The Nation Newspaper

Tag: analysts

  • Analysts predict mixed performance as investors await Q3 earnings

    Large Nigerian banks are expected to post reasonable and steady earnings but most fast moving consumer goods companies and several other financial companies could remain under pressure from sluggish top-line and rising operating expenses in the third quarter.

    As nine-month earnings reports of quoted companies started to trickle in, analysts at FBN Capital said there would be little surprises from the earnings.

    Analysts noted that banks have guided to a slower second half as a reflection of the impact of the worsening macro environment and as such, earnings and margins in the industry will emerge stable.

    Analysts said banks’ profit before provisions and operating expenses, a proxy for revenue growth, might slow down from an average of 18.4 per cent year-on-year in second quarter of 2015 to 13.0 per cent year-on-year in third quarter.

    The preview pointed out that a major contributor to the revenue growth slowdown is the muted loan growth expectations for the sector. After delivering slightly over 25 per cent per annum over the last two years in average loan growth, the previewed banks are expected to post nine per cent loan growth in 2015, much of that having already been achieved in first half.

    “We expect margins to remain stable. Non-interest income continues to be squeezed by the impact of regulatory headwinds. The significant narrowing of growth from the revenue to the profit before tax line is explained by our expectations that asset quality in particular will worsen in second half; it has been defiantly resilience across the board, with most banks reporting non-performing loans (NPL) ratios below five per cent in first half. All the banks we cover guide to their NPL ratios being below five per cent by the end of the year. We believe this guidance is optimistic. However, we do not foresee a meltdown scenario with NPL ratios shooting up to 10 per cent in the near term,” FBN Capital stated.

    The preview noted that while the near term outlook is subdued, there is a good expectation that there would be a growing bifurcation between the larger banks and the tier 2 banks, with the larger banks expected to post decent third quarter results, with profit before tax growth averaging 18 per cent.

    According to analysts, the third quarter results would confirm the position that scale advantages are helping larger banks to gain market share.

    In the non-financial fast-moving consumer goods (FMCG) sector, analysts said the subdued trends witnessed in the first half would persist into the second half of the year as the challenges faced by the consumer companies are not expected to cease in the near term.

    Militating factors against the FMCG stocks included headwinds such as weak demand on the back of a squeeze on household wallets, foreign exchange pressures and insecurity in the North-East. The Naira has depreciated by around 22 per cent against US dollar over the last 12 months.

    Manufacturing firms are however expected to draw on softer raw material prices including sugar, barley palm oil and maize to mitigate macroeconomic headwinds.

    The report indicated that while FMCGs’ third quarter reports may be generally low, many companies including UAC of Nigeria and Unilever Nigeria could record strong bottom-line performance. Analysts generally expected FMCGs’ average third quarter sales and EPS growth of around four per cent and 19 per cent year-on-year.

    According to analysts, Unilever Nigeria and UAC of Nigeria (UACN) are expected to record average growth of 69 per cent in profit before tax in the third quarter. While Unilever Nigeria’s profit before tax growth estimate is primarily due to base effects as operating expenses levels were significant in 2014, UACN’s profit before tax growth forecast is on back of expected improved operating efficiencies and rental income from its investment in UPDC REIT, a new income line in 2015.

     

  • Analysts optimistic on Nestle Nigeria’s future returns

    Nestle Nigeria Plc has a strong potential to generate double-digit return on investment in the year ahead, according to analysts at FSDH Securities Limited.

    Analysts at FSDH Securities placed “buy” on the shares of Nestle Nigeria, citing the company’s historic performance and ongoing initiatives.

    Nestle Nigeria recently distributed N13.87 billion to shareholders as final dividends for the immediate past business year ended December 31, 2014. Nestle Nigeria had earlier distributed N7.93 billion as interim dividends, bringing total dividend for the year to N21.8 billion.

    Shareholders received a final dividend per share of N17.50, bringing total dividend per share for the year to N27.50. The final dividend was paid from the pioneer profits of the company and as such it was not subjected to deduction of withholding tax.

    Key extracts of the audited report and accounts of the company for the year ended December 31, 2014 showed that turnover rose by eight per cent from N133.08 billion in 2013 to N143.3 billion in 2014. Profit before tax however dropped from N26.05 billion in 2013 to N24.4 billion in 2014. Profit after tax was almost unchanged at N22.24 billion in 2014 as against N22.26 billion in 2013.

