The Nation Newspaper

Tag: investors

  • Economic slowdown: Dangote urges investors not to relent

    Economic slowdown: Dangote urges investors not to relent

    Dangote Group has urged investors to continue to invest in the economy as Nigeria still remains a fertile ground for growing businesses.

    The Manufacturers Association of Nigeria (MAN) recently said the devaluation of the naira and increase in the interest rate are all contributory factors to the increase in the cost of production.

    In a statement, the President, Dangote Group, Alhaji Aliko Dangote said Nigeria still remains a fertile ground for growing business, adding that it is not resting on its oars.

    He said investors should collaborate with government towards ensuring that the country, which is Africa’s biggest economy, remained robust.

    According to him, the company  is committed in its aggressive growth plan towards ensuring that Nigeria becomes net exporter of cement.

    The statement described Nigeria as a land of hope and opportunities and commended the Federal Government for encouraging private investment in the country through the recent listing of Nigeria top 100 companies.

  • Investors wait for Vitafoam’s dividend

    Vitafoam Nigeria Plc will soon announce its dividend for the immediate past year, according to the company’s traditional payment pattern.

    Directors of the foam-manufacturing company had met late last month to consider the financial and operational reports of the foam-manufacturing company. One of the top agenda for the meeting was consideration of the appropriate dividend to be recommended for payment to shareholders.

    At the meeting, the board was scheduled to consider and approve the audited financial statements of the company for the year ended September 30, 2014.

    Vitafoam had announced its dividend for the year ended September 30, 2013 in January 2014, sustaining a cycle of regular payment and general meeting.

    The meeting had also considered the date, time and venue for the annual general meeting as well as closure and payment dates for the dividend recommendation.

    Vitafoam Nigeria has almost predictable pattern. It has been holding its annual general meeting around Ikeja, within the vicinity of its head office. It has also retained its dividend payment rate, in spite of stunted earnings.

    While the details of the earnings are still not available, there are strong indications that the company will sustain its unbroken dividend payment record.

    For the past four consecutive years, the company has distributed annually N246 million as cash dividends to shareholders. Usually, shareholders would receive a dividend per share of 30 kobo for the business year.

    Audited report and accounts of Vitafoam Nigeria for the year ended September 30, 2013 had indicated that sales rose by 12.8 per cent but pre and post tax profits dropped by 22.5 per cent and 18.2 per cent respectively. The largest growth on the profit and loss accounts remains finance expenses, which rose by about 40 per cent. With basic earnings per share dropping from 61 kobo to 50 kobo, the retention of the 30 kobo dividend payout cut dividend cover from 2.03 times to 1.67 times. This downtrend is also evident in the underlying returns and profitability of the company.

    Group’s total sales closed 2013 at N16.34 billion compared with N14.48 billion recorded in 2012. Cost of sales however rose by 16.4 per cent from N9.34 billion to N10.87 billion. Gross profit thus inched up by 6.3 per cent from N5.14 billion to N5.47 billion. Total operating expenses rose by 9.8 per cent to N4.34 billion as against N3.95 billion in previous year. Distribution cost had increased from N945.19 million in 2012 to N955.83 million in 2013 while administrative expenses rose from N3.0 billion to N3.38 billion. Non-core business income increased by 13 per cent from N146 million to N165 million. However, finance expenses jumped by 39.7 per cent to N661 million as against N473 million in previous year. With these, profit before tax dropped by 22.5 per cent from N813 million to N630 million. After taxes, net profit dropped by 18.2 per cent to N410 million in 2013 compared with N502 million in 2012.

    Underlying ratios showed similar outlook. Gross profit margin dropped to 33.5 per cent as against 35.5 per cent in 2012. Profit before tax margin also dipped to 3.9 per cent compared with 5.6 per cent in previous year. Average return on total assets declined from 7.9 per cent to 6.3 per cent while average return on equity dropped from 17.2 per cent to 13.2 per cent.

  • Investors reject rice import licence bazaar

    Investors reject rice import licence bazaar

    The rice market is flooded – no thanks to an import licence bazaar that is threatening to run major investors out of business.

    The industry’s stakeholders have cried out to the Federal Government to save their huge investments.

    They are pleading that the Federal Government should:

    •cancel the recent wave of rice import licences; and

    •keep the government’s self-sufficiency plan on track by protecting those who have invested heavily in the sector, which is now threatened by a flood of imports.

    In a protest letter to the government through the ministers of Finance and Trade and Investments, the stakeholders drew attention to the recent “indiscriminate and wrongful “ award of import licences as well as concessions to businessmen with “absolutely no investments in the rice sector “ who are now “making millions and billions of naira selling those licences to importers in the market”.

