Global News: IEA Forecasts Oil .
FEC approves N47.9trn budget for 2025.
World oil demand is forecast to expand by 920 kb/d this year and just shy of 1 mb/d in 2025, to 102.8 mb/d and 103.8 mb/d, respectively. The slowdown in growth from recent years reflect the end of the post-pandemic release of pent-up demand and below-par underlying global economic conditions, as well as clean energy technology deployment.
Our thoughts
So, the International Energy Agency is a governmental body focused on data analysis & policy recommendations in the energy space.
They are forecasting a grim in oil supply globally. America is going to ramp up their supply & China (a major buyer) is going greener by the day.
Impact?
This will negatively impact oil companies and countries that depend largely on oil and have low reserves.
What should you be doing?
If you are a trader, a short position on oil futures isn’t a bad idea.
As a trader, energy stocks (especially energy those that focused on fossil fuels) are going to be quite bumpy.
The dividend-paying ones might give some value, but generally, I would hold and not buy more now, then pick some when the prices correct.
Living in an economy dependent on oil? A drop in oil prices will impact government revenue, government spending, and exchange rates. Bumpy!
African News: Access Holdings Plc Announces Access Bank UK Majority Stake Acquisition in Afrasia Bank.
Access Bank holdings plc has announced that its banking subsidiary, The Access Bank UK Limited, has entered into a binding agreement to acquire a majority equity stake in Afrasia Bank Limited, the fourth-largest bank in the Republic of Mauritius by total assets.
Our thoughts
While their base country is slowing down, Access Bank is on full throttle to become the real “BANK FOR AFRICA” and we are here for it. This one is an interesting structure. The entity that closed this purchase is Access UK. This is good positioning for Access UK to function like an offshore bank (think Standard Bank’s Isle of Man).
On the other hand, It does appear that Nigerian (and it's naira) is happening to the bank:
Standard Bank's group stock price in USD: $1,315.22. (11 to 18 rand in 10years) --> 63%
Access holdings: $0.15 cents (N250 to N1700 in 10years) --> 58%
It depends on how you see it and how long you can wait. There's a LOT of value to unlock, but if the economy doesn't improve, it would take a lot of financial engineering on Access' part to unlock it.
Nigerian News: FEC approves N47.9trn budget for 2025.
The Federal Executive Council (FEC), on Thursday, approved a proposed budget of N47.9 trillion for the 2025 fiscal year..
Our thoughts
Fun fact: the 2024 budget was actually $367 billion (275 Trillion @ 750). So technically, this is a budget cut.
But let's look at the budget assumptions:
2 million barrels per day
$75 per barrel
N1400 exchange rate
Oil production appears unrealistic. Nigeria hovered around 1.4 - 1.6 million daily this year.
With the forecasted glut in 2025, oil price assumptions may be unrealistic.
Expectation: The deficit (i.e., how much will be borrowed) will be increased, or budget implementation will be poor. The current plan is to borrow 30% (13.8/47) of the budget. Think of the impact of having to borrow more!
Very wild.
2025 and economic headwinds: 5&6
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