Being an Analyst Note issued by Proshare Research on November 24th, 2022

Economists Review the Multidimensional Effects, Triggers, and Fixes for Petrol Scarcity 

With the continuous scarcity of petrol spread across many southwest States and Abuja, commercial bus fares have risen on average by 50% while food prices have also gone up. The meeting between the leadership of NNPC Ltd and oil marketers anchored it on logistic and distribution issues, requesting members of the Major Oil Marketers Association of Nigeria (MOMAN) to work overtime to bridge the supply gap. Proshare analysts argued that the challenge is multidimensional, including the soaring cost of shipping voyages, dollar scarcity, logistical issues, multiple taxes, and human distortion. Analysts believe the scarcity cycles will continue to surface at intervals, except some drastic quick fixes are adopted. These include phase deregulation of petrol, operation of some refineries, or switching to naira-denominated charges on fuel imports. 

FG Shares N736.782bn FAAC Revenue for October 2022

In October, the Federation Account Allocation Committee (FAAC) allocated N736.78bn to the FG and other federating units. The allocation is +5.21%, up from the N700.24bn for September 2022.  Further, comparing the FAAC allocations for October with that of September, Analysts observed that distributable statutory revenue declined by -16% hitting N417.724 bn. However, distributable value-added tax (VAT) revenue appreciated +12.2% to N213.283bn, while other non-oil-revenue also declined-29.02 % to hit N5.88bn (see chart 1 below).

Chart 1:

Excess Crude Account (ECA) Rises to $476,513

Nigeria's Excess Crude Account (ECA) balance rose to $472,513.64 as of November 2022. While Distributable VAT seems to be supporting the rise in FAAC Allocations, Analysts express concern about how sustainable such a trend is, especially in the light of an imminent slowdown in the economy. Analysts believe that the Excess Crude Account has resurrected questions about the legality of maintaining the ECA. The Account, established in 2004, was meant to serve as an account into which the excess amount of the budgetary benchmark from crude oil proceeds would be lodged. But the fact that the Account is maintained as an FG account instead of a Federation account raises more questions than answers. Following the establishment of the Sovereign Wealth Investment Authority Act in 2011, such savings were meant to be saved in the Sovereign Wealth Fund, invariably closing the ECA. Yet as of today, the ECA is still in operation.

Commodity Market Analysts Ask What Next for Gold and Silver?

Gold and Silver are part of rare commodities that investors have long valued. Gold is the most high-profile precious metal as it generates a lot of attention from investors, traders and analysts. Gold has a Y-t-D of -3.78%, while Silver has done much worse than Gold, having a Y-t-D of -7.3%. Gold has been affected by Fed's rate hikes this year as investors have moved to the currency market, 'Dollar.' If non-farm payroll is high, investors tend to move to buy the dollar as they expect economic growth. With Fed chair Jerome Powell stating that the Fed could push rates up at least five percent, analysts predict that we could see a bearish push from Gold with investors sticking to the dollar as a safe haven (see chart 2 below).

Chart 2:

Strong Upside in the Industrial Goods Sector Pulls Equity Market Up

The Nigeria Equity market continued its bullish momentum as its All-Share Index advanced by 2.90% to close at 46,232.37 basis points against a 0.60% gain recorded previously to close at 44,662.96 basis points at the end of the last trading session. In Naira terms, the NGX Market CAP records a N709.73bn gain. Dangote Cement and BUA cement recorded +9.98% and +9.72%  increases in their share price to pull up the Industrial Index by 9.52% topping the gainers' chart against the previous trade session. Sectoral Performance was broadly positive as the market recorded fifteen (15) NGX sector indices closed northward, zero (0) closed southward, and three (3) closed flat. Analysts believe investors are gradually pivoting back into the equity market for the long run and taking advantage of previous sell-offs to buy at reasonable prices (see table 1 below).

Table 1: 

Investors Gobble up Total Offer at the GG NTB Primary Auction 

Despite the MPR hike preceding the primary auction, the DMO sold exactly N213.43bn worth of notes offered, indicating a substantial investor's risk appetite. The 364-day tenor had an oversubscription of 147%, while the 91-day and 182-day were undersubscribed by -63% and -93%, respectively. The rates on the 91-day and 182-day stayed unchanged at 6.50% and 8.05%, while the 364-day rose by 85bps to 14.84%. The buying interests at the auction should spread to the secondary market today as the adjustment in rate should attract investors (see table 2 below).

 Table 2: 

Cybercriminals Target Telegram Accounts, NCCCSIRT Warns

The Nigerian Communications Commission's Computer Security Incident Response Team (NCC-CSIRT) is warning of a wave of cyberattacks aimed at gaining access to users' telegram accounts. It has advised users to adopt two-factor authentication to protect their Telegram accounts and not to download unknown Advanced IP Scanner Software. Ukrainian cyber experts discovered the attack using Vidar Malware (Vidar Stealer) to steal Telegram session data. 

Analysts believe that the absence of configured two-factor authentication and a passcode would allow unauthorized access to the victim's telegram account and corporate Account or network. Telegram is significantly more complex than its direct rivals as it serves over 500m users and provides seemingly limitless groups, channels, and a range of other sophisticated features.

Litecoin's Social Engagement Surges to One Year High 

Despite the fall and rise in the market, Litecoin captured the attention of the broader cryptocurrency community, as its daily social engagements reached a peak of 99.91m. Litecoin last clinched this lever of social engagement over a year ago, which triggers the community to pay close attention to it. Moreover, the asset's surge in social engagements comes amidst a surprising rally, as it outperforms most mainstream assets. Analysts believe the sudden increase in social activity could be attributed to the bullish price move in Litecoin, which recently overtook SHIB coin by market capitalization. Litecoin is currently running a market cap of $5.5bn, now sitting at the 13th largest mainstream crypto asset, with SHIB coin relegated to 15th position, having a valuation of $5.3bn at the time of writing (see chart 3 below).

Chart 3: