Category Archives: MARKETS

Gatwick Airport has recorded 7.7 per cent increase in passenger traffic to 44.1 million over the past 12 months

Gatwick Airport has recorded 7.7 per cent increase in passenger traffic to 44.1 million over the past 12 months, with revenue at the airport was also up 7.7 per cent, to £725 million.

This, combined with carefully controlled cost management, resulted in EBITDA rising 12.9 per cent to £373.6 million and a profit before tax of £132 million.

Long-haul continues to be a success story with routes growing 13.6 per cent and now represent one in five of Gatwick’s passengers.

As capacity issues become a challenge, Gatwick will continue to see considerable growth in passenger numbers as airlines swap short haul for long haul services.

Reports released by the National Bureau of Statistics, (NBS) showed that in the first quarter of 2017, the performance of the different parts of the Nigerian Aviation sector varied. Both passenger numbers and aircraft movement declined, relative to both the previous quarter and the first quarter of 2016.

Experts have said this development is partly resulted from the Abuja Airport closure and the general economic downturn, which affected the purchasing power of customers. However, some airports recorded larger percentage declines than Abuja, and declines were also recorded in the previous two quarters, suggesting that other factors

The total number of passengers to pass through Nigerian airports was 2,505,612. Of these, 67.3% were domestic passengers, travelling within Nigeria, and the rest were international, entering or leaving Nigeria.

This represents a considerable drop compared to both the previous quarter (of 31.3%) and the same quarter of the previous year (of 34.5%, based on revised 2016 Q1 figures.

Tayo Ojuri, an industry expert and Chief Executive Officer, Aglo Limited, an aviation support service told Financial Quest that air travel industry is often the first to be affected when there is a recession because travellers are propelled based on their purchasing power. Ojuri added that the industry is also often the last to pick up when the economy comes back to life.

Ojuri however assured that the Nigerian air transport industry will continue to be attractive because most travel in Nigeria are business travels. There was a quarterly fall of 18.2%, and a year on year fall of 23.7%. As discussed, the closure of Abuja Airport will have had less of an effect on international passenger numbers than domestic, because in the case of domestic travel, each trip made to or from Abuja has a corresponding effect on another domestic airport. Nevertheless, the decline was also broad-based, with nearly all airports contributing to the decline.

Financial Quest’s checks show that international airlines had to cut down frequencies into Nigeria, while local airlines suspended operations as a result of the economic downturn and the high exchange rate.

Private-sector credit extension at end-2016 represented just 21.9% of GDP

Minimal growth in private-sector lending

Credit is one of the several inputs in short supply in Nigeria. Private-sector credit extension at end-2016 represented just 21.9% of GDP, compared with 75.0% in South Africa. Nor is there impressive growth to suggest that the gap is narrowing. CBN data from a different series to that shown in our chart highlight an increase of 19.4% y/y in December in naira terms: we should note, however, the large share allocated to the oil and gas sector and the weight of those loans denominated in fx. The increase would otherwise have been negligible.

· One aim of monetary policy in 2016 was to persuade the deposit money banks (DMBs) to boost their lending to what the CBN termed job-creating and productive sectors such as agriculture and manufacturing. Neither lectures nor incentives worked.

· DMBs’ lending to agriculture has risen from about 1% to about 4% of their total loan books over three years. This will not bring about the rapid growth in agro-industry underpinning the FGN’s strategies of import substitution and economic diversification, and explains why the CBN has launched three subsidised credit schemes for the sector in the past decade.

· In February the average prime and maximum lending rates of the DMBs were 17.1% and 29.3%. At the time, FGN bonds were yielding more than 16% and longer tenor NTBs more than 22%.

· Faced with this choice and allowing for the sizeable risk attached to most credit applications from the real economy outside the blue chips, it is little surprise that the DMBs have accumulated very large positions in FGN paper.

· Until those yields retreat substantially and credit applications improve, we do see not much change.

CIS lists benefits of infrastructure funding through capital market

CIS lists benefits of infrastructure funding through capital market

For the umpteenth time, the Chartered Institute of Stockbrokers (CIS) has highlighted the capital market’s role in supporting the mobilisation and deployment of resources to fund infrastructure development in Nigeria.

Addressing journalists at a press briefing to announce the forthcoming 2017 CIS yearly national workshop, slated for July 4, in Abuja, the chairman, organising committee, Umaru Kwairanga, maintained that infrastructure deficit remains a major challenge to Nigeria’s efforts to achieve its full development potential.

According to him, the nation’s capital market has the potential to fill the gap in infrastructure investment given the limited resources of government and banks.He pointed out that there is no single solution to Nigeria’s infrastructure needs, noting the most effective approach lies in mobilising funds that would finance critical infrastructure development through the instrumentality of the capital market.

On how the macro economic instability has impacted trading on the Nigerian Stock Exchange, he said: “Very badly, the index and market capitalisation were down by almost five per cent, while the uncertainty lasted and trading volumes halved from previous years. As you know, participation in our capital market has been slightly skewed in favour of foreign portfolio investors for most of the past decade.

“This category of investors refused to participate in the Nigerian capital market while the foreign exchange (forex) issues persisted. I believe the drastic dip in liquidity of the market was partly due to the refusal of this category of investors to play in the market while the macro economic issues were prevalent

Accessing the current level of confidence in the market, Kwairanga admitted that Investor confidence is gradually returning as can be seen by the positive numbers in the recent weeks.

He urged government and other regulatory authorities to remain consistent in their resolve to tackle the issues that have held the economy down in the past few years.“Our prayer is that the Government, the Central Bank of Nigeria, and other regulators remained consistent in their resolve to tackle the issues that have held our economy and this great country’s potential down in recent years. That will definitely boost investors’ confidence further and guarantee stability

Speaking on the recent rally witnessed in the market, a council member of CIS, Mrs. Nkoli Edoka, described it as a ‘natural course’.According to her, “the stocks have been trading below their good value and it is a good time to catch into the market. The economy is moving forward, we have stayed in this particular price for a long time and the companies are still there posting good dividend.

“Foreigners are beginning to come back to the market and there is more transparency. The federal government savings bond is also functional. You can buy and sell. Government is trying to provide liquidity in the market. In fact, everybody is now out to develop the market.”