This is what I like to call smart buying with an intent to sell, bought some stocks at the lowest price of the day and by market close, the stocks are up already 7% on the first day alone. Taking the type of huge outstanding bids for this stock, it will not be surprising to see it gain 20% in the first week alone.
The stock am talking about is Linkage assurance. It was bought at 1.15 and it closed for the day at 1.26. Lets see what next week has to offer us.
Friday, 7 November 2008
STOCK BROKER TRICKS
This is the stage where stock brokers make their billions; this is a time when, if you are not very careful, you will play right into the hands of greedy brokers. More so as they have been starved of action for many months now. Surely, ugly stories will still be heard about another type of internal manipulation.
There are investors that filled purchase orders at market price and without time limit and left such with their brokers, as prices rise, these brokers will now fill such orders and buy for you at the zenith of the rise, guess where they will get the shares to sell to you? From their reserves of course, selling to you from the ones they accumulate now and tell you its scarce in the market.
Another type of this same practice is where you fill sell orders and leave with your brokers when prices were still high, like three months ago. There might be no buyers then and you will forget about the order, thinking it has expired. Some unscrupulous brokers, sorry breakers will now get up and sell your three months old orders at 50% less the price you had in mind when trying to sell (remember we were all begging to get the stocks sold, so no limit prices then)
They will be the ones buying the stocks!
There are investors that filled purchase orders at market price and without time limit and left such with their brokers, as prices rise, these brokers will now fill such orders and buy for you at the zenith of the rise, guess where they will get the shares to sell to you? From their reserves of course, selling to you from the ones they accumulate now and tell you its scarce in the market.
Another type of this same practice is where you fill sell orders and leave with your brokers when prices were still high, like three months ago. There might be no buyers then and you will forget about the order, thinking it has expired. Some unscrupulous brokers, sorry breakers will now get up and sell your three months old orders at 50% less the price you had in mind when trying to sell (remember we were all begging to get the stocks sold, so no limit prices then)
They will be the ones buying the stocks!
Thursday, 23 October 2008
THE COUNCIL RESTRUCTURES THE EXCHANGE
y Yemi Kolapo and Ifeanyi Onuba
Published: Thursday, 23 Oct 2008
The post of Director-General in the Nigerian Stock Exchange, currently occupied by Ndi Okereke-Onyiuke, may have been abolished.
The scrapping of the position was the high point of a new organisational structure of the NSE approved by its council at a meeting on Friday.
A statement on Wednesday by the council’s Secretary, Mrs. Josephine Igbinosun, however, said that the Exchange would be headed by a Group Chief Executive Officer.
The GCEO, according to the statement, would be assisted by three executive directors that would be in charge of compliance and surveillance, quotations and listings and market operation/IT.
The statement which was silent on the fate of Okereke-Onyiuke came amid calls by stakeholders for government‘s intervention in the crisis currently rocking the Nigerian capital market.
The development however, spurned rumours that Okereke-Onyiuke’s job might be on the line. But the NSE debunked the insinuation, saying the restructuring was a strategic plan that had been on for over five years.
“It is not a new development. There is a terminal age for retirement. She (Okereke-Onyiuke) will leave when she is due for retirement,” the NSE spokesman, Mr. Sola Oni, said in a telephone interview with one of our correspondents.
He, however, declined to speak when asked when Okereke-Onyiuke was due for retirement. Oni added that the NSE DG was very much involved in the restructuring and that the plan had no link whatsoever with the current market crisis.
Okereke-Onyiuke, who was born in 1950, joined the NSE in 1983. She became the DG of the Exchange, a private sector organisation, in 2000.
Had she been in the public sector, she would have been due for retirement in the next two years. Efforts by our correspondents to find out if the post of DG in the NSE had a fixed tenure proved abortive.
Some stockbrokers, who spoke with one of our correspondents on the condition of anonymity, said the restructuring could be a plot to elongate the tenure of Okereke-Onyiuke who also doubles as the Exchange’s Chief Executive Officer.
“A lot of investors are losing their money. Just yesterday (Tuesday), the capital market crisis claimed its first casualty because the managing director of a stock broking firm slumped right inside his office and died. Don‘t be surprised that it might be an indirect way of elongating the tenure of the DG,” one of the stockbrokers said.
The name of the deceased and his company were kept under wraps as at 9pm on Wednesday.
Igbinosun said in her statement that the new structure, approved at the council‘s meeting on Friday, was a consequence of the reorganisation, which the council approved early in 2008.
She added that the restructuring, which was expected to end in December 2010, would involve the transformation of the NSE‘s governance, IT platform and diversification of its listings and market development product offerings into derivatives and exchange traded funds.
The statement said following a diagnostic study of the structure, management and processes of the Exchange by Accenture, the council held a retreat in June 2008 and approved the restructuring plan, which would culminate in the “demutualisation” of the NSE (listing the Exchange on the NSE and other Exchanges).
The statement reads in part, “The transformation process is broken into five distinct and parallel phases. Phase one of the plan, which commenced in June 2008, is the pre-transformation phase, which involves setting up a programme office and appointing a programme manager.
”Phase 11 of the restructuring involves the internal restructuring phase and migrating the NSE into a new operating model.”
It said the execution of the first two phases was in full swing while phase three, which was the most critical, would involve working with identified stakeholders to make the NSE become a diverse and liquid market with a significant number of large, medium and small companies and investors.
The statement added, ”Programme management is phase 1V and will involve ensuring that resources are deployed to all initiatives and managing risks and ensure completion of the project.
”The last phase is the change management phase, which will ensure that all stakeholders understand the implication of the changes on their various businesses, get buy-in and ensure that the change process gets support of investors, stockbrokers and financial regulators such as the Central Bank of Nigeria and the Securities and Exchange Commission.”
However, some capital market operators commended the restructuring, saying it would ensure transparency, stability and vibrancy of the capital market in the long-run.
”What the NSE is doing is a good development, it shows they are being proactive in dealing with future problems but this is not what the market needs right now. Let them save the market from collapse instead of restructuring,” one of them said.
Another, however, said that anything short of the injection of a stabilisation fund into the market would not achieve instant result.
TIGERKENN COMMENTS
Now, it took the death of one big wig to spur these regulators to action, do they know how many 'small' people that have died as a result of this? or do they even care? Many more blood pressures are rising as a result of this, and more deaths may happen if things are not done urgently.
My thinking is that the slow drop is more fatal than the fast drop, like the 5% drops, things will fall faster and rise back faster. There is the feeling of inevitability associated with this 1% drop, you already know your positions are bleeding, you know the bleeding will continue, you know there is nothing you can do about it, you know the banks will come for your throat.
Why wont somebody drop and die, my surprise is that it took this long for the first person to die!
Published: Thursday, 23 Oct 2008
The post of Director-General in the Nigerian Stock Exchange, currently occupied by Ndi Okereke-Onyiuke, may have been abolished.
The scrapping of the position was the high point of a new organisational structure of the NSE approved by its council at a meeting on Friday.
A statement on Wednesday by the council’s Secretary, Mrs. Josephine Igbinosun, however, said that the Exchange would be headed by a Group Chief Executive Officer.
The GCEO, according to the statement, would be assisted by three executive directors that would be in charge of compliance and surveillance, quotations and listings and market operation/IT.
The statement which was silent on the fate of Okereke-Onyiuke came amid calls by stakeholders for government‘s intervention in the crisis currently rocking the Nigerian capital market.
The development however, spurned rumours that Okereke-Onyiuke’s job might be on the line. But the NSE debunked the insinuation, saying the restructuring was a strategic plan that had been on for over five years.
“It is not a new development. There is a terminal age for retirement. She (Okereke-Onyiuke) will leave when she is due for retirement,” the NSE spokesman, Mr. Sola Oni, said in a telephone interview with one of our correspondents.
He, however, declined to speak when asked when Okereke-Onyiuke was due for retirement. Oni added that the NSE DG was very much involved in the restructuring and that the plan had no link whatsoever with the current market crisis.
Okereke-Onyiuke, who was born in 1950, joined the NSE in 1983. She became the DG of the Exchange, a private sector organisation, in 2000.
Had she been in the public sector, she would have been due for retirement in the next two years. Efforts by our correspondents to find out if the post of DG in the NSE had a fixed tenure proved abortive.
Some stockbrokers, who spoke with one of our correspondents on the condition of anonymity, said the restructuring could be a plot to elongate the tenure of Okereke-Onyiuke who also doubles as the Exchange’s Chief Executive Officer.
“A lot of investors are losing their money. Just yesterday (Tuesday), the capital market crisis claimed its first casualty because the managing director of a stock broking firm slumped right inside his office and died. Don‘t be surprised that it might be an indirect way of elongating the tenure of the DG,” one of the stockbrokers said.
The name of the deceased and his company were kept under wraps as at 9pm on Wednesday.
Igbinosun said in her statement that the new structure, approved at the council‘s meeting on Friday, was a consequence of the reorganisation, which the council approved early in 2008.
She added that the restructuring, which was expected to end in December 2010, would involve the transformation of the NSE‘s governance, IT platform and diversification of its listings and market development product offerings into derivatives and exchange traded funds.
The statement said following a diagnostic study of the structure, management and processes of the Exchange by Accenture, the council held a retreat in June 2008 and approved the restructuring plan, which would culminate in the “demutualisation” of the NSE (listing the Exchange on the NSE and other Exchanges).
The statement reads in part, “The transformation process is broken into five distinct and parallel phases. Phase one of the plan, which commenced in June 2008, is the pre-transformation phase, which involves setting up a programme office and appointing a programme manager.
”Phase 11 of the restructuring involves the internal restructuring phase and migrating the NSE into a new operating model.”
It said the execution of the first two phases was in full swing while phase three, which was the most critical, would involve working with identified stakeholders to make the NSE become a diverse and liquid market with a significant number of large, medium and small companies and investors.
The statement added, ”Programme management is phase 1V and will involve ensuring that resources are deployed to all initiatives and managing risks and ensure completion of the project.
”The last phase is the change management phase, which will ensure that all stakeholders understand the implication of the changes on their various businesses, get buy-in and ensure that the change process gets support of investors, stockbrokers and financial regulators such as the Central Bank of Nigeria and the Securities and Exchange Commission.”
However, some capital market operators commended the restructuring, saying it would ensure transparency, stability and vibrancy of the capital market in the long-run.
”What the NSE is doing is a good development, it shows they are being proactive in dealing with future problems but this is not what the market needs right now. Let them save the market from collapse instead of restructuring,” one of them said.
Another, however, said that anything short of the injection of a stabilisation fund into the market would not achieve instant result.
TIGERKENN COMMENTS
Now, it took the death of one big wig to spur these regulators to action, do they know how many 'small' people that have died as a result of this? or do they even care? Many more blood pressures are rising as a result of this, and more deaths may happen if things are not done urgently.
My thinking is that the slow drop is more fatal than the fast drop, like the 5% drops, things will fall faster and rise back faster. There is the feeling of inevitability associated with this 1% drop, you already know your positions are bleeding, you know the bleeding will continue, you know there is nothing you can do about it, you know the banks will come for your throat.
Why wont somebody drop and die, my surprise is that it took this long for the first person to die!
Wednesday, 22 October 2008
BANKING SECTOR AS A MINEFIELD
Banking sector has now become the new minefield, navigating through the stocks there will require tact and knowledge. One will not forget in a hurry the wonders of Sterling bank abracadabra, or the banks which their stock prices have fallen below the PO price, the ones that has foreign investment exposure, the ones with the rumour of illiquidity of funds, the ones that has lost all ideas of how to modernize its comatose service delivery, the ones with cowboys as helmsmen, the ones perpetually seeking merger partners.
These and many more reasons should make one to do more that the usual due diligence before buying bank stocks, to avoid financial amputation.
My major worry is that the banks are the most capitalized companies on the NSE, and by extension the sector which will cause the biggest trouble if they fall, they may drag everything down in their wake, like a Tsunami sweeping everything it engulfed back into the ocean.
These and many more reasons should make one to do more that the usual due diligence before buying bank stocks, to avoid financial amputation.
My major worry is that the banks are the most capitalized companies on the NSE, and by extension the sector which will cause the biggest trouble if they fall, they may drag everything down in their wake, like a Tsunami sweeping everything it engulfed back into the ocean.
HEAVY VOLUME FOR NB
Somebody seems to have started stockpiling the shares of NB. Watch the volume trends and you will see that the volume bought today is far greater than the one sold yesterday. They sold 1,712,723 units today while the units sold yesterday was below 100k.
Are some people starting something?
Are some people starting something?
THINK LIKE A MARKET REGULATOR
Instead of relaxing and fearing the market,or mourning our fate, courage dictates that this is the time we should be trying to think in the line of this market regulations and know if we could think along the same line they are thinking, take a set of actions we think they will take because, pretty soon another twist will come into this movie, I hope we be ahead on that curve by the time they set off.
STOCK MARKET RISK
Just like any other thing in life, the stock market comes with its own fair share of risks, but firstly let’s talks of risks as it affects life and businesses. There is no business venture that will not carry its own type of risks. Some businesses are more risky than others. For instance, getting up in the morning and leaving your house to attend to your school or to report to your office will carry some risks, accidents, robberies, fights or other forms of dangers which we all are exposed to on a daily basis.
The seller of commodities in the market will be afraid of losing some goods to thieves. The landlord that owns houses will be afraid of fire outbreaks that can raze down his building, handlers of cash will always be afraid of armed robbers and so on. Somebody once told me that even staying inside your house, sleeping in your bedroom is also risky; in fact the ceiling can collapse on a sleeping man and hurt him seriously, while in the comfort of his own room. Stories have also been told that a man, while easing himself inside the bush, was killed by a vehicle that lost its brake and lost control, ran deep inside the bush to kill an innocent man answering the call of nature, deep inside the bush!
Back to the stock market, a lot of people say the business is more risky than other businesses, and there is a fact to that statement. Investing is all about converting your risk free money into risky assets. The risk involved is that the company you bought their shares can start to perform badly, making losses instead of profits. The share price can start to fall even lower that the amount you bought it for. This will mean that you are making some losses in your investment, at least, in the short term. This could also change very easily, the company may correct their acts and start to make profits, and the share price will start to rise, pulling you into profits.
To make many readers understand more of what stock market risks look like, I will like to compare investing in the stock market as against patting your money in the bank. Let as compare investing in shares with fixing your money in a time deposit account.
Time deposits are a way of making money in the bank, you can bring in some capital and tell the bank to hold it for you for a year and you will discuss with the bank on how much money they will pay you for keeping your money and using it to do bank business for one year. A percentage will be agreed on and you will come back one year later and collect your capital along with the interest the bank agreed to pay you for using your money for a year. Note that this is sure money. Under normal circumstances the bank must pay you your money even if they did not make any profit from using your money to do business. You can see the risk is minimal because the agreed percentage must be paid and there is little chance of you losing your money.
On the other hand an investment in the stock market, most times, will not come with any agreed percentage of how much money you will make from your investments, there are no guarantees that you will receive any dividend or bonus or that your initial investments will grow more that the amount you used in buying the stock. Everything in the stock market is not fixed. That is why a lot of people think it is risky, but for those that know the business, this is the best thing that was ever invented in this world.
The stock market will come with no guarantees but it has beaten most other ways of making money in every way. It has returned so much profit to investors that it has come to stay as a way of life for those that are ready to understand its dynamics. A great American author, Robert Kiyosaki once said that the riskier a business is the more returns it can generate for its owners. Safe money carries no risk, you can dig a hole and hide your money, and it will remain exactly as you left it, many years after you hid it. But if you invest it, it will grow beyond your expectation and continue to grow even after you are old, continue to feed your children and grand children.
The seller of commodities in the market will be afraid of losing some goods to thieves. The landlord that owns houses will be afraid of fire outbreaks that can raze down his building, handlers of cash will always be afraid of armed robbers and so on. Somebody once told me that even staying inside your house, sleeping in your bedroom is also risky; in fact the ceiling can collapse on a sleeping man and hurt him seriously, while in the comfort of his own room. Stories have also been told that a man, while easing himself inside the bush, was killed by a vehicle that lost its brake and lost control, ran deep inside the bush to kill an innocent man answering the call of nature, deep inside the bush!
Back to the stock market, a lot of people say the business is more risky than other businesses, and there is a fact to that statement. Investing is all about converting your risk free money into risky assets. The risk involved is that the company you bought their shares can start to perform badly, making losses instead of profits. The share price can start to fall even lower that the amount you bought it for. This will mean that you are making some losses in your investment, at least, in the short term. This could also change very easily, the company may correct their acts and start to make profits, and the share price will start to rise, pulling you into profits.
To make many readers understand more of what stock market risks look like, I will like to compare investing in the stock market as against patting your money in the bank. Let as compare investing in shares with fixing your money in a time deposit account.
Time deposits are a way of making money in the bank, you can bring in some capital and tell the bank to hold it for you for a year and you will discuss with the bank on how much money they will pay you for keeping your money and using it to do bank business for one year. A percentage will be agreed on and you will come back one year later and collect your capital along with the interest the bank agreed to pay you for using your money for a year. Note that this is sure money. Under normal circumstances the bank must pay you your money even if they did not make any profit from using your money to do business. You can see the risk is minimal because the agreed percentage must be paid and there is little chance of you losing your money.
On the other hand an investment in the stock market, most times, will not come with any agreed percentage of how much money you will make from your investments, there are no guarantees that you will receive any dividend or bonus or that your initial investments will grow more that the amount you used in buying the stock. Everything in the stock market is not fixed. That is why a lot of people think it is risky, but for those that know the business, this is the best thing that was ever invented in this world.
The stock market will come with no guarantees but it has beaten most other ways of making money in every way. It has returned so much profit to investors that it has come to stay as a way of life for those that are ready to understand its dynamics. A great American author, Robert Kiyosaki once said that the riskier a business is the more returns it can generate for its owners. Safe money carries no risk, you can dig a hole and hide your money, and it will remain exactly as you left it, many years after you hid it. But if you invest it, it will grow beyond your expectation and continue to grow even after you are old, continue to feed your children and grand children.
