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PZ, UNILEVER MAY LEAVE US

2009-02-05T03:53:00.000-08:00

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Panic as Unilever, PZ threaten to leave Nigeria
05 Feb. 2009 00:00
Dipo Kehinde, Segun Adeleye & Segun Edwards

Unilever Plc and... Paterson Zochonis (PZ) Plc are considering pulling out of Nigeria, with possible relocation to neighbouring, Ghana because they could no longer bear the loss to business from the continued deplorable state of basic infrastructure in the country.

The companies are about to join the list of over 150 multinational industries that have divested from the economy since 1995.

According to the Nigerian Compass investigations, more than 60 per cent of local industries, mostly small scale enterprises, folded up since 1986, when the Structural Adjustment Programme (SAP), was introduced.

Going by official statistics, the organised private sector shed 131,000 jobs in 1997 alone, while 70,000 jobs were lost in the public sector. The figures have multiplied since then.

According to their official sites, both companies have combined workforce of 5,249 staff. PZ has a workforce of 3,775 in Nigeria, while Unilever has 1,474 employees.

There is anxiety in the business circle that the exit of the multinationals would further bring the economy to its kneels.

Both Unilever Plc and PZ Plc have been existing in Ghana.

According to sources, if they pull out of Nigeria, they would only need to expand their operations in the neighbouring country to sustain the Nigerian market which is their biggest in Africa.

Nigerian operations have consistently contribute a high proportion of PZ Cussons group’s earnings in recent years. But the complaint remains that the cost of production has hit the roof, due to the cost of self-generated power. A reliable source said PZ would not likely make a public announcement that it would pull out of Nigeria, but it is considering disposing its stock of raw materials and expanding its operations in Ghana.

The calculation of the firms that are finding Ghana attractive is that with the Economic Community of West African States’ free trade treaty, they can easily ship their goods back to service the Nigerian local market.

While Nigeria with over 6,000 megawatts (MW) of installed capacity of electricity power could barely generate 2,000MW, Ghana has been enjoying uninterrupted power supply for over 10 years. Energy experts say Nigeria, with a population of over 140 million, needs over 60,000MW to be self sufficient in power supply.

Comparatively, South Africa, with a population of 48 million can boast of over 39,500MW from Eskom, the counterpart of Nigeria’s NEPA.

Besides, inadequate power supply which cost billions of naira, Unilever and PZ are also said to be indifferent to the multiple taxations regime in Nigeria, which has also reduced their profits drastically.

On the implication of the possible relocation of the two firms to their shareholders, since they are listed on the Nigerian Stock Exchange (NSE), a shareholder and leader of the Progressive Shareholders Association of Nigeria (PSAN), Mr Boniface Okezie said: “If it is true that the companies want to relocate, which is possible because they owe their shareholders the obligations to return value through returns, they may seek de-listing from the Exchange and value the worth of every shareholders’ in the company to be able to pay them off.”

According to him, government should, as a matter of urgency, intervene in the issue of the deplorable situation of basic infrastructure in the country.

He said that the same problem forced all the textile factories out of business, while the promise by government to bail out the industries with a proposed N70 billion intervention funds is yet to be fulfilled.

One of the listed companies in the stock market, CFAO, applied to the NSE for de-listing, over inability to continue to fulfil its obligations to shareholders two years ago, while shareholders were paid off.

According to sources, a possible relocation of PZ and Unilever from Nigeria would greatly hurt the economy in view of their operations that spread across the country, where they sustain many small businesses and families.

PZ Cussons Nigeria Plc is currently the largest subsidiary of PZ Cussons. It has over 100 years’ experience of trading in Africa and has enjoyed tremendous business success in Nigeria with a strong portfolio of local brands. The company’s tentacles spread to almost every state in the country.

It’s operations started in 1879, when George Paterson and George Zochonis set up a trading post in Sierra Leone.

In 1899, Paterson Zochonis (PZ) opened a branch office in Nigeria and acquired its first soap factory in the country in 1948.

In 1973, PZ entered the detergent and refrigerator markets, simultaneously in Nigeria. And in 2003, PZ Cussons Plc entered into a joint venture (Nutricima) with Glanbia Plc to supply evaporated milk and milk powder in Nigeria, two years later the Nutricima JV commenced manufacturing in Nigeria.

With 3,775 employees in Nigeria as against 556 in Ghana and 292 in Kenya, the group’s product lines, the main brands, include - Elephant Blue Detergent, Zip, Jet, Tempo, Rex, Morning Fresh.

Others are soaps, pharmaceuticals, balms, skin and baby care products including: Premier, Imperial Leather, Joy, Duck, Canoe, Drum, Super Atlas, Maladrin, Zubes, Robb, Heatol, Super Robb, Medicated Dusting Powder; Venus, Stella Pomade.

The company also stock perfumes, household appliances and diary products, namely: Dan Duala, Venus Gold, Joy Cologne, Coast milk, Nunu, Olympic, Power Fist, Haier Thermocool and a range of other electronics.

One of its key strengths in Africa is the extensive network of depots and factories in Nigeria.

The financial positions of PZ for the year ended May 31, 2008 revealed that the company’s turnover grew by 22 per cent from N54.21billion in 2007 to N65.94billion in 2008.

Its profit after tax rose to N3.95billion, in the year, from N3.52billion recovered in 2007, representing 12 per cent increase, while its profit before tax item equally grew by 12 per cent from N5.35billion in 2007 to N5.98billion

The company’s shareholders’ funds presently stands at N32.76billion as against N30.56billion in 2007, while it paid a tax of N2.02billion in the year under review as against N1.27 in 2007.

Its five-year financial summary showed that the company’s assets base grew from N21.57billion in 2004 to N36.28 billion in 2008.

The turnover has grown from N27.99billion in 2004 to N65.94billion. The basic earnings per share presently stands at N124 from N0.83 in 2004, N127 in 2005 and 2006, and 138 in 2007.

Shareholders were paid N2.01 per share in the current year, against N1.94 in 2007, while the number of shareholders of the company stands at 79,020, with PZ Cussons Plc, Manchester, United Kingdom having the majority holding of 61.4 per cent of the paid up capital as May 31, 2008.

Its Directors include Professor E.C Edozien, as the largest Nigerian shareholder with 3.88 million shares; Mr. B. Oyelola 441,106 shares; J.O. Akande, 76,435 shares; Mrs O.T. Ifaturoti, 20,226 shares and A.A. Raji 74,410 shares.

Unilever is a multi-national corporation, formed of Anglo-Dutch parentage that owns many of the world’s consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever employs nearly 180,000 people and had a worldwide revenue of almost £40 billion in 2005.

Unilever Nigeria Plc, was incorporated as Lever Brothers (West Africa) Ltd on April 11, 1923 by Lord Leverhulme, but the company’s antecedents have to be traced back to his existing trading interests in Nigeria and West Africa generally, and to the fact that he had since the 19th century been greatly involved with the soap business in Britain.

Unilever Nigeria Plc started as a soap manufacturing company, and it is today one of the oldest surviving manufacturing organisations in Nigeria.

After series of mergers/acquisitions, the company diversified into manufacturing and marketing of foods, non-soapy detergents and personal care products. These mergers/acquisitions brought in Lipton Nigeria Ltd in 1985, and Cheesebrough Ponds Industries Ltd., in 1988. The company changed its name to Unilever Nigeria Plc in 2001.

Unilever Nigeria Plc is a public liability company quoted on the Nigerian Stock Exchange since 1973 with Nigerians currently having 49 per cent of equity holdings.

The company’s principal activity is manufacturing and marketing foods and food ingredients, and home and personal care products. It has manufacturing plants in Aba, Lagos and Agbara. Product brands include Blue Band, Close Up, Key, Knorr, Lipton, Lux, Omo, Pears, Royco and Vaseline.

Unilever PLC in 1994 divested its 40 per cent interest in UAC of Nigeria Plc while the latter became a wholly-owned Nigerian company.

Unilever’s financial report for the year ended December 31, 2007, showed that the turnover grew to N33.99 in the year from N25.55billion in 2006.

The company recorded a loss of N2.01billion in the period under review as against N2.12billion in 2006, while it incurred tax expenses of N716.61million as against N645.87million in 2006.

It paid a dividend of N945.82million as against nil in 2006, representing N0.05 per share to shareholders.

Its parent company, Unilever Overseas Holding B.V, has a majority holding of 1.89 billion shares, representing 50 per cent.

The company’s Directors include Apostle Hayford Alile, former Director General of the NSE, who has 31,250 shares; Egwe N.A Anichebe 65,976; Chief Samuel Adegbite, 227,543; Mr. Felix Ohiwerei, a former MD and Chairman of the company and also former MD and Chairman of Nigerian Breweries Plc.

DENIALS GALORE

2009-02-05T01:05:00.001-08:00

By Yemi Kolapo and Everest Amaefule
Published: Thursday, 5 Feb 2009

The Securities and Exchange Commission has dissociated itself from the comments made by its Executive Commissioner, Legal and Compliance, Mr. Charles Udorah, on behalf of the Director-General, Mr. Musa Al-Faki, calling for a government bail-out for sick banks and firms.

SEC, on Wednesday, declared that statements made by the commissioner, who represented Al-Faki at the Forum of Accountants General of states in Abuja on Monday, did not reflect the position of the commission.

“The management of SEC wishes to state categorically that those statements do not reflect the position of the commission and, therefore, dissociates itself from those views,” it said in a statement signed by the Head, Media, Mr. Lanre Oloyi.

Udorah, who spoke for the DG, had blamed chief executives of certain banks for the crisis in the capital market, saying the time was ripe for the Federal Government to take controlling interest in banks and other companies quoted on the Nigerian Stock Exchange.

He said the take over of controlling shares in unhealthy banks, which were owed N388bn by stockbrokers, should be followed by the injection of fresh hands and the prosecution of “the chief executive officers that had been overcome by greed.”

Meanwhile, the Chartered Institute of Bankers of Nigeria has refuted allegations of misconduct leveled against the banking sector by SEC, saying that the market regulator was incompetent.

In a statement on Wednesday, the institute said, “Chances are that the SEC, under massive pressure from the investing public, has resorted to diversionary tactics to cover up its failure in regulating and managing the stock market. It is time regulators stop fighting themselves and focus on their responsibilities to the investing public.”

