Annual Report - Skyview Capital

Transcription

SKYVIEW CAPITAL
Annual Market Report 2013
The year 2013 witnessed improvement in global economic activities though
Opec Oil Price(US$/barrel)
at a much slower pace than expected as evidenced with positive data from
120
leading economic indicators in respect of output, employment and inflation
115
recorded for most period of the year is not unconnected with prolonged
110
unconventional accommodative monetary policy in terms of quantitative
105
the second world largest economy recorded Gross Domestic Product (GDP)
growth rate of 7.7% in Q12013, 7.5% in Q22013 and 7.8% in Q32013 as
compared to the same period of 2012.
Japanese economy recorded expansion in output by 0.1% in Q12013, 1.2% in
Q22013 and 2.4% in Q32013 up from contraction of 0.2% in Q32012 and
negative growth of 0.3% in Q4 of 2012. In UK, output expanded by 0.7%, 2%
and 1.9% in first, second and third quarter of 2013 respectively. Similar
27-12-13
06-12-13
15-11-13
25-10-13
04-10-13
13-09-13
23-08-13
02-08-13
12-07-13
2.0% in the third quarter relative to the same period in 2012. China which is
21-06-13
expanded by 1.3% in the first quarter of 2013, 1.6% in second quarter and
31-05-13
85
10-05-13
United States economy which constitutes about 25% of the world economy
19-04-13
90
04-01-13
emerging economies and upsurge in global capital market activities. The
08-03-13
95
15-02-13
percent interest rates in these countries as well as huge investment flow into
100
25-01-13
growth for economies coming out of recession, this had resulted in near zero
($)
from advanced economies and emerging markets. The positive trend
easing in the United States, UK and Japan as economic strategy to stimulate
Member of The Nigerian Stock Exchange
Compiled: Jan 02- Dec 31, 2013
29-03-13
GLOBAL ECONOMIC SUMMARY
Source: OPEC, Skyview Capital Research
On the average, OPEC basket traded at $105.89 in the year 2013. Nigeria’s
bonny light crude traded on the monthly average price of between
US$105.50 and US$118.81 a barrel and it closed the year at US$111.54 on
December 31, 2013 well above the 2013 budget benchmark price of US$76 a
barrel.
positive trend was observed in India, South Africa, Nigeria and Kenya except
External Reserve ($'billion)
in EuroArea that is yet to recover fully from recession. The economy of
EuroArea contracted by 1.2% in first quarter, 0.6% in second and 0.4% in third
quarter of 2013 but improvements were seen on quarterly basis. The slow
48.57 48.85 48.41
pace of recovery in Euroarea had remained a drag to global economic
recovery with unemployment reaching another high of 12.1% as at
November 2013.
47.38
45.98
48.04
47.03 46.84
45.48 45.23
44.55
43.61
Significant improvement was observed in employment data in US, UK, China
and Japan with persistent decline in unemployment rate. In US,
unemployment rate declined from 7.9% in January to 7.5% in April, 7.2% in
September and 6.7% in December 2013. In UK, unemployment rate fell from
7.8% in January to 7.6% and 7.4% in October 2013. Similarly, unemployment
rate in Japan came down from 4.2% in January to 3.8% in July but close at 4%
Source: CBN, Skyview Capital Research
in November 2013. Inflation rate which measures changes in general price
Nigeria’s Crude oil production figures exhibited a declining trend in the year
level exhibited downward trend across various countries in 2013. In US,
2013 owing to increasing wave of crude oil theft and oil pipeline
inflation rate came down from 2% in February to 1.1% in April and 1.2% in
vandalization, a development which culminated in frequent declaration of
