Domestic Commodity Prices Rise Amidst Fuel Scarcity +More | Business Morning

Domestic Commodity Prices Rise Amidst Fuel Scarcity +More | Business Morning

[Music] and it’s the last trading day of April good morning good evening wher the world you might be watching from uh hopefully this April was good to your portfolio but that depends on where you were invested in let’s get to the top stories that set your agenda now starting with the oil Market we see oil prices edged up marginally in early trade um today after Israel Hamas ceas fire talks in Cairo that helped Quil Market bread crude Futures uh did about 5 cents to 0.06% at $88 35 cents a barrow but we see a marginal rise there to about $884 a barrel up 0.06% we see WTI Crude as the US um grade $82 73 cents um a barrel up marginally this morning so we’re seeing low volatility um right there in the oil Market as usual let’s get a check on the FX market now we seeing um appreciation at the nafx window there about 18885 cover to close yesterday at 1,342 naira um to the dollar starting weak um strong but we see napam um on the flip side that’s um down about uh 5% at 1,419 Nara um to the dollar losing 79 n88 um CBA so that’s it for the um FX Market let’s get to some other top stories now latest report from The fmdq Exchange um shows uh that the debt management office sold a total of 2.67 trillion nth of treasury bills in the month of March according to the fmdq market monthly report the figure represents 3.07% increase from February sales of about 2.59 trillion n in addition fgn bonds worth 68.86 billion n were sold in March marking a 35.3% over subscription the offered amount and reflects a 59.2 7% decrease from February sales of about 1.49 trillion Nara across 7year and 10-year bond maturities and as part of its strategy to expand its business operations The nigeran Exchange group PLC that the ngx group has announced plans to carry out a comprehensive digital transformation to further enhance its efficiency the group managing director and chief executive officer of the ngx Mr tamy POA made this known at their 63rd annual general meeting says the platform will provide a smarter and efficient way for issuers to raise capital and enhance the subscription process and operational workflow of p and the Capital Market including National um initial uh public offerings rights issues and other public offers take a listen we’re aware that every one of our subsidiaries of our associate companies needs to consume technology somehow and there is no better entity to drive that than the holding company so what do I mean for example we have a unique opport in front of us now with the capital exercises that are coming up the capital raisings that the central bank has announced outside of the financial Community as well there have been many capital raises that have been publicly announced right insurances public offers we want to make sure that for the first time in the history of our Market every single one of those offerings will be digital and how do we drive that it means that the uh operating exchange can speak freely to uh another associate company cscs for example it that those entities can speak to registrars through technology so without going into too much detail we would be launching very soon an application that would allow these public offers to be distributed to any Nigerian as long as you have a bank account and to our first conversation now well I hope you’ve been able to buy foil and if you’ve been able to buy foil hope it was at a good price because definitely we know the black marketers are out there making a buck or two but let’s get a sense of how the commodity Market is fairing now joining us is Mr bzm Rani CEO Financial derivatives company joining me via Zoom great to have the show good morning sir good morning so it it seems we can’t go A Year Without experiencing long cues for uh PMs and you know Black Market sellers you know making bank you know at some point um every year I guess this is another one yes uh let’s call it season seasonal and congestion but this is just a management issue Logistics management and to the large extent I don’t know how far how much of this is accidental how much of it is coincidental and how much of it could be considered as sabotage but definitely the inefficiency stinks to the and we need to get what is more important is to not that the the consequences of having petrol cues the reduction in productivity the impact on the starting prices it is so so so debilitating to an economy that it shouldn’t be tolerated so it is an indictment on on the Nigerian government on the Nigerian nmpc that at a time like this we have still facing petrol cues after deregulation of the industry after reduction in subsidy so the Nigerians are paying a higher price and getting lower quantity this is not this a no no in economics so I guess at any price you know even if it’s 10,000 n per liter we’ll still experience fuel cues at some point no that that shouldn’t be normally if the price is equilibrium price the supply should be all right should be adequate and the demand should actually clear the market should clear but what is happening here is that we have is almost a sole Monopoly of some of the importing PMS refineries are not functioning and the ones that are functioning are producing other products so it it is definitely there’s a breakdown in the entire process and more you know the thing is that the logistics is now creating a problem so you import it it goes to Atlas Co it goes to tank Farms from tank Farms people the price Distortion is there is there subsidy yes there is subsidy but not as much as before but today we are buying petrol today at 1,500 naira in the market and Across the Nation so it is it is an indictment on the system it’s an indictment on on how we run things so we have to do it better we just have to do it better there’s no point you can’t you can’t sugarcoat this we have to do it yes and I’m sure we’re already seeing that uh impact already in the Comm with commodity U prices I’m also hearing their signs of you know cash scarcity also at this time so it seems like um the the the suffering of Nigerians just being compounded daily at this point we call it hardship uh let’s face it suffering suffering