According to the statement, signed by the Registrar/Chief Executive, CIBN, Dr. Uju Ogubunka, “The Nigerian stock market is simply drifting rudderless and we now call on the Federal Government to quickly arrest the situation by overhauling the regulatory machineries and consequently, the level of operational efficiency and transparency. Time is running out and the price Nigerians are paying for this regulatory blindfold cannot but be imagined.”

The bankers said the industry might have paid its price for performing its financial intermediation role such of lending. They noted, however, that, weighed against the strength of the capital base of even the smallest bank in Nigeria today, the impact was minimal.

“None of the banks has been found wanting in ethical conduct as far as their stock market activities are concerned, neither has any of them been found guilty by any court of law in this regard,” it added.

Separately, the Minister of State for Finance, Mr. Remi Babalola, on Wednesday, in Abuja, said that the Federal Government was working on several options to restore confidence in the stock market just as he disputed SEC’s claims.

He said, “The truth is that it is only when we have a categorical statement from the banking regulators and from the financial institutions that we can determine the extent of debts in the banking system and that is what I will rely on.

“I cannot rely on a speech SEC gave because I don’t know the basis of that figure, but if for instance, the regulator of the banking system came out to say this is the make up for each of the banks and this is the exposure they have, then we can agree.

“It is not only in the capital market, there is significant exposure in the downstream. There are so many areas that people might have recorded significant downside. What we need to do is to quantify all these and try to see how we can take it out and give them fresh air to continue their business.”

TIGERKENN COMMENTS
Well, let us deny the fact that we were afraid of the banks and getting ready to pull our funds, let us also deny that we were shaken in our resolve to invest more money. It was good news all though. Lets forgive the market and press forward. It all never happened.

MINI BULLS

2009-02-04T02:08:00.000-08:00

Activities in the NSE have been so poor this year as to tempt some stock traders to abandon stock trading altogether. The low level of liquidity, capital flight and investor apathy unknown before in the capital market has combined to make January one of the worst trading months on the NSE.

There were signs that the market will rebound as early as Friday last week, but the index chalked its first gain on Monday. Gains by highly capitalized stocks like NB, Oando, FBN, etc has pushed the index up for two days now, so where do we go from here. This is the time traders make their worst mistake. Some traders will just wake up now and remember that they have not bought some stocks, invade the market with the hope of making a kill. These investors will buy stocks now after some stocks have gained about 15 %. They then hope and pray that the stock will continue to move up.

I think it is late to buy now if you have short time trades as an objective.

LINKAGE ASSURANCE TRADES

2008-11-07T21:04:00.000-08:00

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.

STOCK BROKER TRICKS

2008-11-07T20:59:00.000-08:00

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!

THE COUNCIL RESTRUCTURES THE EXCHANGE

2008-10-23T01:39:00.000-07:00

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!

BANKING SECTOR AS A MINEFIELD

2008-10-22T14:42:00.000-07:00

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.

HEAVY VOLUME FOR NB

2008-10-22T14:41:00.000-07:00

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?

THINK LIKE A MARKET REGULATOR

2008-10-22T00:21:00.000-07:00

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

2008-10-22T00:09:00.000-07:00

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.

HOW WILL THIS WEEK TRADE.

2008-10-19T21:59:00.000-07:00

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.

THE GOING GETS TOUGH

2008-10-16T15:22:00.000-07:00

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.

FCMB PROFITS UP BY 154%

2008-10-08T10:48:00.000-07:00

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

OCEANIC BANK GROWS PROFITS BY 101%

2008-10-08T10:40:00.000-07:00

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.

PHB SET TO BUY SPRING BANK

2008-10-08T10:01:00.000-07:00

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.

MARKET REPORT 07/10/2008

2008-10-08T09:53:00.000-07:00

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.

PRICES STILL FALLING

2008-10-08T09:51:00.000-07:00

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.

WILL NIGERIAN BANKS SUFFER HUGE LOSSES?

2008-10-08T04:49:00.000-07:00

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.

NSE SET TO INTRODUCE 5 MARKET MAKERS

2008-10-08T04:43:00.000-07:00

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.

BANKS PLANNING TO INJECT 600 BILLION INTO STOCK MARKET

2008-10-08T04:39:00.000-07:00

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.

ECONOMICS AND INVESTING UNCERTAINITY.

2008-10-06T09:39:00.000-07:00

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.

CBN OKAYS RESTRUCTURING OF MARGIN FACILITIES

2008-10-06T09:25:00.000-07:00

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.

STERLING BANK EXPLAINS THE SHARE CONFUSION

2008-10-06T08:15:00.000-07:00

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."

ANGRY REACTIONS TRAIL SOLUDO'S ANNOUNCEMENT

2008-10-05T09:38:00.000-07:00

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.

BUYING FUNDAMENTAL STOCKS NOW.

2008-10-05T09:23:00.000-07:00

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.

WE WERE SUPPOSED TO KNOW THE TRUTH.

2008-10-05T09:19:00.000-07:00

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?

2008-10-05T09:14:00.000-07:00

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?

FOREIGN FUNDS PULL OUT CAUSED MARKET DECLINE - SOLUDO

2008-10-05T09:00:00.001-07:00

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.”

EXPECT UP AND DOWN TRENDS

2008-09-27T01:33:00.000-07:00

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.

LET TIME BE YOUR ALLY

2008-09-27T01:14:00.000-07:00

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.

WILL THE NEW CBN POLICY TURN MARKET?

2008-09-25T10:59:00.000-07:00

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.

STARCOMMS CLARIFIES LOSS SITUATION

2008-09-24T06:12:00.000-07:00

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.

START BUYING NOW!

2008-09-24T04:00:00.000-07:00

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.

AFROIL TO PAY DIVIDEND

2008-09-22T04:07:00.000-07:00

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.

STABILIZATION FUNDS SHOULD HAVE COME EARLIER

2008-09-22T02:53:00.000-07:00

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.

ZOOMMOBILE?

2008-09-22T02:17:00.000-07:00

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.

CHEVRON SALE, WORKERS MEET TOMORROW

2008-09-22T02:06:00.000-07:00

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.”

TRADING MOVES FOR THIS WEEK

2008-09-22T00:48:00.000-07:00

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

NIGERIA INJECTS BILLIONS TO SAVE MARKET

2008-09-18T08:33:00.003-07:00

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)

BUY NBC NOW!

2008-09-18T08:33:00.002-07:00

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

2008-09-18T08:33:00.001-07:00

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

2ND QTR RESULTS FOR GTB

2008-09-18T08:33:00.000-07:00

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

ARE NIGERIAN BANKS AS HEALTHY AS THEY CLAIM?

2008-09-17T10:10:00.000-07:00

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.

FBN 1:4 BONUS REFUSED?

2008-09-17T09:47:00.000-07:00

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

EXPERTS TO REFORM OUR CAPITAL MARKET

2008-09-17T09:45:00.000-07:00

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

DAAR COMES TO MARKET

2008-09-17T09:41:00.000-07:00

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.

MARKET SITUATION FOR LAST WEEK

2008-09-17T09:28:00.000-07:00

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.

NITEL GIVING BASELESS EXCUSES

2008-09-17T09:01:00.001-07:00

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.

NITEL GIVING BASELESS EXCUSES

2008-09-17T09:01:00.000-07:00

GASLINK TO RAISE GAS PRICES

2008-09-11T10:31:00.000-07:00

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

ADENUGA BUYING TELKOM SA?

2008-09-11T10:24:00.000-07:00

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;

FEAR STILL REIGNS AT THE NSE

2008-09-11T09:26:00.000-07:00

Investors still apprehensive over stock market
Friday Ekeoba, Lagos, with Agency Reports - 11.09.2008
NIGERIAN investors are yet to regain confidence in the stock market despite measures taken by the Federal Government last month to stem its decline, brokers said on Wednesday.

Major performance indicators in the market receded at the close of last week’s activities and continued their decline for two consecutive trading days.

For instance, the total market capitalisation of all listed companies declined last Friday to N10.37 trillion from N10.42 trillion recorded the previous day, representing N36 billion or 0.34 per cent loss.

They reason that despite government’s intervention in the capital market slide two weeks ago, the problem facing the market may be far from being over if the banks continue to shun the Central Bank of Nigeria (CBN) directive that waiver be extended to expired margin accounts to allow the market recover fully.

Most banks in the country continued to be adamant about adhering to the CBN directives to restructure loan facilities advanced to operators in the capital market and some stockbrokers have threatened legal actions against such banks.

The grouse of the stockbrokers is the alleged insistence of the financial institutions on selling investors’ shares on their margin account portfolio.

Querying the new regime of the downturn in the market, the stockbrokers attributed the new wave of meltdown trend in the market, which started last Friday, to the resolve of banks to trade off on investors’ accounts, who could not repay loans obtained through margin facilities to purchase shares in the market.
The brokers insist that emerging signs in the market are an indication that investors do not have a grip of the market, as, according them, the pattern of activities is that huge divestment is still ongoing despite government’s intervention.
Meanwhile, a fresh bearish trend which began last weekend has seen the stock market losing another N111 billion in four days.
Another regime of bearish trend has commenced, in spite of the government intervention barely two week ago, which constituted a Presidential Advisory Committee on Capital Market to find solutions to the depreciation of share prices.

Specifically, sources said the credit management units of the banks had persistently put pressure on their assets management units to recover loans given through margin accounts, thereby making the market to witness more divestment than purchase briefs from investors.

The sources also said that the banks had continued to discountenance the CBN agreement, forcing investors to forfeit their investments.

“One would have expected the market to have rebounded by now, but this is because not all the measures announced have been implemented,” Eugene Ezenwa, chief operating officer of Lagos-based brokerage, Spring Capital Ltd, told Reuters.

“Investors have to regain lost confidence in the market after their experience in the recent past,” he said.

“Most investors are now risk averse,” said Olusola Dada, President of Nigeria’s Institute of Directors and chief executive of Lagos-based Anchoria Securities and Investment.

“It will definitely take some time for investors to regain confidence in the market and for the measures to have major impact,” he told Reuters, adding that institutional investors, including pension funds, had been moving money into the money markets because of perceived higher returns.
Some analysts had warned that the stability measures could be counter-productive, saying that the one per cent minimum decline rule could slow market activity to a crawl.

Sodiq Wasiri, head of research at a brokerage firm, Lead Capital Ltd., said allowing companies to buy back shares was a more complicated procedure than might have been expected.