September, 1% in October and 1.2% in November. In UK, inflation rate
force majeure and production shut down for several periods during the year.
declined from 2.7% in January to 2.4% in April, 2.1% in November and 2% in
Available data from OPEC website indicated a declining trend from
December of 2013. Also, in Euro-Area inflation rate fell from 2% in January to
2.036mbpd in January to 1.871mbpd in June and 1.821mbpd in November
1.2% in April, 0.7% in October and 0.8% in December. Similar lower rates were
2013 well below the nation’s 2013 budget benchmark of 2.53mbpd of crude
observed in China, South Africa and Nigeria.
oil production. Consistent drop in Nigeria’s crude oil production figures exert
Expansion in economic activities recorded in US, China and India helped
sustain the average price of crude oil above the US$100 mark for the year
2013 despite increasing shale oil production from the US. The movement in
oil prices responded to changes in demand from the oil consuming countries
particularly US and China and the supply shocks from oil producing countries
as well as periods of crisis in Syria and some other Middle East oil producing
regions. According to OPEC reports, the total world crude oil demand
increased from 88.9million barrel per day in 2012 to 89.0mbpd in Q2 of 2013
downward pressure on the nation’s external reserves as crude oil exports
constitute well over 80% of the country’s source of foreign exchange
earnings. This factor coupled with the persistent use of the reserves by CBN
to stabilize the naira against dollar brought about significant drop in foreign
reserves. Nigeria’s foreign reserves opened at US$44.337billion on January
01, 2013, rose progressively to US$47.385bilion in February, US$48.85billion
in April but maintained declining trend thereafter to as low as US43.61billion
as at December 31, 2013.
and 90.3mbpd in Q3 of 2013 while supply also increased from 89.6mbpd to
Also, inflation rate was at single digit during the year under review nose
90.1mbpd in Q2 of 2013 and 90.4mbpd in Q3 of 2013 leaving a marginal
diving from 9.5% in February to 8.4% in June and 7.8% in October but closed
excess supply of 0.1mbpd as at third quarter of 2013. The OPEC basket price
at 8% in December and 8.52% on the average for the year. The single digit
rose steadily within the first two months of the year reaching the year high
inflation rate well below the benchmark interest rate of 12% implied positive
of US$114.94 a barrel in February but declined sharply between March and
real return on fixed income investment and this had been one of the
April to a year low of US$96.35 a barrel in April this rose again steadily to
enticements for increased flow of foreign portfolio investment into the
above the US$100 mark to close the year at US$107.94 a barrel.
Nigerian economy.
Disclaimer
All reasonable care has been taken to prepare this document, and it is purely based on publicly available information which may change from the companies analytic position, thus the views expressed may change accordingly. The forecast
and estimates are fair view of our own opinion and, the historic data used are not 100% guaranteed for future use, thus neither Skyview Capital Limited nor any of her employees shall accept liability on behalf of person(s) or entity relying
on this report, as it is purely for information purpose.
NIGERIA'S CRUDE OIL PRODUCTION (mbpd)
year figures. In the third quarter and second quarter of 2013, Nigeria
Industrial Production increased by 1.10% and 1.8% year-on-year lower than
4.5% and 8.2% increase recorded in 2012.
2.1
2.05
SELECTED GLOBAL ECONOMIC INDICATORS
2
mbpd
1.95
COUNTRY
