefore contributes to financial stability.

“IOSCO will continue to engage with the industry, its members, and other international bodies to ensure that sound liquidity management practices are implemented,” Servais said.

The review found that larger jurisdictions show a high degree of implementation of regulatory requirements consistent with the objectives of the recommendations.

For the CIS design process, the review identified some challenges with respect to dealing frequency, dealing arrangements and disclosure practices. For day-to-day liquidity management, the Review found that some jurisdictions may need to improve the process of identification of a liquidity shortage before it occurs and provide more guidance on aligning the investment strategy, liquidity profile and redemption policy. Other related areas that may warrant further attention include data availability and third-party providers of liquidity metrics. With regards to contingency planning, the Review found that jurisdictions should further address the availability of liquidity management tools and supplement the current rules and regulations to include requirements that are more specific regarding the use of such tools.

Additionally, the review found that asset managers have a high degree of implementation of the recommendations at the level of policies and practices. While all large global responsible entities described practices that were consistent with the recommendations, improvement might be needed by smaller and less-resourced entities with regard to their liquidity disclosure provisions in their CIS design process. Some weaknesses were also identified in operationalizing contingency plans and activation of liquidity risk management tools.

Sharon Kelly, Chair of the IOSCO Assessment Committee and Senior Analyst, Quebec AMF, said the work of the assessment committee is critical to IOSCO and its members.

Kelly said unless implemented, issuing international standards remains ineffective noting that the findings from the review indicate that IOSCO’s recommendations in this area are broadly well implemented.

“We nevertheless call on both jurisdictions and responsible entities to address the remaining shortcomings identified in our report,” Kelly said.

The findings from the review have informed the FSB’s assessment of the effectiveness of the FSB’s 2017 policy recommendations to address structural vulnerabilities from liquidity mismatch in open ended funds.

Honeywell Group’s Senior Adviser on Government Relations, Oluwayemisi Busari, has said that effective public-private partnership is a must-have in building businesses that transcend generations.

She shared her thoughts with newsmen on the sidelines of the 28th Nigeria Economic Summit (NES28) held in Abuja, on Monday, November 14, 2022.

According to a World Bank report, about 800 million people live without electricity; 2.2 billion people lack safely managed drinking water, with congested and inadequate ports, airports, and roadways—stalling economic growth and international trade. Partnerships between public, private, and social sector institutions help create beneficial social change on a large scale.

Speaking on the importance of government-private sector collaboration, and the role of transformational leadership in economic development, Oluwayemisi Busari said,

“The public and private sectors are like conjoined twins with a symbiotic relationship. Corporate organisations need the government as much as the government requires the support from the private sector. We need to have more relevant policies for businesses, and corporate organisations need to invest in strengthening their relationships with the government by providing the right support.

“At Honeywell Group, we ensure that we work closely with the government to drive the economy. We believe in forming strong partnerships that will enable positive impact. This goes to the core of who we are as a business.”

Strategic collaboration between the public and private sectors plays a critical role in tackling difficult challenges that have proved resistant to government-only, business-only, and non-profit-only solutions. “Nigeria is a blessed country with humongous opportunities. At Honeywell Group, we take pride in putting our money in critical sectors which support the economy and yield profit for our shareholders.”

With a public investment projection of 14.4 per cent of Nigeria’s GDP for the current year compared to 15.2% in the preceding year, a lot still needs to be done. Speaking on Honeywell Group’s involvement in nation building, Busari added that Honeywell Group is empowering young people through its partnership with the Lagos State Employment Trust Fund.

Busari also shed light on how corporate organisations can build effective corporate governance structures and systems. “Integrity, people, processes, performance, and purpose are integral to who we are at Honeywell Group. These tenets form the pillars of our good corporate governance structure. We understand that people are our key assets, and they drive every aspect of the company’s strategy, so we are keen on investing in our people,” Busari said. “

Through strategic investments in its portfolio businesses, Honeywell Group has steadily advanced the economic potential of Nigeria, West Africa and the wider continent globally.”

Senator Ibikunle Amosun has stressed that the capital market remains a veritable tool to rescue the country’s economy from the woods, especially with regards to providing the much needed long term funding.

Senator Amosun, who is the Chairman of the Senate Committee on Capital Market, while commending the SEC on their efforts so far in deepening the market, pledged to encourage companies to get listed in order to further deepen capital market penetration.

Amosun, while speaking during the budget defense exercise by the SEC in Abuja, said: “The Capital market is very important to the development of any economy. When the economy is stressed, the capital market can help. We know that globally, nations have been suffering the effects of Covid-19 and Nigeria is no exception. But we believe that with a vibrant capital market, our growth and development will be faster.

“We now know what the capital market can do to rescue the economy at a time like this. If we have to diversify our economy, the capital market has a role to play and that is why we are here to support you. We will support the capital market for our country to realise these economic goals.”

In his presentation, the Director-General of the SEC, Mr. Lamido Yuguda, while explaining that despite the global economic climate the world over, the Commission has been able to improve its budget performance, also added: “This improvement in our performance is as a result of some of the fees that we introduced at the beginning of this year. When we came to you last year, the Commission was facing a very difficult financial situation. We had various interactions with this Committee and we were asked to think outside the box so that we can bring measures to improve our performance.