    The fear of rice industry sources is that with the current developments “in which new comers without prior experience were favoured over and above operators who are investing billions of naira in line with the Agricultural Transformation Agenda (ATA), their investments may go down the drain.

    “The way it is going, another few years will be wasted and the nation drawn back. With  oil prices falling, the ATA provides the best opportunity for the country to generate alternative revenue by reducing import and in the near future, join the export market. With this sort of policy,this thing is not going to work. The rice import allocations will derail the self-sufficiency efforts,” said the petitioners.

    The industry players across the value chain, with existing substantial investments said the crisis they are facing is “imminent crisis of viability and closure” following the government’s “seemingly biased” allocation of import quotas.

    Besides, if the situation remains, said the petitioner, the government’s Agricultural Transformation Agenda (ATA) may suffer severe reversals. It is their view that the allocations “provide a free ride for smugglers, thereby derailing the objectives on rice self-sufficiency. Nigeria, according to reports, “also stands to lose in excess of N 40 billion through smuggling and loss of Customs revenues.”

    According to a Federal Ministry of Finance stipulated revised lower tariffs for rice imports in a circular dated July 8 2014 (entitled 2014-2017 Fiscal Policy Measures On Rice), bonafide “investors with rice milling capacities and verifiable backward integration programme” are entitled to import rice at the revised tariffs of 10% duty rate and 20% levy.

    Pure rice traders (with no existing capacities/programme) are to pay a duty of 10% and a levy of 60%.

    The allocations released by the Ministry of Agriculture include several beneficiaries who fail to meet the finance ministry’s stipulated criteria.

    Of the 28 companies, only 16 have mills. The remaining 12 have no milling capacities, but account for higher imports than the qualified millers.

    Many of the companies without any proven capacities are selling off the quotas to pure importers for a handsome margin, leading to huge loss of customs revenue and defeating the basic purpose of the allocations – the petitioners allege.

    Some companies have only submitted business plans and expression of interests without verifiable form of investments in the sector may be enjoying waivers amounting to at least N20 billion as per the allocations.

    The basis and pattern of allocations have raised furore and anguish amongst numerous existing investors who were waiting anxiously since July 2014 for the government’s quotas to augment their continuing investments in the rice value chain.

    The gap between demand and supply forming the basis of the allocations seem to have been fixed at 1.5 million tonnes, whereas 2.74 million metric tonnes has been imported, into the country in 2014, including legal imports and smuggled rice from neighbouring countries, such as Benin, Cameroun, Niger and Togo.

  • Investors stake N46.5b on equities amidst recovery

    Investors stake N46.5b on equities amidst recovery

    The Nigerian stock market made a latter-day recovery last week to halt the gripping bearishness that had pervaded the market for eight days. But the gain of N443 billion within two days of recovery on Thursday and Friday could not cover the depreciation in the previous three days. Equities still closed the week with a loss of N151 billion, representing average week-on-week depreciation of 1.49 per cent.

    Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE), which had opened last week at N10.156 trillion, closed the week at N10.005 trillion. The All Share Index (ASI), the composite value-based index that doubles as benchmark for the stock market and country index for Nigeria, dropped from its week’s opening index of 30,763.38 points to close the week at 30,306.51 points.

    Driven by renewed bargain-hunting and cross deals, aggregate turnover was above average at 5.41 billion shares worth N46.47 billion in 22,986 deals. In the previous week, turnover stood at 1.81 billion shares valued at N28.918 billion in 20,677 deals.

    Financial services sector was the most active sector with 4.99 billion shares valued at N37.07 billion traded in 13,641 deals; representing 92.26 per cent and 79.77 per cent of the total equity turnover volume and value respectively. Conglomerates sector followed with a turnover of 186.25 million shares worth N723.491 million in 1,400 deals. Consumer goods sector placed third with 92.022 million shares worth N4.550 billion in 3,784 deals.

    The trio of Union Bank of Nigeria Plc, FBN Holdings Plc and Transnational Corporation of Nigeria Plc were the most active, accounting for 3.96 billion shares worth N29.09 billion in 4,493 deals, representing 73.24 per cent and 62.59 per cent of the total equity turnover volume and value respectively.

    Also, a total of 28,556 units of Exchange Traded Products (ETPs) valued at N531,541 were traded in 21 deals compared with a total of 1,299 units valued at N452,196 traded in 21 deals two weeks ago. A total of 9,000 units of FGN bonds valued at N9.849 million were executed in 5 deals compared with a total of 800 units valued at N825,011 transacted last week in 1 deal.

    Price movement analysis showed that 23 equities appreciated during the week, higher than 10 equities that appreciated in the preceding week. However, 51 equities depreciated, lower than 68 equities that declined in the previous week. One hundred and twenty three equities remained unchanged, higher than 119 that closed flat in earlier week.