    Analysts at FSDH said they considered Nestle Nigeria’s investment and innovation in plants, which should improve efficiency, technical partnership with the parent company and large market size in Nigeria and stable growing population as major drivers in deciding the future outlook of the stock.

    Analysts also noted that Nestle Nigeria’s products have strong demand at all levels, which could moderate the potential downsides that may be created by the prevailing stiff competition in the industry and foreign exchange exposure and possibility of a further depreciation.

    “Our fair value for Nestlé Nigeria Plc share price is N937.29 per share and the stock is currently trading at N850.10. The total return, a combination of the capital appreciation and the dividend, generates 12.68 per cent. Going by historic trend the company shares would always trade at a premium to its fair value,” FSDH Securities stated.

  • Analysts place buy on Julius Berger over growth prospects

    Mresorts Savings and Loans eyes higher turnover with new products

    Resorts Savings and Loans Plc plans to grow its top-line with the introduction of two new products to meet the strategic needs of its customers as well as encourage a savings culture among the populace.

    The products-Resort Daily Savings Account (REDSA) and Resort Group Savings Account (REGSA), were launched recently in Lagos, as part of a drive to encourage long term savings by customers.

    Head, treasury, Resorts Savings and Loans Plc, Mr. Jeff Ejemai said the products were specially designed to encourage “little by little savings targeted towards solving yearly and strategic needs” including mortgage loan, payment of rents, school fees, land purchase and other sundry needs.

    He said with the products, the bank’s customer can be assured that their most important needs would be met without much hassle.

    “We reasoned that Nigerians often have the problem of meeting up with some of their needs that sometimes leads to some form of embarrassment for them. So, to forestall such embarrassment, we came up with the products to assist them save some funds while not feeling the pain of saving,” Ejemai said.

    He said customers who subscribe to the products have opportunity of participating in the bank’s yearly raffle draw and are entitled to business advisory and training as well as higher annual interest rate and personal accident insurance cover.

    According to him, the group savings account is targeted at traders. Existing customers who form themselves into groups can also benefit from the product which entitles them to an automatic loan.

    He added that prospective customers who form themselves to groups of between 10 and 20 people are also eligible to benefit from the product.

    He outlined that the group is expected to maintain a group purse with contributions of a minimum of N1000 from each member of the group. The operation of the account can is dynamic and accessible by all.

    “These accounts are serviced by contributing daily, weekly or monthly towards solving yearly needs. Individuals are expected to save in different categories of N500, N1,000, N5,000 and N10,000. The account is maintained for a minimum of one year without any withdrawal to be able to qualify for a raffle draw at the end of every year. There are exciting gifts to be won,” Ejemai said.

  • Analysts: Govt needs N575b to subsidise fuel yearly

    The Federal government will require N575 billion yearly for fuel subsidy if imported petrol is N134.65 per litre, investment analysts have said.

    The analysts with FBN Capital, an investment and research firm said with the Petroleum Products Pricing Regulatory Agency (PPPRA) statistics pegging the cost of imported petrol at N134.65/ litre, including distributors’ margins, the government would require that amount for subsidy.

    In a report released on Monday, the Head, Equities Market, Olubunmi Asaolu, said the inherent subsidy of N47.65/ litre would, on the basis of industry estimates of daily petrol consumption, amount to N575 billion a year.

    It acknowledged that in the past few weeks, there has been a slowdown in economic activity because of fuel scarcity engendered by rift between the government and marketers over unpaid subsidy claims.

    “The marketers are said to have stopped importing refined products. They are pressing for payments due to concerns that the incoming administration will subject subsidy claims to greater scrutiny, and may remove the remaining subsidies altogether. Government indebtedness to petroleum marketers is estimated at N200 billion ($1 billion),” Asaolu said.

    Continuing, it reiterated that earlier in the year, spot prices for UK Brent/Bonny Light crude were below $50/barrel, prompting the  government to cut the retail price for premium motor spirit (PMS) to N87/ litre.

    Asaolu said in the 2014 budget, N971 billion was provided for fuel subsidy, adding in 2015, it is N143 billion (N100 billion for petrol and N43 billion for kerosene).

    This latter yearly allocation was always too low, given the backlog of unpaid claims. It may well also prove too low in view of the recovery in the crude price. This budget assumes an average of $53/ barrel.