“The process of getting approval from the SEC is so cumbersome that by the time a company gets such approval to buy back its stock to save it from sliding, it would have gone haywire in terms of a price slide,” he said.

He said the initial upturn in the market after the measures were announced was caused by investors minimising losses rather than because of renewed confidence. Those investors were now taking profits after a slight rebound

THE FACE OF MUTUAL FUNDS IN NIGERIA.

2008-09-11T08:59:00.000-07:00

Report on Mutual Funds Operations in Nigeria
Posted Wednesday, September 10, 2008

1. The Basic Nature of Mutual Funds

Mutual funds are collective investments that join various individual contributions of investment capital to create a large pool of funds. It spreads the pool of funds across dozens of investment instruments in the stock market and other predetermined investment targets.

The investment target where the fund will be invested is clearly stated, which enables investors select the funds that meet their own desired investing characteristics. The stock market is the most popular target for mutual funds but there are funds that focus completely outside the stock market.

Stock market-based funds provide an alternative window for people who are not highly knowledgeable or confident enough to select stocks by themselves. Even for those who can pick stocks on their own but have limited equity portfolio, some blend of mutual funds is still needed to reduce the risk balance of the share portfolio.

A mutual fund invests the pool of funds contributed by individual subscribers in a number of blue chips or high grade investment options spread across the target market. Subscribers to the fund become unit holders, part owners of the fund proportionate to the volume of the fund units outstanding.

All rights and privileges of shareholders accrue to subscribers in respect of the funds they have bought their units. They will be invited to annual general meetings, take part in electing directors and receive dividend from profit made from the fund’s investments.

Individual subscriptions made to a mutual fund are not identifiable within the investment assets of the fund itself. They do not attach directly to the underlying investments which the fund’s management has made. The fund may have invested in dozens of shares in different companies, including government bonds and treasury bills. There is however no direct link between the funds contributed by subscribers to the shares and any other investments where the pool of resources has been invested.

Most mutual funds are open ended, which means there is no limit to the volume of units the managers can issue. Applications can be made to the fund managers any time for any volume of units the intending subscriber wants to buy on a continuing basis. Likewise, unit holders are free sell any volume of their holdings back to the fund managers any time they wish.

Mutual funds carry two price quotes – the selling or the offer price and the buying or the bid price. The offer price is the current price the fund managers will sell a unit of the fund to subscribers. The bid price is the price they will buy a unit of the fund from those intending to sell their holding. The quotes carry a spread of 3 to 5 per cent in between them, which covers fund manager’s dealing expenses and commission.

The offer and bid prices change on a continuing basis just as share prices do. The price changes can create capital gains over and above the initial price quotation if the fund is doing well. They will create capital losses when the price declines below previous levels.

The rise and fall of the price of the units reflects changes in the net asset value of the fund’s portfolio of investments, which mirror the overall quality of investments. Net asset value is the current market value of the portfolio less outstanding liabilities. The net value is divided by the volume of units outstanding to arrive at net asset value per unit. Generally, the bid and offer prices of mutual funds follow a long-term uptrend and tend to build huge capital gains over time.

Mutual funds come under the regulation of the Securities and Exchange Commission (SEC). In Nigeria, mutual funds are regulated under section 8(g) of the Investment and Securities Act No. 45 of 1999. They have to be registered as a trust or a trust company in accordance with the provisions of the Trustees Act, Investment and Securities Act and the Companies and Allied Matters Act 1990 as amended.

The Investment and Securities Act contains some provisions made to protect the interest of the investing public, including disclosure requirements, operating modalities that ensure transparency and other prudential norms that govern investments by mutual funds. The investments of a mutual fund should be managed by an asset management company registered under the companies act in accordance with the regulations of SEC.

A code of conduct is specified for mutual funds that governs advertisement of the funds. The regulatory objective here is to prevent mutual funds from making unfounded claims and use same to attract investments from the public. Fund managers are required to file a monthly return with SEC in a format specified to permit regular off-site surveillance.

Mutual funds are also required to submit their audited accounts to SEC every year and make full disclosures of their investment assets. SEC undertakes inspection and audit of their operations as well as valuation of their assets.

2. Mutual Funds: A Good Way To Start Investing

One major challenge that faces beginners in the field of investing is the fear of taking the wrong step in the choice of securities. A beginner usually buys one or two stocks and expects to make the good profit he has been made to believe that comes from stock market investing. Often short-term disappointments happen in place of the profit expected.

This leaves the beginner agonizing over the investments, regretting he has not chosen the more rewarding investment options. He may end up selling the investment and moving into another stock expected to do better than the earlier choices. Soon the stocks he thought were going to do better also begin to go down.

Mutual funds represent one major vehicle to get share investing right from the start and avoid possible initial disappointments killing the investment enthusiasm. Mutual funds create a balance between the expectations of returns in a rising market and possibilities of losses when the market falls.

The investment portfolio for a beginner requires being constructed around a diversified group of securities, spread broadly across the market. This will create a low portfolio risk advantage and thus guarantee the level of returns required to transform investments into great wealth over the years.

The financial capacity needed to achieve the standard portfolio diversification is clearly not within the reach of the small investors. Recent market developments have also tended to place new hurdles for the small investor in direct stock market investing. The main restrictive factor is the general increase in the minimum account opening amounts required by stock broking firms. This has spurred fresh attempts to establish mutual funds to create an alternative investing window for the small investor.

The investing activity requires the involvement of experts in deciding what to buy and when to buy or sell. Mutual funds provide a remedy for limited knowledge about stock market investing and inability to select good investments.

They create investing expertise through the appointment of professional managers and make it available to the general investing public. The fund managers are knowledgeable about the market and are in a better position than individual investors to build a portfolio of stocks and other securities and turn them over to take advantage of market developments.

Mutual funds therefore offer a big window of opportunity for beginners and it is available to both big and small investors. A mutual fund is a financial intermediary that creates instruments for a group of investors to pool their funds for investment in predetermined markets, usually equities, bond and money markets. The funds offer six key advantages to investors.

The first is the wide access to professional skills employed to invest and manage the funds. Beginners do not usually have the skills to analyse the prospects for individual companies and choose those that present the best investment options. A mutual fund appoints and pays a professional fund manager to do this job for its investors. What this means is that no matter the size of the investment in a mutual fund, it has the opportunity of sound professional management.

The second advantage is that mutual funds provide a device for the management of investment risk. The best way to manage risk in investment is to spread it by diversifying the portfolio. Investment in mutual funds gets instant diversification to achieve market-wide coverage, no matter its size. Since a mutual fund is a collection of stocks, bonds and money market securities held in a pool but then sliced into units sold to individual investors, any unit of the fund receives the diversification advantage of this large collection of different types of securities.

This makes it possible to share in the prosperity generated from any part of the market and minimize the net effect of losses from any market segment on the value of investment and the rate of return. Even if you invest only N100 in a mutual fund, you get an equivalent proportion of the diversification effect. This means it is better, for risk management purpose, to invest N100 in a mutual fund than hold equivalent amount of stocks in a single company.

Thirdly, there are usually quite a number of funds available in the market to choose from, especially in the advanced financial markets. In Nigeria, development of mutual funds has been slow but a growing number of new funds have been springing up since the past few years. There are 21 mutual funds presently quoted in the Nigerian Stock Exchange while a number of others are not quoted. A good number of new funds are also in various floatation and setting up processes.

The fourth advantage of mutual funds is the liquidity or flexibility that they offer. Selling the mutual fund investment is easy and they can also be bought back any time. The prices to buy and sell are quoted in the open market but dealing is exclusively with the fund managers. Not all mutual funds are normally quoted in the stock exchange.

Another advantage of mutual funds is in terms of comparatively lower transactions cost. Some statutory charges are fixed irrespective of the volume of transactions and mutual funds have an advantage of dealing in volume. With their large pool of investment capital, they are in a position to negotiate stockbroker’s commission. They are therefore able to achieve a lower average cost of investment than people buying a couple of shares.

The ultimate advantage of mutual funds is the expectedly high rate of return, which reflects the favourable effects of diversification and economy of scale effect on cost. The funds are expected to show returns ahead of average stock or bond markets’ returns. The ability to take up excellent investment opportunities should enable mutual funds to maximize returns while effective portfolio diversification permits them to minimize the risk.

3. Mutual Funds Operations in Nigeria

Mutual funds operations in Nigeria came to the limelight for the first time during the early 1990s, as a result of the rapid growth in the financial sector induced by the deregulation policy of the mid 1980s. They emerged as part of the financial markets innovations that followed the policy of deregulation. Banks engaged in competitive floatation and management of mutual funds then as is happening again presently.

A good number of them closed shop during the financial turmoil that followed. Banks were mainly the fund managers and the funds went down with the banks that were hit by financial distress.

Mutual funds began to re-emerge as from the mid 1990s but remained relatively insignificant with limited impact in the capital market until the recent banking consolidation reinforced the sector once again. Presently there are 21 mutual funds listed in the Nigerian Stock Exchange and another 16 not listed. A growing number of others are still in the process of being set up.

IBTC Nigerian Equity Fund is the biggest mutual fund in Nigeria with a net asset value in excess of N30 billion as at the end of 2007. The fund, which is managed by IBTC Asset Management Limited, commenced operations in 1997. The units of the fund were issued at an initial price of N1,000 per unit and the offer price is presently in excess of N11,000.

The equity fund is mainly capital market-based and requires a minimum subscription of N50,000. The principal investment is guaranteed for a minimum of three months.

The fund has a minimum target allocation of 75 per cent in stocks quoted in the Nigerian Stock Exchange and 25 per cent in money market instruments. A return on investment of 62.14 per cent was realized in 2007 and annual growth is estimated at an average of 53 per cent.

The primary objective of the fund is to achieve long-term capital appreciation by investing in high quality securities quoted on the Nigerian Stock Exchange and in other instruments approved by SEC.

IBTC Asset Management Limited also manages two other funds – Stanbic IBTC Bank’s Ethical Fund and Stanbic IBTC Bank’s Guaranteed Investment Fund. The ethical fund was floated in 2005 at a par value of N1.0 per unit. It has a minimum target allocation of 75% in stocks quoted in the Nigerian Stock Exchange and a maximum of 25% in money market assets.

