MarketWatch

[billions]

Shares post N413bn rebound in response to CBN’s year-end shift
30 July, 2008 02:00:00 GODFREY OBIOMA
Font size:
Respite may have come to the stock market following the Central Bank of Nigeria (CBN’s) change of banks’ year- end harmonisation from 2008 to 2009 as stocks staged a N413 billion rebound.
Market capitalisation rose from N10.058 trillion July 24 to N10.470 trillion July 29, 2008 while the all-share index gained 1,865.66 points, rising from 50,393.75 to 52,259.45 points.

CBN’s earlier directive that set Decembe 2008 as deadline created panic in the financial market with banks desperately scouting for deposits at high rates. To meet the deadline, many banks suspended lending and jerked up rates for existing credit facilities to clean up their balance sheets. Before then, many had ridden on diverse financial year- ends to boost their positions through borrowing from the inter-bank market. The development created liquidity squeeze in the market with the result that the market witnessed share glut and fall in prices. July 23, the apex bank shifted the deadline to December 2009.
Analysts believe that the respite from the policy reversal is responsible for the seeming rebound, with a caution that it may not be sustainable due to the fear already created among investors. S .Enyinnaya, managing director and chief executive of Value Line Securities and Investment Limited agreed that the shift in deadline may have fueled the rebound in three days, but warned that the gain may not be sustained.

According to him, it would take a little while before the uncertainty created by regulators error is erased. Enyinnaya would want a situation where the CBN reaction is made a secret, adding that the shifting of the deadline to 2009 is not enough to have far reaching positive impact on the market. For him, the implementation of the policy should have been spread over four years.

Oladipo Aina, managing director of Signet Investment Securities Limited, who spoke from London said it is too early to attribute the rebound to the CBN change of policy. He thinks prices of blue chip stocks may have bottomed out and are now staging a resurgence.

Others say confidence is gradually returning to the market as banks can now extend facilities to investors to play in the market. But the lingering high interest, experts say, may constrain the market’s ability to fully react to the extension. The concern of operators is that investors who had already shifted to the money market due to the rise in deposit rates may not return to the stock market soon until they are sure that the rebound is real.

[fredski]

Originally Posted by billions

@fredski,u are d last person i thot wld be interested in tech. analysis....with ur portfolio positively skewed in favour of 1st generation banks + ur skepticism towards d new generation banks.

Maybe if i hv ur portfolio i wld be less interested in tech. analysis but with what i have in my portfolio now....i cannot afford to sleep with both eyes closed.

I like to belive my position on new gen banks as Cautious Realism and Optimism rather than Scepticism.
Of then all GT I view has having a solid structure and thats a BUY for me (at current price), though I gave up 70% at N37 high.

In my Portfolio I still hold Skye, Spring, PHB, GT, IBTC, Inter, Eco and ofcus UBA, First, and Union. I gave up 70% of my Zennith at N50 but Jim would not allow me get rid of the remaining 7,000. (They taking 4ever to verify certificate. I guess they love me ).

On technical analysis, I use charts mostly to plot my entry and exit primarily for my short and medium terms. I also trade Forex and financial Spreads and I use 75% Technical and 25% Fundamental at reaching my decisions.

[zainabusman]

Originally Posted by zainabusman

The attachement option seems not to be working. I will try again later as i have on it for 20 minutes with no success.

As promised Peterside's view.

[fredski]

Originally Posted by zainabusman

As promised Peterside's view.

Nice one Zainab.... Superstar

[billions]

Originally Posted by fredski

I like to belive my position on new gen banks as Cautious Realism and Optimism rather than Scepticism.
Of then all GT I view has having a solid structure and thats a BUY for me (at current price), though I gave up 70% at N37 high.

In my Portfolio I still hold Skye, Spring, PHB, GT, IBTC, Inter, Eco and ofcus UBA, First, and Union. I gave up 70% of my Zennith at N50 but Jim would not allow me get rid of the remaining 7,000. (They taking 4ever to verify certificate. I guess they love me ).

On technical analysis, I use charts mostly to plot my entry and exit primarily for my short and medium terms. I also trade Forex and financial Spreads and I use 75% Technical and 25% Fundamental at reaching my decisions.

Interesting!!! I have a wrong idea of d composition of ur portfolio...maybe my decisions are based on 75% fundamental analysis and 25% technical...

[billions]

Originally Posted by zainabusman

As promised Peterside's view.

Simply excellent...cheers.

[ttoladele]

Originally Posted by zainabusman

As promised Peterside's view.

My suspicion is that Mr Peterside is a member of this forum.
Can the experts in the house explain what it means to "sell a stock short".

[billions]

Originally Posted by ttoladele

My suspicion is that Mr Peterside is a member of this forum.
Can the experts in the house explain what it means to "sell a stock short".