GDP
(US$b)
United States
Euro Area
China
Japan
UK
India
South Africa
Nigeria
Egypt
Kenya
15,684.80
12,194.82
8,230.00
5,960.00
2,440.00
1,841.70
384.31
262.61
257.29
37.23
1.9
GDP Growth
y-o-y (%)
Q313
INTEREST
RATE
INFLATION
POPL
(million)
0.25
0.25
6.00
0.00
0.50
7.75
5.00
12.00
8.25
8.50
1.20
0.80
2.50
1.61
2.00
7.00
5.30
8.00
11.70
7.15
315.09
332.88
1354
127
63.26
1217
52.2
166.21
83.66
43.20
1.85
1.8
1.75
1.7
1.65
Federal Government of Nigeria presented a budget of N4.643trillion for 2014
2.00
-0.40
7.80
2.40
1.90
4.80
1.80
6.81
1.50
4.40
fiscal year down by 6.90% from N4.987trillion estimate for 2013. The lower
figure is not unexpected going by dwindling oil revenue as a result of
incessant leakages, pipeline vandalization and crude oil theft in oil producing
areas of the country. The budget was premised on estimated revenue of
N3.73trllion leaving a deficit of N912billion or 19.16% and 1.9% of GDP.
Crude oil price assumption of $77.5 a barrel ($76 in 2013), crude oil
production of 2.3883mbpd (2.583mbpd in 2013), real GDP growth rate of
6.75% and average exchange rate of N160/$. The actual crude oil production
figures for 2013 ranged between 1.82mbpd to 2.035mbpd according to data
At its July MPC meeting, CBN introduced 50% Cash Reserve Requirement
(CRR) on public sector deposits in Nigeria banks effective August 07, 2013
while retaining 12% CRR on private sector deposit. The new policy unsettled
the financial markets with NIBOR Call Rate jumping to as high as 55.83% on
September 19, 2013 before moderating down to within a range of 10.55% to
12% and closed the year at 10.62% on December 31, 2013.
obtained from OPEC website, thus the 2014 estimate though conservatively
Stability of Nigerian naira exchange rate against major foreign currencies was
lower than the 2013 estimate can only be achievable if incidences of crude
a nightmare for CBN in 2013 while the Apex bank utilized frequently
oil theft and pipeline vandalization are efficiently curtailed.
significant volume of nation’s foreign currency reserves to ensure stability of
the naira, the efforts yielded fruition only at the official rate whereas there
was significant depreciation of the naira at other segments of the foreign
exchange market particularly at the Bureau De Change and parallel market
EXCHANGE RATES AS AT DEC 31, 2013
segments where naira lost N13.00 and N14.50 respectively relative to the year
opening figure. The premium between the official rate and the parallel market
CURRENCY
YEAR START
OFFER
JAN 1, 2013
YEAR END
(31-12-13)
Δ
(N)
Δ
(%)
NGN/USD
155.7700
155.7000
0.07
0.04
NGN/GBP
253.8895
257.4811
3.59
(1.41)
NGN/EUR
206.4731
214.4145
7.94
(3.85)
INTERBANK(N/$)
156.6675
159.7875
3.12
(1.99)
BDC
158.0000
171.0000
13.00
(8.25)
PARALLEL
158.5000
173.0000
14.50
(9.15)
rate widened from the year opening spread of N2.73 to N17.30 as at
December 31, 2013, this is high enough to endear round tripping.
MONEY MARKET RATES
Inter Bank
Call Rates
T-Bill
Rate
6-Months
Deposit
12 Month
Deposit
Lending
Rate
Dec’12
11.88
11.77
10.87
10.63
24.61
Jan’13
11.67
11.17
8.56
6.09
24.54
Feb’13
11.98
9.90
1.72
5.67
24.60
Mar’13
10.39
10.17
7.43
6.09
24.49
Apr’ 13
11.24
10.41
7.15
6.49
24.53
May’13
12.23
10.64
7.17
5.26
16.66
Jun’13
11.59
11.60
7.07
5.32
24.58
Jul’13
10.63
11.56
7.34
5.80
24.62
(0.5%), China (6%), India (7.75%), South Africa (5%), Kenya (8.5%) and Egypt
Aug’13
15.24
11.30
7.37
4.88
24.46
( 8.25%), this has also boosted interest rate arbitrage and triggered sustained
Sept’13
16.88
10.91
6.90
4.58
25.11
Oct’13
11.08
10.80
7.32
4.71
24.90
Nov’13
11.15
10.80
8.12
6.51
25.00
Dec’13
10.75
10.97
7.44
5.02
