STL Trustees Capital Market & Money Market News Recap

While you were away!

NIGERIA REMAINS IN RECESSION AS NBS REPORTS 5TH CONSECUTIVE NEGATIVE QUARTERLY GDP

The National Bureau of Statistics (NBS) has revealed that Nigeria recorded a 2017 first quarter GDP growth rate of -0.52%. This confirms that Nigeria is still technically in a recession.  At -0.52%, the first quarter real GDP growth rate is a much more improvement from the -1.73 recorded in the last quarter of 2016.

Key highlights of the report

• Gross Domestic Product (GDP) contracted by –0.52% (year-on-year) in real terms, representing the fifth consecutive quarter of contraction since Q1 2016.
• 2016 4th quarter GDP was revised downwards to -1.73% from -1.3% suggesting that things were actually worse than earlier reported.
• In nominal terms, GDP stood at N26,028,356.03 million, compared to N22,235,315.29 million in Q1 2016, resulting in a Nominal GDP growth of 17.06%.
• This growth was higher relative to growth recorded in Q1 2016 (11.39%).
• The Oil sector recorded a real GDP growth rate of –11.64% (year-on-year) in Q1 2017. This represents a decline of (–4.81%) relative to rate recorded in the corresponding quarter of 2016.
• Growth declined by 6.83% and increased 6.06% when compared to Q1 2016 and Q4 2016 respectively.
• The non-oil sector grew by 0.72% in real terms during the reference quarter. This was 1.05 % higher than the rate recorded in the fourth quarter of 2016, and 0.90 % higher than the corresponding quarter of 2016
• In real terms, the Non-Oil sector contributed 91.10% to the Nigeria’s GDP, higher from share recorded in the first quarter of 2016 (89.98%) but lower than the share recorded in the fourth quarter of 2016 (93.25%)
• Growth in the Non-oil sector was largely driven by the activities in the Agriculture Sector(Crop Production), Information & Communication, Manufacturing, Transportation and Other Services.

SEC REVEALS PLANS TO EASE PROCESS OF ISSUING SHARES

In a bid to eliminate some bottlenecks in the nation’s capital market, the Securities and Exchange Commission, (SEC) has commenced moves to ensure that the process of issuing new shares is completed within three to four weeks and at less cost to the issuers. The Director General of SEC, Mr. Mounir Gwarzo, revealed this to Financial Vanguard at the last Capital Market Committee (CMC), meeting in Lagos.

He said that in order to reduce the cost burden associated with issuing new shares, the SEC, NSE, and the issuing houses have agreed to cut their transaction cost using a formula that would be developed by the CMC later in the year. He expressed optimism that with the various measures, progress would be made in attracting more issuers to the market, while time to market would be reduced.

The Director General added that in order to stop the practice where issuers file separate application and document to the NSE and SEC, a portal would be developed where the issuers will upload the documents for assessment by the SEC and NSE. He warned that henceforth, incomplete application forms would be thrown out by the SEC.

CBN MPC RETAINS MPR AT 14%

The Central Bank of Nigeria’s (CBN)’s Monetary Policy Committee (MPC), on Tuesday 23^rd May, retained the Monetary Policy Rate (MPR) at 14 per cent, the Cash Reserve Ratio (CRR) at 22.5 per cent and the Liquidity Ratio at 30 per cent.

The MPC also retained the asymmetric corridor at +200 and -500 basis points around the MPR.

Briefing journalists on the outcome of the 113th MPC meeting in Abuja yesterday, the CBN Governor, Godwin Emefiele, vowed to sustain the foreign currency intervention programme to achieve rate convergence.

He added that the MPC met against the backdrop of slowly improving global growth prospects even as international cooperation continues to be threatened by anti-globalisation sentiments in major advanced economies.

The CBN Governor said the economy contracted marginally by 0.52 per cent in the first quarter of 2017, describing it as a much more positive development since the first quarter of 2016. He also stated the MPC noted the recent gains in the naira exchange rate, brought about by CBN’s interventions in the foreign exchange market and the resulting downward price adjustments on imported items and their derivatives should be sustained.

The CBN Governor hinted that the MPC was particularly pleased with the gradual retreat in inflation, the relative stability in the naira exchange rate across all segments of the foreign exchange market and the improved prospects of foreign investment inflow.

FEDERAL GOVERNMENT REVEALS PLANS TO RAISE DEBT FOR HOUSING

The Federal Government has revealed plans to raise debt and equity capital from the investing public to support the realisation of the national agenda on mass and affordable housing.

Minister of Power, Works and Housing, Mr. Babatunde Fashola, passed this information on Tuesday, May 23^rd  at a Real Estate Investment Trust (REIT) conference in the Nigerian Stock Exchange (NSE). He said the government would raise additional funds from the private sector through the Nigerian stock market to complement ongoing financing through budgetary provisions.

He outlined that the proposed capital raisings could combine several instruments including equity and debt instruments as well as hybrid capital issues.

He added that other funding sources such as pension funds, private equity funds, and the National Housing Fund managed by the Federal Mortgage Bank to finance development and also acquisition will be under consideration for the new capital issues.

Fashola noted that the government had increase budgetary provision for housing by 1,900 per cent from N1.8 billion in 2015 to N35 billion in 2016, pointing out that government has already commenced construction works on its mass housing plan in the first quarter of 2017 in 33 states that have made land available across the country.

He said in the long term, the role of government will be purely regulatory, controlling designs, quality of finish, construction methods and materials, guaranteeing off-take of any house that private sector can deliver, and strengthening the Federal Mortgage Bank to provide finance to developers and end-users.

Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, said that in spite of the challenging economic headwinds in Nigeria and other commodity based economics, the capital market remains one of the main vehicles to promote sustainable economic development and wealth creation.

He noted that the conference was in line with the Exchange’s strategic initiative to promote and create the enabling environment for sustainable development of REITs in Nigeria and sub-Saharan Africa.

According to him, in order to create a more transparent, liquid and accessible market structure in line with global best practices for REITs, the Exchange recently started the process of implementing some changes in terms of reporting and valuation of REITs and other collective investment schemes listed on the NSE

 DOLLAR EXCHANGE RATE REPORT 13^th MAY TO 26^th MAY, 2017

This report is a compilation of the dollar exchange rate at the official and parallel market from the 13^th of May to the 26^th of May, 2017.  The quoted parallel market prices are to serve as a guide to readers, as they represent the average price obtained daily from different black market dealers in the Country.