ANALYSTS CUT STOCK MARKET GROWTH FORECAST

Some stock market analysts have cut their growth projection for the Nigerian equities market for the current financial year, following the 4.2 per cent growth recorded in the first half (H1) of the year.

Given the forecast of 13.3 and 14 per cent growth analysts projected in the beginning of the year, H1 performance would have been about 6.5 per cent.

However, the market returned 4.2 per cent, indicating that meeting the projected 14 per cent would be difficult; also considering the fact the market has in most times performed poorly in the second half (H2).

Before now, analysts at FSDH Securities Limited had said the market would close the year with a growth of 13.3 per cent, while those at Meristem Securities Limited (MSL) predicted 13.5 per cent. Similarly, analysts at FBN Capital envisaged a growth of 14 per cent.
But given the 4.2 per cent, analysts at MSL have revised their projection from 13.5 per cent to 8.26 per cent.

“We have revised our 2012 full year forecast return on the NSE All-Share Index to 8.26 per cent, given our view of macro-drivers and continued negative sentiment towards local equities.

“After a 4.2 return on the NSE-ASI in H1 (driven by 4.59 per cent return in Q2), we anticipate one more bullish quarter in the second half in line with historical trend,” the analysts said in a document made available to THISDAY last Monday.

Apparently supporting the review of the projections by some of the analysts, the Managing Director/Chief Executive of Financial Derivatives Limited, Mr. Bismarck Rewane, disclosed last week that historically, the NSE index had not done well in the H2.

According to him, average H1 return between 1986 and 2011 was 16.9 per cent while average H2 return was 7.5 per cent. Between 2008 and 2011, market gained 1.15 per cent in the H1 of the year while H2 negative 21.4 per cent per cent.

“See-sawing will continue in July with policy paralysis still keeping out retail investors, while downward trend will continue although at a lower rate. However, a trend reversal should begin from mid-July.

“Results from the banking sector will stimulate a short bullish run. Naira depreciation and persistent inflationary pressure means interest rate will remain high. We expect a positive return between two and three per cent for July,” Rewane added.

NIGERIAN CONTENT: SHELL, MANUFACTURERS TO INVEST $62M IN LOCAL PRODUCTION

The Nigerian Content Development and Monitoring Board (NCDMB) and Shell Petroleum Development Company have entered into an agreement with five foreign companies to ensure that they manufacture their products in-country.

The value of the investment which is expected to begin shortly is put at $62 million.

The five companies are part of the 58 manufacturers of oil and gas equipment that have met the technical requirements prescribed by NCDMB in its Equipment Components Manufacturing Initiative and have been issued Nigerian Content Equipment Certificates.

The ECMI is geared toward getting manufacturers of oil and gas equipment or their representatives to commit to credible proposals on domiciling local manufacturing of some components of their equipment at the shortest possible time.

Under the ECMI, importation of some vital industry equipment by the manufacturers is only allowed by the Board after the suppliers have committed to domiciliation plans.

Speaking at the event in Port Harcourt, the Executive Secretary of NCDMB, Ernest Nwapa, explained that the investments planned by the five companies were expected to create 250 skilled employments for Nigerians.

He listed other benefits to include the transfer of technology know-how, development of manufacturing skills and development of after-market maintenance skills.

Nwapa however, clarified that obtaining the Nigerian Content Equipment Certificates was not a licence to win contracts in the industry.

He added that the Board had an in-built mechanism to track investment commitments and domiciliation plans and will apply appropriate sanctions to defaulters.

The executive secretary further explained that the Board would, in keeping with section 48 of the Nigerian Content Act, make recommendations to the Minister of Petroleum Resources, Diezani Alison-Madueke, for a fiscal framework that will impose a higher tax burden for equipment utilised in the industry with less than 50 percent local content.

This, he said, would help to address issues of price competitiveness usually associated with locally made goods.

In his comments, Mutiu Sumonu, managing director, Shell Petroleum Company of Nigeria and chairman, Shell Group in Nigeria, explained that his company supported the Equipment Components Manufacturing Initiative because of the multiplier effects it will bring to the Oil and Gas Industry and Nigerian economy.

To ensure the success of the investments, he said SPDC was committed to lead the exercise, offer logistics assistance to the OEMs and maintain large demands for the equipment.

He added that “Shell has strategically chosen the focus areas to extend support to foreign investors by identifying some of the prime bottlenecks in the business environment, namely electricity and access to land and security, which contribute to over 11 percent losses in sales and will support, to a certain extent, the increase of activities in country.”

