Equities Market Defies Negative Economic Data to Close Week Firmer

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WEEKLY REPORT

By Goddy Egene and Nosa Alekhuogie

The Nigerian equities market closed firmer last week despite the disappointing second quarter (Q2) economic data released by the National Bureau of Statistics (NBS). The Q2 data showed negative gross domestic (GDP) growth, rising unemployment rate, higher inflation rate, and declining capital importation, indices that ought to dampened investors’ sentiments and depress stock market performance.

However, investors took a longer term view beyond the negative economic data. Consequently, the market closed the week higher with the Nigerian Stock Exchange (NSE) All-Share Index , rising by 1.11 per cent to be at 27,756.67. Market capitalisation added N106.6 billion to be at N9.5 trillion.
Similarly, all other Indices finished higher during the week, with the exception of the NSE Industrial Goods index that declined by 0.24 per cent while the NSE ASeM Index closed flat.
But the positive performance was majorly driven by Dangote Cement Plc as investors reacted to management’s announcement of an upward adjustment in the ex-factory price of its 50kg cement, and an acceleration in the installation of coal mills and mining initiative.

Daily Performance Summary
Trading at the stock market resumed on a negative note last Monday as the NSE ASI depreciated by 0.30 per cent to close at 27,368.41 on the back of losses suffered by Nigerian Breweries, FBN Holdings, Guaranty Trust Bank Plc, NASCON Allied Industries Plc and Transcorp. The total value of stocks traded on the first day of the week was N711.12 million , down by 80.79 per cent from N3.70 billion recorded the previous trading day. The total volume of stocks traded was 83.83 million in 2,279 deals. The three most actively traded stocks were: FBN Holdings (11.65 million), FCMB Group (8.83 million) and Zenith Bank (7.83 million). The most actively traded sectors were: Financial Services (70.40 million shares), Conglomerates (6.45 million shares) and Consumer Goods (3.14 million shares).

The market rebounded on Tuesday to shake off the bearish start on Monday as the benchmark index gained 0.46 per cent to close at 27,493.12 on bargain hunting and news that some foreign investments will enter the Nigerian financial market. Bargain hunting in Dangote Cement (+1.2 per cent), Nigerian Breweries Plc (+1.3 per cent), Seven-Up (+9.4 per cent) and Guaranty Trust Bank (+0.6 per cent) largely buoyed the performance. Also, overall market performance and activity level improved significantly as volume and value traded jumped 174.5 per cent and 285.5 per cent to 230.1 million units and N2.7 billion respectively whilst total deals transacted increased to 3,536 from the previous day’s 2,279.

Performance across sectors was mixed as the Consumer and Industrial Goods indices appreciated 0.7 per cent and 0.6 per cent respectively on the back of uptrend in Dangote Cement, Nigerian Breweries and Seven-Up just as t the Insurance index rose 0.1 per cent following gains in Custodian and Continental Reinsurance Plc.
Conversely, the Banking index declined 0.5 per cent as Zenith Bank and United Bank for Africa trended southwards, while sell-offs in Oando Plc and Conoil Plc dragged down the Oil & Gas Index by 0.6 per cent.

The market sustained is positive momentum on Wednesday despite the announcement of negative macroeconomic data. In line with expectation, economic output declined for the second consecutive quarter as GDP contracted further by 2.1 per cent in Q2:2016 from 0.4 per cent in Q1:2016, thus confirming the economy to be in a recession. The performance for the period was dragged by activities in both the oil and non-oil GDP which contracted 17.5 per cent and 0.4 per cent respectively. Inflation for the month of July hit 17.01 per cent, up from 16.48 per cent in June.

Again, the market surged by 3.0 per cent to complete three consecutive days of gains
The index closed at 28,419.92 while market capitalsiation garnered N281.9 billion to hit N9.8 trillion. However, the performance was influenced by Dangote Cement Plc after management guided to an increase in ex-factory price of cement in Nigeria (its largest market) as well as accelerated installation of coal mills to prune cost of production. Ex-Dangote Cement, the benchmark index would have appreciated 0.4 per cent. Although the index appreciated, broader market performance, activity level however waned as volume and value traded fell 12.7 per cent and 56.6 per cent respectively to settle at 229.2 million units and N2.1 billion.
After three days of appreciation, the market fell on Friday as profit taking. Consequently, the ASI declined by 2.33 per cent to close at 27,756.67. The major drivers of the performance were Dangote Cement, Flour Mills of Nigeria Plc, Lafarge Africa Plc, Zenith Bank Plc and Oando Plc.

Market turnover
Meanwhile, the market recorded a turnover of 1.115 billion shares worth N13.817 billion in 16,083 deals in contrast to a total of 1.124 billion shares valued at N13.839 billion that exchanged hands the previous week in 15,625 deals.
The Financial Services Industry led the activity chart with 993.823 million shares valued at N7.279 billion traded in 10,135 deals, thus contributing 89.11 per cent and 52.68 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 48.047 million shares worth N4.365 billion in 2,682 deals. The third place was occupied by the Conglomerates Industry with a turnover of 31.648 million shares worth N109.579 million in 487 deals.
Trading in the top three equities namely – Guaranty Trust Bank Plc, United Bank for Africa Plc and Diamond Bank Plc, accounted for 394.511 million shares worth N4.397 billion in 3,142 deals, contributing 35.37 per cent and 31.82 per cent to the total equity turnover volume and value respectively.

During the review week, a total of 29,242 units of Exchange Traded Products (ETPs) valued at N283,495.57 were also executed in 42 deals, compared with a total of 16,397 units valued at N1.961 million transacted the previous week.
Similarly, a total of 4,470 units of Federal Government Bonds valued at N4.313 million were traded in eight deals compared to a total of 1,650 units of Federal Government Bonds valued at N1.690 million transacted a week ago in three deals.

Gainers and losers
A total of 28 equities appreciated in price during the week, higher than 27 equities of the previous week. Thirty-one (31) equities depreciated in price, higher than 25 equities of the previous week, while 121 equities remained unchanged lower than the 128 equities recorded in the preceding week.

Seven-Up Bottling Company Plc led the price gainers, rising by 28.2 per cent, trailed by Wema Bank Plc with 17.1 per cent, just as Seplat advanced by 15.8 per cent. Presco Plc and Skye Bank Plc appreciated by 11.8 per cent and 8.4 per cent respectively.
Other top price gainers included: NPF MicrofinanceBank Plc (8.4 per cent); FCMB Group (6.4 per cent); AIICO Insurance Plc (6.4 per cent); Mobil Oil Plc (5.0 per cent) and FBN Holdings Plc (4.9 per cent).

On the negative side, May & Baker Nigeria Plc led the price losers, shedding 19.8 per cent, trailed by Unity Bank Plc with 10.7 per cent. Julius Berger Nigeria Plc went down by 9.7 per cent, while Cutix Plc shed 9.0 per cent. Caverton declined by 8.9 per cent just as African Prudential Registrars Plc and N.E.M Insurance Plc lost 8.3 per cent and 7.7 per cent in that order. Other top price losers were: Fidelity Bank Plc (5.1 per cent); Conoil Plc (4.9 per cent) and Oando Plc (4.8 per cent).