Its choice of investments excludes stocks of companies that operate in the brewery and tobacco sectors or involved in the production of arms and ammunition, gambling or any other businesses considered harmful to society. The fund’s focus is to permit a clear moral conscience by investing with the interest of society in mind. It is designed for those who do not want to make profit at the expense of their religious believes and principles

The minimum requirement for investing in the fund is N50,000 and the principal investment is guaranteed against diminution in value provided the investment is held for a minimum of three months.

The Stanbic IBTC Guaranteed Investment was launched in December 2007 at a nominal value of N100 per unit. The fund builds its assets around fixed income securities such as government bonds, money market securities and other securities approved by SEC. It has a minimum target allocation of 75 per cent in fixed income securities and a maximum of 25 per cent in securities, essentially blue chip companies listed on the Nigerian Stock Exchange.

Investment in fixed income securities is biased in favour of tax exempt assets and those that offer the best post-tax return. The principal investment is guaranteed against diminution subject to funds kept for a minimum of three months. The fund is designed to provide regular income and long-term capital appreciation.

ARM Discovery Fund was established in 1995 and was initially named equity growth fund. The open-ended fund is managed by Asset and Resources Management Company Limited [ARM]. The fund’s investment targets are equities, fixed income securities and real estate.

The investment mix is designed to provide capital growth while achieving an optimum balance between risk and return. The fund’s investments have allocated targets of a minimum of 40 per cent in equities and a maximum of 65 per cent. The fund achieved a return of 56 per cent in 2007. Minimum investment amount is N10,000 with minimum additional investment amount of N5,000.

ARM Aggressive Growth Fund is the second mutual fund managed by ARM and was established in 2004. It has a targeted allocation of 80 per cent of its investments in equities quoted in the Nigerian Stock Exchange and 20 per cent allocation to money market and other fixed income investments.

The fund is designed for investors with the primary goal of achieving capital appreciation and having above average appetite for risk for the possibility of higher returns in the long-term. The fund achieved an 86 per cent return in 2007 and an annual average of 41.4 per cent over the four years of its operations. Minimum investment in the fund is N50,000.

Coral Growth Fund was set up in 2001 and managed by FSDH Asset Management Limited [FAML]. The fund invests 65 per cent of its resources in equities quoted on the Nigerian Stock Exchange and the balance of 35 per cent on investment grade fixed income securities.

The minimum investment amount in the fund is N50,000 with a minimum additional investment of N10,000. The investment objective is to grow capital value over the long-term. It is designed to meet the needs of private pension/retirement plan, savings and investment plans and educational and contingency plans. The fund has recorded an annual average growth of 33.98 per cent by the end of 2006.

Coral Income Fund is the second of the three funds managed by FAML. The funds focus mainly on fixed income securities in both the money and capital markets. As much as 70 per cent of its investments constitute fixed income securities while the remaining 30 per cent is targeted at equities quoted on the Nigerian Stock Exchange.

The objective of the fund is to enable investors preserve the value of their capital and achieve a stable stream of income. It is designed for the less aggressive investors who are desirous of preserving their stock of capital.

Coral Ethical Fund is the third mutual fund managed by FAML and focuses on investing in equities quoted in the Nigerian Stock Exchange but which have been screened to meet specified ethical values. Qualifying equities exclude companies whose principal business is deriving interest income and those engaged in the production of alcoholic beverages.

Interest bearing securities are also excluded from the fund’s investing focus. The objective of the fund is to provide investors with capital growth over the long-term through investment choices that do not offend their ethical and social values.

Intercontinental Integrity Fund emerged is the former A-Z Mutual Fund that was managed by Gateway Bank Plc. After the merger of the bank with Intercontinental Bank, the fund came under the management of Intercontinental Capital Markets Limited in 2006.

The fund’s investment targets are company stocks quoted on the Nigerian Stock Exchange, government bonds, money market investments and real estate. Investing in the fund requires a minimum of 10,000 units at prevailing market price and multiples of 1,000 units thereafter. Investors can realize part or all of their investments in the fund subject to five working days notice and a minimum investment period of 90 days.

Oceanic Vintage Fund was launched in 2007 and is managed by Oceanic Bank International [Nigeria] Plc. The investment targets of the fund are mainly blue chip equities quoted on the Nigerian Stock Exchange and supported with moderate interests in real estate and fixed income investments.

The fund’s objective is to optimize returns for investors from a portfolio of investments diversified into the main high growth sectors of the economy. The minimum qualifying investment in the fund is N50,000.

Legacy Fund was floated in February 2006 and is managed by CSL Stockbrokers Limited. The fund’s objective is to achieve regular income for investors as well as capital gains in the long-term through a diversified portfolio of high quality assets. Its investment portfolio is structured to contain a maximum of 50 per cent of blue chip equities quoted on the Nigerian Stock Exchange and the balance mostly of money market assets with moderate interest in government bonds.

At the end of its first one year in operations, its net asset value stood at N1.37 billion with annualized total return of 55 per cent and a growth of 15 per cent. Minimum investment in the fund is N10,000.

UBA Equity Fund was set up in September 2006 and listed on the Nigerian Stock Exchange Memorandum quotations in December 2006. The fund’s investment objective is to achieve high returns on investment and thus provide a hedge against inflation. It is managed by UBA Asset Management Limited.

Investment allocation targets are 80 per cent equities quoted on the Nigerian Stock Exchange and 20 per cent money market investments. It is ideal for high return seeking investors with above average appetite for investment risk.

UBA Balanced Fund is another mutual fund managed by UBA Asset Management Limited and was established in September 2006. The investment objective is to achieve competitive returns through a diversified portfolio of investments.

Investment portfolio components are allocated to equities listed on the Nigerian Stock Exchange - 40 per cent, money market instruments – 40 per cent and other securities – 20 per cent. The minimum investment in the fund is N50,000.

The third mutual fund managed by UBA Asset Management Limited is UBA Bond Fund, which was also set up in September 2006. The fund’s investing objective is to concentrate on risk free assets to provide regular income on a long-term basis.

The fund’s investment portfolio is structured to contain 80 per cent of bonds and 20 per cent of other securities. The minimum investment in the fund is N50,000. The fund is ideal for low risk oriented investors desiring to preserve the value of their capital and obtain a stream of regular income.

Fidelity Nigfund was established in 2002 and managed by Fidelity Bank Plc. Its investment objective is to achieve maximum return on investment capital through a balanced portfolio of investments. The fund’s investment portfolio is structured to comprise 60 per cent of capital market assets, 35 per cent of money market instruments and 5.0 per cent real estate.

The fund had a net asset value of N2.0 billion as at February 2007 and accumulated yield of 248.74 per cent since inception. The minimum investment in the fund is 10,000 units at prevailing market price.

ICON

Paramount Equity Fund formerly known as ICON Unit Trust Scheme is one of the oldest mutual funds in Nigeria. It commenced operations in April 1991 and changed to its present name in June 2004. The fund, which is comprised of 500 million units of N1.0 par value each, is managed by Denham Asset Management Limited. The minimum investment is N20,000 and a minimum additional investment of N10,000.

The fund carries an aggressive equity portfolio aimed at fully exploiting growth opportunities in the stock market. It focuses on blue chip equities supplemented by opportunistic short-term trading activities.

Denham Asset Management Limited also manages two other funds not listed on the Nigerian Stock Exchange. These are the Nigerian Global Investment Fund and Denham Management Millennium Fund. The Nigerian Global Investment Fund is designed to achieve a balanced portfolio of equities, fixed income securities and money market instruments. The highly liquid fund has the objective of providing total security of funds and long-term capital growth.

Denham Management Millennium Fund carries an investment portfolio designed to defend the value of capital. The fund is invested largely in fixed income securities with the objective providing investors with capital preservation and steady growth.

The other members of the first generation of mutual funds in Nigeria are First Interstate Unit Fund registered in 1991 with an initial floatation of 40 million units of 50 kobo each and Continental Unit Trust also registered in 1991 with an initial floatation of 100 million units of N1.00 each. Other mutual funds registered in 1991 are Devcom Mutual Fund and Indo Nigeria Trust Scheme. The capital market is the main investment targets of the funds with a secondary interest in the money market.

Frontier fund was under the management of NAL Bank Plc and First Trustees Nigeria Limited before the amalgamation that formed Sterling Bank Plc. It was floated in 2003 with its main focus on equities market investing and limited interest in the money market.

A number of new mutual funds are presently in various stages of establishment. Zenith Bank floated three mutual funds in May 2008, which will be managed by Zenith Capital Limited. These are 500 million units of Zenith Equity Fund, 200 million units of Zenith Income Fund and 100 million units of Zenith Ethical Fund all of which are issued at N10 per unit. The funds have the usual distinct features that create varying risk and return preferences for investors.

Cashcraft Asset Management Limited floated two mutual funds in 2007 named Anchor Fund and Bedrock Fund. Each of the funds had an initial closing of 500 million units at N1.0 each. The Anchor Fund is a balanced fund with investment portfolio built around equities, mortgage instruments, real estate and opportunistic investments. Bedrock fund is essentially equity based with investment targets of 75 per cent equities and not more than 25 per cent money market assets. The fund is not listed in the Nigerian Stock Exchange.

Afrinvest [West Africa] Limited, formerly Securities Transactions & Trust Company [Nigeria] Limited [Sectrust], has floated Afrinvest Equity Fund. It is raising N5 billion through 50 million units at N100 each. The fund seeks to maximize returns from the equities market. It is forecast to achieve return on investment of 34.86 per cent in 2009, 30.43 per cent in 2010 and 27.22 per cent in 2011.

DVCF Oil & Gas Limited, a subsidiary of Deep Capital Plc is in the process of establishing DVCF Oil & Gas Fund. It is offering to the public one billion units of the fund at N1.0 each. The minimum subscription is N3,000.

Chapel Hill Denham recently launched Nigeria’s first gender specific N2.5 billion mutual fund (Women’s Investment Fund) through an initial public offer (IPO) at N100 per unit.

With the Women’s Investment Fund (WIF), it is believed that a bridge has been crossed in addressing female investors and entrepreneurs alike. The WIF will invest in a diverse portfolio of assets including quoted equities and fixed income securities, real estate and private equity investments.

PHB Asset Management is the fund manager for the Diaspora fund launched by Nigerians in Diaspora Europe (NIDOE) with the support of all NIDO organizations worldwide which should debut in October 2008. This fund has the unique appeal of attracting the highly informed Nigerians in the Diaspora and ensuring that returns match the average rate of return of the Mutual fund market, at a minimum.

4. Returns Prospects of Mutual Funds in Nigeria

The merit of investing in mutual funds depends on the ability of fund managers to produce the superior returns they normally claim. Research findings in Nigeria have not supported the claim that mutual funds can consistently produce superior returns that beat market average yield.

The ability to consistently produce superior returns is tested by comparing annual average yields of mutual funds over the years with the all-share index that represents average performance of a portfolio not so managed.

A five-year annual yield computation by Mr. M. Ibrahim of the research department of SEC between 1993 and 1997 [see table 1] shows a disappointing performance of mutual funds relative to the all-share index. None of the 9 mutual funds then in operation was able to match the 48.51 per cent five-year average stock market return. Besides there was no consistency in the year by year rates of return achieved by the mutual funds during the period.

This was the period when mutual funds operations just began and two factors are identified to have accounted for the disappointing performance. The first is lack of adequate skills in stock selection and trading. Financial analysis expertise and market intelligence skills were quite low at that time.

The second is the long period of depression the stock market experienced during the period. The experience is that average portfolio performances tend to fall below general market average when the stock market faces a decline and tends to rise above market average in bullish markets.

Table I: First 5 Years Annual Yield Rankings [1993-1997]

S/No.
Mutual Fund
5-year Average Annual Yield %

1
ICON Unit Trust Scheme
35

2
Continental Unit Trust
11

3
First Interstate Unit Trust
4

4
Denham Mgt Millennium fund
4

5
Gloria Unit Trust Scheme
1

6
Lead Unit Trust
1

7
MBA Mutual Trust Fund
[1]

8

3RD QTR RESULT JOHN HOLT PLC

2008-09-11T08:57:00.000-07:00

3RD QTR JUNE 2008
JOHN HOLT PLC, UNAUDITED RESULT FOR 3RD QUARTER ENDED 30-06-2008

TURNOVER 08 N16.808m, 07 N12.533m

EXCEPTIONAL ITEMS 08 N494m, 07 NIL

PBTXATION 08 N302m, 07 N55m

TAXATION 08 (N91m) 07(N43m)

PATTAXATION 08 N705m, 07 N12m

----------------------------------------

NO INSURANCE STOCK GAINED TODAY

2008-09-11T06:58:00.000-07:00

The number of insurance stocks that gained in price today is 0. A full round zero! We need to pray that this is one big joke by a mischevious computer operator at the NSE. Maybe he had too much to drink last night, and after a splitting hangover all morning, decided to paste this pricelist and leave the office in a hurry.

THE BOA CONSTRICTOR STRATEGY

2008-09-11T03:42:00.000-07:00

Okay here we go......
To make money from this present situation, you will need some huge dough and hard balls. I have been studying the Boa constrictor! Don’t ask me what I was looking for in the zoo, but to me, some answers lie in the animal kingdom, since its humans thinking like that who make rules for the market and expect sane people to understand same.

The Boa Constrictor strategy.
I watched in horror as the Boa constrictor was fed one live goat. It entwined itself on the poor goat and started to squeeze... As the goat tries to breathe, the Boa squeezes more...and more, and more until the goat died, that’s when the Boa slowly started 'eating'

With some fairly large amount of money, discipline and patience (this could take some time) you can strike the perfect ambush for this market.

Choose one 'sound' stock e.g. DSR, FBN, NB, Unic etc and start buying down. Buy the first small tranche (break the money into hundred and buy only 1%. As these prices are falling (breathing) you will be constricting (buying) more. This should continue for as long as the fall continues. It looks like NCA, but its different cause you will be ready to get off if the fall reverses and sell to hold cash and wait for another period of madness.

This strategy works for both short and long terms. While short timers can sell as soon as they see 20% or more after commisions, long timers can stop buying immediately the price starts to move up. Take your rest and keep the money resting until the market gets crazy again, then you can step right in and resume the squeeze.

NEW M.D. FOR MOBIL PLC.

2008-09-08T10:58:00.000-07:00

The Executive Direc tor, Retail Sales, of Mobil Oil Nigeria, Mr. Adetunji Oyebanji, has been appointed as the Chairman/Managing Director of the company.

He takes over from Mr. Olu Onakoya who is retiring from the company.

The Board of Mobil Oil Nigeria, an ExxonMobil affiliate company, has announced the voluntary retirement of its Chairman/Managing Director, Mr. Olu Onakoya.

Mr. Onakoya, a chemical engineer, who is the firm’s first Nigerian Chairman/Managing Director, will retire on October 21 after 31 years in Exxon Mobil.

Mr. Oyebanji, according to a statement by its External Affairs Manager, Mr. Akin Fatunke, holds a Bachelor of Science Degree in Economics from the University of Lagos and a Masters in Business Administration (MBA) from City University, London.

Since joining Mobil in 1980, he has had a varied career in sales, marketing and planning in Exxon Mobil affiliates in Africa, Europe and United States of America.

The retiring Onakoya was at various times General Manager, Mobil Oil Ethiopia, Chairman/Managing Director of Mobil Oil Ghana and Mobil Oil Zimbabwe before his appointment in April 2004 to lead the downstream subsidiary of Exxon Mobil in Nigeria. - Tribune

THE MARKET TODAY 08/09/2008

2008-09-08T10:46:00.000-07:00

The Nigerian equities market declined today on the first trading day in the week; causing major indicators to depreciate by 41 basis points. At the end of the trading session, the ratio of advancers to decliners was 1: 3.41; the ASI lost 203.34 points to close at 49,412.21, whilst the market capitalization decreased by US$0.37billion to close at US$88.75 billion. In addition, volumes and values were down by 34.75% and 57.84% respectively.

The share price of Thomas Wyatt Plc was adjusted for a bonus of 1 for 1; the price was frozen at 4.95 kobo during the trading session. However, there were no volumes traded on the shares today.

FCMB released its un-audited account for the first quarter ended 31st July, 2008. Turnover plummeted by 85.19% to N18.5 billion; PBT also increased by 84.04% to N6.11 billion while PAT jumped by 82.26% to N4.83 billion. In line with recent tradition in the market, this result failed to excite the investors as the stock closed on net offer and lost full 1% price depreciation.
The southward movements of major indicators may not be unconnected with the delay in the implementation of policy measures earlier announced by market stakeholders. The investors lethargy in the market may also be linked with recent high volatility of Nigerian equity market, causing the investors (especially investors with mid-term to long term perspective) to be cautious and seek for alternative investment vehicle, such as fixed income instruments. Generally, investors are still cautious, having suffered a sustained bear run while market stability remaining elusive. Implementations of other palliative measures; such as stabilization fund, finalizing the market maker take off, restructuring of margin loan by banks amongst other will be a positive signal to boost confidence and persuade prospective investors to enter the market rather than watch from the sidelines.

Index was down by 41 basis pts on 8,464 trades. Average size of trade was US$3,431 with total value of US$29.04m. Market cap closed at US$88.75billion.

Overall, there were 17 gainers, 58 losers and 53 unchanged.

The Banking sector led the volume chart followed by the Insurance sector and both accounted for 80.11% of total volume traded.

Spring Bank Plc traded 105.411 million shares to top the overall volume chart. Other stocks that closed in the top echelon were, Investment and Allied Insurance, Universal Insurance Plc, International Energy Insurance and Sterling Bank.

Net bid: Continental Insurance and Oando.

Net Offer: Access Bank, Lasaco, Platinum, Aso Savings and NSL Tech.

Top Gainers: Oando, Inter. Breweries, Longman, Cornerstone and Continental Insurance.

Top Losers: Skye Bank, Costain, Dangote Flour, Mobil and Chevron.

2009 BUDGET MAY COME OUT EARLY

2008-09-08T10:44:00.000-07:00

With the return of President Umaru Yar' Adua from his trip to Saudi Arabia, there are strong indications that work on the 2009 Appropriation Bill will resume in earnest, to ensure presentation to the National Assembly in October. Already, the House of Representatives has expressed its readiness to ensure quick passage of the 2008 Appropriation Amendment Bill as soon as it resumes sitting this week, to clear the way for the new budget. Chairman, House of Representatives Committee on Rules and Business, Honorable Ita Enang, said the House will expedite action on the Supplementary Budget, and ensure that it adequately addresses issue of excess crude funds.Enang, while briefing newsmen over the weekend, disclosed that the House had received assurances that preparation of the 2009 Appropriation Bill had reached an advanced stage. He said presentation of the bill to the National Assembly in October would be an added advantage and guarrantee its quick passage. Asked why the National Assembly was still working on a supplementary budget when the new budget was almost ready, Enang said the 2008 Supplementary Budget became imperative, following the phenomenal rise in international price of crude oil, the main stay of the Nigerian economy. The National Assembly, he explained, used $59 per barrel as benchmark for the budget, while oil had been selling at between $105 and $150 per barrel at the international market. Enang said despite the controversy trailing passage of the 2008 Appropriation Amendment Bill, the House will pass the bill on Wednesday, September 10. The Senate and the House had been trading blames over who should be held responsible for delay in the passage the bill.

Source: ThisDay Newspaper

MERGER TALKS BETWEEN FBN AND ECOBANK

2008-09-08T10:29:00.000-07:00

The first merger talk was with First Bank which started in 2005. The First Bank transaction was a very interesting transaction because it was meant to give scale to Ecobank in Nigeria and give scale to First Bank in the rest of Africa. So there was something in it for the two institutions. Unfortunately, because of the size of the transaction, and being the first of its kind in this country and the fact that if involved various countries and various governments, it was difficult to complete that transaction as early as you would complete an in-country transaction. The transaction is not over, however as discussions are still on-going. The second one, which was more Ecobank Nigeria than Ecobank Transactional was with Unity Bank. We could not move ahead within the time frame we had determined for ourselves the proposed partner’s accounts were still being approved because of the large number of banks that came together in their merger arrangement. Then we went to Sterling Bank. We did a lot of work in this transaction. But you know that mergers between institutions with diverse share holding could also be complicated. We could not agree on some issues and so that deal was put on hold. Tomorrow, we can go back to them, but I can assure you, the First Bank transaction is still ongoing.

Source: Businessday Newspaper.