that is consistent and over an extended period becomes hardship hardship leads to restiveness and the consequences could be very devastating so we pray and in a short period I think the nmpc or somebody has said that within two weeks we will get back to normal but the disruption that has costed and the effect on GDP effect on output effect on standard of living is not look at the price of pepper has been up 177% because those are perishables beans up 12.5% and tomatoes are up so the perishables because those ones have to be transported and because of this congestions across the country those ones are stranded in the in the production belt so for now and that feeds into the food inflation number but this is aberrational but is not it’s not just good because this this is this is avoidable let me put it an avoidable we are just shooting ourselves in food totally unnecessary so what what does it take you you program the shipments you bring the quality of the you assure yourself of the quality and then you have it staggered over the period we knew that there was Easter there was Ramadan was this so something is wrong and between the pricing the supply the logistics the ordering and all that and all of this tied into the fact that the refineries are not functioning at least now we know that diesel price is down and we know that um f is down so we need to ramp up and get the refineries including the D refiner to start producing some of these products and U I think that that would that solve the short term but there are some structural issues around the exchange rate that we need to deal with because one thing is the price of crude the other one is the exchange rate at which the crude is brought in if if it’s being imported by independent marketers or independent um Merchants so so we we need to look at all of this things to ensure that if you are if you are subsidizing at the exchange rate level say so and come out thing for the people but right now it’s not good because May one is um tomorrow and it’s workers day and the workers are all sweltering in front of gas stations and the transport has the you can you can see the effect on domestic transport FS and Inter City pH it’s it’s not a good it’s not a good sign yeah it’s quite interesting that tomorrow is actually um workers there and I’m wondering if the workers have anything to smile about or celebrate uh uh tomorrow but definitely we’re hoping for some kind of you know announcement that would make the workers actually happy but you know we’re talking you did mention the FX market and we’re seeing um some distortions there we see the um naam window there closing uh in the red about down about 5% 1,4 9 so it seems we’re seeing some kind of um big demand for dollars yes we U the thing is that the demand is persistent and it’s actually growing this is summer time and why graduation in the United States for Nigerians who have sent who have sent their kids to the United States is in May the OTC conference is in May the uh summer flights people going for medical tourism and Trader tourism all buying doll so there’s no we can’t run away from the fact that there is a shortage of dollars the answer is to increase the supply what what has what has been done so far is sanitizing the market but the question of supply of dollars has not been fully addressed do we expect it to do we expect it to actually appreciate so sharply no we can see that it’s going to it’s closing it’s closing itself at about 1350 14,400 but the fear is that if people lose confidence in the n as a store of value then they begin to push it so what is the central bank doing the central bank is increasing Supply but the increase in Supply is not enough to M up one the actual demand the speculative demand and the demand fear the fear anticipation that if I don’t buy it now then I not I not get it when I want it takes time for a price of of we call this the C Theory where prices of shoot themselves in the wrong direction and come back and so that’s what you’re going to be seeing we’re going to be seeing the N down around like a yo-yo in the next in next three to four weeks uh what in the month of May we have an MPC meeting we think that the central bank will be aggressively increasing the NPR again more up liquidity uh so as that happens and there’s a attempt to actually issue and a Europe a bond issue by the Nan government if that happens and then we also reschedule some of our debt we have the world bank loan that is coming so all the things are Point fact that in the medium term the nir will settle when in the short term we going to have shortages just like you are in petrol you have shortages in foreign exchange you’ll have shortages in some Commodities but these are these are just signs of the times that’s that’s how I put it right signs of the times and definitely we’ll see what the what other intervention we’ll see from the CBN maybe this week or next week but last week we did see intervention there with they increas they increase the quantity they put in the market and that helped to bring it down but only only only just now we are back again so uh it has to be consistent and in the end we think that there should be an auctioning system let’s have an auction even if it’s $50 million let’s have an auction let everybody beat let they B and then we begin price Discovery process becomes efficient if that happens no matter what the price is we know that that’s what the market is buying and no no preferential allotment and then we go on and on until we find it and if we if we need we think the rate is too high we put more into the auction and other people will now auction as well you encourage all the O companies and to auction it becomes a very transparent and open process and then we now monitor how the people that bought it how they how they deploy it I think it I I think the N will settle okay thank you all right Mr Ron we’ll continue the conversation right after this uh short break I still have with me Mr bisb Rani do stay with us we continue uh conversation about the FX Market that’s the moment to stay with us welcome back well let’s get back to the conversation I still have with me Mr bisb Rani CEO Financial director company thank you for uh staying on Sir so another headline we