NSE LIVE! Financial stocks lead Nigerian equities to N283b loss

Investors in banking and insurance stocks were the worst hit in the downtrend that pervaded the Nigerian stock market last week, with banking and insurance investors losing nearly twice the average loss in the overall market.
While the market-wide benchmark indices showed average week-on-week decline of 2.69 per cent during the week, but investors in banking and insurance stocks lost 4.46 per cent and 4.41 per cent respectively.
After it lost 2.34 per cent two weeks ago, the Nigerian stock market came under intense pressure again last week as widespread selling sentiments, which sometimes bordered on panic, pushed the stock market below its psychological point in spite of many impressive corporate earnings and dividend recommendations.
With 61 losers, 11 gainers and 118 stagnant stocks, aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) dropped to N10.241 trillion at the weekend as against its week’s opening value of N10.524 trillion, representing a loss of N283 billion or 2.69 per cent.
The All Share Index (ASI), the composite value-based index that tracks prices of all quoted equities, dropped below its 30,000 psychological point to close at 29,878.33 points, 827.29 points or 2.69 per cent below its week’s opening index of 30,705.62 points.
The downtrend last week further depressed the negative average year-to-date return at the Nigerian stock market to -13.79 per cent. With inflation at 9.2 per cent, inflation-adjusted return opens today at -22.99 per cent. The recession has been compounded by foreign exchange crisis and high cost of funds, which have kept many foreign and domestic investors on the sideline.
Price trend analysis showed that financial services stocks were the worst in the market-wide depreciation, losing nearly twice the average loss for the market. In spite of half-year earnings and interim dividends by banks including Guaranty Trust Bank and Access Bank, the NSE Banking Index indicated a week-on-week decline of 4.46 per cent, the highest by any tracked sectoral group. The NSE Insurance Index trailed with a negative return of -4.41 per cent, an unusually large discount for an industry mostly trading at nominal values.
All other indices showed widespread price depreciation across the sectors. The 40-stock NSE Pension Index, which has significant exposure to financial services stocks, dropped by 4.17 per cent. The NSE 30 Index, which tracks the 30 most capitalised stocks, and the NSE Industrial Domestic Index, which contains Dangote Cement, NSE’s most capitalised stock, mirrored the overall market position with average decline of 2.68 per cent and 2.69 per cent respectively. Losses by Oando and Seplat Petroleum Development Company pressured the NSE Oil and Gas Index to a negative close with average return of -2.73 per cent. The NSE Consumer Goods Index dropped by 0.39 per cent while the NSE Lotus Index, which tracks Islamic-compliant stocks, and the NSE ASem Index, which tracks second-tier stocks, declined by 0.20 per cent and 0.21 per cent respectively.
Analysts at Financial Derivatives Company (FDC) said the market position had been worsened by many unimpressive corporate earnings. “The half-year 2015 earnings season commenced in the month of July and many listed companies released their corporate results for the period. In line with expectations, most results were unimpressive. Equity markets starved-off system liquidity as fixed income securities became the preferred investment instruments if investors,” FDC stated.
Level of activities was above average, driven largely by acquisition trading in the insurance sub-sector and large-volume transactions in the banking sub-sector. Total turnover rose to 4.30 billion shares worth N20.05 billion in 20,219 deals last week as against a total of 1.36 billion shares valued at N12.48 billion traded in 17,867 deals two weeks ago.
With the acquisition deal on Equity Assurance, the financial services sector accounted for 4.01 billion shares valued at N11.01 billion through 12,655 deals; representing 93.26 per cent and 54.91 per cent of the total equity turnover volume and value respectively. The conglomerates sector staged a distant second with a turnover of 106.98 million shares worth N342.65 million in 1,151 deals. The third place was occupied by the consumer goods sector with 53.38 million shares worth N4.69 billion in 2,856 deals.

Read also: NSE LIVE! Corporate earnings fail to lift equities

The trio of Equity Assurance Plc; Access Bank Plc, and United Bank for Africa Plc jointly accounted for 3.25 billion shares worth N4.08 billion in 2,830 deals, representing 75.53 per cent and 20.36 per cent of the total equity turnover volume and value respectively.
The other non-ordinary shares segments continued to tag along. A total of 2,556 units of Exchange Traded Products (ETPs) valued at N981, 146 were traded in 17 deals last week compared with a total of 55,201 units valued at N2.905 million traded in 30 deals in previous week.
At the Federal Government’s bond market, a total of 7,375 units of Federal Government’s bonds valued at N7.766 million were traded in seven deals last week in contrast with a total of 11,000 units valued at N12.346 million exchanged in four deals two weeks ago.
Analysts at Afrinvest Securities said the market trend could remain unchanged in the meantime. “Given the sustained run of losses in the market and the absence of a catalyst to excite investors, performance is expected to be driven by speculations in the short term, thus, we advise investors to maintain medium to long term investment horizons,” Afrinvest Securities stated at the weekend.

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