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Market overview The stock market
had been mixed so far in the week having given up part of the gains
accrued in the past weeks. The market ended last week’s trades with
some declines after witnessing fluctuations in terms of its daily
performance. By the end of the week, the NSE AS index closed at
27,400.21 basis points, down by 2.10 per cent while the market
capitalisation lost N142.34 billion in a week after closing at N6.63
trillion .
The volatile
movement of the market’s indices was as a result of profit taking
transactions on one hand and purchase activities, which were mostly
speculative, on the other. The decline was also occasioned by losses
with stocks in major blue chip companies.
Furthermore, listed
companies continued to announce their annual results for the year 2009.
First Bank, Skye Bank, NAHCO, and BIGTREAT were among the companies who
released their corporate earnings and performance in the just concluded
week. However, the market further retreated due to disappointing
earnings reports from some of these companies.
Meanwhile, the
acting president Goodluck Jonathan during the week signed into law the
2010 appropriation bill of N4.6 Trillion. The budget is aimed to
accelerate economic recovery through targeted fiscal interventions
designed to stimulate the economy and support sustained private sector
growth. This has been based on assumptions reflecting outlook for the
fiscal year, including: oil production of 2.35 mb/d; benchmark oil
price of US$67/barrel, and average exchange rate of N150 to the US
dollar.
Looking ahead, the
market will focus over the coming weeks on more corporate results and
other economic indicators even as speculation and the taking of swift
profits continue to dominate market activities. Currently, attention is
drawn to 2010’s first quarter results in light of NSE’s registered
gains during the first three months of the year. The market will remain
steady in the coming weeks as investors monitor new moving factors on
the strength of future corporate earnings.
During the week,
both the market capitalisation and the NSE AS Index lost 2.10%
respectively. So far, the market has recorded a YTD-high market
capitalisation of N6.78 trillion, representing a YTD yield of 35.88%.
Overall, the market traded a total of 3.36 billion units of shares,
valued at N35.82 billion in 52,134 deals.
Most Active Sector The Banking sub
-sector remain the most active (measured in terms of traded volume) as
it recorded 1.43 billion shares valued at N19.64 billion exchanged in
18,798 deals while the Insurance sub -sector was second with traded
volume of 494.24 million shares valued at N532.78 million in 3,467
deals.
Corporate actions and results In the past week,
First Bank Plc proposed a dividend of 10 kobo and one new share for
every eight shares held in its corporate earnings and benefits
announced.
Guaranty Trust Plc
also released its interim report for the period ended (Q1) March 31,
2010 to the floor of the Nigerian Stock Exchange. The company declared
a Gross Earnings of N44.382 billion and a Profit After Tax of N8.847
billion.
In addition, Skye
Bank Plc released its full year audited financial report. The bank
declared a gross income of N126.665 billion and a profit after tax of
N1.130 billion. The directors also recommended a dividend of 5 kobo per
share.
Market outlook The stock market
will likely be driven again by company earnings reports over the next
two weeks, as investors try to get a sense of how well corporate
profits and benefits will hold up in second quarter of the year.

The management of
First Hydrocarbon Nigeria Limited (FHN), an indigenous company in the
Nigerian oil and gas upstream sector, has promised to realise its
vision of expanding local upstream ownership in the country with its
new directors.

Egbert Imomoh, a
director at the company, while welcoming Owoye Andrew Azazi, Udoma Udo
Udoma and Tosin Runsewe on board, at the weekend said, “I am delighted
to have marked this milestone in our development. I look forward to
working with the Board of Directors and management team to realise our
vision of expanding local upstream ownership and significantly adding
to Nigeria’s production base.”

The board confirmed
the appointment of the three new directors after a meeting in Abuja.
They join Oladele Fajemirokun, Jonathon Long, Magaji Muhammad Inuwa and
Afren Plc Founders -Egbert Imomoh, Osman Shahenshah, Ethelbert J.L
Cooper and Constantine Ogunbiyi as directors of the company.

AfricapracticeR&B,
FHN’s marketing firm, in a statement, said the hydrocarbon company was
established in 2009 as a home-grown business to “fulfil the Nigerian
government’s criteria for indigenous operators.”

According to the
statement, the company intends to acquire and develop substantial oil
and gas assets, including holdings in assets currently under
negotiation and held by the joint ventures between the Nigerian
government and International Oil Companies. It also intends to develop
under producing and shut-in fields to their full potential.

