Tuesday, January 28, 2014

Green Love

It been a while since I last posted and am sorry for that but work has been a bit on the busy side (that's an understatement BTW). So my posting here would be a bit here and there but I would be sure to always read your comments as I always appreciate your comments.

Okay recently I was sent this amazing dress by a friend and immediately I set my eyes on the dress it was love at sight. I don't know what it is about it, the collar, the belt or the fact that it is button down but I wore it the next day after I got it. Although I styled it in a very simple way; pulling my hair up to show off the collar, wearing flats  and going with just a dramatic color of lipstick as my only make-up (okay I do the lipstick all the time because it suits me so don't judge). I made sure the outfit was all about the dress and only the dress.

I love the dress because it's not just work appropriate and severe, it can also be worn for a wide range of occasions if styled properly. Enough said see the dress for your self and tell me your thoughts about it.

Wednesday, January 22, 2014

Monetray Policy Committe (MPC) Meeting Outcomes - Liquidity Tightening

What did the MPC Decide? 

The MPC increased the CRR (cash reserve ratio) on public sector deposits from 50 to 75%; a much-dreaded decision and left all other parameters including the MPR (monetary policy rate) un-changed at 12% p.a, with an asymmetrical corridor of +/-200bps. The CRR on private sector deposit was retained at 12% and the liquidity ratio was unchanged at 30%. 

Liquidity tightening

CRR hike in line with expectations. We believe the CBN is moving towards a complete restriction of public deposits from lending and investing activities by banks. This should promote a sustainable banking model that is based on competition for private customer deposits.  Marginal downturn in share prices is expected. Although we expect a downward pressure on bank stocks over the next few days, we believe it will be marginal. Our view is consistent with the minimal downward pressure seen on the banks in August 2013 when the CRR on the public sector was increased to 50% from 12%. The banks in our coverage witnessed an average downward movement of 1.4% in share prices between 06 August 2013 and 13 August 2013, with prices stabilising afterwards.  UBA was the only stock that witnessed a material decline of 11% during the period. Currently, Skye Bank and FBN Holdings have the highest exposure to the public sector in our universe of banks with CRR on public deposits standing at 35% and 28% of total deposits respectively as at 9M-13. Nonetheless, we do not expect much of a downturn in their share prices as deliberate measures have been taken by the banks to reduce their public deposit exposure.   

NIBOR to rise marginally in the short term. We expect NIBOR to inch upwards on the back of the hike in the public sector CRR for a few days. The impact of the hike in CRR in August 2013 was a 907bps hike in NIBOR for 7 trading days, after which the rates normalised. We do not believe that banks were caught by surprise with this further hike, as strong liquidity currently exists in the market due to t-bill maturities and AMCON bond settlements. NIBOR should therefore be less affected this time in terms of rate spike and duration.

Impact of MPC Decision 

Money Markets SectorThe impact of this decision on money markets will be a shock effect in the short run and a re-turn to equilibrium rates within six weeks. The first time the MPC increased the CRR on public sector deposits in August 2013, an estimate of N1trn or 6.84% of M2 was debited. At that time, the impact was a spike in interbank rates. Also, it coincided with the failure of two discount houses which exacerbated the situation. Eventually, the rates declined to pre CRR levels. This set the stage for another round of excess liquidity. This time, approximately N750bn will be debited on February 4. This amount is equivalent to 5.09% of M2. Therefore, we expect an initial spike of approximately 400bps before settling to a 1.5% increase in the effective cost of funds for the banking system. Banking net interest margins and profitability will be affected whilst their liquidity will remain unimpaired. The Fed and State Governments will face some difficulty in extracting commissions from bankers. 

Exchange Rate Management The key variable that drove this decision remains the protection of the value of the naira in the foreign exchange markets. The CBN Governor expressed some concerns about the declining trend in foreign portfolio flows. This in addition to the leakages and falling fiscal buffers made the CBN take a more aggressive position to defend the naira. The divergence between the official and parallel markets had widened to 12% of the official exchange rate. The CBN is of the opinion that the Nigerian economy is more exchange rate than interest rate sensitive. Therefore a depreciating currency will have a direct impact on inflation and could be counterproductive. 

