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Investors gain big on Airbnb, now worth over $100 billion

At its present trading valuation, Airbnb is more valuable than Uber, and leading hospitality giants Hilton and Marriott combined.

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Global investors are cashing big time on the world’s biggest online vacation rental company, popularly referred to as Airbnb.

Following a remarkable comeback, the company’s share began trading on at its debut for $146 per share, more than double its initial public offer price and values the business at more than $100 billion.

The recent valuation of Airbnb represents a major leap, taking into account its previous valuation high of $31 billion in a 2017 financing round.

At its present trading valuation, Airbnb is more valuable than Uber, and more than two leading hospitality giants Hilton and Marriott combined.

What this means

The amazing surge seen in Airbnb’s stock price lately revealed the strong bias of global investors towards its business model and the latest signal in what’s shaping up to be a good week for the company.

  • Airbnb, the biggest and most popular vacation online rental marketplace, known for disrupting the hospitality industry, is now listed on the Nasdaq, under the ticker symbol ‘ABNB’.
  • Airbnb has become a household name amongst millennials and a growing middle-class population, as it has changed the hold big hotel businesses had on the accommodation industry, leading hotels to reform their business strategies.
  • Airbnb is an online marketplace that allows individuals to let out their apartments or spare rooms to intended guests, at prices often lower than hotels.
  • Airbnb makes a cut of 3% commission of every booking from those individuals listing their apartments on Airbnb’s platform, and between 6% and 12% from guests that book via its platform.

What you should know

Our source, a few days ago, did an in-depth analysis on why it felt the company’s IPO might be worth your money.

Though, Airbnb’s seeming entry into the public market looks new, the business has built a consistent pathway of generating impressive revenue that it’s closest rivals (Bookings, Expedia) would turn green at.

  • Last year alone, Airbnb’s gross bookings earnings of $38 billion were 35% that of Expedia and 39% of Booking Holdings Inc., and it kept the momentum fired up, that it closed it amazingly to 62% and 64%, respectively, when taking to account the recent year to date periodicity.
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COMMODITIES

China’s data disappoints, as oil prices fall

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China, the second-largest oil consumer globally, posted a slightly poor economic report which clouded the fuel demand outlook in the near term.

An earlier report by Caixin showed China’s manufacturing purchasing managers’ index (PMI) was 50.3 in July, lower than expected. On Saturday, manufacturing and nonmanufacturing PMIs came in at 50.4 and 53.3 respectively.

Business activity in the country has slowed due to higher raw material costs, equipment maintenance, recent floods, and the latest outbreak of COVID-19.

Asia’s biggest economy had been recovering at a rapid pace but if this recent slowdown deepens, the outlook will fall significantly. The outlook for crude demand is shaky, and that is unlikely to change until global vaccination rates improve.

Investors also looked forward to more oil production from the Organization of the Petroleum Exporting Countries and its allies (OPEC+).

Brent crude oil futures fell 1.05% at the time of writing this report and WTI crude oil futures fell 0.92%. According to reports, OPEC’s oil production rose to its highest level since April 2020 in July. Efforts to reduce production curbs will be further eased from August 1. Since then, Saudi Arabia has progressively ceased its voluntary supply cut.

There continues to be an increase in COVID-19 cases on a daily basis. A higher vaccination rate could however prevent the need for restrictive measures that caused fuel demand to plummet in 2020.

There will be no lockdown as the Delta variant of the virus fuels an outbreak of cases in mainly unvaccinated populations, but the situation is escalating, U.S. officials report.

The daily gasoline consumption of India, the third-biggest oil importer globally, exceeded pre-COVID-19 levels in July. While COVID-19 lockdowns were relaxed across the country, gas oil sales were low, indicating a sluggish industrial outlook.

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CURRENCIES

We have dollars – Nigerian banks tell customers

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Deposit money banks in the country have moved to implement the directive from the Central Bank of Nigeria (CBN) to set up teller points within their banking halls to attend to the forex needs of customers.

This is evidenced by several emails sent by the banks to their customers over the weekend.

Recall that in an unexpected move last week, Godwin Emefiele, the CBN governor announced the discontinuation of the sale of forex to Bureaux de Change operators in the country citing a slew of misdemeanours by the latter, which were jeopardizing the apex bank’s FX policy, as the reason behind the ban.

Emefiele had in the same breath, instructed banks to set up teller points within the banking halls to attend to the legitimate forex needs of customers.

