Monthly Economic News and Views

Understanding the R Word

Recession: how deep and for how long?
Presented by B.J. Rewane
Financial Derivatives Company Limited

Lagos Business School

Executive Breakfast Meeting Sept 7, 2016
 Understanding the R Word
2

When your neighbour loses his job = Slowdown

When you lose your job = Recession

When an Economist loses his job = Depression

 Outline
3

August Break or Give me a Break

Global & Regional Context

Recession Economics and Nigeria

Lessons from other Countries

Business Proxies & the Stock Market

Prescriptive Policy & the Recovery Path

Political Analysis

Outlook
Recession is not a Depression

Albino no be half cast

 August Break or Give me a Break
5

Nigeria enters into a mild recession

Q2 GDP growth slips further into negative territory (-2.06%)

Cumulative negative growth approximately 2.4%

Output contraction spurred by

Oil production fall
Manufacturing slump

Confidence sinking
Investment paralysis
 August Break or Give me a Break
6

Headline inflation year-on-year surges to 17.1%

An 11-year high, close to hyper inflation territory

The monthly inflation declined sharply to 0.6%

Annualized the inflation rate down to 7.44%

Unemployment is up at 13.3%

Underemployment also up to 19.3%

Misery index is now up to 49.7%

 Revenues Slump
7

Federal revenue shared with state (FAAC) down 20% to N443.63bn

Negative impact of crude oil production sabotage

PMI down 4.8% to 42.1 according to CBN

Stanbic PMI reading also shrank

FBN Quest reveals an expansion

Average opening position of banks is N97.3bn long

 T/Bills Rate Stratospheric
8

Primary T/bill auction totals in August of N570bn

OMO auction is at N1.13trn

Interest rates far higher than dividend yields

Disrupting the deposit base of banks and financial institutions

Together with CRR, deposits have sterilized 25% of M2

Thereby compounding the reduction in aggregate demand

 August Break or Give me a Break
9

The naira traded in a tight range in the IFEM between 314 and 322

In the export proceeds market the naira traded between 345 and 375

In the IFEM, unofficial sources report a N50 under the table premium

External reserves is approximately $25bn

Net reserves after discounting swaps and forwards approximately

$20bn

30 and 60 day forward deliveries were settled by the CBN

 August Break or Give me a Break
10

9 banks suspended from forex market

For failing to remit NNPC dollars back to the CBN

Driving the naira way above the 400 resistance level

The announcement also undermined confidence in the banking system

The banks have all been readmitted into the market

After a most disruptive week

Global & Regional Context
 Global Highlights - US Growth Slows
13

US added 151,000 jobs in August

Not strong enough nor weak enough to nudge the Fed to increase rates
in September
Unemployment rate now 4.9% - down from 10% in 2009
The non-manufacturing PMI fell to 51.4 in August from 55.5 in July
Lowest level since early 2010
New orders and inventories slumped into contraction territory
This forecloses the possibility of a rate hike this month
 US - Banks are Strong
14

Fed stress test clears 31 of 33 banks

Hypothetical scenario:
Unemployment at 10%

50% loss in stock markets

Negative treasury rates

Banks that would normally struggle Bank of America Corp. and

Citigroup Inc. pass test
 US - Banks are Strong
15

Morgan Stanley passes marginally with a caveat requiring a revised

capital plan

Due to weakness in the internal capital risk management process

Deutsche bank AG and Banco Santader SA fail for the second and
third year consecutively

Poor ability to measure risk cited as the main cause

Banks in a more resilient state than leading up to 2008

 Global Highlights
16

Brazil economy shrank by 3.8% in Q2

Worse than expected and the ninth quarter of decline
Brazil Central Bank left interest rates unchanged at 14.25% p.a.
Indias GDP grew by 7.1% in Q2
Down from 7.9% in Q1 but ahead of China
Uber now most valuable start-up company: worth $70bn
Objective to make ride hailing so cheap and convenient that people
will forgo car ownership altogether
 SSA
17

Inflation forecast for region hiked up to 12.2%,

Influenced by big players in the region (e.g. Angola at 38.3% , Nigeria at

17.1%)

