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US Dollar Wins Worst Performing in G10 Group

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US Dollar Wins Worst Performing in G10 Group

The US dollar fell against all major trade partner currencies in early North American trade while the pound sterling outperformed the G10 basket following the release of S&P Global PMI surveys for April.

Dollar pairs fell widely following the North American open, making the greenback the worst-performing currency in the G10 grouping while placing it close to the bottom of the broader G20 basket, behind only the Chinese renminbi.

Losses built and broadened while US government bond yields fell across the curve after S&P Global PMI surveys surprised sharply on the downside of expectations for April in stark contrast to outcomes reported in Europe and Japan previously.

The S&P Global Flash Manufacturing PMI fell to 49.9 in April, from 51.9 previously, leaving it below the consensus favoring an increase to 52.0 and suggesting the US industrial sector may have slipped into recession this month. Meanwhile, the S&P Global Flash Services PMI fell to 50.9, from 51.7 previously, when it had also been expected to edge higher to 52.0.

A quick summary of foreign exchange activity heading into the US lunch hour showed that GBPUSD was trading 0.76% higher at 1.2442, up sharply from the prior session’s lows in the 1.2298 area, making it the best performing currency in the G10 basket and the second best performer in the G20 group behind only the Korean won.

Sterling was already an outperformer prior to the release of the US PMI surveys after rallying in response to the latest remarks from Bank of England Chief Economist Huw Pill and a better-than-expected S&P Global Flash Services PMI. Pill told the London Campus of the Chicago Booth Business School that “we still have a reasonable way to go,” before he can be confident that UK wage growth and services sector inflation have been squeezed down to a level consistent with the 2% inflation target.

His cautious remarks were in contrast to the latest from Governor Andrew Bailey and Deputy Governor Dave Ramsden, who both said the economy is on track to deliver February’s Monetary Policy Report forecast and alluded to the possibility of UK interest rates being cut some time this summer. Previously, the UK services PMI rose much faster than was expected when climbing to an 11-month high in April, though the manufacturing sector was reported to have slipped into recession while the pace of output price inflation in the services sector moderated to its slowest pace since February 2021.

Elsewhere in Europe, USDEUR  was 0.42% higher at 1.0699, up sharply from the prior session’s lows around 1.0622 while placing the single currency around the middle of the G10 rankings for the session.

The weakening dollar was a significant tailwind for the euro, though the single currency also appeared to benefit from remarks made by Bundesbank President Joachim Nagel and the earlier release of better-than-expected S&P Global Services PMIs. Nagel reportedly told the Association of German Banks that he sees momentum in the German manufacturing sector accelerating and that he would prefer to see more economic data before committing to a June interest rate cut.

Previously, USDEUR was lifted during the European morning after S&P Global Services PMIs surprised strongly on the upside of expectations across the continent. Notably for the European Central Bank, average selling prices rose at an above-average pace “to hint at stubborn inflationary pressures,” with many companies reporting “higher wage rates as a key inflation driver alongside greater energy and fuel costs.” Europe’s manufacturing PMIs, however, signalled an ongoing recession in the sector.

In Asia, USDJPY was 0.01% lower at 154.82 during the North American morning after rising from lows of around 154.65 overnight when the Jibun Bank PMI surveys both surprised sharply on the upside of expectations.

The Jibun Bank Composite Flash PMI rose to 52.6, from 51.7 in March, led by a strong increase in the services sector component of the index and an easing of an earlier reported recession in the manufacturing sector.

Commentary from Japanese government officials was also supportive of the yen after member of the House of Councillors Satsuki Katayama was reported to have said authorities could intervene to lift the currency from its current 34-year lows at any time.

Attention in Japan now shifts to the 19:50 ET release of the Services Producer Price Index on Tuesday, and Friday’s release of Tokyo Core CPI data and the April policy decision from the Bank of Japan.

In North America, USDCAD  was trading 0.18% lower at 1.3675 after falling through the prior session’s lows around 1.3688, which also marked the pair’s lowest level since April 12.