  • New vista for investors in agro- marketing

    New vista for investors in agro- marketing

    With the establishment of a model vitamin A cassava sales outlet in Nigeria, the first of its kind in Africa, to link suppliers of cassava products with demand agents (bulking agents, entrepreneurs and consumers) of the products, the search for a robust template to enable the organised private sector see the available profitable investment opportunities in commercial cassava farming, may have started yielding result, writes, Chikodi Okereocha. 

    For farmers and investors along the vitamin A cassava value chain, brighter prospects are here. A model vitamin A cassava sales outlet, the first of its kind in Africa, has been established in Nigeria. The one-stop model sales outlet, known as the ‘Farmers’ Centre’ will act as primary bulking point and link up suppliers of vitamin A cassava products (farmers and processors) with demand agents, like (bulking agents, entrepreneurs and consumers) of the products-stems, roots, fufu mash, garri, fufu, packaged fufu flour, and confectionaries (cakes, chin-chin, tidbits and pies).

    The innovation, which is the result of the ingenuity of HarvestPlus Nigeria in conjunction with its development partners, is seen as a major milestone in the search for a good template to enable the OPS see the available opportunities to invest in commercial cassava farming at a profit.

    “We need partners to buy into this initiative to make it a reality across the length and breadth of the country,” the Country Manager of HarvestPlus,  Dr. Paul Ilona, said, last week, at the  launch of its outlet in Ibadan, Oyo State.

    He said the model outlet is HarvestPlus’ strategy to ensure that Nigerians have access to the bio-fortified crop to address the health challenges of vitamin A deficiency. “We need to establish 300 of this sales’ outlets across Nigeria, so that Nigerians can enjoy the health benefits of the crop,” he said, adding that with over 500,000 households  cultivating the product, and over 550,000  commercial farmers on board in the multiplication of the nutritious crop on over 1,000 hectares of farmland, the need to scale out the product to more Nigerians could not have come at a better time.

    In doing so however, HarvestPlus is not unmindful of the commercial viability of sustaining the demand and supply of vitamin A cassava products, hence the organisation is riding on the back of the opening of the model shop to encourage more investors to take advantage of the profitable business opportunities therein. “Our strategy relies a lot in providing catalysts that will drive investors. We want to see this model become very profitable because it is the profitability that people see that will make them want to invest in it,” Dr. Ilona told The Nation, on the sideline of the launch of the model shop.

    Ilona said there were  plans to hit the Lagos market and other major markets across the country soon. As part of the strategy to woo prospective investors, he explained: “In the next one or two months we are going to ensure that this center functions optimally and that we do the proper book-keeping that will show investors that there is a lot of money coming in. After the two months we will then go to the next stage of sensitisation, bring the investors here so that they will do all the calculations and see the benefits and the opportunities that exist in investing into the system. So, there is a lot of awareness creation that we need to do. We will be going into business education, we shall be relying a lot on advocacy.”

    Dr. Ilona also disclosed that HarvestPlus is riding on its electronic (e-market) platform, which he described as very potent, to attract investors and create markets for vitamin A cassava products. “Last week we got a request from Anambra State Government for almost 9, 000 bundles of vitamin A cassava stems. This is what makes the e-market to be very potent in creating markets. We also got request from Kwara State Government for 500 kilograms of garri. We are not working in Kwara, but somebody knows how to go online and do a request. So, we are hoping that soon, we shall bring all of you (the media) on board to help us communicate to Nigerians so that they can order for their vitamin A garri and fufu online,” he said.

    At a workshop by HarvestPlus, the organisation linked major players and investors along the vitamin A cassava value chain to its e-market portal. It identified bulking agents, cassava stem traders, and investors who were then linked with farmers and cassava processors to create market for vitamin A cassava products. The workshop, which had about 85  participants in attendance, was made up of farmers, processors, entrepreneurs, public and private investors, extension agents from farmer organisations, development and commercial partners of HarvestPlus, and tertiary agriculture institutions.

    Would these strategies do the magic of attracting investors to the business? “yes,” says Ilona. He has reasons to be so optimistic. For a start, Nigeria was among the earliest countries in which new varieties of cassava that are rich in vitamin A were released to farmers in 2011. Following the release of the new cassava varieties to farmers in 2011, over 500, 000 Nigerian households are said to be growing and eating the conventionally bred nutritious vitamin A cassava, which nutritionists say could meet up to 40 per cent of daily needs of Vitamin A for children under five.