Wealth of experience

Meanwhile, Mr.
Imomoh, who is also the Chairman of Afren Nigeria, an independent oil
company, said the decision of the new directors to accept these
positions is “a significant endorsement of the company’s vision and we
are delighted to welcome such high calibre individuals to our Board of
Directors.”

He said, “Each will
bring a wealth of experience to the company as we embark on our
acquisition and development plans. FHN has in place a strong Board of
Directors combining Afren Nigeria’s operational expertise and the
financial strength and local network of two of the largest financial
institutions in the country.”

Mr. Fajemirokun,
another director, said the company’s vision is compelling, adding that
“the intention to list the company on the Nigerian Stock Exchange in
the near future, offering all Nigerians an opportunity to invest in the
upstream sector is particularly appealing.”

The new directors

Mr. Azazi is a
retired General in the Nigerian Army, and has served as chief of
defence staff, as well as chief of army staff. He is currently involved
with Weiboro Properties Ltd and Total Transformation Associates
(security sector reforms consultancy).

Mr. Udoma was a
two-term member of the Nigerian Senate from 1999-2007. At present, he
is the part time Chairman of the Securities and Exchange Commission.
Mr. Udoma specializes on Nigerian investment laws.

Tosin Runsewe is
the chief client officer/executive director of Guaranty Trust Assurance
Plc. Prior to joining the insurance industry over six years ago, he had
acquired over 12 years experience in the banking sector in Nigeria. He
was the head of the oil and gas group in Guaranty Trust Bank.

Finance
experts argue that the 2010 fiscal budget is becoming countercyclical
in that it is aimed at stimulating the economy from its current state
of contraction, a fall-out from the global financial crisis.

Financial
Derivatives Company, a finance and research firm, says that although
some macroeconomic variables paint a relatively healthy post-crisis
economy, the underlying structure that propels sustainable growth is
still tenuous and requires fundamental shifts that could alter the
growth paradigm.

How will the markets react?

In
its economic bulletin issued on Friday the firm says Money and Stock
markets would have their own fair share of economic reactions, arising
from the signed budget.

“Interest
rates are now well below inflation rate which could induce capital
flight and a switch to other asset class,” he said. “The $5.98bn to be
raised by the government through domestic borrowing could help
stabilize rates which are currently at record low. However, this could
have the unintended consequence of crowding-out the private sector.”

The
record low interest rates are already threatening to lead to capital
flight and portfolio rotation by institutional investors, it added.

The
bulletin also highlighted that the equity market has been oblivious to
the signing of the budget, recording a fall of 0.1 per cent and 0.31
per cent in the two days the budget has been in existence. It however
revealed that the indifference of the market comes as no surprise as
there is no direct link between a non-implemented budget and the
market.

The
finance firm says some indicators that back up the requirement for a
fundamental shift include the nation’s external reserves (now
$40.56bn), which have declined sharply by 33 per cent from $60.2bn in
2008, compared to other emerging economies like Brazil and Mexico that
have built their reserves by 34 per cent and 21.5 per cent in the same
period.

Also,
the Excess Crude Account (ECA) has been depleted from $20bn in the
pre-crisis era to less than $4bn while average oil price YTD of
$78.89pb is still about 47 per cent below its all-time peak of $149pb
in 2008.

Oil
production (according to OPEC estimate was 1.986mbpd in March) has
improved, but it is still below productivity of three million barrels
per day.

Money and stock markets remain ambivalent in spite of record low interest rates.

Inflationary pressures

Inflation
has however declined modestly Year on Year to 11.8 per cent in March
from 12.3 per cent in February which is far above short term interest
rates. The inflation gap, which measures the difference between money
supply (M2) growth and GDP growth rate, was 10 per cent as at 2009
compared to 51.82 per cent in 2008.

Inflation
pressure will increase as a result of the budget spending – 45 per cent
of total spending is billed for recurrent expenditure. Other sources of
inflation risk include budget leakages and the proposed deregulation of
the downstream oil and gas sector, the statement highlighted.

According
to the bulletin, the Nigerian economy possesses the absorptive capacity
to convert this budget into a catalyst for growth, but this will depend
largely on monetary policy stability and the success of reform policies
like the Asset Management Company and the Petroleum Industry Bill.

Economic distortion, excess liquidity, no credit

The
economic bulletin also argues that the presence of excess liquidity and
absence of credit is countercyclical, adding that with a massive fiscal
deficit now estimated at six per cent of GDP, maintaining monetary
stability at this time will be a major challenge.