FCMB FIRST QTR RESULTS

2008-09-08T10:24:00.000-07:00

FIRST CITY MONUMENT BANK PLC UNAUDITEDFIRST QUARTER RESULT FOR THE PERIOD ENDED 31 JULY 2008
2008 2007 CHANGE % CHANGE
N'b N'b N'b %
GROSS EARNINGS 18.530 9.990 8.54 85.49%
PROFIT BEFORE TAX 6.110 3.32 2.79 84.04%
TAXATION -1.28 -0.664 0.616 92.77%
PROFIT AFTER TAX 4.83 2.65 2.18 82.26%

DANGOTE FLOUR CERTIFICATES

2008-09-08T06:26:00.000-07:00

Investors who took part into the Dangote Flour Mills 2007 Initial Public Offer (IPO) have renewed their complaints on the non-receipt of share certificates/ return money warrants.
A complaint from one Ukonu Tobechukwu an investor into the Dangote Flour Mill offer reads thus: “I earlier informed that am yet to receive Share Certificates and Return/Money for the stated Dangote Flour Shares.
Well, I received a share certificate against my name Ukonu, Tobechukwu in July 2008 for only 750 units compared to the 3,000 units applied for.
I have not received any Return Money till date.
I have not also received share certificate against the name Ogueri Chimaraoke for the 2,000 units applied for. I have provided all documents involved in this transaction.
The phone lines provided below are not working, and non-response to emails is not a customer friendly attitude. Please direct my request to the appropriate personnel”
Proshare NI sought to clarify the issue with Oceanic Registrars today in Lagos Nigeria, Segun Ogunnoiki; Managing Director/Registrar of the company; in a reaction to the investors complaints, affirmed that Oceanic Registrars have been doing its best to make sure that people get their return money warrants and share certificates.
Ogunnoiki affirmed that Oceanic Registrars has urgently requested all receiving agents, banks and Stockbrokers who participated in the offer to return money warrants and share certificates in their possession for direct posting to shareholders.
Proshare confirmed this through a publication by the company on July 14, 2008 in The Guardian Newspaper.
Ogunnoiki further affirmed that Oceanic Registrars has since dispatch same through Bulk Post Ventures.
“Following this, the complaint has drastically reduced” he said.
He however, advised those who have not received to contact any Oceanic Bank branch for the matter to be resolved.
In the same vein, Ogunnoiki confirmed to Proshare NI that return money warrants are been revalidated by Oceanic Registrars. “For those whose return warrants have expired, we advise them to apply for reissue, we revalidate these warrants and pay them into their accounts” he said.
Dangote Flour Mills had in September, 2007 offered to the investing Nigerian Public 1,250 billion Ordinary Shares of 50 Kobo each at N15.00 per share.
As earlier reported by Proshare NI, Oceanic Registrars had affirmed that they are ready to reissue returned share certificates by hand as regards the Dangote Flour Mills 2007 offer.

WRITTEN BY PETER OBIORA.

OF MARKET INTERVENTIONS AND REGULATORY EXUBERANCE

2008-09-08T04:48:00.000-07:00

Almost a year ago I wrote an article titled “It’s Irrational Exuberance, Stupid”. In the said article, I forewarned of a stock market bubble and that the Nigerian capital market was headed for an imminent correction. What I couldn’t forecast was whether the correction would take the form of a prolonged bear run or a fast and furious crash. I got several reactions to that article. Of all them, the most interesting one came from the Nigerian Stock Exchange. Before I got to the office that Monday morning, Sola Oni, Head of Media at the exchange, called to express his concerns about my article.
His biggest worry was not my gloomy forecast; rather he was more concerned with the title. By some inexplicable interpretation, he read it to mean that I had referred to the director general of the NSE, Dr Ndi Okereke-Onyiuke, as “stupid”. Oni and I, as a matter of fact, spoke quite a number of times that day arguing vehemently over the phraseology I had used for my headline which I insisted was not insulting or rude, but a play on words. In the end, we agreed to disagree, with him promising to send a rejoinder for publication. I still await his response to date.
However, what I found most intriguing about the NSE’s reaction to my article was its lack of concern for the issues raised in the said piece. Instead its officials were losing sleep over an innocuous word. Even more worrying than the flight of fancy that had beclouded all sense of judgment of the regulator, was that the managers of the market were in denial. For some strange reason, for all their international exposure and so-called in depth knowledge of capital markets, they somehow forgot that all markets must go through cycles of booms and bursts. They honestly believed the Nigerian market would beat the odds and that the bubble would remain afloat till the end of time. How myopic they were. A bubble by its very nature can only remain afloat for so long before it reaches saturation and inevitably pops. Alternatively, the slightest prick or trigger would bring it floating down to earth.
The irony of that incident was that I was not the sole voice concerned about the fate of the capital market. Several analysts such as Bismack Rewane of Financial Derivative Limited and Bimbo Olashore of Lead Capital were certain that the unprecedented stock market bull run which started sometime in 2005 would eventually come to a halt. At every opportunity the likes of Rewane cautioned against the inevitable but no one listened. The regulators ignored the warnings because they were living in La-La Land and told anyone who cared to listen that returns in our capital market were as high as 400 per cent, thus making it an attractive investment destination.
To a great extent, the marketing effort did work. Several international hedge funds plunked billions of dollars into the Nigerian market. But were the first to make a dash for the exit when the same NSE applied an ill-conceived circuit breaker sometime in May this year to stem the downward slide of shares. Three months before that incident, the market had been on a downward spiral, and was charging towards wiping out all the gains made in the last two to three years. Unfortunately, it was a panic measure that scared international investors silly, because if officials of the exchange could intentionally stop share prices from going south, then they would stop at nothing to keep prices afloat; even going as far as creating market imperfections.
Well, the bulls did eventually screech to a grinding halt. And in the last six months, it’s been obvious that the regulators of the Nigerian capital market have been at their wits end as to how to stem the market melt down. Even the Central Bank’s postponement of the harmonised year end for banks, and its denial that it had placed an embargo on margin lending, had little impact on the market. Instead, it took a drastic intervention by the government the week before last to restore some measure of sanity to the market. But even then, the quick fix measures as announced by government should still give cause for concern. As the term ‘quick fix’ suggests, they are only temporary that can only firm up prices for a short period before they start to head south again, because the long term prognosis for the market is anything but healthy.
As it stands, the Nigerian capital market is fundamentally flawed and not structured to operate efficiently. It is for this reason that its regulators previously and continue to introduce all sorts of restrictions and apply circuit breakers certain to drive away discerning hedge funds and institutional investors that are the de facto market makers. Second, by placing a maximum downward limit of one per cent on daily price movement, the volume of trade on shares and market turnover has been unnaturally restricted. What this means is that investors with large volumes of particular shares cannot dispose of their equities in a timely manner because the market has been greatly curtailed to what extent a share price can fall on a daily basis. That is not to say that limits on the upward and downward movement of shares did not exist in the past. They did, but with more flexibility.
Third, the share buy-back scheme is a huge mistake that should be revisited immediately irrespective of the nod given the Attorney General to amend the existing provisions under the Companies and Allied Matters Act. The government must be aware that when companies go to the market to raise funds through public offers, they indicate in their prospectus handed to investors that there are reasons they are raising the necessary capital. In the case of banks and insurers, the most common reasons adduced are to expand their branches networks, invest in new ICT infrastructure, and what have you.
By permitting quoted companies to buy back their shares, those shares will automatically be cancelled and the capital of the company restructured. The bigger evil is that even if the companies are so liquid and in a position to buy back their shares, the biggest losers will be investors who will most likely be selling their shares at prices below which they were bought, be it through the secondary market or during a public offer – and this is tantamount to investor fraud. Companies with nothing better to do with their cash, should be encouraged to pay their shareholders special dividends to shore up confidence, and not permitted to buy back their shares.
Moreover, in the case of banks, which account for 65 per cent of market capitalisation, it has been an open secret that they have been acting in concert with stock brokers that have been used as conduits to extend facilities to investors who in turn purchase the banks’ shares and those of other quoted companies. However, the shares remain in the possession (or are warehoused) of the brokers. Under the share buy back scheme these stock brokers will simply sell the shares back to banks at a gain to the financial institutions (banks), but at a loss to shareholders who borrowed money to invest in the shares.
Essentially, the share buy back scheme completely alienates retail investors who have the most to lose under the arrangement. The very notion that such a bizarre arrangement was even tabled for consideration is symptomatic of the calibre of people managing the market. This in itself is in dire need of an overhaul, starting from the management of the NSE to Securities and Exchange Commission. A lot of these so-called managers, I believe, have outlived their uses and lack the capacity to lead the market on to the next growth phase.
But this does not in any way suggest that market interventions to stem massive losses are not necessary. They are, and have been known to occur in all parts of the world, even in the most mature markets. They must, nonetheless, be orderly and subtle as opposed to being overt, which is what happened two weeks ago. The restriction placed on downward price movements is unnatural and has the potential of making discerning investors, especially foreigners, weary of the Nigerian market. It is obvious that the 16-man presidential advisory panel set up to restore confidence in the market has its work cut out. Fortunately, the opportunity still exists for the panel to introduce measures that can improve the long term prospects of the Nigerian capital market.
For instance, the National Pension Commission (Pencom) can be persuaded to relax the restrictions imposed on the asset portfolios of pension fund administrators which currently places a limit of 25 per cent on investment in equities. In other markets, regulators attempting to stem a systemic fall in asset prices have been known to relax liquidity requirements imposed on pensions and insurers so they are compelled not to dump their shares. When this happens, they scramble to buy up shares; and in the process push up prices and help to spur the herd instinct of retail investors. In the case of Nigeria, since the government still owes Pencom, and by extension, fund administrators trillions of naira in legacy debts, it can simply ask the CBN to lend it (Pencom) funds against future contributions to help lift the market. As unfunded contributions trickle in over time, they can be used to offset the monies lent by the CBN.
Another measure that could be considered is the imposition of a capital gains tax to curb the tendency by investors, especially institutional investors, to dump their shares at the slight increase in prices. Once enthusiasm is dampened, investors will be forced to hold their shares for longer periods before they sell. Even the coffers of government will stand to benefit from such an arrangement.
The big problem with Nigeria is that there has always been a disconnect between the government’s fiscal policies, the Central Bank’s monetary policies and the regulatory regime in the capital market. Each segment prefers to operate independently of each other and only acts in concert after the fact, and not before the fact. In the almighty US markets regulators move instantly to stem systemic crashes by subtly increasing liquidity and persuading brokers to buy up shares in overnight and day trading. Instances have been recorded in US markets, where shares are falling drastically this second, only for them to rally sufficiently hours later to recover the losses made the same day. When that happens, market intervention by the regulators was handled surreptitiously and never openly admitted.
Here we wait for six months for investors’ portfolios to get almost completely wiped out before we start to paw at the surface in a feeble attempt to protect them. Yet we pride ourselves on being an emerging market. But I think it’s high time we faced the truth. Nigeria is nothing more than a frontier market.

