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The Nigerian Stock
Exchange said on Monday it expected all eligible non-performing loans
in the banking sector to have been bought by the Asset Management
Corporation of Nigeria (AMCON) in the first quarter. “Additional
purchases of non-performing loans are scheduled for the first quarter
of this year, while it is planned that by March 31 all qualified NPL
from all banks would have been purchased,” the bourse said in an annual
review.

The Exchange also said share purchases by foreign investors rose 48
percent last year to 381 billion naira and that wider trading hours
meant liquidity was continuing to improve adding that wider trading
hours introduced last month had led to a 15.6 percent increase in
traded volumes.

Algeria has
provisionally appointed law firm Shearman & Sterling LLP to advise
it on the nationalisation of Orascom Telecom’s local mobile phone unit,
the finance ministry said.

The firm is
scheduled to complete a valuation of the Djezzy unit (subject of a
long-running dispute between the Algerian government and Orascom
Telecom) within 100 days, the ministry said in a notice in the
government-run Horizons newspaper.

Djezzy has been
Orascom Telecom’s biggest single source of revenue and uncertainty over
its future has confused a planned $6.6 billion deal for Russia’s
Vimpelcom to acquire Orascom Telecom assets.

Chinese direct
investment in Zambia exceeded $1 billion in 2010 and created more than
15,000 jobs, Zambia’s vice president said on Monday.

China has invested
billions of dollars into African states such as Zambia, the continent’s
biggest copper producer, hoping to secure the resources it needs to
fuel its booming economy.

Vice President
George Kunda, who met visiting Chinese Vice Premier Hui Liang Yu, said
he expects Chinese direct investment to top $1 billion again in 2011.

The recent signing
of an agreement with China’s privately owned Zhougui Mining Group will
attract more than $5 billion into Zambia’s mining sector over the next
few years, Mr Kunda said.

Kenya’s central
bank will issue a five-year bond and re-open another 10-year paper for
a total 16 billion shillings this month, a fixed-income dealer said on
Monday.

The bonds will be
auctioned on January 26, said Fred Mueni, director at brokerage Tsavo
Securities after attending a central bank meeting with market players
to determine what bond would be offered for auction.

“They will be
re-opening the 10-year paper at a coupon of 9.307 percent, plus a new
five-year paper, totalling up to 16 billion shillings,” said Mr Mueni.

Initially issued in October 2010, the 10-year bond’s market-determined coupon was 9.307 percent.

The Nigerian Stock
Exchange said on Monday that share purchases by foreign investors rose
88 percent last year to 381 billion naira and that wider trading hours
meant liquidity was continuing to improve.

Africa’s third
biggest stock exchange said falling incomes attributed to rising
unemployment, weaker purchasing power due to inflation, and local
investor apathy had caused a decline in market participation by
Nigerians.

“Some of our
erstwhile foreign investors are returning, while new investors sought
opportunities considering the key attributes of higher returns,” the
stock exchange said at an annual briefing to journalists in Lagos.

The bourse said
wider trading hours introduced last month had led to a 15.6 percent
increase in traded volumes meaning liquidity was improving.

It expected trading
in exchange-traded funds (ETF) to start in 2011. The bourse said in
October it was in talks with South Africa’s Absa Capital about listing
such a fund.

Nigeria’s domestic
debt grew at the fastest pace in 11 years during 2010, with total
public debt of $32.5 billion as at September 2010, according to the
stock exchange.

It said credit to government grew over 50 percent last year while private sector credit grew only 3 percent.

The bourse expects
an increase in money supply this year to provide stability to the stock
market and inject liquidity into the banking system, reviving lending
to the economy.

“Inflationary risk
will remain a threat in the months ahead due to the implementation of
the 64 percent increased minimum wage in the public service, rising
government borrowing and the expected increased political spending up
to the 2011 general elections,” it said in an annual review.

The stock exchange
said it expected all eligible non-performing loans in the banking
sector to have been bought by the Asset Management Corporation of
Nigeria (AMCON), the country’s new “bad bank”, by March 31.

AMCON was established last year to soak up bad loans and get banks lending against after a $4 billion bailout in 2009.

The stock exchange
said it expected a flurry of new issues this year as some bailed out
lenders recapitalise and some manufacturing firms raise funds to beef
up their capital bases.

It also expects to
begin preparations for demutualisation in the first quarter, a process
which will turn the exchange into a listed company, making it more
competitive and giving it a larger incentive to bring in profitable new
products.

Over
70 stockbroking firms have been found to be operating below regulatory
minimum capital base, an inspection of 247 firms has revealed. The
inspection carried out between May 5 and December 23, 2009 by the
Compliance department of the Nigerian Stock Exchange (NSE) was made
public last Friday. It remains unclear whether the affected firms have
regularised their status. The minimum capital for stockbroking firms is
N70 million. Mohammed Momoh, general manager, Compliance and Risk
Management of the NSE who disclosed this at the meeting held on Friday
between chief executive officers of stockbroking firms and the NSE
management, said several firms failed to comply with the rules and
regulations especially on prompt rendition of financial accounts. “The
inspection also uncovered that several firms were illiquid. It was also
discovered that several firms engaged in illegal sale of their clients’
stocks,” Mr Momoh added. Mr Momoh also said that firms which engaged in
the padding of their shareholders’ funds would be penalised after
assets verification based on responses to assets reporting schedule to
be forwarded to stockbroking firms this week. He said firms that have
not separated their current accounts from clients’ account or who are
yet to appoint qualified accountants as chief finance officers or
compliance officers will be sanctioned.