Sunday, 19 October 2008
HOW WILL THIS WEEK TRADE.
Are there any reasons for us to cautiously predict that the days of stock price slide is coming to an end? I am just trying to look at this week and from the little I could piece together, some PEs has gotten too low, banks like Access, Diamond, Oceanic and some other companies like NB, NBC, DSR, ETC has got good prices and unbelievable prospects.
Do you think we might start to see a reversal or is it going to be a week just like the others, where it will be considered a good trading day if 3 companies gain in a day.
Do you think we might start to see a reversal or is it going to be a week just like the others, where it will be considered a good trading day if 3 companies gain in a day.
Thursday, 16 October 2008
THE GOING GETS TOUGH
When the going gets tough, only the tough gets going. It will be wrong for us to concede victory to the bears, have we all run away from them bears? I know we will have them for breakfast when all this is over. Trading must go on, no matter what the market does.
Let this lull be your time to learn more tricks to use when the market rebounds. Watch what is unfolding because it will happen again, oh yes, the past always repeats itself. For those that will be ready when the market decides to race up, good profits will be their portion.
Always remember to make a plan and follow it despite the fickle mindedness of the market.
CHEER UP, IT IS NOT OVER YET.
Let this lull be your time to learn more tricks to use when the market rebounds. Watch what is unfolding because it will happen again, oh yes, the past always repeats itself. For those that will be ready when the market decides to race up, good profits will be their portion.
Always remember to make a plan and follow it despite the fickle mindedness of the market.
CHEER UP, IT IS NOT OVER YET.
Wednesday, 8 October 2008
FCMB PROFITS UP BY 154%
By Udeme Ekwere
Published: Wednesday, 8 Oct 2008
First City Monument Bank Plc has recorded a 154 per cent increase in its profit after tax for the financial year ended April 30, 2008.
The bank’s post tax profit stood at N15.10bn up from N5.25bn recorded in the similar period of 2007. Its gross earnings for the year under review also rose to N52.82bn from N24.97bn in 2007, representing an increase of 112 per cent.
Speaking at the company’s 25th Annual General Meeting in Lagos on Tuesday, the Chairman of the bank, Mr. Jonathan Long, attributed the impressive performance of the company to management commitment to growing shareholder value.
“We have delivered impressive financial results and I believe that we have met the earlier promises made to you during the period under review, while at the same time achieving the crucial strategic objectives which the management had set for itself.”
The bank also declared a total dividend payout of N8.1bn, translating to a 50 kobo dividend per every 50 kobo share, held by shareholders registered in the books of the bank as at September 19, 2008.
“We are confident that we will continue to operate in a stable and encouraging business environment and that as a bank, we are well positioned to expand further, whilst maintaining our tradition of excellence,” he stated.
Long expressed the bank’s commitment to continue to pursue new business openings that were capable of generating sustainable growth for the bank in the coming years.
The company’s Earnings Per Share has also increased by 115 per cent from 63 kobo in 2007 to 135 kobo, while its total assets grew by 78 per cent to N467bn up from N263bn recorded in 2007.
Also speaking at the event, the Chief Executive Officer of the bank, Mr. Ladi Balogun, said that the company remained focused on attaining market leadership in the areas of investment banking, consumer banking and transaction banking.
“We have successfully established a formidable distribution network, with 140 branches and over 1,000 sales agents and comprehensive product set with wealth management being inaugurated in 2008. This points to our ability to sustain a robust and rapid growing earnings which we expect to maintain,” he said.
He said the bank would be inaugurating its wealth management offering which was bound to take the company by leaps and bounds in the coming years
Published: Wednesday, 8 Oct 2008
First City Monument Bank Plc has recorded a 154 per cent increase in its profit after tax for the financial year ended April 30, 2008.
The bank’s post tax profit stood at N15.10bn up from N5.25bn recorded in the similar period of 2007. Its gross earnings for the year under review also rose to N52.82bn from N24.97bn in 2007, representing an increase of 112 per cent.
Speaking at the company’s 25th Annual General Meeting in Lagos on Tuesday, the Chairman of the bank, Mr. Jonathan Long, attributed the impressive performance of the company to management commitment to growing shareholder value.
“We have delivered impressive financial results and I believe that we have met the earlier promises made to you during the period under review, while at the same time achieving the crucial strategic objectives which the management had set for itself.”
The bank also declared a total dividend payout of N8.1bn, translating to a 50 kobo dividend per every 50 kobo share, held by shareholders registered in the books of the bank as at September 19, 2008.
“We are confident that we will continue to operate in a stable and encouraging business environment and that as a bank, we are well positioned to expand further, whilst maintaining our tradition of excellence,” he stated.
Long expressed the bank’s commitment to continue to pursue new business openings that were capable of generating sustainable growth for the bank in the coming years.
The company’s Earnings Per Share has also increased by 115 per cent from 63 kobo in 2007 to 135 kobo, while its total assets grew by 78 per cent to N467bn up from N263bn recorded in 2007.
Also speaking at the event, the Chief Executive Officer of the bank, Mr. Ladi Balogun, said that the company remained focused on attaining market leadership in the areas of investment banking, consumer banking and transaction banking.
“We have successfully established a formidable distribution network, with 140 branches and over 1,000 sales agents and comprehensive product set with wealth management being inaugurated in 2008. This points to our ability to sustain a robust and rapid growing earnings which we expect to maintain,” he said.
He said the bank would be inaugurating its wealth management offering which was bound to take the company by leaps and bounds in the coming years
OCEANIC BANK GROWS PROFITS BY 101%
By Udeme Ekwere
Published: Wednesday, 8 Oct 2008
Oceanic Bank International Plc has reported significant growth in its performance indicators for the 12 months ended September 30 2008 with gross earnings hitting N150.9bn.
According to the bank’s unaudited results recently approved by the Nigerian Stock Exchange, the company’s gross earnings rose by 101 per cent compared to N74.94bn recorded in the corresponding period in 2007.
A statement from the bank on Tuesday showed that its profit before tax increased by 127 per cent to N52.23bn in contrast to N23.01bn posted at the preceding year, while its bank’s profit after tax increased by 135 per cent to N41.24bn in contrast to N17.54bn in 2007.
Speaking on the fourth quarter result, the Chief Executive Officer of the bank, Mrs. Cecilia Ibru, said the high turnover and profitability were the manifestation of strategies put in place by the management to take the bank to a greater height.
She assured that the bank would ensure bumper returns on investments of its shareholders while rendering the best services available in the industry to its teeming customers. Oceanic, she assured, would be the best bank in all ramifications.
According to the statement, the performance reflects Oceanic Bank’s track record of consistent and superior performances over the years. For instance, the bank earned N106.7bn in the third quarter of 2008 over N47.52bn in the same period in 2007.
Commenting further on the success of the bank’s financials, Ibru attributed the superlative performance to the bank’s solid management, continuous quest for innovations and human capital development. These, she said, were geared towards value-added customer service delivery.
The bank’s achievements so far, according to her, was as a result of through rigorous training and refresher courses organized for the staff and more importantly to the strict adherence of all the Management and staff to the bank’s core values, tagged: TEAMS, an acronym of Transparency, Equal Opportunity, Accountability, Merit and Service Excellence.
Published: Wednesday, 8 Oct 2008
Oceanic Bank International Plc has reported significant growth in its performance indicators for the 12 months ended September 30 2008 with gross earnings hitting N150.9bn.
According to the bank’s unaudited results recently approved by the Nigerian Stock Exchange, the company’s gross earnings rose by 101 per cent compared to N74.94bn recorded in the corresponding period in 2007.
A statement from the bank on Tuesday showed that its profit before tax increased by 127 per cent to N52.23bn in contrast to N23.01bn posted at the preceding year, while its bank’s profit after tax increased by 135 per cent to N41.24bn in contrast to N17.54bn in 2007.
Speaking on the fourth quarter result, the Chief Executive Officer of the bank, Mrs. Cecilia Ibru, said the high turnover and profitability were the manifestation of strategies put in place by the management to take the bank to a greater height.
She assured that the bank would ensure bumper returns on investments of its shareholders while rendering the best services available in the industry to its teeming customers. Oceanic, she assured, would be the best bank in all ramifications.
According to the statement, the performance reflects Oceanic Bank’s track record of consistent and superior performances over the years. For instance, the bank earned N106.7bn in the third quarter of 2008 over N47.52bn in the same period in 2007.
Commenting further on the success of the bank’s financials, Ibru attributed the superlative performance to the bank’s solid management, continuous quest for innovations and human capital development. These, she said, were geared towards value-added customer service delivery.
The bank’s achievements so far, according to her, was as a result of through rigorous training and refresher courses organized for the staff and more importantly to the strict adherence of all the Management and staff to the bank’s core values, tagged: TEAMS, an acronym of Transparency, Equal Opportunity, Accountability, Merit and Service Excellence.
PHB SET TO BUY SPRING BANK
By Udeme Ekwere
Published: Wednesday, 8 Oct 2008
The move by BankPHB to acquire Spring Bank Plc is officially underway, as the shareholders of the former have endorsed the proposal.
At the company’s extraordinary general meeting in Lagos on Tuesday, the shareholders gave full approval to the bank to continue with the process.
As part of the arrangement, the shareholders authorised the directors to allot such number of shares in the capital of the bank not exceeding N10 billion ordinary shares of 50 kobo each, upon such terms as they deem fit, to shareholders of Spring Bank Plc.”
According to the President, Association for the Advancement of the Rights of Nigerian Shareholders, Dr. Faruk Umar, the acquisition would add value to the bank, which would bring about profitability and increase in the bank’s networking.
He, however, decried a recent statement by the House of Representatives that the bank should not acquire Spring Bank, noting that “If a case is before the court, the House of Reps had no jurisdiction over it, or to dictate to the authorities what they are to do.
Speaking on the acquisition, the Chief Executive Officer, BankPHB, Mr. Francis Atuche, said that the bank believed that at the completion of the transaction, BankPHB would emerge one of the top five banks in the country, adding that by the move, shareholders stood to benefit in the short-term, medium-term and long-term.
According to him, with the structures which Spring Bank already had on ground, the move will also serve to increase profitability, as well as the asset base when the bank has acquired it.
Bank PHB has in the last three years emerged as one of Nigeria’s fastest growing banks, growing at an average rate of three times the average growth rate of the Nigerian banking industry and delivering great returns to its shareholders. Analysts generally acknowledge that Bank PHB has offered one of the highest returns to shareholders in the Nigerian banking industry.
Atuche explained that the choice of Spring Bank as its target for acquisition was informed by the fact that the bank possessed some intrinsic value which Bank PHB intended to exploit.
Published: Wednesday, 8 Oct 2008
The move by BankPHB to acquire Spring Bank Plc is officially underway, as the shareholders of the former have endorsed the proposal.
At the company’s extraordinary general meeting in Lagos on Tuesday, the shareholders gave full approval to the bank to continue with the process.
As part of the arrangement, the shareholders authorised the directors to allot such number of shares in the capital of the bank not exceeding N10 billion ordinary shares of 50 kobo each, upon such terms as they deem fit, to shareholders of Spring Bank Plc.”
According to the President, Association for the Advancement of the Rights of Nigerian Shareholders, Dr. Faruk Umar, the acquisition would add value to the bank, which would bring about profitability and increase in the bank’s networking.
He, however, decried a recent statement by the House of Representatives that the bank should not acquire Spring Bank, noting that “If a case is before the court, the House of Reps had no jurisdiction over it, or to dictate to the authorities what they are to do.
Speaking on the acquisition, the Chief Executive Officer, BankPHB, Mr. Francis Atuche, said that the bank believed that at the completion of the transaction, BankPHB would emerge one of the top five banks in the country, adding that by the move, shareholders stood to benefit in the short-term, medium-term and long-term.
According to him, with the structures which Spring Bank already had on ground, the move will also serve to increase profitability, as well as the asset base when the bank has acquired it.
Bank PHB has in the last three years emerged as one of Nigeria’s fastest growing banks, growing at an average rate of three times the average growth rate of the Nigerian banking industry and delivering great returns to its shareholders. Analysts generally acknowledge that Bank PHB has offered one of the highest returns to shareholders in the Nigerian banking industry.
Atuche explained that the choice of Spring Bank as its target for acquisition was informed by the fact that the bank possessed some intrinsic value which Bank PHB intended to exploit.
MARKET REPORT 07/10/2008
By Ifeanyi Onuba
Published: Wednesday, 8 Oct 2008
The downward trend in the capital market continued at Tuesday’s close of transactions as only four out of the 301 listed equities recorded price appreciation.
Specifically, Thomas Wyatt Plc, Associated Bus Company Plc, Nigerian Aviation Handling Company Plc and Dunlop Nigeria Plc were the companies that had their shares entering the gainers chart.
While Thomas Wyatt Plc added 24 kobo to its share price to close at N50.70 per share, Associated Bus Company Plc, NAHCO and Dunlop Nigeria Plc chalked up 11 kobo, five kobo and one kobo to close at N5.90 and N1.48 per share in that order.
On the other hand, blue chip companies recorded significant loses as the shares of Julius Berger Nigeria Plc, Flour Mills Plc and United African Company of Nigeria Plc dropped 72 kobo, 64 kobo and 46 kobo to close at N72.06, N64.33 and N46.35 per share respectively.
However, the insurance sub-sector displaced the banking sub-sector on the activity chart as it accounted for 65 per cent of total turnover.
It traded 357.136 million shares valued at N354.255m in 820 deals. This represented a volume increase of 425 per cent over the 68.306 million shares valued at N116.002m traded the preceding day in 601 deals
Turnover in the sub-sector was largely boosted by activity in the shares of Investment and Allied Assurance Plc, which accounted for 85 per cent of the sub-sector’s turnover and 55 per cent of total turnover. It traded 303.932 million shares valued at N224.909m in 119 deals.
The banking sub-sector followed on the activity chart accounting for 20 per cent of total volume traded. It traded 109.397 million shares valued at N1.433bn in 3,744 transactions, as against the 189.116 million shares valued at N2.175bn traded the preceding day in 2,681 transactions.
The shares of Spring Bank Plc drove turnover in the sub-sector accounting for 31 per cent of volume traded.
The market capitalisation of the listed equities continued its downward trend as it slid by N64bn or 0.7 per cent, from N9.684tn at Monday’s close to N9.620tn
Similarly, the All-Share-Index of the Nigerian Stock Exchange dropped by 0.7 per cent from 45,504.69 to 45,203.93.
In all, investors staked N2.741bn on 550.758 million shares in 8,346 deals. This represented a volume decrease of 26 per cent over the 435.979 million shares valued at N3.461bn traded on Monday in 4,924 deals.
Published: Wednesday, 8 Oct 2008
The downward trend in the capital market continued at Tuesday’s close of transactions as only four out of the 301 listed equities recorded price appreciation.
Specifically, Thomas Wyatt Plc, Associated Bus Company Plc, Nigerian Aviation Handling Company Plc and Dunlop Nigeria Plc were the companies that had their shares entering the gainers chart.
While Thomas Wyatt Plc added 24 kobo to its share price to close at N50.70 per share, Associated Bus Company Plc, NAHCO and Dunlop Nigeria Plc chalked up 11 kobo, five kobo and one kobo to close at N5.90 and N1.48 per share in that order.
On the other hand, blue chip companies recorded significant loses as the shares of Julius Berger Nigeria Plc, Flour Mills Plc and United African Company of Nigeria Plc dropped 72 kobo, 64 kobo and 46 kobo to close at N72.06, N64.33 and N46.35 per share respectively.
However, the insurance sub-sector displaced the banking sub-sector on the activity chart as it accounted for 65 per cent of total turnover.
It traded 357.136 million shares valued at N354.255m in 820 deals. This represented a volume increase of 425 per cent over the 68.306 million shares valued at N116.002m traded the preceding day in 601 deals
Turnover in the sub-sector was largely boosted by activity in the shares of Investment and Allied Assurance Plc, which accounted for 85 per cent of the sub-sector’s turnover and 55 per cent of total turnover. It traded 303.932 million shares valued at N224.909m in 119 deals.
The banking sub-sector followed on the activity chart accounting for 20 per cent of total volume traded. It traded 109.397 million shares valued at N1.433bn in 3,744 transactions, as against the 189.116 million shares valued at N2.175bn traded the preceding day in 2,681 transactions.
The shares of Spring Bank Plc drove turnover in the sub-sector accounting for 31 per cent of volume traded.
The market capitalisation of the listed equities continued its downward trend as it slid by N64bn or 0.7 per cent, from N9.684tn at Monday’s close to N9.620tn
Similarly, the All-Share-Index of the Nigerian Stock Exchange dropped by 0.7 per cent from 45,504.69 to 45,203.93.
In all, investors staked N2.741bn on 550.758 million shares in 8,346 deals. This represented a volume decrease of 26 per cent over the 435.979 million shares valued at N3.461bn traded on Monday in 4,924 deals.
PRICES STILL FALLING
There still is no respite for the falling stocks on the NSE. This is in spite of all the litany of efforts made by the authorities at both the NSE, sec, CBN and other concerned government agencies. The stock market is still on a free fall and views from the closing prices suggest that the bleeding of prices continue unabated.
Experts still blame the 1% max drop of stock prices as the main snag causing multiple go-slows in the stock market. This is because the prices cannot fall as fast as they want it and this makes buyers to delay buying decisions since they know they can buy the stocks cheaper if they wait some few days more.
Others blame the foreign fund administrators for pulling their funds from our markets so suddenly (at least that was the explanation given by our own CBN Gov. C. Soludo.) if things continue like this, investor confidence will be hurt the more.
Experts still blame the 1% max drop of stock prices as the main snag causing multiple go-slows in the stock market. This is because the prices cannot fall as fast as they want it and this makes buyers to delay buying decisions since they know they can buy the stocks cheaper if they wait some few days more.
