|DAILY TOP 5 UPDATES- July 16, 2012|
Impressive Results Push NSE Index to 11-Month High (THISDAY)
The bull run at the stock market continued last week with the benchmark index, the Nigerian Stock Exchange (NSE) All-Share Index, hitting 11-month high. Half year (H1) results announced by some companies had sustained the positive trend in the market in the previous week. Although the market had opened last week on bullish note on Monday, the bears set in as some investors attempted profit-booking. However, more impressive H1 results, especially by two banks, spurred fresh buying sentiments among investors. The renewed demand lasted through the remaining three days of the week, causing the All-share index to close higher at 22,741.06, which was 2.8 per cent higher than the opening level of 22,110.91. The last time the index advanced to that level was August 2011. While the benchmark indicator crossed the 22,000 threshold last May, the highest it attained in that month was 22,665.99. Apart from the index, that appreciated last week, the market capitalisation of equities added N210 billion to close higher at N7.26 trillion. More.
Interbank rates ease on higher cash flows (THE NATION)
Interbank lending rates eased 100 basis points to an average of 14.33 per cent last week, aided by improved liquidity. Dealers said the market opened with a cash balance of about N14.6 billion ($90 million) on Friday, compared with a negative balance of 12.74 billion naira last Friday. “We have inflows from repaid matured treasury bills of a net balance of about 50 billion naira and around 30 billion naira disbursal to some government agencies in the week, helping to lift market liquidity,” one dealer said. The Federal Government sold N95.56 billion in three-month and six-month treasury bills on Wednesday, while there was net cash inflow from matured bills. Dealers said some lenders also preferred to take money from the central bank window, helping to ease pressure on the borrowing costs this week. The secured Open Buy Back (OBB) rate eased to 13.50 per cent from 14.75 per cent last week, 1.5 percentage points above the central bank’s 12 per cent benchmark rate, and 350 basis points above the Standing Deposit Facility (SDF) rate. More.
16% bond yields not sustainable, says Okonjo-Iweala (THISDAY)
The Co-ordinating Minister for the Economy and Minster of Finance, Ngozi Okonjo-Iweala, has faulted the 16 per cent yield on government bonds, saying it is unsustainable. Speaking at a video interview session with the news network, ABN, she said government’s borrowing was too high. She said efforts must be exhausted at reducing the cost. She said domestic borrowing remains a major challenge for the economy, though Nigerians are not bothered about it. “The real issue is domestic borrowing even though citizens are not bothered as they believe domestic debt is just domestic, and as such, the government can always borrow if it needs to,” she said. Mrs Okonjo-Iweala said the government’s debt strategy is to gradually reduce the budget deficit. The deficit was reduced by over N100 billion in 2011/2012 and will be gradually reduced by 2015, she added. According to her, the provision of a sinking fund will start in the 2013 budget, to save funds for the retirement of bonds as they fall due. More.
Exchange Rate Volatility Depresses African Banks’ Ranking (THISDAY)
The wave of currency volatility in the global market, owing to the crisis in the eurozone, is also taking its toll on the evaluation ranking of banks in the African continent, a ranking of banks by The Banker magazine has shown. As a result of this, banks in the continent declined in this year’s The Banker’s Top 1,000 ranking due to weaknesses suffered by their currencies. Most African countries depend heavily on primary commodities for export and so, are affected by fluctuation in prices of such products. World Bank’s Country Manager for Ugandan, Mr. Ahmadou Moustapha Ndiaye, had said that as a result of this, price volatilities would continue to affect the growth of critical sectors in the continent as well as the revenue projections of economies. The Banker’s report explained: “African Banks suffered in this year’s Top 1,000 ranking from the weakness of their currencies many of which fell against the US dollar in the second half of 2011.” More.
FGN plans shift in debt mix to boost economy (BUSINESSDAY)
The Federal Government of Nigeria (FGN) may increasingly shift its borrowing mix from Naira to foreign Dollar denominated debt, as it moves to curb domestic borrowing and boost the local economy. Ngozi Okonjo-Iweala, the coordinating minister of the economy (CME) and finance minister, told representatives of the organised private sector and civil society in Abuja last week that she intended to launch a sinking fund in the 2013 budget. The purpose of the fund would be to retire some of the FGN’s domestic bonds. The finance ministry has a medium-term target to reduce the annual domestic borrowing requirement to N500 billion. The projections in the 2011 and 2012 budgets were N852 billion and N744 billion respectively. “A lower domestic borrowing requirement would help to address a common complaint of the CME, namely that the prevailing high interest rates are choking Nigeria’s growth potential. The finance ministry has indicated the launch of a possible Diaspora bond and a second Eurobond,” FBN capital analysts led by Gregory Kronstein, said in a research note released last week. More.