got yesterday we see uh the federal government is planning a $10 billion dper fund uh and that’s supposed to help Shore up the external uh reserves tell us what you think about this yeah it’s a good move uh but again you see the diaspora fund means that at what rate of interest are you going to what kind of yield are you going to offer this one for return on investment two for the safety and three do they believe that when come the come the maturity date you be able to cover up the dollars to me them and this Nigerian diaspora money they have what do you call it they have options they have options to put their money in any other fund so one you have to be competitive on the pricing two you have to appeal to the patriotism of Nigerians people don’t invest money based on patriotism invest money based on safety and the confidence they have in the system so we need to build up credibility over time but I think it’s a great move like they said the longest journey in world starts with the first step it’s a great move if you can mobilize 10 right maybe slightly more 10 12 billion it means that one you meet you can refinance a lot of the hot money that has come in two you can meet your refinance your maturing obligations and three it gives you enough money to actually invest in projects but again the whole idea of raising external reserves is not to defend currency it is to fund to ensure that the currency is well backed and that people can now use the resources to our investors are sure that when they want their money out they get it and when they want the money in they bring it in once that stability and confidence is established in the market you find that things begin to happen and you don’t look at it in isolation of the other fundamentals for example you know the price of Coco has lost 15% it was as high as 12 $1,000 is now down to 8,000 we knew that that price was not sustainable so we don’t we don’t make decisions based on speculative pricing the average price of Coco at the end of the year probably be about four if not $3,000 but what whatever you’re getting now you’re making some gains and now the price of LNG has increased and the price of oil is up there oil production has to increase so when you put all of this together the B of trade begins to look better but the payments and obligations in terms of dividends in terms of the things we have to pay out for Invisibles is also increasing and don’t forget one thing that we already committed forward some of the oil production into all sorts of transaction bank so the oil that has been committed is not available we’ve already we’ve already taken that money and spent it right so it means that our cash flow our Dollar Cash Flow is impeded by the fact that monies that we’ve spent we’ taken some money spent it already on consumption and then we need to raise to raise more money one to cover the whole of what we created and two to invest in productive activity to increase output and GDP growth all right Mr Ronnie well tomorrow we know it’s work is there and definitely everyone is expecting some announcement about a new um minimum wage but we’ve heard from labor that negotiations are not going too well and we might not get that you know number um tomorrow but I want to know what you’re expecting let me say that um I was the chairman of the minimum wage Committee in 2019 minimum wage is not uh something that is open to imagination it’s is something that involves a lot of work a lot of micro work and Analysis the impact of minimum wage on output unemployment on welfare on inflation is it is so so profound therefore I don’t think we should be stampeded workers there or no workers there I don’t think we should be stampeded into announcing the minimum wage which is not affordable and which cannot be sustained we had a few States I think Edo State Ando State have announced minimum wage of 70,000 is that a preemptive move I’m not sure but let me say I put it on the table that in 2019 30,000 was equivalent of $75 today $7 $75 will give you about 9,000 na so even to bring people back to where they were 2019 you got to be paying them $9,000 but can the private sector and the public sector afford 9,000 a month an unproductive work for that’s a big question we have to ask and if you increase it how are you going to fund it in 2019 we increased the V8 from 5 to 7 and half% and that helped to to actually uh moderate the inflationary impact of this can you at this point in time begin to increase taxes on the people because subsidy reduction is an increase in tax indirectly so there are many variables that have to be taken into consideration so I don’t think it’s something that we should Stampede into forcing uh getting leaders to go and make announcements precipitous announcements on May one may one is just a day that will come and go the most important things we must make decisions that are based on strong economic fundamentals based on what we can afford and make sure that there’s no increase in unemployment and the suffering of the people I think that is question we have to add and definitely we all still trying to deal with inflation at this time thank you so much it was great have your perspective uh Mr bismar Rani CEO Financial derivatives company thank you thank you very much l for having me all right we’ll take a break now when we come back head straight to the markets just stay with us all right let’s head straight to the markets now we’ve heard announcements by Major Nigerian Banks and they’re set to pay out a combined 379 billiona that’s in uh dividends to investors we see axis Banks looking at 63 uh billion uh we see Fidelity 19 billion gtq looking at 79 billion Stan big 28 billion and all of that coming up to 379 billion that’s what the shareholders um are going to get um right there and this is coming at a time uh where we’re seeing the recapitalization um exercise well joining us now is Mr MTAR Muhammad CEO Finance with M joining me via Zoom great to have you the show thank you always L fantastic so we’re seeing the banks um huge payouts there and this is a time where they need fresh cash you know to raise uh money for that recap process why do you think the banks are paying uh big dividends regardless well um you you know the um the banks have