Stock Market Soars 7.40% on New FX Policy Sentiment 

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WEEKLY REPORT

By Goddy Egene and Eromosele Abiodun

Investors in the Nigerian equities market smiled home last week as the market soared by a record 7.4 per cent in just three days, taking the year-to-date (YTD) gain to 2.1 per cent.

The market had closed the first two trading days in the red. It shed 0.47 per cent on Monday and 0.26 per cent on Tuesday as investors awaited details of the forex policy.

However the market returned northwards after the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, announced details of the  flexible foreign exchange policy. Bullish sentiment subsequently dominated the bourse for the rest of the week.

Traders had some time to reflect on the governor’s speech, and concluded that the new policies would bring back the offshore portfolio community, hence the massive rally.

At the close of trades for the week, the Nigerian Stock Exchange (NSE) All-Share Index and market capitalisation appreciated by 7.40 per cent to close the week at 29,247.27 and N10.045 trillion respectively.

Similarly, all other Iindices finished higher during the week, with the exception of the NSE ASeM Index, that declined by 0.17 per cent.

The market had remained in negative territory the previous week on the back of massive drive by anxious investors to book profits.

Meanwhile, traders believe the introduction of a flexible foreign exchange regime is a positive catalyst capable of providing support for market performance.

“However, we highlight that there is potential for profit-taking. While macro situation may remain fragile in the immediate, we are positive over the medium to longer term given the recent traction we have seen in both monetary and fiscal policy of the government. As such, we advise investors with a medium to longer term horizon to gradually build position in quality names, “said analysts at Investment One Limited.

Daily Performance Summary

The market had opened the week in the red last Monday with the NSE ASI declining by 0.47 per cent to close at 27,103.31 points, corresponding to a market capitalisation of N9.31trillion. This outcome was influenced by bearish sentiments towards tickers in the Industrial Goods and Oil and gas space. In line with the bearish trend in the index, three of the four major sub-sector indices closed in the red. Industrial (2.05 per cent), Consumer Goods (0.72 per cent) and Oil & gas (0.48 per cent) ended the session negative. On the contrary, banking (0.76 per cent) was up buoyed by gains in the likes of Access Bank Plc (4.17 per cent), Diamond Bank Plc (5.66 per cent) and Fidelity Bank Plc (4.00 per cent). Investors exchanged over 152 million units of stocks valued at N2.29 billion. This represented over 20 per cent decline in volume turnover but a 40 per cent upsurge in value traded.  The bulk of the day’s trade came in through cross deal in Nestle Nigeria Plc stocks valued at N1.2 billion.

On Tuesday, sell-offs in the banking and consumer goods space dragged the NSE ASI to a negative close, shedding 0.26 per cent. Consequently, the benchmark indicator weakened by 69.26 points to settle at 27,034.05 points after a volatile session which saw the ASI rising as high as 27116.21 points during intraday. Volume of trades were up by 12 per cent as investors exchanged over 170 million units of stocks valued at N2.43 billion in 3,153 deals. The banking sector led by Guaranty Trust Bank Plc and FCMB Plc accounted for 71 per cent of total volume of trades, with both names recording  trades in excess of  33 million  and 14 million units. NEM stocks rallied by 5 per cent to lead the gainers’ chart while Glaxo Smithkline Plc’s stocks dipped by 9.72 per cent to top the laggards list.

The equity market appreciated on Wednesday on the news of the flexible exchange rate policy. The NSE ASI appreciated by 3.17 per cent to close at 27,891.96 points. The appreciation recorded in the share prices of Guaranty Trust Bank Plc, Guinness Nigeria Plc, Dangote Cement Plc, Nigerian Breweries Plc and Zenith Bank Plc were mainly responsible for the gain recorded in the index. Similarly, the market capitalisation appreciated by 3.17 per cent to close at N9.58 trillion, compared with the depreciation of 0.26 per cent recorded the previous day to close at N9.28 trillion. The total value of stocks traded on the floors of The NSE on the day was N3.48 billion, up by 43.29 per cent from N2.42 billion recorded the prior day.

