NSE DG, Oscar Onyema

Goddy Egene and Eromosele Abiodun

For the first time in recent times, the Nigerian equities market declined for three consecutive trading days to close last week downbeat driven by profit taking by some investors.

However, it was a brief trading week as the market opened for three days due to a two-day public holiday declared by The Federal Government of Nigeria (Thursday and Friday October 2012) to commemorate the Muslim festival of Eid el Kabir.

The market had the previous week maintained its excellent run amid the third quarter figures released by some banks and other quoted companies.

But it was a direct opposite last week as improved third quarter earnings reports failed to halt rampaging bears. Trading resumed last Monday on a poor note as investors rushed to take profit and raise cash for the Muslim holiday.

Last Tuesday the Nigerian Stock Exchange (NSE) All-Share Index depreciated by 1.25 per cent to close at 26,876.07 from 27,217.27 while market capitalisation also decreased by N108 billion to N8.564 trillion from N8.672 trillion the previous day. It continued on that note on Wednesday to close the week in red.

Consequently, all major market indicators closed the week northward led by the twin market gauge-the ASI and the market capitalisation.

Analysis of trading statistics released by the NSE showed that its benchmark index, which opened the week at 27,296.35 closed at 26,876.07, thereby depreciating 420.28 points or 1.54 per cent. Also, the market capitalisation of the listed equities decreased by N133.221 billion (1.53 per cent) to close at N8.565 trillion.

In the same vein, all the sectorial indices depreciated. The NSE -30, the NSE Consumer Goods Index, the NSE Banking Index , the NSE Insurance Index, the NSE Oil/Gas Index and NSE Lotus II Indices depreciated by 1.85 per cent, 1.45 per cent, 3.23 per cent, 0.07 per cent, 0.63 per cent and 0.52 per cent respectively.

Number of Share Traded

A further analysis of the trading numbers showed that investors traded a total of 794.043 million units of shares valued at N8.515 billion exchanged in 14,048 deals compared to 1.859 billion ordinary shares valued at N16.350 billion that exchanged hands the previous week in 28,383 deals.

The Financial Services sector dominated the activity chart (measured by turnover volume) recording the highest trading volume of 659.759 million units of shares valued at N6.377 billion traded in 8,298 deals, representing 83.09 per cent, 74.89 per cent and 59.07 per cent, of the volume, value and number deals executed on the stock market respectively during the week. The Consumer goods sector (measured by turnover volume) followed with a recorded volume of 44.008 million shares valued at N1.719 billion traded in 2,733 deals. The top two sectors accounted for 703.767 million shares valued at N8.096 billion traded in 11, 031 deals, thus accounting for 88.63 per cent, 95.08 per cent and 78.52 per cent of the volume, value and number of deals respectively.

Similarly, the Banking sub sector was the most active with a volume of 595.989 million units of shares. Activity in the subsector was mostly driven by shares of Zenith Bank Plc, Ecobank Transnational Incorporated Plc and First Bank of Nigeria Plc which accounted for 281.873 million shares, representing 47.30 per cent, 42.72 per cent and 35.50 per cent of the turnover recorded by the subsector, sector and total volume for the week.

 week were 600 units of NewGold Exchange Traded Funds (ETFs) valued at N1.573 million exchanged hands in 4 deals in contrast to a total of 4,700 units valued at N12.488 million transacted last week in 12 deals. However, there were no transactions in the Federal Government Development Stocks, State/Local Government Bonds, and Corporate Bonds/Debentures sectors.

Gainers and Losers

The analysis of the equity price movements indicated that 22 equities gained while 39 equities recorded price declines and prices of 138 equities remained constant. When compared with the preceding week, 27 equities gained while 46 equities recorded price declines and prices of 125 equities remained constant. The top gainers included: Nestle Nigeria Plc (N11.50); CAP Plc (N1.90);Academy Press Plc (N0.69); Beta Glass Company Plc (N0.50); Flour Mills Nigeria Plc (49 kobo), Vitafoam Nigeria Plc (N0.34), DN Meyer Plc (N0.30), Cutix (N0.20), Portland Paints & Products Nigeria Plc (N0.18) and Nigerian Bags Manufacturing Company Plc (N0.12 ).

Conversely, the top 10 losers were: Nigerian Breweries Plc (N3.85); P Z Cussons Nigeria Plc (N3.43); Guinness Nigeria Plc (N2.00); First Bank of Nigeria Plc (N0.80), Ashaka Cement Plc (N0.79), Zenith Bank Plc (N0.70); Cadbury Nigeria Plc (N0.55); United Bank for Africa Plc (N0.41, Arbico Plc and Access Bank Plc (N0.40 each).

New/Supplementary Listing

Last week the NSE listed the N6 billion 17.25 per cent 2017 Series 2 Fixed Rate Notes of Federal Mortgage Bank of Nigeria (FMBN) SPV Issuer Limited, issued under the N100,000,000,000 Residential Mortgage Backed Securities Programme by way of introduction. The instrument is 100 per cent irrevocably and Unconditionally Guaranteed by the Federal Government of Nigeria. Also, Exchanged listed an additional 252,104,285 ordinary shares of Studio Press Nigeria Plc following the conclusion of its Special Placing with Federated Resources Nigeria Limited.

IFC Investment in Ecobank

Also, last week, the Ecobank Transnational Incorporated (ETI) notified the NSE that following the signing of share subscription agreements in July 2012, International Finance Corporation(IFC) invested $100 million by way of common equity in the bank.

According to ETI, the investment was made through IFC’s managed Funds: the IFC Capitalisation (Equity Fund) L.P, the Africa Capitalisation Fund Limited and the IFC ALAC Holding Company II. ETI said it has therefore issued 1.250 billion shares at the agreed price of eight US cents per share.

Decline in NSE Income

Inability of the Nigerian Stock Exchange (NSE) to revive the primary issue market is telling on its income as the NSE recorded a deficit of N358.705 million in its 2011 financial year, compared to a surplus of N357.948 million recorded in 2010.

The NSE earns the bulk of its income from fees received from companies wishing to raise funds by offering new shares to investors. The Exchange charges per each share depending on the price the shares are selling at. But since the global financial crisis of 2008, which resulted to stock market crash around the world, the Initial Public Offering (IPO) market has remained dormant.

This has affected its income. According to the NSE’s financial statement for the year ended, December 31, 2011, the exchange recorded significant decline in its top and bottom lines. Besides, its income was also eroded by rising staff costs and operating expenses.

The exchange recorded gross fees of N3.167 billion, dropping by 21.04 per cent from N4.011 billion recorded in 2010. Its share of profit from associated company rose to N467.202 million from N445.133 million recorded in 2010, while it posted other income of N351.175 million, up from N344.688 million in 2010.

Staff costs rose by 27.33 per cent to N1.724 billion from N1.354 billion recorded in 2010, while its operating expenses dipped significantly by 43.27 per cent to N1.129 billion, from N1.99 billion in 2010.

A breakdown of the staff costs showed that N1.216 billion was paid to a total of 238 staff members as salaries and allowances; pensions and gratuity gulped N102.227 million, medical expenses stood at N37.876 million. However, N367.913 million paid during the year was paid to the Lagos State Internal Revenue Service (LSIRS) from back tax audits.