24.90
Source: Skyview Research
Central Bank of Nigeria (CBN) maintained its tight monetary policy stance
throughout 2013. The monetary policy committee (MPC) of the CBN kept the
benchmark interest rate on hold at 12% in all of its six MPC meetings of
January, March, May, July, September and November 2013 with standing
lending facility and standing Deposit facility put at ±2% of MPR. The
benchmark interest rate at 12% is comparably higher than many other
frontier, emerging and developed economies, for instance, US (0.25%), UK
flow of foreign portfolio investment (FPI) into Nigeria as well as significant
activities in the bond and treasury bill issue transaction. However, the spread
between average lending rates and average deposit rates of commercial
banks was about three times. Average six months deposit rate was within a
range of 7.15% to 8.56% whereas average lending rate was within a range of
24.5% to 25% in 2013. The high lending rate did not bode well for the real
sector most especially the manufacturing sectors as measured by Nigeria
Industrial production indices which was comparatively lower than the prior
Disclaimer
CAPITAL MARKET REPORT
NSEASI (Jan-Dec 2013)
Global stocks closed the year 2013 on a positive note as all equity indices
under our purview appreciate in value except BOVESPA index of Brazil which
declined by 15.50%, closing in red. Equities in United States, Europe, Asia and
Africa trended northward thanks to U.S expansionary fiscal policy which made
41,000.00
36,000.00
the US Fed Reserve committed over $1trillion to bond repurchase during the
year. Other market drivers were improved economic recovery of the Eurozone
coupled with growth in China & Japan. This impacted positively on global
equities.
In America, Dow Jones Industrial Average (DJIA) which measures
31,000.00
26,000.00
21,000.00
manufacturing and industrial growth appreciated by 41.78%. Standard &
Poor’s (S & P) 500 index added 422.17 points (29.60%) to close 1848.36.
Similarly, National Association of Securities Dealers Automated Quotations
(NASDAQ) index advanced by 38.32%. Equities on Wall Street rallied steadily
during the year trending in response to market dynamics as well as major
Source: Skyview Capital Research
Market capitalization added 47.38% (N4.25trillion) while market turnover by
economic events and decisions within the period.
value soared by 58.66% from prior year (2012) figure of N657.77billion to
Similarly, European equities trended northwards during the year under review
106.54billion shares exchanged hands in contrast to 89.155billion shares in
as the Eurozone gradually recover from its gloomy economic crisis. Equities
in European markets advanced till May 2013 but plummeted in June over
growing concern about the possibility of the US Federal Reserve tapering its
N1.044trillion. Volume turnover also trended upwards as a total of
the prior year representing a 19.51% increase.
$85billion monthly bond purchase. This decision caused a shock as global
MARKET INDICATORS
equities to decline within the period (June) as investors kept a close eye on
ALL SHARE INDEX
the US Fed. Reserve decision. German Dax-30 retreated to a low of 7692.45
before reversing to close the year high with YTD return of 25.48%. SMI of
Switzerland added 20.24% over its year opening figure of 6822.44. Other
European indices under our purview also appreciated. In London, FTSE 100
closed 14.43% higher while CAC-40 (France) and Euro STOXX recorded a near
par return of 17.99% and 17.95% respectively.
GSE
78.81
NIKKEI 225
56.72
NSEASI
DJIA
41,329.19
13.226
PREV. YEAR
THIS YEAR
N657.77b
N1044.35b
58.66
47.19
