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Inflation May Breach Long-Term Objective Of Central Banks – CBN

In its recent Monetary Policy Committee (MPC) communiqué, the Central Bank of Nigeria (CBN) noted that the global economic disruption by the COVID-19 pandemic that spurred inflation in some countries due to supply chain impediments “may breach the long-term objective of several central banks in the medium-term”.

It stated that Emerging Market and Developing Economies (EMDEs) experienced sustained high inflation rates, with institutional factors influenced the escalation of countries with “higher inflationary pressures”.

The communique read, “The MPC noted the gradual recovery of prices, especially amongst some developed economies as inflation continued a steady movement towards the long-term objective of their central banks.

“It is expected that inflation may breach the longterm objective of several central banks in the medium term, as economic activities continue to recover with more people being vaccinated.

“In several Emerging Market and Developing Economies (EMDEs), inflation has remained relatively high, with some economies confronted with significantly higher inflationary pressures than others, because of legacy structural issues, capital flow reversals and unabating exchange rate pressures.”

The committee noted, in the communique, that the recovery of global economies from the “six-quarter long COVID-19 pandemic” was due to an extensive vaccination roll out by countries and other factors such as relaxing restrictions of movement, reopening of economies and the resumption of international flights.

It added that “In the domestic environment, the economy is expected to remain on the current trajectory of recovery in 2021, mirroring the cautious optimistic trend in global output recovery.”

Moderate Decline In Inflation
The Committee highlighted the country’s moderate decline in headline inflation on a year-on-year basis declining from 18.17 percent in March 2021 to 18.12 percent in April 2021.

It stated that a slight fall in the inflation rate was due to “a marginal slowdown in food inflation to 22.72 per
cent in April 2021 from 22.95 per cent in the previous month.

“This was partly attributed to the Bank’s massive interventions in various sectors of the economy to stimulate aggregate demand and boost production, particularly for Small and Medium Scale Enterprises.”

According to the CBN, data showed that projections for key macroeconomic “variables for the Nigerian economy suggest that output growth will continue to recover for the rest of 2021.”

Stock market index dips further by 0.08 per cent

Trading on the Nigerian Exchange Limited (NGX) sustained sliding profile, as most blue-chip stocks suffered price depreciation, causing the All Share Index (ASI) to plunge further by 0.08 per cent.

Specifically, at the close of trading yesterday, market capitalisation of listed equities declined by 0.08 per cent to N19.940 trillion from N19.956 trillion recorded the previous day.

The ASI also depreciated by 30.82 basis points to 38256.76 points from 38287.58 points traded on Monday.

Investors traded 250.204 million shares valued at N1.552 billion in 3534 deals as against 141.146 million shares valued at N1.094 billion that exchanged hands the previous day in 3566 deals.

Analysts at Afrinvest said: “With CBN retaining all Monetary Policy Rates (MPR) at the just concluded MPC meeting, we expect to see some bargain hunting on fundamentally viable stocks in the next trading session.”

Analysts at Vetiva Dealings and Brokerage said: “After the MPC chose to hold rates constant once again, we foresee a mild uptick in investor sentiment in the coming sessions, on the back of renewed interest in the Nigerian market, thanks to the streamlined FX policy of the CBN and encouraging Q1 GDP results.”

On the price movement chart, C&I Leasing led gainers’ chart with 9.85 per cent to close at N4.46 kobo. Royal Express followed with a gain of 8.82 per cent to close at N0.74 kobo, Chi Plc added 7.27 per cent to close at N0.59 kobo. Neimeth International Pharmaceutical gained 7.02 per cent to close at N1.83 kobo, Initiates Plc gained 6.82 per cent to close at N0.43 kobo.

On the other hand, Lasaco Insurance topped losers’ chart, shedding by 7.14 per cent to N1.43 kobo, while Champion Breweries followed with a loss of 5.66 per cent to N2.00 kobo.

AIICO Insurance dipped by 4.96 per cent to N1.15 kobo. Chams Plc dipped by 4.76 per cent to N0.20 kobo. Mansard Insurance declined by 4.44 per cent to N0.86 kobo.

The result further showed that Courtville Business Solution was the most active stock during the day, exchanging 36.851 million shares valued at N7.472 million.

Zenith Bank followed with 28.188 million shares worth N649.411 million, Jaiz Bank traded 25.851 million shares cost N14.831 million.

Chams PLC traded 16.098 million shares worth N3.220 million, Sterling Bank exchanged 13.676 million shares worth N21.812 million.

FG willing to work with private sector to revive economy, says Buhari

President Muhammadu Buhari has congratulated the management of the Nigerian Exchange Limited (NGX) on the successful conversion of the defunct Nigerian Stock Exchange (NSE) into a public company.
The President spoke, yesterday, at the NGX virtual launch of the ‘Stock Africa Is Made Of’ campaign to unveil the exchange’s new identity as well as amplify NGX Group’s positioning and commitment to the African financial markets.

Delivering his remarks before sounding of the closing gong, the President assured Nigerians that the Federal Government would continue to engage and collaborate with the private sector to improve lives and transform the country’s economy.

He affirmed that the exchange has continued to play its part in nation-building by stimulating economic growth and providing a platform for businesses to raise capital.

He said: “Let me start by congratulating Nigerian Exchange Group Plc on its recently-concluded demutualisation, which is the first in the country. I recall signing the demutualisation Bill in August 2018, paving the way for the long-awaited demutualisation of the then NSE.

“It is my pleasure to join you all at this important event organised to amplify the positive narrative about Africa and its great potentials. The occasion of the demutualisation of the NSE is yet a proud moment for all of us. Indeed, all Nigerians deserve congratulations for this feat as it is the beginning of a new era for the capital market.

“The exchange continues to play its part in nation building by stimulating economic growth and providing a platform for businesses and individuals to save and raise capital through innovation, diversified products and services, enabling regulatory environments and much more.”

Also speaking at the event, the Minister of Finance, Budget and National Planning, Zainab Ahmed, described the demutualisation of the exchange as a landmark event that generated intense global interest.

According to her, the exercise is critical for the development of the Nigerian capital market (NCM) because it would enable the exchange to build new strategic partnerships, achieve capital raising flexibility and improve its operational efficiency.

She said the transition is expected to deepen the investor base of the exchange as it unlocks opportunities for domestic and institutional investors to create significant economic value by bringing the capital market in line with prevalent international practice and standards resulting in enhanced governance.

NGX group, Abimbola Ogunbanjo, assured that the NGX group is better positioned to support sustainable economic development, provide a wide range of services including listing and trading of securities, licensing, data solution and regulation, real estate among others.

“Our story is one birthed from resilience, collaboration, determination and continued focus on our vision. A true Africa story! With demutualisation, NGX Group is positioned to enable strong economic growth and contribute its quota to the development of the Nigerian capital market, and the African Continent.”

On his part, the Group Managing Director/Chief Executive Officer, NGX Group, Oscar Onyema said: “At Nigerian Exchange Group Plc, we have the vision to be the premier exchange hub for Nigerian businesses and for the wider African economy, building on the strong reputation and corporate governance the NSE has established over the years.

“As we march bravely into the NGX era, we look forward to impact and create partnerships that will unlock value for our stakeholders, whilst improving the state of the Nigerian economy. It is a period to reinforce on the global stage, our great African pedigree and the ‘Stock Africa Is Made of.”