THIS PIECE WAS WRITTEN BY IJEOMA NWOGWUGWU.

1ST QTR RESULTS FLOURMILLS PLC.

2008-09-08T04:44:00.000-07:00

Flourmill Plc also released its un-audited results for first quarter ended 30th June, 2008. Turnover grew by 59.06% to N36.979 billion, while PAT increased by 33.20% to N1.950 billion and PAT increased by 33.17% to N1.365 billion. In spite of the good earnings reported by the two companies, their share price closed flat. This might be due to the current mood in the market for Linkage Assurance and low traded for Flourmill.

LINKAGE ASSURANCE 2007 RESULTS

2008-09-08T04:41:00.000-07:00

Linkage Assurance Plc today released its audited results for the year ended 31st December, 2007. Turnover jumped by 258.49% to N1.026 billion, from N286.2 million, PBT also increased by 298.95% to N304.8 million, from N76.4 million, PAT also increased by 283.08% to N273.9 million, from N71.5 million, in the corresponding period of 2007.

LENDING RATES STILL RISING

2008-09-08T04:40:00.000-07:00

Average normal lending rates officially rose to 17.68 percent at the close of August, in spite of decision by the Monetary Policy Committee (MPC) to retain both the Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR) at 10.5 and four percent respectively.The MPR is the rate at which CBN lends money to banks. At the end of the day, if the apex bank increases its lending rate, banks will in turn lend money to their customers at higher rates.The implication is that retaining the rate means that the lending rates were supposed to be stabilized.As for the CRR, it is the amount of money banks keep with the CBN. In effect, since the apex bank retained the former rate, banks would have more money to play with or lend to their customers.But according to the Money Market Association of Nigeria (MMAN), the rise in lending rates connotes high cost of fund, and the apex bank’s drive to achieve a single digit inflation rate.Nonetheless, recent figures released for the month of July indicate that inflation rate rose from a double digit 12 percent in June to 14 percent the following month.On the other hand, savings rate dropped marginally during the month to an average of 3.4635 percent, while prime lending rate shed 0.11 basis points to end on an average of 17.4048 percent.

Source: Businessday Newspaper

MARKET REPORTS FOR 05/09/08

2008-09-08T04:37:00.000-07:00

The Nigerian equities market witnessed yet another lull period as all major market indicators stride southwards and end in bear’s camp. On a day which saw the ratio of advancers to decliners to be 1:2.57, the ASI lost 171.58 points to close at 49,615.55 whilst the market capitalization declined by US$0.31billion to close at US$89.12billion. However, values of transactions experienced a surge as the indicator increased by 50.29%.

NSE today added a total of 723,161,725 ordinary shares to the shares outstanding in favour of AIICO Plc, following the successful completion of their last public offer. This new listing now brings the total shares outstanding of AIICO to 3.402 billion units. Furthermore, a total of 4,081,925,292 ordinary shares were added to the shares outstanding of Skye Bank Plc. This comprises of 1,500,608,958 units as rights issue and 2, 231,599,145 units as offer for subscription and 349,717,180 as supplementary. The total shares outstanding of the bank now stand at 11.584 billion units.

Linkage Assurance Plc today released its audited results for the year ended 31st December, 2007. Turnover jumped by 258.49% to N1.026 billion, from N286.2 million, PBT also increased by 298.95% to N304.8 million, from N76.4 million, PAT also increased by 283.08% to N273.9 million, from N71.5 million, in the corresponding period of 2007. Flourmill Plc also released its un-audited results for first quarter ended 30th June, 2008. Turnover grew by 59.06% to N36.979 billion, while PAT increased by 33.20% to N1.950 billion and PAT increased by 33.17% to N1.365 billion. In spite of the good earnings reported by the two companies, their share price closed flat. This might be due to the current mood in the market for Linkage Assurance and low traded for Flourmill.

The downturn in the market activities may be connected to the wearing out of the euphoria generated by the recent policy measures introduced by stakeholders which stimulated a short rally which lasted barely a week. The present situation suggests that investors’ confidence have not been fully regained. In our opinion, the market seems to be waiting for the implementation of the other strategies recently announced. Furthermore, the rising cost of fund, tight liquidity condition and scarcity of investible funds are also obstructing the recovery of the market in view of the uncertainties of the policy initiatives.

Index was down by 34 basis pts on 11,890 trades. Average size of trade was US$5,793 with total value of US$68.88m. Market cap closed at US$89.12billion.

Overall, there were 21 gainers and 54 losers and 62 unchanged.

The Banking sector led the volume chart followed by the Insurance sector and both accounted for 80.61% of total volume traded.

Afribank Plc traded 212.301 million shares to top the overall volume chart. Other stocks that closed in the top echelon were Spring Bank, Goldlink Insurance, Japaul Oil and Investment and Allied Insurance.

Net bid: Universal Insurance, Sterling Bank, Continental Reinsurance and Cornerstone Insurance Plc.

Net Offer: Investment and Allied Insurance, Oceanic bank, Bank PHB, Access Bank and GTB.

Top Gainers: PZ, Presco, Nahco, Sterling Bank and Academy Press.

Top Losers: Julius Berger, NBC, GTB, Chevron and Dangote Sugar.

LATEST REPORTS ABOUT WEMA BANK

2008-09-08T04:26:00.000-07:00

There is a lot that has been said and written about Wema Bank Plc saga and the persons who have held the position of GMD/CEO till date. Amidst the fact, myth and realities making the rounds, the Adebisi Omoyeni episode has had a more profound effect on the bank, industry and public at large.

The accusations, counter accusations, court suits, and media communications and petitions have exposed the underbelly of the corporate governance regime in a bank that was set up to define the best of values the western states making up the leadership had to offer.

The level of corporate politics and the limitations of our compliance/enforcement functions has been the defining fall-out, much less the personalities involved.

Far more important however has been the limited role minority investors have in such issues and the role of AGM’s.

Whilst, Wema Bank Plc had some very unique challenges, it must be said that this was the case with others in the sector who were equally involved in the pre and post consolidation issues that defined the banks that existed today.

To use these challenges as an excuse for a failure of leadership is simply turning logic on its head. To even go far as saying that CBN made exceptions is to challenge the very notion that there exists a level playing field.

We must get to a stage in the process and lofty objective of turning Nigeria into a financial hub of excellence where we say, enough is enough.

There has to be some basic and commonly understood tenets and practice guiding conduct and administration of rules. The Adebisi Omoyeni episode up till this evening thus raises some questions deserving of consideration:

When CBN asked him to resume on September 1, 2008 – what did that say of the investigations conducted by its supervision unit or that of NDIC?
Given that a model was once deployed to mitigate board squabbles in another bank dealing with post-consolidation challenges, why was a decision not made early on to address first, the board composition who would then be in a position to deal with the MD/CEO challenge in consonance with the shareholders and the regulator?
The ‘novel’ agreement through an MoU represents a new layer of conflict resolution not defined in the BOFID, so what does this mean? Does it represent another mechanism for the regulator?
What happened to the issues related to ‘kiting’; a subject of supervisory report for two consecutive years prior to the issues blowing open?
Has the subject of an eroded shareholders fund as identified in the NDIC report been resolved? If yes, what is the current shareholders fund of Wema Bank Plc?
When will the firm present results to the market assuming it has continued to meet its obligations of presenting monthly and quarterly returns to the CBN?
When should the market expect the suspension of its stock to be lifted and if that will happen, how will it prevent a massive dump of the shares to the detriment of the bank?

The Wema Bank Plc saga should require an independent review to help stakeholders understand the very challenge of investing in a bank or business of such ‘complex ownership’ structure.

The bank, we believe is blessed with hard working and committed employees, responsible investors and a deep base of loyal customers which sadly have not featured in the thinking of the principal actors in the impasse. They have chosen not to subjugate their self interest to the vision and larger goals of the enterprise.

From our standpoint and the information available to us, we respectfully conclude that with a more value-based inclination, the issues could and should have been better handled by those concerned, especially the regulators, SRO and Government.

Take the issue of the purported involvement of the Deputy Director of Banking Supervision at CBN, Mr. (Reverend) Tunde Lemo. After his ‘leave of absence’ at the height of the public exchange of sensitive internal issues; he resumed without much clarification on his role which has attracted genuine concern as to the veracity of the allegations made by Adebisi Omoyeni. If CBN thus allowed Mr. Omoyeni to come back, was it saying that his complaints against Tunde Lemo had a modicum of truth and merit? If not, why was he re-instated? To do so would have ridiculed the office of the function designed to determine compliance in the banking sector.

If on the other hand, Mr. Omoyeni was correct; to retain Rev. Tunde Lemo without clarifying what became of investigations into his role in the matter which, extended to its logical conclusions, bothers on abuse of process and position, is a bad precedence.

Quite Frankly, we have held a vigil on developments in the bank since the matter broke, painstakingly gathering data and information on developments; and had hoped that with CBN having much more data to guide its decision making, the developments of the last four (4) days should never have occurred.

The ‘drama’ of the last four days has been disheartening to say the least. Much more was expected from the regulators who had the leverage to take decisive steps that would have sent all the right signals to the investing and consuming public (recall that the issues dates back to the consolidation period and the decision by CBN to allow Wema Bank not to publish its financial statements based on an application the bank made as regards certain developments). To allow it to degenerate into a ‘street fight’ with parties bringing different detachments of the Nigerian Police to gain entrance or force an ejection; is less than responsible.

The ‘village square’ show might appear laughable but it is painfully serious enough an indictment of a failed policy of enforcement and protection of the Investor’s rights and market safety; which ironically appears to be their ultimate objective.

The means of achieving a ‘politically sound settlement’ can be rough, we acknowledge; but can CBN claim ignorance of the fact that under its watch, Wema Bank Plc largely operated for a long period with a Group Managing Director and a single Executive Director?

