NSE RoundUp! Nigerian equities lose N83bn in emerging markets slump

Investors ran to the safety of the advanced markets as emerging markets’ stocks struggled with negative macroeconomic overhang characterized by tight sales and declining margins.

Nigerian equities and most other emerging markets closed the immediate past week negative, running the contrarian in a global market that largely saw the advanced markets on the upswing.

With increasing inflow of corporate earnings, Nigerian equities remained under sell pressure in spite of attractive dividend yields. While compressed margins mean relatively lower profits, significant depreciation in share prices laid the ground for double-digit dividend yields for many stocks that have so far declared dividends at the Nigerian market.

But many investors, who had been waiting for increased demand, latched on to the modest rally and bargain-hunting that greeted corporate earnings, using voluminous deals to push back many stocks that should ordinarily be on the upswing on account of dividend yield and considerable outlook. This market situation has seen stocks like Zenith Bank International, United Capital, Dangote Cement and Nigerian Breweries on the downside in spite of subsisting dividends.

With a tit-for-tat pricing trend that saw 24 gainers against 24 losers, aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) declined by N83 billion to close the week at N8.656 trillion as against its opening value of N8.739 trillion. The All Share Index (ASI), the benchmark index for the Nigerian stock market, indicated a week-on-week decline of 0.94 per cent to close at 25,012.08 points compared with its opening index on board of 25,250.37 points for the week. The average year-to-date return for the stock market now stands at -6.93 per cent.

Pricing trend analysis showed that the negative overall market situation was largely driven by the selloff in Zenith Bank and Dangote Cement Plc. Most sectoral indices closed on the upside with the exception of the NSE Premium Index and NSE Industrial Goods Index, which are weighted substantially by Zenith Bank and Dangote Cement. The NSE Premium Index, which tracks the trio of Zenith Bank, Dangote Cement and FBN Holdings, recorded the highest decline of 4.47 per cent. The NSE Industrial Goods Index also declined by 2.33 per cent.

Read also: NSE LIVE! Dangote drags equities to N122bn loss

Meanwhile, the NSE 30 Index, which tracks the 30 most capitalised stocks, rallied a modest gain of 0.12 per cent in the five-day trading sessions. The NSE Banking Index also rose by 0.77 per cent. The NSE Insurance Index appreciated by 0.40 per cent. The NSE Consumer Goods Index rallied by 0.84 per cent while the NSE Oil and Gas Index recorded the highest gain of 4.51 per cent.

United Capital led the losers with a loss of 22.3 per cent to close at N2.85. Cadbury Nigeria followed with a loss of 13.3 per cent to close at N7.80. Seven-Up Bottling Company dropped by 10.8 per cent to N95. Transnational Corporation of Nigeria lost 8.0 per cent to close at 69 kobo. Unity Bank declined by 7.6 per cent to close at 73 kobo. FCMB Group dropped by 6.98 per cent to close at N1.20 per cent. Guinness Nigeria lost 6.6 per cent to close at N63.50. African Prudential Registrars declined by 6.25 per cent to close at N2.70 while Dangote Cement slipped by 4.99 per cent to close the week at N160.55.

Many stocks that touched their lows in previous week or early trading sessions last week rode on the back of bargain-hunting to the top of the gainers’ list. Nestle Nigeria, NSE’s highest-priced stock, led the advancers with a gain of 10.25 per cent to close at N628.42. Okomu Oil Palm followed with a gain of 10.23 per cent to close at N48.70. Vitafoam Nigeria rose by 9.88 per cent to close at N1.89. AIICO Insurance rose by 9.09 per cent to close at 60 kobo. Seplat Petroleum Development Company rallied 8.1 per cent to close at N400. UAC of Nigeria rose by 5.95 per cent to close at N13.35 while Oando added 5.3 per cent to close at N4.96 per share.

Total turnover nearly doubled to 1.39 billion shares worth N13.73 billion in 15,422 last week as against a total of 765.656 million shares valued at N9.717 billion traded in 12,468 deals two weeks ago. The financial services sector remained atop activities’ chart with 1.22 billion shares valued at N9.08 billion t in 10,213 deals; thus contributing 88.19 per cent and 66.15 per cent to the total equity turnover volume and value respectively. The consumer goodssector followed with 52.016 million shares worth N3.435 billion in 2,311 deals while the conglomerates sector placed third with a turnover of 41.515 million shares worth N63.506 million in 586 deals.

The trio of Zenith International Bank Plc, Continental Reinsurance Plc and United Bank for Africa Plc were the most active stocks, jointly accounting for 738.698 million shares worth N6.910 billion in 4,205 deals, contributing 53.24 per cent and 50.34 per cent to the total equity turnover volume and value respectively.

In the debt segment, a total of 375 units of Federal Government bonds valued at N447,055 were traded in five deals compared with a total of 24,850 units valued at N20.533 million traded in six deals in the previous week.

The week also saw the historic listing of the $1 billion Eurobond of the Federal Government on the NSE, the first foreign-currency denominated security to be listed on the domestic capital market. A total 1.0 million units of the 7.875 per cent FGN February 2032 $1 billion Eurobond were admitted to trade at the NSE.

“We do not expect any significant changes in the market mood. Though, coming weeks may witness the release of more results in the financial services and other sectors that would form a basis for positive sentiments. We however, anticipate a sideways trading with the bulls having a slight edge as market looks attractive,” analysts at SCM Capital Markets, a Lagos-based dealer at the Exchange, stated.

Analysts at Afrinvest Securities said they expected “the performance to be shaped by further influx of corporate earnings releases in the coming week”.

Emerging markets’ equities largely followed the Nigerian trend. In the Brazil, Russia, India, China and South Africa emerging bloc, popularly known as the BRICS, transactions were generally on the downward. Russia’s RTS Index dropped by 2.1 per cent. China’s Shanghai Composite Index dropped by 1.1 per cent. Brazil’s IBOVESPA Index dropped by 0.6 per cent while India’s Bombay Stock Exchange (BSE) Index slipped by 0.2 per cent. South Africa’s FTSE Index however rose by 0.1 per cent.

It was a mixed performance for the other African markets. Egypt’s EGX and Ghana’s GSE Composite Index rose by 0.6 per cent each. Kenya’s NSE ASI followed Nigeria with a drop of 2.0 per cent.

In the advanced markets of America and Europe, it was a largely bullish season. In United States of America, the S & P rose by 0.6per cent while NASDAQ appreciated by 0.3 per cent. In United Kingdom, the UK FTSE Index rose by 1.6 per cent. France’s CAC Index appreciated by 3.0 per cent. Germany’s DAX rose by 1.9 per cent while Japan’s Nikkei Index rallied 1.0 percent. Hong Kong’sHANG SENG Index however dropped by 1.7 per cent.

 

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