47.38
$4.21b
$6.51b
54.57
89.155b
106.54b
19.51
1,336.07
1,907.17
42.75
NSE BANKING INDEX
339.63
447.84
31.86
NSE OIL/GAS INDEX
152.92
339.88
122.26
NSE INSURANCE INDEX
118.49
152.87
29.01
NSE INDUSRIAL INDEX
1,403.63
2,546.59
81.43
838.97
1,100.25
31.14
1,769.07
2,863.12
61.84
964.59
962.31
(0.24)
SECTORAL INDICES
NSE AseM INDEX
41.78
28,078.81
8.974
TURNOVER VOLUME
NSE LOTUS ISLAMIC INDEX
44.05
CLOSE
(31-12-2013)
TURNOVER VALUE ($)
NSE CONSUMER GOODS
47.19
NSEASI (KENYA)
38.32
S&P 500
29.60
DAX 30
Source: Skyview Capital Research
25.48
EGX CASE 30
Various sectorial indices appreciated across board with the exception of NSE
24.17
SMI
20.24
CAC 40
17.99
EURO STOXX
17.95
JSEASI
17.85
FTSE 100
AseM which dipped marginally by 24bps. NSE Oil and Gas Index was the best
performer gaining 122.26% during the year. NSE Industrial Index ranked
second, appreciating by 81.43%. Others were NSE Lotus, NSE30 and NSE
Banking Index which climbed 61.84%, 42.74% and 31.86% respectively from
14.43
BSE 30
8.98
H.S.I
BOVESPA
TURNOVER VALUE
NSE 30 INDEX
GLOBAL STOCK INDICES AS AT DEC 31, 2013
NASDAQ
MARKET CAP (Trillion)
ANNUAL
∆ (%)
OPEN
(02-Jan-2013)
its year opening figure. The Banking Index which had earlier appreciated
2.88
21.41% as at Q12013 could not sustain the tempo all through the year, as the
-15.50
-40.00
-20.00
0.00
20.00
40.00
60.00
80.00
100.00
Source: Bloomberg, Skyview Research
Apex Bank in August 2013 increased the Cash Reserve Requirements (CRR)
for banks on public funds to 50%, a decision which caused banking stocks to
decline as investors weigh possible effect on their full year results.
Equities in African bourses performed impressively during the year under
review. Ghana Stock Exchange Composite Index (GSECI) returned 78.81% in
140.00
2013 to top our global stock indices return chart. NSEASI (Nigeria) and
120.00
NSEASI (Kenya) returned 47.19% and 44.05% respectively to place third and
100.00
fourth respectively. Emerging and frontier markets which traditionally have
80.00
greater potentials to give higher returns attracted more inflow in form of
60.00
Foreign Portfolio Investment (FPI) over the period. In Egypt, despite an early
40.00
uprising in the wake of 2013, the EGX CASE30 returned 24.17% after declining
continuously in Q1 2013. In Nigeria, the stock market gauge, NSEASI which
measures market performance began the year on a strong impetus as it
advanced 13.44% in Q12013 and closed the year by adding 47.19%.
Sectoral Returns (%) -2013
122.26
81.43
61.84
42.74
31.86
31.14
29.02
20.00
0.00
-20.00
-0.24
Disclaimer
The market gauge appreciated steadily throughout the year (except in
NSEASI MONTHLY RETURN (2010-2013)
periods from June to September when market indices fell due to concerns of
the US Federal Reserve tapering its quantitative easing (QE) and CBN CRR
15
policy which saw the index retreating after reaching the 40,000 index point.
10
5
0
TOTAL VALUE TRADED (N'billions)
DEC
JAN
FEB
MAR APR MAY JUN
JUL
AUG
SEP
OCT NOV
DEC
-5
-10
-15
1,044.35
797.55
2013
634.92
658.23
Y2011
Y2012
Y2013
Key contributors to this upward movement of share prices include strong
corporate earnings by blue chip companies, such as banks and manufacturers
of fast moving consumer goods (FMCG) together with increased capital
inflow and portfolio investments and also a tight regulatory oversight, aided
by stronger enforcement by the Securities and Exchange Commission (SEC)
and the NSE.
FGN BOND FOR JAN-DEC 2013
TENOR
(YR)
COUPON
(%)
YIELD
YEAR
START
02-JAN-13
PRICE
YEAR CLOSE
31-DEC-13
LAST.WEEK
02-JAN-13
THIS.WEEK
31-DEC-13
10.50% FGN MAR 2014
3YR
10.50
11.73
12.13
86.61
99.59
10.75% FGN MAR 2014