If nothing, on this point; the regulatory body must reflect on a lost opportunity to define leadership standards required and deemed necessary for a post-consolidation bank. Historically, it is able to conclude that such problems don’t just occur in a single day r based on a single event. It would have been brewing up and it was left to its own supervision unit to highlight and provide the early warning signal needed to take action to protect customers and investors alike.

In this case and based on the records and information available, the responsible units (CBN and NDIC) did their job. So who should have acted? The Board of Directors of Wema Bank Plc?

Here again, we must ask the same question – Given that it was a well known fact that the board could not be said to have been independent within the limited confines or restricted definition of uncompromised corporate governance. Examples of directors receiving facilities, the issue of the appointment of directors and the developments leading up to and during the last AGM flies in the face of the counter argument raised by a party in the case.

This however is no time to settle for blames.

We must go away today with the resolution that actions needed to ensure that Wema Bank Plc comes back to the market as a serious player cannot be a matter for political compromise. It must be based on sound principles as applicable to other banks as well and must reflect the best interpretation of the BOFID and regulatory/enforcement rules of the apex body.

We categorically state that we still have an implicit confidence in the ability of the Governor and Governing Board of the Central Bank of Nigeria to do the right thing.

Our primary desire and wish is simply for the current ‘musical chairs’ game to stop.

The song is well worn and it is time to take actions that should reverse the lapses of the past and set a precedent that would strengthen the financial market and restore market confidence in the whole process; especially at this time when morale in the capital market is still weak.

We call on the CBN to take all steps as deemed necessary to encourage the Board of Directors, as appointed by the shareholders and vetted by it; to take steps to put in place a leadership structure that is accountable to the board and responsive to the yearnings of the stakeholders – investors, employees and customers.

Enough of the gamesmanship!

STOCK TRADING PLANNING

2008-09-07T10:52:00.001-07:00

If you decide to trade stocks, it is important to know how you will get into a trade and know how to get out of the trade. Many investors make the mistake of only focusing in the former of there two recommendations. Not only should have a specific method for selecting and entering trades, but its good to also have a plan for selling the stocks you bought. Exit a trade whenever any of the following condition are met.
(1) you make the profit you targeted to make on the trade.
(2) The extended catalyst says to develop or the stick fails to respond as you thought.
(3) The stock fails to altercate with a predefined length of time.

Whenever any of these happens, just sell the stocks and enter a more promising whenever any of these happens, just sell the stocks and enter a more promising trade, you may make some losses but recoup all the losses and ask profits of your next try.

5% RISE, 1% FALL, THE IMPLICATIONS

2008-09-03T04:06:00.000-07:00

All: I think we have a serious problem on our hands!!!

We need to remember that the bulk of stocks bought recently were by stockbrokers, institutional investors and high net worth clients. I reckon that between them, they have bought practically everything worth buying since the false bottom, false 1% exit door was created.

What this means in essence is that as soon as the fabricated bull run commenced they bought existing sell orders that were yet to be actioned, since there were no buyers, previously!!

This is why the brokers made sure they had the first pickings! Now that that they have mopped up sell orders that were not cancelled, who will supply stocks for the rest of us to buy?

Who wants to sell when they are yet to realise profit? If you are in profit, you must have been lucky to buy just before the imaginary bull run!

Who is willing to give up 100k units to enable the price to rise?

Personally I do not see the market going anywhere under the current situation! It will turn out to be a stalemate! Those that want in can't get in, those that want out can't get out, but hey the prices will remain high for as long as the 1% rule remains!!!

Who gains from all this:

The government is happy that it has a stock market that is supposedly "up" and not down! for this reason the government might be the compelled to leave the 1% rule in place much longer than we could possibly imagine.

The government has forced those in the market to remain long term! You have no choice but to go long term, unless you get out quickly as in now!! rather than later!

ARE THE BULLS GETTING TIRED.

2008-09-03T02:14:00.000-07:00

For holders of Union homes, start thinking of selling from tomorrow, some guys have just picked around 30% PAF in that stock since last week.

Sell if you went in low and you are playing short; hold if you a playing long on this one as the company have some good prospects for the future. I am looking at the increasing volume supplied to the floors today and feel that the 24,023,553 units already sold means that some heavy holders may have initiated dumping procedures……… but it may end up gaining today.

HOW TO INVEST WISELY.

2008-08-27T05:55:00.000-07:00

The right investments for a retired mechanic may not be the right investments for a 35 year old medical doctor. The right investment for a University student may not be the right investments for a housewife who has a shop in front of her house. The right investment for someone who earns five million naira annually may not be the right investment for an individual whose income is two hundred thousand naira per annum.
Because everybody has different expenses, risk tolerance, training, available investment capital, family situations, obligations and temperaments, what constitutes an appropriate investment plan will be very different from one individual to the other.

NEVER BUY UNDER PRESSURE

2008-08-27T05:49:00.000-07:00

Never allow yourself to be pressurized into buying or selling stocks or any other form of investment. The chances are you will be making the wrong decisions. You should only buy stocks after due diligence checks; act slowly, diligently, with focus and with purpose. If you feel a significant urgency to buy any stock, then you are likely being pushed or influenced by some one else, either a friend or a stock broker, or by something you have read in a news paper or poster, seen on the television, heard or radio etc.

There are millions of stocks all waiting to be bought and none of them is running away. If you don’t take the time to study the stocks, analyze it and act accordingly, you are headed for disaster. Decisions to invest should not be made in a hurry except you have the experience and understanding.

This advice is most important now, especially after this meeting with the VP and the subsequent bull run.

THE BULLS RETURN.

2008-08-27T05:23:00.000-07:00

The bulls are back! Take a look at the trading floor and see the ravaging bulls in action. There are lots of bids and high value transactions. The indicators are inching higher and discerning traders that want to ride this Bull Run are advised to bid at maximum price tomorrow; raise your bid if you want to have the chance to buy.

Stocks will soon become out of stock! Only make sure those that bought last week/this week will not start dumping on you as soon as they see some slim profit, caveat emptor!!!

TODAY AT THE NIGERIAN STOCK EXCHANGE.

2008-08-26T09:18:00.000-07:00

Today, stocks seemed to show a little resilience from the free fall we had been witnessing consistently for the past month. Stock prices had been falling here since March this year. Lots of reasons have been attributed to this falls, but none seems plausible enough to warrant the scale of this slide.
Today things seemed to cool a bit as some stocks started a slight accent. Eight banking stocks appreciated in value at the end of trading this afternoon while nine still went down, though marginally. In Nigeria, it’s the banking stocks that drive the all share index and as such it will not be out of place to witness a halt to the descent of the index.
I will advice my readers to start picking good, fundamentally sound stocks in preparation of a mini Bull Run which I think will give me 10% profit after fees before the trend will weaken.

NIGERIAN BREWERIES BONUS HISTORY.

2008-08-26T08:46:00.000-07:00

Below is the total of his holding as at the end of June 2004. This example is real and verifiable.
Year Units Bought Bonus Earned Units Received Total Shares
1976 6,597 1 for 2 3,297 9,892
1977 1 for 1 9,892 19,784
1978 1 for 5 3,956 23,740
1979 1 for 3 7,913 31,653
1980 1 for 4 7,913 39,566
1981 1 for 4 9,981 49,457
1982 1 for 4 12,364 61,821
1986 1 for 2 30,910 92,731
1990 1 for 3 30,910 123,641
1993 1 for 1 123,641 247,282
1995 1 for 1 247,282 494,564
1999 2 for 3 329,709 824,273
2002 1 for 1 824,273 1,648,546
2004 1 for 1 1,648,546 3,297,092

RESIDUAL INCOME FROM STOCKS AND OTHER INVESTMENT CLASSES IN NIGERIA.

2008-08-26T07:34:00.000-07:00

Residual income is the type of income you make a result of earlier investments you made; this can come in the form of rents, royalties and dividends from shares of stock you bought earlier. Residual income has a lot of advantages. Imagine a landlord that built his house 40 years ago can still come around and demand that you pay your rent to him, and he has been collecting all the rent for the past forty years and will still continue to collect until he is too weak to do so, and his descendants will still demand and continue to collect the same rent.

The same happens to a musician who played good music; he will continue to enjoy the royalties of his music since his music is still selling to new buyers many years after he played the music. The same thing is applicable to writers, Chinua Achebe and Oliver de coque are good examples of people earning royalties many years after they invested in music and books.

But share holders are the most benefactors of residual income. I can hold this argument because I have seen a investment of only a hundred thousand naira blossom into half a billion naira (five hundred million naira in under eighteen years), while the investor never ever soiled his hands working on his investments, after buying the shares. In fact he has been resting in his house either in the country or on holiday overseas! This is a little example about the power of stock investments.

THE NEED FOR INVESTING IN NIGERIA

2008-08-26T07:20:00.000-07:00

A lot of people have found out that working and earning a salary or trading and making profits is very lucrative, but demanding. It will demand your time, most of it, your energy, your intellect and a lot of other inputs on a daily basis. Working for others on a salary is worse than most other means of making money; this is because you will be required to work for the owner of the business, irrespective of how you feel, mentally, emotionally and physically. It has been argued that you may never be truly rich working for somebody else.

You will stay work in your office irrespective of where else you have to go, you will be tied down in work most days, most weeks and years. A lot of people continue to live this type of live for all their productive years! And in the end they will end up with a pension that is so small that it may not last them another two years. Many people have died on a queue to collect their measure pension. I strongly believe this is not the way we want to end our lives, so why not start saving money to invest from today.

For the business men and women, there is always a boom when they can still move about and hustle for business, travel from here to there, meet people and do fast business. Most times young people find it easy to survive in the harsh business environment that is Nigeria, no good road, no light, no water, too much sunshine and other infrastructure to make life better, until we start to get old, this is when we can no longer afford to move as fast as we want, this is when we expect our labors in life to start to yield some fruit, and if you made wise decisions while young, you will enjoy your old age.

Old age can be a time of laughter, when all or most of your problems are solved, no stress, and no debts. No landlord to knock on your doors for his hose rents. Old age is supposed to be golden. You could easily afford good medical check up and visit your doctors for routine medical tests to see if any disease is planning to affect you in future, and drugs will be prescribed to fight infections even before it starts. They said prevention is better than cure.

All I was trying to discuss above is the reasons I think all young people should invest. There are many benefits from STOCK investments in NIGERIA.