    “There are credit implications of the face-off. The downstream oil and gas industry accounts for an upper-teens percentage of banks’ total lending on average. Historically, it has accounted for a relatively high proportion of non-performing loans. Banks are unwilling to fund oil imports due to the heightened risk,” Asaolu said.

    He explained that the Central Bank of Nigeria’s (CBN’s) External Sector Development Report for the fourth quarter of last year shows that oil imports accounted for 30 per cent of visible trade (or $2.7 billion) in its analysis of foreign exchange utilisation in that quarter.

    “The new administration will also have a decision to take over the Nigeria National Petroleum Corporation (NNPC’s) four refineries: the status quo (unlikely), sale or liquidation. On the subsidies, our hope is that it will opt for deregulation and so attract new greenfield projects for the refining of petroleum products,” he added.

     

  • Analysts place buy on Julius Berger over growth prospects

    Market pundits have said Julius Berger Nigeria has the potential to record more than 70 per cent capital appreciation over the next 12 months as the leading construction company works on major public and private sector contracts.

    Analysts at GTI Securities said Julius Berger Nigeria’s share price, which opened yesterday at N51.70 per share, has a fair value of N87.70 within a 12-month investment horizon, indicating potential capital gain of 69.6 per cent.

    Analysts said they believed that Julius Berger Nigeria is set to immensely benefit from Nigerian government’s bid to diversify the economy with focus on infrastructure development in agriculture, power and transportation among others.

    According to them, the construction company would also benefit from international expansion to African countries, which are seeking to rebuild infrastructure to enhance economic development.

    “We have placed a positive rating on the stock of Julius Berger Nigeria because the stock is undervalued based on our analysis. Our estimates were majorly driven by the company’s fairly seesaw revenue growth trend along with its strong presence in the Nigerian construction sector as it possesses a robust project portfolio due to the high caliber projects it undertakes many of which are government funded projects,” GTI Securities stated.

    Analysts projected turnover of N203.05 billion and net profit of N8.31 billion Julius Berger Nigeria in the year.

    They noted that Julius Berger Nigeria has positioned itself to benefit from the need for economic diversification in Nigeria citing the recent announcement of plans to diversify its line of business to include power plant construction after announcing partnership with General Electric for the construction of the “Project Emerald” which is worth an estimated N50 billion.

    “Overall, we believe that the company’s ability to increase its net profit despite the rising finance cost resulting from slump in oil prices which adversely affected government’s ability to service on-going contracts remains impressive. We are moderately optimistic that the company will record a further improvement in net profit in 2015 compared to 2014,” analysts stated.

    They said the company’s overall performance would be driven by its large portfolio of new projects and its competitive advantage in the area of public private partnerships (PPP), which may be a preferred financing model as the new government struggles with declining revenues.

    “As expected, the company has maintained its position as the giant of the construction sector as revenue remains strong. Julius Berger has consistently maintained its position as preferred bidder for major government funded infrastructural project. It has also expanded it scope of business to meet rising economic demands. We acknowledge that cost of finance is still a challenge considering government’s bureaucracy in payment for executed projects. However, we expect that a stronger growth in revenue would cushion this effect on bottom – line in the succeeding years,” the equity analysis report stated.

    Analysts said they placed a buy recommendation on the shares of Julius Berger Nigeria because it is trading less than their target price with focus on the 2015 estimates adding that the good dividend culture of the company and its relative price stability still makes it a favorite among institutional investors, especially during a period of heightened price volatility.

    Some of the contracts that were recently awarded to Julius Berger Nigeria included the second River Niger bridge project worth N130 billion, Apapa–Oshodi Expressway Section 2, Phase II, estimated at N15 billion and the National Assembly Phase III, Part 3, Abuja, estimated at N40.2 billion.

     

  • Analysts laud UBA as earnings rise to N290b

    United Bank for Africa (UBA) Plc outperformed analysts’ expectations as it released its audited report and accounts for the year ended December 31, 2014, showing increase in gross earnings to N290.02 billion.

    Key extracts of the audited report and accounts of UBA for the year ended December 31, 2014 showed that gross earnings rose from N264.69 billion in 2013 to N290.02 billion in 2014. Interest income had grown from N185.7 billion to N196.68 billion while net interest income increased from N103.23 billion to N106.13 billion.

