Stock Market Declines 5.9% in August on Continuing Negative Sentiments

By Goddy Egene

The Nigerian equities market recorded a decline of 5.86 per cent in the month of August reflecting prevailing negative investors’ sentiments. About 1.63 per cent of the decline was recorded last week as the Nigerian Stock Exchange All-Share Index (NSE ASI) closed lower at 34,848.45.

Although trading has been bearish over the past few months due continued sell down by foreign and domestic investors, analysts said the lower-than-expected gross domestic product(GDP) growth released last week sent negative signals to the market.

“News of the apex Central Bank of Nigeria (CBN)’s  fine on Stanbic IBTC Bank and Diamond Bank Plc for illegally repatriating funds on behalf of telecommunications company MTN Nigeria also contributed to the market’s negative sentiments,” analysts at Cordros Capital Limited said.

Four out of the five trading days were negative leading to a week-on-week decline in the NSE ASI. Similarly, market capitalisation depreciated by 1.63  to close  at  N12.722 trillion. Similarly, all other indices finished lower with the exception of the NSE Consumer Goods and NSE Oil and Gas indices that rose by 0.34 per cent  and 0.97 per cent respectively, while NSE ASeM Index closed flat.

“We guide investors to trade cautiously in the short-to-medium term, as the absence of a positive one-off catalyst and brewing political concerns, continue to cast a shadow on our outlook for risky assets. However, the likelihood of recovery in the long term remains supported by stable macroeconomic fundamentals,” analysts at Cordros Capital stated.

 Daily Performance

The market had opened the week with a decline of 0.32 per cent thereby failing to sustain the rebound recorded the previous week. The   decline on the first day of the week was caused majorly by profit taking in Dangote Cement Plc. Ex-Dangote Cement, the market would have closed 0.43 per cent higher.

The indication that the market would have closed with growth is also reflected in the number of price gainers that stood at 26 as against of 14 price losers. The price losers were led by First Aluminium with 10.0 per cent, trailed by Ikeja Hotel Plc with 9.6 per cent. Universal Insurance Plc followed with 9.0 per cent, while Japaul Oil and Maritime Services Plc shed 7.6 per cent. NSL Technology Plc and UAC of Nigeria Plc went down by 4.7 per cent in that order.

On the positive side, Diamond Bank Plc and Niger Insurance Plc led the price gainers with 10 per cent apiece trailed by Flour Mills of Nigeria Plc with 9.7 per cent. Linkage Assurance Plc chalked up 9.4 per cent, just as Jaiz Bank Plc and Transcorp Plc garnered 8.3 per cent and 7.2 per cent respectively.

Meanwhile, activity level on that day fell as volume and value traded dropped 66.7 per cent and 56.6 per cent to 175.8 million shares and N1.9 billion respectively. On that day, the top traded stocks by volume were NAHCO (19.2 million shares), Access Bank Plc (16.8 million shares), and Diamond Bank Plc (13.2 million shares), while Nestle Nigeria Plc (N270.7 million), Zenith Bank Plc (N230.4 million) and Beta Glass Plc (N197.9 million) were the top traded stocks by value.

In terms of sectoral performance, four of   indices closed higher led by the NSE Banking Index and NSE Insurance Index with 1.0 per cent apiece. The NSE Oil & Gas Index appreciated by 0.5 per cent, while NSE Consumer Goods Index  gained 0.2 per cent. The Industrial Goods Index was the lone loser, shedding 0.8 per cent.

But, the market rebounded on Tuesday  on  bargain  hunting in banking and consumer goods counters.  The positive performance of the equities market was buoyed by the price appreciation in banking and consumer good tickers particularly GTBank  Plc, Access Bank Plc, United Bank for Africa (UBA), Dangote Sugar Refinery Plc.

Commenting on the market performance on Tuesday, analysts at Meristem Securities Limited said as investors took advantage of the relatively cheap prices of counters in the bourse, the market closed in the positive zone, with all sectors recording gains save for the Insurance sector.

“However, we foresee the market closing negative this week, owing to projected profit taking activities on Dangote Cement Plc,” they had said.

Similarly, analysts at SCM Capital Limited said in the interim, they  maintain  their conservative outlook, underpinned by continued apathy towards the market as the 2019 electoral cycle draws nearer amid sustained capital flow reversals in emerging/frontier markets.

Meanwhile, a look at the price movement chart showed that 33 gainers and 16 losers on that day. The gainers were led by Portland Paints with 9.7 per cent, trailed by Jaiz Bank Plc  and Caverton Offshore  with  9.6 per cent apiece.  May & Baker Nigeria Plc, Livestock Feeds Plc and Cornerstone Insurance Plc garnered 9.2 per cent, 9.0 per cent and 8.7 per cent respectively.

