THIS WEEK: The equity market continues its bullish trend as the exchange rate depreciates further

This week, commercial banks in Nigeria raised lending interest rates by up to 200 basis points (2%). Nigerian banks have also taken another opportunity to reiterate CBN’s ban on cryptocurrency transactions to their customers.

The Nigerian stock market closed on a positive note during the week, with the all-stock index appreciating 0.55% from 52,908.24 basis points recorded the previous week to close at 53,201, 38 basis points on Friday, June 10, 2022.

Here is a compilation of notable events this week in Nigeria’s macro-economic space, markets, regulators as well as other global economies.

MACROECONOMICS

Exchange rate

• The official market exchange rate depreciated over the week, falling 0.36% to close at N421.25/$1 on Friday from N419.75/$1 recorded the previous week. A total of $503.78 million was traded in the Investors and Exporters window, which is significantly lower than the $1.34 billion traded the previous week.
• Similarly, on the black market, the naira closed at N608/$1 on Friday, June 10, 2022 compared to N606/$1 recorded the previous week. This represents a depreciation of 0.33% from the previous week.
• Additionally, the exchange rate in the peer-to-peer market closed at N605.35/$1, representing a depreciation of 0.14% from the N604.48/$1 recorded the previous week. .

External reserve

• Nigeria’s external reserve is beginning to trend upwards with the level of reserves gaining $39.9 million during the week under review to stand at $38.52 billion as of Thursday, June 9, 2022, against $38.48 billion recorded the previous week on Thursday.
• The level of Nigerian reserves had dropped significantly, due to the apex bank’s continued intervention in the official I&E window. However, the sustained rise in crude oil prices has led to an increase in the country’s foreign exchange reserves, which will be beneficial for the defense of the local currency.

Nigeria’s outstanding debt stands at 41.6 trillion naira in the first quarter of 2022

• Nigeria’s total outstanding debt rose to 41.6 trillion naira in the first quarter of 2022, representing an increase of 2.05 trillion naira from the 39.56 trillion naira recorded in December of the year. ‘last year. In dollar terms, Nigeria’s outstanding debt reached $100.1 billion.
• According to the Debt Management Office (DMO), Nigeria’s total public debt stock includes new domestic borrowing by the federal government, which was used to partially finance the 2022 fiscal deficit. Debt also includes $1.25 billion in Eurobonds issued in March 2022 and disbursements from multilateral and bilateral lenders.
• Likewise, the outstanding debt of the various state governments and the federal capital has also increased.

Nigeria’s debt-to-GDP ratio rises to 23.3% in March 2022

• Nigeria’s debt-to-GDP ratio fell to 23.27% in the first quarter of the year from 22.47% in December 2022. Although this is below the self-imposed limit of 40%, the rate is accelerating faster, due to increased borrowing and weak economic growth.
• This was indicated in the quarterly report on the public debt portfolio, published by the Debt Management Office (DMO).

World Bank warns of stagflation amid projected global growth to decline to 2.9% in 2022

• The World Bank has lowered its global growth projection and warned that the economy could enter a period of stagflation similar to that of the 1970s.
• Based on the bank’s latest report on the global economic outlook, global economic growth would slow to 2.9% this year from 5.7% in 2021, 1.2% below the 4.1% forecast in 2021. January.
• Economic growth is then expected to hover around that level from 2023 to 2024, while inflation remains above target in most economies, the report says, highlighting the risks of stagflation.

REGULATION

Weeks After New SEC Crypto Regulations, Banks Warn Investors Against Cryptocurrency Trading

• Reports reaching Nairametrics indicate that banks are still issuing warnings to their customers to avoid using their accounts for cryptocurrency transactions.
• This comes on the heels of the SEC’s recently published Cryptocurrency Rules, which essentially formalized cryptocurrency as an asset class in Nigeria.
• In an email seen by Nairametrics shared with bank customers, he warned against using their bank accounts for cryptocurrency transactions as the accounts will be closed if caught.

European Central Bank to raise interest rates and end bond purchases in July 2022

• As Europe faces stubbornly high inflation, the European Central Bank today said it would end its bond-buying program on July 1 and announced a series of rate hikes. interest from July.
• This was revealed at today’s monetary policy meeting, with the Governing Council also saying that at its July meeting it intended to raise policy rates by 25 basis points .
• The conflict between Russia and Ukraine continues to wreak havoc on European and global economies. It disrupts trade, causes shortages of raw materials and contributes to rising energy and raw material prices. These issues will continue to stifle growth and erode confidence, especially in the near term.

