Stock Market Defies Brexit Shock to Close Firmer

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WEEKLY REPORT

By Goddy Egene and Eromosele Abiodun

Investors in the Nigerian equities market again smiled home last week as the market maintained its positive run steadying the year-to-date (YTD) return at 7.01 per cent.

This was despite the massive profit-taking in addition to the Britain’s decision to leave the European Union (EU), a decision that rattled stock markets around the globe.

At the close of trades for the week, the Nigerian Stock Exchange (NSE) All-Share Index and market capitalisation appreciated by 4.79 per cent to close the week at 30,649.66 and N10.527 trillion respectively.

Similarly, all other Indices finished higher during the week, with the exception of the NSE ASeM Index that closed flat.

The previous week, the equities market had soared by a massive 7.4 per cent in just three days, taking the year-to-date (YTD) gain to 2.1 per cent.

The market had returned northwards after the Governor of the Central Bank, Godwin Emefiele, announced the central bank’s new flexible foreign exchange policy.

Meanwhile, traders believe the recent shift to a flexible exchange rate regime will help sustain the positive momentum going forward.

“Going into the coming week, we see the downtrend in the index today as an entry opportunity for investors given our expectation of continued support to market performance by the recent shift to a flexible exchange rate regime. While the 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 the monetary and fiscal policies of the government. As such, we advise investors with a medium to longer term horizon to gradually build positions in quality names, “said analysts at Investment One Limited.

Daily Performance Summary

The market had last Monday, the day the CBN floated the local currency, bowed down to profit taking. The NSE-ASI fell 1.63 per cent to close at 28,769.90 points driven by sell offs in bellwether stocks. With the exception of the oil and gas sector, which rose 0.55 per cent on the back of gains in Total Nigeria Plc (3.99 per cent) and Forte Oil Plc (2.00 per cent), all other major sectors closed in the red. The Banking sector lost 2.61 per cent while Consumer Goods and Industrial shed 1.65 per cent and 1.22 per cent respectively. Investor sentiment as measured by the market breadth index was negative on the day having been positive in the previous five sessions.  Market activity contracted as investors exchanged 417 million units of shares worth N2.25 billion. That represented a decline of 34 per cent and 67 per cent respectively on last week’s close. The Banking sector, led by the N383 million and N286 million worth of shares exchanged in UBA Plc and FBN Holdings Plc, represented 70 per cent of total value.

The NSE All-Share Index recorded the highest points in the year 2016 on Tuesday. This appreciation followed the implementation of the flexible exchange rate. The NSE ASI gained 2.27 per cent to close at 29,422.71 points compared with a depreciation of 1.63 per cent recorded the previous day. The appreciation recorded in the share prices of Dangote Cement Plc, Access Bank Plc, Zenith Bank Plc, UBA Plc and Guaranty Trust Bank Plc were mainly responsible for the gain recorded in the index. Similarly, the market capitalisation appreciated by 2.27 per cent to close at N10.11 trillion, compared with the depreciation of 1.63 per cent recorded the prior day to close at N9.88 trillion.

Investor sentiment remained positive on Wednesday as market gained another 2.40 per cent pushing the NSE ASI to a YTD high of 30,127.82 points. Similar to Tuesday, Wednesday’s session was largely driven by Dangote Cement Plc as well as Banking heavyweights; Zenith Bank Plc and Guaranty Trust Bank Plc offsetting the selloff in WAPCO Plc. Investors exchanged 542 million units of shares worth N7.93 billion representing a 17 per cent and 2 per cent rise in total value and volume respectively. Oil and Gas was the only major sector to close in the red on the day, falling0.34 per cent on the back of declines in Oando Plc (1.26 per cent) and Conoil Plc (4.07 per cent).  Banking was the best performer, gaining 2.92 per cent while Consumer Goods and Industrials were up 1.22 per cent and 0.78 per cent respectively. Mirroring the day’s close, Glaxo Smithkline Plc (10.16 per cent) was the best performer while Trans Nationwide Express Plc (9.09 per cent) was the worst performer.