    Exotix Partners LLP, a global finance and investment firm with offices in major global financial centres and significant imprints in Africa, said UBA’s performance showed “positive underlying trends” and the “earnings better than expected”.

    Exotix coordinates its global operations through five major offices in London, New York, Lagos, Dubai and Nairobi. The Exotix report was signed off by Kato Mukuru and Ronak Ghadia, chartered financial analysts.

    The audited report showed that the banking group substantially consolidated its African operations and enhanced productivity across the group, which helped to cushion impacts of industry-wide regulatory headwinds.

    The bank’s total assets rose to N2.76 trillion in 2014 as against N2.64 trillion in 2013 while shareholders’ funds increased from N235.04 billion to N265.41 billion. The bottom-line performance was however muted by midline costs. Profit before tax stood at N56.2 billion in 2014 as against N56.06 billion in 2013. Profit after tax improved from N46.60 billion in 2013 to N47.91 billion. With this, earnings per share improved slightly from N1.52 in 2013 to N1.56 in 2014. Customer deposits remained stable at N2.17 trillion in 2014.  Buoyed by this stability, UBA expanded its support for businesses on the continent by increasing its loan book by 14 per cent to N1.072 trillion in 2014.

    Group Managing Director, United Bank for Africa (UBA) Mr. Phillips Oduoza said the bank remained focus on its assets quality and efficiency citing its low classified  assets.

    “We expanded our loan book without compromising our focus on asset quality. Notably, our non-performing loan ratio remains one of the best-in-class at 1.6 per cent, as we responsibly grew risk assets in line with our defined risk appetite and target markets,” Oduoza said.

    According to him, the bank was also able to grow shareholders’ fund significantly by 13 per cent to N265 billion in 2014 from N235 billion in 2013, with a capital adequacy ratio above regulatory requirement.

    He said the bank would leverage on its adequate capitalisation and liquidity to grow market share across target business lines.

    He noted that the proposed cash dividend of 10 kobo per share reflects the balance between giving short term return to investors and the commitment to create sustainable long term value to all shareholders.

    “In arriving at the proposed dividend, the board considered a number of factors including shareholders dividend expectation, capital requirements for growth opportunities, and increasing regulatory capital requirements under Basel II. The board decided in favor of relatively higher earnings retention to strengthen the capital base, in line with the strategic goal of increasing our share of the market across all our business segments. We remain committed to creating sustainable long term value to all shareholders,”  Oduoza said.

    Group chief financial officer, United Bank for Africa (UBA) Plc, Ugo Nwaghodoh expressed optimism that the bank will continue to record a steady and sustained increase in its profitability by leveraging on low cost stable funds as well as rising opportunities in the bank’s target markets in Nigeria and across Africa.

    “The performance of our African business was boosted by increased cross selling of our products and a number of other strategic initiatives. As we gain critical mass in the African market, we look forward to increased earnings in line with the diversification of our business across Africa,” Nwaghodoh said.

    Analysts at Exotix noted that UBA’s strong volume growth in-non oil sectors pointing out that while net loans grew by 14.3 per cent to N1.05 trillion in 2014, UBA’s growth was driven mainly by the manufacturing and non-oil sectors, as against noted trend among other Nigerian banks.

    Analysts also cited strong net interest income growth as a positive factor in the report.

     

  • FBN Holdings, UBA, Flour Mills are the best stocks to buy, say analysts

    FBN Holdings, UBA, Flour Mills are the best stocks to buy, say analysts

    Investors seeking to more than double their money within the next 12 months should consider stakes in FBN Holdings Plc, United Bank for Africa (UBA) Plc and Flour Mills of Nigeria Plc, according to analysts at Afrinvest Securities.

    In the latest review of the Nigerian stock market, analysts at Afrinvest Securities indicated that while the equities market had started on a tumultuous note, there are significant buy opportunities in the stock market as several stocks have potential to make between double and three-digit percentage returns over the next 12 months.

    Analysts said FBN Holdings, UBA and Flour Mills have the greatest potential in terms of capital appreciation. FBN Holdings was estimated to have the possibility of appreciating by 177.5 per cent during the period. UBA also has potential upside value of 174.7 per cent while Flour Mills was expected to grow by as much as 171.9 per cent.

    According to analysts, FBN Holdings’ share price could rise to N22.17 over the next 12 months while UBA and Flour Mills could be trading at N10.41 and N96.20 respectively.