Nigerian banks raise interest rates on mortgage, personal and business loans by at least 2%

• Commercial banks in Nigeria have implemented interest rate hikes for loans increasing rates by up to 200 basis points (2%).
• The interest rate hike follows the recent increase in the central bank’s monetary policy rate (MPR) from 11.5% to 13%, an increase of one hundred and fifty basis points.
• The MPR is a benchmark rate used by the apex bank to lend money to commercial banks in Nigeria. Banks often add a premium to the MPR when setting interest rates for their borrowers.

Afreximbank backs Titan Trust Bank with $300m for acquisition of Union Bank

• Titan Trust Bank (TTB) has received a $300 million intra-African investment finance facility from Afreximbank to help it acquire a majority stake in Union Bank of Nigeria (UBN) plc.
• This was revealed in a statement signed by Amadou Sall, Afreximbank’s media contact, on Monday.
• The agreement, according to Sall, will improve the competitive dynamics of the Nigerian banking market while preserving confidence in the country’s financial services and overall financial stability.

SHARES

Market Summary

• The Nigerian stock market closed on a positive note during the week, with the all-stock index appreciating 0.55% from 52,908.24 basis points recorded the previous week to close at 53,201, 38 basis points on Friday, June 10, 2022.
• The market was supported by gains from Global Spectrum Energy Services, Conoil, Fidson Healthcare, University Press and Pharma-Deko Plc.
• A total turnover of 1.83 billion shares worth N19.49 billion in 21,723 transactions was traded this week by investors on the Stock Exchange floor, compared to a total of 28 .74 billion shares worth N209.06 billion which traded last week in 23,688 bids.

Jitters as Femi Otedola offloads 834 million shares of FBN Holdings

• One of Nigeria’s most respected bank holding companies, FBN Holdings, has announced that its largest single shareholder, Femi Otedola, has sold around 834 million shares of FBN Holdings in a deal valued at around $9. .28 billion naira only.
• The trades were flagged by FBN Holdings as part of its stock exchange insider trading notification, a filing requirement that must be disclosed whenever a significant shareholder sells shares. Nairametrics first announced back-to-back sales on Friday June 3 and Monday June 6, 2022, at 274 million and 600 million respectively.

CRYPTOCURRENCY

Why Binance is Under Investigation by the US SEC

• The United States Securities and Exchange Commission (SEC), according to a Bloomberg report, is investigating whether Binance Holdings, one of the largest cryptocurrency exchanges by trade volume and value, violated securities rules when it first launched its BNB token. coin offering (ICO) five years ago.
• Binance is the largest crypto exchange in the world, and its native blockchain token, the BNB Chain, BNB, is the fifth largest cryptocurrency in the world with a market capitalization of $45.4 billion at the time of writing. of this article.

Binance CEO Changpeng Zhao responds to Reuters money laundering allegations

• Reuters, an international news agency and one of the world’s largest news agencies, published an article on Monday alleging that the world’s largest exchange by volume has been a “hub for hackers, fraudsters and drug dealers,” stating that there is at least “$2.35 billion in illicit funds” laundered within the exchange.
• Binance addressed the allegations in a blog post stating that the allegations are not only false, but are also attempts by some interested parties to “mislead the general public” by spreading misinformation. Following this response, the CEO of Binance, popularly known as “CZ”, took to Twitter to share his thoughts.

PwC Says Hedge Fund Interest in Crypto Is Rising Despite Bearish Trend

• Traditional hedge funds are slowly embracing cryptocurrency investments, but are keeping their exposure limited as the market continues to mature and given the current downtrend, according to new research from one of the big four accounting firms, PricewaterhouseCoopers. popularly known as PwC.
• In its 4th Annual Global Crypto Hedge Fund 2022 Report, PwC said that around a third of traditional hedge funds surveyed are already investing in digital assets such as Bitcoin (BTC). So-called “multi-strategy” hedge funds were the most likely to invest, followed by macro strategy and equity strategy firms respectively.

Bloomberg Terminal Increases Crypto Coverage by Adding 40 Coins

• Financial and technical news platform, Bloomberg, has significantly expanded its coverage of cryptocurrency markets after deciding to include data on the top 50 crypto assets in the Bloomberg Terminal.
• Product Manager for Cryptocurrencies at Bloomberg, Alex Wenham, explained that as “the global institutional investor community’s interest in digital assets continues to grow, they will need a way to seamlessly integrate digital assets into their workflows.”

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