Inflation expected to recede to 9.6% on average in 2017

 SSA
18

Countries reliant on domestic demand like Kenya are expected to perform

well

Kenya to achieve GDP of 5.9% from 5.7% in Q2

Inflation: 6.3% MPR: 10.5%

IMF revisits Ghanas fiscal outlook for 2016 to reevaluate US $ 918 million
assistance program

A positive outcome is dependent on an improvement of the macroeconomic

projections
 SSA - Demand for African Eurobonds weak
19

Ghana has scrapped plans to sell its Eurobond

Balking at the price demanded by investors

IMF concerned that monetary reforms and budget targets may be

abandoned in run up to elections

Kenya, Nigeria and Ivory Coast have delayed their issuance of euro
bonds

South Africa and Mozambique are the only two countries that have
sold their dollar securities
Recession Economics
 Rule Of The Thumb
21

A recession is two consecutive quarters of negative GDP growth

Potential GDP growth > Real GDP for an extended period

Marked by widespread contraction of business activity

High unemployment rate

Declining inflation
 The R Word: Consequences
22

Widespread Banking Failure Stock Market Crash Currency Depreciation

High Unemployment
and Retrenchment

Real Estate Delinquency Political & Social Suicide Rates Increase

Unrest
23
Types of Recession

Full year GDP GDP GDP GDP contraction

contraction of contraction of contraction of of 10% and above.
0 - 3% 4 - 7% 7 - 9%
Precedes a
Depression

Mild Recession
Deep Recession
Severe Recession
Chronic Recession
 Is Nigeria in a Recession ?
24

GDP Growth (Q216) -2.06%

Inflation 17.1%
Unemployment +
32.6% Yes, a mild one
Underemployment (Q216)
Misery Index (Q216) 49.7%

Vacancy Factor Index (Q216) 172

Manufacturing PMI 42.1

Consumer Confidence (Q216) -24.2

Aggregate consumption (%GDP) 29%

 The R Word: The Recovery Path
25

V SHAPED Brief economic decline followed by rapid and sustained

recovery

U SHAPED GDP shrinks for several quarters and slowly

returns to growth

L SHAPED Severe recession that stays for many years i.e

depression

W SHAPED Double dip recession, economy recovers and

then falls back before recovering finally
 Way out of a Recession
26

To get out, we need to stimulate and target

Aggregate consumption Consumer confidence

$340bn 9.5

Gross fixed investment Manufacturing PMI

$66bn 53
 Recovery Path & Way Out for Nigeria
27

Given the fall in oil revenues

Increased deficit financing plan is crucial for recovery

$4 5 billion external borrowing

Asset sales to raise more dollars

Nigeria needs to raise money with a Eurobond issue

 Recovery Path & Way Out for Nigeria
28

Minimum wage review and social safety net

Reduce interest rates

Reduce and refund CRR

Create liquidity in the forex market

Curb abuse and arbitrage of the forex

 Recovery Path & Way Out
29

Investor enthusiasm is weak

Recession must be combated with a powerful stimulus package

Turning a U curve into a V curve

Year-on-year inflation of 17.1% forced CBN to raise rates

Choking the economy of funding

 Recovery Path & Way Out
30

MPC under pressure to cut rates

Force T/bill rates lower to single digits

The abuse of the intervention fund programs will be curbed

Prevalent forex market abuse may erupt into a scandal

International and domestic investors will be looking for

policy direction & consistency alignment
 Outlook and Prognosis
31

Doing nothing will lead to atrophy

Interest rate reduction to stimulate consumption

Increase public works and civil construction

Incentivization of investment

Lower unemployment

Increasing inflation
Weaker naira in the short term
 The R Word: Types
32

Recessions are classified by the speed of recovery

V-shaped: brief economic decline followed by rapid and sustained recovery

U-shaped: GDP shrinks for several quarters and slowly returns to growth

L-shaped: severe recession (depression) that stays for many years

W-shaped: double dip recession, economy recovers and then falls back

before recovering finally

 Schools of Thoughts: Keynesian
33

Paradox of thrift: in a recession, people tend to save more because of the

threat of unemployment.

Leading to a reduction in spending which depresses aggregate demand and

GDP

When an economy has spare capacity, increasing aggregate demand will

have an impact on real output and only minimal effect on the price level
 Schools of Thoughts: Keynesian
34

In stabilizing the economy, fiscal policy is the primary tool, while monetary
policy is complementary

Government should reflate the economy through deficit-stimulus policy in

order to get out of recession

Spurring consumption is key

Tackle unemployment rather than inflation as wages become rigid during

recession
 Schools of Thoughts: Monetarists
35

Monetary philosophy is a direct criticism of the classical Keynesian

economic theory.

