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Since the sack of
Ndi Okereke-Onyuike as the Director General of the Nigerian Stock
Exchange (NSE) by the Securities and Exchange Commission (SEC), the
search of the new head seems been fruitless, even after set deadlines.

After the initial
October 12th deadline for the post, Accenture Nigeria, the firm
conducting SEC’s recruitment exercise, continued to place advert for
the offices of the NSE chief executive officer and three executive
directors. “The NSE is transforming to increase the depth of Nigeria’s
capital market and improve access to liquidity for listed
organisations. To provide leadership for its transformation program,
the NSE is seeking to recruit qualified and experienced executives to
be its future,” a paid advertorial published on October 13th in some
national dailies, said. However, the same advert categorically stated
that “the closing date for applications is 12th October, 2010.
Applications will not be received after 5:00 pm Nigerian time (GMT +1)
on this date.”

Nobody is certain

In the meantime,
while the NSE’s spokesperson, Sola Oni, said he was not aware of any
extension of the recruitment, Accenture could not confirm if the
deadline was extended. The head of Corporate Communication Department
at Accenture, who refused to give his name, said, “It (the advert)
could probably be a mistake. The date remains closed. But I don’t know
the cause of the last advert and I can’t be on record over something I
have no power on.”

Meanwhile, Mr Oni
said, “I don’t know what actually happened whether the last publication
was a mistake on the people handling the recruitment exercise. In fact
I cannot explain what happened since the Exchange is not the one
placing those adverts. Accenture is the firm handling the recruitment.
But if there is anything I can find out I’ll let you know. I still want
to believe it was a mix-up. The deadline remains October 12th. There is
no further extension. People should ignore the last adverts since it’s
likely to be a mistake. Even the published advert still maintained the
correct date of closure for applications to show that it expires on
October 12th at 5:00 pm.”

Wasting money

Lanre Oloyi, the
spokesperson for SEC, said the commission is not in the best position
to talk on the matter. “Talk to the NSE,” he said. “They should tell
you if it was a mistake or there is an extension.” However, the last
time the deadline was extended, SEC gave the approval. A finance
analyst at Resource Cap, a portfolio management firm, who did not wish
to be named, said the last publication should be categorised “wastage
funds since the advert according to the advertiser is not intended to
woo applicants again.” “Definitely, millions of naira would have been
spent on those unnecessary ads. Accenture too must be accountable for
all the expenses carried out during the recruitment. You cannot say
because money has been billed for a project, then it must be spent
unjustifiably,” he said.

The SEC had accused
the previous management of the NSE of slowing down the succession plan.
It recently said in a statement that “the commission had previously
asked the NSE to develop and implement a credible and transparent
succession plan and while the NSE had made significant progress, it had
unfortunately not completed the process by the deadline of 31st of July
approved by the commission despite an extension of the deadline.”

Hundreds apply

The commission said
it is certain that the succession process “can be concluded quickly,”
adding that the SEC has contracted Accenture to facilitate the
selection exercise. “Accenture has confirmed that 944 candidates
applied for the four positions, including that of the CEO of the
Exchange. 131 applied for the post of CEO and the rest applied for the
positions of executive director (Listings), executive director (IT and
market Operations), and executive director (Strategy, and Business
Developments),” it stated.

Meanwhile, against requests by some market operators that Mr
Ikazoboh should declare specific date when his tenure would expire, the
substantive CEO said he is not sure of the duration of his tenure. At a
media briefing recently, he said, “How long my tenure will take, I
cannot clearly say right now; but I can only say that the process has
started for the selection of a new DG.”

Of late, Sanusi
Lamido Sanusi, the Governor of the Central Bank of Nigeria, has blown
hot and cold over the bank’s policy on the domestic exchange rate. He
has vacillated between an apparently strong commitment to defend the
“integrity” of the naira, and insouciance over the fortunes of the
embattled currency that in certain quarters could border on the
irresponsible. Still, you cannot but feel sorry for the man. He’s got a
duty to keep domestic monetary conditions on an even keel. No
businessperson wants to be wrong-footed or blind-sided by sudden
movements in the exchange rate, inflation figures, and/or the rates on
debts. They would rather, for their planning purposes, that trends in
these areas are largely predictable. Yet, if the central bank must have
a proper handle on all these, it should itself have reliable real-time
estimates on the different sections of the economy, and a working
understanding of the interactions that define the indices it looks at.

Unfortunately for
the central bank, ours is one of the noisiest economies around: there
are just too many extraneous variables, their emergence into the model
always unpredictable, and their conduct nearly always stochastic. Who,
for instance, could have predicted that waivers on the importation of
rice would be the one way that the campaigning for the next general
election kicks off? Unpredictable though this was, it has had clear and
present implications for foreign exchange demand in the country. To the
same extent, the bulimia with which this government has run down public
finances was just as unexpected. And to the extent that government’s
rapacity may have helped deplete the external reserves, it has burdened
the central bank’s ability to ratchet up supply at the weekly official
foreign exchange auctions.

So the CBN must
have felt a thrill run through it last week as oil prices in the global
marketplace ran past the US$80/barrel mark. With production figures
from the Niger Delta on the mend following the relative pacification of
the previously restive region, higher oil prices should boost the
external reserves, leaving the central bank with a lot more ammo in its
guns. Most commentators had feared recourse by the apex bank to
administrative measures to help ease supply constraints in the official
foreign exchange market, but higher oil prices might see the apex bank
better placed to meet demand at its new levels. More than this, it
would seem that oil prices might remain elevated for some time yet, in
spite of earlier apprehension over the consequences to commodity prices
of the last recession, and the slow global growth that we are
experiencing in its wake.

Although global oil
production was up in the first half of this year, led by a 14% increase
in demand in China, the IMF, reporting in its October edition of the
World Economic Outlook, argues that since “oil markets have not yet
reached a state of full cyclical normalisation”, “Oil demand will
continue to rise as the global recovery progresses, with the buoyancy
determined in part by the strength of the expansion in activity”.
Accordingly, the fund estimates that the “average price of oil will be
US$76.20 a barrel in 2010 and US$78.75 a barrel in 2011 and will remain
unchanged in real terms over the medium term”.

To a considerable degree, the central bank’s current dilemma
describes in small print, the problem with the macroeconomic policies
of the current administration. Déjà vu? Yes, we have been down this
route before. Under Professor Charles Soludo, as governor, the central
bank’s response was to supervise a huge devaluation of the naira, as
demand flourished. Additionally, though, the current administration has
spent all that it has earned, and more. Déjà vu? Yes again, for on the
back of healthy oil prices in the world market, it has superintended
over a staggering increase in government’s consumption as a share of
GDP (at the expense of the private sector). It has also grown public
debt without adding to the economy’s installed capacity, or increasing
productivity. In other words, over the last four years, neither
monetary nor fiscal policies have contributed anything new to how this
economy is managed. Truth be told, today because of the current
macroeconomic policy environment, we might be even more vulnerable to
oil price-based shocks to the economy, than we were at any time in the
history of this country.

The federal
government has purchased fertiliser worth N39 billion in preparation
for the next farming season, Fatima Bamidele, the Permanent Secretary,
Federal Ministry of Agriculture, has said.

Speaking at the end
of this year’s annual National Agricultural Fair in Tudun Wada,
Nasarawa State, the permanent secretary said that the federal
government was more committed to improving the agricultural sector of
the nation’s economy.

She noted that
Nigeria was currently the lowest user of fertiliser in the world and
urged farmers to utilise the opportunity presented by the government to
improve on their output at the end of every farming season.

Mrs Bamidele said that the Federal Government was constructing 17
rice processing mills in the rice producing areas, as part of efforts
at ensuring job creation and food security.

The Fiscal
Responsibility Commission Yesterday in Abuja said the menace of
corruption could be curbed if due process was followed in budget
drafting and implementation across the federating states.

Aliyu Yelwa, the Commission’s Chairman, said this in an interview with the News Agency of Nigeria on Sunday in Abuja .

“Although it is
difficult to completely eradicate the menace of corruption, it can be
reduced to the barest minimum if due process is followed with regards
to budget drafting and implementation as stated in the constitution,”
Mr Yelwa said.

