Experts Observe that Dollarization of Local Oil Transactions Hurt Oil Marketers 

Over the weekend, oil marketers under the aegis of the Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN) again reiterated their calls for the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Ports Authority (NPA) to accept ports charges in naira rather than dollars. Operators in the industry noted that despite the deal brokered by the downstream regulator, NNPC Ltd, and major stakeholders for payment of port charges in naira, most transactions and charges are still made in dollars. 

In effect, sustained strengthening of the greenback against the naira raises the cost of petroleum importation and the associated transaction charges. This eats into the already thin margin of marketers and makes retailing at the regulated pump price unsustainable. Proshare analysts believe oil market operators would not have access to dollars at the official rates, unlike the NNPC Ltd. But a viable respite should be an executive order de-dollarising all transactions and charges within the industry in the domestic market. 

DMO to Raise N225bn from FGN November Bond Issuance  

The FGN monthly bond offer is slated for November 14 to 19, 2022. The offer for subscription is N225bn notes, with N75bn each across the three tenors. The rate for the tenors remained unchanged at 14.55%,12.50%, and 16.2499% for FGN APR 2029, FGN APR 2032, and FGN APR 2037, respectively. A minimum subscription of N50m and a multiple of N1000 after that is required to invest. The rising inflation, declining real return, and hawkish MPR have recently influenced investors' subscription at the monthly bond auction, consistently recording a decline in subscription in the past few months. The auction's minimal participation might persist until the end of the year as investors bid for higher coupon rates. 

COP27 Pays Attention to Agriculture with Fertilizer Top on the Agenda. 

The agricultural sector gained attention at COP27 as discussions were made on the global fertilizer challenge. A consortium of countries came together to solve the problem, resulting in a fundraising of US$135m for fertilizer efficiency. Janusz Wojciechowski, commissioner of agriculture, European Union, pointed out that the current challenge with fertilizer started when the Covid-19  pandemic affected supply chains, causing higher fertilizer prices in 2021. Next, the highest fertilizer exporter, Russia, invaded Ukraine, causing an increase in food prices as exports of grains like wheat and corn were disrupted.

Moving into the Q3, countries battled extreme weather conditions ranging from prolonged heat to flooding in different parts of the world, which destroyed many farmlands. This has posed a global threat as the world braces for a global decline in harvests compared to the initial forecasts earlier this year. The Global Fertilizer Challenge aims to reduce the use of mineral fertilizers and adopt new tools, including biological products, to enhance nutrient efficiency and green nitrogen sources. The first challenge the plan would need to solve is making fertilizer available and affordable, as this would go a long way in helping farmers.

Twitter Lays off over 4,000 Contract Workers

An estimated 4,400 of Twitter's 5,500 contract workers were laid off without prior notice. Unfortunately, the company has no choice as it is losing over US$4m daily. The mass layoffs follow thousands of job cuts at other major tech companies, including Meta, Microsoft Corp MSFT.O, and Snap. Analysts observed that the pandemic-led boom that boosted tech companies and their valuations has turned into a bust this year in the face of decades-high inflation and rapidly rising interest rates.

The Nigerian technology startup ecosystem has recently gained momentum and recorded impressive growth. Nigerian startups retained US$1.37bn of Africa's US$4bn funding in 2021, and reports show that Nigeria has the highest volume of startups in Africa. Unfortunately, Nigerian startups have a high failure rate, with a whopping 61% recorded from 2010-2018. These failures have been attributed to various factors, including aggressive government policies, regulatory bottlenecks, over-saturation of startups in select locations, talent shortage, high cost of doing business, and funding challenges.

Equity Market Turns Mildly Bullish as Market Remains Fragile

The Equity Market ended the second trading week of November at 43,968.75 index points representing a +0.30% growth as against the previous month's trading session and a week-on-week (WoW) decline of -0.68% to close at 43,968.75. The decline caused a N163.64bn loss in naira term, with market capitalization settling at N23.95trn. The Year-to-date (YTD) maintained its positive position to close the week at +2.93%. Analysts noted that sectoral performance was broadly negative WoW; four (4) sectors closed positive WoW while eleven (11) sectors closed negative WoW, and two (2) sectors closed flat WoW. NGX AFRHDYI topped the gainer's chart with a gain of +1.10% WoW, while the NGX INSURANCE Index topped the loser's chart with a loss of -2.25% WoW. Analysts attributed the decline in the Equity Market to high inflation expectations. Analysts expect the bearish sentiment to continue this week as inflation results for last month will be out this week. Also, considering the present devaluation of the dollar in the BDC rate, investors would likely pivot into the money currency in other to take advantage of the current rate (see chart 1 below).

Chart:

Crypto Market Cloudy as FTX Files for Bankruptcy

The Crypto market remains in troubled waters as top investors and traders lose some of their assets. Despite the decline in the U.S inflation rate, investors continued to worry about the stability of the industry and the financial health of the leading crypto exchange, FTX. As a result, digital assets like Bitcoin and altcoins experienced price losses. Last week, Dogecoin recorded an inflow of about US$1.5bn after the Twitter owner, Elon Musk, wrote "Doge to the Moon" on his Twitter page. This raised the price of Dogecoin, which rose by 12% from US$0.079 to US$0.089 in one hour. 

Analysts continue to keep an eye on FTX coin as an address labelled "FTX Accounts Drainer" appears to have recently converted a whopping 400bn SHIB (US$3.9m) from the hacked FTX funds to 2,346 ETH (US$2.96m), which resulted to an approximate loss of US$1m in the process. Considering the timing and the extent of access the assumed account drainer appeared to have achieved from many parts of the company, analysts suspect it could have been an inside job. All hands-on deck to see how things unfold as FTX owner Sam Bankman-Fried faces interrogation from Bahamas Police and Local Securities Commission.