Stock Market Falls 8.6% in Five Weeks on Sustained Sell Pressure

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WEEKLY REPORT

A five-week  bear run at the stock market has pushed the year-to-date decline  of the  Nigerian Stock Exchange (NSE) All-Share Index (NSE ASI) to 10.8 per cent last Friday. The market, which   has been recording a free-fall,   shed 2.42 per cent last week and has dipped by 8.6 per cent in five weeks. