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2014: Another Year Of Locust Portfolio Investment

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The year 2014 will remain
    evergreen in the annals of the Nigerian capital market, just like 2008 — the year of the locust or the global financial meltdown.
The key issue in comparison remains that market within the period under review witnessed a major setback, which wiped away the growth posted in 2013.
Investors returned to another locust era, following the tight macroeconomic policies, falling crude oil prices, prolonged security challenges and anxiety on uncertainties in the scheduled 2015 general elections.
Available statistics showed that, in spite of the orchestrated market recovery championed by the capital market regulators, the Nigerian bourse would close for the year as one the worst performing markets across the globe, due largely to sales pressure by panic foreign investors.
The total foreign exchange outflow, as at October 2014, amounted to N101.22 billion as against N92.54 billion posted in September.
Also, a total of N56.56 billion total foreign outflows was recorded in August 2014, due to investment retreat embarked on by foreign investors, occasioned by falling crude oil prices.
The nation’s market scenario, according to many analysts, point to the need for increase in participation by domestic investors in portfolio investment.
Investments in the sector stood at 12.46 per cent as at October, compared to 49.06 per cent recorded as at November 2013.
Records of trading on the Nigerian Stock Exchange (NSE), as at December 5, showed that the equity market dipped by 20 per cent to-date due to massive sell-off, in spite of strong corporate fundamentals of listed companies, against 47.19 per cent achieved in 2013.
Other factors that affected market growth, in spite enhanced regulatory framework embarked upon by regulators, were hike in Cash Reserve Requirement, increase in Monetary Policy Rate and devaluation of the naira by the Central Bank of Nigeria (CBN).
The market was also negatively impacted by the instability in the exchange rate, which led to the exit of more foreign investors, with the nation’s currency losing about 11 per cent of its value against the dollar in the year.
Market data showed that at the close of market on December 5, the All-Share Index of the Exchange dropped by 20 per cent year-to-date, to close trading at 33,228.29 points, against opening year index of 41,329.19 points.
Also, market capitalisation, which opened trading for the year at N13.20 trillion, dipped by N2.23 trillion to close trading on December 5 at N10.970 trillion.
Speaking on the 2014 market performance, the Group Chief Executive Officer, UBA Capital Plc.,Mrs Oluwatoyin Sanni, attributed the development to depressed investor confidence and concerns surrounding the forthcoming general elections.
Sanni said that security challenges in the country led to a ‘wait-and-see’ game by international investors, who wish to ascertain the outcome of the general elections and the sustainability of the nation’s economy.
The UBA Capital boss said the foreign investors’ ‘wait-and-see’ game would likely continue until the second quarter of 2015 when the outcome of the elections would have been ascertained.
Sanni said that persistent oil price drop- a significant contribution to the nation’s Gross Domestic Product (GDP) — added to the lull in the market and the economy in general.
Another major factor in the nation’s negative economic swing that affected the growth of the capital market, she noted, remained the issue of market-based liquidity challenges.
According to her, Nigeria’s retail investors’ apathy at the NSE remains very visible, following poor financial inclusion.
She, however, argued that the persisting challenges were not insurmountable, stressing that the global economic problems necessitated the need for a regulatory operating synergy among the different arms of the financial markets’ regulators to systemic market failure.
To her, the need to avoid duplication of regulatory oversights has made it imperative for the Securities and Exchange Commission (SEC), the CBN, the NSE and the Pension Commission to collaborate towards achieving market development, depth and growth sustainability.
The Federal Government, she said, must move toward the promotion of a National Savings Policy to engender long-term saving culture among Nigerians.
Sanni also insisted that the desired savings culture would only emerge through updating of the Pension Fund Administrators’ (PFAs) investment guidelines, to ensure maximum use of the opportunities in the nation’s capital market.
She also canvassed the need for the listing of the government privatised entities in the market and prompt privatisation of the remaining agencies to strengthen market depth and breadth.
Also, Mr Emeka Madubuike, President, Association of Stockbroking Houses of Nigeria (ASHON), described 2014 as one of the worst years in the history of the nation’s capital market.
Madubuike, the Managing Director of Compass Securities, said that the major lesson in the period was an urgent need for diversifications of the nation’s economy, with less emphasis on crude oil.
The ASHON boss said that the development called for less spending by the Federal Government and the introduction of more economic buffers to reduce the effect of external shocks on the economy.
Madubuike said that government should support the market by ensuring that the bulk of its investment in the transformation agenda would come from the market, instead of concentrating on local and international borrowings.
He said that the infrastructure needs of the country would not be achieved through borrowings, noting that the capital market remained the vehicle for long-term funding of developmental projects.
Madubuike also stressed the need for increased participation of domestic investors in the market, to reduce shocks caused by the exit of foreign investors. He said this could be achieved through strict implementation of the capital market 10-year master plan launched in 2014.
The Managing Director, APT Securities and Funds Ltd., Malam Garba Kurfi, said that the economy would not achieve any meaningful growth and development with the present security challenges.
Kurfi said that the Federal Government should address issues of national security critically, and ensure political stability, since the nation’s economic performance in 2015 would be determined by the outcome of the general elections.
He also called on the government to ensure the investment of the Sovereign Wealth Fund (SWF) in the nation’s bourse, to strengthen market activities.
Kurfi said that certain percentage of the fund should be invested in the market to avoid foreign dominance, noting, however, that, the funds should be invested in blue chip companies.
He said that government should be committed to the development of the stock market, to protect it from being dominated by foreign investors, as they could offload at any given time.
Overall, the contention of most of the stakeholders was that the Government must, and should, demonstrate more than lip-service in the development of the nation’s capital market because of its role in promoting sustainable economic development.
They contended that the nation’s development challenges, especially in infrastructure, major driver and moderate of growth, would be fast tracked if government and sub-national institutions appreciated the dynamics of development seed funds.
They clearly identified the overhaul of the privatisation legal framework that would compel emerging companies from the privatisation programme to be listed at the Exchange.
According to them, the overhaul of the privatisation laws will enable a large segment of Nigerians to benefit from the unbundling of our commonwealth into viable private-driven companies.
To them, the opportunity to own shares of the new companies would engender confidence in the economy and stimulate avenues for Nigerians to sharpen their entrepreneurial skills in transforming a local company into a global concern.

 

Chinyere Joel-Nwokeoma

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NSIB, AAAU Sign MoU On Air Safety Training

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As part of efforts to curb mishaps in the aviation industry, the Nigerian Safety Investigation Bureau (NSIB) has signed a Memorandum of Understanding (MoU) with the African Aviation and Aerospace University (AAAU) to deepen training on preventing and reducing accidents in Nigeria’s air transport.
Director, Public Affairs and Consumer Protection of NBIS, Mrs Bimbo Olawumi Oladeji, in a statement, said NSIB granted AAAU access to its facilities to facilitate an efficient exchange of resources and expertise.
According to the statement, the Director-General/Chief Executive Officer of NSIB, Captain Alex Badeh, who spoke at the ceremony held at the NSIB Training School, noted that the MoU sets the stage for facility sharing, capacity building, and collaboration between the Bureau and AAAU.
“I am confident that this MoU will enhance the effectiveness of our collaboration and commitment to promoting safer skies and operational excellence in the aviation industry in Nigeria and beyond”, Badeh said.
Registrar of AAAU, represented by the Director of Physical Planning and Works, Engineer Masud Aliyu Yerima, was also quoted in the statement, saying, “The journey of AAAU’s establishment and progress would have faced considerable challenges without NSIB’s generous support”.
He commended Badeh for his exemplary leadership and steadfast dedication in propelling NSIB to greater heights, and affirmed AAAU’s readiness to engage in mutually beneficial endeavours with NSIB.
“This partnership marks a significant milestone in fostering a culture of safety and excellence within Nigeria’s aviation sector, and both NSIB and AAAU are poised to leverage this synergy for the benefit of the industry and the nation at large.
“The African Aviation and Aerospace University, AAAU, is the first Pan-African university dedicated to aviation, aerospace, and environmental science.
“Addressing two critical needs within the continent’s industry, AAAU tackles the research and development gap in Africa’s aviation and aerospace sector while simultaneously cultivating a skilled workforce to propel it forward”, the statement added.

By: Corlins Walter

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Naira Rebound, Air Peace’s Expansion Deepens International Route Competition 

