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Global Economic Roundup

Oil Prices Rose on Record U.S. Oil Demand

The increase in demand for petroleum products inspired fresh optimism in the market, as uncertainty in the markets faded after the Federal Reserve’s tapering announcement. The price of a barrel of WTI rose to $72.04, up $1.17 on the day. The price of a Brent barrel also increased despite measures taken to thwart the new Omicron variant, rising to $74.76, up $0.88 on the day. Oil prices are now at a three-week high. The price moves come just days after Saudi Arabia’s energy minister warned traders not to short oil as they did over Thanksgiving.

Fed to taper faster, and sees three rate rises in 2022

The US Federal Reserve has decided to end its pandemic stimulus programme more quickly, as it reacts to the surge in inflation. America’s central bank will taper its asset-purchase scheme by $30bn per month from January. That would wrap up the bond purchases, which had run at $120bn/month, by next March. Federal Reserve officials also now expect to raise interest rates by 25 basis points three times next year. In new economic projections released following the end of a two-day policy meeting, Fed officials also forecast that inflation would run at 2.6% next year, compared to the 2.2% projected as of September, and the unemployment rate would fall to 3.5%.

World Bank Approves $700 Million Credit for Nigeria’s Agro-Climatic Resilience Project

The World Bank has announced that it has approved $700 million from its International Development Association (IDA) for the Nigeria Agro-Climatic Resilience in Semi-Arid Landscapes (ACReSAL) Project. The scheme is expected to boost Nigeria’s implementation of sustainable landscape management practices in northern Nigeria and strengthen the country’s long-term enabling environment for integrated climate-resilient landscape management. It also added that due to low productivity of cash crops in Nigeria, the fund would be beneficial to deal with climate issues including water shortages in the North leading to desertification and habitat loss.

Some of our recommended stocks are mentioned below;

ACCESS BANK PLC:

Access Plc is projected to have a FY 2021 interest income of N593.78bn, up by 21.37% from N489.21bn in FY 2020. PAT is estimated to increase from N106.01bn in FY 2020 to N128.67bn in FY 2021, bringing the EPS up to N3.62.

Access Plc Q3 2021 showed that interest income advanced by 25.48% from N375.28bn in Q3 2020 to N470.91bn in the current period. Net interest income went up 36.41% from N196.27bn in Q3 2020 to N267.73bn in Q3 2021. Profit before tax advanced by 15.82% from N116.62bn in Q3 2020 to N135.07bn in the current period. Profit after tax went up by 19.15% from N102.30bn in Q3 2020 to N121.89bn in the current period. Consequently, Access recorded a 19.31% rise in earnings per share from N2.90 in Q3 2020 to N3.46 in Q3 2021. Access has a BVPS of N22.49, P/BV of 0.40x and P/E ratio of 1.96x.

MTNN PLC:

MTNN Plc is projected to have a FY 2021 revenue of N1.55trn, up by 15.41% from N1.35trn in FY 2020. PAT is estimated to increase from N205.21bn in FY 2020 to N236.84bn in FY 2021, bringing the EPS up to N11.64.

MTNN’s Q3 ‘2021 results showed an increase in revenue by 23.62% from N975.76bn in Q3’ 2020 to N1.21trn in Q3 ‘2021. Operating profit advanced from N306.95bn in

Q3’2020 to N418.35bn in Q3’2021, reflecting an increase of 36.29%. Profit before tax went up by 51.92% from N211.53bn in Q3’2020 to N321.35bn in the current period. Profit after tax grew by 52.81% from N144.78bn in Q3’2020 to N220.31bn in Q3’2021, despite a 50% surge in taxes. EPS grew by 52.61% to N10.82 in Q3’2021 from N7.09 in Q3’2020. MTNN has a BVPS of N9.14, P/BV of 20.46x and P/E ratio of 12.96x.

Please find here our Weekly Market Review & Stock Recommendations for this week.