“The
Central Bank has resisted the temptation of tightening when price
inflation is in double digits of 11.8 per cent and interest rates very
low- 2-3 per cent per annum,” it says. “With the budget now signed and
spending kicking in, the Central Bank will have to steer a mid-course
between neutral and tightening.”

The
$31billion spending bill was signed into law by the acting president,
setting the stage for Nigeria’s most ambitious and possibly profligate
spending program in two decades. Capital expenditure is projected to
increase by 82 per cent to $12.3billion while recurrent expenditure is
to shoot up to $13.8billion, a 27 per cent increase from the 2009
budget.

The
weekly report from Afrinvest, also a finance and research analysis
firm, states that the Nigerian Stock Exchange All-Share Index lost 31
bps as at Friday, closing at 27, 400.21 from 27, 486.62 the previous
day. Market capitalisation also moved in the same direction, closing at
N6.6 trillion as a total of 598.4million shares valued at N5.8billion
were traded on Friday.

Lately, it seems like every day the headlines talk about thousands of people facing retrenchment. What would you do if your boss called you aside to let you know that due to the recent restructuring, your position no longer exists and they are letting you go? Are you financially prepared for this type of news?

The days of “job security” are a thing of the past. In an era of downsizing, restructuring and retrenchment, no one is assured of long-term employment any longer, so it is important to have a plan of action in case you are suddenly laid off. Many employees see some warning signs that their jobs may be at risk but it is so easy to brush this aside when you don’t feel any immediate threat or are not under undue pressure.

The future is largely uncertain and the threat of sudden unemployment is all too real for many people. Whether you are 25 or 55, chances are that at some point in your life you could find yourself out of work. Even if you feel secure in your job right now, it is best to be financially prepared rather than to be caught off guard. Consider the following tips:

Review your expenses

When you are in a “secure” job you tend not to dwell on what you spend each month and where you can cut back. Do you know how much you spend on your weekly grocery bill or eating out? Are your utility bills exorbitant? Can you reduce your mobile phone bill? Are you paying subscriptions or membership fees for services you don’t even use?

While the job outlook is uncertain, it is important to try to live below your means and avoid unnecessary spending. Try to determine the minimum sum that you may need to cover basic expenses, such as rent or mortgage payments, utility bills, food, transportation and health insurance. Develop a budget that reins in most non essential spending until the job outlook improves. If you had already been on a budget, it would be much easier to cope financially if you have to look for another job.

Start to save

If savings have never been a priority for you, now is the time to start to set some money aside. It is recommended that you have the equivalent of three to six months’ income to tide you over if you lose your job, but given the current state of the job market, it is wise to save more especially if you have a family to support. This for many might seem like an impossible amount to accumulate but by tracking your expenses you can start to work towards this goal rather than to do nothing at all.

Even if you do not have the entire amount saved, whatever you manage to save could go towards your rent, mortgage, food and debt. It will also help to protect your retirement savings. Place such emergency savings in a high yield money market account where it is easily accessible.

Be cautious about debt

Are you in debt? A poor credit profile can negatively impact upon a future job search and limit your financial options. If you sense that redundancy might be in the offing, be cautious about taking on any new debt. Credit card and other high interest debt should become your first priority and should be reduced or paid down immediately. If you were to lose your job while paying thousands of naira in interest and principle, it would be challenging to get yourself out of this difficulty.

Review your health insurance policy

One of the big pitfalls of retrenchment is the loss of health insurance. Review the health benefits at your current job and check what options will be available to you in the event of a lay off. How much would cost you to maintain your insurance cover privately? Remember that you would have to pay both the employer and employee shares of the premiums in order to keep the same coverage.

Improve your skills

You should continually be looking for opportunities for self-development to improve your knowledge, skills and certifications. Do not depend totally on your current employer to put this in place for you; you owe it to yourself to develop yourself. Constantly update your CV to reflect your new skills so that you will always be able to present the most updated version.

It is also worth exploring other income earning opportunities that you can pursue without their having any impact on your present job. This must not become a distraction as if you do not stay totally focused on the job at hand you might actually be accelerating your retrenchment!

Network, network, network

Take networking seriously as some of the contacts you make may well end up being your potential employers in the future. Reactivate your network if you have been a bit lax about keeping in touch with acquaintances and associates; it is much easier to call someone just to say hello than it is to call them to ask for a job, especially when you haven’t spoken to them in several months.

