Despite concerns about the outcome of last Saturday’s election, sentiments remained positive at the Nigerian equities market last week as the market sustained its bullish run.
The market recorded five straight days of strong gains as investors pushed to take position for possible gains during the much expected post -election rally.
The positive performance recorded last week impacted the market as the twin market gauge- the NSE All-Share Index or ASI and the market capitalisation of listed equities appreciated by 4.19 per cent and 5.41 per cent respectively to close last Friday at 30,562.93 and N10.319 trillion respectively.
Similarly, all Indices finished higher during the week.
The rebound at the close of trades the previous week had failed to help the market as it went down by 4.51 per cent driven by concerns over political and macro-economic instability. Banks shares were mostly affected by the renewed apathy as heavy weights in the banking sectors recorded significant losses in five straight days.
Summary of Daily Performance
Sentiments remained positive at the resumption of trading on the local bourse last Monday as increased demand for Stanbic IBTC Plc and WAPCO Plc boosted the benchmark index into its green close of 29,505 points. At the close of trades, the NSE ASI gained 0.58 per cent while market capitalisation increased by N57.1 billion to close at N9.85 trillion. In the same vein, activity level as gauged by volume and value of transactions improved significantly relative to the previous session. Value of transaction was up by 147 per cent to N5.62 billion as well as volume traded which rose by 237 per cent to 612 million shares. Notably, Mansard Insurance accounted for 49.8 per cent of total volume traded on the day. The Consumer tracker was the lone loser, declining 0.27 per cent on the back of price decline in the shares of Nestle Nigeria Plc. On the other hand, the Oil & Gas sector gained 1.26 per cent on account of Forte Oil Plc’s price gain.
The market again closed on a positive note on Tuesday as the NSE ASI appreciated by 0.27 per cent to close at 29,584.00 points, compared with the appreciation of 0.58 per cent recorded the previous day. Similarly, the market capitalisation appreciated by 0.27 per cent to close at N9.87 trillion, compared with the appreciation of 0.58 per cent recorded on Monday to close at N9.85 trillion. The appreciation in the Index today could be attributed to the gains recorded in the share prices of some highly capitalised stocks such as: UBA Plc, Diamond Bank Plc, Skye Bank Plc, FCMB Group and FBN Holdings Plc, amongst others. The total value of the stocks traded on the day on the floors of The NSE was N2.85 billion, down by 49.25 per cent from N5.62 billion traded the previous day.
Sustained interest in Nigerian Breweries Plc, Zenith Bank Plc and Stanbic IBTC Plc accounted for the 1.03 per cent gain on the local bourse on Wednesday. At the end of trades, the NSE ASI settled at 29,889.91 points, while market capitalisation added N102.08 billion to close at N9.97 trillion. The Industrial tracker was the only loser, declining moderately by 0.05 per cent as Dangote Cement Plc lost 0.18 per cent. On the other hand, the Oil & Gas sector gained 1.88 per cent on account of price gains in Forte Oil Plc and OANDO Plc. The banking and Consumer sectors closed in the green, driven by the sector leaders Zenith Bank Plc and Nigerian Breweries Plc respectively. Market activity improved as both volume and value of trades rose by 105.2 per cent and 40.5 per cent respectively. Thus, 434 million units of shares valued at N4.00 billion were exchanged at the end of trades.
The market continued its uptrend on Thursday as the index climbed 0.61 per cent to close at 30,073 pts. Market capitalization increased by N61.13 billion to N10.04 trillion at the close of trades. Also, market activity improved by 66.8 per cent and 79.5 per cent in terms of volume and value of trades respectively. At the close of the session, a total of 723.6 million units of shares valued at N7.19 billion were exchanged in 4531 deals.
The market closed green again last Friday thanks to positive performances from the consumer, banking and consumer goods subsectors. Trading activities decreased in volume as 528.67 million shares worth N4.45 billion in 4,446 deals exchanged hands. This is a decrease from the 723.62 million shares worth N7.19 billion in 4,531 trades carried out on Thursday.
