Bears Reign at Nigerian Stock Market Despite High Trading Volume

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    Employees work on the trading floor at the Nigerian Stock Exchange (NSE) in Lagos, Nigeria, on Monday, Oct. 26, 2015. Nigeria plans to create a $25 billion fund with public and private financing to modernize infrastructure and avoid a recession, Vice President Yemi Osinbajo said. Photographer: George Osodi/Bloomberg via Getty Images

    By Goddy Egene

    The Nigerian equities market extended its negative performance last week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) declined further by 2.12 per cent to close at 31,827.24.

    Similarly, market capitalisation fell by same margin to close at N11.869 trillion. Last week’s decline was worse than the 0.61 per cent of the previous week.

    However, volume and value of shares improved as investors traded 1.752 billion shares worth N19.681 billion in 22,319 deals compared 1.481 billion shares valued at N17.647 billion that exchanged hands the preceding week.

    Apart from the NSE ASI that declined, all other indices finished lower with the exception of the NSE Insurance and NSE Industrial Goods indices which rose by 3.01 per cent and 0.93 per cent respectively while the NSE ASeM index closed flat.

    Given the conclusion of the presidential elections, which reduced the political uncertainty, it was expected that the market would witness a positive performance last week. Also, the release of corporate earnings by firms for the year ended December 31, 2018, was expected to stimulate demand for stocks. But reverse was the case.

    According to some market operators, investors were not a hurry to return to the market despite the conclusion of presidential election.

    “Only investors whose focus is long-term will not put so much emphasis on political risk because they know the market would bounce back once a president is sworn in May,” a broker, Mr. Sam Oguntayo said.

    The current performance of the market does not come to many stakeholders as a surprise because they had projected that the market would stabilise and recover in the second half of the year.

    In her opinion, the Group Chief Executive Officer of Emerging Africa Capital Group, Mrs. Toyin Sanni, had said the general expectation was that the first half 2019 would be more of the same as last year because investors would adopt a wait-and- see approach due to the elections.

    “Investors will wait to see how the elections are accepted and confirm that there will be peace in the post-election period up till May 29, which will be the day the new government will be sworn into office,” she said.

    According to her, investors generally just want stability and peace, stressing that the parameters remain positive for Nigeria from a long-term perspective.

    “Nigeria remains an attractive because of its size, demographics because of the continued activities of SMEs which are the drivers of this economy, because of how we have embraced the digital economy as a people and a nation because we are still a resources rich country.

    “But investors would want to see that there is a stable government, there is peace and government is accepted by the people, investors will want to see they can expect the right economic policy and the policies will be implemented in a consistent manner,” she had explained.

    More companies announced their results last week, recommending dividends. Dangote Cement Plc and African Prudential Plc reported their results, declaring dividends of N16 and 50 kobo per share respectively.

    Dangote Cement Plc posted a revenue of N901.21 billion, with Nigerian operations accounting for N618.30 billion, representing an increase of 11.9 percent over N552.36 billion in 2017.

    Profit after tax stood at N390.32 billion, up from N204.25 billion while earnings per share rose from N11.65 to N22.83.

    Commenting on the results, Group Chief Executive Officer, Dangote Cement, Joe Makoju, said: “This is a record financial performance by Dangote Cement, driven by a strong increase in our home market, Nigeria, despite heavy rains and uncertainties about the election. Although Pan-African volumes were unchanged in 2018, I am confident that we will see an increase in 2019, driven by higher volumes in Tanzania, Ethiopia, Congo and Sierra Leone. Now that we have gas turbines operating in Tanzania we will also see increased profitability in the Pan-Africa region and this will help to improve overall Group margins.”

    Market Turnover

    Meanwhile, a further analysis of the market turnover for the week showed that the Financial Services Industry remained the most traded, recording 1.377 billion shares valued at N11.311 billion traded in 14,180 deals. The sector contributed 78.63 per cent and 57.47 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 115.142 million shares worth N168.128 million in 1,126 deals. The third place was Consumer Goods Industry with a turnover of 113.079 million shares worth N6.051 billion in 2,993 deals. Trading in the top three equities namely, Diamond Bank Plc, Access Bank Plc and Zenith Bank Plc accounted for 594.377 million shares worth N4.757 billion in 4,315 deals, contributing 33.93 per cent and 24.17 per cent to the total equity turnover volume and value respectively.

    Also traded during the week were a total of 101,254 units of Exchange Traded Products (ETPs) valued at N577,835.06 executed in 19 deals compared with a total of 23,701 units valued at N3.020 million that was transacted previous week in four deals.

    Similarly, a total of 25,740 units of Federal Government Bonds valued at N26,597 million were traded last week in 22 deals compared with a total of 5,845 units valued at N6.158 million transacted two weeks in 18 deals.

    Price Gainers and Losers

    The price movement chart showed that 26 equities appreciated in price during the week, lower than 34 in the previous week, while 38 equities depreciated in price, the same as the previous week. Cornerstone Insurance Plc led the price gainers with 19.0 per cent, trailed by Livestock Feeds Plc with 15.5 per cent. Veritas Kapital Assurance Plc with 14.2 per cent. C & I Leasing Plc went up by 9.9 per cent just as Neimeth International Pharmaceuticals Plc 9.8 per cent. Neimeth last week announced the appointment of a new managing director, Mr. Matthew Azoji, a development stakeholders said would consolidate the performance of the company going forward.

    The new MD graduated from the Obafemi Awolowo University, Ile-Ife, Osun State, where he obtained his B. Pharm (first class honours). He went on to obtain an MBA (Marketing) from the Enugu State University of Science and Technology, Enugu, and an Advanced Management Programme (AMP) from the Lagos Business School; Pan Atlantic University, Lagos. With his wealth of experience in the Pharmaceutical Industry, Azoji is expected to drive the activities of the company towards a greater future.

    A.G Leventis Nigeria Plc was also among the price gainers, chalking up 9.6 per cent. Newrest ASL Nigeria Plc, which has applied for voluntary delisting chalked up 9.3 per cent. Niger Insurance Plc and PZ Cussons Nigeria Plc garnered 9.0 per cent and 8.3 per cent in that order.

    Conversely, Transcorp Plc led the price losers with 14.4 per cent, followed by NPF MFB Plc with 12.7 per cent. Oando Plc shed 11.5 per cent, while Unilever Nigeria Plc and Goldlink Insurance Plc went down by 10.0 per cent and 8.3 per cent respectively.

    Wema Bank Plc and Eterna Plc shed 8.3 per cent apiece, just as Japaul Oil & Maritime Services Plc, Access Bank Plc and FBN Holdings Plc dipped by 8.0 per cent, 7.8 per cent and 7.1 per cent in that order.

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