Is the Naira Overvalued? Our crude analysis using the PPP /Mac Donald index suggests that the true value of the naira has not changed dramatically since August 2013. Therefore, an 11% depreciation in the currency in the parallel market in the last 2 months, is more out of fear and speculation than fundamentals. The other indicator less used, is the result of dividing the total money supply by the aggregate foreign assets in the economy. This will give you a score of 340. If you then discount this with the annual dollar earnings, the outcome shows no difference between 2012 and 2013. All these suggest that the naira will most likely appreciate from N173 to N170 in the parallel market initially and diverge again if the external reserves deplete further in March. At the inter-bank and official markets, the naira will trade at current levels. The inverse relationship between interest rates and asset values may undermine the current stock market rally temporarily forcing a mini correction in the near term.

While I check for accuracy and invest time in research, I am not liable for any misinformation. The details here should be construed as my investment view and any use of same is at owners risk. 

Monday, January 20, 2014

Monday Blast

Good Morning dearies, hope your weekend was as restful and amazing as mine. So I have finally gotten my voice back and am one hell of a happy person now. After what seems like forever with lots of experimental remedies I finally have my voice back and I have been rocking it since I got it back. You really never know the value of something till you lose it and now I value my voice (not in a weird way please).

So enough about how amazing I sound to myself these days and more on my outfit of the day. So I wore basic shirt and pants but the jacket put a twist on things for me. What are your thoughts.

Friday, January 17, 2014

Black Corporate

Not that am having a terrible day or anything but I would love to have my voice back (this weather is not just good for me) but till I do get my voice back, I will continue to get noticed in other fashionable ways.

So I decided to go with an LBD with heels an easy choice yep especially since I had no sleep the night before (that is another story for another day) and I wanted to still look amazing. What I love about a pair of heels is that it can elevate just about any piece into  a classy outfit.

I went for a simple but classy take on looking noticeably fashionable. What are your thoughts on that.

 The light was very poor because well the weather sucks and my eyes were puffy which was probably a good thing to hide the face.

Thursday, January 16, 2014

Suit Up

This is how I looked today all suited up like I had an important meeting. I wanted to feel like a powerful lady ready to take the bulls by the horn and set things in motion. I believe I kind of achieved that (I hope) and I pretty much felt a bit powerful even though I have lost my voice (damn weather).

This is as corporate as corporate dressing goes. Enjoy.

Monday, January 13, 2014


Happy Monday all, to say this weekend was not eventful is to understate the awesomeness of the past weekend up until I lost my voice. Arghhh, I just lost my voice (asides the cramps I was experiencing) that was a major bummer for me.

Anyway, I started my early morning work out which is not easy at all (I have to wake up early and that my friends is not cool) but it's for a good cause and that is to get this body of mine back to shape. Also I have decided to be more consistent (that is bi-monthly) with the economic review aspect of my blog. It might be boring to some but I love finance and that is part of who I am and also it sheds a little light on what I do.

This morning as I could no longer speak well in my amazing voice (smiling), I decided to allow my low hemline to do the talking for me and this was the result. Enjoy.

 As usual I wore a jacket through out work to make the outfit work appropriate. Thanks for reading and your comments are always appreciated.