The ASI closed positive with a 1.63 per cent increase to 30,562.93 from 30,073.10 the previous trading day. Market capitalisation appreciated in tandem to N10.32 trillion from N10.04 trillion the prior trading day.
Analysis of activities for the week under review showed that a total of 2.509 billion shares worth N24.115 billion in 19,971 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 1.382 billion shares valued at N12.053 billion that exchanged hands the previous week in 16,877 deals.
The Financial Services Industry (measured by volume) led the activity chart with 2.198 billion shares valued at N14.144 billion traded in 12,589 deals; thus contributing 87.60 per cent and 58.65 per cent to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with a turnover of 161.705 million shares worth N1.095 billion in 1,223 deals. The third place was occupied by the Consumer Goods Industry with 67.492 million shares worth N7.157 billion in 2,516 deals.
Trading in the Top Three Equities namely- United Bank for Africa Plc, Mansard Insurance Plc and FBN Holdings Plc (measured by volume) accounted for 1.223 billion shares worth N5.403 billion in 4,715 deals, contributing 48.76 per cent and 22.40 per cent to the total equity turnover volume and value respectively.
Also traded during the week were a total of 572,478 units of Exchange Traded Products (ETPs) valued at N8.255 million executed in 22 deals compared with a total of 105,162 units valued at N1.504 million transacted the previous week in 20 deals.
A total of 210 units of FGN Bonds valued at N221,637.88 were traded in 3 deals this week. There was no trade recorded on bonds the previous week.
Gainers and Losers
Meanwhile, the price movement chart of the NSE showed that a total of 50 equities appreciated in price during the week, higher than 11 equities of the preceding week. Twenty-one equities depreciated in price, lower than 53 equities of the preceding week, while 125 equities remained unchanged, lower than 132 equities recorded in the preceding week.
The top 10 gainers were: Forte Oil Plc (N34.84), Total Nigeria Plc (N18.74), Unilever Nigeria Plc (N5.36), Zenith Bank Plc (N2.41), Champion Breweries Plc (N1.23), FBN Holdings Plc (N1.10), Dangote Flour Mills (80 kobo), Fidelity Bank Plc (21 kobo), Trans Nationwide Express Plc (14 kobo) and Pfizer Products Plc (9 kobo).
On the other hand, the top 10 losers included: UACN Plc (N3.95), CAP Plc (N2.29), Cadbuy Nigeria Plc (N2.05), PRESCO Plc (N1.31), UBA Capital Plc (36 kobo), Starling Bank Plc (19 kobo), Cement Company of Northern Nigeria Plc (81 kobo), Van Leer Containers Nigeria Plc (60 kobo), Red Star Express Plc (19 kobo) and Costain (WA) Plc (3 kobo). … … … … … … … … … … … … … … ..
Hariri: FG Can Harness ICT Sector Potential to Boost GDP
In this interview with Eromosele Abiodun, Managing Director, AVAYA, Africa, Hatem Hariri, says the federal government can take advantage of the ICT sector to boost the country’s GDP, his company’s foray into Nigeria and other issues. Excerpts:
The Nigerian ICT sector has a huge potential. How can the federal government harness the potential of the ICT sector to enhance its contribution to the gross domestic products (GDP)?
You are very correct that the sector has a huge potential. We recognise this and we are working with the government because government play a significant role to prepare the ground for anybody. In the case of government of Nigerian in the area of technology, they have been helping. Also, we are working with some parastatal organisations to work with the government to provide them with latest technology and information and also we have many delegations from the government of Nigeria who visited our offices to enhance their know-how.
What government can also do to facilitate the life of the citizen by providing this type of technology that I was talking about, for example this smart engage solution.
For the SMEs willing to partner with us, one thing to know about our solutions is they are simple, very easy to configure, easy to use especially for the basic applications.