Fiscal policy is ineffective and potentially destabilizing

The crowding-out effect

It advocates for the control of the supply of money in the economy as an

instrument to influence or tackle inflation

In the long run, the market will fix itself

Nigeria in a Recession ?
 Nigeria in a Recession???
38

Potential GDP has been greater than Real GDP since 2012

Real GDP vs Potential GDP growth

7 6.6

5.9
6 6.3
5.2
4.9
5 5.4
4.3
3.8
4

3
2.7

2 1.4

1
0.3

0
2011 2012 2013 2014 2015 2016*

Growth of Real GDP (%) Growth of potential GDP (%)

 Recession and its fallout

The Nigerian Case: What the figures say?

40
Causes of the Recession
Exogenous External

Oil price Investment level

Oil production
Weak global demand
Monetary conditions
International flow of capital
Monetary policy
Terrorism
Governance & accountability
Subsidies
Competitiveness
Productivity
 Negative Growth
41

Negative growth of -2.06% in Q22016

Real GDP Growth Rate (%)
Compared to forecast of -1.5%
5
4
Economy has found its bottom and only way 3
2
is up 1
0

Pace of recovery is dependent on pace of -1

-2

policy response -3

Q3 growth of -1.0 % and Q4 of 0.5%

 42
Oil Prices

20.00
40.00
60.00
80.00

0.00
100.00
140.00

120.00
Q3' 2011

Q4' 2011

Q1' 2012

Q2' 2012

Q3' 2012

Q4' 2012

Q1' 2013

Q2' 2013

Q3' 2013

Oil Price Q4' 2013

Q1' 2014

Q2' 2014

Q3' 2014
GDP Growth (%)

Q4'2014

Q1' 2015

Q2' 2015

Q3'2015

Q4' 2015

Q1' 2016

Q2' 2016
GDP & Oil prices Positively Correlated

0
2
4
6
8

-4
-2
10

GDP Growth
 Sector Performance
43 Growth Rate Sector Contribution to Job creation
Sectors
Fastest
Oil Refining growing vs Worst49.19%
performers N/A
Water supply & Waste Management 8.46% 0%
Agriculture 4.53% 5.3%
Insurance 3.72% 0.7%
Education 2.88% 60%
Information and Communication 1.35% 1.3%
Manufacturing -3.36% 7%
Construction -6.28% 1.3%
Accommodation & Food Services -6.39% 4%
Financial Institutions -13.24% 4.5%
Crude Oil & Natural Gas -17.48% 0
 Sector Performance
44

Top four fastest growing sectors account for only 6% of new jobs in Q1.

Sector activity does not mean job creation and employment

Therefore, growth does not translate into increased consumption and

income
 The Slump-o-meter: The Recession Scorecard
45
FAAC(N'bn)
Real GDP Growth (%) Unemployment (%)
Q3'16

Q3'16* Q3'16*
Q2'16

Q2'16 Q2'16
Q1'16
Q1'16
Q1'16 0 200 400 600 800
11 12 13 14 15
-3 -2 -1 0 Vacancy Factor Index
Q3'16 FBN PMI
Exchange rate ( N/$ )parallel)
Q2'16
Q3'16* Q1'16
Q3'16*
Q2'16 55 60 65 70 75 Q2'16
Q1'16
Gross Fixed Investment as % of GDP
0 200 400 600 15 Q1'16
14.5
48 50 52 54 56
14
13.5
13
2015 2016 2017 2018
 Inflation loses steam
46

Year-on-year inflation rate of 17.1% is the result

Inflation (%)
of the base year effect 2.00 20.00
1.80 18.00
1.60 16.00
Month-on-month inflation of 0.6% 1.40 14.00
1.20 12.00
1.00 10.00
Shows inflation is slowing down from 0.8% in June 0.80 8.00
0.60 6.00
Annualized rate of 7.4% 0.40
0.20
4.00
2.00
0.00 0.00
Thus, inflation does not pose a potent threat to
stability and growth M-o-M (primary axis)
Y-o-Y (secondary axis)
Y-o-Y inflation to reach 17.5% in August
 Exchange Rate
47
Spread between the parallel market and IFEM
Exchange Rate (N/$)
increased by 58.8% in August 440.00