The Canadian dollar was a relative laggard among major currencies on Tuesday. Similar to the New Zealand dollar, Japanese yen and Swiss franc, although the Loonie remained the third best performer in the G10 basket for the recent week. There was no economic data released on Tuesday in Canada where attention now shifts to Wednesday’s retail sales figures for March. The summary of deliberations from the BoC’s April Governing Council meeting will also garner attention on Wednesday. FAAC Disburses N1.1trn Allocation to FG, States and LGs

Ban: Q1 iPhone Sales Slide 19% in China

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Ban: Q1 iPhone Sales Slide 19% in China

Following a ban placed on government official by Beijing, Apple saw a 19% decrease in iPhone sales in China during the first quarter of 2024, marking the lowest performance in the January-March period since 2020.

This decline happened despite the overall growth in the phone market, resulting in a loss of market share to competitors, including Huawei Technologies. Apple’s market share in China fell to 15.7% from 19.7% a year ago, ranking it third overall behind Vivo and Honor.

The decline in sales was due to a ban on government employees using Apple devices and Huawei Technologies’ return to the high-end segment.

Huawei’s sales increased by 69.7%, moving it to fourth in market share at 15.5%. The rise of Huawei’s new sales in the premium segment and subdued replacement demand for Apple devices also contributed to the decrease in Apple’s sales.

Despite these challenges, there are indications of potential improvement in the second quarter. Counterpoint Research suggests a possible shift in momentum for iPhones, with new color options and aggressive sales initiatives being potential factors.

The company’s future steps in China are eagerly awaited, particularly with the upcoming earnings report on May 2. # Ban: Q1 iPhone Sales Slide 19% in China Treasury Bills Yield Falls as Liquidity Pressure Ease

Wema Bank Earmarks N70m for Hackaholics Contest

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Wema Bank Earmarks N70m for Hackaholics Contest

Wema Bank unveiled the 5th edition of its flagship youth and startup-focused tech competition, Hackaholics 5.0, with no fewer than 15,000 applicants being targeted.

The bank also plans to spend over N70m on winners of the competition as part of its commitment to support young and budding innovators and start-ups across the country.

Hackaholics is an annual tech and innovation competition launched in 2019 to provide a platform for young Nigerians with tech-driven ideas to bring their game-changing ideas to life, scale up their ventures or startups and access a wider market for their tech-enabled solutions.

The breakdown of the prize money indicated that N30m would go to the first prize winner; N20m for the second prize winner, while the third prize winner gets N15m.

In addition, N10m would go to a women-led start-up. Themed “Meta-Idea: DigiTech Solutions for Africa’s Prosperity”, Hackaholics 5.0 will be executed over a six-month period, touring 10 universities across the country.

The Executive Director, Retail and Digital, Mr. Tunde Mabawonku, said Wema Bank is committed to empowering young people through innovation.

“This Hackaholics is so important to us. It is a crucial platform for exploring digital transformation and innovation. Our vision is ambitious and audacious and we believe it is achievable by embracing innovation. I encourage everyone to key into Hackaholics 2024. Bring your ideas and let us use technology to create solutions for societal impact,” he said.

Wema Bank’s Chief Transformation Officer, Babatunde Mumuni, said the bank is using the competition to promote and support STEM education.

“With the birth of ALAT, a few things became clear, one of which is that while we have adopted innovation and digital excellence as our path to greatness, we need talented, bright minds to drive this innovation, and this is one of the reasons we launched Hackaholics.”

The Divisional Head of Brands, People and Culture, Ololade Ogungbenro, stated that the bank is supporting Nigeria’s vibrant huge youth population thereby discouraging the japa syndrome. Brent Price Rises to $88 on US Crude Oil Data

Brent Price Rises to $88 on US Crude Oil Data

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Brent Price Rises to $88 on US Crude Oil Data

ICE Brent, West Texas Intermediate (WTI) crude oil prices rose following US data that shows demand would rise despite market wide supply constraints.

Brent traded at $88.55 per barrel on Wednesday, representing a 0.15% increase from the closing price of $88.42 per barrel in the previous trading session.

WTI traded at $83.46 per barrel at the same time, a 0.12% rise from the previous session that closed at $83.36 per barrel.

The American Petroleum Institute announced late Tuesday an estimated decrease of 3.23 million barrels in US crude oil inventories, against the market prediction of a build of 1.8 million barrels.

The data indicates some tightening in the US markets as the travel-heavy summer vacation season draws near. If official data from the Energy Information Administration (EIA) later on Wednesday reveals a reduction in the amount of gasoline and oil stockpiles, prices are predicted to rise even further.