So if you are talking about office in a box solution for unified solution and IT Telephony, you can partner and in two days be certified to be able to do basic configurations and they can also train customers who will be able to manage its own equipment. We are working on cloud solutions with telecoms operators as well where they can provide our solution to end users.
What solutions do Avaya have that could give Nigeria the needed leverage, especially considering the high cost of broadband in the country and the fact that many operators just come into the country with a lot of one-jacket-fits-all solutions that may not really suit the peculiarities of our environment?
Now, in technology, the one jacket fits all approach will not really work. This is not what we are. We carefully looked at the Nigerian market and decided to open an office here and that is why our route to the market is through the people who know the market. Unlike other vendors who come here and try to take the technologies themselves, take the customers themselves, they do not transfer the knowledge to local people. For us what we are trying to do is to transfer knowledge to Nigerians who know the dynamics of the environment. For instance, we have a training coming up for our partners on latest technologies, so they know our technology, even when we are not here they can do it, they can integrated it, they can service it, they can spot it. We are not a fly-by-night company, we have a reputation in the market and cannot afford to burn our name by coming, selling few equipment and leaving. This is why we call it engage, because we want to engage with our customers. The different between us and the competition is that we are humble and willing to learn. We are looking for the guidance partner in Nigeria to guide us on ways to do it, having understood the environment itself. We used to do products before, now we don’t do that, we do solutions customised for the market. Many companies failed because they were doing products that don’t fit the market, or too early for the market. We are very flexible, willing to learn from our customers and partners on the solutions they need, because we are here to stay, we are here to transfer the knowledge to the new generation that will take it over for the future.
Your teleconferencing solution is very interesting especially the fact that it can be used on mobile phone, but you are not a mobile device maker or an operator, how is this teleconferencing going to be embedded on the mobile phone?
Our teleconferencing which is the Avaya Scopia works on any device, you just download for free from application stores and you connect either over Wi-Fi or 3G network. It will work with any operator. There is a configuration we do that with one number, I can have my conversations on any of my devices I want. Now, here is what separates us from competitions, some other vendors lock you to their protocol. When you take a video conferencing solution from them, it removes every sense of mobility which we believe video conferencing should be about. The good about our technology is that it is open protocol that you can operate with any service provider. It needs the internet and low bandwidth.
The problem with technologies like this is that they come into the mainstream and break it, what kind of security measures are you putting in place to ensure these technologies are totally safe from hackers?
If you think about it today, the enterprise communication is merging with the consumer application. The good thing about our technology is that you can integrate our instant messaging with Microsoft and other different platforms and it will work altogether. Now, security is very important. If you are bringing engaging solution like this, the least you want is for people to hack into sensitive information you have to share. Lots of companies can go bankrupt because of these security issues. We produced our solution in such a way that they are reliable, scalable, secure, and can serve the customer needs. For our solution, there are firewalls that come with them even though you download them, so that the communications you are having via those channels are secured. We also have what we call session border controller which we install for big corporate organisations which is to secure the multichannel. On the networking side, the core of our networking is layer 2. It is actually invisible, people cannot hack into it because we separate the network from the management, so anytime you deploy our solutions, the core of your networking is hidden. So Avaya ensures that at the communication and networking level, you are safe.
What are the challenges that could hinder your operations the way you have projected it and what have you done about it?
One big challenge is the geo-political situations in the regions – terrorism. Security for us is very important, especially for our teams and employees. To bring people who will transfer the knowledge is very challenging sometimes. And the problem really is when they talk about terrorism in Northern Nigeria, some people actually thing all of Nigeria is burning which is not the case. Another challenge lately is the oil and gas price that is dropping very quickly. This is impacting the investment of the government in many of the businesses and you know when government stops investing because of certain limitations like this, all the country will stop investing because they feel something is wrong and then the economy will move very slowly. This doesn’t mean we will stop investing, because when things pick again you need to be there, otherwise you will miss opportunities. The third challenge that is facing us is the currency devaluation which is big challenge for us and our partners. This can be very challenging; however, they are reacting very fine.
