Being an Analyst Note Issued by Proshare Research on September 13^th, 2022

High Layoffs lead to RSA Withdrawals 

Recent data from the National Pension Commission, PenCom, shows that the number of withdrawals made by recently laid-off workers surged by 17.5% to N6.65 bn in Q2 2022, up from the N5.66 bn which was recorded in the corresponding period of 2021. Analysts note that the development indicates a deteriorating economy and a worsening labour market. The Pension Reform Act 2014 permits the payment of 25% of pension contribution to Retirement Savings Account (RSA), to holders under the age of 50 years, who are disengaged and fail to secure another job within four months. The inflationary trend has forced many employers of labour to downsize. 

Dearth of Skills Threatens Global Energy Transition.

The availability of skilled personnel may impede the adoption of renewable energy as renewable energy targets increase globally. Analysts predict that the 650,000 people employed in the EU's wind and solar energy industries will quadruple over the next eight years. However, we see that businesses in the renewable energy sector have trouble finding qualified candidates because of challenges like competitiveness, a small applicant pool, and a dearth of technical, practical, and training abilities. As the market for renewables grows and more renewable energy projects need to be completed in the future, there will be a rise in the demand for qualified people. This could result in a situation where inexperienced or unprepared people manage these initiatives to close the supply-demand mismatch. According to analysts, governments around the world must alter school curriculum to account for future capabilities and implement systematic initiatives to increase the appeal of jobs in the power sector.

NCC teams up with NSCDC to Curb Illegal Sim card Registration

The Nigeria Communications Commission (NCC) has teamed up with the Nigerian Security and Civil Defence Corps (NSCDC) to tackle some of the criminal activities plaguing the telecom sector such as illegal registrations of sim cards and vandalism among others. Analysts believe that this partnership with the law enforcement agency will help go a long way in reducing illegal activities in the telecom sector. These illegal activities include illegal sim registration, illegal call masking, operating without a license, and so on.

Equity Market Signaled Temporary Bearish Reversal

Nigeria’s Equity market started the week bearish. Year-to-date (YTD) the market has grown +16.17% but has softened in recent days. The NGX All-share index dipped by 0.14% to close at 49,625.71 basis points as against a 0.09% gain recorded at the end of the last trading session. In naira terms, the NGX marker CAP recorded a N37.44BN loss. Volume traded fell by -73.86% to close at 86.59m with GTCO contributing +22.49% to the total volume traded as the share price rose by +0.51% to close at N19.8 from N19.7 in the previous trading.

Analysts observed Mr. Miracle Chukwuemaka Nnorom, the son of the Director of United Capital, Mr. Emmanuel Nnorom bought a total of 12,800 shares at an average price of N11. He completed the transaction on the 9^th and 12^th of September 2022, but the share price of United Capital remained flat at the time of purchase. Analysts expect future appreciation of the share price of the company with the present YTD return at 20.2% (see chart below). 

Chart 1: Share Price Movement of GTCO and United Capital 

Cocoa Prices Could Move Up as World’s Second-Largest Exporter Faces a 4-Pronged Problem.

Ghanaian farmers have called on the federal government to increase cocoa prices for the new season, ahead of this year’s Cocoa Day (October 1, 2022), which marks the beginning of the cocoa year. Although the government is yet to make any public statement on the matter, some in the country do not expect an increment from the government. As the world’s second-largest exporter of cocoa faces a four-headed problem (drought, cocoa swollen shoot virus disease, illegal mining, and poor commodity prices), farmers claim the industry is under serious threat.

A Cocobod audit in 2017 revealed that more than three hundred thousand hectares (300,000ha) of cocoa farms had been infected by the disease which renders cocoa trees unproductive. While studies by Cocobod and other stakeholders have established that an irrigation intervention could improve the situation of climate change-induced drought, Solutions have not been found for the devastation caused by the illegal gold miners. This comes after the central bank of Ghana stated that the bank will add about 217,000 ounces of gold from local mines by the end of the year.

With farmers claiming they could sell their farmland to these illegal miners in a bit to engage themselves in other things as they question if the government is ready to help farmers sustain the industry, the effect of reduced production from the world’s second-largest exporter would see cocoa prices go up.

FMDQ Lists Lagos Free Zone Bond on Platform

FMDQ Exchange listed the LFZC Funding SPV PLC N25.00 billion Series 2 Fixed Rate Bond under its N50bn bond issuance programmme on the Exchange platform. The LFZV SPV is a special purpose set up by Lagos Free Zone company to raise finance to boost its business expansion exercise and restructure the company’s debt. The bond was issued at a 13.25% interest rate for a 20-year tenor which is the longest tenor in the history of Nigerian debt markets with 139 subscriptions from various participants from pension funds. Analysts believe the listing will enhance secondary trading of the debt security for investors who might not hold the asset till term. 

US SEC to Set Up Offices for Crypto Filling as Bitcoin Outpaces Ethereum

Following the US SEC's commitment to regulating crypto-related activities, the regulator planned to establish two new offices to review the filling of crypto assets. One is the office of crypto assets, while the other is an office of industrial applications and services. According to the analyst, the two new offices will join seven existing offices under the securities and exchange commission department to provide specialized support in the areas of crypto assets, financial instruments, and industrial applications and services.

Bitcoin appeared to have shown strength since it broke through the support level of US$18,600 on Wednesday. The most well-known currency has increased by nearly 20% to the US$22,000 mark. Over the past 24 hours, Bitcoin gained by +0.03% from US$22,010.45 to US$22,231.82. On the other hand, Ethereum appeared to be trending down, falling by -2.39% from US$1,757.14 to US$1,713.17, despite its long-awaited upgrade to proof of stake. Analysts noted that BTC's market dominance has risen back to 40% after bottoming out at 39.79% (See chart  below)

Chart 2: Bitcoin Price Movement

Use news on RSA, Energy, SIM Card Registration, Cocoa, Cryptos, 

Previous Analyst Notes Loaded