Others blame the foreign fund administrators for pulling their funds from our markets so suddenly (at least that was the explanation given by our own CBN Gov. C. Soludo.) if things continue like this, investor confidence will be hurt the more.
WILL NIGERIAN BANKS SUFFER HUGE LOSSES?
There is fear in the land! This fear is built on the uncertainty about the banking stocks and their level of financial crisis. This crisis is currently bedeviling the American and European stock markets and financial institutions. Several banks have gotten into stormy waters, closing shop as they could no longer meet up with their legal obligations as the financial problems persist.
The Dow closed at 9446 points yesterday, and there is still no assurance that the 700 billion dollars bail out plan in the US will work. In the Middle East, their markets have started tumbling, oil is getting cheaper by the day and most economists are lowering their ealier projections for this year.
Coming back home, the new fear is that some of our banks are not as healthy as they claim, I have written about this earlier last month. But the persistent fall in the price of banking stocks have not helped matters. The stock prices may be falling in reaction to some insiders trying to sell off their shares, having known that the price is overvalued. Everyone may be running away from bank stocks till we get to know how much exposure they have to the margin facilities.
Lets look at the case of Oceanic bank plc, they published their fourth qtr result for the period ended Sept 2008, in the result, their most recent quarter result was much lower than its second and third quarter results. Is this trend going to repeat itself with the other banks or is this a one-off occurrence? Oceanic bank has also been praised for coming clean of the alleged bad loans, let us keep our fingers crossed.
The Dow closed at 9446 points yesterday, and there is still no assurance that the 700 billion dollars bail out plan in the US will work. In the Middle East, their markets have started tumbling, oil is getting cheaper by the day and most economists are lowering their ealier projections for this year.
Coming back home, the new fear is that some of our banks are not as healthy as they claim, I have written about this earlier last month. But the persistent fall in the price of banking stocks have not helped matters. The stock prices may be falling in reaction to some insiders trying to sell off their shares, having known that the price is overvalued. Everyone may be running away from bank stocks till we get to know how much exposure they have to the margin facilities.
Lets look at the case of Oceanic bank plc, they published their fourth qtr result for the period ended Sept 2008, in the result, their most recent quarter result was much lower than its second and third quarter results. Is this trend going to repeat itself with the other banks or is this a one-off occurrence? Oceanic bank has also been praised for coming clean of the alleged bad loans, let us keep our fingers crossed.
NSE SET TO INTRODUCE 5 MARKET MAKERS
5 Primary Market Makers appointed on Market bailout
Posted Tuesday, October 7, 2008
BY PETER OBIORA
Proshare NI
October 07, 2008 at 16.00 GMT
Five Primary Market Makers has been appointed as part of the bailout plans for the Nigerian Capital Market. A source close to Proshare NI in the meeting held at Nigerian Stock Exchange (NSE) made this confirmation today in Lagos Nigeria.
The bailout plan is part of the measures being proposed to help halt the dwindling fortune of the Nigerian Capital Market.
It is being expected that Private Funds would be injected to help bailout the Capital Market.
The Federal Government (FG) two months ago intervened in the market to halt its dwindling fortune, however, up until now; nothing seems to have happened to alleviate this trend.
Recently, the United States Government (US) had come to a conclusion to inject $700 billion to halt the countries ailing financial health.
This is also coming on the heels of the FG aborting plans to introduce a Stabilisation Fund; which would ensure liquidity in the Nigerian Capital Market.
As at the time of filling in this report, Proshare NI could not get much detail in respect of the meeting by Regulators in the Capital Market on the internal bailout plan proposed to help the FG’s intervention on the market.
However, Regulatory Authorities has defined Market Makers as any company that has up to N2.0 billion Capital Base.
In the same vein, the Quotation Committee of the NSE today in Lagos Nigeria sat to deliberate on listing of 15 companies on the Floors of the nations Stock Exchange
Our source confirmed to Proshare NI that most of the companies got the approval to list mostly Rights Issues and supplementary listing.
“Almost all the companies got approval to list its shares on the Floors of the NSE, but I wouldn’t tell you the number” the source affirmed.
Tomorrow October 08, 2008, Multiverse Resources Plc would be listing 3.0 billion Ordinary Shares of 50 Kobo each at N1.80 Kobo per share.
Posted Tuesday, October 7, 2008
BY PETER OBIORA
Proshare NI
October 07, 2008 at 16.00 GMT
Five Primary Market Makers has been appointed as part of the bailout plans for the Nigerian Capital Market. A source close to Proshare NI in the meeting held at Nigerian Stock Exchange (NSE) made this confirmation today in Lagos Nigeria.
The bailout plan is part of the measures being proposed to help halt the dwindling fortune of the Nigerian Capital Market.
It is being expected that Private Funds would be injected to help bailout the Capital Market.
The Federal Government (FG) two months ago intervened in the market to halt its dwindling fortune, however, up until now; nothing seems to have happened to alleviate this trend.
Recently, the United States Government (US) had come to a conclusion to inject $700 billion to halt the countries ailing financial health.
This is also coming on the heels of the FG aborting plans to introduce a Stabilisation Fund; which would ensure liquidity in the Nigerian Capital Market.
As at the time of filling in this report, Proshare NI could not get much detail in respect of the meeting by Regulators in the Capital Market on the internal bailout plan proposed to help the FG’s intervention on the market.
However, Regulatory Authorities has defined Market Makers as any company that has up to N2.0 billion Capital Base.
In the same vein, the Quotation Committee of the NSE today in Lagos Nigeria sat to deliberate on listing of 15 companies on the Floors of the nations Stock Exchange
Our source confirmed to Proshare NI that most of the companies got the approval to list mostly Rights Issues and supplementary listing.
“Almost all the companies got approval to list its shares on the Floors of the NSE, but I wouldn’t tell you the number” the source affirmed.
Tomorrow October 08, 2008, Multiverse Resources Plc would be listing 3.0 billion Ordinary Shares of 50 Kobo each at N1.80 Kobo per share.
BANKS PLANNING TO INJECT 600 BILLION INTO STOCK MARKET
By Goddy Egene and Eromosele Abiodun, 10.08.2008
Strong indications emerged yesterday that the Council of the Nigerian Stock Exchange (NSE) may have made a head way in its efforts to bail out the nation’s stock from its lingering slide.
This followed an agreement reached between the Council of the NSE and some banks to inject N600 billion into the market.
The Director-General of the NSE, Prof. Ndi Okereke-Onyiuke, had last Monday said a meeting would be held between the Exchange and the Securities and Exchange Commission (SEC) as part of fresh efforts to find a solution to the falling share prices.
However, SEC officials were not at yesterday’s meeting that was held in Lagos.
A source close to SEC said that while the Commission was in support of efforts to bail out the stock market, it was not aware of the latest arrangement.
But THISDAY gathered that the part of the bail-out package discussed yesterday include an arrangement that would lead to the appointment of six banks to act as major “Market Makers”. The banks would then provide N100 billion each to buy up to 15 per cent of their shares from the market.
Although any company can be licensed under the guidelines issued by SEC for operators to become Market Makers, it was gathered that the NSE may have encouraged banks to take the lead.
A source said that the thinking is that given the financial muscle of the banks, they would easily meet the minimum capital requirement of N2 billion stipulated by SEC.
“The banks, working according to the guidelines issued by SEC, will provide funds to mop up shares from the market and sell the same shares whenever the need arises,” a source said.
Capital market operators said that given the current capitalisation of banks and the urgency to bail out the nation’s stock market, banks are in a good position to play as Market Makers by floating subsidiaries that would do so.
The SEC’s rules define Market Maker as “Any specialist permitted to act as a dealer, any dealer acting in the position of a block positioner, any dealer, who with respect to a security, holds himself out as being ready to buy and sell such securities for his own account on a regular and continuous basis”.
The Market Maker shall be a company duly registered with Corporate Affairs Commission (CAC) and shall have a minimum paid-up capital of N2 billion. A Market Maker is required to at all times maintain sufficient liquid assets to cover its current indebtedness.
Obligations of the Market Maker include: stabilisation of the market by ensuring continuous liquidity by synchronising buy and sell transactions of a security; operate within the established transaction spread (that is bid/offer spread) which shall be a maximum limit of three per cent and subject to review from time to time.
Also, the Market Maker will have the capacity for continuous two-way quotes in the relevant stocks through the trading session in a minimum quote size of 100,000 units of shares and must have the capacity to deliver and settle transactions within the prescribed settlement cycle of T+3. The Market Maker must equally have the capacity to lend and borrow the designated securities at any time, with a view to ensuring stability in the market among others.
Meanwhile, worried by the worsening global financial meltdown, the Senate will today consider a motion on the issue and its impact on Nigeria.
The motion, entitled: “Global Credit Crisis and its impact on Nigeria”, is being sponsored by Senator Anthony Manzo with 18 co-sponsors.
In the motion, listed on yesterday’s notice paper, the sponsor noted that the wave of the global financial crisis sweeping through United States of America and Europe was the first financial crisis of the 21st century.
If the Senate throws its weight behind motion, commendation may come the way of the Central Bank of Nigeria (CBN) for the quick intervention by injecting N1 trillion into the economy.
Strong indications emerged yesterday that the Council of the Nigerian Stock Exchange (NSE) may have made a head way in its efforts to bail out the nation’s stock from its lingering slide.
This followed an agreement reached between the Council of the NSE and some banks to inject N600 billion into the market.
The Director-General of the NSE, Prof. Ndi Okereke-Onyiuke, had last Monday said a meeting would be held between the Exchange and the Securities and Exchange Commission (SEC) as part of fresh efforts to find a solution to the falling share prices.
However, SEC officials were not at yesterday’s meeting that was held in Lagos.
A source close to SEC said that while the Commission was in support of efforts to bail out the stock market, it was not aware of the latest arrangement.
But THISDAY gathered that the part of the bail-out package discussed yesterday include an arrangement that would lead to the appointment of six banks to act as major “Market Makers”. The banks would then provide N100 billion each to buy up to 15 per cent of their shares from the market.
Although any company can be licensed under the guidelines issued by SEC for operators to become Market Makers, it was gathered that the NSE may have encouraged banks to take the lead.
A source said that the thinking is that given the financial muscle of the banks, they would easily meet the minimum capital requirement of N2 billion stipulated by SEC.
“The banks, working according to the guidelines issued by SEC, will provide funds to mop up shares from the market and sell the same shares whenever the need arises,” a source said.
Capital market operators said that given the current capitalisation of banks and the urgency to bail out the nation’s stock market, banks are in a good position to play as Market Makers by floating subsidiaries that would do so.
The SEC’s rules define Market Maker as “Any specialist permitted to act as a dealer, any dealer acting in the position of a block positioner, any dealer, who with respect to a security, holds himself out as being ready to buy and sell such securities for his own account on a regular and continuous basis”.
The Market Maker shall be a company duly registered with Corporate Affairs Commission (CAC) and shall have a minimum paid-up capital of N2 billion. A Market Maker is required to at all times maintain sufficient liquid assets to cover its current indebtedness.
Obligations of the Market Maker include: stabilisation of the market by ensuring continuous liquidity by synchronising buy and sell transactions of a security; operate within the established transaction spread (that is bid/offer spread) which shall be a maximum limit of three per cent and subject to review from time to time.
Also, the Market Maker will have the capacity for continuous two-way quotes in the relevant stocks through the trading session in a minimum quote size of 100,000 units of shares and must have the capacity to deliver and settle transactions within the prescribed settlement cycle of T+3. The Market Maker must equally have the capacity to lend and borrow the designated securities at any time, with a view to ensuring stability in the market among others.
Meanwhile, worried by the worsening global financial meltdown, the Senate will today consider a motion on the issue and its impact on Nigeria.
The motion, entitled: “Global Credit Crisis and its impact on Nigeria”, is being sponsored by Senator Anthony Manzo with 18 co-sponsors.
In the motion, listed on yesterday’s notice paper, the sponsor noted that the wave of the global financial crisis sweeping through United States of America and Europe was the first financial crisis of the 21st century.
If the Senate throws its weight behind motion, commendation may come the way of the Central Bank of Nigeria (CBN) for the quick intervention by injecting N1 trillion into the economy.
Monday, 6 October 2008
ECONOMICS AND INVESTING UNCERTAINITY.
Investing is a serious business, a business that is made even more serious by the fact that you could lose your life savings by one economic factor which you might not have taken into consideration by the time you are make your stock purchases. As I have remarked somewhere in this blogsite, nothing is certain out there. There is no known way you could predict exactly how the stocks you purchased or even plan to purchase will fare, when other economic considerations start to act on them.
What is happening in the NSE now is an eloquent testimony of what I am trying to put across. As at March this year, there were some stocks that many stock analysts believe are very cheap, given their quoted prices in comparison to other stocks in their sectors. Many newspapers and professional analysts earning huge salaries all played along and kept their employers busy buying more stock and getting trapped like the rest of us. Now the truth is known, some have come out to cast doubts on the whole market, blaming any and everybody.
My advice is to get yourself ready, to keep cherry picking good stocks if you have still got the cash to do so, or sell off if you have the guts and wait for the picture to get clearer.
What is happening in the NSE now is an eloquent testimony of what I am trying to put across. As at March this year, there were some stocks that many stock analysts believe are very cheap, given their quoted prices in comparison to other stocks in their sectors. Many newspapers and professional analysts earning huge salaries all played along and kept their employers busy buying more stock and getting trapped like the rest of us. Now the truth is known, some have come out to cast doubts on the whole market, blaming any and everybody.
My advice is to get yourself ready, to keep cherry picking good stocks if you have still got the cash to do so, or sell off if you have the guts and wait for the picture to get clearer.
CBN OKAYS RESTRUCTURING OF MARGIN FACILITIES
By Ayo Olesin and Yemi Kolapo
Published: Monday, 6 Oct 2008
The Central Bank of Nigeria has okayed the restructuring of loans given for the purchase of shares on the Nigerian Stock Exchange, handing borrowers and banks a 15-month lifeline
The CBN’s move was part of wide ranging measures announced last month by the Minister of Finance, Dr Shamusudden Usman, to arrest the capital market slide that has seen the erosion of stock value by over N3.5tn since March.
The liquidation of margin facilities or loans given for share purchases by banks and panic sale of shares by borrowers to repay loans were attributed as part of the reasons for the persistent bear market.
In a circular to banks, posted on its website on Friday, the CBN said that given that the facilities should have been structured for a much longer period from the outset, it was allowing them to be restructured for a longer period “between now and December 31, 2009.”
The circular, referenced, “BSD/DIR/CIR/GEN/VOL.2/010,” and signed by the Director, Banking Supervision, CBN, Mr. Ignatius Imala, said several banks had recently indicated their desire to reschedule some of their capital market related exposures.
It noted that this desire was informed by the strict consideration of Section 2.3 of the Prudential Guidelines, which provided grounds for re-classifying non-performing facilities.
The apex bank, however, stated that the forbearance was specifically for loans made for the purchase of shares in the NSE.
Loan rescheduling involves a re-negotiation of loan agreements between borrowers and authorised institutions either as a result of deterioration in the borrower’s financial position or the borrower’s inability to meet the initial repayment agreement.
Analysts estimated in January that leverage in the capital market was between 18 per cent and 25 per cent, and had warned of a bubble being built by easy access to funds; share price manipulation and over confidence by investors, who relied on the previous year’s performance when the index gained 74.8 per cent and staked huge funds in companies that were, in cases, moribund.
The withdrawal of foreign capital by hedge funds to cover losses in the Unites States and Europe; speculations over the suspension of margin lending; the CBN’s announcement that all banks would have a common year end and inability of inexperienced short term investors to take loses resulted in a steady slide of the All Share Index and the market capitalisation, which dipped by 13 per cent or N1.65tn between March 6 and June 9, 2008.
Published: Monday, 6 Oct 2008
The Central Bank of Nigeria has okayed the restructuring of loans given for the purchase of shares on the Nigerian Stock Exchange, handing borrowers and banks a 15-month lifeline
The CBN’s move was part of wide ranging measures announced last month by the Minister of Finance, Dr Shamusudden Usman, to arrest the capital market slide that has seen the erosion of stock value by over N3.5tn since March.
The liquidation of margin facilities or loans given for share purchases by banks and panic sale of shares by borrowers to repay loans were attributed as part of the reasons for the persistent bear market.
In a circular to banks, posted on its website on Friday, the CBN said that given that the facilities should have been structured for a much longer period from the outset, it was allowing them to be restructured for a longer period “between now and December 31, 2009.”
The circular, referenced, “BSD/DIR/CIR/GEN/VOL.2/010,” and signed by the Director, Banking Supervision, CBN, Mr. Ignatius Imala, said several banks had recently indicated their desire to reschedule some of their capital market related exposures.
It noted that this desire was informed by the strict consideration of Section 2.3 of the Prudential Guidelines, which provided grounds for re-classifying non-performing facilities.
The apex bank, however, stated that the forbearance was specifically for loans made for the purchase of shares in the NSE.
Loan rescheduling involves a re-negotiation of loan agreements between borrowers and authorised institutions either as a result of deterioration in the borrower’s financial position or the borrower’s inability to meet the initial repayment agreement.
Analysts estimated in January that leverage in the capital market was between 18 per cent and 25 per cent, and had warned of a bubble being built by easy access to funds; share price manipulation and over confidence by investors, who relied on the previous year’s performance when the index gained 74.8 per cent and staked huge funds in companies that were, in cases, moribund.
The withdrawal of foreign capital by hedge funds to cover losses in the Unites States and Europe; speculations over the suspension of margin lending; the CBN’s announcement that all banks would have a common year end and inability of inexperienced short term investors to take loses resulted in a steady slide of the All Share Index and the market capitalisation, which dipped by 13 per cent or N1.65tn between March 6 and June 9, 2008.
STERLING BANK EXPLAINS THE SHARE CONFUSION
Sterling Bank explains share reconstruction
By Gbenga Agbana
WORRIED by several complaints by investors about the recent share reconstruction embarked upon by Sterling Bank Plc, the bank's board of directors has clarified issues on the process.