Don’t get unduly stressed by the possibility of being made redundant as this is largely out of your control. As you continue to work with a positive attitude, build a sound business reputation and give your job your very best commitment, you are less likely to face this prospect. But no matter how good your prospects may be, it does no harm to be prepared and to get your finances in order.

The world’s top
cellphone maker Nokia cut its profit outlook and delayed the launch of
phones it needs to compete with the iPhone and Blackberry in the
fast-growing high end of the market.

Nokia still lacks a
top-range model to challenge Apple’s iPhone three years after its
launch. It’s last high-end hit phone was the N95, which was unveiled in
2006.

Nokia reported on
Thursday a rise in January-March earnings and sales, roughly in line
with expectations, but cut the outlook for its 2010 operating profit
margin at its key phone unit to 11-13 percent from 12-14 percent.

The average forecast of 33 analysts in a Reuters poll was 13.7 percent.

Shares in Nokia
were 14.5 percent lower at 9.64 euros by 1142 GMT, dragging the STOXX
Europe 600 Technology Index .SX8P four percent lower.

The smartphone
market continued to expand through the economic downturn, helped by
cheaper models, and research firm Gartner has forecast it will grow a
whopping 46 percent this year.

Nokia delayed the
renewal of its Symbian software — seen as crucial to improve its
position in the high-end of the market — to the third quarter from
second quarter.

“This is pretty
significant as Nokia and Symbian have lost a lot of market share in the
last few years,” said analyst Neil Mawston from Strategy Analytics.

“Psychologically it
is a blow as well as iPhone, Blackberry ad Android are surging ahead
with software updates. Symbian cannot afford any delays,” said Mawston.

Smartphone prices drop 17 pct in one quarter

Nokia slashed
prices of its cell phones across its portfolio this week, with the
deepest cuts of around 10 percent seen for some smartphone models, data
seen by Reuters showed on Thursday.

Nokia is struggling
to battle with new rivals Apple and Blackberry maker Research in Motion
(RIMM.O) at the high end of the cellphone market, and sees a cheaper
price as its strongest weapon to hold on to market share, analysts said.

Nokia is benefiting
from growth among cheap smartphones, which dragged the average sales
price of a Nokia smartphone 17 percent from the previous quarter to
just 155 euros ($208). This compares to more than $600 for iPhone.

Apple’s quarterly
results blew past Wall Street expectations on the back of record iPhone
sales earlier this week, and the company gave a strong revenue
forecast, sending its shares to an all-time high.

For Nokia,
underlying first-quarter earnings per share rose 40 percent from a year
ago to 0.14 euros ($0.19), marking the first annual rise since the
second quarter of 2008 but missing the average forecast of 0.15 in a
Reuters poll of 43 analysts.

Earnings were
boosted by massive cost cuts as Nokia slashed thousands of jobs last
year, aiming to reduce costs at its key handset unit alone by more than
700 million euros to counter recession-hit demand.

January-March sales
at the market leader, which makes one in three phones sold globally,
grew 3 percent from a year ago, also rising for the first time since
the second quarter of 2008.

Nokia shares had
gained 26 percent in 2010 prior to the result, boosted by strong
fourth-quarter results and hopes that its smartphones business was
winning back lost market share. The share remains 8 percent higher for
the year.

($1=.7439 Euro)

Stephen Covey, a motivational speaker, has said that in order
for organisations to grow effectively they need to first discover their “road
map.”

Speaking at an event with business representatives in Nigeria on
Wednesday in Lagos, organised by Zain Nigeria and tagged ‘An Evening with Dr.
Stephen Covey’, Mr. Covey said only an accurate road map will lead to great
improvement in business.

Maps and principles

“In business, there is need to practice positive mental attitude
but attitude and action is insufficient, the key is to have an accurate map,”
he said. “Every great breakthrough is a great win. If you want to make minor
involvement, work on behaviour and attitude; if you want to make quantum
involvement work on paradigms. A paradigm is like a model for assumption of a
map.

“To have an accurate map is extremely important and that can be
embodied in your mission statement. Secondly, the power of principles is very
in important in organisations. A true principle is always the same. So, the
idea is that you build your life and organisation on the correct paradigm or
map and the principles that are universal and timeless.”

Mr. Covey explained that principles are important in any
organisation or cultural environment but should not be misunderstood as values.

