Being an Analyst Note issued by Proshare Research on November 3rd, 2022

Analysts See Nigeria as the Refining Hub of Africa in 2023

The latest World Oil Outlook (WOO) of the Organisation of Petroleum Exporting Countries (OPEC) showed that 1.2mb/d of the 7.3mb/d global additional refining capacity expected in the medium term (2022-2027) would come from Africa. Over half of expected Africa's refining facilities will be accounted for by the Dangote's 650,000b/d refinery complex. The Dangote refinery will complement Angola's 100tb/d, Algeria's 110tb/d, Egypt's 160tb/d, DR Congo's 110tb/d, and other modular refineries from Guinea, Ghana, and Senegal, among others. Analysts expect the onboarding of these refineries to ease the tightness in the downstream oil sector in Africa. According to the Outlook, Asia-Pacific, the Middle East, and Africa will account for over 90% of the long-term (2022-2045) refining capacity addition to the global economy. The operation of the Dangote refinery and the four national refineries under rehabilitation will position Nigeria as a refining hub of Africa: raising the country's refining capacity and increasing petroleum products exportation. The increase in refining/exports and the halt in petroleum importation will further ease the pressure on the naira against the dollar.

Naira Slides 17% week-on-week at Parallel Market 

The pace of the fall in naira is becoming problematic as the decision by CBN to redesign specific notes causes a rush to exchange stashed naira for dollars in the parallel market. On Wednesday, the naira fell significantly to 900/US dollar from 768/US dollar recorded on October 26, indicating a -17% week-on-week depreciation at the parallel market. The pound has followed a similar trend, settling at N950 to a pound yesterday. At the official rate, the naira depreciated to 446/US$ at the Investor and Exporter FX windows on Tuesday, the highest fall since the beginning of the year despite the frequent intervention. Fears about the apex deadline essentially cause the pursuit of the dollar and pound. Analysts worry that the probability of a 1000/US dollar is closer than envisioned and might see a worse depreciation in the coming weeks as the chase toward FX widens.    

Investors Buy Interest in Dangote Cement Lifts Equity Market

The NGX All-Share Index (ASI) rose by 1.23% to close at 44,283.02 Index points against a 0.21% loss recorded at the end of the previous trading session. Analysts attribute the N292.65bn gain in market capitalization at the end of the last trading session to the increase in the share price of Dangote Cement, with a +8.84% gain to close at N240 as against N220.5 recording a gain of N332 bn in market Capitalisation. Analysts believe the renewed buy interest in Dangote Cement can be attributed to the company's increased sales volume in their Q3 report, posting a Profit of N213bn for the year.

Sectorial Performance in the Equity Market was broadly positive as nine (9) sectors closed positive; six (6) sectors closed negative, while three (3) sectors closed flat. The NGX-IND Index advanced by 3.98% to top the gainers' chart, while the NGXMERIVAL dipped by 1.52% to top the losers' chart (see chart below). 

Chart 1: NGX ASI SHARE PRICE MOVEMENT

Nigeria Telecom Operators Gain from Rising Data Use as Voice Revenues Slow

According to the information in the financial statement of MTN Nigeria and Airtel Africa, data is fast catching up with voice, which used to be the primary revenue source for telecom operators.  In the nine months that ended September 30, 2022, MTN Nigeria recorded a 4.4% growth in voice revenue to N753.7bn, whereas its data earnings jumped by 49.1% to N549.6bn. Airtel also recorded a 26.7% growth in data revenue compared with an 11.9% increase in voice revenue. Analysts believe data will overtake voice revenue at some point as data from DataReportal shows that 92.4% of the total internet users in Nigeria are from smartphones and the uptake of 5G.

Meta to Test Ways to Make and Sell NFTs on Instagram

Meta announced it was testing ways to buy and sell non-fungible tokens (NFTs) to fans and collectors on and off Instagram. Meta has expanded the list of digital collectables that users can showcase on Instagram, including videos and added support for the Solana blockchain and Phantom wallet. Analysts predict this move would boost Solana (SOL) blockchain if Solana merges with Meta, just as with Doge and Twitter.

The cryptocurrency market showed a bearishness, with Bitcoin and Ethereum slumping. While Bitcoin has struggled to break the US$20,604.63 resistance level, it dropped to US$20,2748 in the early hours of Thursday. Elsewhere, Tether, BNB, USD Coin, Binance USD and Dogecoin were stable.