14 Dec

Daily Watch – Reps approve MTEF, Nigerian stocks returned peanuts in 2016

  • The House of Representatives on Tuesday adopted the 2017 to 2019 MTEF and Fiscal Strategy Paper. The House fixed the exchange rate of the naira to the American dollar at ₦350 as against the ₦290 recommended by the executive. The House concurred on the oil benchmark of $42.50 per barrel with a proposed daily production of 2.2 million barrels per day. Consequently, the House mandated its joint committees on Finance, Appropriation, National Planning and Economic Development, Legislative Budget and Research and Aids, Loans and Debt Management to further scrutinise the document. Buhari had on October 4, forwarded a request to the National Assembly seeking the approval of the MTEF and FSP.
  • Nigeria plans to sell ₦83.24 billion ($264.25 million) in short-dated treasury bills at an auction on Dec. 22, the CBN said on Tuesday. The regulator said it will sell ₦28.12 billion in three-month papers and ₦55.12 billion in six-month bills, using the Dutch Auction system. Payment would be made the day after the auction. Nigeria issues treasury bills to fund its budget deficit, manage banking system liquidity and curb rising inflation.
  • The FG has given the approval for the construction of three deep seaports, and approved a 50 year concession period for Ibom Deep Sea Port (IDSP) to help attract investors. The Director General of the Infrastructure Concession Regulatory Commission (ICRC), Aminu Diko, confirmed the long concession period at the Ibom Deep Sea Port stakeholders visioning workshop. Diko said three deep seaports had been captured in the nation’s port development master plan – Ibom Deep Seaport in Akwa Ibom, Badagry Deep Seaport and Lekki Deep Seaport, both in Lagos. The Chairperson of the Technical Committee for the Realisation of Ibom Deep Seaport, Mfon Usoro said IDSP would have sufficient cargo and sound throughput to remain viable even if all Nigeria’s ports operated at maximum capacity. Equity participation in the project is jointly shared between Akwa-Ibom (20 percent), the private sector (60 percent), while a 20 percent stake is floating for interested private investors or other state governments within the region to grab.
  • Pension funds have come under pressure from increased withdrawals, as the country’s biting recession is causing many Nigerians to lose their jobs. Figures obtained from the National Pension Commission (PenCom) Q3 report for the period ended September 2016 show that a total of 177,284 people aged less than 50 years have so far accessed about 25 percent of their Retirement Savings Accounts (RSA) balance in the sum of ₦55.46 billion, having been disengaged from work in the last four months or more. The 2016 figures represent a significant 41 percent increase in the number of people taking money from their pension funds, compared to the 125, 295 cumulative withdrawals recorded in the same period of 2015. Withdrawals also rose 71% from ₦33 billion in the same period of 2015, showing that more Nigerians are turning to their accumulated pension funds as they lose their incomes. The figures also show that the private sector accounted for 90 percent of disengaged workers. 4.5 million Nigerians have lost their jobs between the Q3 2015 and Q2 2016 according to NBS figures.
  • The top ten most capitalised stocks on the NSE delivered an average return of 8.6 percent YTD, outperforming the NSE’s Main-Board Index (NSEMB), which posted a YTD return of -9.8 percent. A BusinessDay analysis of returns data show that the ten least capitalised stocks with mark cap. of N2.9 billion and equivalent to less than 1 percent of the value of the exchange, posted an average return of -3.51 percent, less than the return of the most capitalised stocks, but higher than the NSEMB year-to-date (YTD) returns. Seplat Petroleum, the 8th most capitalised stock posted the highest return among the large cap stocks, with YTD returns of 73 per cent, beating Dangote Cement Plc, the most capitalised stock at the NSE, which posted a negative YTD return of 2.34 percent. Meyer Plc, the 6th least capitalised stock added the highest value to its shareholders with a returns performance (30 percent) that ranks behind that of only two of the ten most capitalised stocks, Seplat Petroleum (73 per cent) and GTB (42 percent). Overall, Dangote Flour Mills Plc, the 44th most capitalised stock with a value of N18.5 billion thrilled investors the most as the Food, Beverage and Tobacco stock returned 232 per cent YTD. United Capital Plc, Total Nigeria Plc, Mobil Nigeria Plc, and Seplat Petroleum Plc joined DFMP as the top five performing stocks, having posted YTD returns of 139 percent, 121 percent, 101 percent, and 73 percent respectively. Lafarge Africa Plc and Ecobank Transnational Inc dealt the most blows to their investors’ wealth with returns of -52 per cent and -40 per cent respectively. Overall, 60 percent of the ten most capitalised stocks yielded YTD average returns of 31 percent, with the remaining 40 percent giving their investors a negative YTD average returns of 24 percent.
  • Royal Exchange General Insurance Company, one of Nigeria’s foremost insurance underwriters with a focus on General and Special Risks, has paid out ₦1.683 billion as claims settlements to its clients at the end of Q3 2016. According to Benjamin Agili, the company’s MD, his company’s focus will remain the prompt settlement of genuine insurance claims and this will continue to be the business philosophy of the company in years ahead. Giving a breakdown of the numbers in the different insurance classes, Agili said a total of ₦551.19 million was paid on Industrial All Risk (IAR) insurance policies, representing 33 percent of the total Q3 payouts. For Motor and Accident insurance policies, ₦434.57 million (26 percent) was paid to policyholders, while Marine Insurance claims were 21 percent of the total, which amounted to ₦346.95 million. Other classes of insurance with claims payments include General Accident policies with ₦140.97 million paid out as claims, representing 8 percent, while Fire Insurance policies resulted in total claims payment of ₦N105.33 million paid out, which is about 6 percent of the claims paid to various clients. “Royal Exchange has once again demonstrated its strength and ability to honour its financial obligations and also protect the interest of its various corporate and individual clients,” Agili concluded.