Specifically, the board, in a statement issued at the weekend, said the reconstruction exercise was carried out after due diligence and approvals from regulatory authorities.
According to the statement, "the five banks that merged into Sterling Bank, entered into a scheme of merger, sanctioned by the court, which provided for two key review exercises to be undertaken in order to, whereby necessary, adjust the relative pre-merger values of the legacy banks. The two review exercises prescribed in the scheme were:
"A close-out audit of the accounts of each of the legacy banks as at 31st December 2005: to take into consideration and compensate pre-merger shareholders for changes that had occurred to the legacy banks' values since 31st March, 2005, when due diligence was conducted on the banks, i.e. the cut-off date for the merger.
"Post-merger adjustments: to further compensate pre-merger shareholders of the legacy banks, for material changes attributable to any of the legacy banks, provided that the aggregate value of such material change exceeded N100 million.
The bank explained further that each of the legacy banks appointed a firm of auditors/ consultants as its shareholders' representative. "The five shareholders' representatives, who derived their power from the court sanctioned scheme of merger, submitted a report dated 13th March, 2007 wherein they unanimously recommended the issuance of additional 13,317,026,285 ordinary shares as compensation shares to be issued to the various shareholders of the legacy banks who hitherto, were the holders of 10,552,847,651 ordinary shares of the bank."
Also, "the shareholders' representatives, mindful of the implication of almost 24 billion shares in issue also recommended a reconstruction of the entire shares.
"The shareholders of the bank, at the 45th yearly general meeting held on 28th August, 2007, approved a resolution for the reconstruction of the entire shares of the bank that is 23,869,873,936 ordinary shares of the bank."
In the statutory notice of the yearly general meeting, which was published in at least two national daily newspapers, it was specifically stated under special business, among others,'to consider, and, if thought fit, to pass the following resolutions as special resolutions: resolution10:'that the directors be empowered to reconstruct the bank's shares as a result of the post-merger share adjustment in accordance with the approved scheme of merger on the basis, terms, and at a time to be determined by the directors'. This resolution was unanimously approved by the shareholders.
The statement added that, "the two key regulatory agencies, the Nigerian Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN), in September 2007, separately wrote to the bank to invoke the clause relating to the close-out audit share adjustment in the scheme of merger to compensate the shareholders of the legacy banks as recommended by the shareholders' representatives.
"The Board of directors of the bank consequently applied for regulatory approvals to issue the compensation shares and simultaneously reconstruct the shares from the CBN, the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE); all the approvals were obtained.
"The bank subsequently placed the shares on total suspension from daily trading in order to effect the issuance of compensation shares as well as the reconstruction of the shares of the bank. This reconstruction was carried out at a ratio of 10 new shares for every 19 existing shares.
"It is true that the reconstruction of the original 10.5 billion shares (10 for 19) should have led to a simultaneous doubling of the share price; however, the issuance of the additional 13,317,026,285 compensation shares (also reconstructed) automatically diluted the expected effect.
"The situation was further exacerbated by the current bearish market."
The bank assured the shareholders that the merger/integration process has been completed and the financial institution "is on course to deliver superior return on investments and enhance shareholders' value."
By Gbenga Agbana
WORRIED by several complaints by investors about the recent share reconstruction embarked upon by Sterling Bank Plc, the bank's board of directors has clarified issues on the process.
Specifically, the board, in a statement issued at the weekend, said the reconstruction exercise was carried out after due diligence and approvals from regulatory authorities.
According to the statement, "the five banks that merged into Sterling Bank, entered into a scheme of merger, sanctioned by the court, which provided for two key review exercises to be undertaken in order to, whereby necessary, adjust the relative pre-merger values of the legacy banks. The two review exercises prescribed in the scheme were:
"A close-out audit of the accounts of each of the legacy banks as at 31st December 2005: to take into consideration and compensate pre-merger shareholders for changes that had occurred to the legacy banks' values since 31st March, 2005, when due diligence was conducted on the banks, i.e. the cut-off date for the merger.
"Post-merger adjustments: to further compensate pre-merger shareholders of the legacy banks, for material changes attributable to any of the legacy banks, provided that the aggregate value of such material change exceeded N100 million.
The bank explained further that each of the legacy banks appointed a firm of auditors/ consultants as its shareholders' representative. "The five shareholders' representatives, who derived their power from the court sanctioned scheme of merger, submitted a report dated 13th March, 2007 wherein they unanimously recommended the issuance of additional 13,317,026,285 ordinary shares as compensation shares to be issued to the various shareholders of the legacy banks who hitherto, were the holders of 10,552,847,651 ordinary shares of the bank."
Also, "the shareholders' representatives, mindful of the implication of almost 24 billion shares in issue also recommended a reconstruction of the entire shares.
"The shareholders of the bank, at the 45th yearly general meeting held on 28th August, 2007, approved a resolution for the reconstruction of the entire shares of the bank that is 23,869,873,936 ordinary shares of the bank."
In the statutory notice of the yearly general meeting, which was published in at least two national daily newspapers, it was specifically stated under special business, among others,'to consider, and, if thought fit, to pass the following resolutions as special resolutions: resolution10:'that the directors be empowered to reconstruct the bank's shares as a result of the post-merger share adjustment in accordance with the approved scheme of merger on the basis, terms, and at a time to be determined by the directors'. This resolution was unanimously approved by the shareholders.
The statement added that, "the two key regulatory agencies, the Nigerian Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN), in September 2007, separately wrote to the bank to invoke the clause relating to the close-out audit share adjustment in the scheme of merger to compensate the shareholders of the legacy banks as recommended by the shareholders' representatives.
"The Board of directors of the bank consequently applied for regulatory approvals to issue the compensation shares and simultaneously reconstruct the shares from the CBN, the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE); all the approvals were obtained.
"The bank subsequently placed the shares on total suspension from daily trading in order to effect the issuance of compensation shares as well as the reconstruction of the shares of the bank. This reconstruction was carried out at a ratio of 10 new shares for every 19 existing shares.
"It is true that the reconstruction of the original 10.5 billion shares (10 for 19) should have led to a simultaneous doubling of the share price; however, the issuance of the additional 13,317,026,285 compensation shares (also reconstructed) automatically diluted the expected effect.
"The situation was further exacerbated by the current bearish market."
The bank assured the shareholders that the merger/integration process has been completed and the financial institution "is on course to deliver superior return on investments and enhance shareholders' value."
Sunday, 5 October 2008
ANGRY REACTIONS TRAIL SOLUDO'S ANNOUNCEMENT
When Soludo talks, he spits out crap. The money being pulled out of the Nigerian capital markets by foreign investors is not to service their facilities. Rather, it is a lack of confidence in the Nigerian economy. What do you expect, when you have that idiot heading the stock exchange and an imbecile like Soludo at the helm. Dangote saying that their should be a restriction on investors selling their stock, shows him as an illiterate, who has simply made money by buying import licences.
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Lately, Obsanjo said "Nigeria is better today than yesterday." Yaradua said the same thing in his Independence Speech of propagandas. They knew they lied, these are people who´re anti-development with Middle Ages dispositions. Not until corruption, election rigging and the flirtation of PDP to implement One-party system in Nigeria is torpedoed, Yaradua´s ranting tirades about marching Nigeria forward into 2020 development will be another false dawn for us.
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Our father use to say cut your coat according to your size. Prof Soludo and the other bankers can learn one or two things from the present market situation also fedral government. America government and people were good people and well advance, but to me it look like another World War without gun and bullet and i dont know why its so quick now that President Bush is going, i will remember the president for many things let pray that God give America another good president better than Pres Bush.
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Could someone please tell Soludo that Nigerians are not illiterates and that we are very aware of the current events happening within and outside Nigeria. Most importantly, the supposed withdrawal of FDI did not affect the ability of Nigerian Banks to grant credit as they hardly granted credit before then except to importers and exporters who are still getting the credit
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mr summers you have to be rudely critical for nigeria to understand the insult you have rightly metted out to their decrepit leadership.the fools pissed away the wealth of the nation ,investors will pull their money b/c you refuse to invest in your country.gen malu will soon fly for med treatment abroad but he drives a rolce royce in nigeria,misplaced priorities.nigeria has failed.oil will soon run out ,us is looking for alta energy .then what? doom is looming.see nig beyond lagos/abuja ,hell.
.................................................................................
Lately, Obsanjo said "Nigeria is better today than yesterday." Yaradua said the same thing in his Independence Speech of propagandas. They knew they lied, these are people who´re anti-development with Middle Ages dispositions. Not until corruption, election rigging and the flirtation of PDP to implement One-party system in Nigeria is torpedoed, Yaradua´s ranting tirades about marching Nigeria forward into 2020 development will be another false dawn for us.
....................................................................................
Our father use to say cut your coat according to your size. Prof Soludo and the other bankers can learn one or two things from the present market situation also fedral government. America government and people were good people and well advance, but to me it look like another World War without gun and bullet and i dont know why its so quick now that President Bush is going, i will remember the president for many things let pray that God give America another good president better than Pres Bush.
....................................................................................
Could someone please tell Soludo that Nigerians are not illiterates and that we are very aware of the current events happening within and outside Nigeria. Most importantly, the supposed withdrawal of FDI did not affect the ability of Nigerian Banks to grant credit as they hardly granted credit before then except to importers and exporters who are still getting the credit
....................................................................................
mr summers you have to be rudely critical for nigeria to understand the insult you have rightly metted out to their decrepit leadership.the fools pissed away the wealth of the nation ,investors will pull their money b/c you refuse to invest in your country.gen malu will soon fly for med treatment abroad but he drives a rolce royce in nigeria,misplaced priorities.nigeria has failed.oil will soon run out ,us is looking for alta energy .then what? doom is looming.see nig beyond lagos/abuja ,hell.
BUYING FUNDAMENTAL STOCKS NOW.
Yes fundamental stocks will do you good in this season, but how fundamental are the fundamental stocks we used to know? Until banks will start to fold here will we see the type of mess we have gotten into. What I am saying is that buying the fundamental stocks is not even a guarantee in this uncertain times, reasons, the stock you think will pay dividends as usual may not pay this year because of losses incured by this crisis, the ripple effect will be companies that will be denied funding because the banks are less inclined to loan, owing to exposures that are still not covered.
Moreover, many companies will feel less inclined to release cash to pay dividends now, knowing it may mean the difference between folding up and staying afloat, especially as the troubled banks hold on tighter to their cash. The debacle goes on, lets see how tomorrow will look like, because there might be some positives from this disclosure from the CBN Governor.
Moreover, many companies will feel less inclined to release cash to pay dividends now, knowing it may mean the difference between folding up and staying afloat, especially as the troubled banks hold on tighter to their cash. The debacle goes on, lets see how tomorrow will look like, because there might be some positives from this disclosure from the CBN Governor.
WE WERE SUPPOSED TO KNOW THE TRUTH.
To think that guys, both big and small are here shooting at the air, grasping at straws and losing money week in week out, hoping for reversals that just evaporate and turn to more losses, hoping this week will be the last bleeding week. And the authorities just sat still and left everything to burn, maybe because they think it will cause more panic if they talked..... Maybe Soludo is just making excuses, he may not know the true cause of this crises.
WHEN DID SOLUDO FIND OUT THE TRUTH?
And would you guys think it will amount to asking for too much if I suggest that next time the foreigners will want to pull out their fear gripped cash, that our authorities try to warn us in any way, either discreetly or publicly to also take actions to protect our positions from this type of issues.
I just dont think it is the best thing to do, to come out and tell us the reason we have been bleeding this bad is because of a known ailment, or come to think of it........ when did Soludo find out it was the foreigners pulling the plugs that caused the katakata?
I just dont think it is the best thing to do, to come out and tell us the reason we have been bleeding this bad is because of a known ailment, or come to think of it........ when did Soludo find out it was the foreigners pulling the plugs that caused the katakata?
FOREIGN FUNDS PULL OUT CAUSED MARKET DECLINE - SOLUDO
The Governor of the Central Bank of Nigeria, Prof. Chukwuma Soludo, on Friday linked the decline in the Nigerian capital market to the credit crunch currently rocking the global financial market.
Soludo, who spoke at the Town Hall Meeting organised by ThisDay newspaper in Abuja, said following the credit crunch, many portfolio foreign investors pulled out from the Nigerian stock market to be able to service their obligations in other financial horizons. According to him, this resulted in the downward spiral, which equities on the Nigerian Stock Exchange have experienced since March.
Also speaking at the event, a former United States of America Secretary of Treasury and President of Harvard University, Lawrence Summers, said Nigeria had failed the world as a result of poor management of the economy.
He regretted that although Nigeria had ranked the highest among newly independent nations in the 1960s and was set to emerge a global economy, several decades of mismanagement had resulted in Nigeria having one of the poorest living standards in the world.
Soludo said, “Given the credit crunch in the advanced industrial world, several of the institutional investors in those markets began to pull out of our own markets. That was the origin of our own crisis here. Unless we understand it, then we will go on to what went on in this country for about five months.
“People were just busy not discussing the problem but looking for scapegoats – maybe somebody stopped the margin trading, maybe common year ending; they were just looking for scapegoat and not advancing the problem.
“The origin of the problem is the credit crunch that started globally and the institutional investors were pulling out in order to service their facilities elsewhere and then stock prices went down.”
He added, “As it went down, most of the investors in the Nigerian market were new and they are there for the short run. They are there mostly for speculative purposes and so they began to sell. That triggered off two quick reactions. The first reaction was the panic response on the part of all the stakeholders. The banks panicked by calling in the existing facilities; the participants in the market panicked by also selling quickly to repay their loans.
“And so you found a serial where the banks stopped new credit lines going into the market. They were calling in existing facilities and those who were already panicky wanted to get out of the market and there was only one way the market could go and that is the decline. And I think it is very important that we understand how we got to where we are in order for us to begin to think about how we make progress.”
Soludo expressed the hope that the credit crunch, especially in the United States, would not result in a worse currency crisis with the capacity to threaten the foreign reserve of Nigeria and other countries that hold their foreign reserves in dollar.
“I must also point out two other lingering threats from Nigeria’s point of view. One major threat that people call me to ask about is the safety of our foreign reserve. Whether the failure of these banks threatens our foreign reserve and I want to quickly use this occasion to say our foreign reserves are safe and we have been very prudent in terms of where we put them, the institutions where they are,” he said.
The Chairman of Dangote Group, Alhaji Aliko Dangote and Managing Director of Oceanic Bank, Mrs. Cecilia Ibru, agreed that the massive withdrawal of funds from the stock market caused the trouble for Nigeria. Dangote said, “I know of a bank in this country that lost so much money from its foreign partners recently. Its partners, on seeing what was happening to the financial sectors of US and Europe, quickly withdrew $3.4bn (N401bn) and left. We want government to put in measures that will stop foreign investors from suddenly pulling out like this to avoid a shock in the system.”
Summers, in his emotional argument, said, “I have spent sometime in Nigeria. So, I have very good knowledge about the country. Your country is well placed and is very successful in oil resources. If you look at the history of your country; there have been periods where oils prices have risen and the amount of money, which your country has earned since then from the sale of oil is more than any other country can accomplish and is worth many opportunities of uplifting the sufferings of the people. But it has not been so.
“Most of the oil windfall that has come into your country, when you look at living standard in Nigeria, of the average Nigerian, one does not see the kind of prosperity which one wants to see. When I came to Nigeria in 1991, I remarked at that time on the very different economic trajectories of Nigeria and Indonesia. When I went to school in the United States in the 1960s, we saw Nigeria as a country with far brighter prospects than Indonesia, but that is not the true state now.
“Your next generation of children should live far better than this generation of children. We should think about the future of Africa and the future depends on two countries - South Africa and Nigeria. South Africa has it challenges, you have yours, but you are blessed with tremendous moments of opportunities in terms of what is happening in the world today; and I pray to God that your society uses the tremendous opportunities of high oil prices today to make immense difference in the lives of millions of children alive today and the millions of children who will inherit your country in the nearest future.”
Soludo, who spoke at the Town Hall Meeting organised by ThisDay newspaper in Abuja, said following the credit crunch, many portfolio foreign investors pulled out from the Nigerian stock market to be able to service their obligations in other financial horizons. According to him, this resulted in the downward spiral, which equities on the Nigerian Stock Exchange have experienced since March.
Also speaking at the event, a former United States of America Secretary of Treasury and President of Harvard University, Lawrence Summers, said Nigeria had failed the world as a result of poor management of the economy.
He regretted that although Nigeria had ranked the highest among newly independent nations in the 1960s and was set to emerge a global economy, several decades of mismanagement had resulted in Nigeria having one of the poorest living standards in the world.
Soludo said, “Given the credit crunch in the advanced industrial world, several of the institutional investors in those markets began to pull out of our own markets. That was the origin of our own crisis here. Unless we understand it, then we will go on to what went on in this country for about five months.
“People were just busy not discussing the problem but looking for scapegoats – maybe somebody stopped the margin trading, maybe common year ending; they were just looking for scapegoat and not advancing the problem.
“The origin of the problem is the credit crunch that started globally and the institutional investors were pulling out in order to service their facilities elsewhere and then stock prices went down.”
He added, “As it went down, most of the investors in the Nigerian market were new and they are there for the short run. They are there mostly for speculative purposes and so they began to sell. That triggered off two quick reactions. The first reaction was the panic response on the part of all the stakeholders. The banks panicked by calling in the existing facilities; the participants in the market panicked by also selling quickly to repay their loans.
“And so you found a serial where the banks stopped new credit lines going into the market. They were calling in existing facilities and those who were already panicky wanted to get out of the market and there was only one way the market could go and that is the decline. And I think it is very important that we understand how we got to where we are in order for us to begin to think about how we make progress.”
Soludo expressed the hope that the credit crunch, especially in the United States, would not result in a worse currency crisis with the capacity to threaten the foreign reserve of Nigeria and other countries that hold their foreign reserves in dollar.
