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Markets Are Mellow Ahead of G20 Meeting

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Lukman Otunuga, a research analyst at FXTM.

FXTM Research Analyst Lukman Otunuga comments on the rapidly diminishing optimism over the OPEC production cut deal has heavily dented buying sentiment towards Oil with the commodity struggling below $49.50 as of writing.

The “dovish hike” powered stock market rally slightly cooled off during Friday’s trading session with investors turning cautious ahead of the anticipated G20 meeting. Asian shares were mostly mixed as participants weighed on the prospects of fewer US interest rates increases this year.

In Europe, the defensive trading mood slightly pressured equities and the bearish contagion could limit gains on Wall Street this evening.

An explosively volatile trading week is slowly coming to an end with investors turning their attention towards the G20 finance meeting which could offer some insights on how world leaders feel about key topics such as protectionism and global growth.

With some discussions of currencies also being a possibility, the Greenback could turn volatile if leaders start to discuss the impacts of its resurgence since Trump’s presidential victory.

Gold Elevated by Feds Caution
Gold has staged a sharp rebound this week with prices springing above $1230 after the Federal Reserve signaled a more gradual pace of monetary tightening in 2017 then what markets anticipated.

The “dovish hike” and caution displayed by the Fed simply disappointed many hawks consequently exposing the Dollar to downside shocks.

Although bulls have exploited Dollar’s weakness to elevate Gold, gains could be limited in the longer term if the Fed readopts an aggressive stance.

With sentiment towards the U.S economy firmly bullish, the Greenback remains supported consequently capping gains on Gold in the medium to longer term. From a technical standpoint, although prices are turning bullish on the daily charts, the $1240 regions could act as a checkpoint for bears to attack prices lower.

Currency spotlight – Dollar
The Greenback was under intense selling pressure this week after the Federal Reserve’s cautious attitude to future rate hikes left the hawks empty handed. Although the depreciation this week has sent the Dollar Index towards 100.20, prices may remain buoyed in the longer term amid the bullish sentiment towards the U.S economy.

Much attention may be directed to how the Dollar Index reacts around the 100.00 psychological support which could be a real game changer for the bulls or bears.

Commodity spotlight – WTI
The rapidly diminishing optimism over the OPEC production cut deal has heavily dented buying sentiment towards Oil with the commodity struggling below $49.50 as of writing. Although U.S Crude stockpiles have eased from record levels last week, concerns still remain elevated over the high global inventories.

With concerns lingering over the compliance of some OPEC and non-OPEC members to cutting production, the upside on oil seems limited.

While some remain cautiously optimistic towards OPEC renewing their six-month supply cut to sustain the recovery in oil prices, the resurgence of U.S shale and lingering fears of members not following compliance could obstruct the extension. From a technical standpoint, WTI is heavily bearish on the daily charts. Bears remain in firm control below $50.

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E-Financial

CBN, NDIC Push Banks to Return to Northeast

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There are ongoing moves by the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) to get commercial banks and microfinance banks return to the troubled North-East region, Umaru Ibrahim, Managing Director, NDIC, has said.

Speaking at the ongoing NDIC Annual Workshop for financial journalists in Kano, Ibrahim, called on the CBN to provide incentives for commercial banks and microfinance banks to come back to the North-east after they closed shops because of the impact of the Boko Haram on their operations.

He said the Northeast has potentials to support economic growth and should be supported by banks to achieve the desired result. He spoke on the theme: “The Nigerian banking sector: Challenges, opportunities and the way forward.”

He said: “Many bank CEOs have forgotten the economic potentials that exist in the Northeast. We need to awaken the banks to see the economic potentials in the Northeast. During the next special Bankers’ Committee meeting, the Northeast infrastructural revival will be discussed. The CBN already has planned to rebuild the Northeast,” he said.

He called on the CBN and other major stakeholders in the financial system to rebuild the financial infrastructure in the troubled North-East region.

He said the activities of insurgents in the region in the last few years have led to huge damage of financial infrastructure in the region.

The NDIC boss disclosed that given the crisis in the North-East region, so many businesses have been adversely affected while some investors have moved their investments out of that region.

He said the rate at which people are being financially excluded in the region has increased due to lack of adequate provision of financial services which was caused by insurgents.

The NDIC boss said he would personally table the issue to the Bankers’ Committee during their next meeting so that concrete steps could be taken to address the problem.

To encourage Deposit Money Banks to open more branches in the North-East, he said there was need for the CBN to provide more incentives to banks. He said, “We need to have the government of the North-East on board, they need to be sensitised on this issue.

