Weekly Market Review & Stock Recommendations – November 8, 2021Yahya Abdulrahman
Global Economic Roundup
US Federal Reserve winding down Covid stimulus
The US Federal Reserve has announced it is winding down the massive stimulus programme it put in place at the onset of the Covid-19 pandemic amid fears that the central bank may have to raise rates soon to control rising inflation. Fed officials have been debating for months over whether and when to taper the stimulus programmes that it set up to head off the economic headwinds caused by the pandemic. They announced on Wednesday that they would begin cutting that stimulus by $15bn a month but left interest rates unchanged.
Oil gains as supply concerns re-emerge after OPEC+ output plan
Brent crude was up $2.14, or 2.7%, at $82.68 per barrel. West Texas Intermediate crude (WTI) gained $2.47, or 3% to $81.28. The Organization of the Petroleum Exporting Countries and allies including Russia, collectively known as OPEC+, agreed on Thursday to stick to their plan to raise oil output by 400,000 barrels per day (bpd) from December. U.S. President Joe Biden had called for extra output to cool rising prices. OPEC’s decision to stay the course and the Biden administration’s lack of a substantial response has the oil rally continuing. Only a coordinated effort, with China and others involved, would address the lack of barrels in the market. After the OPEC+ meeting, the White House said it would consider all tools at its disposal to guarantee affordable energy, including the possibility of releasing oil from strategic petroleum reserves (SPR).Pension funds invested in banks rise to N2.05tn
Nigeria owes China $3 billion as of 2020
The World Bank says Nigeria has so far borrowed $3.121 billion from China as at March 2020, an amount which represents only 3.94 per cent of Nigeria’s total public debt of $79.21 billion as of September 2021.Similarly, in terms of external sources of funds, loans from China accounted for 11.28 per cent of the External Debt Stock of USD27.67 billion as of the same date. According to the World Bank, the total borrowing from China of USD 3.121 billion as of March 31, 2020, are concessional loans with interest rates of 2.50 per cent per annum with a tenor of 20 years and a grace period (moratorium) of seven years.
Some of our recommended stocks are mentioned below;
Zenith Plc Q3’2021 results showed that gross earnings advanced by 1.91% to N518.67bn from N508.97bn in Q3’2020. Interest income declined by 3.13% from N318.82bn in Q3’2020 to N308.84bn. Profit before tax advanced by 1.43% from N177.28bn recorded in Q3’2020 to N179.81bn in the current period. Profit after tax went up by 0.80% from N159.31bn in Q2’2020 to N160.59bn in Q3’2021 after a 6.95% increase in income tax expenses. Earnings per share advanced by 0.79% from N5.07 in Q3’2020 to N5.11 in the current period. Zenith Bank has a BVPS of N37.81, P/BV of 0.66x and P/E ratio of 2.45x.
Afriprud Plc’s result for Q3’2021 showed that Gross Earnings declined from N2.63bn in Q3 2020 to N2.44bn in Q3 2021 by 7.03%. Interest income dropped by 9.16% from N1.77 bn in Q3’2020 to N1.60bn in Q3’2021. Profit before tax went down by 14.25% from N1.56 bn in Q3’2020 to N1.34 bn in the current period. Profit after tax declined by 18.27% to N1.15 bn in the current period from N1.40 bn in Q3’2020. Consequently, Earnings per share went down by 18.31% from N0.71 in Q3’2020 to N0..58 in the current period. Afriprud has a BVPS of N4.25, P/BV of 1.49x and P/E ratio of 5.47x.
Please find here our Weekly Market Review & Stock Recommendations for this week.