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

The release of major corporate earnings reports failed to stimulate the Nigerian equities market in the immediate past week as investors scrambled to offload Nigerian banking stocks in almost a week-long selloff that saw the banking sector with nearly a triple of the average decline.

Trading sentiment was generally weak at the Nigerian Stock Exchange (NSE) as the earnings season gathers momentum amid global concerns that policy shifts in the United States of America (USA) and United Kingdom (UK) could negatively impact the global economy. Global equities traded largely on the negative in the immediate past week over policy altercations within the quartet of USA-China-UK-Russia moderated investors’ sentiment.

Foreign portfolio investors account for nearly half of trading at the Nigerian stock market, with strong exposures to the top tier banking and industrial stocks. Domestic concerns over recent report on non-performing loans, dividend payment and capital adequacy compounded global disquiet to unsettle Nigerian banking stocks.

Three top-tier banks including Guaranty Trust Bank, Zenith Bank and Stanbic IBTC Holdings- released their audited reports and accounts for the year ended December 31, 2017 during the week, showing improved earnings performance and dividend payouts. These and other earnings reports however failed to excite the market.

The NSE Banking Index- which tracks Nigerian commercial banking sector, recorded average week-on-week decline of 8.35 per cent last week, nearly a triple of the market’s overall average decline of 2.85 per cent. The NSE Corporate Governance Index and the NSE 30 Index-where banking stocks are considerably influential, posted muted losses of 4.26 per cent and 3.41 per cent respectively. The NSE 30 Index tracks the 30 most capitalised companies at the NSE while the recently launched NSE Corporate Governance Index tracks companies adjudged to have complied fairly well with the NSE’s rules and regulations.

With more than two decliners for every advancer, the overall market situation at the Nigerian equities market was broadly negative during the week with nearly all sectoral indices closing in the red. The NSE Consumer Goods Index dropped by 1.59 per cent. The NSE Oil and Gas Index depreciated by 1.64 per cent while the NSE Industrial Goods Index slipped by 0.24 per cent. However, the NSE Insurance Index played the contrarian with average gain of 0.25 per cent.

Read also: NSE RoundUp! Nigerian equities trend with global markets with N104bn gain

The All Share Index (ASI)- the benchmark index that tracks price changes at the Nigerian equities market, showed average week-on-week decline of 2.85 per cent, equivalent to net loss of about N442 billion. The delisting of the only remaining soft-drink bottling company at the Exchange-Seven-Up Bottling Company, during the week raised aggregate net depreciation for the week to N50.6 billion.

Aggregate market value of all quoted equities dropped from the week’s opening value of N15.508 trillion to close the week at N15.002 trillion. The ASI declined from the week’s opening index of 43,167.86 points to close weekend at 41,935.93 points. The sustained decline pushed the average year-to-date return downward to a single digit of 9.66 per cent.

There were 60 decliners against 25 advancers during the week compared with 45 advancers and 40 decliners recorded in the previous week. Japaul Oil & Maritime Services, which had on the back of $350m investment deal led the rally in recent weeks, led the decliners, in percentage terms, with a drop of 30.9 per cent to close at 67 kobo. Fidelity Bank followed with a drop of 22.5 per cent to close at N2.31. Unity Bank declined by 21.5 per cent to close at N1.35 per share. Africa Prudential dropped by 20.2 per cent to close at N3.99. Regency Alliance Insurance dipped by 20 per cent to close at 28 kobo. Lasaco Assurance lost 18.2 per cent to close at 36 kobo while Wema Bank declined by 18 per cent to close at 82 kobo per share.

On the upside, Associated Bus Company led the advancers with a gain of 14.3 per cent to close at 48 kobo. John Holt followed with a gain of 12.5 per cent to close at 54 kobo. Insurance rose by 11.6 per cent to close at N2.70 per share. Cutix appreciated by 9.8 per cent to close at N2.69. NPF Microfinance Bank rose by 9.2 per cent to close at N2.02. Fidson Healthcare improved by 7.1 per cent to N5.25. Learn Africa rose by 5.8 per cent to N1.10 while First Aluminium inched up by 3.9 per cent to 53 kobo per share.

Total turnover at the Nigerian equities market stood at 2.444 billion shares worth N36.665 billion in 26,712 deals as against a total of 3.079 billion shares valued at N39.990 billion traded in 23,086 deals two weeks ago. The financial services sector led the activity chart with 2.044 billion shares valued at N26.330 billion traded in 16,788 deals; thus contributing 83.61 per cent and 71.81 per cent to the total equity turnover volume and value respectively. The consumer goods sector followed with 168.973 million shares worth N8.111 billion in 4,927 deals. The third place was occupied by oil and gas sector with a turnover of 94.742 million shares worth N825.871 million in 1,641 deals.

Banks dominated the top activities chart with the trio of FBN Holdings Plc, Zenith International Bank Plc and Fidelity Bank Plc emerging the most active stocks with total turnover of 1.084 billion shares worth N17.852 billion in 7,074 deals, contributing 44.34 per cent and 48.69 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 1.889 million units of Exchange Traded Products (ETPs) valued at N10.512 million in four deals, compared with a total of 50,547 units valued at N4.593 million traded in 12 deals in the previous week.

In the Federal Government debt segment, a total of 40,566 units of Federal Government bonds valued at N44.313 million were traded last week in 29 deals compared with a total of 6,574 units valued at N6.332 million traded in 31 deals two weeks ago.

Globally, equities traded on negative with marked depreciation from New York to London, Paris, Frankfurt, Beijing and Johannesburg. In USA, the S & P 500 Index dropped by 1.4 per cent while the NASDAQ declined by 1.0 per cent. In UK, the FTSE ASI declined by 1.1 per cent. France’s CAC 40 Index slipped by 0.2 per cent. Russia’s RTS Index dropped by 3.9 per cent. China’s Shanghai Composite Index indicated average loss of 1.1 per cent. South Africa’s FTSE ASI dropped by 1.8 per cent. Brazil’s Ibovespa Index depreciated by 1.7 per cent while Ghana’s GSE Composite Index dropped by 0.9 per cent.

Asian markets were the major contrarians during the week. Hong Kong’s Hang Seng Index rose by 1.5 per cent while Japan’s Nikkei 225 Index appreciated by 1.0 per cent. Also, India’s BSE Sens posted a modest gain of 0.3 per cent while Egypt’s’ EGX 30 Index and Kenya’s NSE 20 Index appreciated by 3.2 per cent and 1.3 per cent respectively.

Market analysts meanwhile remained positive on the outlook for the Nigerian equities, with most pundits expecting a rebound in the new week.

“Although the market performed negatively, we believe this has created bargain hunting opportunities. Hence, we expect a rebound in the market as investors take position in fundamentally sound stocks that declined,” Afrinvest Securities stated.

Analysts at Cordros Capital noted that the positive outlook for the equities market was strengthened by improving macroeconomic fundamentals, which suggest headroom for further capital gains.

 

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