Equities’ return drops to 9.07% as downtrend continues

Nigerian equities continued on the downtrend on Wednesday as investors showed preference for profit-taking than dividend yields.

Equities dropped by 0.46 per cent on Wednesday, equivalent to net capital loss of N69 billion.

The sustained decline depressed the average year-to-date return at the Nigerian equities market to 9.07 per cent. While many large-cap stocks had declared their results and recommended dividend payout, equities have remained on the downbeat in recent trading sessions as profit-taking transactions dominated the orders. Nigeria’s most capitalised company had on Tuesday declared a dividend of N179 billion. Access Bank and Ecobank Transnational Incorporated also announced their results on Wednesday.

With 35 decliners to 19 advancers, aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) dropped from its opening value of N14.913 trillion to close at N14.844 trillion. The All Share Index (ASI)-the main value-based index that tracks share prices at the Exchange, also declined correspondingly from its opening index of 41,686.36 points to close at 41,495.43 points.

Most sectoral indices also closed negative. The NSE Industrial Goods Index declined by 2.5 per cent. The NSE Insurance Indexdeclined by 1.9 per cent. The NSE Consumer Goods Index also declined by 0.7 per cent while the NSE Oil and Gas Index closed flat. However, the NSE Banking Index inched up by 0.1 per cent.

Nestle Nigeria-Nigeria’s highest-priced stock, led the decliners with a drop of N30 to close at N1,350. Lafarge Africa followed with a loss of N3.30 to close at N47.05. Stanbic IBTC Holdings declined by N2.15 to close at N46. Cadbury Nigeria lost N1.35 to close at N12.65. Nigerian Breweries dropped by N1.20 to close at N126 while PZ Cussons Nigeria declined by N1.15 to close at N22.40 per share.

On the upside, Guinness Nigeria rose by N4.80 to close at N105. GlaxoSmithKline Consumer Nigeria followed with a gain of N1.05 to close at N22.05. Dangote Flour Mills rose by 75 kobo to close at N15.75. Cement Company of Northern Nigeria and Nascon Allied Industries appreciated by 50 kobo each to close at N18.75 and N20.50 respectively while United Bank for Africa added 45 kobo to close at N11.50 per share.

Read also: NSE RoundUp! Investors dump Nigerian banking stocks as global equities stutter

Total turnover stood at 488.97 million shares valued at N5.64 billion in 5,524 deals. African Alliance Insurance was the most active stock with a turnover of 82.77 million shares valued at N20.37 million. Japaul Oil & Maritime Services followed with 75.55 million shares worth N42.28 million while Fidelity Bank recorded 63.88 million shares worth N151.42 million.

“The sell offs experienced in the local bourse so far can largely be attributed to profit taking in stocks that had rallied significantly before the beginning of the earnings season as well as contagion effect of the rout in equities across global markets. With investors sceptical of forward earnings vis-à-vis elevated valuations, sentiment has turned bearish in recent trading sessions,” Afrinvest Securities stated.

Analysts at Afrinvest Securities however “believe declining level of valuation has presented investors with attractive entry opportunity; hence, we expect a reversal of the bearish trend in the near term”.

“Our outlook for the equities market remains positive, supported by strengthening macroeconomic fundamentals,” Cordros Capital stated.

 

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