NSE RoundUp! Nigerian equities lead global decliners amidst weak corporate earnings

Nigerian equities were among the worst-performing equities globally as continuing ambivalence over the foreign exchange (forex) management, weak corporate earnings and generally tight macroeconomic conditions combined to depress investors’ appetite for Nigerian equities.

The benchmark index for the Nigerian stock market, the All Share Index (ASI) of the Nigerian Stock Exchange (NSE), indicated a week-on-week average decline of 3.98 per cent for the Nigerian market, the highest within the tracked African, Asian, emerging and advanced markets.

The sustained successive decline throughout the five trading sessions last week shaved off N393 billion from the market values of Nigerian quoted equities. The decline also erased the modest marginal year-to-date gain and left investors with a negative average year-to-date return of -3.43 per cent. With inflation rate at a high of 16.5 per cent, the nominal inflation-adjusted return at the Nigerian stock market now stands at -19.93 per cent.

Aggregate market value of all quoted equities on the NSE dropped from its week’s opening value of N9.893 trillion to close the week at N9.500 trillion, representing a net capital loss of N393 billion. The ASI also declined correspondingly by 3.98 per cent from its week’s opening index of 28,805.45 points to close at 27,659.44 points.

Nearly all sectoral indices at the NSE, with the exception of the consumer sector, closed in the red, which showed the spread of the sell-offs that pervaded the week. The NSE Banking Index recorded above-average decline of 7.3 per cent. The NSE Industrial Goods Index depreciated by 7.1 per cent. The NSE Insurance Index lost 3.1 per cent while the NSE Oil & Gas Index declined by 0.9 per cent.However, the NSE Consumer Goods Index played the contrarian with a modest gain of 0.89 per cent.

There were 44 losers against 15 gainers during the week, compared with 38 losers and 22 gainers recorded in the previous week. A total of 121 stocks closed flat, almost like 120 stocks recorded in the previous week. Oando Plc, which had forewarned of decline in profit in the second quarter, led the losers with a loss of 25.58 per cent to close at N5.12. Livestock Feeds followed with a decline of 17.76 per cent to close at 88 kobo while Stanbic IBTC Holdings dropped by 16.13 per cent to close at N13 per share.

Total turnover stood at 1.35 billion shares worth N9.287 billion in 18,679 deals compared with a total of 1.149 billion shares valued at N13.616 billion traded in 21,868 deals two weeks ago. The financial services sector led the activity chart with 1.148 billion shares valued at N4.861 billion traded in 11,668 deals; thus contributing 85.01 per cent and 52.34 per cent to the total equity turnover volume and value respectively.

The three most active stocks were Skye Bank Plc, United Bank for Africa Plc and FBN Holdings Plc, which jointly accounted for 573.927 million shares worth N1.250 billion in 3,745 deals, contributing 42.51 per cent and 13.46 per cent to the total equity turnover volume and value respectively.

Read Also : Why CBN extends lifeline to Sky Bank

Also traded during the week were a total of 11,420 units of Exchange Traded Products (ETPs) valued at N136,400 in 42 deals compared with a total of 941 units valued at N2.646 million traded two weeks ago in 22 deals.

A total of 13,550 units of Federal Government Bonds valued at N14.061 million were also traded in six deals last week as against atotal of 44,381 units of Federal Government Bonds valued at N44.679 million traded in five deals two weeks ago.

On the upside, Skye Bank, which received a lifeline from the Central Bank of Nigeria (CBN) to stem the adverse impact of panic withdrawals that greeted the apex bank’s change of Skye Bank’s directors and management, led the positive stocks with a gain of 41.67 per cent to close at 85 kobo. Forte Oil staged a distant second with a gain of 8.11 per cent to close at N194.90 while Premier Breweries rose by 4.98 per cent to close at N2.95 per share.

Many African and emerging markets largely followed the Nigerian downtrend, although at relatively slower pace. Major Africa markets closed in the red, marking out the continent in negative during the week. The Kenya Nairobi Stock Exchange 20 Index dropped by 2.3 per cent. Egyptian EGX 30 Index declined by 1.9 per cent while South Africa dropped by 0.4 per cent. However, Ghana Stock Exchange (GSE) Composite Index recorded modest gain of 0.1 per cent.

In the emerging markets zone, Brazil’s IBOVESPA Index rose by 1.9 per cent. Russia’s RTS Index appreciated by 0.1 per cent. China’s composite index however indicated a drop of 1.4 per cent while India’s Bombay Stock Exchange (BSE) main index dropped by 0.1 per cent.

In the advanced markets of America and Europe, it was a largely positive week. As presidential election primaries rounded off in the United States of America, the S & P 500 Index and NASDAQ Index inched up by 0.1 per cent and 1.0 per cent. In United Kingdom, the UK FTSE Index appreciated by 1.0 per cent. In Europe, Germany’s DAX Index indicated a return of 0.7 per cent while France’s CAC Index rose by 0.01 per cent. Asian markets were also on the upbeat with Japan’s Nikkei Index rising by 0.8 per cent. Hong Kong’s Hang Seng Index also rose by 1.4 per cent.

The performance of the Nigerian equities highlighted worries over the returns outlook for quoted companies, after early reports showed depressed earnings in the first half. In one of the report, Lafarge Africa, one of the biggest quoted companies, reported a net loss of N30.2 billion within the first half. Nigerian Breweries, Nigeria’s second most capitalised quoted company, also reported decline in profitability. All the companies had blamed forex losses for the low overall performance.

“Without ruling out speculative positioning in value stocks, performance in the coming week may worsen amid further influx of second quarter 2016 earnings,” Afrinvest Securities, a dealer on the NSE, stated in the outlook for this week.