It means selling stocks dat dont belong to u with d aim of buying dem back when the price drops.The reason behind it is dat u are convinced dat d price will fall....so u can buyback at a lower price.

[waaan5]

Originally Posted by ttoladele

My suspicion is that Mr Peterside is a member of this forum.
Can the experts in the house explain what it means to "sell a stock short".

One of these: Avocado, Ms Zainabusman, Apache, Kenebobo, Billons, XXcash, hisp99, ttoladele, micheal, fredski... must be a pseudo name for Atedo Peterside on the SMN - just a joke! Anyway great minds think alike so I'm not surprised that Atedo's view of the mrkt is similar to those of the senior guys of this forum.

[Avocado]

zainabusman: thank you for uploading the document.
waaan5: some joke, eh! We're in the presence of brilliance, and Mr. Peterside's opening words are at once contrarian, insightful and telling:

I believe that when one speaks about a “lull”, that word should ordinarily refer to a period of low activity. In Nigeria however the 37.80% appreciation in the NSE’s All Share Index (“ASI”) in 2006 followed by an even more impressive 74.73% appreciation in 2007 (See Figure 1 below) has led many investors to consider rapidly escalating stock prices as “normalcy”, while any form of deceleration or decline in prices is now referred to as a “lull”.

One hasn't read the rest of the document beyond these opening words, but it is precisely because of these peculiarities that it's been argued that what's regularly defined as bear territory/bear market etc etc is a definition appropriate to developed markets, and that such definitions miss the heart of the matter wrt to the current situation on the NSE. No doubt, Peterside's document will have more insights. So, I soldier on.

The topic was: "THE NIGERIAN CAPITAL MARKET: HOW LONG WILL THE LULL LAST?" Peterside rendered the key word significantly differently: "lull", and redefines normalcy as “normalcy”.
.

[dejiotus]

Originally Posted by zainabusman

As promised Peterside's view.

Hi Zainabusman,
Yet to digest the content of the article inside out.Flipping through the pages however revealed he was discussing very recent events in the stock market.Guess he delivered the lecture on 24th July 2008 rather than 24th July 2007 as was dated on the Article.

[zainabusman]

Originally Posted by dejiotus

Hi Zainabusman,
Yet to digest the content of the article inside out.Flipping through the pages however revealed he was discussing very recent events in the stock market.Guess he delivered the lecture on 24th July 2008 rather than 24th July 2007 as was dated on the Article.

Yes it was delivered last week and not last year as can be inferred from the contents. A friend was at the forum last week.

[kenebobo]

There is one thing that i have noticed in the market price which is that prices are moving up gradually and not as fast as they used to in the previous bulls. Maybe this bull would last longer that others.

[billions]

The index increased by 0.36%.

[XXCASH]

The body of the message doesn't necessarily go with the headings but that's how i got it from business world Intelligence. The body sure has useful information
Business World Newspaper Nigeria | Economic Intelligence Delivered


Money Laundering: Bankers Slam AFC Probe Panel

By Wole Tokede

As a fallout of the persistent and unbridled loss of value by stocks listed on the Nigerian Stock Exchange (NSE), banks operating in the country are now unwilling to accept shares from those seeking facility as collateral for such facilities, BusinessWorld Intelligence can reveal.
Investors who tendered their share certificates as collaterals for facilities have had their hopes of raising funds through bank loans dashed as the banks turned down their requests due to what they referred to as “inappropriate cover”. Our investigations reveal that some investors have continued to experience rejection by three second generation banks known to be daring in granting facilities to customers.
Apart from turning back intending borrowers who want to use their shares as collateral, we gathered that banks are now at a loss as to what to do with the people they had granted facilities with their shares in the Central Securities Clearing System (CSCS) depository as cover. Because of foreclosure problems, the use of property as collateral which is the in-thing in other parts of the world is gradually being de-emphasised in favour of equity cover when Nigerian capital market was on all-seasons bull-run.
Many Nigerians who are now aware of the wisdom in using their shares lodged with CSCS depository as collateral for credit from banks and other financial institutions are now looking for other instruments that can attract banks as cover for new facilities in the market.
Our investigations have further revealed that as at July 31, 2007, a total of 6700 investors have used their shares in CSCS depository as collateral to access several billions of naira loans. This development was projected by operators to continue based on the anticipated market situation which, until few months ago, was very promising.
BusinessWorld Intelligence also reveals that prior to the ongoing meltdown, banks were asking for about 150 per cent cover for any short term borrowing or structured lending with special emphasis that the cover must be in shares. Borrowers were enthusiastic about the option based on the viability of the market.
Shares became the bride of bank treasurers when CSCS reduced the level of theft or loss of share certificates and raised market confidence in it, using the new information technology applications. This offered share better acceptance and less vulnerability, unlike properties that have several unforeseen difficulties attached to them.