THIS WEEK: Bitcoin price plunges, NGX ASI breaks record, CBN Gov’s surprise move

The Nigerian stock market ended the week on a positive note, with the benchmark index’s year-to-date (YTD) performance jumping to 19.24%, making the NGX one of the world’s best-performing markets. However, the foreign reserve contracted over the week, falling $248 million to $39.37 billion on Friday, signaling a pessimistic turn for some macro indicators.

The Central Bank of Nigeria expressed worry over transactions involving the Benin Republic, but more interesting is the news of the CBN governor, Godwin Emefiele purchasing the APC presidential nomination and expression of interest form.

These and many more happened during the week, hence, Nairametrics compiled a list of notable events across macroeconomy, equities market, regulators, and the crypto market that made the headlines.

MACROECONOMY

Nigeria spends 96% of its revenue on debt servicing in 2021, worst on record

  • Nigeria’s external reserve contracted during the week with a $248 million decline (WoW) to stand at $39.37 billion as of Friday, 5th May 2022, compared to $39.43 billion recorded as of the previous week.
  • The decline in the country’s reserve level is largely attributed to the continuous intervention by the Central Bank of Nigeria in the official FX market, as a means to manage the volatility in the market.
    Nigeria’s debt service-to-revenue hit 96%.
  • Notably, Nigeria’s Federal government previously incurred a sum of N4.2 trillion on debt servicing in 2021, increasing by 29.3% compared to N3.27 trillion spent in the year. On the other hand, revenue for the period only increased marginally by 9.3% to N4.39 trillion.

Exchange rate: Naira gains against the dollar

  • Naira gained against the US dollar during the week, recording a 0.5% appreciation to close at N417/$1 at the official Investors and Exporters Window on Friday.
  • The market only opened for three days, due to a nationwide holiday declared by the federal government on Monday and Tuesday in Celebration of Eid El-Fitr.
  • A sum of $359.36 million was traded in the market during the week, compared to $788.44 million that exchanged hands in the previous week.
  • The exchange rate at the parallel market remained stable during the week, maintaining the rate of N590 to a dollar.

Nigeria’s pension fund asset gained N453.8 billion in Q1 2022

  • Nigeria’s pension fund assets increased by N453.8 billion in the first quarter of 2022 to stand at N13.88 trillion as of the end of March 2022, representing its highest level.
  • The industry’s assets under management increased by 3.38% in the review period from N13.4 billion as of December 2021.
  • However, 12,336 PFA contributors transferred their RSA accounts from one PFA to another in the period under review. This is 4.2% lower than the 12,874 contributors who switched in the previous quarter. This brings the total number of transferred RSA accounts to 63,728 since Q4 2020.

REGULATION

CBN warns Nigerian banks to be vigilant of transactions related to the Benin Republic

  • The Central Bank of Nigeria has warned Nigerian banks to be vigilant regarding related to the Benin Republic due to intelligence that suggests the country is increasingly becoming a drug trafficking and consumption hub in West Africa.
  • The apex bank called for additional measures such as re-classifying related customers and conducting Enhanced Due Diligence. CBN also asked Nigerian banks to strengthen its Know Your Customer (KYC) and Customer Due Diligence (CDD) policies, as mandated by regulation.

CBN says eNaira’s next update would support DSTV, Air travel and USSD transactions

  • The CBN has announced that the eNaira’s next update would support DSTV renewals, recharge card purchases, air travel ticket payments, among others.
  • CBN is now at the second phase of the eNaira onboarding process, with the first part focusing on persons who already have bank accounts.

MARKETS

Gold pushes back above $1,900 despite fed interest rate hike

  • The yellow metal is bullish by over $32 at the start of the London trading session today, despite the US Federal Reserve increasing interest rates in its latest effort to curb inflation. The Fed highlighted inflation as a risk to the economy while also ruling out larger hikes for the rest of 2022.
  • The surge in the price of Gold came unexpectedly, especially after the US Fed increased interest rate as it handed down its policy decision.
  • The increase in the interest rate should have brought a strong dollar index (a measure of the strength of the US dollar), however, we saw a decline, which suggests that the increase of the interest rate has already been priced into risky assets like Gold .