Meanwhile, the longstanding Israeli-Palestinian conflict showed no signs of abating and is continuing to raise geopolitical risks in the Middle East.

Israel is continuing its relentless onslaught for the 201st day despite a UN Security Council resolution demanding an immediate cease-fire in the besieged Gaza Strip.

Since last October, Israel’s offensive has killed over 34,183 people and injured 77,143 others amid a crippling blockade that has left most of the population on the verge of starvation.

Israeli airstrikes on several areas in the Gaza Strip are still in play, including the city of Rafah. This is where Israel insists on invading under the pretext of confronting the last strongholds of the Hamas movement, despite increasing international warnings of catastrophic consequences in an area that hosts approximately 1.4 million displaced people. Treasury Bills Yield Falls as Liquidity Pressure Ease

Treasury Bills Yield Falls as Liquidity Pressure Ease

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Treasury Bills Yield Falls as Liquidity Pressure Ease

The average yield on Nigerian Treasury bills settle lower over increased demand for bills in the secondary market ahead of midweek primary auction. Liquidity concerns in the financial system had triggered massive selloffs, which raised yield upward by more than 6% last week.

Information obtained from FMDQ Securities Exchange revealed that liquidity level in the money market increase, though funding rates diverge as banks queue at the Central Bank Standing Lending Facility to meet their daily funding demand.

Data from the money market showed that short term benchmark interest rates diverge, as there was no significant inflows into boost liquidity level strongly.

The overnight lending rate contracted by 21 basis points to 30.8%, in the absence of any significant pressures in the system. On the other hand, pen repo rate witnessed a 7 basis points increase to settle at 29.96%.

Analysts expected short term benchmark interest rates to rise sharply this week on expected effects of Central Bank of Nigeria Treasury bills primary market auction.

Treasury bills buying in the secondary market caused the average yield to contract by 7 basis points to 25.1% on Wednesday, according to Cordros Capital Limited.

Traders said in the market update that across the curve, the average yield increased at the short (+77bps) end. This was due to sell pressures on the 16-day to maturity whose yield rose by +391bps.

Yield dipped at the mid (-2bps) and long (-44bps) segments driven by interests in the 156-day to maturity (-2bps) and 226-day to maturity (-511bps) bills, respectively. Elsewhere, the average yield advanced by 41bps to 18.8% in the OMO bills segment in the secondary market.

Trading activities on The FGN secondary bond market was bullish. Fixed interest securities investor interests were seen at the short to mid-segment of the yield curve. Notably, activity was evident in the 22-Jan-26 (-72bps), 20-Mar-26 (-56bps), 20-Mar-27 (-58bps) and 27-Apr-32 (-16bps) instruments. Consequently, the average yields dropped by 7 bps to 18.97%. Naira Devaluation Deepens Economic Crisis in Nigeria

Agency Seals UBA Branches in Kaduna State Over Alleged N14.3m Unpaid Tax

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Agency Seals UBA Branches in Kaduna State Over Alleged N14.3m Unpaid Tax

The Kaduna Internal Revenue Service (KADIRS) on Wednesday sealed the United Bank for Africa branches in the state metropolis over an alleged N14.3 million unpaid tax.

Speaking to newsmen after the exercise, Hajiya Aysha Ahmad, the KADIRS Board Secretary/Legal Adviser, said the enforcement was to ensure tax compliance in the whole state concerning withholding taxes and money agents

“We sent so many demand notices to them. We have asked them to pay the money but they refused, we are left with no other option but to enforce,” she said.

Ahmad added that the service wants voluntary compliance with tax payment while lamenting that the defaulter had been recalcitrant.

She, however, said when the defaulters pay, the service would unseal the premises.

Speaking further, the board secretary said the enforcement was part of a process to achieve the N120 billion revenue target set by the Kaduna state government.

“To achieve a target, there is always a starting point. Sealing UBA branches in the state for tax default is our start. We are also going after all other defaulters to get what is due to the state government.

“We served them with demand notices. We have been communicating with their consultant and Headquarters. They even took us to court and the outcome was like a win-win situation at the tax appeal tribunal.

