MarketWatch

[chokit]

I never see anything wrong in locking up profit but it depends on what is behind the action.But the reason kenebob gave looks one kind to me because if all of us decide to do the same then what will happen to the ASI we are talking about.I belive it is better to stay and even buy more of those fundamentally sound stocks to be able to boost the market.The present situation doesnt apply to NSE alone the same happens all over Europe.

[billions]

Originally Posted by zainabusman

I think we are even fortunate with a 4.37% drop in the index year to date. I was looking at the FSDH weekly report and most indexes are down. eg:

.....................YTD July 3rd
DOW..............(15.54)
S & P 500.......(14.58)
Nasdaq...........(16.04)
FTSE 100........(15.44)
CAC (France)...(22.8)
DAX(Germany)..(21.2)
JSE.................(4.19)
BSE 30 (India)...(35.2)
Ghana..............56.87

As we can see only Ghana is positive. The fact that the Ghanian Index is rising is not surprising as i read a piece in Financial Times of London were they said portfolio managers are targeting Ghana instead of Nigeria as the the climate there is more conducive.

I think our regulators should be cool and not do anything rash. The current negative trend is global.

I dont think we are fortunate to have a 4.37% drop in index...most of d countries on ur list are non-oil producing and dey are massively exposed to d subprime mortgage problem.

Relevant authorities in Nigeria need to be proactive bk -4.37% can become -40.37%.

If d situation shd get worse,investors wld be d 1st to say "why did dey not do anything until now".

[knightofdelta]

Originally Posted by billions

I dont think we are fortunate to have a 4.37% drop in index...most of d countries on ur list are non-oil producing and dey are massively exposed to d subprime mortgage problem.

Relevant authorities in Nigeria need to be proactive bk -4.37% can become -40.37%.

If d situation shd get worse,investors wld be d 1st to say "why did dey not do anything until now".

But the fact still remains that the oil we are producing can fast become the bane of the NSE. Foreign investors are scared of coming to Nigeria because of the Niger Delta crisis that is escalating everyday and it has added a major component to the rise in global oil prices. The high crude oil prices that is supposed to generate cash for the economy and boost infrastructural growth has been neutralized by the 10% loss in production.

This brings to the fore the fact that electricity distribution has dropped significantly over the past few weeks as we have all experienced and in the long run will affect the profit margins of most if not all the companies on the NSE both directly and indirectly. The companies may be sound fundamentally but I am getting wary of the results that will hit the markets in the near future based on this.

This is coupled with the fact that the unified year end for banks may end up becoming a trojan horse as the banks hold on tightly to their money just to be able to meet up with the claims they have been making all along. This will also lead to starvation of funds to the real sector as they will not be willing to lend to a sector that has a significantly increased risk profile courtesy poor infrastructure (back to square one). A good example. We are happy that Costain got a good contract to build a Watch Tower in Benin. BUT there will be a problem when they have to rely more on generating their own electricity to get the deal done, which will affect the bottom line. I just pray the NPV of the project was solid.

There is a vicious cycle that has started playing out there and unless something concrete is done real fast, my perspective has gone bleak on the NSE returning something good for investors, for now.

[iharry]

A report prepared by two reputed financial institutions has indicated that the Nigerian stock market continues to have short and long term opportunities, stating that the recent decline in the market was only a blip and that the growth projection is getting back on track. The report was put together by Renaissance Capital and J.P Morgan, and analysts said at the weekend it would calm investors’ nerves.

Note:Except from Business day.

[zainabusman]

Originally Posted by knightofdelta

But the fact still remains that the oil we are producing can fast become the bane of the NSE. Foreign investors are scared of coming to Nigeria because of the Niger Delta crisis that is escalating everyday and it has added a major component to the rise in global oil prices. The high crude oil prices that is supposed to generate cash for the economy and boost infrastructural growth has been neutralized by the 10% loss in production.

This brings to the fore the fact that electricity distribution has dropped significantly over the past few weeks as we have all experienced and in the long run will affect the profit margins of most if not all the companies on the NSE both directly and indirectly. The companies may be sound fundamentally but I am getting wary of the results that will hit the markets in the near future based on this.

This is coupled with the fact that the unified year end for banks may end up becoming a trojan horse as the banks hold on tightly to their money just to be able to meet up with the claims they have been making all along. This will also lead to starvation of funds to the real sector as they will not be willing to lend to a sector that has a significantly increased risk profile courtesy poor infrastructure (back to square one). A good example. We are happy that Costain got a good contract to build a Watch Tower in Benin. BUT there will be a problem when they have to rely more on generating their own electricity to get the deal done, which will affect the bottom line. I just pray the NPV of the project was solid.

