Stock Market Defies Sell Pressure to End 2012 Higher

31 Dec 2012

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Arunmah Oteh, DG, SEC

By Goddy Egene and Eromosele Abiodun
The Nigerian equities market defied its historical Christmas period lull last week to attain its highest peak in 2012, as investors relied on sound 2013 economic outlook to take position for possible gains in the new- year.

After about three weeks of consistent gains, the market had the previous week succumbed to profit-taking as most local investors rush to raise cash for the Christmas and New Year holidays.
Trading had resumed last Monday on a poor note. The Nigerian Stock Exchange(NSE) All-Share Index declined by 0.20 per cent, extending the losses of prior trading days.

Trading activities witnessed intense sell pressure across sectors on the exchange as local investors focused on raising cash for the yuletide. Trading closed at 12.30 pm on Monday in compliance with the Federal Government’s directive to observe December 24, 2012, the eve of Christmas as half day nationwide.

The stock market opened for three days as Tuesday and Wednesday were declared Public Holidays to celebrate the Christmas and Boxing Day.

However, at the resumption of trading last Thursday, the NSE benchmark Index gained 1.43 per cent as investors showed signs of optimism.

And at the close of business last Friday exchange's benchmark Index added 0.46 per cent following investors’ response to the positive economic outlooks.

As a result, most market indicators closed the week firmer led by the twin market gauge-the All-Share Index or ASI and the market capitalisation.

A review of trading results showed that the ASI appreciated by 1.69 per cent to close at 27,866.51, compared with a 1.02 per cent decline. Also, market capitalisation of the listed equities appreciated by 1.73 per cent to close at N8.907 trillion.

All but one of the sectorial indices appreciated: the NSE-30, the NSE Consumer Goods, the NSE Banking, the NSE Insurance, and NSE Lotus II appreciated by 1.41 per cent; 0.83 per cent; 0.41 per cent; 3.38 per cent; and 1.75 per cent; respectively. However, the NSE Oil/Gas index depreciated by 0.41 per cent.
Market Turnover
A further analysis of the trading results showed that investors sold a total of 571.077 million shares worth N5.246 billion in 7,579 deals in contrast to a total of 1.293 billion shares valued at N13.725 that exchanged hands the previous week in 20,499 deals.

The financial services sector was the most active during the week (measured by turnover volume) with 387.860 million shares worth N3.163 billion exchanged hands by investors in 4,454 deals

The volume of shares sold in the sector was largely driven by activity in the shares of UBA Plc, Zenith Bank Plc, FBN Holdings Plc and First City Monument Bank Plc. Trading in the shares of the four banks accounted for 202.626 million shares, representing 52.24 per cent and 35.48 per cent of the sector turnover and total turnover traded during the week respectively. The conglomerates sector boosted by activity in the shares of Transnational Corporation of Nigeria Plc followed on the week’s activity chart with a turnover of 94.154 million shares valued at N107.592 million in 271 deals.

The consumer goods sector (measured by turnover volume) was third with 35.693 million shares valued at N1.494 billion traded in 1,578 deals. The top three sectors accounted for 517.708 million shares valued at N4.765 billion traded in 6,303 deals, thus accounting for 83.16 per cent, 90.65 per cent and 90.82 per cent, of the volume, value and number of deals respectively.

Also traded during the week were 213 units of NewGold Exchange Traded Funds (ETFs) valued at N539.090 million exchanged hands in 2 deals in contrast to a total of 638 units valued at N1.636 million transacted last week in 4 deals. There were no transactions through the stock market in the FGN Bonds, State/Local Government Bonds and Corporate Bonds/Debentures sectors.

Gainers and Losers
A review of the equity price movements for the week indicated that 31 equities gained while 21 equities recorded price declines and prices of 143 equities remained constant. When compared with the preceding week, 40 equities gained while 35 equities recorded price declines and prices of 120 equities remained constant. The top 10 gainers for the week included: Guinness Nigeria Plc (N11.12), Dangote Cement Plc (N6.10), Okomu Oil Palm Plc (N3.89), Lafarge WAPCO Plc (N1.35), National Salt Company of Nigeria Plc (N0.96), UACN Property Development Company Plc (N0.80), Nigerian Breweries Plc (N0.70), Zenith Bank Plc (N0.43), Ecobank Transnational Incorporated (N0.38) and B.O.C. Gases Plc (N0.29).

Conversely, the top 10 losers included: Guaranty Trust Bank Plc (N0.35), Oando Plc (N0.23), Portland Paints & Products Plc (N0.21), Presco Plc (N0.20), John Holt Plc (N0.17), Trans-Nationwide Express Plc (N0.14), UBA Plc and FBN Holdings Plc (N0.11), May & Baker Plc (N0.07 ) and Nestle Nigeria Plc (N0.06).

Analysts View

While reviewing the market, analysts stressed that the weeks ahead might be rosy for investors in the equities market as some local and foreign institutional investors are still taking strategic positions in selected stocks on the local bourse.

“These two categories of investors are believed to be equipped with technical analysis of selected stocks. This may have informed their recent buying actions on the stocks. However, the retail investors are participating in the market via increased exposures to mutual funds considered to be a proactive measure of mitigating risks.

“Investors have indeed returned with position taking in the market. Arguably, stocks’ prices are usually low in December due to the cashing out spree of mostly the retail investors. Nonetheless, market activities have been on a consistent rise except for a short snap witnessed for few trading days. The country’s favourable macro-economic statistics continue to woo discerning investors as they remain steadfast with their buy action, “said analysts at BGL Securities Limited.
SEC’s Budget
Meanwhile, capital market operators under the aegis of Association of Stockbroking Houses of Nigeria (ASHON) last week stated that the decision of the National Assembly to pass the 2013 appropriation bill without allocating funds to the Securities and Exchange Commission (SEC) was a big threat capital market recovery and the development of the economy in general.

While passing the N4.987 trillion 2013 budget, the House of Representatives decided to withhold funding for the commission over following its earlier decision not to have anything to do with the apex regulator until its director-general, Ms. Arunma Oteh, is removed.
However, speaking on the development on behalf of other members, Chairman of ASHON, Mr. Emeka Madubuike, said the issue should be resolved so as to avoid jeopardising the entire economy
Madubuike, who said starving SEC of funds, meant incapacitating the apex regulator of the Nigerian capital market, therefore called for a dialogue between the National Assembly and Executive to amicable resolve the issue.

“The issues the National Assembly is talking about should be resolved with the Executive. We believe they are issues that could be resolved in the interest of the capital market in particular and economy in general,” he said.

According to him, institutions should be built and not individuals.
He noted that SEC was one of such critical institution that must be built.
His words: “If this issue is not resolved as soon as possible, we will have a situation where the capital market does not have a regulator. The clause in that bill is very strong and it means SEC cannot even move and nothing can happen. And this will not be in the interest of the market. For us as market operators, we believe that this issue should be resolved very quickly one way or the other.

Tags: Nigeria, Featured, Business, Arunmah Oteh

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