CBN, Oil Prices, Stock Market: Insights and Headlines

CBN, Oil Prices, Stock Market: Insights and Headlines

Resumption of Economic Activities: life of humans or life of the economy

“I have approved for a phased and gradual easing of lockdown measures in FCT, Lagos and Ogun States effective from Monday, 4th May, 2020 at 9 am” President Muhammadu Buhari

“We need to restart our economy, we need to restart our society.” Australian Prime Minister, Scott Morrison

It’s the same echo in Europe and Asia, Germany will continue easing today, while Slovenia, Poland and Hungary will allow public spaces and businesses to partially reopen. Iranian President Hassan Rouhani announced mosques would reopen and South Korea has also allowed public gatherings.

At TrustBanc, we are super excited to see that humans are gradually resuming their normal Pre-Covid activities as they continue to battle the virus head-on.

The virus has infected over 3.4 million people globally and killed over 247,100. A lot of the countries easing lockdown guidelines have seen the worst of the virus, unlike Nigeria, we are still very far from touching the peak of the pandemic. Number of infections is now 2,558, over 130% growth in the last 10 days and over 1,000% growth in the last one month with 85 deaths already recorded.

In the absence of a cure or vaccine, Governments are faced with a tricky decision – the life of humans and/or the life of the economy?

Stay safe, don’t go for the economy to live.

 

Oil Prices: stability or growth

As humans resume economic activities, businesses, offices and factories will reopen, we expect demand for oil to power these activities to increase. In addition, the price war between Russia and Saudi Arabia has ended and the production cut has taken effect since 1st May. All these point to increase in oil prices, it’s time to celebrate. Sadly, we cannot celebrate yet as more than 4.6 billion people are still on some form of lockdown or obligation to stay confined.

One thing is certain though, oil prices will not go negative again and we are optimistic of some stability in the coming days.

Already, we have started seeing positive movement in prices. In the last four days, Brent has gained over 3% while Nigeria’s Bonny Light has done over 13%.

CBN is Back… let the dollar flow

It’s no more news that the CBN supplied Nil FX to the I & E window in the whole of April. In March, the Investors & Exporters (I&E) FX window received about 78% of its supplies from the CBN.

Faced with depleting reserves and crashing oil prices, the lockdown order imposed by the FG in March through April provided the perfect opportunity for the CBN to dodge the dollar demands of Foreign Portfolio Investors (FPIs).

Now that the lockdown has been eased, now that we have received $3.4 billion from the IMF, we expect dollars to exchange hands between FPIs and the CBN in the coming days and weeks. The current queue for dollars in the I & E FX window is currently valued at about $1.5 billion.

Stock Market: local Investors or FPIs

By the time dollars starts to exchange hands between the CBN and FPIs, we expect heavy sale activities from FPIs. Heavy sales bring Bears to the equities market, that can only mean a decline in the value of ASI and loss to Investors.

For most of April, local investors dominated the equities market. Heavy bargain hunting by the Bulls pushed the ASI up by 7.92%, unlike in March when FPIs sold heavily and ASI lost -18.75% of its value.

The muted sale activities by FPIs in April was due to their inability to repatriate FX proceeds from their naira equity sales, if CBN resumes heavy activities in the I & E Fx Window, sales pressure on the equities market will resume. Can local investors fill the gap that will be created by FPIs? How far the ASI will go down will be determined by how much gap local investors can fill.

This is the week to watch the Market with four eyes.

Currently, the market is down by -0.29%.

