NSE RoundUp! Nigerian equities in modest rally amidst earnings rush

Nigerian equities closed the last trading week of the quarter at the weekend with improved buying sentiments as quoted companies rushed to meet Friday March 31, deadline for the submission of their full-year earnings for the 2016 business year.

Not less than 40 companies submitted their full-year annual reports on Friday alone and almost 60 per cent of relevant quoted companies submitted during the week.

With major acquisitions in the insurance and oil and gas sectors, the market saw both an increase in momentum of activities as well as price considerations. Advancers outstripped decliners and turnover was above average. All key overall and sectoral indices at the Nigerian Stock Exchange (NSE) showed a broad rally, although the momentum continued to be tempered by cautions over Nigeria’s foreign exchange management. The Economic and Financial Crimes Commission (EFCC) during the week confirmed it was investigating some top officials of the Central Bank of Nigeria (CBN) over foreign exchange racket, an open-ended move that harbours many uncertainties.

With dividend yields for many stocks in double digits, bargain-hunters appeared to be running round the market for value stocks as corporate earnings showed steady performance and dividend recommendation flowed in from most active companies.

Benchmark indices at the NSE showed average week-on-week gain of 0.24 per cent last week, equivalent to a net capital gain of N22 billion. Aggregate market value of all quoted equities on the NSE rose from the week’s opening value of N8.807 trillion to close at N8.829 trillion. The All Share Index (ASI)-the value-based index that tracks share prices at the stock market, also closed higher at 25,516.34 points as against its week’s opening index of 25,454.93 points.

Most sectoral indices also closed the week on the upside. The NSE 30 Index, which tracks prices of the 30 most capitalised stocks, appreciated by 0.27 per cent. The NSE Oil and Gas Index was the main driver of the rally with a week-on-week gain of 3.95 per cent. The NSE Industrial Goods Index followed with a gain of 2.16 per cent while the NSE Consumer Goods Index inched up by 0.21 per cent.

However, financial services stocks were largely on the downside with the NSE Banking Index and NSE Insurance Index dropping by 1.0 per cent and 0.75 per cent respectively. Also, the average year-to-date remained negative at -5.05 per cent.

Read also: NSE LIVE! Equities break into major rally with N92bn gain

Price trend analysis showed that there were 36 gainers against 24 losers last week, a considerable improvement on the previous week when there were 16 gainers against 35 losers. The number of unchanged stocks also reduced to 117 stocks last week compared with 126 stocks in the previous week. Newrest ASL led the gainers, in percentage terms, with a gain of 14.8 per cent to close at N3.56. Cadbury Nigeria followed with a gain of 11.75 per cent to close at N8.37. Seplat Petroleum Development Company rose by 10.22 per cent to close at N396. Transcorp Hotels added 10.04 per cent to close at N5.04 while Seven-Up Bottling Company rallied 9.20 per cent gain to close at N83.

On the other hand, Livestock Feeds led the losers with a drop of 16.9 per cent to close at 59 kobo. UACN Property Development Company followed with a drop of 6.32 per cent to close at N1.63. Guaranty Trust Bank declined by 6.04 per cent to N24.90. Ecobank Transnational Incorporated dropped by 5.23 per cent to close at N8.70 while Law Union and Rock Insurance slipped by 5.0 per cent to 76 kobo per share.

Total turnover surged to 3.195 billion shares worth N104.217 billion in 14,674 deals last week as against a total of 1.309 billion shares valued at N10.323 billion traded in 13,042 deals two weeks ago.The traditional dominant financial services sector remained the most active with 2.784 billion shares valued at N7.932 billion traded in 9,129 deals; thus contributing 87.12 per cent and 7.61 per cent to the total equity turnover volume and value respectively. The oil and gassector followed with 233.982 million shares worth N92.545 billion in 1,410 deals while the consumer goods sector placed third with a turnover of 80.623 million shares worth N1.957 billion in 2,138 deals.

Insurance stocks were the most active stocks, driven largely by cross deals on major acquisitions in the sector. The trio of Niger Insurance, Standard Trust Assurance and Continental Reinsuranceaccounted for 1.523 billion shares worth N1.145 billion in 76 deals, contributing 47.68 per cent and 1.10 per cent to the total equity turnover volume and value respectively.

Also, a total of 52,885 units of Exchange Traded Products valued at N425,464 were traded in 19 deals last week compared with a total of 11,585 units valued at N144,678 traded in five deals in the previous week.

In the debt segment, a total of 2,870 units of Federal Government bonds valued at N2.638 million were traded in seven deals compared with a total of 18,144 units valued at N17.555 million traded in 12 deals two weeks ago.

The stock market also saw many new listings during the week. The Federal Government during the week listed the maiden tranche of the Federal Government of Nigeria Savings Bond. A total of 2,067,961 units of 13.01 per cent FGNSB March 2019 at N100 each were admitted to trade. Also, a total volume of 5 million units of 16.2884 per cent FGN MAR 2027 at N100 each were admitted.

Additional volumes of 80 million units and 30 million units were added to the issued quantity of 12.40 per cent FGN MAR 2036 and 14.50 per cent FGN JUL 2021 respectively. Law Union and Rock Insurance also listed 859 million shares that resulted from a special private placement.

“This week, we expect a mix of bargain-hunting and profit taking activities,” analysts at Cowry Asset Management stated in a preview.

Analysts at Afrinvest Securities noted that investors had continuedto bet on cheaply valued stocks but the outlook will remain cautious as investors seek to decipher the medium-to long term macroeconomic variables.

“With the improvement observed on key macroeconomic variables lately, we imagine that investors will want to see how this pans out on first quarter 2017 earnings to reorganize their investment strategies for the rest of the year,” Afrinvest Securities stated.

 

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