Nigerian Equities Maintain Negative Momentum

WEEKLY REPORT

By Goddy Egene

Stock market closed lower last week as most investors remained on the sidelines in the absence of inspiring economic news that will stimulate demand for stocks. The market has remained negative since the beginning of the second half of the year as investors locked in profits from the gains recorded in the month of June.

The market had declined by 1.54 per cent the previous week that saw only two days of trading due to an unusually extended national public holiday to commemorate Eid-El Fitr celebration.

The bears maintained a hold on the market last week leading to a decline of 0.17 per cent in the Nigerian Stock Exchange (NSE) All-Share Index (ASI) to close at 28,805.45. In a similar vein, market capitalisation shed N17 billion to close at N9.9 trillion. Apart from the NSE ASI that fell,  the NSE Banking Index,  NSE Oil and Gas Index and  NSE Insurance  Index also ended the week negatively.  The Insurance Index went down by 1.8 per cent following depreciation recorded by AXA Mansard Insurance Plc and NEM Insurance Plc. A decline in the price of Oando Plc and Mobil Oil Nigeria Plc led to a fall of 1.3 per cent in the NSE Oil & Gas, while losses in the prices of Guaranty Trust Bank Plc and Access Bank among others resulted in fall of 0.21 per cent in the NSE Banking Index.

On the other hand, the NSE Industrial Goods Index rose by 1.46 per cent majorly due to gains by Lafarge Africa Plc. The NSE Consumer Goods Index was buoyed positive interest in Nigerian Breweries Plc, Nestle Nigeria Plc and Unilever Nigeria Plc to closer 0.95 per cent higher.

Daily Performance Summary

Unlike the previous week when the market opened for only two days, trading last week was for five days. While bears controlled three days, bulls where in charge for two days.

The market opened the week on Monday bearishly as persistent sell-offs in large-cap stocks drove the NSE ASI 0.14 per cent lower.  Just as the bear run was expected to continue, the market rebounded on Tuesday as positive change in sentiment  lifted the market by 0.2 per cent.

But the market trended southwards on Wednesday with the ASI shedding 0.4 per cent.  No respite came on Thursday as the market went down by another 0.1 per cent. However,  bargains hunting by some investors led to the second rebound for the week as the  NSE ASI appreciated by 0.4 per cent. Consequently, the market ended the week with an overall decline of 0.17 per cent, while to year to date (YTD) appreciated settled at 0.6 per cent.

Market turnover

Meanwhile, investors traded 1.149 billion shares worth N13.616 billion in 21,868 deals were traded last week by investors on the floor of the exchange, showing an increase of 203 per cent from of 377.798 million shares valued at N3.641 billion that exchanged hands   in 7,466 deals the previous week.

However, the Financial Services Industry led the activity chart in volume terms with  868.827 million shares valued at N6.110 billion traded in 13,046 deals, thus contributing 75.59 per cent  and 44.87 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 103.304 million shares worth N272.848 million in 1,111 deals. The Consumer Goods Industry occupied the third position with a turnover of 66.743 million shares worth N3.501 billion in 3,368 deals. Trading in the top three equities namely –FBN Holdings Plc, Guaranty Trust Bank Plc and Access Bank Plc accounted for 353.999 million shares worth N3.867 billion in 4,188 deals, contributing 30.80 per cent   and 28.40 per cent to the total equity turnover volume and value respectively.

A daily analysis of the trading showed that investors traded 275.363 million shares valued at N3.442 billion on Monday, while Tuesday recorded 207.623 million shares worth N3.640 billion. The volume of trading was lower on Wednesday as investors exchanged 190.302 million shares valued at N2.342 billion. A total of 203.578 million shares worth N2.494 billion on Thursday, while investors traded 272.528 million shares valued at N1.696 billion on Friday.

Also traded during the week were a total of 941 units of Exchange Traded Products (ETPs) valued at N2.646 million executed in 22 deals, compared with a total of 35 units valued at N374.00 transacted last week in 7 deals. Similarly, a  total of 44,381 units of Federal Government Bonds valued at N44.679 million were traded in five  deals compared to a total of 13,767 units of Federal Government Bonds valued at N14.356 million transacted  the previous  week in  five  deals.

Gainers and losers

An analysis of the price movement chart showed that 22 equities appreciated in price last week, higher than nine equities of the previous week. Conversely, 38 equities depreciated in price, lower than 48 equities of the previous week, while 120 equities remained unchanged lower than  123 equities recorded in the preceding week.

Honeywell Flour Mills Plc led the price gainers with 14.8 per cent.United Capital Plc rose by 7.6 per cent as investors reacted positively to the highly impressive results for the half year ended June 30, 2016.

United Capital recorded gross revenue of  N3.655 billion in 2016, up by 34 per cent from N2.750 billion posted in the corresponding period of 2015. Investment income rose from N1.349 billion to N1.721 billion, while fees and commission income grew from N817 million to N980 million. Net operating income settled at N3.411 billion, up from N2.546 billion, while total revenue stood at N3.655 billion, compared with N2.750 billion in the corresponding period of 2015.

In spite of rise  in inflation, the management of the United Capital maintained  a commendable cost strategy that led to a reduction in total operating expenses from N1.128 billion to N1.074 billion.

Consequently, the company ended the half year  with a profit before tax of N2.065 billion, indicating a growth of 47 per cent. However, the company’s bottom-line was boosted by a N1.526 billion realised from the sale of investment in an associate company to hit N3.591 billion in 2016, up from N1.408 billion in 2015.

Zenith Bank Plc appreciated 6.0 per cent, while Livestock Feeds Plc went up by 4.9 per cent. Other top price gainers included: Forte Oil Plc (4.8 per cent); Lafarge Africa Plc (4.6 per cent); Unilever Nigeria Plc (3.7 per cent); Flour Mills of Nigeria Plc (3.6 per cent); Dangote Sugar Refinery Plc (3.2 per cent) and United Bank for Africa Plc (3.1 per cent).

Conversely, Skye Bank Plc led the price losers with 31 per cent trailed by NPF Microfinance Bank Plc with decline of 21 per cent, while Trans Nationwide Express Plc went down by 18.5 per cent.

Other price losers among the top 10 were: Oando Plc (14.5 per cent); Glaxosmithkline Consumer Nigeria Plc (13.1 per cent); Wema Bank Plc (10.7 per cent) Diamond Bank Plc (10.5 per cent); P. Z. Cussons Nigeria Plc (10.4 per cent) and Dangote Flour Mills Plc (9.0 per cent).