Investors in the Nigerian equities market ended the week with additional net capital gain of N30 billion as continued bargain-hunting sustained the recovery at the stock market for the fourth consecutive week.
Against the generally negative performance in the advanced and emerging markets of Europe, America and Asia, Nigerian equities bucked the global downtrend with more quoted companies being traded as investors’ appetite appeared to be on the rise.
The two main indices at the Nigerian stock market showed average week-on-week return of 0.31 per cent, equivalent to a net capital gain of N30 billion. There were 35 advancers against 32 decliners last week compared with 33 adva ncers and 25 decliners recorded in the previous week. Some 113 equities were flat against 122 equities that closed unchanged in the previous week.
Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) rose from its week’s opening value of N9.703 trillion to close at N9.733 trillion. The benchmark index for the Nigerian equities market, the All Share Index (ASI), also rallied from week’s opening index of 28,247.07 points to close at 28,335.40 points.
Total turnover stood at 1.29 billion shares worth N9.30 billion in 15,258 deals as against a total of 4.33 billion shares valued at N16.80 billion traded in 16,797 deals in the previous week. The financial services sector continued to dominate activities, accounting for 970.503 million shares valued at N4.540 billion in 8,298 deals; representing 75.4 per cent of total equity turnover volume.
The agriculture sector followed with 109.788 million shares worth N155.716 million in 269 deals. The consumer goods sector placed third with a turnover of 82.938 million shares worth N2.774 billion in 2,884 deals.
Nigerian investors appeared to show keen interest in low-priced equities, otherwise known as penny stocks. The trio of Continental Reinsurance, FCMB Group and Livestock Feeds, which trade around N1 per share, were the most active stocks, accounting for 463.64 million shares worth N516.31 million in 770 deals, some 36 per cent of total equity turnover volume.
Also traded during the week were a total of 4.761 million units of Exchange Traded Products (ETPs) valued at N25.821 million in 45 deals, compared with a total of 615 units valued at N6, 070 traded in 21 deals two weeks ago.
In the debt market, a total of 2,023 units of Federal Government bonds valued at N1.925 million were traded in four deals compared to a total of 3,994 units of Federal Government bonds valued at N3.263 million traded in five deals two weeks ago.
Also, three new supplementary listings were undertaken in the Federal Government bonds segment at the weekend. A total of 30 million units were added to the Federal Government of Nigeria (FGN) 12.50 per cent January 2026 bond. Additional 60 million units were added to the FGN 12.40 per cent March 2036 bond while 31 million units were added to FGN 14.50 per cent July 2021 bond.
Further price analysis showed widespread appreciation across the sectors. Most sectoral and group indices at the stock market closed on the upside during the week. The NSE 30 Index, which tracks the 30 most capitalised companies at the market, recorded a week-on-week gain of 0.48 per cent. The NSE Insurance Index rose above average with 0.93 per cent.
The NSE Consumer Goods Index showed the strongest rally with 2.52 per cent. The NSE Oil and Gas Index appreciated by 1.38 per cent while the NSE Premium Index, which tracks the trio of Dangote Cement, FBN Holdings and Zenith Bank International, inched up by 0.17 per cent. However, the NSE Banking Index, NSE Lotus Islamic Index, NSE Industrial Goods Index and the NSE Pension Index declined by 2.26 per cent, 0.23 per cent, 0.84 per cent and 0.59 per cent respectively.
Law Union and Rock Insurance led the gainers, in percentage terms, with a gain of 32.7 per cent. UACN Property Development Company followed with a gain of 16.2 per cent. Learn Africa rose by 13.8 per cent. Flour Mills of Nigeria and Continental Reinsurance appreciated by 9.4 per cent each while Pharma-Deko rose by 9.36 per cent.
On the negative side, Caverton Offshore Support Group led the losers with a loss of 27.6 per cent. Ashaka Cement followed with a loss of 18.45 per cent. Conoil declined by 15.06 per cent. Beta Glass dropped by 13.9 per cent. Presco declined by 11.1 per cent while Oando lost 8.2 per cent.
The performance of the Nigerian equities market fell broadly within the positive sentiments for African equities in a week that saw most global advanced markets closing in the negative. From South Africa to Ghana to Kenya to Nigeria, African equities were on the uptrend. South Africa’s FTSE/JSE Index appreciated by 0.6 per cent. Ghana’s GSE Composite Index inched up by 0.1 per cent while Kenya’s Nairobi Stock Exchange Index rallied 1.2 per cent gain. However, Egypt’s EGX 30 Index declined by 0.4 per cent.
In United States of America, the twin indicators, the S & P and NASDAQ declined by 0.6 per cent and 0.7 per cent respectively. In London, the United Kingdom FTSE Index dropped by 0.8 per cent. In Europe, it was almost a red market. Germany’s XETRA DAX Index dropped by 2.4 per cent. France’s CAC Index lost 2.4 per cent. In Asia, Hong Kong’s HANG SENG Index dropped by 1.6 per cent. Japan’s Nikkei Index slipped by 1.6 per cent.
China’s Shanghai Composite Index and Brazil’s IBOVESPA Index dropped by 1.0 per cent each while India’s BSE Sens Index recorded a week-on-week decline of 2.8 per cent. However, Russia showed a major rebound with its RTS Index rising by 2.1 per cent.
The outlook for the Nigerian equities market was brightened last week with the decision of MSCI, the global provider of research-based indexes and analytics, to continue to retain Nigeria in its benchmark indexes for frontier markets in acknowledgment of government efforts at easing access to foreign exchange (forex) and improving liquidity in the market.
In a statement issued at the conclusion of its consultation on the potential market reclassification for the MSCI Nigeria Indexes, the global analytics firm noted the positive efforts by the Nigerian authorities and the Central Bank of Nigeria to enhance the liquidity in the foreign exchange market through a number of initiatives, such as the adoption of a more flexible exchange rate.
It however pointed out that the situation still remains challenging and it will continue to monitor and welcome feedback on the level of accessibility in Nigeria.
“The consultation discussions revealed that despite low level of accessibility of the Nigerian market, the investment community recognizes that more time may be needed for Nigerian authorities to improve liquidity of the foreign exchange market. Hence, MSCI will actively monitor the developments on the Nigerian market over the following months and reassess the market classification of the MSCI Nigeria Index as part of the 2017 Annual Market Classification Review,” MSCI stated.
MSCI then added the MSCI Nigeria Indexes to the review list for potential reclassification to standalone status as part of the 2017 annual market classification review. Results of annual market classification reviews are usually announced in June.
Also, MSCI stated that it would continue to apply the special treatment on Nigeria announced on April 29, 2016 until further notice. With this, MSCI will not implement selected changes for any securities classified in Nigeria in the MSCI Nigeria Indexes or indexes which Nigeria is a component of including the MSCI Factor, Thematic, ESG or other derived indexes as part of the upcoming index reviews as well as corporate event treatments.
Besides, MSCI warned that introduction of restrictive measures, such as capital or foreign exchange controls, which can lead to material deterioration of equity market accessibility, may result in the exclusion of the Nigerian market from the MSCI Frontier Markets Indexes and a reclassification to standalone status.
With the end of the third quarter and expected release of corporate earnings for the nine-month period over the next few weeks, analysts were almost unanimous that corporate earnings performance and macroeconomic policies would intertwine to shape the market’s direction in the week ahead.
“In the coming month, market direction will be mainly dependent on third quarter 2016 earnings reports as well as macro-economic indicators,” analysts at Lagos-based Afrinvest Securities stated.
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