“We looked inwards and introduced various measures that drastically cut down our expenditures. We had a staff strength that we said was top heavy and we were able to implement a voluntary early retirement programme in 2021 and concluded in December 2021.”

Global securities regulators under the auspices of the International Organisation for Securities Commissions (IOSCO) yesterday outlined the actions it undertakes to protect investors by mitigating greenwashing in financial markets, to contribute to sustainability disclosure standards benefitting issuers and investors, and to promote well-functioning carbon markets.

IOSCO has set out its expectations that both disclosures and assurance standards should be ready for use by corporates for their end-2024 accounts. Corporate disclosures underpin valuations in financial markets; sustainability disclosures will play the same role.

Chair, IOSCO Board, Jean-Paul Servais said that in 2023, the ISSB will issue its standard for climate disclosures and general requirements while IOSCO will move promptly to decide on endorsement and will develop a support programme for its members to assist them in moving forward immediately should IOSCO decide to endorse these standards.

He said IOSCO also supports the efforts of the ISSB in seeking to be inclusive through its capacity building partnership initiative.

He also highlighted the importance of maximizing interoperability of standards and aligning key climate disclosures. Interoperability across the world will be an important factor in IOSCO’s endorsement decision. IOSCO believes close alignment between the ISSB and those jurisdictions seeking to implement their own sets of standards is essential to ensure capital flows to where it is most needed.

He also stressed the importance of well-functioning carbon markets.

“Carbon markets have a big role to play in moving us to net zero, but they must be made efficient, liquid and free from conflicts of interests and undue political interference.

“We are committed to bringing liquidity, transparency and integrity to these markets, as we have done successfully with all other financial markets,” Servais said while speaking on stage at COP27.

IOSCO also yesterday published a consultation paper setting its recommendations on how to establish sound and well-functioning compliance carbon markets and a discussion paper seeking industry views on the role of financial markets regulators in voluntary carbon markets.

Vice Chair of the Sustainable Finance Task Force, Rodrigo Buenaventura, stressed the importance of mitigating greenwashing to ensure trust underpins sustainable finance.

“Greenwashing can occur throughout the investment value chain. As a result, there is a need to involve all relevant stakeholders in preventing and addressing it. Through its Call for Action, IOSCO is now calling upon all voluntary standard setting bodies and industry associations operating in financial markets to promote specific good practices among their members to counter the risk of greenwashing,” Buenaventura said.

IOSCO published a call for action earlier this week, asking all voluntary standard setting bodies and industry associations operating in financial markets to promote good practices among their members to counter the risk of greenwashing related to asset managers and ESG rating and data providers.

Voluntary initiatives have thus far played an important role in seeking to build the foundations of a well-functioning sustainable finance markets, but IOSCO believed their actions are no longer sufficient. According to IOSCO, governments and regulatory authorities must take further action and IOSCO will work with its members to use the tools within its remit to assist in building sound and well-functioning sustainable finance markets.

Nigerian equities sustained a modest rally yesterday as investors remained cautious about the outlook for the stock market.

Benchmark indices at the Nigerian Exchange (NGX) indicated average gain of 0.04 per cent, equivalent to net capital gain of N9 billion. This nudged the average year-to-date return to 1.78 per cent.

The All Share Index (ASI)- the common value-based index that tracks all share prices at the Exchange, rose from its opening index of 43,461.60 points to close at 43,477.48 points. Aggregate market value of all quoted equities also increased from its opening value of N23.672 trillion to close at N23.681 trillion.

There were 12 advancers against 11 decliners. Dangote Cement led the gainers with a gain of N1.30 to close at N221.30. Nigerian Aviation Handling Company followed with a gain of 15 kobo to close at N5.65. United Bank for Africa rose by 10 kobo to close at N7.10 while Royal Exchange and Champion Breweries added 6.0 kobo each to close at 88 kobo and N3.50 respectively.

On the negative side, Presco led the losers with a drop of N7.90 to close at N120.50. NGX Group dropped by 35 kobo to close at N20.85.  Honeywell Flour Mills declined by 20 kobo to close at N2. Oando depreciated by 18 kobo to close at N3.90. International Breweries dropped by 15 kobo to close at N4 while Access Holdings dipped by 10 kobo to close at N8 per share.

The momentum of activities dropped considerably with the exchange of 133.405 million shares valued at N1.811 billion in 3,078 deals, a drop of about 47 per cent. FBN Holdings topped the activity chart with a turnover of 30.381 million shares valued at N303.740 million. Oando followed with 16.770 million shares worth N64.167 million. Zenith Bank traded 13.473 million shares valued at N268.151 million. UBA traded 9.845 million shares valued at N69.024 million while Guaranty Trust Holding Company (GTCO) transacted 8.966 million shares worth N157.715 million.

Analysts at GTI Securities Limited said they expected “negative sentiments to continue during week, as pre-election risks amplify”.

“The reversal in the key statistics trend at the close of trading indicates a bearish outlook. Hence, we expect the bullish close to be short-lived based on the recently established trend of paltry traded volume on previous trading day.

“We would like to reiterate that investors should go for stocks with good fundamentals with regards to their portfolio,” Arthur Stevens Asset Management stated.