Business
Nigerian Equities Market Posts Worst Return In Africa
The Nigerian Exchange Limited All-Share Index posted the worst gains among African stock markets at -2.53 per cent year-to-date as of September 7, according to African Markets.
African Markets is a provider of financial market data, news, analysis, and research with a focus on Africa.
Data from the website showed that among 17 stock exchanges across Africa tracked by the index, the NGX posted the lowest returns YTD, followed by the Botswana Stock Exchange Domestic Companies Index at -1.93 per cent.
The Rwandan Stock Exchange ASI also saw negative returns as it depreciated by 0.82 per cent YTD.
On the positive side, the Zimbabwean ASI jumped by 150.38 per cent YTD, posting the highest gains on the continent while the Ghana SE Composite Index followed at 42.10 per cent.
The Lusaka Stock Exchange, Namibian Exchange Overall, and the Bourse Régionale des Valeurs Mobilières which is the regional stock exchange of francophone West Africa increased by 22.76 per cent, 22.09 per cent and 21.05 per cent respectively.
However, looking at the chart by year-on-year returns, the NGX ASI saw the second-highest appreciation as it rose by 53.30 per cent, coming second to the Zimbabwean SE ASI at 340.16 per cent.
The Ghana SE Composite was third highest with a 49.94 per cent gain while the Botswana SE Domestic Companies Index recorded the highest negative losses at -4.27 per cent.
Mr Olaide Baanu, a research analyst at Atlas Portfolios Limited, told our correspondent that Nigeria having experienced a recession last year was very lucky to exit the recession in the third quarter of 2020.
He explained that based on what other countries experienced around the world, Nigeria was able to cushion the effects of the pandemic with the financial sector contributing more to the Gross Domestic Product.
He said, “The financial sector on the NGX too performed quite well during the second half of the year. The financial services providers are some of the most capitalized stocks on the NGX; so they were partly responsible for the positive movement in the market.
“Companies like Total Nigeria Plc (now Total Energies Marketing Plc), Seplat Energies Plc and Nestle Nigeria Plc also saw good returns on equity.
“Industrial firms like Dangote Cement Plc and Lafarge Africa Plc saw gains too and posted positive financials. Telcos like MTN and Airtel Africa Plc benefited from the digital boom of last year as their data revenues rose which fueled investor confidence in their fundamentals.
“The depression this year is attributable to profit-taking from investors. They were withdrawing their gains to the fixed income markets. Because of the divergent nature of our fixed income and equities markets, when one benefits, the other loses.
“The derivatives market is still immature while the commodities market has yet to gain much ground. So the focus is mostly on equities, bonds and treasury bills. Around January till lately, the fixed income market has posted better returns than last year, while the equities market has corrected due to sell-offs.”
The PUNCH had earlier reported that net foreign portfolio investment this year stood at –N11.48bn as foreign investors withdrew more gains from the exchange than they invested as of June 30.
Foreign investor’s overall interest in the market also declined year on year, according to a report from the NGX.
Managing Director at Credent Investment Managers, Mr Ibrahim Shelleng, said, “The rebound in the equities market last year was as a result of low yields in the fixed income and money markets.
“At some point, treasury bills were in the negative territory and investors moved to the equities market to improve returns.”
He said foreign investors that were unable to exit due to forex illiquidity entered the equities space to improve their yields.
With the rebound in fixed income yields, he added, investors had shifted back to secure yields to reduce the volatility the stock market brought.
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TotalEnergies and Nigerian independent energy company AMNI International have taken the Final Investment Decision on the $800 million Ima Gas Project, more than five decades after the gas field was discovered.
The Ima Gas Project, located in shallow waters across Oil Mining Leases 112 and 117 near Bonny Island, Rivers State, is expected to begin production in 2028 and reach a plateau of 350 million cubic feet of gas per day.
The development is expected to play a major role in supplying feed gas to Nigeria LNG, with the Ima field projected to provide about one-third of the additional gas required for the ongoing Train 7 expansion.
Train 7 is expected to increase Nigeria LNG’s liquefaction capacity from 22 million tonnes per annum to 30 million tonnes per annum, strengthening Nigeria’s capacity to process and export liquefied natural gas.
The Ima field was discovered in 1973 but remained undeveloped for more than 50 years. The Final Investment Decision provides the commercial and financial basis for finally developing the long-dormant resource.
Under the development plan, TotalEnergies will operate the project with a 40 per cent interest, while AMNI will hold the remaining 60 per cent.
The field will be developed using a single offshore platform connected to Nigeria LNG’s facility on Bonny Island through a 22-kilometre pipeline.
TotalEnergies said its investment in the project is more than $600 million, while the Federal Government described the overall Final Investment Decision as an $800 million investment.
At the FID signing ceremony in Abuja, TotalEnergies Exploration and Production Nigeria Managing Director, Mathieu Bouyer, described the decision as the culmination of a development process that had stretched across several decades.
He said the project reflected increased confidence in Nigeria’s investment environment and highlighted reforms targeting the non-associated gas sector as part of the factors that helped make the development commercially viable.
President Bola Tinubu welcomed the investment, saying the project demonstrated the potential of reforms introduced to reduce the cost and time required to develop oil and gas projects.
The President said the government had introduced incentives aimed specifically at unlocking onshore and shallow-water gas projects that had remained undeveloped for years.
He said the Ima development would create opportunities for Nigerian businesses, engineers, technicians and contractors, while generating jobs, economic activity in host communities and additional export earnings.
The project is also expected to have a strong Nigerian content component. TotalEnergies said all key contractors for the development would be Nigerian companies, while about 60 per cent of the workforce during the development phase is expected to come from host communities.
The development will incorporate measures aimed at reducing emissions. TotalEnergies said the platform would receive electricity from shore, operate without routine flaring and use permanent methane detection and monitoring systems.
The Federal Government said the project is part of efforts to turn Nigeria’s large natural gas reserves into productive assets capable of supporting industrialisation, energy supply, jobs and export earnings.
Special Adviser to the President on Energy, Olu Verheijen, said the Ima development illustrated the importance of creating commercial and investment conditions that allow previously stranded resources to be developed.
The government also noted that Nigerian financial institutions arranged 77 per cent of the project’s financing, further highlighting the participation of domestic financial institutions in the development.
For Nigeria LNG, the project comes as the company continues work on the Train 7 expansion, which is designed to increase the Bonny Island plant’s liquefaction capacity and strengthen the country’s position in the global LNG market.
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