7YR
10.75
11.75
12.20
98.84
99.57
9.20% FGN JUN 2014
7YR
9.20
11.87
12.70
96.45
98.37
9.25% FGN SEP 2014
7YR
9.25
11.75
12.43
96.14
97.78
4.00% FGN APR 2015
5YR
4.00
12.26
13.40
83.81
89.02
13.05% FGN AUG 2016
3YR
13.05
15.10% FGN APR 2017
5YR
15.10
11.54
13.05
111.81
105.33
9.35% FGN AUG 2017
10YR
9.35
11.90
13.07
91.03
91.02
10.70% FGN MAY 2018
10YR
10.70
11.86
13.07
95.44
89.41
7YR
16.00
11.77
13.06
118.81
92.24
7.00% FGN OCT 2019
10YR
7.00
11.69
13.09
78.36
111.28
16.39% FGN JAN 2022
10YR
16.39
11.68
13.20
125..90
75.71
15.00% FGN NOV 2028
20YR
15.00
12.16
13.22
119.75
115.52
12.49% FGN MAY 2029
20YR
12.49
12.19
13.22
102.07
111.44
8.50% FGN NOV 2029
20YR
8.50
12.22
13.22
73.65
95.22
10.00% FGN JUL 2030
20YR
10.00
12.27
13.22
83.80
68.94
-
13.10
-
99.86
INFLATION RATE (JAN-DEC 2013)
10.00
8.00
2010
16.00% FGN JUN 2019
2011
CORPORATE BENEFITS FOR THE YEAR
Y2010
BOND
2012
9.00 9.50 8.60 9.10 9.00
8.40 8.70 8.20 8.00
7.80 7.90 8.00
6.00
4.00
STOCK
Banking
Access Bank
Access (Interim)
ETI.
FBNH
FCMB
Fidelity Bank
Guaranty
Guaranty (Interim)
Skye Bank
Stanbic
Stanbic (Interim)
Sterling Bank
UBA
Zenith Bank
DIVIDEND
BONUS
CLOSURE DATE
85 kobo
25 kobo
0.4 cents
N1.00
Nil
21 kobo
N1.30
N0.25
50 kobo
10 kobo
70 kobo
20 kobo
50 kobo
N1.60
Nil
Nil
Nil
Nil
1 for 25
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
17th April, 2013
4th September 2013
5th July, 2013
13th May, 2013
5th – 7th June, 2013
6th May, 2013
11th April, 2013
3rd Sept, 2013
6th – 10th May, 2013
3rd May, 2013
14th August, 2013
15th – 19th April, 2013
22nd – 24th May 2013
15th April, 2013
5kobo
7 kobo
8 kobo
6 kobo
8 kobo
10 kobo
Nil
Nil
Nil
Nil
Nil
Nil
13th November 2013
14th May 2013
23rd October 2013
10th - 15th January, 2014
2nd September, 2013
9th September 2013
N5.00
24.34 kobo
75 kobo
N1.00
Nil
Nil
Nil
Nil
30th April, 2013
22nd – 26th July, 2013
8th – 9th July, 2013
2nd - 6th September, 13
Breweries
Guinness
Intl Breweries
Nigerian Brew.
N7.00
25 kobo
N3.00
Nil
1 for 85
Nil
21st – 25th October 2013
19th July, 2013
14th – 20th March, 2013
Construction
AshakaCem
Dangote Cement
Julius Berger
WAPCO
42 kobo
N3.00
N2.50
N1.20
Nil
Nil
Nil
Nil
4th June 2013
6th – 10th May 2013
3rd – 5th June, 2013
6th – 10th May, 2013
Conglomerates
Cadbury
Nestle
Nestle (interim)
PZ Cussons
UAC
Unilever
50 kobo
N18.50
N1.50
56 kobo
N1.60
N1.40
Nil
Nil
Nil
Nil
1 for 5
Nil
15th April, 2013
29th May, 2013
25th November 2013
Insurance
Custodian (interim)
Mansard
Custodian
NEM
AIICO
Cont. Reinsurance
Oil & Gas
Mobil Oil
MRS Oil
Oando Plc
Conoil
16th September 2013
27th May 2013
8th – 12th April, 2013
2.00
0.00
JAN
FEB MAR APR MAY JUN
JUL
AUG SEP
OCT NOV DEC
Disclaimer
YEAR
OPEN
02-Jan2013
THIS
Year
Low
THIS Year
High
YEAR
CLOSE
31-Dec2013
Change
(%) BTW
YH & YL
YTD
(%)
JAN-DEC
FO
7.73
7.73
115.64
97.75
1395.99
1164.55
EVANSMED
0.87
0.83
4.80
3.85
478.31
342.53
TRANSCORP
1.05
0.99
5.87
4.35
492.93
314.29
CHAMPION
4.15
4.15
19.48
16.91
369.40
307.47
CONOIL
20.5
20.5
79.8
67.93
289.27
231.37
JOSBREW
1.53
0.81
9.09
4.6
1022.22
200.65
LIVESTOCK
1.44
1.44
7.18
4.30
398.61
198.61
FIDSON
1.06
1.06
2.9
2.79
173.58
163.21
UNIONDICON
4.22
4.29
11.01
10.45
156.64
147.63
WEMABANK
0.52
0.52
1.93
1.22
271.15
134.62
MRS
23.76
16.8
55.90
54.44
232.74
129.12
ETERNA
1.99
1.99
4.87
4.51
144.72
126.63
PRESCO
17.00
17.00
41.14
38.50
142.00
126.47
CCNN
5.30
5.30
12.99
11.75
145.09
121.70
CAP
22.4
22.40
60.00
48.45
167.86
116.29
JBERGER
34.65
33.48
83.75
72.29
150.15
108.63
CADBURY
29.00
29.00
66.28
59.01
128.55
103.48
WAPCO
58.53
54.67
115.00
115.00
110.35
96.48
OANDO
12.35
9.32
24.25
24.25
160.19
96.36
STOCK
NIGERIA’S ECONOMIC TIPS IN 2013