An email from First City Monument Bank (FCMB) to customers read in part:

“We are pleased to inform you that the Central bank of Nigeria (CBN) has approved the resumption of sales of Personal or Business Travel Allowance (PTA/BTA).

To access this, simply visit any FCMB branch today with the following documents and make your request.

  • Duly completed form A
  • Valid international passport and visa
  • Return flight ticket

For more information, please contact your Relationship Manager.

Thank you for choosing FCMB.”

A similar email from Zenith bank read:

“Personal/Business Travel Allowance (PTA/BTA) available for sale at Zenith Bank Branches nationwide. Simply walk into any of our branches with your travel documents.”

The email from UBA stated that the bank had implemented dedicated teller points for FX transactions at all their branches nationwide, listing PTA/BTA, foreign school fees payment, receipt of money transfer (FX) in cash and access to other remittance services “with ease” as services available to customers.

From Guarantee Trust Bank and Stanbic IBTC, the notifying email was much lengthier with Stanbic Bank including a subtle caveat.

“…As part pf our commitment to continually serve our customers, we will ensure all customers’ requests are handled on a first served priority basis based on the availability of funds both in cash and electronically…”

Guaranty Trust Bank’s email had even more caveats. While listing the pre-qualifying documents for PTA/BTA, they noted:

“…PTA request is limited to a maximum of $4000 per quarter per applicant.”

In the same breath, the bank also listed, “A return ticket originating from Nigeria with a minimum travel time of 5 hours to your destination,” as one of the qualifying documents for accessing PTA/BTA from the bank.

It is interesting to note that flights to some African countries are completed well under 5 hours and this leaves one wondering about GT Bank customers needing forex to make such trips. On an Air Peace carrier, for instance, a trip from Lagos to Accra is estimated to take 1 hour. Lagos to Banjul (The Gambia) takes 4 hours 45 minutes, Lagos to Dakar (Senegal) takes 3 hours 30 minutes while Lagos to Freetown takes just 3 hours.

These notwithstanding, bankers who spoke to our source  (on condition of anonymity) confirmed that the banks are fully prepared to meet individual and business forex needs, stating that the CBN’s move in ending forex sale to BDCs was the right move.

“The banks are more than capable of rendering this service,” Kayode (name changed), a staff of one of the top tier banks told our source .

“The issue has always been that the BDCs had constituted themselves into a powerful cabal with far-reaching influence among Nigeria’s powerbrokers. This is why they were able to take over such a crucial banking function, but the days of their reign are over now. We are only hoping that Emefiele is not removed from office for this bold action,” he added.

When asked if the CBN had funded the banks with sufficient forex to meet customer requests, another bank staff told our analyst:

“All the branches of all the banks have been capacitated to disburse FX to customers. You can walk into any bank branch and change your naira to dollar up to the daily limit set by the bank.

“You can also receive FX directly into your domiciliary account, which unlike before, now takes only a few minutes to set up. What government wants is for monies received from abroad to be documented, which is why the CBN has asked that we route FX inflows through domiciliary accounts.”

When asked about the availability of forex for transactions such as overseas payments, he said:

“The bank will not give you forex to make overseas payments; you present the necessary paperwork to them and they debit your account and credit the organisation where you want to send the money to abroad.

“The CBN does not want individuals to start another round-tripping racket and this is why the regulator has put this rule in place. This is the procedure for making oversea payments like school fees, medical bills, and payment of suppliers for goods (or services) to be imported into the country.”

Our respondent also confirmed that the exchange rate would fall over the coming weeks as the panic and furore over the CBN/BDC debacle subsides and people start to see that the system has been rejigged in their favour. He advised individuals to open domiciliary accounts and save in forex if they can afford to.

In case you missed it

It was reported last week that the CBN governor instructed Deposit Money Banks (DMBs) to set up teller points in designated branches for the sale of foreign exchange to meet legitimate forex requests of their customers.

This came after the apex bank announced that it will discontinue the sale of dollars to the Bureau De Change (BDC) operators.
The directive was contained in a memo by the CBN to the deposit money banks and signed by the Director, Bank Supervision Department of the apex bank, on Thursday, July 28, 2021, in Abuja.

The CBN in the memo also asked the banks to publicize the locations of the designated branches and make necessary arrangements to sell forex to customers in cash and/or electronically.