    FBN Holdings opened this week at N7.99 while UBA and Flour Mills started trading at N3.79 and N35.38 respectively.

    Other stocks with potential for three-digit growth included FCMB Group Plc, with possible appreciation of 162.6 per cent, Diamond Bank, 133.1 per cent; Access Bank, 124.8 per cent; Skye Bank, 120.8 per cent; Aiico Insurance, 117.9 per cent and Dangote Sugar Refinery, which has upside potential of 109.6 per cent.

    Investors in Nigerian equities started this year with the unnerving hangover of the previous year as quoted equities lost about N1.5 trillion in the first week of the New Year. With consecutive decline all through the five trading sessions, last week saw most equities dropping to their lowest levels.

    Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) closed last week at a low of N9.980 trillion as against its opening value of N11.478 trillion, representing a loss of N1.498 trillion. The benchmark index at the NSE, the All Share Index (ASI)- a value-based index that tracks prices of all quoted equities and also doubles as country index for Nigeria, indicated a week-on-week average decline of 13.05 per cent. The ASI dropped from its opening index of 34,657.15 points to close at 30,143.02 points.

    The performance of quoted equities last week raised the spectre of the previous year. Nigerian equities ranked among the worst-performing stocks globally in 2014 with average full-year decline of 16.14 per cent. Aggregate market value of all quoted equities closed 2014 at N13.226 trillion as against its opening value of N11.477 trillion for the year, indicating a loss of N1.75 trillion during the year.

    Analysts at Afrinvest attributed the bearish market situation to weak macroeconomic fundamentals pointing out that the steep decline in crude oil price and increasing Nigeria’s vulnerability were making investors to be anxious.

    Afrinvest’s stock recommendation may further encourage investors’ participation in the ongoing supplementary issue by UBA. UBA is raising funds from existing shareholders through a rights issue of one for 10 ordinary shares held as at October 15, 2014. The offer price is N4. Application for the rights issue, which opened on December 29, 2014, will close on February 5, 2015.

    UBA plans to use the net proceeds of the N13b rights issue to strengthen its business units across Africa.

    UBA had in 2013 launched a new business development plan aimed at consolidating the bank’s position as a leading pan-African global financial services group. The three-year business development plan codenamed Project Alpha was designed as the group’s next focus of strategic transformation and it contained key transformation initiatives.

    Group managing director, United Bank for Africa (UBA), Mr. Phillips Oduoza, said the new business plan was designed to consolidate the group’s strategic positioning and fully capture the opportunities from Africa’s economic renaissance.

    According to him, Project Alpha is focused on leveraging all aspects of the group’s footprint, product offerings and operational capability, allowing a commitment to customer service transformation, market share growth, the implementation of key e-banking initiatives across all segments, the growth of corporate and trade finance capabilities.

    He outlined that a critical aspect of the Project Alpha initiative is the focus on UBA Africa, which is projected to contribute about 50 per cent to the group by 2016.

     

  • Analysts optimistic on Nigerian equities

    Nigerian equities may start a modest rebound towards the end of this quarter and thereafter enter a major recovery phase as investors begin to see clearer picture of the macroeconomic and political direction.

    Most analysts said they expected the stock market to start a modest recovery towards the end of this quarter after the presidential and National Assembly elections.

    Analysts said the current downtrend at the stock market was due mainly to anxieties over the political transition and the clouded outlook for fiscal and monetary directions. These concerns are however expected to reduce after the elections.

    Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) dropped by N1.498 trillion to close last week at a low of N9.980 trillion as against its opening value of N11.478 trillion. The benchmark index at the NSE, the All Share Index (ASI)- a value-based index that tracks prices of all quoted equities and also doubles as country index for Nigeria, indicated a week-on-week average decline of 13.05 per cent. The ASI dropped from its opening index of 34,657.15 points to close at 30,143.02 points.

    The performance in the first week of the year raised the spectre of the previous year. Nigerian equities ranked among the worst-performing stocks globally in 2014 with average full-year decline of 16.14 per cent. Aggregate market value of all quoted equities closed 2014 at N13.226 trillion as against its opening value of N11.477 trillion for the year, indicating a loss of N1.75 trillion during the year.

    Managing director, Finawell Capital Limited, Mr. Tunde Oyekunle said the bearish state of the market is due to the current state of the Nigerian economy.