    Also, Africa accounts for over half of the total global production of cassava, with Nigeria the single largest producer, producing over 54 million metric tons of cassava annually. Besides, an estimated 100 million Nigerians or 60 per cent of the country’s population eat cassava daily in one form or another. “We have our strength in agriculture,” Ilona maintained, adding, “If we truly want to help Nigeria; if we truly want to add value to the life of an average Nigerian, and we truly want to create jobs for them, agriculture is the area to go. No field in life will pay as much as agriculture does. You plant one grain of maize, it gives you 400 grains. No business gives you 400 per cent profit.”

    Continuing, Ilona asked, rhetorically, “How many oil wells do we have? How many hectares do we have in Nigeria to put into agriculture? According to him, Thailand depends a lot on agriculture, making more money than Nigeria makes from her oil. He said the money Thailand makes from cassava alone is much more than what Nigeria boasts of from oil. “We are always scared, the more scared we are however, the more we will be able to focus on our challxalue chain are seen by not a few analysts and experts as opportunities. The Deputy Director, HarvestPlus, Dr. Ina Schonberg, who launched the model shop, alluded to this when she said: “You (Nigerians) are known all over the world for your entrepreneurial spirit. Nigeria is a leader in Africa. We look forward to seeing Nigeria develop innovative strategies to scale up vitamin A cassavas well as vitamin A maize and build sustainability for the project in the country.”

    For investors willing to throw their hat in the ring, they would be encouraged by the growing preference of the yellow vitamin A cassava over the conventional one. Vitamin A cassava is yellow in colour because it contains high amounts of beta-carotene, unlike common white cassava. Beta-carotene is a naturally occurring substance that the body converts into vitamin A. Experts say that in Nigeria, an estimated 30 per cent of pre-school-aged children and 20 per cent of pregnant women suffer from vitamin A deficiency, resulting in poor vision, blindness and sometimes death. By eating the new yellow cassava variety, women and children can meet almost half their daily needs of vitamin A.

    HarvestPlus developed the nutritious cassava variety through conventional breeding in collaboration with IITA and National Root Crops Research Institute (NRCRI), Umudike, Umuahia, Abia State.

    The launch of the outlets was witnessed by scientists from IITA led by Cassava Breeder, Dr. Elizabeth Parkes; traditional rulers from Idiose, Ibadan, HarvestPlus developmental patners from Akwa-Ibom, Benue, Imo,and Oyo states, farmers, cassava processors, bulking agents, and entrepreneurs.

  • ‘Why foreign investors are dumping Nigerian equities’

    Foreign investors are nervous about Nigeria’s macroeconomic and monetary outlook and increasing political risks as the nation struggles with steep decline in global crude oil price, insecurity and political tension.

    Against the background of a recent exclusive report by The Nation that Nigeria recorded net foreign portfolio investment deficit of N101 billion over the past 10 months, financial and investment experts said the sell pressure from the foreign investors was due to anxieties over the nation’s economy and political situation.

    Chief Executive Officer, Stanbic IBTC Asset Management Limited, Mr. Olumide Oyetan, said the foreign investors were concerned about the adverse effect of the decline in global crude oil price on Nigeria’s macro economy, especially the stability of the nation’s monetary and exchange system.

    According to him, foreign investors were anxious Nigeria may be forced to devalue its currency directly or indirectly, thus exposing them to foreign exchange risks and potential loss of value.

    He however noted that the downtrend at the stock market occasioned by the foreign investors-induced sell pressure presents opportunities for investors to build up their portfolios at good prices.

    Head, research and investment advisory, Sterling Capital Markets, Mr. Sewa Wusu, also said investors were anxious about Nigeria’s macroeconomic and monetary outlook in the light of the declining global oil prices and rising economic risks.

    According to him, foreign investors are pulling out from their Nigerian assets including stocks because of exchange rate risks and concerned over Nigeria’s macroeconomic and monetary stability.

    He said foreign investors were concerned and were pulling out to play safe because of apprehension over implicit and explicit devaluation of Naira, especially in the light of the declining oil prices and its impact on Nigeria as oil-dependent mono-product economy.

    “It’s flight to safety, they are pulling out from Naira-denominated assets including stocks, we also saw that affecting the bond market too,” Wusu said.

    Head, financial advisory, GTI Capital Limited, Mr. Kehinde Hassan, said the political risk was also a contributing factor as investors are worried about the tension in the political terrain as the 2015 elections draw near.

    According to him, the foreign portfolio inflow-outflow scenario may remain unchanged till the end of this year.

    Head, equity research, FBN Capital Limited, Mr. Olubunmi Asaolu, underscored the need for Nigeria to further diversify its economy to stave off negative impact of decline in crude oil price.

