MarketWatch

[hispy99]

CBN okays restructuring of margins facilities
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.

[hispy99]

Experts support CBN’s claim on market decline
By Udeme Ekwere
Published: Monday, 6 Oct 2008
Capital market analysts have supported the Central Bank of Nigeria’s claim that the decline witnessed in the Nigerian capital market could be linked to the exit of foreign investors.

They said that although this had not been not detected as a major factor from the outset, events had proven that it was a major cause of the persistent bearish trend in the stock market.

The Managing Director, Lambeth Trust & Investment Company Limited, Mr. David Adonri, said that as a result of the credit crunch that rocked the global financial market, foreign investors withdrew their funds from the Nigerian market, and this action greatly affected the market.

In an interview with our correspondent on Saturday, he said, “The exit of the foreign players from our market played a major role in the current declines recorded in our market.

“If we encourage the foreigners to bring in their ‘hot money’ into our market, and then at the slightest excuse, these foreigners exit the market, it is bound to affect the market negatively.”

He said, even though it was true that other factors like the margin trading issue, recapitalisation and the illiquidity problem contributed to the decline, the global financial crisis, which led to foreign investors’ exit, constituted a major cause.

The CBN Governor, Prof. Chukwuma Soludo, had on Friday linked the decline in the Nigerian market to the global financial market credit crunch, which resulted in the downward spiral that the equities in the Nigerian Stock Exchange had been experiencing since March.

Adonri noted that the reason that the foreign investors gave for their exit at that time was that most of the equities on the Nigerian market were largely over-valued and so the market was not suitable for them.

“A report from JT Morgan at that time, had said that our market was over-valued with an average price-earnings ratio of almost 50 for Nigerian equities. However, if that was truly the reason for their exit from our market, they should be back now that our stocks are grossly under-valued, with the average PE ratio having declined to almost 20,” he stated.

The Managing Director, Ideal Securities Limited, Mr. George Okafor said, one event had led to the other in the capital market.

He said the withdrawal of foreign investments, the loss of confidence by local investors, and the recent re-focus of investors on the property market, had all contributed to the declines recorded in the market.

[olusolakemmy]

Originally Posted by hispy99

Experts support CBN’s claim on market decline
By Udeme Ekwere
Published: Monday, 6 Oct 2008
Capital market analysts have supported the Central Bank of Nigeria’s claim that the decline witnessed in the Nigerian capital market could be linked to the exit of foreign investors.

They said that although this had not been not detected as a major factor from the outset, events had proven that it was a major cause of the persistent bearish trend in the stock market.

The Managing Director, Lambeth Trust & Investment Company Limited, Mr. David Adonri, said that as a result of the credit crunch that rocked the global financial market, foreign investors withdrew their funds from the Nigerian market, and this action greatly affected the market.

In an interview with our correspondent on Saturday, he said, “The exit of the foreign players from our market played a major role in the current declines recorded in our market.

“If we encourage the foreigners to bring in their ‘hot money’ into our market, and then at the slightest excuse, these foreigners exit the market, it is bound to affect the market negatively.”

He said, even though it was true that other factors like the margin trading issue, recapitalisation and the illiquidity problem contributed to the decline, the global financial crisis, which led to foreign investors’ exit, constituted a major cause.

The CBN Governor, Prof. Chukwuma Soludo, had on Friday linked the decline in the Nigerian market to the global financial market credit crunch, which resulted in the downward spiral that the equities in the Nigerian Stock Exchange had been experiencing since March.

Adonri noted that the reason that the foreign investors gave for their exit at that time was that most of the equities on the Nigerian market were largely over-valued and so the market was not suitable for them.

“A report from JT Morgan at that time, had said that our market was over-valued with an average price-earnings ratio of almost 50 for Nigerian equities. However, if that was truly the reason for their exit from our market, they should be back now that our stocks are grossly under-valued, with the average PE ratio having declined to almost 20,” he stated.

The Managing Director, Ideal Securities Limited, Mr. George Okafor said, one event had led to the other in the capital market.