“Principles are not values; the key is to value principles. The
different is that values are social norms, personal, emotion and subjective
while principles are natural laws, impersonal, objective and factual,” he said.
“These principles are applied in any country and in any culture. The more you
value principles and live by principles the higher the trust become. The higher
the trust is, the lower the cost is and speeds is exalted enormously. When you
have lower trust, speed really slows down and cost goes up. So that is why it
is important to have a correct map or paradigm and live by principles. The
essence of what I teach over 140 countries around the world is to teach people
about research, strategic planning and leadership.”

Growth and impact

However, Mr. Covey said that in order for organisations to grow,
they must seek customers who can also aid in promoting their products and such
a relationship must be built on principles.

“Relationship with organisations and customers/clients must be
built on principles so that on the net promotion scores you get 9-10 scores on
the scale; people will be committed, loyal and would stay with you,” he said.
“After decade of research only one question correlative to an organisation’s
profitable growth (is relevant): how likely is it that a customer could
recommend this product to others? If they give you 9-10s, they become
promoters; anything less than eight are detractors, they would find fault with
your products and service and would not recommend you to others.”

Speaking with NEXT at the event, business participants agreed
that motivational lectures can help change and develop organisation and
governance in Nigeria.

Tunde Ayeye, a business consultant, said “I think it goes beyond
organisation effectiveness; it helps you in your life as an individual and I
think it very useful.”

Mr. Ayeye added that despite the problems in Nigeria, especially
corruption, there is a basic need to adopt principles in order to transform
society. “The truth of the matter is corruption is global and its pervasive.
You are a product of your choices, and you make choice based on principles. So,
I think other business and governance need to adopt those principles if we want
to transform our businesses and our society,” he said.

However, Ayo Akintujoye, a marketing executive at 2G Consulting
firm, said that the virtues recommended by the speaker are good, but the
cultural reality of the country has not fully allowed for change to take place.
“I have been to events like this both international and local and you discover
that there is a vacuum from what you learn and the cultural reality of
Nigeria,” he said.

The newly appointed group managing director of the Nigerian
National Petroleum Corporation (NNPC), Shehu Ladan, has joined his predecessor
to state that NNPC is fully in support of the planned deregulation of the
downstream sector of the petroleum industry by the federal government.

While presenting a paper, titled, “Downstream Petroleum Sector:
The Imperatives of Deregulation,” before a coalition of legislators at the
National Assembly in Abuja, on Wednesday, Mr. Ladan, said the speedy implementation
of the deregulation policy would go a long way in encouraging inflow of private
sector and international investment in the downstream sector.

“Without mincing words, let me join my predecessor to state that
NNPC is 100 per cent in support of deregulation, not just because it will
support our business, but because this is the only way that majority of
Nigerians will derive fair deal from the abundant petroleum resources in the
country. With deregulation, consumers will enjoy fair product prices and
operators will be in a position to recover full cost and reasonable margins on
their operations,” he said.

The NNPC boss argued that implementation of the policy would
give rise to efficiency in product usage, product availability and effective
competition among investors, hence putting an end to the “NNPC monopoly.”

Investors’ fear

Mr. Ladan said it is only when a deregulated regime is put in
place that the private refineries that have been licensed can really take off,
noting that investors who have been given licenses to build refineries are
scared of venturing into the multimillion naira project because of the
regulated regime in Nigeria.

“Clearly there is the need to move away from the current ad hoc
pricing to an automatic price adjustment mechanism that is truly
de-politicised. In the transition to full market liberalisation, the regulator
has the responsibility to monitor and check anti-competitive behaviour such as
price gouging and predatory pricing,” he explained.

The Corporation head further explained that complimentary
measures have been included in the 2009 supplementary and 2010 budgets to
cushion the likely effects of the policy, adding that the measures included the
provision of intra-city rail transportation in six major cities: Lagos, Kano,
Port-Harcourt, Jos, Enugu and Maiduguri, as pilot projects. He also said plans
were underway by the federal government to commit N373 billion to massive road
rehabilitation and new construction interventions across the entire country in
addition to the procurement of 25 railway locomotives.

“Part of the complementary measures to cushion the effect of
deregulation on the low income and the poor household include the provision of
low income housing scheme and civil servants mortgage scheme and N10 billion
revolving mass transit scheme in 2009 supplementary budget,” Mr. Ladan said.

The Chairman of the Coalition, Bassey Etim Bassey, said the
corporation head was invited to outline the merits and demerits of deregulation
to members of the National Assembly, to enable them to take an informed
position about the policy.