Economy expanded by 6.81% in Q3, 6.18% in Q2, and Q1 GDP of 6.56%.

Industrial scale theft and sabotage caused oil output to fall consistently
from 2.064mbpd in December 2012 to 1.821mbpd as at November
2013.

Inflation rate averaged 8.52% in 2013 and at single digits for the 12
months of the year.

Naira was relatively stable against dollars at official market within CBN
band of N155/$ ±3%

Naira depreciated significantly against the US dollar at the BDC and
parallel markets thus created unprecedented appetite for round
tripping and high volatility.

Nigeria’s external reserves opened the year at $44.337 in January rose
progressively to $48.486 in June due to rising crude oil price and
increased flow of funds from offshore investors but declined steadily to
$43.610b on Dec 31st 2013 upon its use to stabilise the naira.

CBN mandated commercial banks to pay minimum of 30% MPR on
savings deposit (i.e. 3.6%) compared to traditional range of 1.7-2.5%
per annum.
BASIC ASSUMPTIONS FOR INVESTMENT CASE IN 2014
•
Nigeria’s single digit inflation rate (2013 average of 8.52%) implies
positive real return on fixed income instruments.
•
Nigeria’s benchmark interest rate of 12% still remains highest among
emerging and frontier markets this will continue to attract significant
flow of foreign portfolio investments.
•
CBN naira stability policy stance will continue to support flow of foreign
investment into the country.
•
Privatization of power sector is a confidence booster to positive
economic prospects in 2014 with increased flow of funds into the
sector.
•
Nigeria’s stable GDP growth-6.81% as at Q3 of 2013 remains second to
China on global scale supported by enhanced revenue generation other
than oil sector this makes Nigeria an investment hub in Africa.
•
NSE stock market performance for 2013 of 47.19% is significantly
higher than return on investment in other financial assets-TB (10.512%), FGN Bond (12-13%).
•
NSE new trading platform has enhanced transparency in stock market
transactions thus reducing manipulation and boosting investors’
confidence.
•
Regulatory frame work and oversight functions had been strengthened
and enhanced to stimulate confidence in the stock market. Also, advent
of market makers had brought about price stability.
•
The stock market will continue to benefit from increased government
spending and sustained oil price level above budget benchmark of $76/
barrel which will increase economic activities thus improving the
liquidity in the economy.
OUTLOOK FOR 2014