    “Specifically, the economic and political risk of the country is currently too high for multinational and foreign investors. Factors influencing this includes dwindling price of Brent Crude Oil, uncertainly of the election transformation period, decreasing value of Naira and unfavourable foreign exchange. Local investors are further affected by the increased volatility of the market due to increase in movement band from daily allowable change of five per cent to 10 per cent,” Oyekunle said.

    He said the market situation would improve towards the end of the first quarter as the political risks subside.

    Group head, research, Lead Capital Plc, Mr. Sadiq Waziri, attributed the current downtrend to the pump and dump technique adopted by most traders at the NSE.

    According to him, traders forced the market to close high towards the end of 2014 by pumping up the share prices in order to ensure that their portfolios closed the year on a good note.

    “They all adopted the same tactics to close the market high and dump in the New Year. Since everybody has the same strategy, the market will suffer for it,” Waziri pointed out.

    He however noted that the market situation will moderate after the February elections, adding that investors should expect stronger performance after the swearing in of the newly elected government.

    Head, research and intelligence, BGL Plc, Mr. Femi Ademola, said the security challenges in the North East, which is scaring away many strategic investors and the continuous decline in oil price with its effect on exchange rate stability as well as political uncertainty had created a risk scenario that is making investors to be afraid to risk their money into the market.

    According to him, most investors would now rather sell down and keep their assets in cash and other more liquid form than staking on quoted equities.

    He outlined that the crude oil price outlook is not favourable to the country in the short term since this will affect Nigeria’s foreign earnings capacity and may lead to further devaluation.

    “Since we adopt a semi-fixed exchange regime, using our foreign reserve to defend the currency, the reduced earnings capacity of country will continue to put pressure on the exchange rate and may necessitate devaluation in the short term. Devaluation would lead to losses on existing investment by foreign investors in the country; hence they would rather wait until after the devaluation before they commence investment,” Ademola said.

    He however added that most of the identified problems are transitory and the market may ride over remaining concerns after the February elections.

    “The elections are five weeks away and while some skirmishes are likely, it is expected to be largely free and fair with competing parties expected to handle the fall out in matured way and seek legal redress where necessary. Once the election is favourably settled, the security challenges are expectedly to be dealt with swiftly by whoever wins the election. This is because while a new government would like to score political points by quickly resolving the problem, the continuing administration would be more assertive to combat the menace given the new mandate that it has,” Ademola said.

     

     

  • External reserves may drop to $30b, say analysts

    External reserves may drop to $30b, say analysts

    Analysts at Financial Derivatives Company (FDC) see external reserves dropping to $30 billion from current $34.5 billion in the coming months.

    Its Chief Executive, Bismarck Rewane said the naira under pressure, could cross N200 to a dollar and that further depreciation of three to five per cent at the official market is expected.

    He explained that said the Monetary Policy Rate (MPR) will be reduced cumulatively by 1.5 per cent per annum adding that economic growth is weaker but outlook remains positive.

    Rewane had said the reserves which stood at $37.87 billion as at April 3, had about $10 billion of which is in hot money. He said reversal of capital flows into the economy will intensify, further depleting external reserves.

    Hot money is the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts.

    These speculative capital flows are called “hot money” because they can move very quickly in and out of markets, potentially leading to market instability.

    Rewane said there would be further external sector imbalances in a run-up to this year’s elections even as equity market imbalance is likely to increase with stock market correction continuing.

    He said spill over from Russia-Ukraine crisis poses downside risks for neighbouring countries and Europe with 20 per cent of European Union (EU’s) energy consumption is from Russia with 32.5 per cent of Nigeria’s imports coming from the EU.

    He said countries that have tried to prop up their currencies stood the risk of depleting their foreign exchange reserves adding that Nigeria’s Gross Domestic Product (GDP) growth is estimated to spike to 7.22 per cent during the past quarter as against 7.72 per cent recorded last December.

    GDP rebasing is expected to boost Nigeria’s estimated size by about 40 to 70 per cent and is almost certain to push it ahead of South Africa to become Africa’s biggest economy.

    The National Bureau of Statistics (NBS) changed the base year for calculating Nigeria’s GDP to 2010 from 1990 to reflect changes in the economy of Africa’s most populous nation, and more accurately assess the size of its current output.