420.00
Driven by the 10.2% depreciation at the parallel 400.00

market. 380.00

360.00
Rates to appreciate marginally in September 340.00

320.00
Parallel: N410/$ and IFEM: N312/$ by Sept end
300.00

Forward contract of $1.57 billion due this month

Parallel Market Rate IFEM Rate
At N275/$

CBN will pay up - by hook or by crook

 Unemployment
48

Unemployment at 6-year high of 13.3%

25 60
Highest in 15-24 age group 50
20
Unemployment 24.0% 40
15
Underemployment 34.2% 30

Underemployment rate is flattening 10

20
5
out: 19.3% 10

0 0
Misery Index now 49.8% Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16*
underemployment
Expected to reach 53% by Q3
unemployment
5,726 jobs created in Q1 inflation
misery index (secondary axis)
8,764 jobs lost
Recession Lessons from History

Other Cases of Recession

 The Asian Crisis (1997)
51

Originated from Thailand before spreading to other East Asian economies

South Korea, Indonesia, Malaysia, Philippines

Foreign Debt-to-GDP ratios rose to 167% for the top ASEAN economies

Prior to the crisis was the Asian economic miracle when economies
experienced high levels of growth of about 8-12%

The economic bubble was however fuelled by hot money

 Thailand Crisis to Recovery
52

Maintenance of a fixed exchange rate regime (i.e. pegging to the dollar)

resulted in stronger domestic currencies which slowed exports

Lower exports reduced forex earnings and which led to a misaligned

currency exchange policy

This led to excessive exposure to foreign exchange risk in the financial &
corporate Sector

Making these economies vulnerable to external shocks such as sudden

capital outflows
 Thailand Crisis to Recovery
53

Thailands economy grew at an average of over 9% between 1985-1996

The highest economic growth rate of any country at the time

Inflation was kept reasonably low within a range of 3.45.7%

The baht was pegged at 25/$

In 1997, the Thai Baht was hit by massive speculative attacks but Thailand

lacked the foreign reserves to support the USDBaht currency peg

 Thailand Crisis to Recovery
54

The government was eventually forced to float the Baht, on 2 July 1997,
allowing the value of the Baht to be set by the currency market

This caused a chain reaction of events, eventually culminating into a region-

wide crisis

The baht devalued swiftly and lost more than half of its value

Reached a record low of 56/$

The stock market dropped 75%

 Thailand Crisis to Recovery
55

The IMF unveiled a rescue package for Thailand which was subject to
conditions such as:
Establishing strong regulation frameworks for banks and other financial
institutions

By 2001, the economy had recovered

The increasing tax revenues allowed the country to balance its budget
and repay its debts to the IMF in 2003
Four years ahead of schedule
 The US The Recovery
56
US Growth rate US Unemployment rate

The financial crisis triggered the worst recession since The Great Depression

The economy contracted by as much as 8% and unemployment soared to 10%

The severity of the crisis resulted in a dramatic fall in household net worth

Today, unemployment is down to 4.9% and GDP growth is positive at 1.2%

 The US TARP Program
57

$298bn
October 2009

$0bn
Outstanding
January 2015

TARP bank investment programs helped stabilize the financial system

Provided capital to more than 700 banks
Banks paid back funds within 7 years
Treasury realised gain from dividends, warrants and other income
 Business Proxies
Income falling and markets shrinking
 FAAC down on lower oil production
59

Monthly allocation moved contrary to expectations

Down 20.65% to N443.6bn from N559.03bn last
Monthly FAAC Allocation
month.
800 700
Driven by lower crude oil production and export. 700
600 559.03
600

500 443.6

FAAC expected to rebound this month

370 345
400 299.75 281.5 305.12
300
200
To reach N500bn. 100
0
On improved revenue collection, higher oil prices in
June. Monthly FAAC Allocation

Average crude oil price increased to $49.87pb in June

from $47.5pb in May.
 Ships Awaiting Berth Down
60

Ships awaiting berth decreased to 41 from 45

last month.
60 Ships Awaiting Berth 450
This is attributable to higher customs duties, 50
400
350

bottlenecks and forex shortages 40 300

250
30
200
Importers are diverting cargoes to neighbouring 20 150
100
10
countries to avoid undue restrictions at Nigerian 0
50
0

ports and high custom duties

Smuggling activities expected to increase Ships Awaiting Berth Parallel Rate (N/$)