The Nigerian Stock Exchange ASI advanced for the third consecutive day on Thursday as the index appreciated by 3.13 per cent to close at 31,071.25 points. Similarly, the market capitalisation appreciated by 3.13 per cent to close at N10.67 trillion, compared with the appreciation of 2.40 per cent recorded the previous day to close at N10.35 trillion. The appreciation recorded in the share prices of Dangote Cement Plc, Nigerian Breweries Plc, Zenith Bank Plc, Guinness Nigeria Plc and Guaranty Trust Bank Plc were mainly responsible for the gain recorded in the Index.

Profit taking on recent gains drove the NSE-ASI to a negative close last Friday, halting three consecutive days of bullish run. Consequently, the benchmark indicator lost 1.36 per cent to settle at 30,649.66 points, corresponding to market capitalisation of N10.53 trillion. Activity level closed lower as investors exchanged over 400 million units of stocks in 5,565 deals valued at N3.7 billion. This represented over 35 per cent decline in value turnover. Major sub-sector indices closed in the red. The banking (1.87 per cent), Consumer Goods (1.38 per cent), Industrial Goods (1.13 per cent) and the Oil & Gas (0.27 per cent) ended the session with loss. There were 22 gainers led by Glaxo Smithkline Plc (10.21 per cent) as against 30 losers led by FCMB Group (5.08 per cent).

 

Market Turnover

The market recorded a turnover of 2.387 billion shares worth N26.381 billion in 28,072 deals were traded by investors in contrast to a total of 2.158 billion shares valued at N20.394 billion that exchanged hands the previous week in 24,369 deals.

The financial services industry led the activity chart with 1.951 billion shares valued at N16.832 billion traded in 17,226 deals, thus contributing 81.75 per cent and 63.80 per cent to the total equity turnover volume and value respectively.

The conglomerates industry followed with 223.156 million shares worth N477.064 million in 1,461 deals. The third place was occupied by the consumer goods industry with a turnover of 91.705 million shares worth N6.253 billion in 4,433 deals.

Trading in the top three equities – United Bank for Africa Plc, Zenith Bank Plc and Guaranty Trust Bank Plc, accounted for 887.282 million shares worth N12.894 billion in 7,483 deals, contributing 37.17 per cent and 48.88 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 121,501 units of Exchange Traded Products (ETPs) valued at N90.716 million executed in 34 deals, compared with a total of 519,199 units valued at N6.582 million transacted the prior week in 42 deals.

A total of 9,439 units of Federal Government Bonds valued at N10.429 million were traded in 7 deals compared to a total of 4,170 units of Federal Government Bonds valued at N4.413 million transacted the previous week in three deals.

 

Gainers and losers

Meanwhile, the price movement chart of the NSE displayed a total of 40 equities that appreciated, lower than 44 equities of the previous week. Thirty-two equities depreciated in price, higher than 24 equities of the previous week, while 108 equities remained unchanged lower than 112 equities recorded in the preceding week.

The top 10 gainers were: Glaxo Smithkline Plc (N7.90), Champion Breweries Plc (N1.53), Transcorp Plc (48 kobo), Neimeth Plc (24 kobo), Fidson Healthcare Plc (32 kobo), AXA Mansard Insurance Plc (36 kobo), Law Union and Rock Insurance Plc (8 kobo), Honeywell (28 kobo), AG Leventis Plc (14 kobo) and Custodian and Allied Insurance Plc (49 kobo).

On the other hand, the top 10 losers were: CAP Plc (N1.44), NEM Insurance Plc (15 kobo), Trans Nationwide Express Plc (16 kobo), CCNN Plc (55 kobo), DN Meyer (9 kobo) Vitafoam Plc (27 kobo), FBN Holdings Plc (25 kobo), Wema Bank Plc (4 kobo), Eterna Plc (13 kobo) and Deap Capital Management (2 kobo).