    Most governments overhaul GDP calculations every few years to reflect changes in output and consumption, but Nigeria has not done so since 1990, meaning sectors such as the internet, telephoney and even the “Nollywood” film industry have had to be newly factored in to give a truer picture.

    He said Nigeria’s GDP growth is accelerating but hampered by insecurity, which currently has five to eight per cent negative impact on nominal GDP.

    Also, data from the CBN showed that gross external reserves as at December 31, 2013 stood at $42.85 billion, representing a decrease of $ 0.98 billion or 2.23 per cent compared with $43.83 billion at end- December 2012.

    The reserves have further dropped to $38.79 billion as at March 12 after dropping by $3 billion in one month.

    The reserves were at $42.77 billion on February 3, and dropped to $39.72 billion on March 3. It has further dropped to $37.8 billion in March 28. Analysts said the reserves declined as imports of fuel and foods soared.

  • Analysts cautious as Euro shows early dive

    The euro is starting 2015 with a tumble against the dollar, raising the prospect that for a second year analysts weren’t bearish enough in their forecasts.

    In only its third trading day, the single currency has slumped below the median of more than 50 strategist estimates in a Bloomberg survey for both the first and second quarters. Falling as much as 1.2 per cent today and grazing $1.18, their target for year-end, the euro touched its weakest since March 2006. Should it close below that level this week, trading patterns suggest the euro-dollar pair, the world’s most-traded, could reach the 2005 low of $1.1640.

    The moves add to the euro’s biggest annual decline since 2005 amid speculation the European Central Bank is closer to starting large-scale government bond purchases, while the Federal Reserve prepares to raise interest rates from a record low near zero.

    ECB President Mario Draghi last week gave his strongest hint yet that quantitative easing could be imminent, saying policy makers must act against the risk of deflation.

    “We’re basically plumbing close-to-decade lows now, and I think the likelihood is that we see a continued breakdown,” a strategist at Citigroup Inc. in Singapore, Todd Elmer, said by phone today. “When you look at consensus forecasts for the euro, they likely are underestimating the downside.”

    Elmer sees United States dollar strength contributing more to the depreciation in the exchange rate this year than last year. Intercontinental Exchange Inc.’s Dollar Index, which measures the U.S. currency against major peers, rose to its strongest level since December 2005 today.

    Citigroup joined Barclays Plc as the most bearish forecaster of the euro for end-2015, predicting a drop to $1.07, a level unseen since April 2003.

    Strategists were too timid with their call for a decline in 2014 to $1.28. The single currency was at $1.1934 at 10:28 a.m. in New York and touched as low as $1.1864. It slid 12 percent last year to $1.2098.

    “The euro was so close to such a keenly watched round number as $1.20 that we didn’t need any fresh news to tip us over the cliff today, it just needed a little bit of a nudge,” Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney, said by phone. “Even so, the scale of the move was still surprising. It was pretty wild.”

    The euro-dollar pair accounts for almost a quarter of all trades in the $5.3 trillion a day currency market, according to the latest triennial survey by the Bank for International Settlements in Basel, Switzerland.

    Today’s Economic data forecast is expected to show euro-area consumer prices dropped 0.1 percent in December from a year earlier, the first decline since 2009, while the U.S. unemployment rate fell to 5.7 percent, the lowest since June 2008.

    “There’s a triple whammy of events that look set to trip up the single currency,” Steve Barrow, head of Group of 10 strategy at Standard Bank Plc in London, wrote in a client note today, referring to the inflation report, possible asset purchases by the ECB and a snap election in Greece. The euro will drop to $1.10 in the next 12 months, and much of that decline could come in early 2015, Barrow said.

    Adding additional uncertainty to the euro-area outlook, Greece began an election campaign that polls indicate may see victory for the anti-austerity Syriza party this month, potentially jeopardizing the country’s place in the currency union.

    If the euro closes under $1.18 this week, that would take it below a descending trend channel stretching back to July, and would herald a drop to as low $1.1640, according to Yusuke Fujishima, a senior manager for currency and financial product trading at Mitsubishi UFJ Trust and Banking Corp.

    The euro last week formed a bearish pattern on its weekly candlestick chart called a black closing marubozu — meaning shaven-headed monk in Japanese — which has a long colored bar with an upper shadow but no lower one.

    “This is an extremely strong sign of further euro weakness,” Fujishima said today by phone from Osaka. “We need to watch the battle for $1.18 very carefully this week.”