ECOBANK SIGNS €40.7M LOAN AGREEMENT WITH PROPARCO, BIO

The Ecobank Transnational Incorporated (ETI) has signed a 40.7 million Euro seven-year loan facility agreement with two international development institutions to develop the banks systems and technology infrastructure.

A statement signed by the bank’s spokesman, Ouedraogo Nabi Souleymane, in Abuja on Wednesday said the agreement was signed on June 29, in Lome, Togo.

The statement said the agreement was signed by Ecobank, PROPARCO, the subsidiary of the French Development Agency dedicated to financing the private sector and the Belgian Investment Company for Developing Countries (BIO).

It noted that facility would serve nine million retail, local corporate, public sectors and microfinance customers, through 1,180 branches; 1,632 Automated Teller Machines; and 2,744 Point of Sales.

It quoted Arnold Ekpe, Ecobank’s Group Chief Executive Officer, as saying: ``the investment demonstrates our ongoing commitment to enriching Ecobank’s customer experience through investments in systems, technology and processes.”

Meanwhile, Ecobank’s Nigeria affiliate has in the past days experience disruptions in its inter-connectivity services thereby making it difficult for the customers to access their accounts.

The problem had incapacitated the retrieval of currencies sent to the customers through Western Union Money Transfer and Money gram.

Ecobank Nigeria recently acquired Oceanic Bank Plc. but the customers of the latter had not been fully integrated into the transnational bank’s transaction systems.

UBA , ACCESS, STERLING LEAD BANK STOCKS IN 6 MONTHS

Three banks stocks –namely United Bank for Africa (UBA) plc, Access Bank plc, and Sterling Bank plc, gained more than others in the banking subsector of the Nigerian Stock Exchange (NSE), Business Day investigations showed.

In a six-month trend (January 4, 2012 to July 4, 2012) monitored by Business Day, United Bank for Africa (UBA) plc stock rose most, by 61.54 percent, from N2.47kobo to N3.99kobo in the period under review. This was followed by Access Bank plc stock which rose by 41.95 percent from N5.03kobo to N7.14kobo. Sterling Bank plc was the third best performer, also in terms of stock price movement, after rising by 24.46 percent to N1.17kobo from N0.94kobo.

First Bank plc and Zenith Bank plc stocks occupied the fourth position, according to our trend-watch. While First Bank rose by 22.22 percent, to N11 on July 4 from the January 4 level of N9; Zenith Bank plc also rose by 22.22percent, from N12.15kobo to N14.85kobo in the same period under review.

The banking sub-sector of the Nigerian Stock Exchange has remained the most active over the 6-month period, when measured by turnover volume. Year-to-date (YtD), the Nigerian bourse has returned 6.66 percent evidenced in last week’s report, while the NSE Banking-10 Index has risen by 23.99 percent year-to-date.

Analysts at Financial Derivatives Company said liquidity remains an issue at the nation’s bourse “with total volume and value traded for the first half of the year at 50.6billion units and N347billion respectively.
Other bank stocks that were upbeat  in price include Diamond Bank plc and Guaranty Trust Bank plc (GTBank). While the former rose by 15 percent from N2 to N2.30kobo; the latter rose by 12.11 percent, from N14.20kobo to N15.92kobo.

These feats recorded in the banks’ stock price are not expected to reverse soon, as the analysts said valuations, especially of Nigerian Banks, are compelling and strengthening, adding that “Banks balance sheets are now at a level that can be considered clean, even as the stock market is now responding to earnings release.”

Further in trend-watch, banks stock that lagged most in price are Skye Bank plc, FCMB plc, and Stanbic IBTC Bank plc.
In the review period, Skye Bank plc lost 24.28 percent of its stock price from the January 4, 2012 level of N3.83kobo, to N2.9kobo as at July 4, 2012. FCMB plc lost 20.28 percent in its stock price, from N4.19kobo to N3.34kobo; while Stanbic IBTC Bank plc dipped from N8 to N6.51kobo in the review period of six-months.

Other banking stocks in this category are Fidelity Bank plc which dipped from N1.41kobo to N1.23kobo in the review period; Unity Bank plc and Wema Bank plc dropped by 9.09 percent respectively. Unity Bank plc dipped from N0.55kobo to N0.50kobo while Wema Bank plc also dropped from N0.55kobo to N0.50kobo.

In a related development, Ecobank Transnational Incorporated (ETI) stock price dipped by 1.23percent, from N10.59kobo in the review period of January, to N10.46kobo on July 4.