According to him,
the constitution demands full consultation with the people before every
budget preparation while priority should be given to their desires. He
added that anything short of that was unconstitutional and capable of
breeding corruption in the country.

“Nigeria ought not to be poor but it is unfortunate that some
Nigerians are richer than state governments not to talk of Local
Government Councils because of lack of due process,” he said.

As the people of
Bayelsa await President Goodluck Jonathan, who is expected in the state
in a few days’ time, electricity supply in Yenagoa, the state capital,
has improved.

Consequently,
social and economic activities have received a boost with artisans and
other self-employed persons who closed shops due to lack of electricity
supply returning to work.

The News Agency of
Nigeria (NAN) reports that the improved power supply became noticeable
on Wednesday, two days after the governor, Timipre Sylva, announced the
President’s visit.

The governor said Mr Jonathan will be on a two-day working visit to the state from October 22 and 23.

Power supply in the state, especially in the state capital, has been
characterised by constant outages which last for long periods and at
times, results in total blackout for days. But since the President’s
visit was announced, power supply has been stable, lasting for as long
as 18 hours, daily.

Gold fell on
Friday, snapping a two-day record-setting rally, as the dollar rose and
Fed Chairman Ben Bernanke offered few new details on further economic
stimulus which prompted investors to take profits.

In a day of
volatile trade and a host of mixed market signals, bullion is still on
track to end higher for an 11th straight week, driven by a hardening
view that the Fed will resume buying government debt to stimulate the
economy.

On Friday, Mr
Bernanke delivered his most explicit signal yet that the U.S. central
bank is likely to use easier monetary policy as soon as its next
meeting in November. But he failed to offer the details that some gold
investors are craving to sustain the rally.

“The question is
for how much longer the market is prepared to run just on the
quantitative easing story. I think the market at these levels wants to
see the facts before committing additional capital to the upside,” said
Saxo Bank senior manager Ole Hansen.

Zimbabwe’s annual
inflation quickened to 4.2 per cent year-on-year in September from 3.6
per cent the previous month, the Zimbabwe National Statistical Agency
(Zimstats) said on Friday.

Month-on-month
inflation was at 0.1 per cent from -0.1 per cent in August, Zimstats
said in a statement. Zimstats figures showed that rising food,
beverages and utility prices drove inflation higher.

Investors
positioning based on the rumor of AMCON commencement of operations,
changed the market mood on the last trading day of the week as the
market run up by 2.42% or 592.56 points on Friday. NSE ASI was up
through the five trading days of the week under review, thus, it
wrapped up trading at 25,077.73 points from the opening figure of
23,772.40 having gained 5.49% or 1,305.33 points through the week. The
market capitalization followed the same trend and closed up at N6.145
trillion. NSE-30 Index closed up at 1,061.79 points. All the four
sectoral indexes end the week above their respective opening points.

Volume performances

The stock market
had a turnover of 1.32 billion shares valued at N11.53 billion in
27,714 transactions. In these the banking stocks was most active with
758 million shares worth N6 billion that were exchanged in 14,608
deals. The said volume was moved by transactions in the shares of
Access Bank Plc, United Bank for Africa and First City Monument Bank
Plc. Unlike previous week when Insurance sector followed, the Airline
services subsector was boosted by volume on the shares exchanged on
Airline Services and Logistics Plc as it top performance with 161.4
million shares worth N403.72 million in 427 transactions. Please not
that the moving volume on this equity emerged on Friday.

62 equities closed
the week above their various opening prices, 23 bows to the bear’s call
and 116 equities end on a flat note. Meanwhile, gainers’ volume stands
at 879.20 million shares and it accounted for 66.43% of total market
volume for the week. The losing stocks moved 339.89 million shares,
same as 26% of market volume and the unchanged stocks traded 104.42
million shares or 7.89% of the market volume. It could be deduced from
the market statistics table that it’s indeed a bullish week.