CBN introduced 50% CRR rate on public sector deposits in Nigerian
Banks effective August 7


NIBOR CALL peaked at 55.83% on Sept 19th, a fallout of CBN’s new CRR
policy on public sector deposits, but moderated down subsequently
within 10.50-14.5%.


Nigeria’s Bonny Light Crude traded US$105.50-118.81/barrel well
above 2013 budget benchmark of $76.

Bond Yields traded within 10.95-13.8% higher than 032-3.86% in US,
0.46-3.61% in UK

Foreign and local investors’ participation in NSE market transaction
from January-November stood at 50.94% and 49.06% respectively.

Power : FGN successfully sold power GENCOs & DISCOs to private
investors to pave way for effective power availability, N50b set aside in
escrow account for drawing by GENCOs as buffer against any unsold
generated power


Overall the direction of global economic growth is positive though at
a slow pace
US Fed tapering decisions to influence financial market volatility and
global growth
Nigeria’s Bonny Light crude price to remain well above the 2014
budget benchmark of $77.5/barrel
Projection for Nigerian stock market is largely positive for 2014 most
especially in Q1 & Q2 while some retracements may occur in Q3.
Proposed GDP rebasing is expected to increase the size of the
economy thus enhancing available investment opportunities
Bond market activities to increase as comparable higher yields will
remain a toast for global fund managers
Power sector reform and privatization to increase flow of funds into
the economy
Ahead of 2015 elections, with some taking place between Q2 & Q3 of
2014 there will be increased spending from government and
politicians thus increased systemic liquidity
Following from above, CBN may further tighten monetary policy
especially the use of CRR hike
Exchange rate volatility to continue and trade above the CBN +/-3%
band above official rate especially at BDC and Parallel markets
As the premium between official and parallel exchange rates widen,
devaluation of naira may become inevitable
RISKS TO WATCH IN 2014

US Fed to commence tapering its bond purchase programme, thus put
temporary volatility in stock market prices at every time that Fed is
about to meet.

Heightened political climate in Nigeria will increase investment risks
thus may constrain investment opportunities.

DANGOTE GROUP kick-started building of private refinery

CBN may further tighten monetary policy.

PIB dream still in pipeline for effective reform of the sector


Financial Sector: FBN, GTB and Access bank and others raised
Eurobonds to finance operations at 6.25-7.5% to insulate their
operations from CBN new CRR policy on public sector deposit.
Nigeria’s crude oil production may drop further if leakages remain
unchecked.

Following from above, further decline in foreign reserves will exert
pressure on naira, thus prompting devaluation of the currency.
Disclaimer
Corporate Office
71, Norman Williams Street
South West, Ikoyi, Lagos.
Port Harcourt
CHARIS Plaza Suite 201
141, Olu-Obasanjo Rd
Abuja Office
13, Konoko Crescent
Off Adetokunbo Ademola Crescent
Tel: 234 1 9035651.
Port Harcourt.
Wuse II, Abuja.
08036702177, 08033602630
08023179546
08036692387, 07030535620
Feedback: info@skyviewcapitalng.com
www.skyviewcapitalng.com
Disclaimer

Annual Report - Skyview Capital

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