Could you please tell our readers who you are and what you do?
My name is Hatem Hariri, I am the Managing Director for Avaya in Africa, Based in Dubai, I’m from Lebanon, I am a French-Canadian. I used to work for Nortel. Lately I came back from Montreal to Saudi Arabia to manage Avaya for Saudi Arabia/Bahrain and from there, I moved to Dubai to manage Avaya in Africa around four years ago. I started in Africa almost alone about four years ago. We were serving Africa as Avaya and Nortel but from outside. Only four years ago, Avaya decided that this is the market; this is where we need to be. If we look at the overall market globally, you look at America, Europe, you see they are more saturated and there are recessions, economical issues. We looked at Africa, a great continent, young, aggressive, educated people, people who want to make a difference and are hungry for technology, so we decided this is the territory we need to focus on and we started giving compete focus to Africa about four years ago and today I am happy to say that we already have up to five offices and we are working on other three inside Africa. Nigeria is our headquarters for West Africa
Tell us about technologies to engage What we mean by engagement is to engage with the end users, with the customers. We are not here to sell product, we are here to engage with the customers and to provide them with solutions to their problems, as well as opportunities using technology to have mobility, to have unified communication, to have team engagement, to have customer engagement, and also to have better customer service because in Nigeria of today, you have many businesses and as such, what you need is a real customer experience. You know before, when you have a complain about a bank, you go talk to your wife and few friends, and that’s only probably about 7, 10 people, but today, if you have a problem, the following day, you will go on Twitter, put it on Facebook, and other social media and hundreds of thousands of people will know about the problem. This is why Avaya is coming with solutions that are the latest of technologies to do customer service, customer experience, where you can do proactive management of the social media, of your customer experience so as to make things easier for your customers and differentiate yourself from competition and also react to any problem and customer complaints very quickly and in the right way before it’s driven to the whole market.
There people out there who are not conversant with technological terms. please tell us the specific solutions Avaya provides?
Quite a number of competitors came into this market before Avaya. But what we discovered was that the market was looking for alternatives with good quality. Avaya has 130 years of history in telecommunications. We were the one who founded phone with Alexander Graham Bell. He was the one who founded Avaya. He is the founder of actually Bell Labs. Alexander Bell started this Bell Labs to do research on phones. This company became Norte in Canada and in the US, it became AT & T and after that AT & T because of competition spin off the customer base. They kept their R & D and their labs and everything with a company called Lucent. And after that, history repeated itself, Lucent spin off the enterprise activities and called it Avaya. Avaya at about 6 years ago bought Norte. So we separated at some point and we came back together to form the biggest telephony company in the world. We are number one in telephony across the world, we are number one in contact center solutions across the world, and we are number one in IT telephony and unified communication. Also, on the networking side, data networking, lately we came up with a very beautiful technology. You know there is a technology called SDN (software-defined networking) which our competition were putting this on the data center on the high level type of networking, we brought it to the mid-market, we brought it to the edge, we brought it to the SMB and now we are the only vendor who provides networking at the edge level using SDN technology, which is the latest and greatest of technologies in the market. For video conferencing, we acquired a company about three years ago called Radvision, which was producing all the video conferencing equipment for different vendors. We have end to end solutions on video conferencing that we integrate into out IP telephony and unified communication to provide useful solution. If, for example, I want to have a meeting with my team across Africa, I just send a link from my outlook. All they need to do is to click on this link on their different mobile devices or PC, and we come on the video conferencing altogether from different areas in the world having a meeting and presenting. Imagine how important and easy this kind of solution will be for a territory like Nigeria that is so verse, you don’t need to travel or go through traffic to have your meetings. So, what we are doing is bringing virtuality to reality. With all these: video conferencing, contact center, telephony, unified communication, and data networking, the beauty is we have differentiated ourselves from competitors, who work at the SMB level. We have built solutions, for example the IP office, which is an office in a box solution, that you can offer an end to end telecommunication for SMB. So whatever you need, contact center, video conferencing you can do on a small box and it starts from 2 users to 2,500 users. We are simplifying business and providing an end to end telecommunication networking equipment for our customers and partners. And we have very good quality price ratio compared to our competition and also our total costs of ownership from maintenance perspectives is a lot cheaper. Also electricity, on networking equipment, we save 7 times compared to competition. We know a lot people use generator and will want to save so much on electricity. Also, on our video conferencing, you need low bandwidth to have a very good video conferencing conversation.
