By Goddy Egene and Nosa Alekhuogie
The stock market closed in the red last week pulling back from four weeks of positive performance. The Nigerian Stock Exchange (NSE) All-Share Index went down by 1.77 per cent to close at 27,835.22 compared with a growth of 2.7 per cent the previous week.
Market analysts at Cordros Capital said they were not surprised at the negative close last week following broad-based profit-taking after gains which were not supported by a significant positive catalyst. According to them, the macroeconomic landscape remains strained while unimpressive earnings continued to hit the market. Besides the NSE ASI that declined, the volume and value of trading also declined. The market capitalisation also shed N172.5 billion to close at N9.561 trillion. Similarly, all other Indices finished lower during the week with the exception of the NSE ASeM Index that closed flat. The NSE Industrial Goods recorded the highest decline of 5.3 per cent on the back of price declines in Lafarge Africa Plc (-13.87 per cent) and Ashaka Cement Plc (-7.62 per cent).
Sell-offs in Zenith Bank Plc(-6.44 per cent), Access Bank Plc (-2.70 per cent), GTBank (-2.29 per cent), and FBN Holdings Plc (-1.90 per cent), dragged both the NSE Banking (-2.88 per cent). Similarly, PZ (-9.95 per cent) , whose first quarter (Q1) earnings failed to impress investors, Guinness Nigeria (-9.74 per cent), Nigerian Breweries (-2.80 per cent) and Nestle Nigeria Plc led to a decline of 2.69 per cent in the NSE Consumer Goods Index. Also, the NSE Oil & Gas Index closed the week 1.16 per cent lower.
Daily Market Performance Summary
Trading at the stock market resumed last Tuesday as Monday was declared a public holiday to mark the 56th independence anniversary of Nigeria. However, the market opened on a bearish note with the NSE ASI depreciating by 0.20 per cent to close at 28,277.93. The depreciation recorded in the share prices of United Bank for Africa, Nigerian Breweries Plc Access Bank Plc , Nestle Nigeria Plc and FBN Holdings Plc were responsible for the decline in the NSE ASI.
Apart from the decline in the benchmark index, the total value of stocks traded on the first trading day also went down to N1.32 billion shares, from N2.39 billion the previous trading day. The total volume of stocks traded was 198.10 million shares exchanged in 2,806 deals. The three most actively traded stocks were: Access Bank (41.09 million shares), FCMB (37.66 million shares) and UBA (23.92 million shares).
Performance across sectors was mixed on Tuesday as the NSE Banking Index advanced 1.4 per cent on the back of buying interest in Guaranty Trust Bank Plc (+4.1 per cent) and Zenith Bank Plc (+2.4 per cent). Similarly, the NSE Oil & Gas Index gained 0.1 per cent boosted by appreciation in the shares of Oando Plc(+1.3 per cent).
Conversely, the NSE Consumer Goods Index fell by 1.7 per cent as losses in Nigerian Breweries Plc (-2.8 per cent) and Nestle Nigeria Plc (-1.2 per cent) impacted sector performance. The NSE Insurance Index declined marginally by 0.1 per cent.
The bears sustained their hold on the market on Wednesday, pushing the NSE ASI down by 1.0 per cent to close at 28,009.40. Market capitalisation also decreased N94.3 billion to settle at N9.6 trillion. The negative performance was influenced by sell pressures on Dangote Cement Plc(-1.1 per cent),GTBank (-3.6 per cent), Zenith Bank (-3.7 per cent) and Forte Oil Plc (-4.5 per cent).
Analysis of the sectoral performance indicated that all sector indices close in red except the insurance index that rose by0.7 per cent on account of gains in AIICO Insurance (+1.2 per cent).
The NSE Banking Index contracted the most, shedding 2.3 per cent following depreciation in GTBank(-3.6 per cent) and Zenith Bank (-3.7 per cent). The NSE Oil & Gas Index followed closely with a fall of 1.4 per cent as Forte Oil and Conoil Plc shed 4.5 per cent and 0.3 per cent in that order.
The total value of stocks traded on the second day rose by 11.7 per cent to N1.47 billion, from N1.32 billion recorded the previous day.
