Profit-taking, Christmas Sale Halt Price Rally

24 Dec 2012

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Trading session at NSE

By Goddy Egene and Eromosele Abiodun

After about three weeks of consistent gains, the Nigerian equities market succumbed to heavy supply pressure as most local investors rush to raise cash for the Christmas and New Year celebration.

Investors in the equities market had smiled home the previous week as the decision by the Federal Government to bail out dealing member firms of the NSE helped to fuel massive demand for shares by local and foreign investors.

The intervention helped the stock market extended the gains recorded the two weeks as the market witnessed an avalanche of buy mandates from foreign investors, in addition to the significant purchase transactions executed on behalf of the local institutional investors.

However, at the resumption of trading last week, the  high demand by local investors to raise funds for the yuletide impacted the market negatively as the market closed weaker.

The market continued on that note till mid week when losses recorded in the share prices of United Bank for Africa Plc, Nestle Nigeria Plc, ETI, Nigerian Breweries Plc and UACN Plc depressed the market further by 0.32 per cent.

On Thursday, the equities market closed on a positive note as the benchmark index appreciated by 0.58 per cent  helped by gains recorded in the share prices of Guaranty Trust Bank Plc, UBA Plc, Diamond Bank Plc, ETI and Dangote Cement Plc. At the close of business last Friday, the market closed on a negative note as the benchmark index declined by 0.39 per cent.

Consequently, NSE All-Share Index  fell by  1.02 per cent  to close at  27,402.06, thereby bringing the year-to-date (YTD) growth to 32.18 per cent.
Also, the market capitalisation of the listed equities went down by 1.03 per cent to close at N8.755 trillion.

Likewise, the NSE 30, the NSE Consumer Goods, the NSE Insurance, the NSE Oil/Gas and NSE Lotus II Indices depreciated by 1.40 per cent; 5.83 per cent; 0.73 per cent; 2.91 per cent; and 0.39 per cent. However, the NSE Banking index appreciated by 3.29 per cent.

Market Turnover
A further analysis of the trading results showed that investors sold a total of 1.293 billion ordinary shares worth N13.725 billion made in 20,499 deals in contrast to a total of 1.929 billion shares valued at N14.640 billion that exchanged hands the previous week in 22,650 deals.

The financial services sector (measured by turnover volume) accounted for 952.745 million shares valued at N7.857 billion traded in 11,975 deals. Consumer Goods sector (measured by turnover volume) followed in the activity chart with for 81.616 million shares valued at N4.377 billion traded in 4,295 deals. The industrial goods sector (measured by turnover volume) was third with 72.867 million shares valued at N265.817 million traded in 1,057 deals. The top three sectors accounted for 1.107 billion shares valued at N12.499 billion traded in 17,327 deals, thus accounting for 85.63 per cent, 91.07 per cent and 84.53 per cent,of the volume, value and number of deals respectively.

Similarly, the banking subsector of the Financial Services sector was the most active during the week (measured by turnover volume); with 695.408 million shares worth N6.525 billion traded in 8,731 deals. The volume in the Banking subsector was largely driven by activity in the shares of Zenith Bank Plc, UBA Plc and Guaranty Trust Bank Plc. Trading in the shares of the three banks accounted for 343.272 million shares, representing 49.36 per cent, 36.03 per cent and 2.50 per cent of the turnover recorded by the subsector, sector and total turnover for the week, respectively.

Also traded during the week were 638 units of NewGold Exchange Traded Funds (ETFs) valued at N1.636 million exchanged hands in 4 deals in contrast to a total of 880 units valued at N2.300 million transacted last week in 6 deals. However, there were no transactions through the stock market in the FGN Bonds, State/Local Government Bonds and Corporate Bonds/Debentures sectors.

Analysts View
Despite last week’s poor performance, analysts remain positive about the outlook of the equities market in the next few weeks.
“We expect the NSE All Share Index to close the year in the region of 32.05 per cent . As a result of the festivity we expect intermittent upside coupled with profit taking to persist for the remainder of 2012.  Investors are advised to consider investment opportunities in the under listed stocks, as they have good fundamentals that can generate good returns in the medium to long- term, “said analysts at FSDH Securities Limited.

Price Change Summary
Meanwhile, a review of the equity price movements during  last week indicated that 40 equities gained while 35 equities recorded price declines and prices of 120 equities remained constant. When compared with the preceding week, 44 equities gained while 25 equities recorded price declines and prices of 129 equities remained constant. The top 10 gainers included: Okomu Oil Palm Plc (N3.00), Guaranty Trust Bank Plc (N1.85), International Breweries Plc (N1.70), Presco Plc (N1.09), PZ Cussons Nigeria plc (95 kobo), National Salt Company of Nigeria Plc (N0.64), Dangote Cement Plc (N0.50), Conoil Plc (N0.45 ), B.O.C. Gases Plc (N0.28) and FBN Holdings Plc (N0.23).
Conversely, Nigerian Breweries Plc led the price losers with N20.70. Nestle Nigeria Plc trailed with a loss of N9.94; Guinness Nigeria Plc (N4.00), Seven-Up Bottling Company Plc (N2.00), UACN Plc (N1.98), Lafarge  Cement WAPCO Nigeria Plc (N1.95), Oando Plc (N1.58), Total Nigeria Plc (N1.11), John Holt Plc (N1.00) and Unilever Nigeria Plc (N0.50).

  SEC to Check Shareholders’ Excesses
Meanwhile,  information came last week that worried by the threat posed by the activities of some shareholders’ associations, the Securities and Exchange Commission (SEC) is considering a new strategy to regulate the associations in the Nigerian capital market.

A senior official of the SEC told THISDAY last week in Abuja that the activities of some of the associations, are making some listed companies to contemplate delisting while new ones are feeling reluctant to list on the Nigerian Stock Exchange (NSE).

Consequently, the apex regulator, the official said, was working out a new strategy to curtail the excesses of  such associations and their members.
Pursuant to Section 8(y) of the Investments and Securities Act (ISA) 1999 to make provisions for the conduct of members of Shareholders’ Associations during general meetings of public companies and their relationship with public companies outside the general meetings and for other purposes , SEC issued a code of conduct for shareholders’ associations.

The code is intended to ensure the highest standard of conduct amongst association members and the companies with whom they interact as bona fide shareholders.
One of the major requirements of the code is that all the association must be registered with Corporate Affairs Commission (CAC).

However, apart from the fact that many of them are yet to be registered, they are violating other provisions of the code.

“When we tried to discourage them, they claim that they have the right of association. But their conducts are becoming a threat to efforts to attract more companies to list and are even a threat to  the already listed ones. We are therefore looking at new strategy to check their excesses. This will become effective in the new year,” the SEC source said.

Tags: Nigeria, Featured, Business, NSE

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