Ships awaiting berth expected to decline further

 Rig Count Set to Increase
61

Shell Nigeria declared force majeure on Rig Count

Bonny Light
1000
800
600
Niger Delta Avengers declare conditional 400
200

ceasefire 0

Nigerian oil rig count remained flat at 5 for

US Canada Nigeria

July
Down by 50% year-on-year
Stock Market
 Stock Market in a Recession Environment
64
Scott-Free BC 30 NSE Index

31,000

29,000

27,000

25,000

23,000

21,000

Source: NSE, Scott-Free, FDC Think Tank

 Market in August
65

Stock declined in the month of August by 1.47%

Bringing YTD return of the index to -3.64%
Attributable to crowding out effect of government securities and
weak investors sentiments
Augusts Market capitalization declined 1.46% to N9.47trn
The average daily turnover increased 2.18% to N2.56bn
Best performing sector in the index was Oil & Gas with 2.35%
Worst performing sector was Banking with -2.79%
Average market PE ratio currently at 10.6x
 Market in August - Scott-Free Index
66
SFNG Total Share Index down 0.97%
Monthly volatility 10.54%

BC30 index lost 0.98% in August

The SFNG Blue-Chip 30 Index (USD) was up 2.08% while the SFNG
Blue-Chip Index (EUR) was up 1.42% for the month of August
30 day volatility of 11.84% (down from 17.52% in July)
Sharpe ratio of -1.48
1 year return of -8.45%
Trailing P/E 7.38
 Impact of Recession in Stock Market
67

Lower sales

Declining profitability

Higher P/E ratio

Consolidation in most industry

Attractive to international investors

 Corporate Profit Growth Still Negative
68

Revenue (%) PBT (%) GDP (%)

Q116 -2.55% -13.84% -0.36%
Q216 5.24% -29.4% -2.06%

Weakness in macroeconomic condition translating to profitability decline

Earnings and profitability fell short of expectations
Worsen investors confidence
Low dividend yields turning investors to government securities
August dividend yield vs T/Bills yield (6.01%:14.29%)
Profits from quoted companies have fallen by about N178 billion
 Banking Industry
69

Steady asset growth of 9.9% (3 years CAGR)

74.6% of industry revenues amounting to N1.21trn (H116)
concentrated in Tier I banks
Industrys profitability is slowed by high loan loss charge offs and
rising operating costs
Impairment charge continues to record high credit losses of
N218.9bn for H116 from N41.3bn in H114
Size matters as Tier II banks struggles to grow PBT
Tier II PBT for H116 was N50.3bn as against N59.2b recorded in
H114
70
Banks Stressed Test What Does it Signify?
CBN conducts stress tests as well as routine examinations on banks
In light of growing NPLs and deteriorating asset quality due to naira
weakness
Raises apprehension on the state of Nigerian banks
Last released financial stability report was May 2016 for December
2015
Divulge banks asset quality decline
Industry ratio of non-performing loans (net of provisions) to capital
increased to 7.4% from 5.5%
Attributable to unfavourable macroeconomic environment and
exposure to the oil and gas sector
Real Estate Industry
 Recession Taking its Toll
72

VFIX up 4.2% from 165 in Q116 to 172 in Q216

A lagging indicator yet to respond to policy changes

Lekki has the highest vacancy rate at 65%

Affordable rents 6-10% above asking rents of $780psqm in Victoria Island

Residential index rose by 6.8% q-o-q, commercial index remained flat at

148

Prime office rent drop by 6% to $810 per sqm per annum

 VFIX up to 172 in Q2 2016
73

Vacancy rates trend upwards in prime areas

Expected to decline gradually from December 2016 onwards

200
180
160
140
120
100
80
60
40
20
0

Source: FDC Think Tank

 VFIX up to 172 in Q2 2016
74

Month/Year VFIX Residential Index Commercial Index

Jan 2015 100 100 100

Jan 2016 160.2 169.2 148
Mar 2016 165.3 176.9 148
Apr 2016 165.9 180.8 143
May 2016 170.5 188.5 143
June 2016 172.2 188.5 148
Nigeria in Recession means High Vacancy Rates
75