    According to him, intense naira pressure due to the recent fall in oil prices has killed off any hopes of a late-year recovery in Nigeria’s equity market. This has further highlighted the consequences of the nation’s huge dependence on the oil sector.

    Asaolu said the falling oil revenues do not bode well for reserves and increase the risk of currency devaluation, which simultaneously lead to the offshore investor community finding ways to exit. This then compounds foreign exchange pressure.

    In its latest Foreign Portfolio Investment (FPI) report, the Nigerian Stock Exchange (NSE) indicated that Nigeria has so far recorded a net foreign portfolio deficit of some N101.41 billion over the past 10 months as divestments significantly outpaced investments by foreign investors.

    The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers. Nigeria presently operates a mono stock exchange, which makes the NSE the sole gateway to the nation’s stock market and the NSE’s benchmark indices, the country indices for Nigeria.

    The NSE report used two key indicators – inflow and outflow – to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy. Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE.

    The latest report, which aggregates data for the 10-month period ended October 31, 2014, showed that foreign portfolio outflow was N676.67 billion as against inflow of N575.26 billion during the period, representing a net deficit of N101.41 billion.

    Foreign investors remained the dominant bloc at the Nigerian stock market. Total foreign transactions during the period stood at N1.25 trillion compared with domestic transactions of N964.74 billion, representing foreign-domestic ratio of 56.5 per cent to 43.4 per cent. Aggregate foreign and domestic transactions stood at N2.22 trillion over the 10-month period.

    Nigerian equities market particularly has witnessed increased foreign divestment in recent period. In October, when foreign transactions accounted for 87.5 per cent of total market transactions, foreign outflows totaled N101.22 billion as against inflow of N52.06 billion. Total transactions stood at N175.10 billion in October, with Nigerian individual and institutional investors only contributing N21.82 billion.

    The foreign portfolio outflow had impacted negatively on the overall market situation at the Nigerian stock market. In October, the stock market lost an average of 8.88 per cent, equivalent to about N1.17 trillion.

    Aggregate market value of all quoted equities closed October at N12.437 trillion compared with the opening value of N13.607 trillion for the month, representing a loss of N1.17 billion. The All Share Index (ASI), the composite value-based index that tracks prices of all quoted equities on the NSE, closed October at 37,550.24 points as against 41,210.10 points recorded as opening index for the month.

    The decline in October pushed the average year-to-date for the past 10 months to -9.14 per cent. This simply amounted to a loss of N789 billion, although the average decline in market capitalisation was moderated by new listings.

    The ASI indicated a 10-month average decline of 9.14 per cent. The ASI, as the pricing barometre for the stock market, serves as the country index and measures the pricing direction of the country’s stocks within a particular period.

    Aggregate market value of all quoted equities had opened this year at N13.226 trillion, indicating a loss of N789 billion. The ASI had opened the year at 41,329.19 points, representing average 10-month return of 9.14 per cent.

  • Foreign investors dump Nigerian equities

    •NSE loses N1.44tr

    Foreign investors are scaling down their Nigerian portfolios as global concerns about Nigeria’s macroeconomic, political and security outlook pressured the stock market to a whooping loss of N1.44 trillion last week.

    Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) dropped to N11.001 trillion at the weekend as against its opening value of N12.437 trillion for the week, representing a loss of N1.44 trillion.

    The All Share Index (ASI), the main composite index that tracks all quoted equities, dropped by 11.54 per cent to 33,216.31 points compared with 37,550.24 points recorded as index-on-board for the week. The spiral decline exacerbated the bearishness that had gripped the market in October.

    Nigerian investors lost an average of 8.88 per cent in October, equivalent to about N1.17 trillion, as the stock market set on a grueling fourth quarter that looks to exacerbate the recession at the equities’ market.

    Aggregate market value of all quoted equities closed October at N12.437 trillion compared with the opening value of N13.607 trillion for the month, representing a loss of N1.17 billion. The ASI closed October at 37,550.24 points as against 41,210.10 points recorded as opening index for the month.

    The decline in October pushed the average year-to-date for the past 10 months to -9.14 per cent. This simply amounted to a loss of N789 billion, although the average decline in market capitalisation was moderated by new listings.

    The average-year-to-date return last week rose to 19.63 per cent.

    Stockbrokers attributed the steep decline to the open market orders by foreign investors exiting their positions in Nigerian equities.

    Analysts at Cowry Asset Management Limited, a top investment banking firm, said the continued onslaught on Nigerian equities was “due to outflows of foreign portfolio investments”.

    A six-month report for the first half ended June 30, 2014 showed that foreign investors accounted for 60.84 per cent of total turnover value in the Nigerian stock market as against 39.16 per cent recorded by Nigerian investors.