Wednesday, January 8, 2014

The Economy In Brief as as The Year Ended December, 2013

2013 FY ended with the following occurrences in the Nigerian economy;
  • Food prices pressure drove headline inflation a tad upwards, although inflation rate still remains at its 7 year lowest at 7.9%
  • The Naira closed December 2013 1.3% weaker amid US Federal Reserve decision to scale back its monthly LASP (Large Scale Asset Purchase) program
  • The weak trend was also felt by most Emerging Market (EM) currencies with Ghana suffering a loss of 25%, South Africa a loss of 24%, India 14% and Indonesia 24%.
  • Also Turkey and Thailand suffered currency loss of 6% and 3% respectively largely due to recent political upheavals.
  • In response also to the US Fed decision on tapering of expected bond yields, yields rose as market speculators appear to have their concerns domiciled on the short term end
  • Brent Crude Oil prices rose by 1% as supply concerns over Libya persist and political unrest in South-Sudan (a major exporter in Sub-Saharan Africa) among others.
The on-going reforms in the various sectors of the Nigerian economy are gradually yielding positive results. This has manifested in the country being classified among the fastest growing economies in the world and a middle income country. In addition to the robust growth largely driven by the non-oil sector, the stance of monetary policy has helped to significantly rein in inflationary pressures. The moderation in consumer price inflation reflected a trend which began in the fourth quarter of 2012. However, the threat of a spending blow-out in the run-up to the 2015 elections poses potential risks to inflation.

In addition, the conducive investment climate brought about by predictable macroeconomic environment has continued to ensure sustained inflow of foreign capital into the economy. For instance, the aggregate foreign capital inflows stood at US$7.79 billion at the end of second quarter 2013 compared with US$4.53 billion in second quarter, 2012. Of this, the foreign direct investment inflow was US$1.47 billion or 18.9% while portfolio investment inflow accounted for US$6.52 billion or 81.1%.

The financial sector has continued to play a critical role in the development of the economy by mobilizing resources for productive investment.

The capital market continued its rally with the equities market providing the lead. The All-Share Index (ASI) increased by 47.19% from 28,078.81 on December 31, 2012 to 41,329.19 on December 31, 2013. Market Capitalization (MC) increased by 44.66% from N8.97 trillion to N13.23 trillion in the review period. Improved earnings and investor confidence in macroeconomic management and substantial portfolio inflows (as foreign investors took advantage of the favourable domestic economic environment) accounted for the upswing in capital market activities.

The performance of the financial sector was as a result of the continuous implementation of the financial sector reforms that have strengthened the sectors’ financial intermediation process engendered by improved interventions in relevant and critical sectors of the economy, stronger regulation and supervision through better disclosures by financial institutions, improved corporate governance, and capital market development. Other measures include improved cost structure of banks, enhanced financial inclusion, and improving financial infrastructures. There have also been numerous programmes and projects to improve the payments system. 

While Federal Government spending overall in 2013 has not been significantly higher than in 2012, oil revenues have continued to decline in spite of the relative stability in oil price when compared with preceding years. As a result, Excess Crude savings have fallen from about $11.5b at year-end 2012 to less than $3b on December 2013. External Reserves have remained in excess of $43billion only because of a massive inflow in portfolio funds. The implication of this is that financial markets are susceptible to external shocks.