“I must also point out two other lingering threats from Nigeria’s point of view. One major threat that people call me to ask about is the safety of our foreign reserve. Whether the failure of these banks threatens our foreign reserve and I want to quickly use this occasion to say our foreign reserves are safe and we have been very prudent in terms of where we put them, the institutions where they are,” he said.
The Chairman of Dangote Group, Alhaji Aliko Dangote and Managing Director of Oceanic Bank, Mrs. Cecilia Ibru, agreed that the massive withdrawal of funds from the stock market caused the trouble for Nigeria. Dangote said, “I know of a bank in this country that lost so much money from its foreign partners recently. Its partners, on seeing what was happening to the financial sectors of US and Europe, quickly withdrew $3.4bn (N401bn) and left. We want government to put in measures that will stop foreign investors from suddenly pulling out like this to avoid a shock in the system.”
Summers, in his emotional argument, said, “I have spent sometime in Nigeria. So, I have very good knowledge about the country. Your country is well placed and is very successful in oil resources. If you look at the history of your country; there have been periods where oils prices have risen and the amount of money, which your country has earned since then from the sale of oil is more than any other country can accomplish and is worth many opportunities of uplifting the sufferings of the people. But it has not been so.
“Most of the oil windfall that has come into your country, when you look at living standard in Nigeria, of the average Nigerian, one does not see the kind of prosperity which one wants to see. When I came to Nigeria in 1991, I remarked at that time on the very different economic trajectories of Nigeria and Indonesia. When I went to school in the United States in the 1960s, we saw Nigeria as a country with far brighter prospects than Indonesia, but that is not the true state now.
“Your next generation of children should live far better than this generation of children. We should think about the future of Africa and the future depends on two countries - South Africa and Nigeria. South Africa has it challenges, you have yours, but you are blessed with tremendous moments of opportunities in terms of what is happening in the world today; and I pray to God that your society uses the tremendous opportunities of high oil prices today to make immense difference in the lives of millions of children alive today and the millions of children who will inherit your country in the nearest future.”
Saturday, 27 September 2008
EXPECT UP AND DOWN TRENDS
People purchase stocks in the hope or belief that the stock price will go up. In our dogged attempts to -ride the upward trends, any investment loss generally comes as an unwelcome surprise.
In reality, however, market cycles-the highs and the lows-should be expected. In more than forty years of tracking the performance of stocks and bonds, investment professionals have made one thing clear: What goes up must come down, and vice versa.
The cycles experienced but stocks and bonds characterize every investment, from money markets to real estate. Such ups and downs would make perfect sense to King Solomon, who referred to a “day of prosperity” and a “day of adversity” (Eccles. 7: 14) and wrote that there is a time for everything-from mourning to dancing (See Eccles. 3:1, 4). As investors, we must be prepared for both scenarios.
In reality, however, market cycles-the highs and the lows-should be expected. In more than forty years of tracking the performance of stocks and bonds, investment professionals have made one thing clear: What goes up must come down, and vice versa.
The cycles experienced but stocks and bonds characterize every investment, from money markets to real estate. Such ups and downs would make perfect sense to King Solomon, who referred to a “day of prosperity” and a “day of adversity” (Eccles. 7: 14) and wrote that there is a time for everything-from mourning to dancing (See Eccles. 3:1, 4). As investors, we must be prepared for both scenarios.
LET TIME BE YOUR ALLY
Watching today’s investors is like watching an old “Beat the Clock” game-show rerun. Thinking that time is short, people scurry around looking for the “best” investment options since every day that passes is one less day available for wealth accumulation. Too often, such anxiety-driven decisions turn out to be poor ones. Harrison is a dermatologist I know. The short-term mind-set that once drove him to buy a big house, join an expensive country club, and generally go for life’s “gusto” has come back to haunt him. Burdened by debt and with no preparations made for his children’s education or his retirement, Harrison is in a race against time. He waited too long to start investing for the future, and like those who allow themselves to be pressured into hasty and ill-considered decisions, he now sees time as an enemy.
Had Harrison adopted a long-term outlook, time would have become his ally. Time is a tool-and the more you have of it, the better. It does not matter whether you have a lot of money to invest or just a little as long as you are willing to let time work on your behalf. For example, both a ten-thousand-dollar one-time investment and a one-hundred-dollar-per-month savings effort can yield significant rewards, thanks to the “magic” of compounding over time.
Had Harrison adopted a long-term outlook, time would have become his ally. Time is a tool-and the more you have of it, the better. It does not matter whether you have a lot of money to invest or just a little as long as you are willing to let time work on your behalf. For example, both a ten-thousand-dollar one-time investment and a one-hundred-dollar-per-month savings effort can yield significant rewards, thanks to the “magic” of compounding over time.
Thursday, 25 September 2008
WILL THE NEW CBN POLICY TURN MARKET?
The apex bank reduced the monetary policy rate (MPR) from 10.25 percent to 9.75 percent while cash reserve ratio (CRR) dropped from 4.0 percent to 2.0 percent. Liquidity ratio was sliced from 40 percent to 30 percent as repos transactions against eligible securities would be allowed for 90 days, 180 days and 360 days. The policy mix is primed to attract about N1 trillion in to the economy. Out of this fund, a good proportion is expected into the stock market.
This is likely to increase liquidity in the economy and financially empower investors to take position and stir demand and prices.
The stock market has lost about 27 percent since March. The slide was caused by a number of factors, including the confusion over margin trading; the 100,000 minimum trade before prices could move; and earlier planned recapitalisation of the stock broking firms; now rescinded harmonisation of banks’ year- end; increase in MPR from 9.50 percent to 10.5 percent ; increase in CRR from 2 percent to 4 percent; flight by hedge funds .Each of these factors led to liquidity squeeze in the stock market.
The current effort of government is expected to trigger upward trend in prices. The calculation of government is that reduction of MPR which is the rate the CBN lends money to banks would lead to fall in interest rate and allow customers, including investors to borrow at lower cost. This was meant to increase money supply in the economy, boost liquidity in the capital market and encourage investors to play in the market. Reduction in cash reserve requirement implies that more cash would be available to banks from their reserves and allow them extend credits to desiring investors.
Some of the most potent instruments in stabilising the market are the margin trading shares buy-back and creation of market makers. In share buy back, companies are allowed to buy their shares if they believe that the price is too low. This helps to boost share prices. Margin trading, which was the order of the day before the confusion that surrounded it, allows banks to extend margin credist to stock brokers or investors to take positions in stocks. Margin account was lucrative when the market was bullish. Until late March this year, those who played the market with money borrowed at even high interest rates harvested good returns as some stocks recorded three digit percent price appreciation . The practice was so rewarding that banks exposure in the area was high.
But since the market down turn, many investors have lost so much money that venturing into margin trading, may not worth the plunge. Already, there is share glut in the market now following liquidity squeeze and excess supply of stocks. In response to banks’ pressure to recover their money, stock brokers are said to be selling shares bought with margin credits, a development if allowed, that would further depress the market. To forestall this, the Central Securities and Clearing System, is said to have frozen such accounts.
The share buy back is yet to commence because of the legal hurdle which will take a while to be removed because of the long process of amending the Investment and Securities Act (ISA) to reflect the new rule. The appointment of market dealers would have been one of the best things that would happen to the market. But the logistics are still being worked out by SEC and the Nigerian Stock Exchange. And until that happens, market makers whose responsibility it is to buy off shares from selling investors are not going to be available to bail out the market.
As laudable as the intervention is, it remains an indirect instrument and is yet to impact the market. The truth of the matter is that the market needs direct intervention, if we must achieve similar immediate positive effects like what is happening in Europe and America . The injection of $180 billion by central banks of developed economies, led to market rebound over night because of the direct intervention.
Although the CBN may be cautious of the inflationary tendency of direct injection of funds into the economy, it may be the best option now given the level of loss the stock market has recorded so far. It could be an interim policy, pending when the other policies would start having effect. The apex bank can then mop up as an anti inflationary act.
The suspension of the stabilisation policy, I believe is ill-advised. The decision should be revisited. I do not agree with Finance Minister Shamsudeen Usman that the latest decision to stabilise the market has taken care of the earlier plan for intervention fund. Most of the latest pronouncements to halt the market slide are indirect policies. So, the stabilisation fund would have been a more effective tool.
As for the recovery period for the market, I see that happening soon. A study of the market in the last few days shows that the level of loss is declining. And as the share glut in the market is mopped up following the liquidity- enhancing policies, the market would stage resurgence.
This is likely to increase liquidity in the economy and financially empower investors to take position and stir demand and prices.
The stock market has lost about 27 percent since March. The slide was caused by a number of factors, including the confusion over margin trading; the 100,000 minimum trade before prices could move; and earlier planned recapitalisation of the stock broking firms; now rescinded harmonisation of banks’ year- end; increase in MPR from 9.50 percent to 10.5 percent ; increase in CRR from 2 percent to 4 percent; flight by hedge funds .Each of these factors led to liquidity squeeze in the stock market.
The current effort of government is expected to trigger upward trend in prices. The calculation of government is that reduction of MPR which is the rate the CBN lends money to banks would lead to fall in interest rate and allow customers, including investors to borrow at lower cost. This was meant to increase money supply in the economy, boost liquidity in the capital market and encourage investors to play in the market. Reduction in cash reserve requirement implies that more cash would be available to banks from their reserves and allow them extend credits to desiring investors.
Some of the most potent instruments in stabilising the market are the margin trading shares buy-back and creation of market makers. In share buy back, companies are allowed to buy their shares if they believe that the price is too low. This helps to boost share prices. Margin trading, which was the order of the day before the confusion that surrounded it, allows banks to extend margin credist to stock brokers or investors to take positions in stocks. Margin account was lucrative when the market was bullish. Until late March this year, those who played the market with money borrowed at even high interest rates harvested good returns as some stocks recorded three digit percent price appreciation . The practice was so rewarding that banks exposure in the area was high.
But since the market down turn, many investors have lost so much money that venturing into margin trading, may not worth the plunge. Already, there is share glut in the market now following liquidity squeeze and excess supply of stocks. In response to banks’ pressure to recover their money, stock brokers are said to be selling shares bought with margin credits, a development if allowed, that would further depress the market. To forestall this, the Central Securities and Clearing System, is said to have frozen such accounts.
The share buy back is yet to commence because of the legal hurdle which will take a while to be removed because of the long process of amending the Investment and Securities Act (ISA) to reflect the new rule. The appointment of market dealers would have been one of the best things that would happen to the market. But the logistics are still being worked out by SEC and the Nigerian Stock Exchange. And until that happens, market makers whose responsibility it is to buy off shares from selling investors are not going to be available to bail out the market.
As laudable as the intervention is, it remains an indirect instrument and is yet to impact the market. The truth of the matter is that the market needs direct intervention, if we must achieve similar immediate positive effects like what is happening in Europe and America . The injection of $180 billion by central banks of developed economies, led to market rebound over night because of the direct intervention.
Although the CBN may be cautious of the inflationary tendency of direct injection of funds into the economy, it may be the best option now given the level of loss the stock market has recorded so far. It could be an interim policy, pending when the other policies would start having effect. The apex bank can then mop up as an anti inflationary act.
The suspension of the stabilisation policy, I believe is ill-advised. The decision should be revisited. I do not agree with Finance Minister Shamsudeen Usman that the latest decision to stabilise the market has taken care of the earlier plan for intervention fund. Most of the latest pronouncements to halt the market slide are indirect policies. So, the stabilisation fund would have been a more effective tool.
As for the recovery period for the market, I see that happening soon. A study of the market in the last few days shows that the level of loss is declining. And as the share glut in the market is mopped up following the liquidity- enhancing policies, the market would stage resurgence.
Wednesday, 24 September 2008
STARCOMMS CLARIFIES LOSS SITUATION
Starcomms on Wednesday 17th September, held a stakeholders forum aimed at providing insight to the company’s performance for the half year ended 30th June 2008. Contrary to our expectations, Starcomms had posted a half year net loss of N1.014 billion on the back of turnover of N8.965billion. A swift market reaction to the result announced on August 14 saw the stock shedding 23% of its value, thus resulting in a need for the company to throw more light on its operational and financial performance.
We present below major highlights of the forum pending our equity note on the stock:
· Management reiterated that the result was adversely impacted by exogenous factors, mainly attributable to a spike in power costs (owing to sharp increases in diesel price during the period), and exchange rate related losses as a result of foreign currency debt. Diesel expenses as at end of Half year 2008 was approximately N583million, an increase of 82.7% over management’s budget figure of N319million. Management also stated that losses due to foreign exchange were approximately N233million.
· Management also stated that it made debt provisions of N172million in respect of Interconnect charges owed by four telecoms operators during the period.
· At the end of June 2008, Starcomms had an estimated net debt position of $26million, and cash balance $229 million, implying total balance sheet debt of $255million.
· It was affirmed that the company’s ownership structure remained intact, as the core investor (SN Communications Holdings ltd) increased its equity stake in the company to 29%. Management stated that the huge volumes observed upon listing was in line with the Nigerian Stock Exchange (NSE) rules on listing by introduction, which stipulated that the issuer offered 5% of its outstanding shares (approximately 350million) to the market to provide liquidity for the stock.
· Current subscriber base is estimated at 1.5million with average daily activations of 10,000 subscribers, while Average Revenue per User (ARPU) at $19 per user remains solid, and well above competitors ARPU; MTN $16/ user, Zain $12/ user and Globacom$ 14/user.
· The company’s network expansion plan is very much on course. Starcomms effective coverage now extends to 21 major cities in the country. The company’s coverage is expected to extend to 31 major cities by the end year. Management also stated that revenue projections were also on target.
· Starcomms intends to adopt the Co-location of base station infrastructure with competitors with a view to reducing costs. It is expected that this measure would greatly reduce capital investment costs on network development.
· Key strategies being employed by management in meeting its year end forecasts include, Aggressive growth of its higher margin data business, driving volume growth in its tele-centre business segment and development of product lines to cater for corporate customers.
While management has expressed great optimism in meeting its full year earnings forecast, we tend to adopt a more cautious stance in view of the company’s recent results. It is our view that the results for the next few quarters would be very crucial in determining management’s ability to meet key performance indices as stated in its offer prospectus. We will be publishing our recommendation on the stock once we get the required input for our financial model.
We present below major highlights of the forum pending our equity note on the stock:
· Management reiterated that the result was adversely impacted by exogenous factors, mainly attributable to a spike in power costs (owing to sharp increases in diesel price during the period), and exchange rate related losses as a result of foreign currency debt. Diesel expenses as at end of Half year 2008 was approximately N583million, an increase of 82.7% over management’s budget figure of N319million. Management also stated that losses due to foreign exchange were approximately N233million.
· Management also stated that it made debt provisions of N172million in respect of Interconnect charges owed by four telecoms operators during the period.
· At the end of June 2008, Starcomms had an estimated net debt position of $26million, and cash balance $229 million, implying total balance sheet debt of $255million.
· It was affirmed that the company’s ownership structure remained intact, as the core investor (SN Communications Holdings ltd) increased its equity stake in the company to 29%. Management stated that the huge volumes observed upon listing was in line with the Nigerian Stock Exchange (NSE) rules on listing by introduction, which stipulated that the issuer offered 5% of its outstanding shares (approximately 350million) to the market to provide liquidity for the stock.
· Current subscriber base is estimated at 1.5million with average daily activations of 10,000 subscribers, while Average Revenue per User (ARPU) at $19 per user remains solid, and well above competitors ARPU; MTN $16/ user, Zain $12/ user and Globacom$ 14/user.
· The company’s network expansion plan is very much on course. Starcomms effective coverage now extends to 21 major cities in the country. The company’s coverage is expected to extend to 31 major cities by the end year. Management also stated that revenue projections were also on target.
· Starcomms intends to adopt the Co-location of base station infrastructure with competitors with a view to reducing costs. It is expected that this measure would greatly reduce capital investment costs on network development.
· Key strategies being employed by management in meeting its year end forecasts include, Aggressive growth of its higher margin data business, driving volume growth in its tele-centre business segment and development of product lines to cater for corporate customers.
While management has expressed great optimism in meeting its full year earnings forecast, we tend to adopt a more cautious stance in view of the company’s recent results. It is our view that the results for the next few quarters would be very crucial in determining management’s ability to meet key performance indices as stated in its offer prospectus. We will be publishing our recommendation on the stock once we get the required input for our financial model.
START BUYING NOW!
Sometimes investors will like to stay away from the stock market when there is a sustained market downturn. These investors will run away after being bombarded with all the negative news.
I think this is wrong. This is the time to be active here, to ask all buying questions now, to make your purchases now, and they wait for the bulls to arrive. That bullish time is when mistakes are common. That is when caution is thrown to the winds, when people buy just because others are buying, when everyone suddenly becomes the stock expert. Giving buying tips because it’s easy to say this stock will go up, and it does. That is when you need to sell, not buy!
Bear periods are supposed to be active time while bull periods, well you just sell and hide.
I think this is wrong. This is the time to be active here, to ask all buying questions now, to make your purchases now, and they wait for the bulls to arrive. That bullish time is when mistakes are common. That is when caution is thrown to the winds, when people buy just because others are buying, when everyone suddenly becomes the stock expert. Giving buying tips because it’s easy to say this stock will go up, and it does. That is when you need to sell, not buy!
Bear periods are supposed to be active time while bull periods, well you just sell and hide.
Monday, 22 September 2008
AFROIL TO PAY DIVIDEND
After 10 years without a dividend payout to its shareholders, the management of Afroil Plc has concluded plans to declare dividends at the end of its 2009 financial year.
A statement from the company on Friday stated that the payment of dividend had become imperative following the resolution of its internal crisis and the company’s drive for profitability.
The statement added that the company had assured investors of increased return on investment as soon as the technical suspension placed on its shares by the Nigerian Stock Exchange was lifted.
The Managing Director, Afroil Plc, Mr Olakunle Sanni, while speaking at its extra-ordinary general meeting in Kano, stated that the company was no longer indebted to any commercial creditor and as such, its long-term solvency as at June 2008, had been re-established with a total shareholders’ fund of N300m and a turnover of N200m.
