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Market Digest Nigeria

Finance

Nigerian stocks in Bull terrain, lead global markets with N1.33tr gain

Nigerian equities regained the global lead as the most-rewarding stocks, after rising for five consecutive trading sessions to close weekend with net capital gains of N1.33 trillion.

Nigeria’s sovereign equities indices at the weekend indicated average return of 7.46 per cent for the week, equivalent to net capital gain of N1.33 trillion. Gains by Nigerian stocks considerably surpassed average returns across the global advanced and emerging markets.

The five-day sustained rally pushed average year-to-date return for Nigerian equities to 37.12 per cent, setting up Nigeria for a top position in global returns for 2020.

Global stock analysis showed a generally positive sentiment as hopes on crude oil deals, fiscal stimulus and COVID-19 vaccines tickled the markets from America to Europe, Asia, Middle East and Africa. In United States of America, the Dow Jones Industrial Average (DJIA) rose by 0.9 per cent while the S & P appreciated by 1.6 per cent. In United Kingdom, the FTSE 100 posted a modest return of 0.1 per cent while Japan’s Nikkei 225 appreciated by 0.4 per cent. The MSCI EM Index, which tracks emerging markets, rose by 1.2 per cent while the MSCI FM Index, which tracks frontier markets, appreciated by 0.9 percent.

An exterior view shows the Nigerian Stock Exchange building in Lagos, Nigeria February 10, 2016. Nigeria’s stock exchange, Africa’s second-largest, is looking to attract investors spooked by a weak currency and oil price by offering more products ahead of a possible listing. REUTERS/Akintunde Akinleye

The All Share Index (ASI)- the value-based common index that tracks all share prices at the Nigerian Stock Exchange (NSE) closed weekend at 36,804.75 points as against its week’s opening index of 34,250.74 points. The ASI doubles as Nigeria’s sovereign equities index.

Aggregate market value of all quoted equities on the NSE crossed two trillion marks to close weekend at a high of N19.236 trillion compared with its opening value of N17.902 trillion for the week.

With three advancers for every decliner, the positive overall market position at the Nigerian equities market was driven by widespread bargain-hunting across the sectors, especially within the active large and mid cap stocks.

The NSE 30 Index, which tracks the 30 largest stocks on the Exchange, posted average return of 5.47 per cent. The NSE Banking Index, which tracks the most active and influential banking sector, also recorded average return of 5.12 per cent. The NSE Insurance Index-riding on the bubbles of recapitalisation, mergers and acquisitions, posted the highest gain of 13.39 per cent.

The NSE Industrial Goods Index, where the largest cement companies are listed, rose by 7.74 per cent, a major influence on the overall market given the capitalisation of the sector. The NSE Consumer Goods Index rose by 3.08 per cent while the NSE Oil and Gas Index recorded average gain of 1.34 per cent for the week.

Most analysts believe Nigerian equities still have headroom for further gains, citing comparative yields and valuations across domestic assets and global markets.

“We anticipate a sustained bullish performance in the coming week as investors position in undervalued stocks,” Afrinvest Securities stated in a weekend note on market outlook.

Analysts at Cordros Securities said there was still scope for expansion in share prices in the meantime as the hunt for alpha-yielding opportunities, in the face of increasingly negative real returns in the fixed income market, remains positive for stocks.

“However, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings,” Cordros Securities stated.

The momentum of activities however slowed down as total turnover dropped to 1.89 billion shares worth N17.65 billion in 20,660 deals, as against a total of 2.27 billion shares valued at N20.99 billion traded in 23,722 deals two weeks ago.

The bank-led financial services sector remained the most active with a turnover of 1.49 billion shares valued at N8.39 billion in 10,834 deals; representing 78.65 per cent and 47.52 per cent of the total equity turnover volume and value. The consumer goods sector occupied a distant second with 106.986 million shares worth N2.36 billion in 3,447 deals while the services sector placed third with a turnover of 74.754 million shares worth N191.833 million in 448 deals.

The three most active stocks were Jaiz Bank Plc, FBN Holdings Plc and Niger Insurance Plc, which altogether accounted for 761.866 million shares worth N1.47 billion in 1,395 deals, representing 40.25 per cent and 8.32 per cent of the total equity turnover volume and value respectively.

Also, a total of 412,358 units of Exchange Traded Products (ETPs) valued at N1.396 billion were traded in 40 deals compared with a total of 292,510 units valued at N2.270 billion traded in 45 deals penultimate week.

At the debt market, a total of 47,699 bond units valued at N53.129 million were traded in 22 deals compared with a total of 13,555 bond units valued at N17.369 million traded in eight deals two weeks ago.

Further price analysis showed that there were 53 gainers against 17 losers during the week compared with 13 advancers and 46 decliners recorded in the previous week. FTN Cocoa Processors led the gainers, in percentage terms, with a gain of 40.9 per cent to close at 62 kobo. Japaul Gold & Ventures followed with a gain of 36 per cent to close at 34 kobo. Airtel Africa jumped by 21 per cent to close at N774.40 per share. AIICO Insurance appreciated by 19.05 per cent to close at N1.25 per share. Consolidated Hallmark Insurance rose by 15.38 per cent to close at 30 kobo while Dangote Cement appreciated by 14.48 per cent to close at N209.50 per share.

On the negative side, AXA Mansard Insurance, which was adjusted for scrip issue, led with a drop of 60 per cent to close at 92 kobo. NEM Insurance, which was also adjusted for bonus issue, followed with a drop of 47.23 per cent to close at N1.24 per share. Omatek Ventures declined by 16.67 per cent to 20 kobo. International Breweries lost 12.67 per cent to close at N6.27 while Linkage Assurance declined by 10 per cent to close at 45 kobo per share.

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