There is a vicious cycle that has started playing out there and unless something concrete is done real fast, my perspective has gone bleak on the NSE returning something good for investors, for now.

I agree with ur analysis. The electricity situation has been a scandal in the last few weeks. I was in Kano this weekend. The story is the same. I saw light only for about 2 hours in 3 days.

The electricity crises will surely affect the bottom line. I recall WAPCO giving this excuse in the first quarter as the reason 4 decline in profitability.

We are now in July. We expect quarterly announcements to hit the floor of NSE soon. Lets wait and see how the likes of WAPCO fare.

[zainabusman]

Originally Posted by iharry

A report prepared by two reputed financial institutions has indicated that the Nigerian stock market continues to have short and long term opportunities, stating that the recent decline in the market was only a blip and that the growth projection is getting back on track. The report was put together by Renaissance Capital and J.P Morgan, and analysts said at the weekend it would calm investors’ nerves.

Note:Except from Business day.

What we need is increased flow of funds into the NSE. Where will that come from? Ur guess is as good as mine.

Regulators and analysts can continue talking, as long as liquidity does not improve the market wont go up.

[Apache]

Originally Posted by zainabusman

I agree with ur analysis. The electricity situation has been a scandal in the last few weeks. I was in Kano this weekend. The story is the same. I saw light only for about 2 hours in 3 days.

The electricity crises will surely affect the bottom line. I recall WAPCO giving this excuse in the first quarter as the reason 4 decline in profitability.

We are now in July. We expect quarterly announcements to hit the floor of NSE soon. Lets wait and see how the likes of WAPCO fare.

I won't be too worried about electricity generation cos as far as I am concerned, that never existed in the first place so its continuous decline won't affect much.
However, what i am most concerned about is the continuous rise in the price of oil and comodities generally cos most firms rely on diesel to power their generators and any increase in the cost of diesel will adversely affect the margins of the company. it's a different thing if it was a one off increase, then you can say they will pass the cost to the final cnsumer but when the increase becomes sustained, then wahala dey. also, almost every packaing material has one connection with oil so increase in oil price will make packaging materials more expensive. Also food comodities like cocoa, wheat etc are on the rise and will definitely be more expensive to procure for companies than it was a year ago.
I am also concerned about the future performances of companies on the NSE especially the FMCG firms as I think they will be worst hit cos there will be a general increase in their raw and packaging materials. Definitely, to keep their margins intact, we consumers might begin to see some of these FMCG companies increasing the prices of their products but that might not solve the problem completely bcos there's a limit to which you can pass on these cost to consumers hence, the company will still be hit.

[billions]

CBN, NSE, SEC, banks evolve rebound strategies

A report prepared by two reputed financial institutions has indicated that the Nigerian stock market continues to have short and long term opportunities, stating that the recent decline in the market was only a blip and that the growth projection is getting back on track. The report was put together by Renaissance Capital and J.P Morgan, and analysts said at the weekend it would calm investors’ nerves.

The report formed the plank of a four-hour meeting of stakeholders involving chief executives of regulatory agencies in the money and capital markets with managing directors of the nation’s 24 banks. A source told Business Day the report was a sweet balm to the nerves of investors and stakeholders who were before now worried stiff by developments in the capital market.

Business Day gathered that the parley deliberated on what was seen as the real cause of the problem in the capital market recently and observed that three key issues must have been responsible.

Firstly, it was observed that investors must have been confused about initial government’s inability to provide a clear signal as to what its policy direction looks like. Specifically, there were fears that the government may not be able to carry out its reforms both in the financial markets and the economy, hence, people were not sure of the government.

Secondly, the general feeling was that Nigerians, especially the investing public, had developed the impression that recent growth recorded in the market cannot be sustained based on reports by analysts who did not have the parameters.

This was also reinforced by the House of Representatives probe of the Nigerian capital market with the title: "Unethical and Fraudulent Practices in The Financial System". This, a source at the meeting disclosed, cast the reputation of the banks in bad light and since the banks constitute about 70 percent of the market, investors were beginning to lose confidence in the system.