“The court gave us directives to review our assessment which we did and they did not still comply. It is on the reviewed assessment we are enforcing this morning,”she said. Naira Devaluation Deepens Economic Crisis in Nigeria

Ahmad called on the people of the state to ensure voluntary tax compliance, describing it as a civic responsibility.

Unilever Nigeria Posts N3.4bn Profit in First Quarter

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Unilever Nigeria Posts N3.4bn Profit in First Quarter

Unilever Nigeria Plc grew its net profit by 39.6% year on year to N3.4 billion, driven primarily by strong revenue across various product segments and a higher finance income during the quarter from N2.407 billion in Q1-2023.

The company reported a 57.8% year on year growth in top-line, following stronger revenue accretion across its product segments during the quarter, according to analysts.

Specifically, the personal are and beauty & wellbeing line surged by 97.8% and food products grew by +36.4%. The growth recorded at the segments accounted for 43.7% and 56.3% of total revenue for the period, respectively.

Due to tough macroeconomic condition and increase rivalry, Unilever Nigeria discontinued the Home Care product line in September 2023 and split the Personal Care and Beauty & Wellbeing lines into two separate segments at the beginning of the year.

Its unaudited results showed that the company’s cost of sales increased by 75.0% year on year, largely due to the higher cost of raw materials.

 Interestingly, the company recorded a revaluation gain of N1.18 billion arising from foreign currency-denominated balances related to deposits for imports of raw materials, which lowered the cost of sales amount.

Consequently, the gross profit margin declined to 41.8% from 47.5% in Q1-2023.

Its operating expenses rose by 100.7% year on year in the period, a consequence of about 435% year on year increase in marketing expenses. Its overheads also rose by +52.8% year on year.

This resulted in a decline in the operating profit by 17.5%. Meanwhile, the company recorded a net finance income of N516.3 million versus net finance cost of N159.9 million in Q1-2023.

Analysts said this was driven by a significant foreign exchange gains in the bank balances and higher interest on call deposits and bank accounts. This masked the surge in interest paid on third-party bank loans.

At the end of the period, Unilever Nigeria pre-tax profit moderated to 3.1% year on year. Further down, the 40.2% decline in the tax charge for the period helped to keep the company’s bottom line above water, CardinalStone Securities Limited said in its review..

Unilever Nigeria divestment from the homecare business category, following a strategic decision to place greater focus on its margin-accretive products, eased further bottom-line pressure. As a result, EPS grew by 18.4% year on year to N0.58.

The company’s net cash balance decreased by 21.3% YoY to N38.9 billion, nudged by increased advances and prepayments made to leverage favourable pricing opportunities for raw and packaging material needs. Naira Sinks to N1300 despite FX Sales to BDCs

Axxela Decides on 50 MMSCF/D Gas Processing Plant

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Axxela Decides on 50 MMSCFD Gas Processing Plant

Axxela Ltd., says it has taken a Final Investment Decision (FID) for the development of a gas processing plant, situated in OML 56, Delta State, South-South Nigeria.

Mr Franklin Umole, the Director of Business Development of Axxela, said this in a statement on Tuesday in Lagos.

Umole said that the strategic investment marked another significant stride toward delivering on Axxela’s commitment to deepen domestic gas utilisation in Nigeria.

He said that the gas processing plant with a total capacity of 50 MMSCF/D would be delivered in phases.

According to him, the first phase will comprise a 12 MMSCF/D modular plant, with an interconnection pipeline network of about 4km alongside other ancillary infrastructure.

“The facility is expected to commence operations by the end of 2024.

Speaking on the development, Umole said, “As the federal government continues to pursue its decade of gas and energy transition agenda.

“We remain a reputable private sector partner with the capacity to develop gas processing plants aimed at tackling the longstanding challenge of gas flaring and commercialisation in Nigeria.

“We are positioning to develop requisite infrastructure for natural gas processing and last mile distribution that creates market access for at least 20 per cent of Nigeria’s gas demand.

“Over the past two decades, we have been at the forefront of natural gas advocacy.

“And this project is a further reaffirmation of our dedication to gas infrastructure development and our vision to deliver innovative energy solutions across Nigeria and Africa,’’ he said. United Capital Shareholders Approve N10.8bn Dividend

Afreximbank Bags Six Awards at Capital Markets Africa Awards

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Afreximbank Bags Six Awards at Capital Markets Africa Awards

The African Export-Import Bank (Afreximbank) has bagged six awards at the recently concluded 2024 Bonds, Loans and ESG Capital Markets Africa Awards in South Africa.