He noted that with the inauguration of a new board of directors, the company was well repositioned for effective competition with N4.5bn capital expenditure programme within the next three years; construction of 30 new service petrol stations, investment in lubricants blending and aviation depots.
While commending officials of the Securities and Exchange Commission and the Corporate Affairs Commission for their presence during the EGM, Sanni pointed out that the relationship between the company and the regulatory authorities would lead to a favourable impact on its shareholders.
Meanwhile the company’s shareholders at the meeting approved the resolution to consolidate its share capital of N65m divided into 235 million shares of 20 kobo each, to 130 million shares of 50 kobo each, with all shares ranking equally in rights, as contained its articles of association.
A statement from the company on Friday stated that the payment of dividend had become imperative following the resolution of its internal crisis and the company’s drive for profitability.
The statement added that the company had assured investors of increased return on investment as soon as the technical suspension placed on its shares by the Nigerian Stock Exchange was lifted.
The Managing Director, Afroil Plc, Mr Olakunle Sanni, while speaking at its extra-ordinary general meeting in Kano, stated that the company was no longer indebted to any commercial creditor and as such, its long-term solvency as at June 2008, had been re-established with a total shareholders’ fund of N300m and a turnover of N200m.
He noted that with the inauguration of a new board of directors, the company was well repositioned for effective competition with N4.5bn capital expenditure programme within the next three years; construction of 30 new service petrol stations, investment in lubricants blending and aviation depots.
While commending officials of the Securities and Exchange Commission and the Corporate Affairs Commission for their presence during the EGM, Sanni pointed out that the relationship between the company and the regulatory authorities would lead to a favourable impact on its shareholders.
Meanwhile the company’s shareholders at the meeting approved the resolution to consolidate its share capital of N65m divided into 235 million shares of 20 kobo each, to 130 million shares of 50 kobo each, with all shares ranking equally in rights, as contained its articles of association.
STABILIZATION FUNDS SHOULD HAVE COME EARLIER
Analysts have said that the bearish trend of activities in the Nigerian capital market have continued because the establishment of the stabilisation fund was not given priority.
According to them, the intervention measures by the Federal Government were not being implemented in the order of importance.
While noting that the rescue measures were in the right direction, they said if implementation was not at the right priority level, it might not have the desired effect.
The Chief Consultant, B. Adedipe Associates Limited, Mr. Biodun Adedipe, said that if the establishment of a capital market stabilisation fund had been implemented on time, the market might have started to pick up.
Speaking during the Securities and Exchange Commission’s workshop for journalists in Kaduna, he said, “The intervention fund by the Federal Government, through the immediate injection of funds into the system, should have been put first.
“Other jurisdictions, which have experienced this same trend, usually implement the intervention funds first.
“This is the reason why the intervention in the Nigerian capital market has not yet brought the desired results. It is because the intervention fund has not been properly applied.”
The Minister of Finance, Dr. Shamsuddeen Usman, however, said on Thursday that with the recent liquidity injection measures taken by the Central Bank of Nigeria, the establishment of a stabilisation fund was no longer required.
But Adedipe advised that there should be teamwork between the CBN, SEC and the Nigerian Stock Exchange to effectively regulate the financial services sector of the economy.
He said, “The pattern and nature of market operations compel collaboration by the financial system regulators. For effectiveness of regulation, regulators must protect investors and represent their interest, and should be fully schooled about the operations of the system.”
He said that the regulators should ensure that they created an enabling environment, if they wanted wider participation from both local and foreign investors in the capital market.
“SEC must be primed to handle issues that have to do with cross border listing and trading, 24-hour trading and other complications in the market. The Director-General has to ensure market integrity, without thinking of the political undertone of the ideas,” he said.
On whether it was right for operators to intervene in capital market activities, the Managing Director, Nigerian Capital Market Institute, Mr. Oluwatobi Oyefeso, said some form of intervention was required.
He said that the regulatory bodies, including the CBN, had been intervening through moral suasion to improve the money market.
According to them, the intervention measures by the Federal Government were not being implemented in the order of importance.
While noting that the rescue measures were in the right direction, they said if implementation was not at the right priority level, it might not have the desired effect.
The Chief Consultant, B. Adedipe Associates Limited, Mr. Biodun Adedipe, said that if the establishment of a capital market stabilisation fund had been implemented on time, the market might have started to pick up.
Speaking during the Securities and Exchange Commission’s workshop for journalists in Kaduna, he said, “The intervention fund by the Federal Government, through the immediate injection of funds into the system, should have been put first.
“Other jurisdictions, which have experienced this same trend, usually implement the intervention funds first.
“This is the reason why the intervention in the Nigerian capital market has not yet brought the desired results. It is because the intervention fund has not been properly applied.”
The Minister of Finance, Dr. Shamsuddeen Usman, however, said on Thursday that with the recent liquidity injection measures taken by the Central Bank of Nigeria, the establishment of a stabilisation fund was no longer required.
But Adedipe advised that there should be teamwork between the CBN, SEC and the Nigerian Stock Exchange to effectively regulate the financial services sector of the economy.
He said, “The pattern and nature of market operations compel collaboration by the financial system regulators. For effectiveness of regulation, regulators must protect investors and represent their interest, and should be fully schooled about the operations of the system.”
He said that the regulators should ensure that they created an enabling environment, if they wanted wider participation from both local and foreign investors in the capital market.
“SEC must be primed to handle issues that have to do with cross border listing and trading, 24-hour trading and other complications in the market. The Director-General has to ensure market integrity, without thinking of the political undertone of the ideas,” he said.
On whether it was right for operators to intervene in capital market activities, the Managing Director, Nigerian Capital Market Institute, Mr. Oluwatobi Oyefeso, said some form of intervention was required.
He said that the regulatory bodies, including the CBN, had been intervening through moral suasion to improve the money market.
ZOOMMOBILE?
ZOOMmobile, one of Nigeria’s foremost telecommunications solutions providers, has rolled out its national voice, data and other value-added services in Kano, the company said on Thursday.
The Emir of Kano, His Royal Highness Alhaji Ado Bayero, while receiving the Management team of ZOOMmobile at his palace, as part of activities marking the launch, lauded the company for pioneering tariff reduction in the industry, and continuously striving to make telecommunications services affordable to all, irrespective of social or economic class.
The emir further urged the company to ensure that residents of Kano enjoyed world class services on its network, and pledged his continued support and encouragement to the company.
Earlier in his speech, the Group Managing Director of ZOOMmobile, Mr. Tony Okonkwo, said that his team was in the palace to pay homage to the monarch and seek his royal blessing for a mutually beneficial business relationship with the good people of Kano.
Okonkwo stated that ZOOMmobile was in Kano to alter the telecommunications landscape for good, by providing a robust, fast, stable, effective and affordable network that empowered people to excel in all of their aspirations and endeavors.
In keeping with its corporate social investment strategy of empowering enterprising Nigerians to own their own businesses, the company donated 50 telephone handsets and recharge cards to the Emir, for distribution to some of his subjects, as a way of helping in the fight to alleviate poverty in the country.
It will be recalled that ZOOMmobile re-branded recently, dropping its former name (Reltelwireless), and launching the unique 0707 range of numbers, making it the first CDMA operator to acquire a four-digit number prefix.
The company has also maintained leadership of the CDMA segment of the market by having the widest coverage and subscriber base. ZOOMmobile currently covers 20 states in Nigeria, including the Federal Capital Territory, and has a subscriber base of more than 1.5million.
ZOOMmobile was recently voted the “CDMA Company of the Year 2008” and the “Most Improved Telephone Company of the Year 2008 at the Nigeria Telecoms Award.
TIGERKENN comments.........
All these companies are fighting for the soul of Nigeria's telecomm business, we hope Nitel will wake up and give some little challenge.
The Emir of Kano, His Royal Highness Alhaji Ado Bayero, while receiving the Management team of ZOOMmobile at his palace, as part of activities marking the launch, lauded the company for pioneering tariff reduction in the industry, and continuously striving to make telecommunications services affordable to all, irrespective of social or economic class.
The emir further urged the company to ensure that residents of Kano enjoyed world class services on its network, and pledged his continued support and encouragement to the company.
Earlier in his speech, the Group Managing Director of ZOOMmobile, Mr. Tony Okonkwo, said that his team was in the palace to pay homage to the monarch and seek his royal blessing for a mutually beneficial business relationship with the good people of Kano.
Okonkwo stated that ZOOMmobile was in Kano to alter the telecommunications landscape for good, by providing a robust, fast, stable, effective and affordable network that empowered people to excel in all of their aspirations and endeavors.
In keeping with its corporate social investment strategy of empowering enterprising Nigerians to own their own businesses, the company donated 50 telephone handsets and recharge cards to the Emir, for distribution to some of his subjects, as a way of helping in the fight to alleviate poverty in the country.
It will be recalled that ZOOMmobile re-branded recently, dropping its former name (Reltelwireless), and launching the unique 0707 range of numbers, making it the first CDMA operator to acquire a four-digit number prefix.
The company has also maintained leadership of the CDMA segment of the market by having the widest coverage and subscriber base. ZOOMmobile currently covers 20 states in Nigeria, including the Federal Capital Territory, and has a subscriber base of more than 1.5million.
ZOOMmobile was recently voted the “CDMA Company of the Year 2008” and the “Most Improved Telephone Company of the Year 2008 at the Nigeria Telecoms Award.
TIGERKENN comments.........
All these companies are fighting for the soul of Nigeria's telecomm business, we hope Nitel will wake up and give some little challenge.
CHEVRON SALE, WORKERS MEET TOMORROW
The Petroleum and Natural Gas Senior Staff Association and its National Union of Petroleum and Natural Gas Workers, will meet on Tuesday to discuss Friday’s announcement that Chevron Oil Plc had been sold to a Panamanian company, Corlay Global S.A.
The Chairman, PENGASSAN, Chevron Branch, Mr. Mr. Clement Ofoegbu, who spoke with our correspondent on Sunday, said the sale was another gimmick being adopted by the United States corporation to deny workers of their benefits and severance package.
He said, “We heard the announcement on Friday that the company (Chevron Oil) had been sold to a Panamanian company, when we all know it is MRS Oil and Gas, but they will not go too far.
“The unions are going to meet on Tuesday to discuss the development, because of this Panama angle. That was the same thing the management did when the issue of the divestment came up, and suddenly Chevron Oil became a Bermuda company, rather than the one in San Ramon, California.
“No matter what excuse they come up with, they must pay us because we have worked for it, and to think that the announcement was made when the matter was still in court shows that some of the top management are ready to go to prison.”
Inquiries showed that Corlay Global S.A. is registered in Panama and is owned by an African-based consortium composed of MRS Holdings Limited, an indigenous oil marketing firm owned by business mogul, Sayyu Dantata, and Petroci Holdings.
The lack of information on Corlay, made analysts believe that it was merely a portfolio company set up purposefully for the buy out, which confirms workers fears that the transaction was all a rouse to deny them of their benefits.
Chevron Corporation announced that its subsidiary, Chevron Africa Holdings Limited has agreed to sell Chevron Nigeria Holdings Limited to Corlay Global S.A,
According to the corporation, “Chevron Nigeria Holdings is a Bermudan company that holds 60 per cent of the issued shares of Chevron Oil Nigeria PLC, a public listed operator and owner of downstream marketing assets in Nigeria.”
The Chairman, PENGASSAN, Chevron Branch, Mr. Mr. Clement Ofoegbu, who spoke with our correspondent on Sunday, said the sale was another gimmick being adopted by the United States corporation to deny workers of their benefits and severance package.
He said, “We heard the announcement on Friday that the company (Chevron Oil) had been sold to a Panamanian company, when we all know it is MRS Oil and Gas, but they will not go too far.
“The unions are going to meet on Tuesday to discuss the development, because of this Panama angle. That was the same thing the management did when the issue of the divestment came up, and suddenly Chevron Oil became a Bermuda company, rather than the one in San Ramon, California.
“No matter what excuse they come up with, they must pay us because we have worked for it, and to think that the announcement was made when the matter was still in court shows that some of the top management are ready to go to prison.”
Inquiries showed that Corlay Global S.A. is registered in Panama and is owned by an African-based consortium composed of MRS Holdings Limited, an indigenous oil marketing firm owned by business mogul, Sayyu Dantata, and Petroci Holdings.
The lack of information on Corlay, made analysts believe that it was merely a portfolio company set up purposefully for the buy out, which confirms workers fears that the transaction was all a rouse to deny them of their benefits.
Chevron Corporation announced that its subsidiary, Chevron Africa Holdings Limited has agreed to sell Chevron Nigeria Holdings Limited to Corlay Global S.A,
According to the corporation, “Chevron Nigeria Holdings is a Bermudan company that holds 60 per cent of the issued shares of Chevron Oil Nigeria PLC, a public listed operator and owner of downstream marketing assets in Nigeria.”
TRADING MOVES FOR THIS WEEK
Hello good people out there, its another brand new week for us traders in the Nigerian capital markets, the stock market to be exact. We have been presented with another opportunity to better our fortunes trading stocks on the good old NSE.
Looking at the recent happening, as regards the announcements that were made by the CBN after due consultations with many institutions, the market condition seems to be headed for the better, i.e., stock prices going up and allowing investors that have already taken position in the stock market to enjoy some capital appreciation.
After those announcements were made last Thursday, investors all expected to see a full reversal of all market indices, we all expected to see all stocks gaining across board as early as last Friday, but that was not to be as the market still closed Friday at a loss. Some has suggested that the real impact of this announcement will take some time to kick in since the market players are still studying the rules and its possible effects, negative and positive. But others say the loss on Friday was as a result of investors discomfort with the persistent fall in the stock prices.
So, what do we do as traders? Buy now and risk a possible relapse to the losing streak or stay off buying and also risk being left behind as the bulls take over. The good trader will want to be in on the bull as it as it starts, but care should be taken to avoid burning our fingers.
There was also this rumor at the end of last week for the suspension of the 1% maximum drop in share prices, we await this announcement as it will return things to near normal and clear the way for good trading.
We are watching
Looking at the recent happening, as regards the announcements that were made by the CBN after due consultations with many institutions, the market condition seems to be headed for the better, i.e., stock prices going up and allowing investors that have already taken position in the stock market to enjoy some capital appreciation.
After those announcements were made last Thursday, investors all expected to see a full reversal of all market indices, we all expected to see all stocks gaining across board as early as last Friday, but that was not to be as the market still closed Friday at a loss. Some has suggested that the real impact of this announcement will take some time to kick in since the market players are still studying the rules and its possible effects, negative and positive. But others say the loss on Friday was as a result of investors discomfort with the persistent fall in the stock prices.
So, what do we do as traders? Buy now and risk a possible relapse to the losing streak or stay off buying and also risk being left behind as the bulls take over. The good trader will want to be in on the bull as it as it starts, but care should be taken to avoid burning our fingers.
There was also this rumor at the end of last week for the suspension of the 1% maximum drop in share prices, we await this announcement as it will return things to near normal and clear the way for good trading.
We are watching
Thursday, 18 September 2008
NIGERIA INJECTS BILLIONS TO SAVE MARKET
ABUJA, Sept 18 (Reuters) - Nigeria's central bank said on Thursday it injected about 150 billion naira (around $1.27 bln) into the financial markets and reduced the cash reserve requirement to 2 percent from 4 percent.
"In order to lubricate the system, (the Monetary Policy Committee) has decided to ensure that the financial system remains liquid," said Central Bank Governor Chukwuma Soludo.
The bank also lowered its liquidity ratio to 30 percent from 40 percent, and said it would allow repo transactions against eligible securities for 90 days, 180 days and 360 days. (Reporting by Camillus Eboh; Writing by Randy Fabi)
"In order to lubricate the system, (the Monetary Policy Committee) has decided to ensure that the financial system remains liquid," said Central Bank Governor Chukwuma Soludo.
The bank also lowered its liquidity ratio to 30 percent from 40 percent, and said it would allow repo transactions against eligible securities for 90 days, 180 days and 360 days. (Reporting by Camillus Eboh; Writing by Randy Fabi)
BUY NBC NOW!
From reliable information, there is a good reason to get in and stay long in NBC stocks. The company is embarking on some reorganization unseen in the last 20 yrs of the company’s existence. Cost cutting, better negotiation of contracts and generally profit oriented moves will start to pay in about one year from now. Load up on this one if you plan to stay long.
2ND QTR RESULT FOR NBC PLC
2ND QUARTER ENDED JUNE 2008
NIGERIAN BOTTLING CO. PLC. 2ND QUARTER ENDED 30/06/08.
TURNOVER 08 N39.4B 07 N34.1B
PBT 08 N2.22B 07 N2.0B
TAXATION 08 (N5M) 07 (N332.0M)
PAT 08 N2.21B 07 N1.68B
NIGERIAN BOTTLING CO. PLC. 2ND QUARTER ENDED 30/06/08.
TURNOVER 08 N39.4B 07 N34.1B
PBT 08 N2.22B 07 N2.0B
TAXATION 08 (N5M) 07 (N332.0M)
PAT 08 N2.21B 07 N1.68B
2ND QTR RESULTS FOR GTB
GUARANTY TRUST BANK PLC
UNAUDITED RESULTS FOR SECOND QUARTER ENDING AUGUST 31, 2008
2008 2007 %CHANGE
TURNOVER N57.2b N33.0b 73
PROFIT BEFORE TAX N23.0b N11.0b 109
TAXATION (N7.4b) (N3.5b) 109
PROFIT AFTER TAX N15.7b N7.5b 109
UNAUDITED RESULTS FOR SECOND QUARTER ENDING AUGUST 31, 2008
2008 2007 %CHANGE
TURNOVER N57.2b N33.0b 73
PROFIT BEFORE TAX N23.0b N11.0b 109
TAXATION (N7.4b) (N3.5b) 109
PROFIT AFTER TAX N15.7b N7.5b 109
Wednesday, 17 September 2008
ARE NIGERIAN BANKS AS HEALTHY AS THEY CLAIM?
