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The Nigerian Stock
Exchange recorded a total gain of N5 billion on equities at the close
of trading activities in December, after recording N74 billion losses
in the preceding month.

The market value of
the 217 listed equities, which opened the month at N7.908 trillion,
closed on the last trading day in December at N7.913 trillion,
reflecting a N5 billion marginal gains or a 0.06 per cent increase.

The Exchange’s
Strategy and Business Development Department said the marginal increase
in market capitalisation during the month could be attributed to the
“commencement of operations by the Asset Management Company of Nigeria
which boosted investors’ confidence, as reflected in positive equity
price movements.”

The Exchange said
the 217 listed equities accounted for 79.85 per cent of total market
capitalisation of the 264 listed securities which closed December at
N9.92 trillion; down by 0.94 per cent from N10.015 trillion in November.

Market turnover

The market recorded
a turnover of 6.63 billion shares valued at N56.7 billion in 111,114
deals during December, in contrast to a total of 7.43 billion shares
valued at N60.34 billion exchanged during November in 121,531 deals.
Trading days in December were 21, compared with 20 in November.

Aggregate stock
market turnover between January and December 2010 were 93.335 billion
shares valued at N797.551 billion, exchanged in 1,918,479 deals. In the
comparable period during 2009, the market recorded turnover of 95.3
billion shares valued at N638.11 billion in 1,619,385 deals.

Measuring by
turnover volume, the Banking subsector was the most active in December
with traded volume of 3.83 billion shares valued at N35 billion, while
the Insurance subsector was second with traded volume of 1.01 billion
shares valued at N658.55 million. The Information Communication
Technology subsector was third with transaction volume of 398.1 million
valued at N276.62 million.

A total of 173
equities out of the 217 listed were traded during the month compared
with 176 in November. Zenith Bank was the most active stock with
transaction volume of 981.1 million shares, followed by Guaranty Trust
Bank with 367.1 million shares, while First Bank placed third with 350
million shares.

Analysts at Renaissance Capital, an investment bank, said equity market outlook is compelling in 2011.

“Nigeria is just
beginning to fully recover from the financial crisis that started in
2008. Equities remain an attractive asset class to be in during the
recovery phase of the business cycle, and as such our outlook for
equity market performance in 2011 is robust,” they said.
Over-The-Counter (OTC) bond market, a turnover of 465.9 million units
worth N430.03 billion, was recorded in December 2010, in contrast to a
total of 730.82 million shares valued at N750.91 billion, exchanged
during the preceding month.

The most active
bond, in terms of volume, was the 5.50 per cent Federal Government of
Nigeria (FGN) Bond Feb 2013 with traded volume 81.2 million units
valued at N73.21 billion.

It was followed by
10 per cent FGN July 2030 with a traded volume of 73.85 million units
valued at N56.1 billion. Only 24 of the available 33 FGN Bonds were
traded during the month, compared with the 26 in the preceding month.

Standard &
Poor’s Ratings Services has assigned its ‘B+’ long-term senior
unsecured debt rating to the proposed $500 million 10-year bond to be
issued by Nigeria in the next few weeks.

At the same time,
S&P assigned a recovery rating of ‘4’ to the proposed bond,
indicating its expectation of average (30 per cent to 50 per cent)
recovery in the event of a payment default.

In an issued
statement yesterday, the global ratings agency said: “We rate bonds
with a ‘4’ recovery rating at the same level as the issuer credit
rating. The rating on Nigeria’s upcoming bond is, therefore, equalised
with the ‘B+’ long-term foreign currency sovereign credit rating.”

The agency stated that it applied a hypothetical event of default as a starting point.

“If the government
were to default, we believe it would likely follow a prolonged period
of adverse terms of trade that deepened the country’s regional
tensions.”

The agency noted
that Nigeria’s debt profile would look very different under such a
scenario, and a period of uncertain governability could ensue.

“In this scenario,
we assume that Nigeria’s multilateral creditors would maintain their
preferred creditor status and bilateral creditors would resist a debt
reduction,” since, according to the agency, Nigeria has already
benefited from a 60 per cent reduction of $30 billion of Paris Club
debt in 2000 and 2005.

While downplaying
the possibility of such a scenario, as indicated by the ‘B+’ rating,
S&P noted that its sovereign credit ratings on Nigeria are
constrained by its view of the country’s political risk, as manifested
in its underdeveloped political institutions and apparently weak
governance.