    Total foreign transactions stood at N705.15 billion as against N453.91 billion by Nigerian investors. Total transactions during the period thus stood at N1.159 trillion. However, there were more outflows than inflows with net foreign deficit of more than N100 billion. Total foreign outflows stood at N402.63 billion as against foreign inflows of N302.52 billion.

    Earlier reports had indicated general decline in foreign investments as the overall trend continued to show net deficit with outflows more than inflows. While foreign participation declined from 75.25 per cent in April to 45.56 per cent in May, domestic participation more than doubled from 24.75 per cent to 54.44 per cent.

    The five-month report for the period ended May 31, 2014 detailed month-on-month as well as periodic transactions by both foreign investors and Nigerian investors.

    According to the report, the quantity of total foreign transactions dropped by about N47 billion in May to N91.9 billion, its lowest position in four months. Besides, the inflow- the buy side of the foreign transactions, declined by about N24 billion from this year’s high of N65.1 billion in April to N41.3 billion in May, its lowest position in three months.

    Total transactions trended to its high of N201.61 billion in May, driven largely by significant increase in transactions by Nigerian investors, which rose from N45.64 billion in April to N109.75 billion in May.

    Five-month cumulative analysis however still underlined the dominance of foreign investors, who accounted for about 63 per cent of the turnover on the NSE during the period. Aggregate turnover during the period stood at N933.55 billion, consisting of N587.15 billion from foreign investors and N353.41 billion from Nigerian investors.

    Buy-sell analysis of the foreign transactions showed that foreign investors had taken out more than they invested during the period. Foreign outflows stood at N353.41 billion within the period as against inflows of N233.74 billion.

    In April, foreign investors traded N138.79 billion worth of shares including sales transactions of N73.73 billion and buy transactions of N65.06 billion. Total domestic transactions stood at N45.64 billion. Total transactions during the month stood at N184.43 billion.

    The foreign sale-buy trend in April followed the same trend in recent months, although the momentum of buy transactions appeared to be picking up. In the first quarter, nearly two-thirds of foreign portfolio transactions were on the sell side.

    According to the NSE, total foreign outflows stood at N229.03 billion in the first quarter, representing some 64.2 per cent of total foreign transactions during the period. Total foreign inflows stood at N127.41 billion. Altogether, foreign investors’ deals accounted for N356.50 billion during the three-month period, more than 65.11 per cent of total transactions of N547.51 billion. This indicated that Nigerian investors accounted for N191.01 billion, 34.89 per cent of total transactions, during the period.

    Month-on-month analysis showed that there was increase in the momentum of foreign transactions in March 2014, with increases in both sell and buy orders. However, the downtrend continued to dominate transactions. Total foreign outflow in March 2014 stood at N75.42 billion as against inflow of N55.13 billion, totaling N130.55 billion. Foreign investors accounted for 78.25 per cent of total transactions-foreign and domestic, of N166.84 billion in March 2014.

    The flow of investments in March 2014 contrasted sharply with the situation in March 2013 when there were more inflows than outflows. Total foreign inflows totaled 53 per cent of total foreign transactions in March 2013. Total foreign transactions stood at N80.14 billion in March 2013, consisting of inflow of N43.13 billion and outflow of N37.01 billion.

    Month-on-month, the outflows in February are about 107 per cent higher compared to January 2014 and about 183 per cent compared to February 2013. While total transactions at the NSE increased from N181.97 billion in January 2014 to N198.70 billion in February 2014, foreign outflows accounted for the increased tempo of activities and the higher proportion of foreign participation to local participation.

  • Chinese investors stake N18b as foreign investors scout for Nigerian firms

    Chinese investors stake N18b as foreign investors scout for Nigerian firms

    Foreign investors are scouting for viable Nigerian companies and possible turnaround targets as inlets into the economy, emerging talks and deals on mergers and acquisitions have shown.

    Regulatory filings obtained by The Nation indicated that two quoted firms are currently targets of significant foreign investments as foreign investors continue to make enquiries on possible acquisitions, takeovers and strategic equity investments.

    In one of the strategic investments, a leading Chinese Lead and Zinc mining company, Anhui Huishang Metal Corporation Limited, has committed to investing some N18 billion, about $111 million, in a joint venture business with Multiverse Plc, a company quoted on the Nigerian Stock Exchange (NSE).

    According to emerging details of the transaction, Multiverse and Anhui Huishang Metal Corporation (AHMCL) have created a Special Purpose Vehicle (SPV) to explore, develop and mine the huge deposit of Lead and Zinc ores at Multiverse’s Exploration License EL 16879 in Abuni, Awe Local Government of Nasarawa State. Both companies had already signed a Joint Venture Agreement with AMHCL becoming the technical partner to Multiverse.