The meeting which was held at the Civic Centre in Victoria Island, Lagos was attended by the minister of state for finance, Remi Babalola, Central Bank of Nigeria (CBN) governor, Chukwuma Soludo, chairman of Securities and Exchange Commission (SEC), Udoma Udo Udoma and the president of council of the Nigerian Stock Exchange (NSE), Oba Otudeko. Others are the director general of the SEC, Musa al Faki, his NSE counterpart, Ndi Okereke- Onyiuke, chief executives of the 24 banks in the country as well as representatives of Renaissance Capital and J.P Morgan.

However, as part of measures to safeguard the market and the economy as a whole, all regulators and key stakeholders agreed at the meeting to close ranks with a view to ensure that analyses that are unfounded are erased from the system.

Besides, the meeting agreed to adopt a report which indicated that only 12 percent of funds in the capital market are from outside the country while the remaining 88 percent are local. This goes to show that even when people move money from the capital market either to the money market or other areas of investment, it is still within the economy and would not have a ripple effect on the economy.

According to the source, "majority of the remaining 88 percent of Nigerians are unable to invest outside the country because they did not have the volume while others are scared because they have skeletons in their cupboards".

However, key stakeholders who were present at the meeting were optimistic that the simple correction that has been witnessed in the market would lead to a rebound.

There was also a general optimism that President Umaru Yar’Dua remained mindful that investors are watchful of his economic policy direction and would ensure that the economy is placed on a strong pedestal.

Speaking to journalists after the meeting, Babalola noted that the Nigerian capital market would continue to grow alongside the overall economy.

"It is clear that the market is still very robust, it is on the upswing and there is enough liquidity to boost the market. The macro economic performance direction is very robust, strong and positive," he said.

In the same vein, Soludo observed that the Nigerian capital market has immense potentials for future growth adding that the meeting was held with the Bankers’ Committee because the banks are the major players in the market.

He noted that all the key operators of the economy would collaborate and take proactive steps to protect the growth that the market had recorded in recent years.

He said: "It should be noted that it is normal for markets to go up and down and that is the nature of every market. However, we are ready to take all necessary procedures to ensure that the market does not crash. The various institutions are keen to introduce reforms in order to protect the market".

[ttoladele]

Originally Posted by Apache

I won't be too worried about electricity generation cos as far as I am concerned, that never existed in the first place so its continuous decline won't affect much.
However, what i am most concerned about is the continuous rise in the price of oil and comodities generally cos most firms rely on diesel to power their generators and any increase in the cost of diesel will adversely affect the margins of the company. it's a different thing if it was a one off increase, then you can say they will pass the cost to the final cnsumer but when the increase becomes sustained, then wahala dey. also, almost every packaing material has one connection with oil so increase in oil price will make packaging materials more expensive. Also food comodities like cocoa, wheat etc are on the rise and will definitely be more expensive to procure for companies than it was a year ago.
I am also concerned about the future performances of companies on the NSE especially the FMCG firms as I think they will be worst hit cos there will be a general increase in their raw and packaging materials. Definitely, to keep their margins intact, we consumers might begin to see some of these FMCG companies increasing the prices of their products but that might not solve the problem completely bcos there's a limit to which you can pass on these cost to consumers hence, the company will still be hit.

FMGC firms? Abeg which companies are these, remember there are laymen like me on this forum oo. Make i guess sef : Federal Millitary Govenment Companies? I correct? Apache, i dey wait please.

[kenebobo]

Originally Posted by ttoladele

FMGC firms? Abeg which companies are these, remember there are laymen like me on this forum oo. Make i guess sef : Federal Millitary Govenment Companies? I correct? Apache, i dey wait please.

FMCG= fast moving consumer goods

[kenebobo]

The index fell by about 0.9% today against 1.6% on friday. Most stock prices remained unchanged because of the 100K rule and there were more gainers today than friday.

[zainabusman]

Originally Posted by kenebobo

The index fell by about 0.9% today against 1.6% on friday. Most stock prices remained unchanged because of the 100K rule and there were more gainers today than friday.

Well i guess overall there were more loosers than gainers?

The NSE website has been down since around 130pm. This does not inspire confidence.

[billions]

Originally Posted by kenebobo

The index fell by about 0.9% today against 1.6% on friday. Most stock prices remained unchanged because of the 100K rule and there were more gainers today than friday.

...not a bad sign.

[kenebobo]

Originally Posted by billions

...not a bad sign.

Lets hope tomorrow would be better. The market seems to be getting tired of taking very deep dives.

[olusolakemmy]