ThinkBusiness Today - July 28th

E kaaro o, Ututu Oma, Barka da Safiya - Good morning, and a warm welcome to ThinkBusiness Nigeria, your Monday – Friday dose of commentary, contexts, and insights on business and economic news that matter to you.

TGIF.

The weekend is a long time to ponder on the list of Ministers submitted by the President. The list is largely predictable – a combination of long-term associates, party loyalists and those that helped with the 2023 elections, and a few technocrats.

When they are confirmed next week, we will have further conversations.

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Markets

• NGX ASI (Nigerian Exchange All-Share Index) down 0.31% on Thursday, shedding 204.25 points to close at 65,482.91, representing a 1-week gain of 2.43%, a 4-week gain of 8.94%, and an overall year-to-date gain of 27.77%. Japaul Gold and Ventures declined 9.91%, followed by Cadbury Nigeria (-9.8%), FTN Cocoa Processors (-9.4%) and Neimeth International Pharma (-9.34%).

Corporate results –

- Airtel Africa Plc on Thursday reported in its Q2 report that it lost US $151m due to the harmonisation of the foreign exchange rates in Nigeria.

- FBN Holdings Plc, one of Nigeria’s largest banks released its Q2 2023 results showing pre-tax profits rose five folds to N150.1 billion (N29.2 billion Q2 2022), raising H1 2023 profits by 213% to N206.2 billion compared to N65.7 billion same period last year.

- Unilever Nigeria Plc Q2 2023 unaudited results shows pre-tax profits fell 72.95% to N169.9 million. The company reported an operating loss of N3.2 billion in the quarter under review as costs escalated beyond revenues.

- Ecobank Group Q2 2023 results shows a 63% increase in pre-tax profits to N92.52 billion. The increase in second-quarter profits helped its half-year profit before tax to rise by 38% to N150.31 billion compared to N108.96 billion same period last year.

• Oil prices rebounded Thursday after dipping on Wednesday. Brent crude traded above US $84 per barrel and West Texas Intermediate was changing hands at close to US $80 per barrel.

• Naira was down both at the I & E window and street markets. At the I & E window, Naira depreciated by 3.79%, closing at N768.60 against the US dollar while slid slighty by 0.12%, down to N855 against the US dollar on the streets.

• Natural gas futures fell about 3% to a one-week low on forecasts for less demand and less hot weather over the next two weeks.

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National Headlines

• Federal Ministers list – Yesterday, the Senate finally received the ministerial nominee list of the President. It contains 28 nominees, five women. This list is not done yet, but it is not clear yet when additional names will be submitted to the Senate. The list is a combination of groups of people expected to be made Ministers by the President – long term friends and associates, those that helped him win the 2023 elections, and few identified ‘technocrats.

Global Headlines

• Africans in Russia – While about 17 heads of States met the Russian president Vladimir Putin for the Russia – Africa Summit, it is suggested that the coup in Niger two days ago was instigated by Russia. It is not clear what the outcomes of the St Petersburg meeting will mean for Africa, especially since all the promises of the 2019 meeting were never met, though Covid – 19 soon followed. This meeting is at the back of the stoppage of the United Nations grain deal by Russia that allows Ukraine to export its grains.

• US Q2 2023 growth rate at 2.4% - The US economy grew faster than expected in Q2 2023 at 2.4%, following a revised 2% in Q1 2023. The growth is underlined by a strong labour market. June inflation came at 3%. If the inflation declines further in July amidst a continuous strong labour market, it will provide the Fed mixed signals at its next meeting in September.

• ECB raised rates again, now 3.75% - The European Central Bank raised interest rates for the ninth consecutive time on Thursday to 3.75% but signals a pause in September as inflation pressures show tentative signs of easing and recession worries mount. The 3.75% is the highest level since 2000, before euro notes and coins were even in circulation. The European monetary authority has now lifted borrowing costs by a combined 425 basis points since last July. Meanwhile, Turkey expects its inflation to reach 58% by year end, more than double the 22.3% estimated few months ago. Interest rate is now 17.5% in the country.

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