Quoted companies on the Nigerian Stock Exchange (NSE) started 2016 with a round of downtrend with nearly three losers for every gainer in the first week of the year.
The widespread declines in share prices shaved off N555 billion from aggregate market value of all quoted equities, worsening investors’ anxiety over N3.38 billion lost in the past two years.
With four out of the five trading sessions ending on the negative, average year-to-date return for Nigerian equities now stands at -5.63 per cent. Nigerian stocks had closed 2015 with a negative full-year average return of -17.36 per cent, slightly higher than -16.14 per cent recorded in 2014.
The All Share Index (ASI)-the benchmark value-based index that tracks prices of all quoted companies on the NSE, dropped to 27,028.39 points as against its year’s opening index of 28,642.25 points. Aggregate market value of all quoted companies also declined by the same margin from the year’s opening value of N9.851 trillion to close at N9.296 trillion.
All sectoral and group indices at the NSE, with the exception of the industrial sector’s gauge, closed in the red. The NSE Industrial Goods Index recorded a modest gain of 0.45 per cent. The NSE Premium Index, which tracks Dangote Cement, Zenith Bank International and FBN Holdings, dropped by 6.49 per cent. The NSE Main Board Index, which tracks all the stocks on the main board of NSE with the exception of those under premium board, declined by 5.16 per cent. The NSE 30 Index, which tracks the 30 most capitalised stocks, dropped by 6.16 per cent. The NSE Banking Index returned -4.90 per cent.
Also, the NSE Insurance Index dropped by 1.04 per cent. The NSE Consumer Goods Index recorded the highest drop of 9.90per cent. The NSE Oil and Gas Index dropped by 1.60 per cent. The NSE Lotus Islamic Index, which tracks stocks that comply with Islamic investment rules, depreciated by 1.98 per cent while the NSE Pension Index, which tracks companies screened for pension investments, declined by 6.06 per cent.
There were 50 losers to 17 gainers during the week while 123 stocks, nearly two-thirds of quoted companies, were unchanged. Skye Bank led the losers with a drop of 25.3 per cent to close the week at N1.18. Unity Bank followed with a loss of 24.1 per cent to close at 85 kobo. Nigerian Breweries dropped by 19.5 per cent to close at N109.50. Tiger Branded Consumer Goods Company lost 16.8 per cent to close at 94 kobo. Honeywell Flour Mills declined by 15.6 per cent to N1.73. Eterna dropped by 13.7 per cent to N1.77. Union Bank of Nigeria lost 13 per cent to close at N6. Transnational Corporation of Nigeria dropped by 12.5 per cent to close at N1.33 while GlaxoSmithKline Consumer Nigeria and FBN Holdings lost 12.28 per cent and 11.9 per cent to close at N30 and N4.52 respectively.
Total turnover stood at 899.60 million shares worth N7.67 billion in 14,164 deals, substantially lower than a total of 2.96 billion shares valued at N9.36 billion traded in 7,174 deals in the last week of 2015. Activities remained concentrated in the financial services sector, which last week accounted for 764.79 million shares valued at N4.86 billion in 8,904 deals; representing 85 per cent and 63 per cent of the total equity turnover volume and value respectively. The conglomerates sector occupied a distant second position with a turnover of 40.16 million shares worth N100.47 million in 626 deals. It was followed by the consumer goods sector with a turnover of 40.01 million shares worth N1.71 billion in 2,116 deals.
The trio of Access Bank Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc, were the most active stocks. They accounted for 339.03 million shares worth N2.80 billion in 3,116 deals, more than one-third of the turnover volume and value.
Also traded during the week were a total of 12,016 units of Exchange Traded Products (ETPs) valued at N2.050 million executed in 25 deals. There were however no transactions in listed sovereign bonds.
On the upside, Okomu Oil Palm led the contrarian stocks with a gain of 19.64 per cent to close at N36.25. Vono Products rose by 18.5 per cent to close at 96 kobo. Learn Africa added 15.5 per cent to close at 82 kobo. Lafarge Africa chalked up 8.5 per cent to close at N105 while Cement Company of Northern Nigeria added 8.02 per cent to close at N10.10 per share.
“The strong correction this week showed a herd pattern as most of the stocks that were sold off were the same ones that pulled the broader index up last week. This may be due to profit-taking and portfolio re-adjustment by fund managers after closing their books for the year. Nevertheless, we cannot discount the impacts of the weak macroeconomic fundamentals – following another bearish week for crude oil — and liquidity tightening by the Central Bank of Nigeria this week on the overall sentiment for equities. We remain bearish on equities in the short term,” Afrinvest Securities-a Lagos-based trader on the NSE, stated.
Around the world, the stock markets generally opened 2016 on the downtrend. United States’ S & P 500 index declined by 4.8 per cent while counter-part NASDAQ Index dropped by 4.9 per cent. United Kingdom’s FTSE 100 Index slipped by 5.0 per cent. Germany’s DAX Index lost 8.3 per cent. France’s CAC Index dropped y 6.5 per cent. Hong Kong’s Hang Seng index declined by 6.7 per cent. Japan’s Hang Seng index dropped by 7.0 per cent.
The Chinese Shanghai Composite Index dropped by 10 per cent. The Brazil IBOVESPA Index declined by 6.1 per cent. India’s BSE Sens Index dropped by 4.7 per cent. South Africa’s FTSE JSE Index indicated a drop of 5.1 per cent.
Analysts expressed worry that with the increasing downside risk of weaker global growth, the global markets would likely remain volatile in the trading sessions ahead. Emerging and developing markets are likely to experience further selloffs on the back of their strong links to events in the Chinese market, further decline in commodities and heightened expectation of more devaluations.
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