Nigerian equities turned around from the negative start of the first week of this year to a modest recovery in the second week as global emerging markets showed positive outlook.
Average return at the Nigerian equities market last week stood at 0.28 per cent, equivalent to a net capital gain of N26 billion.
Most other African and global emerging markets also traded on positive sentiments. South Africa’s FTSE/JSE Index rose by 3.1 per cent. Egypt’s EGX Index indicated a week-on-week return of 4.9 per cent.
Ghana’s benchmark index appreciated by 1.8 per cent. Brazil’s IBOVESPA Index and Russia RTS Index appreciated by 3.4 per cent each while Hong Kong’s HANG SENG Index returned 1.9 per cent during the week.
The price recovery at the Nigerian stock market, though modest, appeared to blunt the report of an increase in inflation rate. Inflation rate, which measures changes in prices of items, trended upward to its highest in more than 11 years in December 2016, beating several analysts’ projections of a moderation to increase to 18.55 per cent.
A report just released by the National Bureau of Statistics showed that the Consumer Price Index (CPI), which measures inflation, rose by 0.07 per cent from 18.48 per cent in November to 18.55 per cent in December, the 11th straight monthly increase.
The benchmark index at the Nigerian Stock Exchange (NSE), the All Share Index (ASI), closed the weekend at 26,325.93 points as against its week’s opening index of 26,251.39 points. Aggregate market value of all quoted equities also rose from the week’s opening value of N9.032 trillion to close at N9.058 trillion.
Sectoral indices showed mixed performance. The NSE Banking Index recorded above-average growth of 3.3 per cent while the NSE Industrial Goods Index inched up by 0.1 per cent. However, the NSE Oil & Gas Index dropped by 3.1 per cent. The NSE Consumer Goods Index slipped by 1.8 per cent while the NSE Insurance Index declined by 0.3 per cent.
There were 31 gainers to 34 losers while 110 equities closed flat.Low-priced stocks recorded the largets gains. Diamond Bank recorded the highest gain, in percentage terms, of 23.3 per cent. Okomu Oil Palm followed with 10.2 per cent. Continental Reinsurance and Sterling Bank posted a week-on-week return of 10 per cent each while United Capital rose by 9.6 per cent. On the other hand, Cutix led the decliners with a loss of 18 per cent.
Seven-Up Bottling Company dropped by 13.6 per cent. Caverton Offshore Support Group dropped by 12.8 per cent. Fidson Healthcare declined by 12.78 per cent while Nascon Allied Industries dropped by 11.18 per cent.
Total turnover stood at 1.117 billion shares worth N9.041 billion in 16,482 deals last week compared with a total of 4.319 billion shares valued at N7.376 billion traded in 9,330 deals two weeks ago.
Sectoral analysis showed that the traditionally dominant financial services sector continued to lead the activity chart, recording a turnover of 903.696 million shares valued at N3.336 billion in 9,240 deals; thus contributing 80.88 per cent and 36.90 per cent of the total equity turnover volume and value respectively.
The conglomerates sector followed with 67.147 million shares worth N109.014 million in 609 deals. The third place was occupied by consumer goods sector with a turnover of 59.710 million shares worth N4.002 billion in 2,686 deals.
Banking stocks were the most active stocks. The trio of Fidelity Bank Plc, Omoluabi Savings and Loans Plc and Diamond Bank Plc were the most active, jointly accounting for 299.270 million shares worth N277.933 million in 1,029 deals, contributing 26.79 per cent and 3.07 per cent of the total equity turnover volume and value respectively.
Also traded during the week were a total of 2,443 units of Exchange Traded Products (ETPs) valued at N730,619 in 23 deals, compared with a total of 55 units valued at N505.65 traded in 11 deals in the previous week.
In the debt segment, a total of 5,200 units of Federal Government bonds valued at N5.004 million were traded in five deals, slightly improving on a total of 5,100 units valued at N5.120 million traded in two deals penultimate week.
Analysts remained cautious about the outlook for the stock market as the foreign exchange crisis continued to limit inflow of foreign portfolio investments while tough macroeconomic environment stifles domestic investments.
Total amount of transactions by foreign portfolio investors in the Nigerian equities market within the 11-month period between January and November 2016 dropped by 51.4 per cent to N473.5 billion compared with N973.7 billion recorded in comparable period of 2015.
Chief executive officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, pinpointed resolution of the multiple foreign exchange rates and discriminatory foreign exchange policy as a major deciding factor for the performance of the stock market in 2017.
According to him, investors will continue to keep a close eye on the divergence between the interbank foreign exchange rate and other exchange rates in the country and such a convergence of foreign exchange rates in the country and the performance of listed companies will determine the level of market activity in the short term.
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