NSE RoundUp! Equities in cautious optimism amidst global rally

Nigerian equities rode over early disruptions caused by a technical glitch at the Nigerian Stock Exchange (NSE) to sustain a largely positive outlook last week, with average week-on-week gain of 0.53 per cent, equivalent to about N45 billion.

For the first time in many weeks, the number of advancers outpaced decliners, underlining spreading positive sentiments as bargain-hunters were further spurred by early first quarter results. There were 35 advancers against 32 decliners last week as against 26 advancers and 41 decliners recorded in the previous week. However, the inactive segment of the market remained large with 122 equities closing flat for the last two consecutive weeks.

Key benchmark and group indices at the NSE indicated a broad positive market sentiment but caution continued to hang on the marketplace as turnover slowed below average last week.

The All Share Index (ASI) – the value-based index that tracks prices of all quoted equities on the NSE, rose from its week’s opening index of 24,719.27 points to close the week at 24,850.11 points, representing a week-on-week gain of 0.53 per cent.
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Aggregate market value of all quoted equities also rose by N45 billion to close the week at N8.548 trillion as against its week’s opening value of N8.503 trillion. The gains paired down the negative average year-to-date return to -13.24 per cent.

Most sectoral and group indices closed on the upside, underlining the spread of the rally during the week. The NSE 30 Index, which tracks the 30 largest stocks at the stock market, recorded above average growth of 0.66 per cent. The NSE Banking Index, which tracks the banking sector, appreciated by 3.82 per cent. The NSE Insurance Index also rose by 2.59 per cent. The NSE Industrial Goods Index inched up by 0.04 per cent. The NSE Pension Index, which tracks 40 stocks specially screened and adjudged in line with pension fund investment guidelines, also rallied a week-on-week gain of 1.45 per cent.  The NSE Premium Index-which tracks the trio of Dangote Cement, FBN Holdings and Zenith Bank International, rose by 0.71 per cent. The NSE Main Board Index, which tracks equities on the main board, appreciated by 0.42 per cent while the NSE ASeM Index returned a modest week-on-week gain of 0.14 per cent. However, the NSE Consumer Goods Index dropped by 0.83 per cent. The NSE Oil and Gas Index also declined by 0.73 per cent while the NSE Lotus Islamic Index depreciated by 0.77 per cent.

While the highly capitalised stocks continued to dictate the overall impact of price changes on broad and group indices, the biggest price changes last week were in the low-priced stocks category, otherwise known as penny stocks. Tiger Branded Consumer Goods continued its rally with a gain of 20.87 per cent to close at N2.78. Eterna followed with a gain of 20.37 per cent to close at N1.95. Transnationwide Express rose by 14.14 per cent to close at N1.13. Learn Africa appreciated by 12.50 per cent to close at 81 kobo while FCMB Group rose by 11.96 per cent to close at N1.03 per share.

“The positive performance and rebound in market sentiment this week was driven by better-than-expected corporate scorecards for the first quarter in 2016,” Afrinvest Securities, a Lagos-based dealer on the NSE, stated.

Companies that released their first quarter 2016 results during the week included Forte Oil, Union Bank of Nigeria, Nigerian Breweries, Transcorp Hotels, Guaranty Trust Bank, United Bank for Africa, Secure Electronic Technology, Zenith Bank, Dangote Sugar Refinery, Courteville Business Solutions, NEM Insurance and CAP Plc.

Total turnover stood at 885.367 million shares worth N5.829 billion in 13,870 deals last week as against total of 8.054 billion shares valued at N13.328 billion traded in 15,212 deals in the previous week. The financial services sector continued to lead the activity chart, accounting for 747.817 million shares valued at N3.832 billion in 8,768 deals; thus contributing 84.46 per cent and 65.73 per cent of the total equity turnover volume and value respectively. The consumer goods sector staged a distant second with 45.517 million shares worth N977.579 million in 2,145 deals. The third place was occupied by the agriculture sector with a turnover of 32.313 million shares worth N48.460 million in 247 deals.

Banking stocks dominated the activities chart. The three most active stocks were Zenith International Bank Plc, Guaranty Trust Bank Plc and United Bank For Africa Plc, which altogether accounted for 290.319 million shares worth N3.015 billion in 3,795 deals, representing 32.79 per cent and 51.72 per cent of the total equity turnover volume and value respectively.

Besides equities, a total of 4,511 units of Exchange Traded Products (ETPs) valued at N1.401 millionwere traded in 38 deals compared with a total of 690 units valued at N572,158 traded in 28 deals in the previous week.

In the debt segment, a total of 3,241 units of Federal Government and corporate bonds valued at N3.579 million were traded in four deals compared to a total of 28,280 units of Federal and State Government bonds valued at N29.572 million exchanged in eight deals two weeks ago. Following successful new bond auctions by the Federal Government, a total volume of 20 million, 110.180 million and 40 million units were to the 15.54% FGN FEB 2020 bond, 12.50% FGN JAN 2026 bond and 12.40% FGN MAR 2036 bond respectively.

On the downside of the price movement at the equities market, Law Union & Rock Insurance recorded the highest loss, in terms of per cent, of 18.03 per cent to close at 50 kobo. Fidelity Bank dropped by 13.57 per cent to close at N1.21. Union Homes Savings and Loans dropped by 9.58 per cent to close at N3.87. Airline Services and Logistics declined by 9.50 per cent to close at N1.81 while Okomu Oil Palm slipped by 9.38 per cent to close at N29 per share.

The upbeat at the Nigerian stock market was broadly in line with the African and global markets performance during the week. Most tracked advanced and emerging markets showed increased investors’ appetite.

Across Africa, it was largely a bullish week. The Egypt EGX Index recorded highest gain of 4.3 per cent. Kenya’s Nairobi Stock Exchange (NSE) Index rose by 1.2 per cent. However, Ghana Stock Exchange composite index dropped by 2.3 per cent.

In Europe, the German DAX Index indicated a week-on-week return of 3.5 per cent. France’s CAC Index recorded a return of 1.8 per cent. Japan’s Nikkei Index grew by 4.3 per cent. The Hong Kong Hang Seng Index rose by 0.7 per cent. In the United States of America, it was a mixed performance as the NASDAQ Index rose by 0.5 per cent against a 0.4 per cent decline by the S & P 500 Index.

In the emerging markets bloc of Brazil, Russia, India, China and South Africa (BRICS), the beat was more on the downside than upside. Russia’s RTS Index rallied a gain of 4.7 per cent. India’s Bombay Stock Exchange (BSE) Index also appreciated by 0.8 per cent. However, Brazil’s Ibovespa Index dropped by 0.5 per cent. In China, the Shanghai Composite Index fell by 3.9 per cent while South Africa’s JSE/FTSE Index dropped by 0.3 per cent.

In the new week, cautious optimism continued to be the phrase for the sentiments among market pundits. Analysts at Cowry Asset Management Limited said they expected the recovery at the stock market to continue citing “current low market valuations”.

“Sentiment is likely to switch to profit-taking mode in the week ahead as investors continue to speculate on weak macro fundamentals, but further declaration of impressive earnings results may counteract this,” analysts at Afrinvest Securities stated.

 

 

 

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