NSE RoundUp! Nigerian equities gain N306bn as global stocks set for Santa rally

Nigerian equities set on a major rally this past week as positive global and domestic macroeconomic indicators combined to trigger intense bargain-hunting for already underpriced Nigerian equities.

Average turnover more than doubled, there were more than two advancers to a decliner and the spread of the bullish rally was the widest in recent trading weeks.

Nigerian stock market indicators showed an average week-on-week return of 3.44 per cent, equivalent to net capital gain of N306 billion within the four trading sessions in the week. Total turnover surged to 1.66 billion shares worth N12.58 billion in 12,860 deals last week as against a total of 894.76 million shares valued at N10.63 billion exchanged in 13,418 deals in the previous week.

Aggregate market value of all quoted equities crossed another trillion mark rising from its week’s opening value of N8.883 trillion to close at N9.189 trillion. The benchmark index, the All Share Index (ASI), also crossed from the week’s opening index of 25,817.69 points to close at 26,707.10 points.

Most sectoral indices at the Nigerian Stock Exchange (NSE) also closed on the upside. Riding on the back of a rally in the global crude oil price to $50 per barrel, the NSE Oil and Gas Index surged by 7.4 per cent. The NSE Banking Index followed with 6.3 per cent. The NSE Industrial Goods Index rose by 3.51 per cent. The NSE Premium Index, which tracks the trio of FBN Holdings, Zenith Bank International and Dangote Cement, rallied by 5.05 per cent.

The NSE 30 Index, which tracks the 30 most capitalised stocks at the stock market, rose by 3.05 per cent while the NSE Pension Index, which tracks a basket of stocks specially screened in line with the pension investment guidelines, returned 2.39 per cent during the week. However, the NSE Consumer Goods Indexdeclined by 1.68 per cent while the NSE Insurance Index declined by 0.53 per cent.

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The rally last week moderated the negative average year-to-date return to -6.76 per cent, raising the prospects that the stock market might close within a range of marginal negative or positive. There were 40 gainers against 19 losers last week as against 27 gainers and 36 losers recorded in the previous week.

Honeywell Flour Mills led the gainers, in percentage terms, with a gain of 24.53 per cent to close at N1.32. Ecobank Transnational Incorporated (ETI) followed with a gain of 21.13 per cent to close at N12.04. Seplat Petroleum Development Company rose by 20.59 per cent to N410. United Capital rallied by 11.92 per cent to close at N2.91. Livestock Feeds rose by 11.54 per cent to 87 kobo. Vitafoam Nigeria rallied 10.96 per cent to close at N2.43 while Africa Prudential Registrars and Neimeth International Pharmaceuticals rose by 10 per cent each to close at N3.19 and 66 kobo respectively.

On the other hand, Portland Paints and Products Nigeria led the decliners with a drop of 13.54 per cent to close at N1.98. Unilever Nigeria followed with a drop of 12.07 per cent to close at N39.57. Fidson Healthcare dropped by 8.63 per cent to N1.27. Caverton Offshore Support Group lost 8.51 per cent to close at 86 kobo while Mobil Oil Nigeria dropped by 8.2 per cent to close at N280 per share.

Further analysis of turnover showed that the traditional dominant sector, the financial services sector, still led activities with a turnover of 1.50 billion shares valued at N6.18 billion in 7,311 deals, representing 90.8 per cent of the total equity turnover volume. The consumer goods sector staged a distant second with a turnover of 51.395 million shares worth N4.753 billion in 2,027 deals while the conglomerates sector placed third with a turnover of 46.282 million shares worth N52.408 million in 553 deals.

Three banks-Union Bank of Nigeria (UBN) Plc, United Bank for Africa (UBA) Plc and FCMB Group Plc, were the most active, jointly accounting for 865.70 million shares worth N3.37 billion in 999 deals, representing 52.3 per cent of the total equity turnover volume.

Also traded during the week were a total of 2.439 million units of Exchange Traded Products (ETPs) valued at N18.276 million in 15 deals, slightly lower than a total of 2,850 units valued at N355,162 traded in 21 deals in the previous week.

In the debt market, a total of 411 units of Federal Government Bonds valued at N428,996 were traded in a deal.

Market analysts attributed the increase in momentum of trading and obvious investors’ appetite for equities to the modestly stable rally in the global crude oil price, which topped $50 per barrel. Crude oil is Nigeria’s main revenue source, and the steep decline in oil price has been linked to Nigeria’s foreign exchange crisis and economic recession, two factors that contributed significantly to the decline at the stock market.

Besides, with a loss of N1.34 trillion in November, most Nigerian equities are trading at their lowest prices in several years, inducing a bargain-hunting trend that targets the Gregorian calendar year-end. Most Nigerian equities follow the Gregorian calendar year and are expected to submit their annual audited accounts and report, including dividend recommendation, on or before March 31, 2017.

Also, President Muhammadu Buhari during the week presented the 2017 Appropriation Bill to the National Assembly. The expansionary budget proposes total expenditure of N7.3 trillion, 20.4 per cent higher than N6.1 trillion budgeted for 2016. Contrary to the contraction in 2016, the 2017 budget assumes a 2.5 per cent growth in Gross Domestic Product (GDP) while the average crude oil benchmark was put at $42.5 per barrel. Widely seen as ambitious, the budget proposal raised expectations that the economy may witness considerable stimulus during the year.

“We expect short term uptrend to persist,” says Afrinvest Securities Limited, a Lagos-based stockbroker.

The Nigerian equities’ rally further highlighted the increased demand for quoted shares globally as stocks set for the traditional Santa Claus rally. The Santa Claus rally, otherwise known as Santa rally, is a traditional tendency for share prices to rise towards the end of the year as investors and portfolio managers rebalance their portfolios.

Globally, equities were on the upside from the advanced to emerging markets. With the hike in interest rates by 0.25 per cent by the United States’ Federal Open Markets Committee (FOMC), the US twin indices, S&P 500 Index and the NASDAQ Index, rose by 0.2 per cent each. In London, the United Kingdom’s FTSE Index returned 1.5 per cent. Germany recorded average appreciation of 2.0 per cent while Japan’s NIKKEI Index also rose by 0.2 per cent.

Across the emerging markets, equities were mostly on the rally. Russia’s RTS Index rose by 3.1 per cent. India’s benchmark index rose by 0.8 per cent. Ghana’s GSE Composite Index jumped by 5.4 per cent while the Egypt’s EGX Index inched up by 0.2 per cent. However, Hong Kong’s HANG SENG dropped by 4.6 per cent. Brazil’s IBOVESPA Index declined by 2.5 per cent while South Africa’s JSE/ FTSE Index dropped by 2.4 per cent.

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