Mixed custodianship

The
NSE also notified stockbrokers that from April 1, it will begin to
operate the mixed custodianship system to safeguard investors’ assets.
By this, clients’ accounts would no longer be accessed by the
stockbroking firm but will be held by a custodian which will be
separate. This is to prevent incidence of firms selling clients holding
without due authorisation. Director General of the Securities and
Exchange Commission (SEC), Arunma Oteh, who was at the meeting,
reiterated the necessity to safeguard investors’ assets in the market
in line with global best practices. Ms Oteh said 85 per cent of
complaints received from investors were on unauthorised sales, hence,
the need to take far reaching measures encapsulated in the adoption of
mixed custodianship approach currently operational in South Africa.
However, the Association of Stockbroking Houses of Nigeria (ASHON) says
that the matter of capitalisation should be considered in the light of
the current market downturn. Chairman of the association, Rasheed
Yussuff, said the issue of under capitalisation was more complex that
it is made out to be. Mr Yussuff said it will not be fair to assess the
capital profile of stockbroking firms at current market value as the
market downturn has affected the value of the asset upon which the
companies were formerly assessed. “It is not that the businesses have
collapsed but that the market has crashed which has affected the value
of the shares held by these companies. It is not an absolute figure.
Until you sell, you have not actually lost money. If tomorrow the
market starts to go up as it is doing now, the companies can value up
to the N70 million required.”

The council of the
Nigerian Stock Exchange (NSE) has approved the acquisition of a new
trading platform, Emmanuel Ikazoboh, interim administrator of the NSE,
has said. Mr Ikazoboh said this on Monday during a media briefing on
his appraisal of the nation’s capital market performance in 2010. He
said discussion with global vendors on the need to upgrade the
Exchange’s trading platform commenced early last year. “An ad-hoc
committee of management and council including operators engaged with
various vendors to ensure that a new platform, which would address all
concerns relating to equities, derivatives, bond trading and
dissemination of data, was put in place. The committee completed its
job last year and I must say that council has finally approved that we
acquire a new trading platform,” Mr Ikazoboh said.

He said management
and the negotiating committees have been put in place to start
negotiating with the chosen vendor as to the costing and ensuring that
the nation gets the right trading platform in its Exchange. Mr
Ikazoboh, however, did not disclose the amount made available for the
purchase of the new trading platform.

Meanwhile, he
maintained that the exiting market infrastructure remains capable of
meeting the current needs of inventors, issuers of securities and
market operators. The total market value of 264 securities listed on
the Exchange increased by 41.12 per cent from N7.03 trillion to stand
at N9.92 trillion by year-end 2010. The NSE said the rise in market
capitalsation resulted mainly from new listings of equities and state
government bonds coupled with price appreciation by equities. Market
capitalsation had in 2009 declined by 26.5 per cent.

Foreign portfolio investment

On the extension of
trading hours, the Exchange’s head said, “I’m pleased to announce that
as a result of our trading extension one month after, we have an
increase in the number of deals by five per cent, an increase in traded
volume by 15.6 per cent and increase in traded value by 34.8 per cent.
This justifies that we should continue with our extended trading hours.
It also shows that our foreign investors have actually started trading
and increase the volume of our operation.” Mr Ikazoboh said some of the
erstwhile foreign investors are returning while new investors sought
opportunities considering the key attributes of high returns,

liquidity and
safety of investments. NSE statistics showed that purchases by foreign
investors during 2010 were N381.34 billion, representing 48 per cent of
the aggregate turnover. This is an increase when compared with the
N202.483 billion recorded in 2009.

“We have also put
in place strict enforcement of Exchange’s rules and post listing
requirements. As a result, we have suspended 74 dealing members during
the year for failure to submit audited accounts for 2008, 2009 and
2010. A total of 42 companies are placed on technical suspension for
infraction of listing rules; however, 17 are no longer on suspension.
Also, 15 companies are placed on full suspension for violation of
listing rules and seven companies are recommended for delisting,” Mr
Ikazoboh said.

Meanwhile, Binos
Yaroe, General Manager of NSE’s Listing Department, said non release of
financial forecasts by listed companies at the Exchange attracts no
sanction compared with non release of quarterly and annual results
which attracts various penalties.

CSCS performance

Onyewuchi Asinobi, Managing Director of the Central Securities Clearing System (CSCS),

said the CSCS made a turnover of N3.88 billion in 2010 as against a
turnover of N3.2 billion in 2009. This represents 21.25 per cent
increase in revenue. Mr Asinobi said a total of 437 shareholders used
their shareholding in CSCS depository as collateral to obtain loan in
year 2010 as against 1,550 shareholders in 2009 representing a decrease
of 71.8 per cent. Meanwhile, he said Thomas Murray, an International
Central Securities Depository (CSD) and Capital Market Infrastructure
Risk Rating Organisation, appraised CSCS’ operational processes and
performance in the year 2010 and rated it A- 2011 outlook The fiscal
injections relating to AMCON’s purchase of non-performing loans of
deposit money banks is expected to produce a twin effect in 2011. Mr
Ikazoboh said the move should provide further stability to the stock
market and inject significant liquidity into the banking system. “Asset
valuation of listed companies would likely improve with the
commencement of the operations of AMCON. However, the huge fiscal
injections may fuel further inflationary pressure,” he said.