Top price gainers included: Japaul Oil and Maritime Services Plc (8.3 per cent); Diamond Bank Plc, Union Diagnostic and Clinical Services Plc ( 7.4 per cent); PZ Cussons Nigeria Plc (7.2 per cent); Honeywell Flour Mills Plc (7.2 per cent) and  Mutual Benefits  Assurance Plc (6.9 per cent).

Conversely,  Ikeja Hotel Plc led the price losers on that day, with 9.9 per cent, trailed by NPF Microfinance Plc with 9.3 per cent. Linkage Assurance Plc shed 7.4 per cent, just as Glaxosmithkline Consumer Nigeria Plc went down by 6.6 per cent.  Other top price gainers to Custodian Investment Plc (6.4 per cent); Skye Bank Plc (5.4 per cent); Regency Alliance Insurance Plc, A.G Leventis Nigeria Plc (4.5 per cent each).

At the close trading, four of the five sectors appreciated led by the NSE Banking Index with 1.7 per cent. The NSE Oil & Gas Index gained 0.7 per cent. The NSE Consumer Goods Index rose 0.3 per cent.

The market fell back to the bears’ territory on Wednesday with the NSE ASI depreciating  by 0.44 pe rcent  to close at  35,358.94, while  market capitalisation  shed N47.4 billion to close at   N12.91trillion.

The depreciation recorded in the share prices of some highly capitalised companies such as Dangote Cement, FBN Holdings, Unilever Nigeria Plc , Zenith Bank Plc, and UBA were mainly responsible for the decline.

 On the market fell further to   settle  lower  on the back of the prevalent negative sentiment. The NSE ASI   dropped by 0.77 per cent to settle the year to date(YtD) decline  at 8.25 per cent.

The market fell further on the last day of the week, shedding 0.68 per cent to close at 34,848.45.

Market Turnover

Despite the negative close, market total turnover improved to    1.533 billion shares worth N23.026 billion in 17,009 deals, up from  968.947 million shares valued at N10.246 billion that exchanged hands  in 9,654 deals the previous week. The Financial Services Industry led the activity chart with 1.218 billion shares valued at N12.634 billion traded in 10,132 deals,  thus contributing 79.42 per cent  and 54.87 per cent  to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 70.807 million shares worth N120.611 million in 803 deals. The third place was occupied by Consumer Goods Industry with a turnover of 58.505 million shares worth N3.422 billion in 2,624 deals.

Trading in the top three equities namely – N.E.M Insurance Plc, Diamond Bank Plc and United Bank for Africa Plc accounted for 512.615 million shares worth N1.928 billion in 1,818 deals.

Also traded during the week were a total of 2,422 units of Exchange Traded Products (ETPs) valued at N3.752 million executed in 15 deals, compared with a total of 9,205 units valued at N201,119.15 that was transacted in four deals  the previous week.

 Similarly, a total of 42,158 units of Federal and State Government Bonds valued at N42.397 million were traded in 25 deals compared with a total of 152,741 units valued at N179.381 million transacted in 13 deals last two weeks ago.

Price Gainers and Losers

Meanwhile, 37 equities appreciated in price last  the week, higher than 15 in the previous week, while 34 equities depreciated lower than 45 equities of the previous week.

Portland Paints & Products Nigeria Plc led the price gainers with 20.6 per cent, trailed by AIICO Insurance Plc with 17.1 per cent, just as PZ Cussons Nigeria Plc chalked up 14.9 per cent.  Transnational Corporation of Nigeria Plc, N.E.M Insurance Plc garnered 14.5 per cent and  13.3 per cent  in that order.

Other top price gainers included: Flour  Mills Nigeria Plc(13.0 per cent); Diamond Bank Plc (11.8 per cent); Eterna Plc (11.6 per cent);Niger Insurance Plc (10 per cent) and Caverton Offshore Support Group Plc (9.6 per cent).

Conversely, Ikeja Hotel Plc led the price losers with 18.6 per cent, trailed by First Aluminium Nigeria Plc with 15 per cent. Glaxosmithkline Consumer Nigeria Plc shed 14.3 per cent, just as Forte Oil Plc went down by 13 per cent.

Other top price losers were: Skye Bank Plc (10.5 per cent); Lafarge Africa Plc (10.4 per cent); Law Union and Rock Insurance Plc, AXA Mansard Insurance Plc (9.8 per cent each); International Energy Insurance Plc and  Standard Alliance Insurance Plc (9.5 per cent each).