This is contained in a statement signed by Vincent Musumba, Manager, Communications and Events, Afeximbank, in Abuja on Tuesday.

Musumba said the awards were presented on the sidelines of the Bonds, Loans and ESG Capital Markets Africa Conference.

He said the awards recognised Afreximbank’s outstanding achievements in financing, promoting, and facilitating trade and for its broadening work to facilitate sustainable economic growth and development in Africa.

Musumba said Afreximbank was recognised with ‘Financial Institutions Bond Deal of the Year’ for acting as Joint Lead Manager on the debut 300 million dollar senior Eurobond issuance by Mauritius Commercial Bank (MCB), in April 2023.

“This marked the first Investment Grade-rated commercial bank senior bond out of Africa as well as the first international Eurobond out of Mauritius.”

He said Afreximbank also won the ‘Infrastructure Finance Deal of the Year’ award for its 1.76 billion dollar loan to the Government of Tanzania, issued on June 30, 2023.

Musumba said the award for the Export Credit Agency, Development Finance Institution, and International Finance Institution Deal of the Year was presented to the bank for its 640 million dollar Samurai loan issued in July 2023.

“The Renewable Energy Finance Deal of the Year award went to the Bank for its 147 million euro loan to the Government of Cameroon which was issued on October 7, 2023.”

“For the Oil and Gas Deal of the Year award, the organisers recognised Afreximbank for its 1.3-billion dollar loan to Sonangol Finance Limited, issued in August 2023.”

He said the final award to the bank was for being the Financial Institution Debt House of the Year.

Musumba said Chandi Mwenebungu, Director and Group Treasurer, Afreximbank, reacting to the awards, was quoted as saying “These awards represent a recognition of our bank’s strategic work in Africa’s financial markets.

“They also present an opportunity for Afreximbank to recognise and celebrate the outstanding achievements of its clients and partners working to advance the economic development of Africa.”

Mwenebungu said that the bank had been playing a leading debt-arranging role across Africa’s main industry sectors.

The director said Afreximbank had been instrumental in promoting the inclusion of environmental, social, and governance (ESG) standards in financing structures, thereby furthering their application on the continent and attracting capital.

Musumba said the Bonds, Loans and ESG Capital Markets Africa Conference is the only Pan-African debt event bringing together local and international bonds issuers, investors and financial institutions, and financial services providers from across the continent.

“The conference is recognised as the number one business meetings facilitator for Africa’s capital markets and is Africa’s largest corporate and investment banking event.”

He said no fewer than 1,060 senior borrowers, issuers, regulators, bankers, investors, advisors, and government officials from 383 companies and 46 countries participated. NERC Transfers Regulatory Oversight of Electricity Market in Ekiti to State Govt

Naira Sinks to N1300 despite FX Sales to BDCs

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Naira Sinks to N1300 despite FX Sales to BDCs

The naira weakened against US dollar at the Nigerian Autonomous Foreign Exchange market (NAFEM) due to squeezed foreign currency liquidity at the time the market recorded an increased demand.

In the parallel market, exchange rate has started to claw back losses after the apex bank sold foreign currency to FX traders in the informal segment.

FX spot rate at the parallel market has started trading around N1230 -1250 early in the midweek as Central Bank of Nigeria (CBN) asked BDCs to bid for $10,000 at subsided spot rate of N1,021. 

According to FMDQ Securities Exchange, exchange rate slipped by 5.1% to close at N1300.15 per US dollar at the official window of the Central Bank.

Last month, Naira pared back losses against the dominant US dollar to sub NGN1400 levels within the official section DUE to improve USD liquidity and CBN interventions within the N1300–1400/$ corridor.

While the authority denied defending the naira, FX subsidies at the informal segment have helped the official rate to reclaim value. Some manufacturers, and importers told MarketForces Africa that sometimes they channel FX requests to informal currency traders when there is an insufficient amount in the official market.

To them, the Bureau de Change or the informal currency traders are less bureaucratic and timely for some transactions that cannot really wait for banks to process for final approval.

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