He said the withdrawal of foreign investments, the loss of confidence by local investors, and the recent re-focus of investors on the property market, had all contributed to the declines recorded in the market.

because nigeria is part of the global family, it is only natural that the credit crunch in the global financial system affect us, and that foreign investors move their money away for a while, but did soludo also mention that poor capital and financial market regulation played a major role in destroying local investors confidence?

if foreign investors are confortable with our regulatory system, despite the effect of global credit crunch, the wont leave our market so acutely like this, so the poor regulatory governance didnt only affect local investors but the market as a whole.

It is obvious the prof only looking for an excuse to save his name, because if a bank can under your watch, slash people share worth and you think its ok and even approve of it and not bother to call them to order, means the gentle man doesnt know his primary function is

[knightofdelta]

Originally Posted by hispy99

CBN okays restructuring of margins facilities
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.

Is this piece of news going to halt the meltdown... most likely not. Not we what we have been seeing so far.

[knightofdelta]

Originally Posted by olusolakemmy

because nigeria is part of the global family, it is only natural that the credit crunch in the global financial system affect us, and that foreign investors move their money away for a while, but did soludo also mention that poor capital and financial market regulation played a major role in destroying local investors confidence?

if foreign investors are confortable with our regulatory system, despite the effect of global credit crunch, the wont leave our market so acutely like this, so the poor regulatory governance didnt only affect local investors but the market as a whole.

It is obvious the prof only looking for an excuse to save his name, because if a bank can under your watch, slash people share worth and you think its ok and even approve of it and not bother to call them to order, means the gentle man doesnt know his primary function is

I cannot table the entire blame on the Central bank. Their main focus is to stabilize the fiscal policy, which they are trying really hard to do. It is SEC and NSE that are making me nauseous. Imagine one of NSE's official was the only one that had made a statement about the rip-off and he came out to tell us glibly that the share price of Sterling bank was cut down because of mispricing. BS! As if it was an everyday thing.

[olusolakemmy]

Originally Posted by knightofdelta

I cannot table the entire blame on the Central bank. Their main focus is to stabilize the fiscal policy, which they are trying really hard to do. It is SEC and NSE that are making me nauseous. Imagine one of NSE's official was the only one that had made a statement about the rip-off and he came out to tell us glibly that the share price of Sterling bank was cut down because of mispricing. BS! As if it was an everyday thing.

am not also blaming cbn absolutely, infact the weakness or lack of managerial ability of the other two bodies SEC and NSE is not something i really like to talk abt cause it makes me feel sick!!!!!

one of the duties of CBN is to protect depositors fund as well as shareholders fund, if there was mispricing, it means there was an issue with sterling bank 25b capital base during consolidation. is it not the shareholders fund cbn required to be atleast 25b?
if they price their share upward, it is for the purpose of meeting cbn requirement, the dirty detail is too messy for all of them and so investors are the easiest cow that can be reached for sacrifice, thats why i nailed cbn in this particular matter, infact and dead sure that cbn approval will form bulk of the process of passing the fraud

[hispy99]

Latest Market Info
ADC: 7 OTHERS DELISTED FROM NSE
DELISTING: THE FOLLOWING COMPANIES HAVE BEEN DELISTED FROM THE DAILY OFFICIAL LIST TODAY.

INTRA MOTORS, ADC, GROMMAC, ONWUKA HI-TEK, NIGERIAN LAMPS, NIG. YEAST & ALCOHOL, SECASSURE, SUN INSURANCE AND NIGERIAN TEXTILE MILLS.

[zainabusman]

The Index went down for the 20th straight trading day closing at 45,505. This is 0.45% lower than Friday closing. Value of transactions was N3.46 billion. This is higher than Friday but certainly nothing to shout about.

[panej]

Originally Posted by hispy99

Latest Market Info
ADC: 7 OTHERS DELISTED FROM NSE
DELISTING: THE FOLLOWING COMPANIES HAVE BEEN DELISTED FROM THE DAILY OFFICIAL LIST TODAY.