The market remained buoyant on Thursday following the news of the flexible exchange rate policy announced the previous day. The NSE All Share Index appreciated by 2.14 per cent to close at 28,489.89 points. The appreciation recorded in the share prices of Guaranty Trust Bank Plc, FBN Holdings Plc, Dangote Cement Plc, Nigerian Breweries Plc and Zenith Bank Plc were mainly responsible for the gain recorded in the Index. Similarly, the market capitalisation appreciated by 2.14 per cent to close at N9.78 trillion, compared with the appreciation of 3.17 per cent recorded the previous day to close at N9.58 trillion.

The equity market maintained its upward trend at the close of business last Friday as the Nigerian Stock Exchange All Share Index appreciated by 2.66 per cent to close at 29,247.27 points. The appreciation recorded in the share prices of Guaranty Trust Bank Plc, FBN Holdings Plc, Dangote Cement Plc, Nigerian Breweries Plc and Guinness Nigeria Plc were mainly responsible for the gain recorded in the Index. Similarly, the market capitalisation appreciated by 2.66 per cent to close at N10.04 trillion, compared with the appreciation of 2.14 per cent recorded the previous day to close at N9.78 trillion. The total value of stocks traded on the floors of the NSE on the day was N6.79 billion, up by 25.52 per cent from N5.41 billion recorded the previous day.

Market Turnover

Meanwhile volume of trading soared by 125 per cent last week as investors traded 2.158 billion shares worth N20.394 billion in 24,369 deals, compared with 959.917 million shares valued at N7.871 billion that exchanged hands the prior week in 17,561 deals.

However, the Financial Services Industry remained the most traded leading with  1.939 billion shares valued at N12.393 billion traded in 16,023 deals; thus contributing 89.85 per cent and 60.77 per cent to the total equity turnover volume and value respectively.

The Consumer Goods Industry followed with 77.415 million shares worth N4.747 billion in 3,489 deals. The third place was occupied by the Conglomerates Industry with a turnover of 74.437 million shares worth N412.717 million in 1,018 deals.

United Bank For Africa Plc, FBN Holdings Plc and Zenith International Bank Plc accounted for 1.001 billion shares worth N6.778 billion in 7,153 deals, contributing 46.37 per cent and 33.23 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 519,199 units of Exchange Traded Products (ETPs) valued at N6.582 million executed in 42 deals, compared with a total of 78,666 units valued at N866,656.30 transacted the previous week in 25 deals.

A total of 4,170 units of Federal Government Bonds valued at N4.413 million were traded in 3 deals compared to a total of 4,725 units of Federal Government Bonds valued at N5.266 million transacted the prior week in 3 deals.

Gainers and Losers

In terms of price movement, a total of 44 equities appreciated in price during the week, higher than 27 equities of the previous week. Conversely, 24 equities depreciated in price, lower than 41 equities of the previous week, while 112 equities remained unchanged equal to that of the previous week.

The top 10 gainers were: Dangote Cement Plc (N18.81), Nigerian Breweries Plc (N17.86), Guaranty Trust Bank Plc (N2.73), Zenith Bank Plc (N1.65), Champion Breweries Plc (74 kobo), FBN Holdings Plc (60 kobo), UBA Plc (51 kobo), Diamond Bank (27 kobo),  Transcorp Plc (17 kobo) and NEM Insurance Plc (13 kobo),

On the other hand, the top 10 losers were: Lafarge Africa Plc (N5.01), Glaxo Smithkline Plc (N3.99), Fortis Microfinance Bank Plc (N2.57), Conoil Plc (N1.15), Berger Paints Plc (70 kobo) NAHCO Plc (45 kobo), University Press Plc (22 kobo), MCNichols (17 kobo), Trans Nationwide (8 kobo), Learn Africa Plc (four kobo).