    AHMCL is committed to spend about $111 million in terms of equipment, exploration and mine technology over a period of four years, starting from this year.

    Already, the Geological Institute of China has conducted a Resource Study to determine the Reserve Estimate of Lead and Zinc at the mines.

    In another similar development, some strategic foreign investors are currently scouting for opportunities in Nigeria’s fast moving consumer goods (FMCGs) industry.

    Regulatory filing indicated that Frigoglass SAIC, Athens, which holds the ultimate majority equity stake in Beta Glass Plc through its Nigerian subsidiary, Frigoglass Industries Nigeria Limited, has been approached by a variety of investors expressing their interest in a wide range of strategic options, such as joint ventures, minority participations or even full acquisition of its Nigerian business. Beta Glass is quoted on the NSE.

    Frigoglass SAIC is commencing an exploratory process relating to strategic options for the glass business stating that the long-term high growth potential of the glass packaging business and the company’s strong position and solid manufacturing base in Nigeria has attracted substantial foreign investors’ interests.

    According to the report, as such foreign interests may represent significant value creation potential, Frigoglass has resolved to evaluate those options in a structured manner and has retained Citigroup Global Markets Limited as its exclusive financial advisor to this effect.

    Investment banking pundits said foreign investors have particularly showed keen interests in the agriculture, financial services and healthcare sectors which were seen as growth sectors of the economy.

    Sources said though the security challenge facing the country appeared to be moderating discussions around many major investments, foreign investors appeared to be discounting the security risks against the huge opportunity presented by Nigeria’s emerging economy.

    In spite of the global economic contraction, Nigerian economy has sustained consecutive years of growth with average yearly growth of more than six per cent.

    The International Monetary Fund (IMF) in its regional economic outlook for the sub-Saharan Africa (SSA) noted that among oil producers, Nigeria’s growth is expected to accelerate from 5.4 per cent to between 7.0 and 7.25 per cent between this year and next year on the back of buoyant non-oil sectors and recovering oil production.

     

     

     

     

  • Investors upbeat about Stanbic IBTC’s N1bn Exchange Traded Fund

    A LOT seems to be working in favour of Stanbic IBTC Asset Management, arguably Nigeria’s leading asset management firm and a member of Standard Bank Group, the largest banking group in Africa, as some investors are already showing positive interest in the initial public offering for the Stanbic IBTC Exchange Traded Fund 30 (ETF 30).

    The Stanbic IBTC Exchange Traded Fund 30 (ETF 30) flagged off on Monday,  September 15, with 10,000,000 units of the Fund available at N100 each at par, is expected to close on Wednesday, October 15, 2014, while the deal hopes to be sealed by December, the bank said.

    The offer, which has received approval from the Securities and Exchange Commission and the Nigerian Stock Exchange, will have a minimum subscription of 10,000 units and multiples of 5,000 units thereafter. Stanbic IBTC Capital Limited is the issuing house to the offer.

    A cross-section of investors and market operators who at a forum recently scored the Stanbic IBTC Exchange Traded Fund 30 (ETF 30) high, saying it has the potential to deepen the market.

    Firing the first salvo, Mr. Kola Yakub, who noted that Exchange Traded Fund was an emerging investment window in the country, expressed optimism that the bank judging by its pedigree has the potential to grow the market segment.

    Echoing similar sentiments, Mr. Bawo Oritsejafor, of UBA Mutual Funds, said the Exchange Traded Fund was an idea whose time has come, even as he urged prospective investors to put their money where their mouth is.

    According to the  Olumide Oyetan, Chief Executive Officer of Stanbic IBTC Asset Management Limited, managers of the Fund, “The opening of the Stanbic IBTC ETF 30 is a direct response to increased investor demand for passive investment strategies that will deliver the market return for the index being tracked, which in this case is the NSE 30 of  The Nigerian Stock Exchange (NSE Our ETF is merely providing  a transparent and flexible structure that allows investors efficiently gain exposure to the securities of these companies that have over time out-performed the broad equity market.”

    He stated that the fund is designed to track the performance of The NSE 30 index which comprises of the top 30 companies listed on The NSE in terms of market capitalisation and liquidity. The index serves as the flagship benchmark for the stock market as it represents 92per cent of The NSE’s market capitalisation and the Stanbic IBTC ETF 30 will replicate the price and yield performance of the index.

    “The fund represents a convenient and efficient way for investors to have access to the top 30 most capitalised and liquid stocks on The NSE, in a cost effective manner. We believe that it will appeal to sophisticated and institutional investors that believe in the growth story of companies listing on The NSE and by extension in the abundant growth opportunities that exist in Nigeria,” added Oyetan.