Technical view

On 10/15/2010, NSE
closed above the upper band by 0.0%. This combined with the steep
uptrend suggests that the upward trend in prices has a good chance of
continuing. However, a short-term pull-back inside the bands is likely.
During the past 10 bars, there have been 8 white candles and 2 black
candles for a net of 6 white candles. During the past 50 bars, there
have been 23 white candles and 27 black candles for a net of 4 black
candles. A long lower shadow occurred; this is typically a bullish
signal. The RSI has just reached its highest value in the last 14
periods this is bullish.

Market outlook

Before the new face
on the last trading day of the week, the market was already dull and
traders are already holding cash to position at bottom of the expected
pull back. If the market fundamentals remains, then the market may
continue on the bullish run from the first trading day of the new week,
nevertheless, traders should expect short pull back due to profit
taking activities. Whichever way it is viewed, cautious positioning
should be every trader’s watchword.

Corporate actions for the week ended

In the week under
review more staled results were reported in the market. Majority of
these results were audited reports. In terms of performance, many of
these reports were poor. We do not expect these reports to have
positive impact on the market indicator in the week ahead. The below
analysis on Arbico Plc and Union Dicon Salt Plc are reflection of how
bad some of these reports are.

Arbico Plc

Arbico Plc is a
building construction company incorporated way back in 1958 and listed
on the Nigerian Stock Exchange in December 1978. The company currently
has a share holding structure of 116.5 million shared in this order of
investors; Nigerians – 60% and Foreign – 40%. The directors yesterday
reported its belated financial year (FY) results for the period ended
December 31, 2007 and 2008. Lead indicators revealed abysmal
performance. Turnover dipped by 12.3% and 5.9% in both 2008 & 2007.
PAT indicator fared worst as it slide deeper in the red from loss after
tax of N2.08 million in 2007 to N36.14 million in 2008. In terms of
ratio performance; Loss per share of 62 kobo was attained against LPS
of 4 kobo in 2007. Loss profit margin stood at 3.01% against 0.15% in
2007. Price earnings multiples (PE ratio) remained dip rooted in the
red meaning the Arbico is not expected to return any positive earnings
in the nearest future.

In terms of book
value, Arbico is unattractive and selling above its intrinsic value at
current market price N26. Book value is 2.6, Price to book value is
9.99 and PSR 2.52. All are above bench mark indicators.

Observation; Arbico
current faced stiff competition in its industry militating against
revenue. Its cost of operation is high. Its intrinsic values are weak
compare to benchmarks. All these put together makes the stock
unattractive for short-medium-long term investment goal.

Union Dicon Salt Plc

Union Dicon Salt
Plc is a food, beverage & tobacco quoted company. The company was
listed on the exchange in September 1993 and currently has a paid-up
capital of 360 million. It currently has a six man board of director
chaired by Rtd Gen T.Y. Danjuma. In the recent reports of the company,
all the belated results for period ended December 31, 2004 through 2008
were made public. Hindsight revealed that the company’s operation is
being inhibited by continuous negative returns which have led to
massive erosion of shareholders’ fund after the FY 2003 figure (N219.2
million). Shareholder’s equity as at FY 2008 is in net liability of
N844.2 million.

In terms of
operational performance, for FY 2007 & 2008, no figure was reported
at turnover level meaning the company probably did not engaged in
productive activities. Others P & L indicators (P/LBT & P/LAT)
revealed negative figures from 2004 through 2008 FYs. As such loss per
share of (-1.04, -1.34, -0.40, -0.52 and -0.56) were posted from 2004
through 2008. For details on the revealed period performance, see the
below table.

Report on the OTC Market for FGN bonds

A total volume of
266.9 million units of bonds worth N246.36 billion in 1,978 deals was
recorded last week, in contrast to a total of 248.9 million units
valued at N243.41 billion exchanged in 1,940 deals during the week
ended Thursday, October 7, 2010. The most active bond (measured by
turnover volume) was the 10.00% FGN July 2030 series with a traded
volume of 100.8 million units valued at N84.20 billion in 714 deals.
This was followed by 4.00% FGN April 2015 series with a traded volume
of 35.25 million units valued at N28.53 billion in 331 deals.

Sixteen (16) of the available thirty-six (36) FGN Bonds were traded
during the week under review, compared with seventeen (17) recorded in
the fort-night week ago.