THE bright logos of Nigeria’s financial institutions adorn the tallest and poshest office blocks in central Lagos, the country’s commercial capital, testimony to years of impressive growth in banking. But now, after a rocky year, there are worries that some of the optimism may have been overblown.
The reform of Nigeria’s creaking, corrupt banking system was one of the big achievements of President Olusegun Obasanjo in his second term in office (2003-07). As part of a policy to squeeze weak or failing banks out of business, in 2005 the Central Bank of Nigeria raised banks’ capital requirements. In a hectic round of consolidation, the number of banks dropped from 89 to 24. Those that remained have had a very good few years, with massive local expansion and sometimes triple-digit growth in their share prices. And with less than a fifth of Nigerians keeping their money in banks and with fast growth led by private companies, there still seems to be plenty of potential for more business. Banks surveyed by a Lagos-based stockbroker, Afrinvest, showed that median before-tax earnings had risen by 141% year-on-year by June.
Yet share prices have been dropping throughout 2008, suggesting a lack of confidence. Would-be investors have started to eye Nigeria’s banks, in particular their regulatory practices, more warily. Some wonder whether the apparent gains of the past few years are all they seem. “The foundation is not there, it’s weak,” says an analyst, Osaruyi Orobosa-Ogbeide, of a Lagos-based firm, Financial Derivatives.
Though banking standards have certainly risen a lot in recent years, they still lag behind those of America and the European Union, particularly in terms of transparency. In April, United Bank for Africa, one of the country’s biggest, fell foul of American regulators who served the bank with a $15m fine for ignoring anti-money-laundering regulations despite several warnings. “There’s no resemblance at all between operating in Britain or America and operating in Nigeria,” says Fola Fagbule, a research analyst with Afrinvest. “It’s light years apart, and it’s an issue [the banks] need to address”.
The top seven Nigerian banks, with a combined market value of almost $40 billion, are overvalued by as much as 56%, according to a report published in May by JPMorgan, an American financial-services company. Part of the problem is that banks have used their own money to push up their stock prices by engaging in risky lending to corporations and individuals who invest in the banks’ own shares.
Those in charge of imposing some order on the sector have also been found wanting. After share prices began to fall earlier this year, the central bank set a floor on trading in a bid to buoy the market. Investors were left with no choice but to hold on to stocks; that unnerved many of them. Bismarck Rewane of Financial Derivatives described the action as “a disorderly intervention in a chaotic market.”
Lamido Sanusi, a risk-control officer who will take over next January as the head of Nigeria’s oldest bank, First Bank, is disappointed that regulators are not tougher in insisting on transparency and disclosure of information. Foreign investors demand open banking procedures, he says, yet banks are not now obliged to open their books to scrutiny. “Are these banks being properly managed? Are these assets being properly deployed?” asks Mr Sanusi. “We don’t know the reality.”
Nigeria is sub-Saharan Africa’s second-biggest economy after South Africa’s and the world’s eighth-largest oil exporter, yet the continent’s most populous country (with 140m-plus citizens) has yet to fulfil its economic potential. A robust banking sector that everyone can have confidence in is essential; the country’s reformers and regulators cannot rest on their laurels.
The reform of Nigeria’s creaking, corrupt banking system was one of the big achievements of President Olusegun Obasanjo in his second term in office (2003-07). As part of a policy to squeeze weak or failing banks out of business, in 2005 the Central Bank of Nigeria raised banks’ capital requirements. In a hectic round of consolidation, the number of banks dropped from 89 to 24. Those that remained have had a very good few years, with massive local expansion and sometimes triple-digit growth in their share prices. And with less than a fifth of Nigerians keeping their money in banks and with fast growth led by private companies, there still seems to be plenty of potential for more business. Banks surveyed by a Lagos-based stockbroker, Afrinvest, showed that median before-tax earnings had risen by 141% year-on-year by June.
Yet share prices have been dropping throughout 2008, suggesting a lack of confidence. Would-be investors have started to eye Nigeria’s banks, in particular their regulatory practices, more warily. Some wonder whether the apparent gains of the past few years are all they seem. “The foundation is not there, it’s weak,” says an analyst, Osaruyi Orobosa-Ogbeide, of a Lagos-based firm, Financial Derivatives.
Though banking standards have certainly risen a lot in recent years, they still lag behind those of America and the European Union, particularly in terms of transparency. In April, United Bank for Africa, one of the country’s biggest, fell foul of American regulators who served the bank with a $15m fine for ignoring anti-money-laundering regulations despite several warnings. “There’s no resemblance at all between operating in Britain or America and operating in Nigeria,” says Fola Fagbule, a research analyst with Afrinvest. “It’s light years apart, and it’s an issue [the banks] need to address”.
The top seven Nigerian banks, with a combined market value of almost $40 billion, are overvalued by as much as 56%, according to a report published in May by JPMorgan, an American financial-services company. Part of the problem is that banks have used their own money to push up their stock prices by engaging in risky lending to corporations and individuals who invest in the banks’ own shares.
Those in charge of imposing some order on the sector have also been found wanting. After share prices began to fall earlier this year, the central bank set a floor on trading in a bid to buoy the market. Investors were left with no choice but to hold on to stocks; that unnerved many of them. Bismarck Rewane of Financial Derivatives described the action as “a disorderly intervention in a chaotic market.”
Lamido Sanusi, a risk-control officer who will take over next January as the head of Nigeria’s oldest bank, First Bank, is disappointed that regulators are not tougher in insisting on transparency and disclosure of information. Foreign investors demand open banking procedures, he says, yet banks are not now obliged to open their books to scrutiny. “Are these banks being properly managed? Are these assets being properly deployed?” asks Mr Sanusi. “We don’t know the reality.”
Nigeria is sub-Saharan Africa’s second-biggest economy after South Africa’s and the world’s eighth-largest oil exporter, yet the continent’s most populous country (with 140m-plus citizens) has yet to fulfil its economic potential. A robust banking sector that everyone can have confidence in is essential; the country’s reformers and regulators cannot rest on their laurels.
FBN 1:4 BONUS REFUSED?
Security & Exchange Commission (SEC) is yet to clear and register First Bank of Nigeria Plc (FBN) bonus of one for every four shares declared by the Directors of the bank for the year ended March 31 2008.
A source at First Registrars Limited confirmed this to Proshare NI today in Lagos Nigeria. “We have no clearance from SEC to go ahead and pay the bonus” the source affirmed.
“For the fact that a bonus is declared does not mean that we would just issue same, it has to be cleared and registered by SEC” the source said.
The source further affirmed that if there are new issues in the market, the Apex Capital Market Regulatory Body would be convinced that such issues to be given out are appropriate and are from the right source.
Proshare NI sought to confirm the issue with another source at FBN Capital. However our source at FBN Capital affirmed to Proshare NI that it is the duty of the Board of a company to approve and issue bonus to investors and not within the purview of SEC.
“This may be a recent development, which I may not be aware; that a company is awaiting SEC’s clearance to issue bonus declared by it to investors” the source said.
Our source at FBN Capital further affirmed that bonus issue is not a thing done in a hurry. “It takes a little time” the source confirmed.
This is coming on the heels of investors enquiries that has inundated the mail box of Proshare NI in respect of the 1 for 4 bonus issue recommended by First Bank’s Board of Directors.
However, as at the time of filling in this report, Proshare NI could not clarify the true status of the issue with either the officials of SEC or FBN.
As earlier published on Proshare NI’s website FBN audited results for the year ended March 31 2008 showed the bank made a Gross Earnings of N155.3 billion in year 2008 compared to N91.2 billion recorded in 2007.
In the same vein, its Profit after Tax (PAT) increased from N20.64 billion in year 2007 to N36.54 billion in the
A source at First Registrars Limited confirmed this to Proshare NI today in Lagos Nigeria. “We have no clearance from SEC to go ahead and pay the bonus” the source affirmed.
“For the fact that a bonus is declared does not mean that we would just issue same, it has to be cleared and registered by SEC” the source said.
The source further affirmed that if there are new issues in the market, the Apex Capital Market Regulatory Body would be convinced that such issues to be given out are appropriate and are from the right source.
Proshare NI sought to confirm the issue with another source at FBN Capital. However our source at FBN Capital affirmed to Proshare NI that it is the duty of the Board of a company to approve and issue bonus to investors and not within the purview of SEC.
“This may be a recent development, which I may not be aware; that a company is awaiting SEC’s clearance to issue bonus declared by it to investors” the source said.
Our source at FBN Capital further affirmed that bonus issue is not a thing done in a hurry. “It takes a little time” the source confirmed.
This is coming on the heels of investors enquiries that has inundated the mail box of Proshare NI in respect of the 1 for 4 bonus issue recommended by First Bank’s Board of Directors.
However, as at the time of filling in this report, Proshare NI could not clarify the true status of the issue with either the officials of SEC or FBN.
As earlier published on Proshare NI’s website FBN audited results for the year ended March 31 2008 showed the bank made a Gross Earnings of N155.3 billion in year 2008 compared to N91.2 billion recorded in 2007.
In the same vein, its Profit after Tax (PAT) increased from N20.64 billion in year 2007 to N36.54 billion in the
EXPERTS TO REFORM OUR CAPITAL MARKET
The Securities and Exchange Commission (SEC) will today inaugurate a 10-man committee of experts, including international fund managers, to review the operations of the Nigerian capital market and align it with its peers around the world.
The planned reform comes in the wake of lingering worry over the continued downward trend in the stock market in spite of desperate moves by the Federal Government to stem the fall.
This latest intervention at the instance of SEC is expected to be the forerunner to perhaps the most fundamental reform of the market and should help to restore the market’s reputation and give comfort to major market players who have taken a very dim view of the unorthodox methods applied lately by the authorities.
Business Day learnt that the committee which to be chaired by Adedotun Suleiman, chairman of both Accenture and Cornerstone Insurance plc, draws membership from both J.P Morgan and Goldman Saachs. Other members of the committee include Albert Okumagba, chief executive of BGL Securities, Francis Wood, managing director of FCMB Capital and Bismark Rewane, leading economist and managing director of Financial Derivatives who has consistently canvassed more market transparency.
The review panel is expected to focus on such issues as the controversial upper and lower cap on price movements and the cost structure of transactions on the market.
The stock market lost 25.5 percent before the Federal Government intervention which appear only to have caused more concern than comfort. . Source: BusinessDay Newspaper
The planned reform comes in the wake of lingering worry over the continued downward trend in the stock market in spite of desperate moves by the Federal Government to stem the fall.
This latest intervention at the instance of SEC is expected to be the forerunner to perhaps the most fundamental reform of the market and should help to restore the market’s reputation and give comfort to major market players who have taken a very dim view of the unorthodox methods applied lately by the authorities.
Business Day learnt that the committee which to be chaired by Adedotun Suleiman, chairman of both Accenture and Cornerstone Insurance plc, draws membership from both J.P Morgan and Goldman Saachs. Other members of the committee include Albert Okumagba, chief executive of BGL Securities, Francis Wood, managing director of FCMB Capital and Bismark Rewane, leading economist and managing director of Financial Derivatives who has consistently canvassed more market transparency.
The review panel is expected to focus on such issues as the controversial upper and lower cap on price movements and the cost structure of transactions on the market.
The stock market lost 25.5 percent before the Federal Government intervention which appear only to have caused more concern than comfort. . Source: BusinessDay Newspaper
DAAR COMES TO MARKET
Proshare NI
September 16, 2008 at 20: 11 GMT
Broadcast Giants DAAR Communications Plc (DAAR) owners of radio station Ray Power 100.5 Frequency Modulation (FM) and African Independent Television (AIT) would September 26, 2008 list is shares at N5.00 per share on the Floors of the Nigerian Stock Exchange (NSE). A source close to Proshare NI made this confirmation today in Lagos Nigeria.
DAAR in February 2008 approached the Nigerian Capital Market to raise fresh funds of N13.947 billion through a hybrid offer of Initial Public Offering (IPO) by way of an offer for subscription of 1.829 million and DAAR Investment Holding Company Limited offer for sale of 960 million ordinary shares of 50 Kobo each at N5.00 per share respectively.
During the offer from the Prospectus made available to Proshare NI, DAAR affirmed that an application has been made to the council of the NSE for admission to its Daily Official list of its 8.0 billion Ordinary Shares of 50 Kobo each.
This is coming on the heels of investors concern as regards the listing of the Broadcast Giants.
Though as at the time of filling in this report, Proshare NI could not get further details in respect of the proposed listing of the company.
In the same vein, come October, 2008, DAAR would be launching its satellite television in Abuja Nigeria; viewers are expected to pay in order to have access to this satellite station.
September 16, 2008 at 20: 11 GMT
Broadcast Giants DAAR Communications Plc (DAAR) owners of radio station Ray Power 100.5 Frequency Modulation (FM) and African Independent Television (AIT) would September 26, 2008 list is shares at N5.00 per share on the Floors of the Nigerian Stock Exchange (NSE). A source close to Proshare NI made this confirmation today in Lagos Nigeria.
DAAR in February 2008 approached the Nigerian Capital Market to raise fresh funds of N13.947 billion through a hybrid offer of Initial Public Offering (IPO) by way of an offer for subscription of 1.829 million and DAAR Investment Holding Company Limited offer for sale of 960 million ordinary shares of 50 Kobo each at N5.00 per share respectively.
During the offer from the Prospectus made available to Proshare NI, DAAR affirmed that an application has been made to the council of the NSE for admission to its Daily Official list of its 8.0 billion Ordinary Shares of 50 Kobo each.
This is coming on the heels of investors concern as regards the listing of the Broadcast Giants.
Though as at the time of filling in this report, Proshare NI could not get further details in respect of the proposed listing of the company.
In the same vein, come October, 2008, DAAR would be launching its satellite television in Abuja Nigeria; viewers are expected to pay in order to have access to this satellite station.
MARKET SITUATION FOR LAST WEEK
For the week ended September 12, 2008, the NSE index declined 878 or 1.8% to 48,738, representing a 17,633 or 26.6% decline relative to its 52 week high of 66,371; maintaining the market in a bear state. However, it should be noted that the decline in the NSE index would have been more severe if the new NSE regulation which mandates that only a one percent maximum downward limit on daily price movement would be allowed, while the current five per cent limit on upward movement is retained.
Since the market began its downtrend in the middle of March 2008, there has been three attempts at recovery. These brief recoveries were spurred by some new polices or policy changes by the government and market regulators. Some of the policy changes that have been implemented to turn the market around are:
1. Posting the uniform fiscal year-end deadline for commercial banks from December 31, 2008 to December 31, 2009.
2. Suspension of the N 1 billion capitalization for Stock brokerage firms
3. Issuance of an exemption to the provisions of the relevant sections of CAMA, to permit quoted companies to buy back up to 20 per cent of their shares to curb the spate of bearish trading in the market by the office of the Attorney General of the Federation
4. Policy reversal to allow commercial banks to continue extending margin loans to inventors
5. Reduction of the NSE fees by 50 percent effective September 8, 2008.
6. Allowance of one percent maximum downward limit on daily price movement , while retaining the current five per cent limit on upward movement
The regulators and the government should get some kudos for all the efforts they have put forward so far to turn the market around. I believe it is time to give this market the shock treatment that it truly needs.
For example, the NSE’s new policy of one percent maximum downward limit on daily price movement, while the five per cent limit on upward movement is retained is very wrong. This policy has an upward bias and in the long run negates what the NSE is trying to achieve, which is to prevent the continued decline of the capital market.
With this new policy of one percent downward price movement limit, it will take longer for the market to complete its current downtrend, because the policy will never completely allow stock prices to truly bottom out. For the markets to truly correct, sellers in the market must be completely washed out.
Although this may sound callous, studies have shown that until most traders (or gamblers) not investors throw in their towels saying that they can’t take the beating any more, the market downtrend will continue.
The truth of the matter is that some investors in the Nigerian stock market for the 4 years prior to March 2008 saw the NSE as a casino that paid out large sums of money. As a result, some of these investors invested heavily in the market by buying every secondary or initial public offering and throwing caution to the wind with some of their speculative trades. Some of these investors were caught in the downtrend and are still waiting in the winds to sell their shares. Since the Nigeria bull market had a prolonged run ( approximately 4 years), it is safe to believe that there are many speculators in this category and significant up trend will be sold into.
Some of the recent government/NSE policies that I believe will help the market turnaround are:
1) The postponement of the uniform fiscal year-end deadline for commercial banks from December 31, 2008 to December 31, 2009;
2) The possible issuance of an exemption to the provisions of the relevant sections of CAMA, to permit quoted companies to buy back up to 20 per cent of their shares to curb the spate of bearish trading in the market;
3) The policy reversal to allow commercial banks to continue to extend margin loans to inventors; and
4) The 50% reduction in NSE fees.
I believe allowing stock prices to decline only by one percent, while allowing the prices to increase by 5% daily is the worst policy. As noted in the schedule below, a N10.00k stock which gained 5% daily in five consecutive days will take 18 days to lose the same points it gained in five days.
One of the reason that I believe that this is a wrong policy is that the banks and institutional traders might be favored in this policy. While the large and institutional traders might be able to sell easily in an uptrend, retail investors might not be able to do so. Additionally, the commercial banks might use the uptrend in a bear rally to sell the shares of customers who are unable to satisfy their margin requirements.
My recommendations:
· Scrap the current policy of one percent daily allowable decline, while the 5% allowable increase is still in effect. This policy has an upward bias and will result in traders selling into the upward trend.
· Reinstate the former policy of the 5% upward limit and a 5% downward limit. This will allow the market to get to the bottom faster.
· Remove all artificial stop gap measures and let prices float freely with one caviar, introduce simple option strategy and shorting selling to enable investors hedge their positions. The current policies will discourage foreign investors from investing in the NSE, because it breaks all the rules of an “efficient market”. My stance might seem controversial to many investors, but I believe that in the long run it will be good for the market. The current policy strikes me as stock price manipulation.