Click on the link https://bit.ly/2XrvIf9 to open a stockbroking/share purchase account and trade within 24 hours

Headlines:

Nigeria Records 170 New Cases, Total Infections Now 2,558
Nigeria has recorded 170 new cases of the novel coronavirus, bringing the country’s total infections to 2,558. According to a tweet by the Nigeria Centre for Disease Control (NCDC) on Sunday, of the new infections, 39 are in Lagos, 29 from Kano, 24 in Ogun and 18 from Bauchi. The FCT and Sokoto had 12 each, while Katsina has 8 cases and 7 cases were recorded in Borno. Read more
Global coronavirus cases surpass 3.5 million amid underreporting fears
Global coronavirus cases surpassed 3.5 million on Monday and deaths neared a quarter of a million, according to a Reuters tally, concerning experts who fear substantial underreporting even as the rate of fatalities and new cases slows. North America and European countries, where growth rates are easing, still accounted for most of the new infections reported in recent days. But case numbers were rising from smaller bases in Latin America, Africa and Russia, and experts expressed concern that the overall data falls well short of the true impact of the pandemic. Globally, there were 74,779 new cases over the past 24 hours, according to the Reuters tally that is based on official government data, taking total cases to around 3.52 million. Read more
CBN, Bankers’ Committee Suspend Lay-Offs in Banks
The Central Bank of Nigeria (CBN) and the bankers’ committee have agreed to suspend lay-offs in banks across the federation. This agreement was reached at a special meeting of the Bankers’ Committee which was convened on May 2, 2020, to further review the implications of the COVID-19 pandemic on the Nigerian banking industry. At the special meeting, the Committee particularly deliberated on the issue of the operating costs of banks in view of the disruptions emanating from the global economic difficulties. Read more
Anxiety, as lockdown eases in Lagos, Ogun, FCT
The Nigerian Medical Association, NMA, Joint Health Sector Unions, JOHESU, and Nigerian Union of Allied Health Professionals, NUAHP, have again warned the Federal Government against easing the lock-down on the Federal Capital Territory, FCT, Lagos and Ogun states in the wake of coronavirus. Easing of the lock-down begins today. This is even as members of the Peoples Democratic Party Caucus in the House of Representatives yesterday, asked President Muhammadu Buhari to immediately rescind the decision to ease the lockdown, sayibng relaxing it would increase spread of the disease. Read more
Presidential Task Force Links Kano Deaths to COVID-19
Ejiofor Alike, Segun James, Chinedu Eze in Lagos, Olawale Ajimotokan in Abuja and Ibrahim Shuaibu in Kano.The Head of the Presidential Task Force on COVID-19 sent to investigate the high incidence of deaths in Kano State, Dr. Nasiru Gwarzo, yesterday linked the deaths to COVID-19, saying the results of 80 per cent of the tests conducted were positive for the disease. His report came on the day the Nigeria Centre for Disease Control (NCDC) said the tally for confirmed cases of the virus had climbed to 2,558 with 400 discharged and 87 dead. Read more
COVID-19: Shell cuts dividend for first time since WWII
Royal Dutch Shell on Thursday cut its dividend for the first time since the 1940s after a first-quarter loss – and warned virus-ravaged oil prices will take time to fully recover. The Anglo-Dutch group sank into a $24 million ($29.5 million) net loss in the three months to March – when oil went into freefall on tumbling demand and a price war between producers Saudi Arabia and Russia. That contrasted sharply with profit after tax of $6.0 billion in the same period a year earlier, the London-listed giant added in a statement. Read more
3,256 listed as CBN begins N50bn COVID-19 fund disbursement
NIRSAL Microfinance Bank has commenced the disbursement of the Central Bank of Nigeria N50bn Targeted Credit Facility. The Managing Director, NIRSAL MFB, Mr Abubakar Kure, inaugurated the disbursement of the fund on Thursday in Abuja. Read more
Cut interest rates to boost economy, says Tinubu
he National Leader of the All Progressives Congress, Asiwaju Bola Tinubu, has said the Central Bank of Nigeria should seize the opportunity of the coronavirus crisis to lower interest rates in a bid to boost the nation’s economy. Tinubu also urged the Federal Government to demand a renegotiation of existing loans or debt relief from the World Bank and other development finance institutions. Read more
FG retains N125/litre petrol price despite crude oil crash