Oil bullish on weaker dollar and proposed EU sanctions

  • The prices of the two major oil benchmarks are bullish in the London trading session today as a result of the European Union’s proposal for new sanctions against Russia, including an embargo on crude in six months, which offset concerns over Chinese demand.
  • The global benchmark, the Brent crude futures ended the week trading $113.22 a barrel while the United States (US) benchmark, the West Texas Intermediate crude futures ended the week trading $110.61 a barrel. Both benchmarks gained over 5% for the week.
  • The sanctions proposal, which was announced by the European Commission President Ursula von der Leyen, still needs backing by the 27 EU countries to take effect. The sanction proposal includes phasing out supplies of Russian crude in six months and refined products by the end of 2022.

NGX ASI breaks record, now trades above 50,000 BP

  • The NGX closed on a positive note amidst sell-offs and buy-interests as the benchmark All-Share Index (ASI) appreciated for the week to currently trade above the elusive 50,000 basis points, for the first time in almost 14 years.
  • The NGX ASI closed the week trading at 50,935.03 points, which puts its Year-to-Date (YTD) performance at 19.24%, making the NGX one of the top-performing markets in the world. Also at the close of the market on Friday, the stock exchange market capitalization stood at N27.46 trillion at the end of the trading day.

Dangote Cement raises N116 billion in the largest corporate bond issue in Nigerian capital market

  • Dangote Cement, Sub-Saharan Africa’s largest cement producer has raised N116 billion in the largest corporate bond issue in the Nigerian capital market.
  • Dangote Cement stated that it has completed the issue of N116 billion series 2 fixed rate senior unsecured bonds under its N300 billion multi-instrument issue programme.

INTERNATIONAL

Amid the EU’s proposed Russian oil ban, ruble gains 11% against the dollar and euro within a week

  • Despite the European Commission’s proposed oil ban, the Russian ruble has shown extraordinary resilience, rising over 10% against the dollar and euro within a week.
  • Fears of a eurozone recession and the Euro’s bearish momentum have rekindled the chance that the currency may reach parity with the dollar.
  • The Russian ruble has shown significant gains against the US dollar last month. At the time of writing, the ruble was up 22.29% against the dollar and 25.37% against the euros

POLICIES

CBN Governor, Godwin Emefiele, picks N100 million APC Presidential forms

  • The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, has reportedly paid the sum of N100 million for the All Progressives Congress (APC) presidential nomination and expression of interest form.
  • According to media reports, the forms were chosen on behalf of the CBN Governor by his associates at around mid-day in Abuja, and he is expected to contest under the platform of the ruling APC.

CRYPTOCURRENCY

Over 100,000 traders lose $403 million as Bitcoin falls below $36,000

  • It was a sea of ​​red in the cryptocurrency space which saw 103,518 traders have their accounts liquidated as Bitcoin and other cryptocurrencies sell-off, a day after the United States Federal Reserve handed down its policy decision to increase the interest rate by half a percentage.
  • Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It happens when a trader is unable to meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open). Liquidation occurs in both margin and futures trading.
  • The total liquidations from these traders amounted to a total of $403.42 million, with longs accounting for $344.52 million or 85.40% of the total liquidations. The shorts accounted for the rest of the total amount ($58.9 million).

More than $1.6 billion have been stolen on DeFi platforms so far in 2022

  • The decentralized finance (DeFi) ecosystem has not been having a stellar year as this sector of the cryptocurrency space has been plagued with hacks, exploits, and scams. Just a little over four months in the new year, over $1.6 billion in crypto has been stolen from users, surpassing the total amount stolen in 2020 and 2021 combined.
  • Analysis from blockchain security firm CertiK revealed the statistics showing the month of March having the most value stolen at $719.2 million, over $200 million more than what was stolen in all of 2020. The March figure is as a result of the Ronin Bridge exploit where the hackers stole over $600 million worth of crypto, from the world’s largest Play-to-Earn (P2E) platform.

Institutional investors sold off $133 million worth of Bitcoin-related investments last week

  • Institutional investors shed $133 million worth of Bitcoin investment products last week, marking the largest week of outflows since June last year, as Bitcoin’s price tumbles below $38,000 over fears of the impending US Federal Reserve’s interest rate hike.
  • According to CoinShares’ weekly Digital Asset Fund Flows report, the overall digital asset fund for last week, resulted to a decline of $20.1 million, with the large Bitcoin sell-off marginally offset by a surprise $38 million worth of purchase for FTX’s native token, the FTT Token products.
  • The $132.7 million worth of sales from BTC funds last week, brings the month-to-date (MtD) sell-offs for April to $310.8 million. We also saw selloffs from Ethereum products which amounted to $25.1 million. The MtD performance for Ethereum based products currently stands at $82.3 million.

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