Dear Client/Reader,

Global Economic Roundup

Oil Rises After Saudi Price Hike Signals Confidence in Demand

Oil prices rose after Saudi Arabia boosted the prices of its crude, signalling confidence in the demand outlook despite the spread of the omicron variant of the coronavirus. Futures in New York advanced 2.9% to trade near $68 a barrel. The kingdom increased its oil prices for customers in Asia and the U.S. for January, just days after the OPEC+ alliance agreed to boost output for the same month. Prices for its high-sulphur barrels in Asia were the highest since at least 2000.

U.S. Consumer Prices Climb at Fastest Annual Rate Since 1982

U.S. consumer prices rose last month at the fastest annual pace in nearly 40 years, magnifying how rapid and persistent inflation is eroding paychecks and increasing pressure on the Federal Reserve to tighten monetary policy. The consumer price index climbed 6.8% from November 2020, according to Labour Department data released Friday. The widely followed inflation gauge rose 0.8% from October 2021, exceeding forecasts and extending a trend of sizable increases that began earlier this year. The S&P 500 gained 0.5% and Nasdaq 100 added 0.4% as the headline CPI rate came in at 6.8%, as expected.

Access Bank Announces Restructure into Non-Operating Financial Holding Company

The Chairman of Access Bank Plc has issued a letter to all shareholders of Access Bank informing them about the restructuring of the Bank’s Group into a non-operating financial holding company structure. The holding structure is expected to hold the banking group that is, Access Bank and its banking subsidiaries. According to the Chairman, the Board expects that the restructured group will have greater flexibility to adapt to future business opportunities, market and regulatory changes than is currently the case. Also confirming receipt of the requisite Approval-In-Principle from the CBN and SEC in respect of the Scheme, the chairman added that the Scheme will be presented to shareholders for consideration and approval at a Court-Ordered Meeting to be held at Access Bank Plc Head Office on December 16, 2021.

Some of our recommended stocks are mentioned below;

UBA PLC:

UBA Plc is projected to have a FY 2021 interest income of N450.96bn, up by 5.40% from N427.86bn in FY 2020. PAT is estimated to increase from N113.77bn in FY 2020 to N119.19bn in FY 2021, bringing the EPS up to N3.51. UBA Plc Q3 2021 result showed that Interest income advanced by 8.38% from N317 bn in Q3 2020 to N343bn in the current period. Net interest income increased by 23.25% to N229bn in Q3 2021 from N186bn in Q3 2020. Likewise, profit after tax advanced by 36.35% from N77bn in Q3 2020 to N104bn in Q3 2021 despite a 41.67% increase in tax expense. Consequently, earnings per share went up by 36.11% from N2.16 in Q3 2020 to N2.94 in Q3 2021. UBA has a BVPS of N23.34, P/BV of 0.34x and P/E ratio of 2.05x.

FIDELITY PLC:

Fidelity Plc is projected to have a FY 2021 interest income of N223.24bn, up by 8.80% from N205.18bn in FY 2020. PAT is estimated to increase from N28.03bn in FY 2020 to N30.5bn in FY 2021, bringing the EPS up to N1.05.

Fidelity Bank Q3 2021 results showed that interest income advanced by 3.73% from N132.47 bn in Q3 2020 to N137.41 bn in the current period. Net interest income decreased by 13.39% to N64.96bn in Q3 2021 from N75bn in Q3 2020. Profit before tax increased by 31.40% from N21.35bn recorded in Q3 2020 to N28.05bn in the current period. Profit after tax increased by 29.93% from N20.41bn in Q3 2020 to N26.51bn in Q3 2021, despite a 63% surge in income tax expense. Earnings per share increased by 31.43% from N0.70 in Q3 2020 to N0.92 in the current period. Fidelity Bank has a BVPS of N9.76, P/BV of 0.26x and P/E ratio of 2.07x. 

Please find here our Weekly Market Review & Stock Recommendations for this week.