Global Economic Roundup
Oil Prices Are Set To Rise Throughout 2023
Crude oil prices started last week with a loss. The reason for that initial weekly loss came down to overall global economic growth pessimism and expectations that the U.S. Federal Reserve will continue raising interest rates, making the dollar more expensive and sapping demand for dollar-priced crude. But by the end of Monday, oil prices had rebounded and were trading higher. The reason is that comments from attendees at the Cambridge Energy Research Associates Week (CERAWeeek) industry conference suggested that supply will tighten before too long. Just another week in oil, some would say, and indeed, oil prices fluctuate constantly, to such an extent it is extremely difficult to predict them with any accuracy, especially over a shorter period of time. Yet it does bear pointing out that most forecasters seem to expect higher prices for oil later this year. There appears to be broad consensus on this. Some, such as Forbes’ Bill Sarubbi, note the technical data of oil trading to suggest prices are going to go higher. In a recent story, Sarubbi said that historical data shows oil prices tend to rise between March and May most of the time, so it makes sense to expect them to rise this year as well. Others, such as Refinitiv, the data analytics firm, single out two factors that will drive prices on the supply and demand sides, respectively: Russia and China. And Refinitiv expects Brent crude to rise above $100 per barrel by the end of the year and average $90 for the full year 2023.
Eurozone Economy Stalled in Q4
The Eurozone economy failed to grow in the final quarter of 2022, compared with preliminary estimates of 0.1% growth and upwardly revised 0.4% expansion in the previous three-month period. Household consumption slumped by 0.9% and gross fixed capital formation tumbled 3.6%, as stubbornly high inflation, rising borrowing costs, and supply chain bottlenecks hit activity and demand. Meanwhile, government spending rose by 0.7% and net external demand contributed positively to the GDP as exports inched 0.1% higher and imports were 1.9% lower. Inventory changes have also added 0.1pp to the GDP. Amongst the bloc’s largest economies, the GDP grew in the Netherlands, Spain, and France, but contracted in Germany and Italy.
CBN’s Open Banking Could Spur Tighter Competition
In a recent circular, the Central Bank of Nigeria issued operational guidelines for open banking in Nigeria. The new policy allows financial service providers to access the banking history of prospective customers with other banks. This would be through application programming interfaces (APIs), and with the explicit consent of the customers. It basically allows customers to share their banking data with other financial service providers, enabling them to access a wider range of products and services. Analysts say the initiative would further ensure the deepening and stability in the nation’s financial system. Through the Open Banking Registry which the CBN would establish and manage, the regulatory oversight would be enhanced. The most important gain derivable from the new data-sharing policy is the degree of competition and a greater level of efficiency that would be promoted among banks. While the recent circular on Open banking has generated interest among fintech entrepreneurs nevertheless, for open banking to function well, developers will need to find solutions to integration issues that may make it impossible to communicate financial data securely and seamlessly.
Some of our recommended stocks are mentioned below;
Fidson FY 2022 results showed an increase in revenue by 31.67% from N30.86bn in FY 2021 to N40.63bn in FY 2022. Operating profit advanced from N5.86 bn in FY 2021 to N7.38bn in FY 2022, reflecting an increase of 25.93%. Profit before tax went up by 20.45% from N4.71bn FY 2021 to N5.68bn in the current period. Profit after tax grew by 18.65% from N6.09bn in FY 2021 to N7.22bn in FY 2022. EPS grew by 1.69% to N1.81 in FY 2022 from N1.78 in FY 2021. Fidson has a BVPS of N7.34, P/BV of 1.34x, and P/E ratio of 5.44x.
MAY & BAKER:
May & Baker FY 2022 results showed an increase in revenue by 20.39% from N11.90bn in FY 2021 to N14.32bn in FY 2022. Operating profit advanced from N1.70bn in FY 2021 to N2.26bn in FY 2022, reflecting an increase of 32.86%. Finance cost increased by 23.92% to N330 million in FY 2022 from N266 million and interest income increased by 332.03% from N59million in FY 2021 to N256 million in FY 2022. PBT went up by 48.03% from N1.46bn in FY 2021 to N2.16bn in the current period. PAT grew by 64.90% from N1.04 billion in FY 2021 to N1.73 billion in FY 2022, despite a 4.94% surge in taxes. EPS grew by 63.93% to N1.00 in FY 2022 from N0.61 in FY 2021. May & Baker has a BVPS of N4.74, P/BV ratio of 0.95x and P/E ratio of 4.5x.
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