06:30PM / Abdulazeez Kuranga, Proshare Research
It was a “Y’ello Thursday” as MTNN listed by introduction on the premium board of the Nigerian Stock Exchange on 16th May 2019. The company became the first telecommunications network provider to be listed on the Nigerian Stock Exchange (NSE) as it floated 20.35 billion units of ordinary shares at N90 per share, corresponding to a market capitalisation of N1.83 trn as at 16th May 2019.
Barely a month after, the share price of MTNNclimbed by 36.97% from its listing day close of N99 to N135.6 as at 14 June 2019. The June 14 close translated to a market CAP of N2.76 trn as at 14 June 2019, thereby making it the second largest company in Nigeria in terms of market capitalisation (contributing 20.86% to the NSE-ASI).
Table 1: Top 5 Most Capitalized Companies on the NSE as of June 17th, 2019
Table 2: MTN Share Price and Volume Traded From May 16th 2019
Movements in the price of the stock and its median value served to check the volatility of the share price of MTNNover one month; the median value was preferred because it discounted the impact of extremely high and extremely low values of the share over the period. Proshare’sanalysis shows that 50% of the share price movement was above N135.80, while 50% of the price over the period was below N135.80. Therefore, N135.80 served as the average price over which the share hovered around during the one month.
Graph 1: Relationship Between MTN Share Price and Volume Traded From May 16th, 2019
Source: Proshare Research
The first six days of trading in MTNN shares was bullish as the share price moved by 8.56% on the average over this period and moved by at least 9% for the first five days of trading. However, bearish sentiment set in on the 24 and 27 May 2019 before bouncing back on the 28; rising marginally over the period.
During the one month, the volume traded was the highest on 21 May as a total of 110.72 million shares were traded, and the share price recorded 9.98% to close at N131.70. Two days later, the share price soared to a one month high of N149 as 34.23 million units of the stock changed hands.
The movement between the share price and volume traded showed a positive correlation. The higher the volume traded, the higher the share price and vice versa.
When volume traded declined sharply, the share price followed. For example, on 24 May, the volume traded declined by 77.43% to 7.72 million shares traded. As a result, the share price also fell from N149 recorded on the 23rd to N140 at the end of the trading day on the 24th.
Table 3: MTN Share Price Movement Compared with NSE-ASI From May 16th, 2019
The NSE-ASI declined for 8 days consecutively before MTNN listed on the NSE. However, within few minutes ofMTNN trading on the NSE on 16th May, the market rebound its loss and gained marginally by 0.54%. Going further, from MTNN listing date to 28 May, there was a positive relationship between the share price movement of MTNN and the NSE-ASI that is, the positive the movement in MTNN, the positive the movement in NSE-ASI and vice versa. As a result, the NSE-ASI recorded its highest YtD positive movement of 3.68% on 28th May.
Graph 2: Movement in MTN Share Price VS Movement in NSE-ASI From May 16th 2019
However, when the share price started hovering around the median price of N135.80, the positive correlation began to fade away. From 30 May to 6 June, a negative correlation set in between MTNN and the NSE-ASI before bouncing back to its positive situation from 7 June. Therefore, over the one month in view, the correlation betweenMTNN and NSE-ASI was nearly perfectly positive.
Over the one month, the total volume traded on the NSE was 4.998 billion shares as against 412.17 million MTNN shares traded, thus representing 8.25% of the total volume of shares traded on the NSE from 16 May to 14 June 2019.
Table 4: MTNN Compared with Companies Listed on the Premium Board
As noted earlier, MTNNclosed the trading day on 16th May at a share price of N99.00. Since then, it has grown by 36.97% as the share price as at 14th June was 135.60.
One month before MTNNlisted on the premium board, the premium board index declined M-o-M by 2.65% from 2133.32 basis point on 16 April 2019 to 2076.70 on 16 May 2019. However, one month after MTNNlisted on the premium board, the premium board index increased by 16.95% from 2076.70 basis point to 2428.73 basis point as at 14th June 2019 majorly due to the heavy trading onMTNN and DANGCEMwhich contribute large percentages to the premium board index.