Following the economic performance in 2013, the Nigerian economy is expected to grow strongly in 2014 with the growth to be driven by high oil prices and robust domestic demand. In addition, the several reforms initiated and pursued by government and her agencies in 2013 are expected to impact the economy positively in 2014. These include:
- Government efforts to improve transportation network and port reform to strengthen economic linkages between sectors, cities and regions and make growth more inclusive,
- The expected passage of the Petroleum Industry Bill (PIB), which is expected to improve local content, ensure technology transfer and job creation;
- The modernization of agriculture through improved seedling and value chain initiatives which will likely increase agricultural output;
- Financial sector reform through financial inclusion which is expected to further enhance economic growth and job creation through access to financial products and services by a large segment of the informal sector of the economy.
- Power sector reform that will reduce cost of doing business and attract local and foreign investors into the industrial and manufacturing sectors of the economy and open job opportunities. 
- The licensing of private refineries will boost job creation and stem petroleum product importation and conserve foreign exchange outflow. 
- In the real sector, it is projected that real output growth will reach 7.3 per cent. On its part, the IMF has projected an output growth of 7.4 percent. The forecast for inflation shows that the rate will remain within the single digit band through to 2014, despite the pre-election spending that might threaten price stability. 
- The full effects of Federal Government and CBN interventions in the real sector such as Power and Airlines Intervention Fund, the Nigeria Incentive – based Risk Sharing System for Agricultural Lending (NIRSAL), the Entrepreneurship Development Centres (EDCs) and other complementary projects of the government will improve the growth prospects in 2014. 
- The conclusion of the privatization of the power sector is expected to have positive impact on output growth and employment generation as activities in the formal and informal sector are expected to pick up.
- The developments in the external sector are expected to be favourable as the increase in oil price in the global commodity market are projected to be sustained. This is expected as the performance of the economies of the advanced and emerging economies gradually improve. Consequently, robust external reserves and external debt will remain within the sustainable thresholds. 
-Most importantly, Nigeria will have competitive edge in the international capital market in 2014, owning to robust growth, high reserves level, stable exchange rate and clement investment climate. The interest rate differential between Nigeria and most developed countries will continue to be a source of attraction for global capital flows to Nigeria. 
- The retention of the BB- rating for Nigeria by Fitch and Standard and Poor’s rating agencies is an indication of the conduciveness of the country as an attractive investment destination. Nigeria is also expected to remain a low-risk debtor country which is an indication of its credit worthiness.
-In the fiscal space, the outlook in 2014 remains bright, as oil prices are expected to maintain their high levels given the gradual recovery of major oil consumers like the United States and China from the impact of the recent global financial crisis, thereby pushing up crude oil demand. Though the discovery of shale oil in the US may adversely affect Nigeria’s crude oil demand, the impact may not significantly reduce oil demand for now. However, given that 2014 is an election year, government spending is expected to rise due to the financing of election activities which may expectedly worsen the liquidity conditions in the system leading to inflationary pressures.
- The outlook for the financial sector in 2014 is bright. With the commitment of the CBN to macroeconomic and financial system stability, Nigeria is likely to evolve as a preferred destination of choice for investment in 2014. In addition, the CBN’s commitment to the pursuit of financial inclusion is expected to broaden the deposit base of deposit money banks (DMBs). Financial system stability will be strengthened in 2014 with sustained macroeconomic stability, and consolidation of the on-going reforms in the financial system. The positive ratings of Nigerian banks by international rating agencies are evidence of their soundness and will continue to enhance the inflow of capital into the banking sector.

The outlook for 2014, however, portends some potential headwinds that may lead to further tightening in monetary conditions. It is expected that 2014 will be the year for QE- tapering in the US and interest rate rises in Europe, both of which will lead to some pressure on the exchange rate and stock prices due to the impact on capital flows. It is also the year in which election spending is likely to take place domestically, thus bringing more pressure to bear from the fiscal side. As a result, there may be need to continue the current monetary tightening mode in response to these eventualities in 2014.

Let me conclude by stating that while the overall economic outlook for 2014 appears mixed, there is need to sustain and consolidate current efforts to address the lingering challenges of insecurity, infrastructural deficits as well as the threats to oil production such as pipeline vandalism, crude oil theft, etc. There is also the need to give greater attention to the diversification of the Nigerian economy away from the current over-dependence on Oil export in order to avoid the vagaries in the international oil market and their attendant adverse effects on the domestic economy.

While I check for accuracy and invest time in research, I am not liable for any misinformation. The details here should be construed as my investment view and any use of same is at owners risk. 

Through The Xmas Period

I have been unavailable on the blog for a while now mainly because I traveled to the Villa for Christmas (more like a tradition in my family) and the reception there even for a phone call is crappy. Hence my non-availability, the yuletide season was amazing surrounded by family (in other words a lot of people with opinions) and friends, lots of wedding, parties, laughter, eating (I have added a lot of weight) and drinking. But above all, the period gave me opportunity to appreciate those that really matter in my life.

I didn't really take snapshots largely due to my busy schedule but I have gathered different snapshots of I and some members of my family to show how great this period was.

My Gorgeous GrandMa, Can't believe she's in her 80's. She rocks
My brothers

The family (although my twin brother is missing from this snapshot, he hates pictures)

I and my younger brother goffing around
My nieces (oh so pretty and funny)

I have so many others, so I would post those later (so I don't clog this post with just pictures). Hope you all enjoyed the festive season as much as I did.