The Market Punishes

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.

The world is not fair. It has never been fair. It will never be fair. The whole construct and the dynamics of life is not fair.

So, how do nations succeed? They play, bending the rules to favour them. President Buhari, for 8 disastrous years did not understand that folly economic policies have consequences. In the space of just under three months, the international market arrangements are punishing Nigeria. First, it was JP Morgan that exposed that our net foreign reserves were weaker than thought. Then Fitch released statement on the same matter. At the end of last week, it was the turn of FTSE Russell to downgrade Nigeria’s stock market to unclassified on trapped funds in the country.

I hope we learn.

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Markets

• The benchmark NGX All-Share Index (ASI) declined 847.16 (-1.24%) points to close at 67,296.18, representing a week loss of 1.44%, 4-week gain of 3.2%, and an overall year-to-date gain of 31.31%. Learn Africa share price depreciated by 15.64% at NGN 3.29 per share, followed by National Salt Company (-10%), E-Tranzact International (-10%) and Secure Electronic Technology (-10%).

• Oil price – Brent crude settled down 5% to US $90.59 a barrel while U.S. West Texas Intermediate crude settled down 22 cents to US $87.29.

• Naira depreciated by 7.08% at the I&E exchange, closing at N773.50 to the US dollar. On the streets, Naira largley flat, doing N920.00 to the US dollar.

• U.S. natural gas futures held near a one-week high on Monday on a big daily drop in U.S. output and much higher global gas prices. Front-month gas futures for October delivery on the New York Mercantile Exchange rose 0.9 cents, or 0.12%, to US $2.62 per million British thermal units (mmBtu), putting the contract on track for its highest close since Sept. 1 for a second day in a row

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National Headlines

• UAE lifts visa ban on Nigerians – The nearly a year-old visa ban on Nigerians by the UAE is said to have been lifted after President Bola Ahmed Tinubu visited his UAE counterpart on his way back from the G20 meeting in New Dehli, India. The widely shared reports also suggests that the meeting resolved that Emirate Etihad airlines will resume their international flight operations from Nigeria.

• UK extends visa centre to Enugu – After Abuja, Lagos, and Portharcourt, Enugu has become the latest city to have a processing centre for Nigerians that wants to travel to the UK. The arrangement is a temporary one for three months to determine the uptake in demand. Only premium service for the three months.

• The market punishes – If it was never clear to President Buhari, I hope it is now – the market punishes countries for bad behaviour. First, it was JP Morgan that detailed and exposed Nigeria’s net external reserves as weaker than it was initially thought. That sent speculation to the roof and dramatic depreciation of the Naira followed. Then last week, Fitch, though yet to revise its ‘B-‘ Nigeria’s ratings with a stable outlook, expressed the same sentiment. Then few days ago, FTSE Russell, a leading global provider of benchmarks, analytics, and data solutions, and part of the London Stock Exchange Group (LSEG) downgraded Nigeria’s stock market from frontier to unclassified. That led to one day decline in of over 1%, sending banking stocks down.

This Week

• On Thursday, 14^th September 2023, The Nigeria Bureau of Statistics is expected to release the Q2’2023 Nigeria public Debt and the railway data for the same quarter

• On Friday, 15^th September 2023, the NBS will release the inflation report for the month of August.

• On Tuesday, 12^th September, the United Kingdom will release it unemployment rate for the month of August. The unemployment rate in the UK increased to 4.2% in the three months to June 2023, the highest since late-2021 and above market forecasts of 4% and 4% in the previous period

• Also, On Wednesday, 13th September, the United State will release its inflation rate for the month of August. The unemployment rate in the UK increased to 4.2% in the three months to June 2023, the highest since late-2021 and above market forecasts of 4% and 4% in the previous period. The Consumer Price Index in the United States increased by 3.2 percent year-on-year to 305.691 points in July 2023, which was an acceleration from the 3.0 percent growth recorded in the previous month.