The Nigerian Exchange (NGX) Limited further lost 1.04 per cent on Thursday, making it the eighth consecutive trading day the market has been in the red territory.
Business Post observed that these recent sell-offs have been caused by the decision of some offshore investors to exit the market. This was triggered by the recent comments by the Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, that those who withdraw the Naira to buy Dollars would be prosecuted.
In order not to find themselves in a situation they will not be able to repatriate their funds, just like what happened in 2020, foreign portfolio investors are liquidating their Naira investments to save in a more stable currency like the greenback, causing the stock market to bleed excessively.
Yesterday, the All-Share Index (ASI) shed 521.41 points to settle at 49,667.14 points from 50,188.55 points, while the market capitalisation moderated by N281 billion to N26.784 trillion from N27.065 trillion.
Investor sentiment remained weak as a total of 10 stocks appreciated as 28 stocks recorded losses, with Lasaco Assurance depreciating by 10.00 per cent to sell for 90 Kobo.
Stanbic IBTC declined by 9.98 per cent to N28.40, Cadbury Nigeria fell by 9.94 per cent to N15.40, Nestle Nigeria dropped 9.84 per cent to trade at N1262.30, while Axa Mansard went down by 9.47 per cent to settle at N1.72.
Conversely, appreciated by 9.23 per cent to N3.55, RT Briscoe rose by 8.57 per cent to 38 Kobo, Chams grew by 8.33 per cent to 26 Kobo, Custodian Investment went up by 7.94 per cent to N6.80, while Livestock Feeds chalked up 4.35 per cent to close at N1.20.
During the session, the energy space gained 0.59 per cent, while the consumer goods index dropped 3.77 per cent, the banking index fell by 3.54 per cent, the insurance counter lost 3.19 per cent, while the industrial goods sector shed 0.46 per cent.
A total of 206.2 million shares worth N3.9 billion were bought and sold in 5,053 deals on Thursday as against the 829.5 million shares worth N4.1 billion exchanged in 4,977 deals on Wednesday, implying a decline in the trading volume and value by 75.14 per cent and 4.49 per cent respectively and an increase in the number of deals by 1.53 per cent.
The stock with the highest number of sales was Transcorp as it traded 38.5 million units valued at N39.0 million, followed by Zenith Bank with 16.9 million units worth N333.7 million, Chams with the sale of 13.6 million units for N3.3 million, GTCO with a turnover of 12.7 million units worth N244.8 million, and UBA with 12.6 million units valued at N86.9 million.
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Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng
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Activities of some currency traders in Abuja were on Friday disrupted by officials of the Economic and Financial Crimes Commission (EFCC).
It was alleged that the foreign exchange (forex) traders were mopping up hard currencies, especially the Dollar, in circulation in a bid to create artificial scarcity for the purpose of selling at higher rates later.
Currency speculators had taken over the local FX market in the past few days and this action has weakened the domestic currency to different all-time lows.
On Thursday, the value of the Nigerian currency against the United States currency depleted to N715/$1 in the parallel market as a result of scarcity of the latter.
This week, after the exchange rate broke the N700/$1 ceiling, the Senate summoned the Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, to explain actions he was taking to save the local currency from a total collapse.
Today, according to reports, operatives of the EFCC invaded a hub of Bureaux De Change (BDC) operators in the country’s capital, precisely in the Wuse 4 area of the city.
Nigeria operates more than one exchange rate regime and at the official market, the Naira is around N430/$1 but in the unofficial space, it sells above N700/$1. This market segment is seen by some as the authentic platform to get the true value of the Nigerian Naira because it is controlled by market forces unlike in the Investors and Exporters (I&E) window, which is under the control of the CBN.
Last year, the apex bank stopped the sale of FX to BDCs, directing customers to commercial banks. However, many forex users find it difficult to access foreign currencies and have had to rely on the black market to complete their transactions abroad.
BDC operators, under the aegis of the Association of Bureaux De Change Operators of Nigeria (ABCON), have severally appealed to the central bank to rescind its decision on the stoppage of forex sales to them so as to help restore the confidence of the indigenous currency.
Governor Babajide Sanwo-Olu of Lagos State has expressed optimism that the Lagos Commodities and Futures Exchange (LCFE) would create limitless opportunities for investors as the platform will enable them to earn a steady income from electronic trading of receipts of their commodities products on a transparent and well-regulated market.
He expressed this view at the launch of the trading exchange on Thursday, noting, “Today, history is being made with the inauguration of Lagos Commodities and Futures Exchange, its dedicated electronic trading of commodities platform and launch of the proof of concept of the first tranche of special gold called Eko Gold Coins.”
Mr Sanwo-Olu explained that, “The 58 coins launched are gold-backed and the special coins can be redeemed at any time,” pointing out that, “The launch comes at a period that Nigeria is contending with hyper-inflation, rising debt and a host of other challenges.”
The Governor, while launching the 58 units of spots contracts of Eko Gold Coins, explained that the Coins represented the culture, value and inclusivity of Lagos State.
He commended the board and management of LCFE for the great vision that has strong potential to grow the Nigerian economy through the commodities ecosystem.
Before the event yesterday, LCFE had conducted a series of test trades on its state-of-the-art technology and other basic infrastructure to drive the processes of operations in line with the global best practices.
The exchange introduced the Eko Gold Coins valued at 100 million pounds in tranches, commencing the much-awaited electronic trading of commodities receipt in Nigeria.
Earlier in his welcome address, the chairman of LCFE, Mr Onyenwechukwu Ezeagu, said the platform has recorded many successful trading ahead of its inauguration.
“The exchange has conducted a series of system tests and successful trades through its Trade Matching Engine, and this is a first step in fulfilling our mission to catalyse and transform the Nigerian economy and create value as well as wealth for all the stakeholders.
“We have conducted numerous training, capacity building and sensitization sessions to help our stakeholders navigate and harness the full potential of the Nigerian Commodities ecosystem geared towards transforming the Nigerian Economy at large,” he said.
Also commenting, the Managing Director of LCFE, Mr Akin Akeredolu-Ale, who ascribed the delay in the take-off of the platform to the COVID-19 pandemic, explained that LCFE operations would enhance the double-digit growth of Nigeria’s Gross Domestic Product (GDP) through de-risking of commodities products and transparent price discovery.
“We are proud to be the first exchange in Nigeria licensed by the Securities and Exchange Commission (SEC) to commence trading of gold contracts. The gold aggregators are IAC Global Investment Limited and Tradenet Limited while GTI Capital is the transaction Adviser,” he said.
Mr Akeredolu-Ale had earlier stated that “We have put in place necessary structures to commence trading as a full-fledged commodities and futures exchange.
“Our basic function is to trade electronic receipts. We have addressed the issue of payment and settlement system, depository, registration of settlement banks and dealing member firms and certification of commodities brokers.”
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