Stock Market Falls 1.54% on Continuing Bear Run

WEEKLY REPORT

By Goddy Egene

The downtrend in the Nigerian equities market was sustained last week as the bears dominated trading that saw the market open for only two days. In what was a shortened trading week – due to an unusually extended national public holiday to commemorate the Eid-El Fitr celebration, the bears dominated the market and sending the Nigerian Stock Exchange (NSE) All-Share Index (ASI) down by 1.54 per cent to close the  week lower.

The market had in the previous week declined by 4.3 per cent due to lack of expected inflow from foreign portfolio investors (FPI) following the introduction of flexible foreign exchange policy by the Central Bank of Nigeria (CBN).

Some level of bargain hunting was expected after the two weeks of losses. However, that did not happened as trading for the two days reflected  broad-base profit taking amid lingering concerns about the domestic macroeconomic landscape.

Consequently, the ASI went down by 1.54 per cent to close at 28,854.98, while market capitalisation shed N154.70 billion to close at N9.91trillion thereby trimming the Year-to-Date gain to 0.74 per cent.

In a similar vein, all other Indices finished lower during the week, with the exception of the NSE ASeM Index that closed flat.  The NSE Industrial Goods index declined  the most, down 4.9 per cent following losses in Lafarge Africa Plc (-9.1 per cent) and Dangote Cement Plc (-0.3 per cent). The NSE Banking Index followed, falling 2.6 per cent on sell-offs in Access Bank Plc (-4.3 per cent).  The NSE Insurance went down by 1.9 per cent, just as the NSE Consumer Goods Index dipped by 1.3 per cent. The NSE Oil & Gas Index closed week 1.1 per cent lower.

Daily Performance Summary

The market had opened the week on Monday negatively as reports of the CBN’s dissolution of Skye Bank’s board and management hit the market.  The benchmark index declined 1.0 per cent to close at 29,005.33 while market capitalisation dipped N104.2 billion to settle at N9.7 trillion. Performance was broadly driven by sell-offs in Dangote Cement Plc (-0.5 per cent), Zenith Bank Plc (-3.1 per cent), Lafarge Africa Plc (-4.3 per cent), Nigerian Breweries Plc (-0.8 per cent) and Forte Oil Plc (-5.0 per cent). Market activity was weak  as volume and value traded declined 24.7 per cent and 39.4 per cent  to close 142.8 million units and N1.2 billion  respectively.

 In terms of sectoral performance all indices   closed on Monday in the red. Similar to the benchmark index, performance across sector indices was very bearish. The Industrial Goods Index led with decline of 2.1 per cent caused by the sell-offs in Dangote Cement Plc (-0.5 per cent) and Lafarge Africa Plc (4.3 per cent). The Banking Index (-1.1 per cent) ended  Monday’s  trading session as the second worst performing index on account of  losses by Zenith Bank Plc (-3.1 per cent), Stanbic IBTC   (-4.4 per cent) and Access Bank  (-1.4 per cent). The Consumer Goods Index fell 0.9 per cent as profit taking activities continued in Nigerian Breweries Plc (-0.8 per cent) and Guinness Nigeria Plc (-5.2 per cent).

The Insurance and Oil & Gas index declined 0.8 per cent apiece on the back of the depreciation in AXA Mansard Insurance Plc (-4.8 per cent), Custodian (-3.7 per cent), Forte Oil Plc (-5.0 per cent) and Total Nigeria Plc (-4.5 per cent).

On Friday when the trading resumed after the three-day holiday, the market recorded a fall of 0.51 per cent. The depreciation recorded in the share prices of Transcorp, Forte Oil, Unilever, GTBank and Lafarge Africa were mainly responsible for the loss recorded in the index.

Market Turnover

Meanwhile, the volume and value of trading fell significantly during the week under review as total volume traded shrank by 74.28 per cent to 377.80 million shares, worth N3.641 billion and traded in 7,466 deals, compared to the 1.47 billion shares, valued at N17.06 billion that exchanged hands in 21,246 deals the previous week.

However, the Financial Services Industry remained the most traded in volume terms leading the activity chart with 305.334 million shares valued at N2.011 billion traded in 4,260 deals. By this performance the sector contributed 80.82 per cent and 55.23 per cent to the total equity turnover volume and value respectively. The Oil & Gas Industry followed with 32.753 million shares worth N341.230 million in 1,029 deals. The third place was occupied by the Consumer Goods Industry with a turnover of 16.258 million shares worth N635.951 million in 1,179 deals.

FBN Holdings Plc, Guaranty Trust Bank Plc and Access Bank, which where the top three equities accounted  for 122.347 million shares worth N1.291 billion in 1,477 deals, thus contributing 32.38 per cent and 35.47 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 35 units of Exchange Traded Products (ETPs) valued at N374.00 executed in seven deals, compared with a total of 12,695 units valued at N174,028.05 transacted last week in 35 deals.

Gainers and Losers

Meanwhile, only nine equities appreciated in price during the week, lower than 22 equities of the previous week. Conversely, 48 equities depreciated in price, lower than 52 equities of the previous week, while one 123 equities remained unchanged higher 106 equities recorded in the preceding week.

The price gainers were led by Oando Plc with 20.3 per cent gain as investors reacted to the company’s return to profitability in the first quarter ended March 31, 2016. The company recorded a profit of N4.1 billion in 2016, compared with a loss of N20 billion in the corresponding period of 2015.

The Group Chief Executive Officer of Oando Plc, Mr. Wale Tinubu had last week said: “This first quarter of 2016 demonstrates our dedication to return our business to profitability by the end of the 2016. We are succeeding in our corporate initiatives which are today’s driving forces for our business in this new global reality of economic restraint and lower oil prices in our industry. As a group we have placed our focus on growing our dollar earning upstream higher margin and export trading businesses. We continue to count on the consistency of our retail and midstream interest and look forward to a rewarding year, where we solidify our aspirations and return to profitability.”

These comments, market operators said, buoyed investors’ hopes, hence the renewed demand for the shares.

 Unity Bank Plc closed as the second highest mover, rising by 8.08 per cent followed by Stanbic IBTC Holdings Plc with 5.4 per cent. Greif Nigeria Plc and Red Star Express Plc went up by 4.98 per cent and 4.88 per cent respectively.

Conversely, Skye Bank Plc led the price losers, shedding 17.4 per cent as investors reacted negatively to the replacement of its board and management by the CBN. Diamond Bank Plc went down by 12.6 per cent, just as Honeywell Flour Mills Plc, Beta Glass Plc, and Glaxosmithkline Consumer Nigeria Plc dipped by 11.8 per cent, 9.74 per cent and 9.73 per cent in that order.