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CURRENCIES

Naira gains at forex markets as dollar supply rises by 108.5% with drop in demand

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Friday, 30th July 2021: The exchange rate between the naira and the US dollar closed lower at N411.44/$1 at the official Investors and Exporters window. 

Naira appreciated against the US dollar to close at N411.44/$1 on Friday, representing a 0.06% gain compared to N411.67/$1 recorded on the previous day.  

Also, naira appreciated the parallel market to close at N515/$1, having traded at N520/$1 on the previous day. This represents a N5 gain when compared to the previous day’s rate as dollar supply rose significantly by 108.5% 

The recovery is coming after exchange rate had had dropped following the announcement of the ban placed on the sale of forex to BDC operators in Nigeria by the CBN Governor, Godwin Emefiele. 

The naira strengthened further as dollar demand dropped with the BDC operators assuring of continuous provision of foreign exchange services despite non-allocation of forex by the CBN.

Trading at the official I&E window

Naira appreciated against the US dollar at the Investors and Exporters window on Friday to close at N411.44/$1, representing a 23 kobo gain when compared to N411.67/$1 recorded on Thursday.  

  • The opening indicative rate also appreciated from N411.58/$1 recorded on Thursday, 29th July 2021 to close at N411.40/$1 on Friday.
  • An exchange rate of N412.25 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.44/$1, while it sold for as low as N400/$1 during intra-day trading.
  • Meanwhile, forex turnover at the Investors and Exporters (I&E) window rose by 108.5% on Friday, 30th July 2021.
  • According to data tracked  from FMDQ, forex turnover increased from $58.07  million  recorded on Thursday, 29th July 2021 to $121.08 million on Friday.

Cryptocurrency watch

The world’s most popular and largest cryptocurrency, Bitcoin, dropped by 5.91% in the early hours of Monday to close at $39,753.20 after it had built some momentum and hit the highest level since the middle of May.

  • Bitcoin had gained on Sunday for an 11th day in the past 12 and traded up to $42,606, its highest since May 18. 
  • Bitcoin, which for weeks trended downward from its mid-April record near $65,000, has now spent more than a week building back as supportive comments from Elon Musk and Cathie Wood helped bump it out of a declining trend. 
  • Edward Moya, senior market analyst for North America at Oanda Corp., Edward Moya, in his note on Friday said that retail interest is strong, while institutional interest is somewhat lagging and needing fresh endorsements. 
  • Meanwhile, the second biggest cryptocurrency by market capitalization, Ethereum, dropped by 2.66% to trade at $2,551.84. 

Crude oil price

The crude oil market was bearish on Sunday evening as Brent crude dropped by 1.14% to close at $74.55 per barrel as oil fell after 4 monthly gains with data signaling a slowdown in China and investors monitored the spread of the delta coronavirus variant.

  • While futures dropped, traders also monitored a rise in tensions between Iran and the U.S. Washington has formally blamed Tehran for an attack on an Israel-linked oil tanker, warning of an appropriate response. 
  • The standoff comes as the two nations are seeking to revive a nuclear accord that, if successful, may pave the way for an end to U.S. sanctions on official Iranian oil flows. 
  • Oil has risen every month this year apart from March as the global recovery from the pandemic stoked consumption, although traders remain wary about the threat carried by the disease’s persistence. 
  • Against that backdrop, the Organization of Petroleum Exporting Countries and allies have largely followed through with plans to ease supply curbs, with an extra 400,000 barrels a day to be released this month 
  • Also, WTI Crude dropped 1.04% on Sunday evening to trade at $73.18 per barrel, Natural gas recorded a 1.18% gain in price to trade at $3.960. Meanwhile, Bonny Light traded in a positive region at $74.32 per barrel, representing a 0.27% gain. 

External reserve 

Nigeria’s foreign reserve increased by $26 million on Thursday, 29th July 2021 to close at $33.381 billion compared to $33.355 billion recorded as of 28th July 2021. 

  • Since the reserve started moving positively it has gained over $287.1 million in just 10 days despite enduring a significant plunge in the previous months. 
  • Recall that the Central Bank of Nigeria banned the sales of foreign exchange to Bureau De Change (BDC) operators in the country, due to reports of the operators’ illegal trading of the dollar, trading beyond the limit threshold of $5,000 and gradually dollarizing the Nigerian economy, according to the CBN governor. 
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Cryptocurrency Market

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