Category Archives: INVESTMENT BANKING

Opinion: Gold bugs hope to tap bitcoin’s mother lode of profits

Gold investors are kidding themselves if they’re counting on a “bitcoin bump” for gold prices.

It is of course understandable why long-struggling gold GCQ8, -1.03%  investors are hoping for such a boost. Bitcoin BTCUSD, +21.70%   is up more than 11,000% year-to-date, while gold bullion has gained 11%. The yellow metal has even lagged the stock market: the S&P 500 SPX, +0.34%  has gained 20% since the beginning of the year, including dividends.

Hope is not a strategy, however. Even if bitcoin and bullion are correlated — a big “if” that I will discuss in a moment — gold investors are forgetting that both bitcoin and bullion could just as easily re-establish their correlation by bitcoin plunging as gold skyrocketing.

Furthermore, the gold market remains much larger than the combined market cap of bitcoin and other cryptocurrencies. Currently, for example, the market-cap of the biggest 100 cryptocurrencies is $338 billion, according to data from CoinMarketCap.com. That’s just 4.4% of the current market value of all above-ground stocks of gold in the world ($7.7 trillion, according to data from the World Gold Council).

In other words, cryptocurrencies remain a very small tail to wag gold’s very large dog.

My skepticism about a “bitcoin bump” is bolstered by the absence of any significant correlation between bitcoin and gold bullion. I had my PC’s statistical package search for correlations between the two over the trailing week, month, two months and three months, and in no event were any of them significant at the 95% confidence level that statisticians often use when determining if a pattern is genuine.

As long-term readers of this column know, I believe the more plausible explanation for gold’s shorter-term direction is the prevailing sentiment among gold market timers. Just as contrarian analysis teaches us, gold tends to struggle when there is excessive bullishness—and vice versa.

Take what I concluded six weeks ago, the last time I devoted a column to gold market sentiment. At a time when an ounce of gold was trading at around $1,275 an ounce, I wrote that “There is not enough skepticism among gold timers to support a big rally in gold and gold mining shares.” That’s because the average recommended gold market exposure level was well above the minus 30% level that in the past has often accompanied significant gold market lows.

Bullion today is no higher today than then, and yet the gold timers I monitor are more bullish. That means we are even further away from a contrarian buy signal. So contrarians continue to counsel patience.

The usual qualifications apply, of course. Contrarian analysis isn’t always right, and even when it is it provides insight only into the market’s near-term direction.

But insofar as past sentiment patterns persist, gold is unlikely to mount a significant rally in coming weeks — regardless of how bitcoin performs.

Federal Government of Nigeria (FGN) N100bn Debut Sukuk Offer Opens For Sale to the Public

Federal Government of Nigeria (FGN) N100bn Debut Sukuk Offer Opens For Sale to the Public Federal Government of Nigeria (FGN) N100bn Debut Sukuk Offer Opens For Sale to the Public

Federal Government of Nigeria (FGN) N100bn Debut Sukuk Offer Opens For Sale to the Public

FBN Merchant Bank Limited and Lotus Financial Services Limited have been appointed as Joint Financial Advisers to the Debt Management Office (DMO) of the Federal Government of Nigeria on the inaugural FGN N100 billion Sukuk offer.

The offer was opened to the public on the 14th of September, and is billed to close on the 20th of September following a series of investor meetings in Lagos, Abuja, Port Harcourt, Kano and Kaduna by the Advisers and the DMO, to interact with investors and provide information on the purpose, structure and benefits of the Issuance.

As a Joint Financial Adviser, FBN Merchant Bank assisted the DMO with the determination of the requirements for structuring the Issuance, working with Lotus Financial Services, Legal Advisers and Incorporated Trustees on the transaction to structure the Sukuk and prepare relevant transaction documents in compliance with legal and regulatory requirements.

The FGN Sukuk Issuance supports financial inclusion goals by providing access to individuals and communities that traditionally have had limited or no access to the formal financial sector, providing a secure investment opportunity for ethically-minded investors, and offering attractive returns similar to conventional sovereign instruments. According to Mr. Taiwo Okeowo, Deputy Managing Director of FBN Merchant Bank Limited ‘While Sukuk issuance is not new in domestic capital markets, we are proud to be working with the DMO on this offer as its potential as a comparably cheaper source of long-term infrastructure financing remains untapped’.

Proceeds from the Issuance will be used solely for the construction and rehabilitation of key roads across the six geopolitical zones of the country, while rental payments and redemption are backed by the full faith and credit of the Federal Government of Nigeria and qualify as securities for trustees, pension funds, banks, individuals and various investors.

-ENDS-

About FBN Merchant Bank

FBN Merchant Bank is the Merchant Banking business of FBN Holdings Plc. providing services in Advising, Financing, Trading, Investing and Securing to support the diverse financial needs of our clients.

From securing wealth to financing business opportunities, we are constantly searching for what comes next so we can take our clients there first. We are a trusted and inspirational partner founded on innovation, a strong heritage and a pioneering spirit that drives us to help our clients look beyond today, and redefine tomorrow.

AXA Mansard’s half-year gross premium rises by 36 per cent, posts N17.9 billion

AXA Mansard Insurance Plc, a member of the AXA Group announced gross premium of N17.95billion in its half-year performance, against N13.22billion achieved in the corresponding period in 2016.

Specifically, the firm’s unaudited result for the period ended June 30, 2017, showed 36 per cent rise in gross premium from N13.22billion recorded in 2016 to N17.95billion in 2017.

However, its profit after tax stood at N2.12billion, down by six per cent when compared to N2.26billion recorded during the same period in 2016.Total asset rose to N65.8billion from N54.9billion in the previous year, while Net premium income also increased from N5.48billion to N6.46billion, representing 18 per cent growth.

Commenting on the results, the Chief Financial Officer, Mrs. Rashidat Adebisi, said: “One of our key goals going into this year was to improve the efficiency of our reinsurance strategy as a way of managing the anticipated growth in our portfolios. The improvement in our accounting loss ratio from 80 per cent to 78 per cent in 2017 validates our efforts in this regard.”
Also commenting, the Chief Executive Officer, Kunle Ahmed, said: “Our focus on identifying new growth areas in our markets continue to pay off as we grew revenues by 36 per cent despite the challenging operating environment. We also strengthened the bottom-line through cost optimisation and efficient resource utilization as demonstrated by the four per cent improvement in our Opex ratio.”

The Chairman of the company, Olusola Adeeyo, had at the 2016 yearly general meeting held in Lagos recently, said: “We recorded 25 per cent growth in Gross Written Premium to N20.7billion in 2016 from N16.6 billion in 2015. Net premium income also grew to N10.9billion from N9.9billion in 2015; profit before tax up by 53 per cent to N3.1billion from N2.02billion in 2015.

“Profit after tax up by 63 per cent to N2.7billion from N1.7billion in 2015, while our balance sheet remained robust in 2016, experiencing moderate growth of seven per cent in total assets to N55 billion from N51.21 billion in 2015.”