“We need more collaboration with the CBN and government of the North-East because without this, not much can be done.

“It is necessary for the CBN to provide incentives for various banks in order to come back to the North-East because many bank CEOs have forgotten the potentials that exist in this region.”

In his presentation titled “Rebuilding Financial Infrastructure in the North East”, Mudashiru Olaitan, Director Development Finance, CBN, lamented the low level of access to the bank’s interventions in the region.

Olaitan, who was represented by Sani Mohammed, Deputy Director in the Department, said out of the N82 billion that was spent between 2001-2008, no state in the region accessed the apex bank’s interventions.

“In the commercial agricultural scheme intervention by the CBN, no state in the North-East accessed this intervention except in Taraba and Gombe which have only one each.”So there is need for the region to tap into the interventions,” he added.

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IFC Invests to aid Better Access to Quality and Affordable Healthcare in Nigeria

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International Finance Corporation (IFC) the largest global development institution focused on the private sector in emerging markets has announced that it recently committed an equity investment of USD 8.5 million in Santa Clara Africa Limited, to support the development of a 150-bed hospital and two 10-bed clinics in Lagos, Nigeria.

 

The project is promoted by AXA Mansard Plc, the Nigerian subsidiary of AXA Group, who provided equity to the project alongside IFC, the CAPE IV Fund, managed by African Capital Alliance and the hospital operator, Healthshare Ltd, through its parent company EOH Holding Ltd.

The two clinics will create a strong referral system of patients to the hospital.

 

These three facilities together will provide the necessary economies of scale to deliver better value for money in healthcare services.

 

The project is expected to provide healthcare at a price point that is below that of comparable hospitals and clinics in the market.

Eme Essien Lore, Country Manager, IFC, Nigeria, said “with this investment, IFC wants to contribute to increase the capacity of Nigeria’s healthcare system to offer quality and affordable services.

 

“We will look to scale up this efficient and integrated model nationwide” She added.

Nigeria’s healthcare sector remains underserved as demand – driven by population growth, higher income levels, rapid urbanization, and a rise of non-communicable diseases – continues to outstrip supply of quality healthcare infrastructure.

 

Diagnostic and primary care services are also limited, and at varying qualities. As a result, Nigerians spend an estimated US$1 billion annually on health services abroad.

The lack of secure access to affordable and good quality healthcare with an appropriate service mix has also hampered the growth of health insurance in Nigeria.

 

The low levels of health insurance penetration, which currently constitutes less than 10 percent of the population, contributes to the high cost of healthcare in Nigeria.

 

An increased availability of health insurance schemes would not only provide sustainable access to health services but also motivate the service providers to adopt cost-effective models.

This is IFC’s second investment with the AXA Group in the health sector. Earlier this year, IFC supported AXA’s insurance business in Egypt which includes health insurance, also through an equity investment.

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Linkifin to provide Supply Chain Financial Solution in West Africa

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Linkifin, a leading financial technology company in Nigeria, announces a new partnership with the South African company Propell.

 

This partnership is part of Linkifin’s International Development plan. Linkifin, based in Lagos Nigeria, provides end to end Supply Chain Finance (SCF) solutions across West Africa.

 

Both companies recently signed an agreement to provide Prime Revenue’s award-winning supply chain finance platform in South Africa..

 

Ms. Omolade Fadase, business development and Ibukun Ekujumi, technical lead both at Linkifin spoke to Nigeria CommunicationsWeek on the challenges in the supply chain ecosystem, stating that one of the biggest headaches in the supply chain link was cash flow challenges and delays in payments due by buyers to suppliers and this is what Linkifin SCF platform is about to change.

 

Obinna Mejeh, head of Business Development, added, “Our platform is basically one for invoice trading, adding flexibility and visibility in a supply chain ,unlike the legacy systems used by banks , discount houses and factoring companies. One of the beautiful things about this platform is that it is a win-win situation for all – buyers, suppliers and funders.

 

Hussaini Yakubu, MD/CEO of Linkifin, further commented, “Nigeria is the second strongest economy in Africa and the largest in West Africa. In order to gear the region towards a robust supply chain finance solution for the future we have to act now. The potential is huge and untapped amongst our target of small and medium sized businesses. We have already met with several major local companies and are going to announce new customers in the coming month”.

 

He ended by expressing his optimism that Linkifin will be able to bridge the gap in the supply chain ecosystem and ended the interview by saying the future for supply chain finance in Nigeria was bright.

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