NSE DG, Oscar Onyema
Goddy Egene and Eromosele Abiodun
The Nigerian equities market continued its positive run last week as investors sentiment remained positive for frontier markets in general, and Nigeria in particular.
The Nigerian Stock Exchange (NSE) All-Share Index has soared by over 19 per cent year to date (YTD), a situation analysts attributed to the accommodative monetary stance in the United States and other developed economies. The policy, they reasoned, has fuelled portfolio inflows into emerging and frontier markets.
Positive investor confidence buoyed by expectation of strong full year results by quoted companies had the previous week helped the market to sustain its positive momentum.
Activities in the stock market increased significantly at the beginning of trading last Monday by 41 per cent in conjunction with growth in market indices as investors bought 578.03 million shares worth N4.385 billion in 7,740 deals.
The market continued on a bullish note the next day as investors position themselves ahead of year-end results, which analysts predicted will be very strong.
By mid-week, the bulls re-enforced their presence with strong agility on the floor of the NSE with the index inching up 410 points to settle around the midpoint of the 33,000 points - 34,000 points resistance level.
At the close of business on Thursday, the market experienced a reversal of fortune as the market ended negatively after three-day rally.
The market again closed on a positive note last Friday helped by gains recorded in the share prices of Dangote Cement Plc, Guaranty Trust Bank Plc, Unilever Nigeria Plc, Guinness Nigeria Plc and Ecobank Transnational Incorporated.
The strong performance recorded in the week under review impacted market indicators positively as the twin market gauge closed firmer.
Trading statistics released by the NSE showed that the exchange’s benchmark index appreciated by 901.63 points or 2.78 per cent to close on Friday at 33,313.49. Also, the market capitalisation of the listed equities went up by 2.78 per cent to close at N10.659 trillion.
All the NSE sectoral indices appreciated: the NSE 30, the NSE Consumer Goods, the NSE Banking, the NSE Insurance, the NSE Oil/Gas and NSE Lotus II appreciated by 2.63 per cent, 2.47 per cent, 3.40 per cent, 14.21 per cent, 1.70 per cent and 4.11 per cent respectively.
Analysis of the performance of the market during the week under consideration revealed that a total of 3.572 billion ordinary shares worth N24.692 billion made in 39,321 deals were transacted last week on the floor of the exchange in contrast to a total of 2.813 billion shares valued at N22.188 billion that exchanged hands the previous week in 33,123 deals.
The financial services sector sustained its dominance as the most active during the week, contributing 70.75 per cent, 66.16 per cent, 58.71 per cent to the total equity turnover volume, value and number of trades respectively in 2.527 billion shares valued at N16.338 billion exchanged hands by investors in 23,085 deals.
Similarly, the banking subsector of the financial services sector was the most active during the week (measured by turnover volume); with 1.780 billion shares worth N13.050 billion traded in 16,104 deals. The volume of shares sold in the banking subsector was largely driven by activities in the shares of Unity Bank Plc, Access Bank Plc, and UBA Plc. Trading in the shares of the three banks accounted for 800.442 million shares, representing 44.96 per cent, 31.68 per cent and 22.41 per cent of the turnover volume recorded by the subsector, sector and total turnover for the week, respectively.
The conglomerates sector followed with a total turnover volume of 473.147 million shares worth N1.051 billion in 2,341 deals. Volume in the sector was largely driven by the shares of Transnational Corporation of Nigeria Plc (Transcorp) with a turnover volume of 465.210 million shares valued at N803.042 million in 1,826 deals.
Also traded during the week were 539 units of NewGold Exchange Traded Funds (ETFs) valued at N1.382 million exchanged hands in four deals in contrast to a total of 234 units valued at N595, 491 transacted last week in 5 deals.
In addition, 1,670 units of FGN bonds valued at N2.087 million were traded during the week in 41 deals. However, there were no transactions in the State/Local Government Bonds and Corporate Bonds/Debentures sectors.
Price Change Summary
A review of the equity price movement indicated that 73 equities gained while 18 equities recorded price declines and 106 equities remained constant. When compared with the preceding week, 55 equities gained while 27 equities recorded price decline and 115 equities remained constant. The top 10 gainers were: Lafarge WAPCO Plc (N6.20), Guinness Nigeria Plc (N5.38), Ashaka Cement Plc (N5.33), Cadbury Nigeria Plc (N5.27), Unilever Nigeria Plc (N4.93), PZ Cussons Nigeria Plc (N4.81), CAP Plc (N3.13), UACN Plc (N2.90), MRS Oil Nigeria Plc (N2.54) and International Breweries Plc (N2.49). On the other hand, the top 10 losers included: Nestle Nigeria Plc (N5.03), Nigerian Breweries Plc (N1.50), Flour Mills Nigeria Plc (91 kobo), Dangote Cement Plc (87 kobo), Forte Oil Plc (87 kobo),Beta Glass Company Plc (50 kobo), Eterna Plc (46 kobo), Chellarams Plc (28 kobo), University Press Plc (26 kobo) and John Holt Plc (22 kobo).
Experts believed the market had continued to sustain its positive run because Nigeria’s risk profile has improved since its inclusion in the JP Morgan local currency government bond index.
"The positive news flow this year has been striking. We also have to note concerns about the Kenyan (a major contender for foreign funds with Nigeria) elections due on 04 March. A second round in the presidential vote is highly likely and, despite the new constitution and enhanced preparations, investors cannot forget the violence and economic dislocation last time round in 2007/08," said analysts at FBN Capital.
Meanwhile, investors looking to raking in maximum returns on their investments in 2013 were last week advised to place equities ahead of treasury bills, bonds, collective investments and fund placements.
In their forecast for the financial market in 2013, experts at FSDH Merchant Bank advised that equities with expected return of 22.54 per cent should take 35 per cent of investors’ portfolio allocation in 2013.
According to FSDH, “In our estimation of the opportunities and challenges of the financial market in the next one year, we are recommending a portfolio allocation of 35 per cent, 10 per cent, 20 per cent, 15 per cent and 20 per cent in favour of equities, fund placement, treasury bills, bonds and collective investment, respectively. Taking into consideration the expected returns from these asset classes, we expect a portfolio return of 17.33 per cent within the next one year, all things being equal.”
They added that treasury bills with expected return of 20 per cent should come second with a portfolio allocation of 20 per cent.
The FGN, states and corporate bonds, which received huge patronage due to attractive rates in 2012, came their on their list. According to the experts, bonds with expected return of 15 per cent should be given only 10 per cent of investors’ portfolio allocation.
Collective investment came 4th with allocation of 20 per cent and expected return of 20.01 per cent.
FSDH also advised investors to consider fund placements with 10 per cent portfolio allocation and expect a return of 11.75 per cent.
They also listed FBN Holdings Plc, Diamond Bank Plc Zenith Bank Plc, Flour Mills Nigeria Plc, Nigerian Breweries Plc, AIICO Insurance Plc, Lafarge WAPCO Plc, UACN Plc, National Salt Company of Nigeria Plc and Dangote Cement Plc to give investors a return of 17.10 per cent, 46.60 per cent, 24 per cent, 20.6 per cent, 13.6 per cent, 23.1 per cent, 18.8 per cent, 26.7 per cent, 26.7 per cent 13.7 per cent returns respectively.