Stock Market Hits Six Months High on Flexible Exchange Rate

WEEKLY REPORT

By Goddy Egene and Eromosele Abiodun

The bulls dominated the Nigerian equities market last week following the Central Bank of Nigeria’s (CBN’s) announcement during the week that it would adopt a more flexible exchange rate policy. Consequently, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) crossed the 28,000 points level last Wednesday, the first time since the 5th of January this year.

At the close of trades for the week, the NSE ASI and market capitalisation appreciated by 6.59 per cent and 6.58 per cent to close the week at 28,902.25 and N9.926 trillion respectively.

Similarly, all other indices finished higher during the week. The Year-to-Date (YTD) performance stood at 0.91 per cent.

Traders and market analysts have said the  developments will impact the performance of the market positively.

“In the immediate, while we expect the ongoing optimism regarding a possible shift to a market-determined exchange rate regime to support market performance. We see the impacts of these events on market performance. However, in the medium to longer term, we see improved performance on the back of efficiency gains from an expansionary fiscal policy leading to improvement in aggregate demand,” said analysts at InvestmentOne Limited.

Daily Performance Summary

Trading had resumed last Monday, the first trading session after the publication of the Nigeria Bureau of Statistics’ GDP report, which showed a 0.36 per cent decline in GDP, on a poor note as the NSE ASI declined by 0.37 per cent to close 27,015.97 points. The session was driven by decline in Banking names such as Zenith Bank Plc, Access Bank Plc and Guaranty Trust Bank Plc in addition to Nigerian Breweries Plc and PZ Cussons Plc. These performances offset the gains in Stanbic IBTC Plc and Dangote Sugar Plc. All major sectors closed in the red, with the exception of the industrial which was flat at close. The Banking sector was by far the worst performer shedding 2.01 per cent while the Consumer Goods and Oil and Gas sectors fell by 0.41 per cent and 0.09 per cent respectively.

The market closed higher on Tuesday with the Nigerian Stock Exchange All Share Index appreciating by 0.80 per cent to close at 27,231.50 points. The appreciation recorded in the share prices of ETI Plc, Transcorp Plc, Access Bank Plc, Nigerian Breweries Plc and Dangote Cement Plc were mainly responsible for the gain recorded in the Index. In the same vein, the market capitalisation appreciated by 0.80 per cent to close at N9.35 trillion compared with the depreciation of 0.37 per cent recorded the previous day to close at N9.28 trillion. The total value of stocks traded on the floors of the NSE on the day was N1.54 billion, down by 19.40 per cent from N1.91 billion recorded the prior day.

The market surged up 3.78 per cent or 1,029 points to close at 28,260.61 points on Wednesday, supported by previous day’s  announcement that the CBN would be introducing a degree of flexibility into current foreign exchange policy.  All major sectors closed in the green with the exception of the Oil and Gas (0.12 per cent), which was dragged down by Forte Oil Plc (2.95 per cent) and Mobil Oil Nigeria Plc (5.00 per cent). Banking was the best performer, climbing 5.89 per cent, followed closely by the Industrial, up 4.16 per cent and Consumer Goods which increased by 3.29 per cent. There was also a noticeable improvement in market activity as investors exchanged 474 million units of shares worth N3.5 billion. The banking sector accounted for the majority of total volume and value as investors exchange N961million worth of Guaranty Trust Bank Plc (3.81 per cent) shares and N790 million worth of Zenith Bank Plc (10.07 per cent) shares.

The bulls maintained strong hold on the equity market on Thursday as the NSE ASI recorded a gain of 2.18 per cent to close at 28,877.47 points. Consequently, the NSE ASI recorded the highest level in the year 2016 bringing the Year-to-Date (YTD) return to a positive region of 0.82 per cent. The appreciation recorded in the share prices of Nestle Nigeria Plc, UBA Plc, Zenith Bank Plc, Nigerian Breweries Plc and Lafarge Africa Plc were mainly responsible for the gain recorded in the Index. Similarly, the market capitalisation appreciated by 2.18 per cent to close at N9.92 trillion compared with the appreciation of 3.78 per cent recorded the previous day to close at N9.71trillion. The total value of stocks traded on the floors of the NSE on the day was N5.02 billion, up by 43.29 per cent from N3.50 billion recorded the prior day.

The equity market took a breather at the close of business last Friday after a three-day rally. The NSE ASI slowed down to record a marginal gain of 0.09 per cent to close at 28,902.25 points. The appreciation recorded in the share prices of ETI Plc, Unilever Nigeria Plc, Oando Plc, Nigerian Breweries Plc and Union Bank Plc were mainly responsible for the gain recorded in the Index. Similarly, the market capitalisation appreciated marginally by 0.09 per cent to close at N9.926 trillion compared with the appreciation of 2.18 per cent recorded the previous day to close at N9.917 trillion.

Market Turnover

During the week under review, a turnover of 2.338 billion shares worth N14.789 billion in 24,942 deals were traded by investors on the floor of the exchange in contrast to a total of 2.446 billion shares valued at N13.145 billion that exchanged hands the previous week in 23,680 deals.

The Financial Services Industry measured by volume led the activity chart with 1.874 billion shares valued at N10.549 billion traded in 15,232 deals, thus contributing 80.16 per cent and 71.33 per cent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 225.806 million shares worth N351.338 million in 1,462 deals. The third place was occupied by the Consumer Goods industry with a turnover of 64.001 million shares worth N1.430 billion in 3,444 deals.

Trading in the Top Three Equities namely – FBN Holdings Plc, United Bank for Africa Plc and Transnational Corporation of Nigeria Plc.(measured by volume) accounted for 810.444 million shares worth N2.904 billion in 5,128 deals, contributing 34.67 per cent and 19.64 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 537,969 units of Exchange Traded Products (ETPs) valued at N56.655 million executed in 43 deals, compared with a total of 307,411 units valued at N21.406 million transacted the prior week in 38 deals.

A total of 4,000 units of Federal Government Bonds valued at N4.438 million were traded in 8 deals compared to a total of 4,143 units of Federal Government valued at N4.248 million transacted the previous week in 8 deals.

Gainers and Losers

In terms of price movement, a total of 56 equities appreciated, higher than 35 equities of the previous week. Twenty equities depreciated in price, lower than 37 equities of the previous week, while 104 equities remained unchanged lower than 109 equities of the previous week.

The top 10 gainers were: ETI Plc (N2.93), Stanbic IBTC Plc (N2.70), Oando Plc (N1.50), NAHCO Plc (N1.03), DN Meyer Plc (21 kobo), Diamond Bank Plc (44 kobo), FCMB Group Plc (32 kobo), Unity Bank (15 kobo), Livestock Feeds Plc (18 kobo) and Transcorp Plc (20 kobo).

Conversely,  the top 10 losers were: Mobil Nigeria Plc (N8.75), CAP Plc (N2.00), Glaxo Smithkline Plc (N1.92), Union Dicon Plc (N1.30), PZ Cussons Plc (N1.29), Learn Africa Plc (9 kobo), University Press Plc (47 kobo), AG Leventis Plc (8 kobo), Caverton Plc (10 kobo) and Ikeja Hotel (11 kobo).