did good good profits over the year they they are not really um this dividend payout will not affect their recapitalization not to forget that the retail earnings of the bank which is the earning per share that some of the dividend are paid from are not part of the recapitalization process so those those retails those earnings are still there and so what will happen is that um a lot of this Bank going forward will still be able to pay because you’re looking some banks with an earing per of about 17 naira some with 22 naira and so they’re just paying a fraction it’s really a fraction some have paying less than um um less percentage of of the fraction of their ret earnings and when you look at those things sometime you just begin to wonder that at a point the the capital base of the bank was 25 billion and today we have a company like zened Bank paying 109 billion in terms of of dividend payout and 7829 63 billion from assets so it tells you how far the Nigerian Bank have gone thus far so I for me I’m excited about it and I um it’s an opportunity for other investors to begin to look at how to begin to get um cash because in an economy like this when your economy is going through a lot of microeconomic headways Cash become Kings yeah cash is King definitely but you know talking about that banking counter at this time we’re seeing the banking index is down a lot in 2024 used to be about over a th000 um index points we’re now seeing about 700 index points um talk to me about where you see the bottom you know for that banking counter where you see uh buying opportunity um I think there’s a lot of buying opportunity L now um bottom you won’t know until at the end of today we’ll know whether CBN is going to extend that um um procedure for them to submit their recapitalization plan and that has been what have affected the bank thus far because a lot of these banks are coming to the market most investors don’t know how much they are coming to the market are there at the premium at the moment or is it on high will it still go low I think those are the challenges that why you saw those numbers come down but when you look at result that have come from one of the bank um ibtc um St ibtc you also St a little bit optimistic that um when those numbers begin to roll out the banks will begin um will see the upside so I think buying opportunities are still there especially for stock like uba dividend pay still holding not yet paid register um I mean the register is not yet closed so a lot of investors are reinvesting most of their dividend from assets from um um from assets especially into UB and others so definitely there’s still a lot of opportunity in the banking sector and like I said again Fidelity is also there so good numbers One bank to watch out for going forward in the near future and you must take you mustn’t forget it t One banks always up the in terms of dividend PA capital appreciation um like I always say um if not because the CBN is saying they shouldn’t use their retain earning almost 90% of the bank would have would stay through the recapitalization so this Rec capitalization is injection of new funds so that they would do high ticketing deal especially when we are going to an economy that want to be a trillion dollar economy so it’s it’s good for the banks and again I keep saying that this exchange those uh this Rec capitalization is towards bringing in investors especially International investors with their effects into the market so that that also will contribute in the stabilization of the market the fs Market but again like I said it’s still a long way to go two years from now but I don’t think most Bank want to wait till two years before they recapitalize I hopefully I see some of these Bank doing it before the end of of their next financial year we might see those number coming in so still a lot of opportunity for investors the fear from most investors is the dilution of their shares when this place other initial public offer right issues injected back into the share Capital but I don’t think it’s any cause to to worry because Nigerian Bank are genius and they are still very profitable so going forward is still exciting time for the banking sector yeah I know for you know some markets that are on a downtrend it’s definitely hard you know to find that bottom you know definitely because at the same time you’re afraid of catching a falling uh uh knife but let’s talk about another issue quickly now we see about 15 firms have delisted from the ngx between 2021 and 2023 what do you make of these the listings well the listing Sometimes some of them the list and then go to the other side of the NGS and like mov W mov did that and others but again it’s not good for the market especially when you look at some of these companies that are deleting sometime they delet when it seems that everything is going to go better for them going forward and they just begin to delas um one of those names I’m hearing now that say soon be deled in mrss and remember Mrs just signed a contract with dang to be one the so LIF marketing arm of dang refinary in terms of sell of diesel so this is supposed to excite investors and see this this stock appreciate and investors begin to earn a lot of dividend from there but I think the NGS need to do a lot the security Anis commission need to do with what so that investors are not always sub charge when it comes and I like I like what they did in one of the the listing company where they said no what they are paying investors is not commissary to what investors have been doing thus far so I’m excited about it the DeMent I mean sorry I’m not excited about the DeMent is not good for us especially when it’s sector like the petroleum sector which we’ve been craving to be part of the capital market and one one of the player the listing is not good for us at all right well we’ll keep tracking that thank you so much always great having your H perspective MTAR Muhammad CEO Finance with M thank you thank you L for having me all right that’s it from me on uh business morning we’ll track more Market reactions later on business Incorporated that’s by 1 p.m. I’m ly Williams and hand things over now to the sunrise daily team [Music]

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