    An Exchange Traded Fund (“ETF”) is an investment vehicle that tracks an index, a basket of assets, or a commodity but trades like regular shares on a stock exchange. The Fund will invest 100per cent of its assets in the same portfolio of securities that comprise The NSE 30 Index in proportion to their weightings in the Underlying Index.

  • Investors bet on Asia despite U.S. rate threat

    A consensus is emerging among investors that some Asian markets can do well even with the prospect of higher U.S. interest rates on the horizon.

    Fund managers see stepped-up corporate and economic overhauls by leadership in China and India this year, combined with relatively strong growth in Asian economies compared with the rest of the world, as reasons to be bullish. Investors choosing Asia have been rewarded in the past three months. The MSCI Asia ex-Japan index is up 2.4%, topping the 0.4% gain in emerging markets globally and comparable to the 2.6% increase in the S&P 500.

    Last week was a bumpy one for some Asian markets, starting out with bad economic news from China early in the week and anxiety over a Federal Reserve meeting and the Scottish independence vote later in the week. At the same time, investors were selling shares of Asian stocks to fund their purchases of Alibaba Group Holding Ltd. shares in its big U.S. initial public offering, traders said. For the week, the MSCI Asia ex-Japan was off by 1.1%, compared with a 0.7% drop for the MSCI Emerging Markets Index and a 1.3% gain in the S&P 500.

    The Fed said  that it remains on track to end its bond-buying stimulus program in October. It is widely expected to raise interest rates next year. Higher interest rates in the U.S. can hurt Asian assets by drawing investment money into U.S. assets and away from Asia’s markets.

    Despite the concerns over U.S. interest rates, investors say they are selectively investing in Asian markets that they see as cheap and where economic fundamentals have improved or where they believe reforms are on the way.

    Investors continued putting money into Asian emerging markets last month, according to the latest data on money flows from the Institute of International Finance. Stocks and bonds in Asian emerging markets received $9.7 billion in August. While that is down from $23.3 billion in July, Charles Collyns, chief economist at the institute, said last month’s inflows were comparable to the average $15.3 billion that the region  received each month between May and July. In contrast, emerging markets in Europe, the Middle East and Africa saw investors pull out money in August. Data for September are due next week.

    “Flows [to Asia] look more robust because these economies are generally doing quite well and [their] exports [are] benefiting from the recovery of countries tightly linked to the global supply chain,” said Mr. Collyns. “We expect capital flows to Asia to remain solid,” unless the market starts expecting the Fed to raise rates sooner than it does now, he added.

    Still, within Asia, investors are getting pickier. As the time for a likely U.S. interest- rate increase approaches, “we are seeing money be more selective,” says Petr Kocourek, senior portfolio manager of multi-asset solutions at First State Investments.

    Ajay Argal, head of Indian equities at Barings Asset Management, says India is in a better position to withstand higher U.S. interest rates now that it has cut its current-account deficit to less than 2% of gross domestic product.

    “India had quite a big scare last year” with its current-account deficit rising to more than 4.5 per cent of GDP as the prospect of the Fed winding down its stimulus program was announced.

    “We still believe in the long-term fundamentals in India,” and increased investments in its infrastructure should help boost economic growth, says Pruksa Iamthongthong, Asian equities investment manager at Aberdeen Asset Management.

    The firm is still overweight Indian stocks even after taking some profits as the market has outperformed its counterparts in the region this year. India’s S&P BSE Sensex index is up 28% for the year.

    Also looking past the Fed’s tighter monetary stance, asset managers such as Edinburgh-based Standard Life Investments and New York-based AllianceBernstein are investing more in China. The country’s capital accounts are closed, helping protect the domestic economy from the potential impact of a U.S. rate increase.

    AllianceBernstein’s director of research for Asia ex-Japan equities, Rajeev Eyunni, says while a U.S. rate rise might weigh on Chinese sectors like property, which are sensitive to borrowing costs, it hasn’t stopped the firm from building up its exposure there.

    Chinese stocks are cheap and Chinese company profits will benefit from lower commodity prices and increased consumer demand due to higher wages, as well as opportunities for firms to gain market share in still fragmented industries, said Stuart Rae, the firm’s chief investment officer.

    The MSCI Asia ex-Japan index has gotten cheaper on a price-to-book basis compared with the MSCI World Index, suggesting there is “no argument for overheating” in Asia, Mr. Rae said.

    Fund managers in China have also been able to focus on fundamentals in the country, including improvements at its big state-owned enterprises.

    “We’ve generally been underweight SOEs, but now we’re adding,” says Alistair Way, investment director of emerging markets at Standard Life. He cited China’s largest oil refiner, China Petroleum & Chemical Corp., as an example.