Wema and Custodian Kicked Out of the NGX-30
4 Customs Street: 10 Jul 2023
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welcome to this week’s edition of 4 Customs Street, our weekly newsletter on the stock market.
The newsletter is divided into two:
Green White Green—focused on the Nigerian stock market.
Star-Spangled Banner—focused on the US stock market.
Green White Green Last Week
The Battle for FBN Holdings
In a recent development, Oba Otudeko's Honeywell Group purchased a significant number of shares in FBN Holdings Plc. The cross deal involved the acquisition of 4,770,269,843 shares worth N87.8 billion, marking the largest volume of FBN Holdings shares traded in a single day since 2012. As a result, Otudeko now owns a 13.3% stake, making him the single largest individual shareholder.
The acquisition was disclosed through a notification from Honeywell Group Limited's affiliate, Barbican Capital Limited, to FBN Holdings Plc. The letter, sent on July 7, 2023, stated that Barbican Capital Limited had acquired the aforementioned shares, in addition to the previously disclosed interests by Honeywell Group Limited's affiliates. FBN Holdings Plc acknowledged this acquisition in a letter and confirmed that Barbican Capital Limited now holds a 13.3% equity stake in the company.
Otudeko, the former chairman of First Bank, is swiftly making a comeback as the bank's single largest shareholder. Previously, billionaire Femi Otedola held that position.
ABC Transport founder retires as CEO
ABC Transport Plc announced changes in its board of directors, including the retirement of Mr. Frank Nneji as the MD/CEO, which was effected on June 30, 2023. Mr. Nneji, the company's founder, will continue to serve as a non-executive director.
Additionally, Mr. Jude Nneji has been appointed as the acting MD/CEO, effective on July 1, 2023. Lastly, Mr. John Okoro has retired as an independent non-executive director, with the Board acknowledging his service and wishing him well in his future endeavours.
Wema and Custodian have been kicked out of the NGX-30
As a result of the market index review conducted in 2022, Wema Bank Plc and Custodian Investment Plc have been removed from the NGX-30 by the Nigerian Exchange Limited (NGX). The two companies underwent a process of removal and replacement due to a decrease in their total market capitalisation which led to their exclusion from the NGX-30 index which tracks the performance of the 30 largest companies according to market capitalisation listed on the NGX.
As a result of the review, at the opening of the market on Monday, July 3, 2023, Geregu Power Plc and Sterling Financial Holding Plc replaced Custodian Investment Plc and Wema Bank Plc in the NGX-30 Index.
Decline in Nigeria’s fuel consumption
Nigeria's average daily fuel consumption has decreased by 18.5 million litres, going from 66.9 million litres before President Tinubu eliminated the costly fuel subsidy programme to 48.4 million litres.
The data provided by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) indicates a 28% decline in the country's daily petrol consumption.
Dangote Cement commences share buy-back programme
Dangote Cement Plc (DCP) has announced the start of its share buy-back programme. A share buy-back, also known as a stock repurchase, refers to a situation in which a company buys back its own shares from existing shareholders. This process involves the company using its available cash or borrowing funds to purchase shares of its own stock on the open market or directly from shareholders.
The first tranche of the programme, Tranche 1, has begun following approval from the company's shareholders at an extraordinary general meeting held on December 13, 2022. The share buy-back is conducted in accordance with the regulations of the Companies and Allied Matters Act and the Securities and Exchange Commission's Rules and Regulations.
The programme will be executed in multiple tranches, with Tranche 1 being handled by designated stockbrokers on behalf of the company. The number of shares to be repurchased under the share buy-back programme will not exceed 10% of DCP’s issued capital. You can get more information here.
Green White Green This Week
Geregu Power Plc board meeting
The board of directors of Geregu Power Plc scheduled a meeting on July 14, 2023, to review and approve the unaudited financial statements for the second quarter of 2023, which covers the period ending on June 30, 2023.
The following companies will be holding their AGMs this week: Champion Breweries Plc and The Initiates Plc.
AGM stands for Annual General Meeting. It is a mandatory yearly meeting held by companies, organisations, and associations to discuss important matters with their shareholders or members.
The AGM serves as a platform for key stakeholders to receive updates on the company's performance, review financial statements, elect board members or directors, approve the distribution of dividends, and address any other significant issues.
If you held your shares within the qualification period, expect your dividends after the AGMs.
Star-Spangled Banner Last Week
Meta launches Instagram Threads
Meta's CEO and co-founder, Mark Zuckerberg, recently introduced Threads, a new text-focused messaging app, marking its official release. Threads bears a resemblance to Twitter in terms of its interface and functionality. Interestingly, users can utilise their Instagram usernames on Threads and follow the same accounts as they do on Meta's popular photo-sharing app. This launch is significant, especially considering the recent challenges faced by Twitter under the ownership of Elon Musk, leaving room for competing messaging apps to gain traction.
During a recent announcement, Mark Zuckerberg revealed that Threads has already garnered an impressive 70 million sign-ups. Jasmine Enberg, a principal analyst at Insider Intelligence, commented that if just one in four Instagram users adopts Threads on a monthly basis, it could potentially rival the size and influence of Twitter. This underscores the potential impact and popularity of this text-based social media product.
June jobs report: mixed signals for US labour market
The latest jobs report for June in the United States indicated that the labour market may be losing momentum after a period of strong growth. However, some sectors experienced significant increases in employment. The health care and social assistance sector saw the largest growth, with 65,200 jobs added. When including education, this category expanded by over 70,000 jobs. The government sector also showed notable growth, adding 60,000 jobs.
Overall, the US economy added 209,000 jobs in June, which was lower than expected and the smallest increase since the end of 2020. This slower job growth raised concerns about the impact of the Federal Reserve's interest rate hikes on the labour market. However, other aspects of the report, such as stronger-than-expected wage increases, suggested that the Federal Reserve may still consider raising interest rates later this month. As a result, there may be a potential decline in stock market performance after significant gains in June and the second quarter, leading to volatility as the earnings season approaches.
Supreme Court rejects Biden's student debt forgiveness
In a significant decision, the Supreme Court invalidated the Biden administration's plan to forgive student debt, stating that it exceeded the authority granted by Congress. The plan aimed to eliminate $430 billion in government-held loans has been overturned. This ruling has far-reaching implications for inflation, consumer spending, and wealth distribution in the United States, according to analysts. As a result, stocks of student loan-related companies like SoFi Technologies, Sallie Mae, Navient, and Nelnet have been experiencing volatility since the decision.
Star-Spangled Banner This Week
This week marks the beginning of earnings season, with major banks and financial firms like JPMorgan Chase, Wells Fargo, Citigroup, and BlackRock set to report. We can also expect reports from Bank of America, Morgan Stanley, Goldman Sachs, and other companies like UnitedHealth Group, Delta Air Lines, and PepsiCo.
According to FactSet research, earnings for S&P 500 companies are projected to have declined 6.8% in the second quarter, representing the sharpest drop since the start of the COVID-19 pandemic.
Additionally, the University of Michigan will release its preliminary Consumer Sentiment Index (CSI) reading for July. This index is a widely used measure that provides insights into consumer confidence, reflecting their outlook on the economy and personal finances. The University of Michigan Consumer Sentiment Index, also known as the Michigan Consumer Sentiment Index (MCSI), is one of the most renowned surveys used to gauge consumer sentiment in the United States.
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