The Federal Government has failed to review the N123.5 to N125/litre pump price of petrol for the month of May 2020 despite continued crash of crude oil price. The Petroleum Products Pricing Regulatory Agency had stated that the cost of petrol would be reviewed monthly in accordance with the fluctuation of crude oil price in the international market. Read more
Stocks fall as U.S./China tensions threaten rebound
European stock markets and oil prices fell on Monday as a spat between top U.S. officials and China over the origin of the coronavirus fuelled fears of a new trade war, derailing a rebound in global markets. European shares opened down 2.5% with U.S. stock futures trading close to 1% in the red. Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.5%, pulled down by Hong Kong where the Hang Seng returned from a two-session holiday with its biggest drop in six weeks. Read more
European stocks drop, kick off May on dour note
European stocks tumbled on Monday as investors returned from a May Day break to a fresh spat between the United States and China over the coronavirus crisis that triggered losses in cyclical sectors. The pan-European STOXX 600 fell 2.5% in a downbeat start to May after the index recorded a 6% gain in April. Oil & gas. SXEP, automakers. SXAP, banking. SX7P and technology indexes. SX8P were the biggest drags on the index, falling between 3.6% and 5%. Read more
Oil prices fall on demand concerns, U.S.-China trade tension
Oil prices fell on Monday, paring last week’s gains, on worries a global oil glut may persist amid slumping demand and U.S.-China trade tensions that could restrict an economic recovery even as coronavirus pandemic lockdowns start to ease. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell as low as $18.10 a barrel earlier in the session and were down $1.01, or 5.1%, at $18.77 at 0658 GMT. The benchmark contract rose 17% last week. Brent crude LCOc1 futures were down 10 cents, or 0.4%, at $26.34, after touching a low of $25.50. Brent rose about 23% last week following three consecutive weeks of losses. “As optimism fades around global growth prospects, oil is giving up (last week’s) gains, aided by a strengthening U.S. dollar,” said Michael McCarthy, chief market strategist at CMC Markets. Read more
China, Russia take advantage of virus emergency, U.S defense secretary says
Russia and China are taking advantage of the coronavirus emergency to put their interests forward in Europe, U.S. Defense Secretary Mark Esper said on Monday, describing Chinese efforts to promote Huawei mobile phone network equipment as malign. “(The United States) is aware that some (countries) will try to use the pandemic as a way to invest in critical industry and infrastructure, with effect on security in the long term,” Esper told newspaper La Stampa, when asked whether China and Russia were trying to gain influence in Italy by sending aid. Read more
Italy eases long lockdown, but fears resurgence of coronavirus
Italy started on Monday to unwind Europe’s longest coronavirus lockdown, letting some 4.5 million people return to work after nearly two months at home and finally allowing families to reunite. A continuous hum of cars, buses and motorbikes pointed to an increase in early morning commuting, but traffic was still noticeably lighter than before the virus struck in February. The government has ordered only a gradual revival, giving factories the green light to restart their dormant production lines. It has also said parks can reopen, giving children the chance to run around, while relatives can once again meet up. Read more
UK starts state-backed loans for smallest firms
A government-backed loan scheme to help Britain’s small businesses survive the coronavirus lockdown comes into effect on Monday, allowing firms such as hairdressing salons, coffee shops and florists to receive emergency cash. Finance minister Rishi Sunak, who previously opposed 100% state backing for commercial loans, announced the new facility on April 27, bowing to pressure to do more for the smallest companies after a previous scheme got off to a slow start. The new “Bounce Back Loans” allow businesses including sole traders to borrow between 2,000 and 50,000 pounds ($2,500-$62,500) for up to six years. The first year is interest-free for firms, after which they pay an interest rate of 2.5%. Read more
Trump says up to 100,000 Americans may die from coronavirus
U.S. President Donald Trump said on Sunday he now believes as many as 100,000 Americans could die in the coronavirus pandemic, after the death toll passed his earlier estimates, but said he was confident a vaccine would be developed by the year’s end. Trump alternated during a two-hour virtual town hall broadcast by FOX News between forecasting a rapid recovery for the U.S. economy and casting blame for the pandemic’s spread on China, where the disease is believed to have originated. Read more

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