Since the market began its downtrend in the middle of March 2008, there has been three attempts at recovery. These brief recoveries were spurred by some new polices or policy changes by the government and market regulators. Some of the policy changes that have been implemented to turn the market around are:
1. Posting the uniform fiscal year-end deadline for commercial banks from December 31, 2008 to December 31, 2009.
2. Suspension of the N 1 billion capitalization for Stock brokerage firms
3. Issuance of an exemption to the provisions of the relevant sections of CAMA, to permit quoted companies to buy back up to 20 per cent of their shares to curb the spate of bearish trading in the market by the office of the Attorney General of the Federation
4. Policy reversal to allow commercial banks to continue extending margin loans to inventors
5. Reduction of the NSE fees by 50 percent effective September 8, 2008.
6. Allowance of one percent maximum downward limit on daily price movement , while retaining the current five per cent limit on upward movement
The regulators and the government should get some kudos for all the efforts they have put forward so far to turn the market around. I believe it is time to give this market the shock treatment that it truly needs.
For example, the NSE’s new policy of one percent maximum downward limit on daily price movement, while the five per cent limit on upward movement is retained is very wrong. This policy has an upward bias and in the long run negates what the NSE is trying to achieve, which is to prevent the continued decline of the capital market.
With this new policy of one percent downward price movement limit, it will take longer for the market to complete its current downtrend, because the policy will never completely allow stock prices to truly bottom out. For the markets to truly correct, sellers in the market must be completely washed out.
Although this may sound callous, studies have shown that until most traders (or gamblers) not investors throw in their towels saying that they can’t take the beating any more, the market downtrend will continue.
The truth of the matter is that some investors in the Nigerian stock market for the 4 years prior to March 2008 saw the NSE as a casino that paid out large sums of money. As a result, some of these investors invested heavily in the market by buying every secondary or initial public offering and throwing caution to the wind with some of their speculative trades. Some of these investors were caught in the downtrend and are still waiting in the winds to sell their shares. Since the Nigeria bull market had a prolonged run ( approximately 4 years), it is safe to believe that there are many speculators in this category and significant up trend will be sold into.
Some of the recent government/NSE policies that I believe will help the market turnaround are:
1) The postponement of the uniform fiscal year-end deadline for commercial banks from December 31, 2008 to December 31, 2009;
2) The possible issuance of an exemption to the provisions of the relevant sections of CAMA, to permit quoted companies to buy back up to 20 per cent of their shares to curb the spate of bearish trading in the market;
3) The policy reversal to allow commercial banks to continue to extend margin loans to inventors; and
4) The 50% reduction in NSE fees.
I believe allowing stock prices to decline only by one percent, while allowing the prices to increase by 5% daily is the worst policy. As noted in the schedule below, a N10.00k stock which gained 5% daily in five consecutive days will take 18 days to lose the same points it gained in five days.
One of the reason that I believe that this is a wrong policy is that the banks and institutional traders might be favored in this policy. While the large and institutional traders might be able to sell easily in an uptrend, retail investors might not be able to do so. Additionally, the commercial banks might use the uptrend in a bear rally to sell the shares of customers who are unable to satisfy their margin requirements.
My recommendations:
· Scrap the current policy of one percent daily allowable decline, while the 5% allowable increase is still in effect. This policy has an upward bias and will result in traders selling into the upward trend.
· Reinstate the former policy of the 5% upward limit and a 5% downward limit. This will allow the market to get to the bottom faster.
· Remove all artificial stop gap measures and let prices float freely with one caviar, introduce simple option strategy and shorting selling to enable investors hedge their positions. The current policies will discourage foreign investors from investing in the NSE, because it breaks all the rules of an “efficient market”. My stance might seem controversial to many investors, but I believe that in the long run it will be good for the market. The current policy strikes me as stock price manipulation.
NITEL GIVING BASELESS EXCUSES
NITEL accuses PTOs, GSM operators of sabotage
By Everest Amaefule, Abuja
Published: Wednesday, 17 Sep 2008
The Nigerian Telecommunications Limited on Tuesday accused Fixed Wireless Operators popularly known as PTOs and leading GSM operators of willfully damaging its transmission cables to cut it off from the booming telecoms market.
Speaking at a Stakeholders’ Forum on Vandalism of Telecommunications Infrastructure organised by the Nigerian Communications Commission, General Manager, Operations at NITEL, Mr. Alex Achi, also accused the NCC of doing little to intervene in its predicament.
Giving graphic details of several instances of damage to its underground transmission cables across the country, Achi said other operators took advantage of its loss of steam in the telecoms market to inflict additional blows on the company’s capacity to compete.
He said, “The problems associated with the theft and vandalisation of NITEL cables nationwide has grown to such a huge extent that today it has crippled our network.
“On the whole, NITEL has lost billions of naira as a result of the vandalisation of its infrastructure. This has been made difficult by its present financial condition.”
He added that as a result of the vandalism of its infrastructure especially by other networks, the first national operator was operating below 30 per cent of its installed capacity.
Representatives of other telecom operators at the forum argued that NITEL was not the only company that had suffered vandalisation of its cables as a result of installation of cables by competitors and construction of roads by various tiers of government.
Spokesperson of Globacom at the event disclosed that as a result of vandalism of its cables, it suffers the loss of 150 hours a month, which translates to six days in a month of 30 days.
A representative of MTN Nigeria Limited, on the other hand, also informed the forum that his company lost an average of 30 generators in a month.
Executive Vice Chairman, NCC, Mr. Ernest Ndukwe, wondered why NITEL should be losing its cables installed by Siemens, the same company that MTN has hired to install its own fibre optic cables.
TIGERKENN COMMENTS.......
Excuses are very easy to invent. I dont know how true it is that there is sabotage going on to frustrate Nitel, or any other GSM operator for that matter. But why are they business managers if they cant prevent vandalism? How does MTN manage to operate amidst vandalism while Nitel cant? And why hasnt they caught at least one vandal to prove their points.
Their comment smacks of people that are not even ready to face competition.
By Everest Amaefule, Abuja
Published: Wednesday, 17 Sep 2008
The Nigerian Telecommunications Limited on Tuesday accused Fixed Wireless Operators popularly known as PTOs and leading GSM operators of willfully damaging its transmission cables to cut it off from the booming telecoms market.
Speaking at a Stakeholders’ Forum on Vandalism of Telecommunications Infrastructure organised by the Nigerian Communications Commission, General Manager, Operations at NITEL, Mr. Alex Achi, also accused the NCC of doing little to intervene in its predicament.
Giving graphic details of several instances of damage to its underground transmission cables across the country, Achi said other operators took advantage of its loss of steam in the telecoms market to inflict additional blows on the company’s capacity to compete.
He said, “The problems associated with the theft and vandalisation of NITEL cables nationwide has grown to such a huge extent that today it has crippled our network.
“On the whole, NITEL has lost billions of naira as a result of the vandalisation of its infrastructure. This has been made difficult by its present financial condition.”
He added that as a result of the vandalism of its infrastructure especially by other networks, the first national operator was operating below 30 per cent of its installed capacity.
Representatives of other telecom operators at the forum argued that NITEL was not the only company that had suffered vandalisation of its cables as a result of installation of cables by competitors and construction of roads by various tiers of government.
Spokesperson of Globacom at the event disclosed that as a result of vandalism of its cables, it suffers the loss of 150 hours a month, which translates to six days in a month of 30 days.
A representative of MTN Nigeria Limited, on the other hand, also informed the forum that his company lost an average of 30 generators in a month.
Executive Vice Chairman, NCC, Mr. Ernest Ndukwe, wondered why NITEL should be losing its cables installed by Siemens, the same company that MTN has hired to install its own fibre optic cables.
TIGERKENN COMMENTS.......
Excuses are very easy to invent. I dont know how true it is that there is sabotage going on to frustrate Nitel, or any other GSM operator for that matter. But why are they business managers if they cant prevent vandalism? How does MTN manage to operate amidst vandalism while Nitel cant? And why hasnt they caught at least one vandal to prove their points.
Their comment smacks of people that are not even ready to face competition.
NITEL GIVING BASELESS EXCUSES
NITEL accuses PTOs, GSM operators of sabotage
By Everest Amaefule, Abuja
Published: Wednesday, 17 Sep 2008
The Nigerian Telecommunications Limited on Tuesday accused Fixed Wireless Operators popularly known as PTOs and leading GSM operators of willfully damaging its transmission cables to cut it off from the booming telecoms market.
Speaking at a Stakeholders’ Forum on Vandalism of Telecommunications Infrastructure organised by the Nigerian Communications Commission, General Manager, Operations at NITEL, Mr. Alex Achi, also accused the NCC of doing little to intervene in its predicament.
Giving graphic details of several instances of damage to its underground transmission cables across the country, Achi said other operators took advantage of its loss of steam in the telecoms market to inflict additional blows on the company’s capacity to compete.
He said, “The problems associated with the theft and vandalisation of NITEL cables nationwide has grown to such a huge extent that today it has crippled our network.
“On the whole, NITEL has lost billions of naira as a result of the vandalisation of its infrastructure. This has been made difficult by its present financial condition.”
He added that as a result of the vandalism of its infrastructure especially by other networks, the first national operator was operating below 30 per cent of its installed capacity.
Representatives of other telecom operators at the forum argued that NITEL was not the only company that had suffered vandalisation of its cables as a result of installation of cables by competitors and construction of roads by various tiers of government.
Spokesperson of Globacom at the event disclosed that as a result of vandalism of its cables, it suffers the loss of 150 hours a month, which translates to six days in a month of 30 days.
A representative of MTN Nigeria Limited, on the other hand, also informed the forum that his company lost an average of 30 generators in a month.
Executive Vice Chairman, NCC, Mr. Ernest Ndukwe, wondered why NITEL should be losing its cables installed by Siemens, the same company that MTN has hired to install its own fibre optic cables.
TIGERKENN COMMENTS.......
Excuses are very easy to invent. I dont know how true it is that there is sabotage going on to frustrate Nitel, or any other GSM operator for that matter. But why are they business managers if they cant prevent vandalism? How does MTN manage to operate amidst vandalism while Nitel cant? And why hasnt they caught at least one vandal to prove their points.
Their comment smacks of people that are not even ready to face competition.
By Everest Amaefule, Abuja
Published: Wednesday, 17 Sep 2008
The Nigerian Telecommunications Limited on Tuesday accused Fixed Wireless Operators popularly known as PTOs and leading GSM operators of willfully damaging its transmission cables to cut it off from the booming telecoms market.
Speaking at a Stakeholders’ Forum on Vandalism of Telecommunications Infrastructure organised by the Nigerian Communications Commission, General Manager, Operations at NITEL, Mr. Alex Achi, also accused the NCC of doing little to intervene in its predicament.
Giving graphic details of several instances of damage to its underground transmission cables across the country, Achi said other operators took advantage of its loss of steam in the telecoms market to inflict additional blows on the company’s capacity to compete.
He said, “The problems associated with the theft and vandalisation of NITEL cables nationwide has grown to such a huge extent that today it has crippled our network.
“On the whole, NITEL has lost billions of naira as a result of the vandalisation of its infrastructure. This has been made difficult by its present financial condition.”
He added that as a result of the vandalism of its infrastructure especially by other networks, the first national operator was operating below 30 per cent of its installed capacity.
Representatives of other telecom operators at the forum argued that NITEL was not the only company that had suffered vandalisation of its cables as a result of installation of cables by competitors and construction of roads by various tiers of government.
Spokesperson of Globacom at the event disclosed that as a result of vandalism of its cables, it suffers the loss of 150 hours a month, which translates to six days in a month of 30 days.
A representative of MTN Nigeria Limited, on the other hand, also informed the forum that his company lost an average of 30 generators in a month.
Executive Vice Chairman, NCC, Mr. Ernest Ndukwe, wondered why NITEL should be losing its cables installed by Siemens, the same company that MTN has hired to install its own fibre optic cables.
TIGERKENN COMMENTS.......
Excuses are very easy to invent. I dont know how true it is that there is sabotage going on to frustrate Nitel, or any other GSM operator for that matter. But why are they business managers if they cant prevent vandalism? How does MTN manage to operate amidst vandalism while Nitel cant? And why hasnt they caught at least one vandal to prove their points.
Their comment smacks of people that are not even ready to face competition.
Thursday, 11 September 2008
GASLINK TO RAISE GAS PRICES
The Manufacturers Asso-ciation of Nigeria (MAN) has said over 100 manufacturing companies in the country could be shut down with 50,000 employees thrown out of work if Gaslink Nigeria Limited implements its recent decision to raise the price of industrial gas by over 200 per cent.
MAN said yesterday in Lagos that Gaslink, a subsidiary of Oando Plc, was “set to put the last nail on the coffin of the dying Nigerian manufacturing sector by increasing the price of industrial gas from N21.05 per scm to N63.27 per scm”.
But in response to MAN’s allegations, Oando’s spokesperson, Mr. Niyi Olowola, told THISDAY yesterday that Gaslink was still negotiating with its customers on the issue and was positive that they would come to a common ground.
“Gaslink’s management understands the challenges our customers face and is positive that the issues on ground will be resolved in a matter of days. Already, another meeting is scheduled for tomorrow (today) towards achieving an amicable resolution,” Olowola said. “Only nine of our over 80 customers are yet to make any form of payment for our services, which indicates a large degree of cooperation.”
The gas price hike has resulted in a major rift between Gaslink and MAN.MAN accused Gaslink of disregarding the Gas Sales and Purchase Agreement (GSPA) signed between the gas company and members of MAN.Explaining the GSPA, the Director-General of MAN, Mr. Jide Mike, said it was stated explicitly in article 10.2 of the agreement that the price of gas would be benchmarked against the price of LPFO as determined and published by the Pipeline Product and Marketing Company (PPMC).
“Logically therefore, the price of gas can and will only change if the price of LPFO changes. To date, the price of LPFO has remained N25.40 per mscf and we have proof that the PPMC has not published or declared any increase in the price of LPFO,” Source: Thisday Newspaper
MAN said yesterday in Lagos that Gaslink, a subsidiary of Oando Plc, was “set to put the last nail on the coffin of the dying Nigerian manufacturing sector by increasing the price of industrial gas from N21.05 per scm to N63.27 per scm”.
But in response to MAN’s allegations, Oando’s spokesperson, Mr. Niyi Olowola, told THISDAY yesterday that Gaslink was still negotiating with its customers on the issue and was positive that they would come to a common ground.
“Gaslink’s management understands the challenges our customers face and is positive that the issues on ground will be resolved in a matter of days. Already, another meeting is scheduled for tomorrow (today) towards achieving an amicable resolution,” Olowola said. “Only nine of our over 80 customers are yet to make any form of payment for our services, which indicates a large degree of cooperation.”
The gas price hike has resulted in a major rift between Gaslink and MAN.MAN accused Gaslink of disregarding the Gas Sales and Purchase Agreement (GSPA) signed between the gas company and members of MAN.Explaining the GSPA, the Director-General of MAN, Mr. Jide Mike, said it was stated explicitly in article 10.2 of the agreement that the price of gas would be benchmarked against the price of LPFO as determined and published by the Pipeline Product and Marketing Company (PPMC).
“Logically therefore, the price of gas can and will only change if the price of LPFO changes. To date, the price of LPFO has remained N25.40 per mscf and we have proof that the PPMC has not published or declared any increase in the price of LPFO,” Source: Thisday Newspaper
ADENUGA BUYING TELKOM SA?
LAGOS, Sept 2 (Reuters) - Nigerian tycoon Mike Adenuga wants to buy South African fixed-line operator Telkom so he can merge his cellphone company Globacom with Telkom's stake in Vodacom, a Nigerian newspaper said on Tuesday.
Business Day said Adenuga had met with Telkom Chief Executive Reuben September after proposing the deal, which would allow Adenuga to merge Globacom with Telkom's 50 percent stake in Vodacom, South Africa's biggest mobile operator.
Globacom could not bid for Telkom's stake in Vodacom directly because Britain's Vodafone, which owns the other 50 percent, had the first right of refusal, the Nigerian newspaper said.
"My chairman was in South Africa ... and I am aware that he met with Telkom officials but I have not been briefed on what they discussed," a Globacom official told Reuters, asking not to be named.
Officials from Telkom, which said last week it had not entered into talks with Globacom but would evaluate any proposal it received, were not immediately available to comment.
South African newspaper Business Day reported last week that Adenuga wanted to create a pan-African telecoms firm "Vodaglo" worth $18 billion.
A Globacom official told Reuters on Friday there were discussions about "building a business partnership" between Globacom and Vodacom, but a Vodacom spokeswoman said she was not aware of any such talks.
A deal with Globacom could derail plans by Vodafone to win control of Vodacom by buying part of Telkom's stake.
The Nigerian Business Day report said Adenuga's plan would leave Telkom's fixed line operations as a listed entity. (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/ ) (Reporting by Tume Ahemba;
Business Day said Adenuga had met with Telkom Chief Executive Reuben September after proposing the deal, which would allow Adenuga to merge Globacom with Telkom's 50 percent stake in Vodacom, South Africa's biggest mobile operator.
Globacom could not bid for Telkom's stake in Vodacom directly because Britain's Vodafone
"My chairman was in South Africa ... and I am aware that he met with Telkom officials but I have not been briefed on what they discussed," a Globacom official told Reuters, asking not to be named.
Officials from Telkom, which said last week it had not entered into talks with Globacom but would evaluate any proposal it received, were not immediately available to comment.
South African newspaper Business Day reported last week that Adenuga wanted to create a pan-African telecoms firm "Vodaglo" worth $18 billion.
A Globacom official told Reuters on Friday there were discussions about "building a business partnership" between Globacom and Vodacom, but a Vodacom spokeswoman said she was not aware of any such talks.
A deal with Globacom could derail plans by Vodafone to win control of Vodacom by buying part of Telkom's stake.
The Nigerian Business Day report said Adenuga's plan would leave Telkom's fixed line operations as a listed entity. (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/ ) (Reporting by Tume Ahemba;
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