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he commencement of flights operations on the London route by an indegenous Carrier, Air Peace Airline, and the recovery of the local currency have sparked fresh competition on international routes.
Air Peace, Nigeria’s outstanding indigenous airline, may face a prolonged market battle with many foreign airlines with decades of experience in the industry following its entrance on the Nigeria-London route.
Some of the industry’s experts say the airline required support from the government and a strategic approach to stay competitive.
Analysts have also stated that the strategic move has garnered high praise from stakeholders in the aviation sector, considering that Nigerians were paying exorbitant prices to travel from Nigeria to London, but that sustaining this momentum will require more than just offering low prices.
On March 31, 2024, the 11-year-old airline made a bold statement with its inaugural flight, using a Boeing 777 aircraft, offering a capacity of 274 seats and carrying 260 passengers from Lagos to London.
It sold its tickets for N1.2m, a price way lower than the rates offered by most foreign airline operators plying the same route.
Just two weeks after entering the market, Air Peace’s Chief Executive Officer, Allen Onyema, complained on Arise TV that foreign airlines were undercutting prices in an attempt to push Air Peace out of the market.
Onyema said, “We are aware that there are devilish conspiracies. All of a sudden, airlines are pricing below the cost. One airline is advertising $100  and the other $350. If you peel up your entire aircraft and carry people on the wings, it is not even enough to buy fuel.
“Why are they doing that? Their government is supporting them because Nigeria has been a cash cow for everybody. The idea is to take Air Peace out, and the moment they succeed in taking Air Peace out, Nigerians will pay 20 times over. It would happen, God forbid, if they were able to take Air Peace out”.
It was gathered that an economy ticket for a flight scheduled for April 29, 2024, from Lagos to London costs about N679,375 on Ethiopian Airlines, an operator with 75 years of experience.
Air Peace priced the same ticket at N1,090,750. The difference is that on Air Peace, it will be a 6-hour non-stop flight, while on Ethiopian Airlines, it will take 16 hours with one stopover.
Last Friday, Ethiopian Airlines reduced the price of its London ticket by 0.77 per cent to N1,628,660 from  N1,641,249 two weeks ago.
In the same period, Air France’s price dropped to N1,687,824, nearly halving from last month’s N2,482,138.
On March 4, 2024, Lufthansa offered the Lagos-London route for N1,966,165. Qatar Airways provided the same ticket for N2,016,824, and KLM priced it at N2,448,740.
This continuous decline in air ticket prices was also driven by the strengthening of the naira against the US dollar and the payments of airlines’ trapped funds by the Central Bank of Nigeria.
Minister of Aviation and Aerospace Development, Festus Keyamo, had confirmed that the Federal Government, through the CBN, had cleared all the trapped funds (foreign exchange backlogs) to the tune of about $160m.
Beyond the ongoing price war, the Air Peace Chairman had also lamented the challenges with ground handling and space allocation at the London Gatwick Airport, adding that no airline has faced such obstacles before.
He noted, “On the inaugural flight out of London, 24 hours before departure, the management of Gatwick Airport moved us to another checking area instead of the designated one.
“The area they provided had a malfunctioning carousel, forcing us to manually transport luggage 50 meters away, causing delays”.

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PH Airport Users Lament Down Turn In Flight Operations 

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Users and business operators at the Port Harcourt International Airport, Omagwa, have decried the downward trend in flight operations at the airport.
Some of the users and operators told The Tide that flight operations at the airport, rather than go upward, have steadily been irregular, and diminishing steadily.
A regular air passenger of the airport, Simeon Echeonwu, in a chat with The Tide, said many airlines, both domestic and international operators, that usually operate at the Port Harcourt airport, have stopped operations, whereas others that are still operating are no longer very stable as before.
Echeonwu noted that airlines such as Aero Contractors, United Nigeria, and Green Africa airlines, now operate about one flight, twice a week, unlike before that they flew every day on Lagos and Abuja to Port Harcourt.
Also speaking, former Chairman of the FAAN Accredited Car Hires Association, Clifford Wahunoro, lamented that the down turn in Operations has affected the business of car hires.
“If you have noticed, I have not been regular at the airport for some time now, because business is no longer flowing at the airport as before. I will not fold my hands and be sitting down doing nothing, so I have to look for other things, so I come when I think there will be something.
“You can see that between 12noon and 1pm, after that segment of flights, when you have few flights arrival, many people will close for the day, and when you wait till evening, flight like Dana may come very late at night, and sometimes, it will not arrive, and by that time, many people will not like to book for commercial vehicle”, he said.
Meanwhile, a travel agent, who wished to be anoyimous, decried the rate at which the airport is going down in terms of flights operations, noting that Port Harcourt airport ought to be competing with the other major airports like Lagos and Abuja.
He queried if such was a calculated attempt to bring the airport to its kneel in terms of flight operations, while other major airports have steady flow of flight operations both for domestic and international.
TheTide observed a continuous distortions in flight movement at the airport. Some of the airlines, like Max air, which many passengers patronize, have completely stopped operations, and no new airline has been added.
Apart from the Air Peace Airline that has maintained some level of stability in operations, other few operators have been involved in either steady rescheduling of flights, cancellation and regular delay, resulting in poor and unpredictable flight movement, which affects or determine other businesses in the airport.

By: Corlins Walter

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