Nigerian equities rallied a net capital gain of N659 billion last week as improving investors’ appetite continued to sustain upward revaluation of hitherto undervalued shares at the Nigerian Stock Exchange (NSE). Benchmark indices for the stock market showed a week-on-week positive return of 6.07 per cent for the immediate past week, equivalent to net capital gain of N659 billion.
Price movements at the stock market are directly related to volumes of activities. The NSE operates a two-tier price-moving rules that altogether primarily depends on the availability of a specified volume of share for any price change-up or down, to take place.
In 2012, the NSE had alongside the introduction of market-making introduced a pilot programme under which stockbrokers could move prices of “high-priced stocks” with 10,000 shares and retained the general operating rule of 50,000 shares for the movement of share prices of other stocks. The “high-priced stocks”, according to the NSE categorization, are stocks with share prices of N100 and above and regular and pre-determined level of activities.
There are now 11 stocks under the “high-priced stocks” category including Dangote Cement Plc, Mobil Oil Nigeria Plc, Nestle Nigeria Plc, Nigerian Breweries Plc, SIM Capital Fund, Skye Shelter Fund, Nigerian Energy Sector Fund (NESF), Total Nigeria Plc, Seplat Petroleum Development Company Plc, Seven-Up Bottling Company and Lafarge Africa. Lafarge Africa may soon be downgraded from the category having been trading below N100 since the beginning of this year.
Total turnover at the Exchange stood at 3.10 billion shares worth N29.18 billion in 33,677deals last week, compared with a total of 2.32 billion shares valued at N23.81 billion traded in 22,310 deals in the previous week.
Equities rose in four of the five trading sessions during the week, overrunning early profit-taking breather. The sustained rally pushed the average year-to-date return at the stock market to 23.82 per cent, implying that most investors are currently on the positive side when compared with the opening values of their portfolios for this year.
Across many sectors, average returns were above the overall average. Investors in banking stocks were the richest with the average year-to-date return in the banking sector at 43.97 per cent. The NSE Banking Index had rallied 4.91 per cent last week to top up the impressive appreciation in the sector. The NSE 30 Index, which tracks the 30 most capitalised stocks, closed weekend with a year-to-date return of 26.54 per cent after trailing the overall average index with a gain of 6.03 per cent last week.
The NSE Industrial Goods Index rose by 7.96 per cent last week to push its year-to-date return to 25.44 per cent. The NSE Oil and Gas Index recorded the highest gain of 17.11 per cent last week to reverse the negative year-to-date return to appreciable gain of 10.47 per cent. The NSE Consumer Goods Index rose by 3.86 per cent to close the year-to-date return at 13.11 per cent while the NSE Insurance Index was flat, leaving the year-to-date return for the risk-bearing sector at 11.45 per cent.
Aggregate market value of all quoted equities on the NSE surged at the weekend to N11.504 trillion as against the week’s opening value of N10.845 trillion. The All Share Index (ASI)-a common-share index that tracks prices at the Exchange, spiraled from the week’s opening index of 31,371.63 points to a new high at 33,276.68 points at the weekend.
With nearly three advancers to every decliner, most equities closed on demand at the week as investors held on to bargain-hunting. May & Baker Nigeria led the 59-stock weekly gainers’ list with a gain of 58.7 per cent to close at N2.84. Cadbury Nigeria followed with a gain of 43.9 per cent to close at N15.67. Forte Oil rose by 39.8 per cent to close at N64.30. Sterling Bank appreciated by 34.2 per cent to close at N1.06 while Seplat Petroleum Development Company rose by 33.9 per cent to close at N468.56 per share.
On the other hand, University Press led the 21-stock losers’ list with a drop of 9.7 per cent to close at N3.46. Jaiz Bank followed with a loss of 7.69 per cent to close at 84 kobo. Thomas Wyatt Nigeria dropped by 7.41 per cent to 50 kobo. Unilever Nigeria declined by 5.2 per cent to N35.55 while Eterna lost 5.1 per cent to close at N3.70 per share.
Further analysis of transactions showed that financial services industry led the activity chart with 2.577 billion shares valued at N16.524 billion traded in 19,831 deals; thus contributing 83.15 per cent and 56.63 per cent to the total equity turnover volume and value respectively. The conglomerates industry followed with 173.544 million shares worth N985.456 million in 1,620 deals while consumer goods industry ranked third with a turnover of 161.347 million shares worth N3.540 billion in 5,275 deals.
The trio of FBN Holding Plc, Diamond Bank Plc, and Access Bank Plc were the most active stocks and altogether, they accounted for 1.084 billion shares worth N6.522 billion in 7,095 deals, contributing 34.98 per cent and 22.35 per cent.
Also traded during the week were a total of 40.317 million units of Exchange Traded Products (ETPs) valued at N178.841 million executed in 12 deals compared with a total of 52 units valued at N13,803 traded in previous week in six deals.
In the debt segment, a total of 10,860 units of Federal Government Bonds valued at N10.196 million were traded in 10 deals, compared with a total of 3,786 units valued at N3.806 million traded in fourdeals.
Most analysts were optimistic on continuing uptrend at the stock market. “Nigerian equities as a basket is currently the 2017 goldmine of the emerging and frontier markets following the improved flexibility in the administration of foreign exchange. The on-going repricing of the market suggests investors are playing “catch-up” with resilient company fundamentals, which market has lagged, having reduced the premium on macro risk,” analysts at Afrinvest Securities stated.
“The market is expected to trade in mixed zone next week with periodic profit taking,” analysts at GTI Securities said.
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