“The ratings are
also constrained by a low level of development and high dependence on
the oil sector. Furthermore, we see residual risks in Nigeria’s
financial sector, although the Central Bank has addressed solvency and
liquidity problems in the banking sector,” it said.

The ratings on Nigeria are supported by the sovereign’s strong
external and fiscal balance sheet, owing to debt write-offs in 2005 and
2006 and fiscal reserves built up during years of high oil prices.

The naira has shed
114 kobo, or 0.76 per cent at the official market as the Central Bank
of Nigeria (CBN) struggles to meet increasing foreign exchange demand.
The naira opened the New Year at N149.17 to the dollar and closed
Monday at N150.31 at the official market. At the interbank, the dollar
traded for around N155 and N57 at the parallel market.

Out of a total of
$1.67 billion that was demanded in the four auctions held this year,
the CBN sold $1.15 billion, representing 69 per cent of demand. This is
coming as the regulator’s resolve that it would continue to defend the
naira by striving to meet all legitimate demand at the bi-weekly
Wholesale Dutch Auction System (WDAS) foreign exchange market.

The CBN governor,
Lamido Sanusi, confirmed recently that it will maintain its foreign
exchange objective in achieving stability. “We remain committed to
stability in the forex market. We are pleased that we had stability
last year,” Mr Sanusi said in a response to enquiry on how the CBN
intends to pursue its foreign exchange objective in 2011.

Cost of stability

However, this
stability was at the cost of depleting foreign reserves, which went
down from $42.39 billion at the beginning of 2010 to $32.35 billion at
the close of the year, though, the reserves has been trending upwards
in the last few weeks, closing last Friday at $33.53.

A currency dealer
on Broad Street, Lagos, Suleiman Ghali, hinged the depreciation of the
naira on Central Bank’s failure to substantially meet demand. “Dollar
is scarce and even allocating only $50,000 to bureau de change does not
help matters,” Mr Ghali said.

CBN recently added
the Chinese Yuan, to the list of foreign currencies that can be used
for trade settlement in the domestic foreign exchange market. This was
in a bid to reduce the pressure on the dollar since a substantial part
of Nigeria’s international trade settlement is for imports from China.

The directive has,
however, not become operational. “It is not yet implemented. Let us
wait and see how it will affect demand for dollars. You know the system
of government, sometimes, it is not what they say but what they do” Mr
Ghali said.

Increased supply

Analysts at
Afrinvest West Africa, a financial services and advisory firm, said
CBN’s pursuit of maintaining stability may result in more intervention
in the weeks ahead. “Given CBN‘s commitment to managing the exchange
rate at the $1.00 / N150.00 – N151.00 band, we expect increased supply
of the dollar to meet demand at the official market,” according to the
firm’s weekly report.

“Nigeria’s growing
and substantial trade relation with China (especially imports) is
expected to spur demand for the Yuan in the medium to long term. We
expect forex exposure to fluctuations in the US Dollar to be
significantly reduced as banks begin to issue Yuan accounts to their
customers,” the report stated.

Angola’s
much-delayed stock market will not open this year as many of the
country’s companies do not meet the requirements needed to participate
on a bourse, the government said.

The announcement
from state news agency, Angop, monitored by Reuters in Portugal, is the
latest set-back for investors looking to tap into one of Africa’s
fastest-growing but most impenetrable economies.

A Luanda bourse has been in the pipeline for more than eight years.

“It is clear that
the commercial, business and legal situation does not allow us to say
that in 2011 we can have a stock market already,” Angop quoted minister
of state, Carlos Feijo, as saying.

The Consumers Protection Council (CPC) received 2,860 complaints from consumers between January and October 2010.

Statistics made
available on Tuesday showed that the figure represents an increase of
24.35 per cent in the number of complaints received in the previous
year. The council received 2,300 complaints from consumers in 2009.

Ify Umenyi, the
director general of the council, explained that the complaints were the
products of public awareness campaigns organised by the agency.

“Ninety per cent of
the complaints were resolved amicably, while the outstanding 10 per
cent are being sorted out through negotiations, mediation and
conciliation,” Mrs. Umenyi said.

The National Bureau
of Statistics says inflation rate stood at 11.8 per cent in December.
It said in a statement on Tuesday in Abuja that the figure was lower
than the 12.8 per cent recorded in November.

According to the
statement, the Composite Consumer Price Index went up by 1.29 per cent
to 114.2 points, compared with 112.8 observed in November.

The statement
attributed the increase in the index mainly to the increase in the
prices of some food items such as meat, fish, oil and fat, vegetables
and fruits.

