E-Financial
Nigerian Equity Markets Stabilize; Naira Steadies
By Lukman Otunuga, FXTM Research Analyst,
The mood across equity markets in Nigeria has improved this week with the All-Share Index rising by roughly 0.14% yesterday. With the presidential elections over, investors are now redirecting their attention back towards Nigeria’s economy and what can be done to promote economic growth this year. Sentiment towards the Nigerian Naira also showed some improvement as the local currencies slightly gained against the Dollar on the parallel markets. This show of stability and recovery across Nigerian stock markets is likely to continue ahead of the parliamentary elections this weekend.
Markets on standby in absence of fresh catalyst
Asian stocks traded mixed this morning as investors adopted a ‘wait and see’ approach due to a lack of fresh catalysts.
With much of the hope of a US-China trade deal priced in and the risks of a no-deal Brexit by March 29 heavily priced out, a new theme needs to be brought to the table. Although geopolitical risks continue to linger in the background, they appear contained for now while ongoing concerns over global growth are slowly becoming old news.
The movements across global equity markets are likely to be limited until investors are offered some real clarity on the progress of US-China trade talks. With a high degree of optimism over trade talks already baked into the markets, many will be left empty-handed if the final deal fails to mirror the heightened expectations. Such a development would impact appetite for riskier assets, consequently punishing equities across the globe.
While US equities have erased the losses seen since December, this year-to-date rally appears to be running on fumes. Are equity bulls running out of steam? Time will tell.
Currency spotlight – GBPUSD
It is shaping up to be another rough trading week for the British Pound thanks to growing concerns over Prime Minister Theresa May’s ability to pass her Brexit deal through Parliament by March 12.
Reports of the talks between European Union and British negotiators ending in an impasse worsened matters for the British Pound, with the GBPUSD trading around 1.3134 as of writing. While a lack of progress or clarity on Brexit talks will most likely punish the Pound this week, the downside will be limited by speculation over the government extending Article 50 to prevent a no-deal outcome. With uncertainty still a major theme when dealing with Brexit, the Pound’s medium to longer term outlook remains open to question.
In regards to the technical picture, the GBPUSD is under pressure on the daily charts. The breakdown below 1.3200 at the start of the week has provided bears with enough ammunition to attack 1.3080. A breach below 1.3080 will open a path back towards the psychological 1.3000 level.
Commodity spotlight – Gold
Gold prices edged higher this morning after rebounding from a more than five-week low yesterday thanks to a pause in the stock market rally.
The absence of a fresh market catalyst has the potential to send investors back towards Gold which tends to perform well in times of uncertainty. While the near-term outlook for the precious metal points to further downside amid Dollar strength and US-China trade optimism, the medium to longer term outlook remains in favour of bulls. With geopolitical risks, concerns over global growth, and expectations over the Fed taking a break on monetary tightening this year being dominant market themes, Gold still has upside potential. Focusing on the technical perspective, the yellow metal is seen depreciating towards $1278 as long as the psychological $1300 level proves to be a reliable resistance. A breakout back above this psychological level will bring bulls back into the game.
E-Financial
Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme
“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.
MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.
Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.
The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.
The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.
E-Financial
CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering
Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.
The inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.
In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN, disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.
“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.
The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.
However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.
Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.
Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.
E-Financial
CBN Urges Banks to Expedite Action on Recapitalisation
Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.
Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.
The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.
Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.
“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”
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