Nigerian equities rallied net capital gain of N242 billion in the first trading week of 2018, setting a positive course that built on the significant recovery that left investors in quoted equities with net capital gain of N4.36 trillion in 2017.
There were nearly five advancers for every decliner in a noticeable scramble that started the year as investors jostled to take positions in value stocks ahead of the earnings season. All major indices at the Nigerian Stock Exchange (NSE) closed on the upside with the one-week year-to-date return closing at the weekend at 1.78 per cent.
The All Share Index (ASI)-the common value-based index that tracks share prices at the Exchange rose from its year’s opening index of 38,243.19 points to close at 38,923.26 points. Aggregate market value of all quoted equities also appreciated to N13.851 trillion as against N13.609 trillion recorded as value-on-board at the beginning of the year.
With these, the average year-to-date return now stands at 1.78 per cent, equivalent to net capital gain of N242 billion within the first four trading sessions of the year.
All sectoral indices closed positive, underlining the widespread bargain-hunting that dominated transactions during the week. The NSE 30 Index, which tracks the 30 most capitalised companies, recorded above-average gain of 2.46 per cent. The NSE Banking Index led the rally with a return of 6.32 per cent. The NSE Insurance Index followed with a gain of 4.66 per cent. The NSE Consumer Goods Index appreciated by 1.47 per cent. The NSE Oil and Gas Index posted a modest gain of 0.95 per cent while the NSE Industrial Goods Index recorded a return of 3.49 per cent.
Investors appeared to focus on low-priced stocks, otherwise known as penny stocks, setting off a major scramble that saw more than a quarter increase in share prices of many penny stocks. There were 55 advancers to 12 decliners in the immediate past week as against 32 advancers and 25 decliners recorded in the previous week.
Sterling Bank led the gainers, in percentage terms, with a gain of 30.56 per cent to close at N1.41. FCMB Group followed with a gain of 28.38 per cent to close at N1.90. Diamond Bank rose by 26 per cent to N1.89. Skye Bank appreciated by 22 per cent to close at 61 kobo. Eterna posted a return of 21.18 per cent to close at N4.92. Honeywell Flour Mills appreciated by 20 per cent to N2.52. Fidelity Bank rose by 18.7 per cent to close at N2.92. Linkage Assurance rallied by 18.18 per cent to close at 78 kobo. Unity Bank rose by 16.98 per cent to close at 62 kobo while Livestock Feeds posted a gain of 16.87 per cent to close at 97 kobo per share.
On the downside, 11, formerly Mobil Oil Nigeria, led the decliners with a drop of 12.64 per cent to close at N170. NEM Insurance declined by 7.83 per cent to close at N1.53. Neimeth International Pharmaceuticals and Omoluabi Mortgage Bank dropped by 4.0 per cent each to close at 72 kobo each while Transnationwide Express lost 3.85 per cent to close at 75 kobo.
The momentum of activities improved considerably during the week as total turnover stood at 2.417 billion shares worth N18.813 billion in 20,874 deals as against a total of 1.310 billion shares valued at N12.635 billion traded in 9,016 deals in the previous week. The financial services sector led the activity chart with 1.677 billion shares valued at N8.734 billion traded in 13,033 deals; thus contributing 69.39 per cent and 46.43 per cent to the total equity turnover volume and value respectively. The conglomerates sector followed with 536.922 million shares worth N1.258 billion in 1,288 deals while the third place was occupied by consumer goods sector with a turnover of 100.460 million shares worth N6.951 billion in 3,426 deals.
The penny stocks-Transnational Corporation of Nigeria Plc, Diamond Bank Plc and Skye Bank Plc, were the most active stocks, accounting for 1.193 billion shares worth N1.681 billion in 2,957 deals, contributing 49.37 per cent and 8.93 per cent of the total equity turnover volume and value respectively.
Also traded during the week were a total of 305,604 units of Exchange Traded Products (ETPs) valued at N3.498 million in eightdeals compared with a total of 276 units valued at N9,865 traded in 12 deals in the previous week.
In the sovereign debt market, a total of 2,162 units of Federal Government bonds valued at N2.016 million were traded in nine deals compared with a total of 422,672 units valued at N436.190 million traded in 20 deals two weeks ago.
The rally at the Nigerian stock market underlined the optimism that started the global stock markets, after several markets recorded impressive returns in 2017. Global equities traded mostly on the positive in the immediate past week, arching a rainbow of hopes from the advanced to emerging markets.
In the advanced markets of Europe and America, United States of America’s benchmark indices, S & P 500 and NASDAQ appreciated by 1.9 per cent and 2.5 per cent respectively. In United Kingdo0m, the UK FTSE Index inched up by 0.4 per cent. Japan’s Nikkei Index appreciated by 4.2 per cent. Hong Kong’s Hang Seng Index rose by 3.0 per cent. Germany’s XETRA DAX Index improved by 3.0 per cent while France’s CAC 40 Index rose by 2.6 per cent.
In the emerging markets, Brazil’s Ibovespa Index rallied by 2.7 per cent. China’s Shanghai Composite Index rose by 2.6 per cent. Russia’s RTS Index appreciated by 5.1 per cent while India’s BSE Sensex Index inched up by 0.3 per cent.
In Africa, it was a mixed performance with an equal split between the advancers and the decliners. Ghana’s GSE Composite Index followed Nigerian trend with a gain of 1.3 per cent while Egypt’s EGX 30 Index and Kenya’s NSE 20 Index declined by 0.8 per centand 0.3 per cent respectively.
“Following a broadly bullish performance this week, we expect to see some profit taking in early trades next week,” analysts at Afrinvest Securities stated.
Most analysts meanwhile remained positive on the medium-term outlook for the Nigerian equities market. “The market rally continued with activity level and investor sentiments largely positive. Bargain hunting was broadly sustained, however, profit taking set in as expected, particularly in the banking sector stocks which rallied to the upper limit at the opening of the market. Profit taking is likely to continue in the coming sessions but the market will remain positive and active in the immediate term,” FSDH Securities noted.
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