The most actively traded sectors were: Financial Services (162.13 million shares), Conglomerates (7.85 million shares) and Consumer Goods (6.50 million shares).
However, the market rebounded on Thursday, appreciating by 0.08 per cent. The NSE ASI closed higher at 28,031.90, while market capitalisation added N7.7 billion to be at N9.6 trillion. Gains in Dangote Cement Plc (+1.1 per cent), UBA Plc (+3.0 per cent) and Seven-Up Bottling Company Plc (+4.3 per cent) bolstered the rebound.
The NSE Consumer Goods Index emerged the lone price gainer, rising by 0.4 per cent on account of gains in Seven-Up and Flour Mills Nigeria Plc. Despite positive sentiment in Dangote Cement, the NSE Industrial Goods Index contracted the most, losing 3.1 per cent. The NSE Insurance Index followed, declining 0.4 per cent as Continental Reinsurance Plc and AIICO Insurance shed 4.8 per cent and 1.6 per cent respectively.
The NSE Banking Index and NSE Oil & Gas indices shed 0.3 per cent and 0.1 per cent in that order as losses in Ecobank Transnational Incorporated (-2.3 per cent), FCMB (-1.7 per cent), Oando (-5.0 per cent) and Total Nigeria (-2.7 per cent) impacted both indices.
The market could not sustain the rebound recorded the previous day as the NSE ASI depreciated by 0.70 per cent to close lower at 27,835.22, while market capitalisation declined to N9.56 trillion. The depreciation recorded in the share prices of Guinness, Lafarge Africa, Zenith Bank, Nestle and GTBank were responsible for the decline on the last day of the week. The total value of stocks traded on was N921.57 million shares staked on 200.84 million shares in 3,048 deals.
Meanwhile, total volume traded fell by 27.35 per cent to 934.90 million shares, worth N6.36 billion and traded in 12,352 deals, compared to the 1.29 billion shares, valued at N9.30 billion that exchanged hands in 15,258 deals the previous week.
The financial services industry led the activity chart with 817.195 million shares valued at N4.081 billion traded in 7,268 deals, thus contributing 87.41 per cent and 64.19 per cent to the total equity turnover volume and value respectively. The conglomerates industry followed with 46.366 million shares worth N86.730 million in 514 deals. The third place was occupied by the oil and gas industry with a turnover of 21.539 million shares worth N465.820 million in 1,310 deals.
Trading in the top three equities– Access Bank Plc, Diamond Bank Plc and FCMB Group Plc-accounted for 364.682 million shares worth N1.074 billion in 1,359 deals, contributing 39.01 per cent and 16.90 per cent to the total equity turnover volume and value respectively. Also traded during the week were a total of 184 units of Exchange Traded Products (ETPs) valued at N2,077.37 executed in 16 deals, compared with a total of 4.761 million units valued at N25.821 million transacted the previous week in 45 deals. Similarly, a total of 580 units of Federal Government Bonds valued at N576, 723.03 were traded in two deals compared to a total of 2,023 units of Federal Government Bonds valued at N1.925 million transacted the preceding week in four deals.
Also traded during the week were a total of 4.761 million units of Exchange Traded Products (ETPs) valued at N25.821 million executed in 45 deals, compared with a total of 615 units valued at N6,070.20 transacted a week earlier in 21 deals. Similarly, total of 2,023 units of Federal Government Bonds valued at N1.925 million were traded in four deals compared to a total of 3,994 units of Federal Government Bonds valued at N3.263 million transacted two weeks ago in five deals.
Gainers and Losers
In terms of price movement, 22 equities appreciated in price last week, lower than 35 equities of the previous week. A total of 35 equities depreciated in price, 32 equities of the previous week, while 123 equities remained unchanged higher than one hundred and 113 equities recorded in the preceding week. Seven-Up Bottling Company Plc led the price gainers with 13.6 per cent, followed by FCMB Group Plc with 8.4 per cent, just as Champion Breweries Plc gained 8.3 per cent. United Capital Plc garnered 7.2 per cent, while Fidelity Bank Plc went up by 6.8 per cent.