Uganda’s 2010 sugar
production rose slightly on a year earlier but fell short of forecasts,
hit by technical problems at the leading producer and poor rains, an
industry association said on Tuesday.

Richard Orr,
chairman of the Uganda Sugar Cane Technologists Association (USCTA),
said East Africa’s third-largest economy produced 292,051 tonnes of raw
sugar last year, 8.2 per cent below the projected 318,000 tonnes
forecast.

“The 4.3 per cent fall in production here was to do with adverse
weather conditions for part of the year and also a technical problem we
had with a new mill drive that was not installed correctly,” Mr. Orr,
who is also KSW’s general manager, said.

Nigeria’s Foreign
Direct Investment (FDI) inflows fell from six billion dollars in 2009
to 2.3 billion dollars in 2010, a new United Nation report says.

The fall represents
a 60.4 per cent decline. The latest UN Conference on Trade and
Development (UNCTAD) Global Investment Trends Monitor (GITD) was
released on Monday at the UN office in Geneva. The report notes that
inflows into Africa, which peaked in 2008, is on the decline, despite
an increase in developing and transition economies, which rose by 10
per cent in 2010.

“Estimates show
that FDI inflows in the continent fell by 14 per cent to 50 billion
dollars in 2010, although there are significant regional variations,”
the report stated.

China’s Sichuan
Hongda Co. Ltd. will invest $3 billion in a coal-fired power plant and
two iron ore mines in Tanzania, the state-run National Development
Corporation (NDC) said on Tuesday.

Sichuan Hongda is
in advanced talks with senior Tanzanian government officials to sign a
contract for the projects after it beat bids from more than 20
international companies including Rio Tinto and BHP Billiton.

“The Chinese firm was picked from a long list of bidders as the
preferred investor after winning an international bidding process. We
are now negotiating final details before a contract can be signed,”
said NDC’s board chairman, Chrisant Mzindakaya.

Nigeria began a
series of investor roadshows for the planned multi-billion dollar
privatisation of its power sector on Tuesday, soliciting interest in
electricity distribution companies and power stations.

The Bureau of
Public Enterprises (BPE), the country’s privatisation agency, met with
investors in the commercial hub Lagos and will hold similar events in
Dubai, London, New York and Johannesburg over the next three weeks.

Africa’s most
populous nation, plagued by blackouts, wants to privatise power
generation and distribution. Government will continue to own the
national grid but its management will be privatised.

The investor
meetings come ahead of a February 18 deadline for expressions of
interest in 11 distribution companies, two thermal generating firms and
two hydropower stations.

They also come
ahead of presidential and parliamentary elections in April. Some
investors have said they are reluctant to commit themselves until the
political uncertainty has cleared.

“The idea of this
is that it enables investors to gain some confidence. Even if we don’t
complete it before the handover of government, no harm is done,” BPE
Director General Bolanle Onagoruwa said.

“From the response
you have seen here, power is something that has attracted the interest
of most people in Nigeria. I don’t think any administration will come
in and not take the issue of reforms in the power sector seriously.”

Election

Goodluck Jonathan
unveiled the privatisation plans last August. Nigeria estimates it will
need $10 billion a year of investment over the next decade to meet its
energy needs.

Power blackouts are
a major brake on growth in sub-Saharan Africa’s second-biggest economy
and Mr Jonathan has made ending them one of the cornerstones of his
election campaign.

Some executives
said while the elections may be delaying things on the Nigerian side,
with minds focused on campaigning, they had little impact on long-term
investment decisions.

“The election is
not holding us up … We will evaluate every opportunity and if it
makes sense we will invest,” said one Asian executive, asking not to be
named.

He said his company
felt “more comfortable” since Mr Jonathan’s victory in the ruling
party’s primary last week, which increased his chances of victory in
April.

Investors have praised the blueprint for reform but say its implementation, and regulation of the sector, will be key.

The 11 distribution
companies up for grabs are in the capital Abuja in central Nigeria, the
cities of Benin, Enugu, Eko, Ibadan, Ikeja, and Port Harcourt in the
south and those of Jos, Kaduna, Kano, and Yola in the north.

The thermal power
stations are Ughelli Power Plc, in Delta State in the southern Niger
Delta oil region, and Geregu Power Plc in Kogi State in north-central
Nigeria.

The hydro power
companies, for which concessionaires are sought, are Kainji Power Plc
— comprising power stations in Niger and Kwara States in north-central
Nigeria — and Shiroro Power Plc, also in Niger State.