Nigerian equities lost N68 billion amidst a global selloff in equities that saw most emerging markets and key advanced economies with comparatively higher losses. In a tight market that saw a topsy-turvy of gains and losses, the benchmark index for the Nigerian equities market recorded a net week-on-week return of 0.72 per cent, equivalent to a loss of N68 billion.
But more equities closed on the upside than downside, underlining the impact of losses by highly capitalised stocks on the overall market situation. Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) dropped from its week’s opening value of N9.496 trillion to close the week at N9.428 trillion. The All Share Index (ASI), Nigeria’s benchmark stock index that tracks prices at the NSE, declined from its week’s opening index of 27,650.32 points to close the week at 27,450.91 points.
There were 27 gainers against 25 losers during the week compared with 25 gainers against 39 losers recorded in the previous week. However, 128 stocks were unchanged last week as against 116 stocks that closed flat in the previous week.
The performance of Nigerian equities fell broadly within the global sell-off that gripped the global equities last week. In the advanced markets of Europe and America to the emerging markets of Asia and Africa, equities closed the week mostly in the red. In United States, the twin index, the S & P 500 Index and NASDQA dropped by 0.5 per cent and 0.3 per cent respectively. In United Kingdom, the UK FTSE Index declined by 0.5 per cent. Germany’s XETRA DAX Index slipped by 0.1 per cent. However, France’s CAC 40 Index appreciated by 0.6 per cent.
In the emerging bloc of Brazil, Russia, India, China and South Africa (BRICS), losses were comparatively higher. Brazil’s IBOVESPA Index lost 1.8 per cent. China’s Shanghai Composite Index declined by 1.2 per cent. Russia’s Index dropped by 0.7 per cent. South Africa’s FTSE/JSE Index braced the odds with a gain of 1.0 per cent.
In other African countries, the sell-off was more pronounced. Kenya’s Nairobi Stock Exchange 20 Index fell by 7.1 per cent. Egypt’s EGX 30 Index dropped by 2.2 per cent. However, Ghana’s Ghana Stock Exchange (GSE) rallied 3.8 per cent gain.
In Nigeria, investors staked N13.84 billion on 1.12 billion ordinary shares in 15,625 deals, slightly lower turnover volume and deals than 1.375 billion shares valued at N12.940 billion traded in 16,915 deals in the previous week. The financial services sector remained the most active with 922.145 million shares valued at N7.739 billion traded in 9,612 deals; thus contributing 82.07 per cent and 55.92 per cent. The consumer goods sector staged a distant second with 113.395 million shares worth N4.680 billion in 2,689 deals. Conglomerates sector placed third with a turnover of 42.988 million shares worth N60.763 million in 610 deals.
On stock by stock basis, the trio of Guaranty Trust Bank Plc, FBN Holdings Plc and Diamond Bank Plc, were the most active, jointly accounting for 434.979 million shares worth N5.236 billion in 3,490 deals, contributing 38.71 per cent and 37.84 per cent to the total equity turnover volume and value respectively.
Also traded during the week were a total of 16,397 units of Exchange Traded Products (ETPs) valued at N1.961 million executed in 37 deals compared with a total of 57,828 units valued at N766.162 traded in 37 deals two weeks ago.
In the debt segment, a total of 1,650 units of Federal Government Bonds valued at N1.690 million were traded in three deals compared to a total of 3,127 units of Federal Government Bonds valued at N3.057 million traded in six deals two weeks ago.
Price trend analysis, in percentage terms, showed that oil and gas stocks led the gainers. Seplat Petroleum Development Company rose by 14.58 per cent to close at N275. Forte Oil rose by 10.56 per cent to close at N177. Transnational Corporation of Nigeria gained 10.48 per cent to close at N1.16. CAP gathered 10.22 per cent to close at N30.09 while Presco rose by 9.55 per cent to close at N40.49 per share.
On the downside, FCM Group recorded the highest loss of 14.96 per cent to close at N1.08. AG Leventis followed with a drop of 10.10 per cent to close at 89 kobo. Academy Press declined by 9.52 per cent to close at 57 kobo. Skye Bank slipped by 7.8 per cent to close at 59 kobo while Unity Bank dropped by 7.69 per cent to close at 84.
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Overall, average year-to-date return at the Nigerian market stood negative at -4.61 per cent. With analysts’ consensus indicating possible increase in inflation rate from 16.48 per cent for June to above 17 per cent for July, investors will likely trade on more bargain-hunting than risk-taking. The National Bureau of Statistics (NBS) is expected to publish the inflation rate and other indices this week.
“We expect July inflation rate to inch higher and GDP growth rate for second quarter 2016 to worsen. Although we do not expect a knee jerk reaction from investors, we think weaker than expected numbers may further dampen appetite for equities. Thus, we advise the risk-averse investors to trade cautiously,” Afrinvest Securities stated.
The NBS is expected to announce the sixth consecutive spike in inflation rate, according to analysts at FSDH Merchant Bank.
In a preview of the inflation report, analysts at FSDH Merchant Bank said year-on-year inflation rate could rise to 17.35 per cent for the month of July, from 16.48 per cent recorded for the month of June 2016.
According to analysts, the expected increase will come from the increase in the prices of food items and other non-food items as a result of the depreciation in the value of the Naira.
“Our analysis indicates that the value of the Naira depreciated at the inter-bank market and the parallel market by 11.89 per cent and 6.63 per cent respectively in July 2016. The Naira lost N38.19 and N25.00 at the inter-bank and parallel market to close at $/N321.16 and $377 respectively as at the end of July. The depreciation recorded in the exchange rate between the two months would put further pressure on domestic prices,” FSDH Merchant Bank stated in a preview obtained at the weekend.
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