What other sectors of the economy could benefit from your solutions apart from Telcos?
For the banking, we just launched in Dubai what we called the SmartEngage solution which is an end to end virtual bank, where you can come anytime to open an account, get debit card, credit card, print cheque book, do all the transactions that you are looking for. We are offering this solution as well for the government, for renewing driver’s license, for renewing visa, to print sim card, etc. So, this type of technology that we are bringing is engagement, it’s not like just selling phones or machine, it is more of solutions that business needs. We have deployed contact center solutions to different organisations, we are working with the government as well to have a centralized contact center solution for the whole country. For example, you can one number to call one ministry and you will be routed automatically. If you are from the north for example, the system will recognise that you are calling from the north and you will be routed to an agent that speaks same language with you.
CAPTION: Mr. Godwin Emefiele, CBN Governor Interbank Rates Rise as CBN Enforces Monetary Policy
The overnight lending rates rose to an average of 12.5 per cent on Friday, compared with nine per cent the preceding week, after the central bank drained cash from the money market. The central bank debited commercial lenders N58.2 billion to enforce its cash reserve requirement (CRR) and another N306 billion to fund treasury bill purchases, curbing liquidity.
Reuters reported that the central bank debits lenders twice in a month to enforce its CRR rule, which requires banks set aside cash with the regulator against its public and private deposits. “Rates shot up… to an average of 15 percent when the CRR was debited, but later eased as cash for government workers hit the market,” one dealer said.
Meanwhile, the level of liquidity in the banking system improved at the beginning of the week — traceable to the Federation Account Allocation Committee (FAAC) funds that hit the system the preceding week. This brought liquidity opening balance to N192.8 billion last Monday, hence a decline in money market rates.
The open buy back (OBB) rate eased to a 3-week low of 9.3 per cent while the overnight rate berthed at a 6-week low of 9.9 per cent at market close on Monday. Unlike the previous week where there was no OMO auction, the central bank resumed auction last week to mop-up liquidity in the system.
According to an Afrinvest West Africa Limited report, CBN conducted an OMO auction on Tuesday to mop-up N88 billion. This consequently drove OBB and overnight rates higher to settle at 10.8 per cent and 11.3 per cent respectively.
With the unrelenting hawkish stand of the CBN, rates climbed higher to 14.8 per cent (OBB) and 15.2 per cent (Overnight) last Wednesday as there was another OMO mop-up of N108.8 billion. On Thursday however, with a liquidity opening balance of N186.1 billion, the OBB and overnight rates declined to 12.3 per cent and 12.8 per cent, while treasury bills matured into the system last Thursday.
“We expect that money market rates would continue to trade quite moderate as liquidity level is expected to remain fairly robust in the coming week even as we expect the CBN to continue to mop-up liquidity,” analysts at Afrinvest predicted.
The naira remained stable at the interbank market closing at N199.11/$1 during the week. The domestic currency rose to N199.13/$1 last Monday and peaked at N199.14/$1 on Tuesday. “Customer trade obligations during the week were partially met by dollar auction by oil companies. However, Commercial banks and their customers continue to rely on intervention from the apex bank to fill excess demand, even as CBN maintained dollar sales at N197/$1 and purchased at N196/$1 all week.
“Stability of the local unit was further driven by the decision of the Monetary Policy Committee (MPC) to keep all policy rates at their current levels on Tuesday 24th March at the conclusion of its second sitting for the year.