Nigeria in recession increases vacancy rates further

Carrying cost of properties is excruciating

Landlords reduce rental payment to annually

Previously collected 2 to 3 years payment

Pedigree of tenants remains important

Nigeria in Recession means High Vacancy Rates
76

Headline inflation at 17.1% is negative for real estate

Replacement cost far in excess of market value

Home prices cut, payment plans extended

Smaller commercial spaced quickly occupied- deemed more affordable

 Aviation Update
Nigerian Airlines are bleeding
 Aviation Update
78

Global air passenger traffic up 6% in H1 2016

Passenger load factor at 79.2% in H1 2016
0.2% marginally lower than 2015
Premium class traffic lagging economy
Airline profitability up marginally in 2016
Airline share prices up by 5.9% in July
In Nigeria global network carriers are cutting back frequencies and
capacity
 Aviation Update
79

Emirates cut 50% of flight frequency to Lagos

United and Iberia exited the market

Lufthansa reducing Abuja & PH frequency to 4 per week from 7 this

month

May cut Lagos to 5 flights per week from December

Meridian now operating 1 flight per week from Milan to Lagos

Delta cutting frequency from 6 per week to 5 on Lagos-Atlanta route

 Aviation Update
80

Round trip economy fares to New York now N450K N600K

Passenger load factors declining compared to 2015, now average 80%

inbound

Outbound load factors falling much faster

Fares, more expensive dollars and declining income impacting demand

Nigerian airlines cancelling flights to New York and London

 Aviation Update
81

Domestic aviation is consolidating

Aero and First Nation suspended operations

Mounting bills, declining revenue and static demand

Minister of State of Aviation assures market that Aero will return

Nigerian carriers are cutting back on maintenance and training

 Aviation Update
82

Unable to service debt and pay salaries

Chinese airlines are paying huge salaries for pilots

Paying top dollars for experienced pilots to meet rising traffic demand

Senior pilots annual salaries:

$ $
Xiamen 332K American 280K
Qing Dao 318K Delta 252K
Sichman 302K United 245K
South West 223K
Political Update & Risk Analysis
 Political Risk Analysis
85

APC leveraging on incumbency to consolidate hold on power

The languishing economy, increased Misery Index & weak naira are
challenges

The favourability ratings of the FGN are sliding

Recent comments show a sense of urgency, determination and

understanding

Reality and expectations gap is high

 Political Risk Analysis
86

The public is hurting and anxious about the naira

The statements and signals on monetary policy are mixed

Edo election and postponement indicates jitters

PDP remains in complete disarray

Defectors and disgruntled APC leaders will form a new party

The economic downturn and the absence of rent will impede funding
 Political Risk Analysis
87

In spite of economic decline, opposition politics in Nigeria is not

lucrative

Ondo state is a slippery terrain and is in play

An opposition win with support of outgoing governor is possible

The NASS crisis and the Senate trials will impede legislation

Flashpoints remain in the Niger Delta and the amnesty

 Political Risk Analysis
88

The Chibok Girls situation is also a potent source of concern

The naira weakness in the forex market and the abuse is a ticking political
time bomb

Buhari is now visiting the States of Nigeria

He is beginning to respond to the economic crisis by engagement with

the private sector

Monetary policy changes & direction are now imperative

OUTLOOK
 September Outlook
90

The Economic Management Team will announce a step up in the stimulus

package

Inflation in August will increase marginally to 17.6%

T/Bill stop rates will be allowed to decline sharply to 12% p.a. for 90
days and 14% p.a. for 180 days

MPR will be cut to 13%p.a.

CRR will be reduced to 20% to ease monetary conditions

 September Outlook
91

Capex spending and disbursement to contractors will increase sharply

The naira will appreciate marginally in the parallel market to N415/$

The CBN will increase the funding of the forex market

APC will retain power in Edo state

The legislator/executive infighting in the APC will continue

PDP squabbles will intensify, leaving the party in shambles

GDP growth for Q3 is likely to be negative

 Bismarck J. Rewane, MD/CEO
Financial Derivatives Company Ltd.
Lagos, Nigeria
01-7739889

2016. This publication is for private circulation only. Any other use or publication without the prior express consent of Financial Derivatives Company
Limited is prohibited.