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Investors lose N1.9tr in third quarter

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NSE: Trading extends positive outlook, up 0.08%

Investors in equities lost N1.90 trillion in the third quarter of the year as political risks, macroeconomic concerns and tight financial condition combined to sustain massive sell-offs over the three-month period.

Investors closed at the weekend with double-digit negative return with most companies trading around their lowest values in the period under review.

The steep decline in the third quarter wiped off the modest gain of N257 billion recorded at the end of the first half, leaving investors with a nine-month net capital depreciation of N1.65 trillion. The third quarter witnessed the worst performance as losses increased  monthly.

Last month, investors lost N760 billion, about 10.5 per cent increase, on N688 billion recorded the previous month. Quoted equities started this quarter with a net loss of N456 billion in July.

High-wire political risks compounded fragile macroeconomic outlook to moderate investors’ appetite for equities. Minister of Finance, Mrs Kemi Adeosun resigned during the period after discovery that her certificate of exemption from the mandatory National Youth Service Corps (NYSC) scheme was forged.

The period was also highlighted by high-wired political activities as the political parties head toward primaries to pick their candidates for the 2019 elections. Defections, political realignments and continuing bickering between the executive and legislative arms, among others, put politics on the front burner.

“We expect weak sentiments will remain in the near term. Nevertheless, we believe opportunities to buy cheap assets exist for investors with medium to long term investment horizons,” analysts at Afrinvest Securities stated in a weekend note.

Benchmark indices at the Nigerian Stock Exchange (NSE) indicated average decline of 5.97 per cent in September, depressing the three-month decline for the third quarter to -14.40 per cent. With these, average year-to-date return for the nine-month period stood at -14.32 per cent.

The All Share Index (ASI)-the main index that tracks share prices at the NSE, closed weekend 32,766.37 points compared with 38,278.55 points recorded at the beginning of the third quarter. Aggregate market value of all quoted equities also declined from its opening value of N13.866 trillion at the beginning of the third quarter to close the period at N11.962 trillion.

The ASI and aggregate market capitalisation of quoted equities opened this year at 38,243.19 points and N13.609 trillion respectively. The ASI declined by 5.86 per cent to close August at 34,848.45 while aggregate market value of quoted equities dropped by 5.13 per cent to close August at M12.722 trillion.

Association of Stockbroking Houses of Nigeria (ASHON) President, Mr Patrick Ezeagu, said the political process was not engendering investors’confidence as politicians appeared to be more disposed to self-serving intrigues than the interest of the national economy.

According to him, while there might be some macroeconomic concerns, the major risk stoking the decline at the stock market is the political risk.

“The economic team needs to wake up and redirect things appropriately. Let them play less of politics and focus more on the economy. We really need to stabilise ourselves,” Ezeagu said.

He noted that quoted companies have good fundamentals that should ordinarily make them attractive to investors.

From a net capital gain of about N1.7 trillion at the height of its rally in the first quarter, equities closed the second quarter almost flat with average gain of 0.09 per cent for the six-month period ended June 30, 2018, compared with average gain of 8.53 per cent recorded at the end of first quarter.

Nigerian equities recorded average loss of 7.77 per cent in the second quarter, equivalent to net capital depreciation of N1.13 trillion compared with capital gain of N1.384 trillion recorded by the end of first quarter. The ASI closed the first half at 38,278.55 points as against its 2018’s opening index of 38,243.19 points. Aggregate market value of  quoted equities on the NSE closed the six-month period at N13.866 trillion as against N13.609 trillion recorded at the beginning of the year, representing net gain of N257 billion or 1.88 per cent. The difference between the ASI and aggregate market value was due to supplementary listings of shares.

Aggregate market value of quoted equities had closed the first quarter of the year at N14.993 trillion as against its year’s opening value of N13.609 trillion, representing a net increase of N1.384 trillion or 10.17 per cent. The ASI also rose from its 2018’s opening index of 38,243.19 points to close the first quarter at 41,504.51 points, representing average gain of 8.53 per cent.

Equities in January hit all-time high with market capitalisation of N15.3 trillion while the ASI had risen to 43,041.54 points, its highest index points since October 2008. However, profit-taking fluctuations that started in March 2018 worsened considerably into a swinging selloff in May 2018. Nigerian equities lost N1.15 trillion in May 2018, equivalent to average month-on-month decline of 7.67 per cent.  Nigerian equities had lost N557 billion in March and showed restraint with a modest loss of N44 billion in April.

The chequered performance of the stock market in first half 2018 counterbalanced the optimism that started the year as Nigerian equities closed 2017 with full-year average return of 42.30 per cent, ranking within the top 10 best-performing equities across the world. Aggregate market value of quoted equities had closed 2017 with net capital appreciation of N4.36 trillion.

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WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners

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…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live

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The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: www.maritimefirstnewspaper.com and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured

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…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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