“The continued bullish outing noticed in the equities market during the week in our view also accounted for the sustained stability of the naira. This is attributable to likely capital inflow resulting from bargain hunting by foreign portfolio investors. We expect the local unit to remain stable in the near term. However, we imagine that an unpopular outcome of the general election may be a downside to this,” they added.
The positive performance of the bond market last week was similar to that of the equities market, as average bond yield fell 50 basis points week-on-week to close at 15.4 per cent. Average yields declined three basis points to close at 15.9 per cent last Monday compared to the previous close.
To close the week, investors’ sentiment favoured the short-term maturities as yield on short end of the curve declined 40 basis points week-on-week, save the Apr 2015 which dipped 10 basis points week-on-week. The yield on mid-tenor bonds weakened the most as the Mar 2024 instrument fell 50 basis points week-on-week.
While uncertainties on the outcome of the presidential elections linger, market analysts suspected that investors renewed appetite for Nigerian Bond may be due to the high yield environment ahead of polls outcome.
Afrinvest analysts however added: “While we expect the bullish trend to continue in the coming week, we also imagine that probable social unrest linked to election outcomes in the coming week may halt this drive.”
CAPTION: Managing Director/Chief Executive Officer, Mr. Phillips Oduoza UBA’s Loan Book Crosses N1trn Mark
The recently released United Bank for Africa (UBA) Plc’s 2014 full year results showed a 14 per cent year-on-year growth in its loan book to N1.12 trillion in 2014. That was the first time the bank crossed the N1 trillion mark in its loan book.
The bank however explained that the loan growth was broadly in line with its management’s set target for the year.
The quality of the loan book was also attractive because of the bank’s low non-performing loan (NPL) ratio of 1.55 per cent well below the Central Bank of Nigeria’s (CBN’s) recommended maximum of five per cent.
In its support to loyal customers in the corporate, commercial and retail segments of the African markets, UBA continued to grow loan portfolio in a responsible manner that ensured the quality of the assets and sustainability of its earnings.
“We expanded our loan book without compromising our focus on asset quality,” its Group Managing Director/Chief Executive Officer, Mr. Phillips Oduoza said in a note at the weekend.
The pan-African bank focuses its lending on emerging growth sectors across the African markets; agriculture, manufacturing, resource-based sectors such as oil, gas and mining, information and communication technology, power and infrastructure.
UBA is considered by businesses on the African continent as a well-positioned partner for multinational corporates seeking opportunities in the diverse African markets.
UBA’s high level liquidity and strong capital base also makes it one of the banks of choice for big-ticket transactions in the emerging African markets, where it continues to offer unique financial solutions to businesses and governments.
“We continue to support Africa-focused businesses and governments, given our strong belief in the continent’s prospect. We believe the opportunities in Africa far outweigh the risks, given our on-the-ground experience in these markets.
“We however do not compromise our risk management criteria and selective approach to lending across all our target markets, as we focus on quality and profitable risk assets that fit into our sustainable growth principles and objectives,” the bank’s Group Chief Financial Officer, Ugo Nwaghodoh explained.
Also speaking on the 2014 loan growth, the Group Chief Risk Officer, UBA Plc, Uche Ike explained the growth in the bank’s loan book, is in line with it moderate risk appetite in the year 2014.
He also said that the bank was pleased with the quality of the risk assets created, as reflected in the low NPL ratio and moderated 0.7 per cent cost of risk.
“These measures of asset quality are evidence of our investment in risk management; human capital and ERM tools. We will remain consistent in our responsible approach to lending, especially as we are conscious of macroeconomic headwinds in our core markets.
“We will continue to maintain a diversified portfolio, with strict concentration limits on obligors, sectors, market segments and markets. More so, we will be proactive than ever in our portfolio monitoring in the years ahead, as we are committed to being the industry benchmark on asset quality,” Ike added.
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People (4) Patrick Ugeh
Despite concerns about the outcome of last Saturday’s election, sentiments remained positive at the Nigerian equities market last week as the market sustained its bullish run.