Other top price gainers include: AIICO Insurance Plc (6.5 per cent); Diamond Bank Plc (5.8 per cent); Union Bank of Nigeria Plc (5.7 per cent);Okomu Oil Palm Plc (5.5 per cent)and Transcorp Hotel Plc (4.9 per cent).
Conversely, Lafarge Africa Plc led the price losers, shedding 13.8 per cent to close at N54.80 per share. Wema Bank Plc followed with a decline of 12.5 per cent, while Caverton Offshore Support Group Plc went down by 11.8 per cent among others.
Causes, Cures for Inequality Lie in Policies, Say Experts
Inequality within countries is on the rise and policymakers can combat the economic, social, and political impact with a mixture of tax policy, income transfers, and education—which is often difficult to achieve.
In a seminar on inequality, globalisation and technology during the just concluded IMF-World Bank annual meetings in Washington, D.C, panelists agreed that globalisation has brought huge gains across countries, lifting millions out of poverty. Countries now must meet the challenge of putting their own houses in order, as incomes stagnate and social mobility—the ability to move up the income ladder—dissipates.
“The big differences between countries has nothing to do with globalisation, but with the use and misuse of domestic policy,” Deputy Prime Minister of Singapore and Minister for Economic and Social Policies, Tharman Shanmugaratnam, said.
“What makes inequality toxic is the combination of stagnation of incomes, and the fact that [people’s] children seem to be trapped in the same position,” he said.
While inequality between countries has declined over the past 20 years, inequality within countries is on the rise.
What economists call pre-distribution policies—education, access to health care, and financial inclusion—can provide equality of opportunity and help level the playing field.
“In Colombia, what we have found is the most effective, and produces the most significant impact on distribution, but also take the longest to mature, are policies targeted to early childhood programs to make sure kids have identical opportunity,” Finance Minister of Colombia, Mauricio Cárdenas said.
Cardenas also said that redistribution is a “must” to address inequality.
Redistribution policies, such as taxes and programs that transfer benefits, address inequality and do not hurt growth. IMF research had shown that there is little evidence that countries’ redistribution policies hinder growth, unless they were extreme. The IMF also advised governments on the trade-offs between efficiency and equity when it comes to a country’s choices for the right mixture of policies to address inequality.
Technology has changed and disrupted work and employment, with gains in wages in the top incomes and the erosion of middle-income jobs.
“That means machines are replacing brawn, and replacing brains,” a professor at the Haas School of Business at the University of California, Berkeley, Laura Tyson said.
In response, countries need policies that “train people over a lifetime and give them the tools and the capabilities to complement the technology, rather than being substituted out by the technology.”
In a press conference during the annual meetings, IMF Managing Director Christine Lagarde said the world needs inclusive globalisation—one that actually benefits all players, not one that only reduces inequality between countries, but one that also allocates fairly within countries and pays attention to those that are at risk of losing out.
“We still think countries benefit from globalisation,” Deputy Managing Director of the IMF, Tao Zhang.
“But we have to pay more attention to those left behind.” Advanced economies are seeing the effects of inequality play out in the social and political arenas. Many people in the United States are not satisfied with the income inequality gap, and also the social mobility gap,” a financier and founder of The Carlyle Group, a private equity investment company based in Washington, D.C, David Rubenstein said.
“Increasingly, people in our society feel they can’t get to the top, and that may be a bigger problem than income inequality.”
The lack of mobility has political repercussions, as people fail to advance and look to globalization, trade, and immigration as the source of their struggle.
“We may not have social unrest in the United States right now, but we clearly are having deep, deep divisions about what is fair, and what can be done to make the outcome more even, and that is tied in many circles with an anti-immigration and anti-trade perspective,” said Tyson.
With advanced economies now confronting rising inequality, the debate about what countries should do has become global.
“The downside is that the reaction of the advanced economies to inequality is building walls,” said Cardenas. “Making sure that we solve the problems of inequality [in the United States] by ensuring there is no immigration, or through protectionism—all of that just makes things worse for a region like Latin America.”