INTRA MOTORS, ADC, GROMMAC, ONWUKA HI-TEK, NIGERIAN LAMPS, NIG. YEAST & ALCOHOL, SECASSURE, SUN INSURANCE AND NIGERIAN TEXTILE MILLS.

I know the individual reasons may be different, but was there any that stood out?

[BLUEMONEY]

Originally Posted by olusolakemmy

because nigeria is part of the global family, it is only natural that the credit crunch in the global financial system affect us, and that foreign investors move their money away for a while, but did soludo also mention that poor capital and financial market regulation played a major role in destroying local investors confidence?
if foreign investors are confortable with our regulatory system, despite the effect of global credit crunch, the wont leave our market so acutely like this, so the poor regulatory governance didnt only affect local investors but the market as a whole.

It is obvious the prof only looking for an excuse to save his name, because if a bank can under your watch, slash people share worth and you think its ok and even approve of it and not bother to call them to order, means the gentle man doesnt know his primary function is

No He did not mention the poor regulation in our financial market but said we are all now looking for scapegoats because the market is down.

[BLUEMONEY]

Originally Posted by panej

I know the individual reasons may be different, but was there any that stood out?

Nigerian Lamps and Grommac stand out from the Bunch. Overconfidence when the market was still Bubbling then made some investors to buy these companies stock into thier portfolio. Even Ignorant Brokers recommended them to Novice Investors based on the fact that they are penny stocks and of course they went up But the story is different now.

There was also a News months ago that a core investor wants to buy into Nigerian Lamps and if the news is true, they will buy into a delisted company.

[panej]

Originally Posted by zainabusman

The Index went down for the 20th straight trading day closing at 45,505. This is 0.45% lower than Friday closing. Value of transactions was N3.46 billion. This is higher than Friday but certainly nothing to shout about.

Only 3 advances.

[hispy99]

NSE meets to appraise15 requests for IPOs
Posted Tuesday, October 7, 2008

Quotations committee of the Nigerian Stock Exchange (NSE) will meet today to consider applications from 15 companies that had notified the council of the exchange of their intentions to raise funds from the capital market.

Business Day learnt last night that the companies which are mainly from the manufacturing sector had applied to the NSE for capital raising, but out of the 15 companies, only two may be allowed to scale through because of the present bearish nature of the market.

The reason for allowing the two companies, it was learnt, is to ensure that full confidence was restored in the market before others are allowed to come.

It would be recalled that part of the measures adopted by the Federal Government to shore up market value was the listing of new companies and not fresh capital raising.

Market watchers who spoke with Business Day last night affirmed that only companies with strong fundamentals would be able to weather the current storm that is ravaging the capital markets across the globe. It was gathered some of the companies that had been to the market to raise funds in the midst of the market meltdown had not really been successful.

Besides, not a few other companies had to shelve the plans of raising funds through a public offer because of the fear of under subscription. It was for this reason that Crusader Insurance plc, for instance, which is currently in the market with a hybrid of Rights Issue and a Debenture stock had to suspend its earlier proposed public offer. - BusinessDay.

[hispy99]

Tackling debt incurred from stock market crisis
Posted Monday, October 6, 2008
Someone owes N2 million as a result of borrowing money some months ago to buy shares. He added N1 million from his personal savings and bought shares of about N3 million in different quoted companies. The value of the shares has declined to about half its original value and seems to even be sliding further down.



He has asked his stockbroker to sell. The stockbroker has informed him that not even all his shares can be sold currently as a result of investors’ loss of confidence in the market.



He has heard various experts say the stock market moves in a cycle. After a bullish run in which the prices of shares generally soar, the market becomes saturated and then becomes bearish; prices of shares fall. Even though this time around, there are some factors that are prolonging the rebound of stocks prices, the cycle would continue eventually and stock prices would rise again. But he wants to know what people who are in debt as a result of borrowing money to invest in the capital market can do.



John Osuoha, a stockbroker, chief executive officer of Bringforth Investments Limited, while speaking on the issue said "those who have taken loans from a bank to invest in the capital should go back to the bank to renegotiate the loan. A committee has been set up by the Federal Government advising Nigerian banks to res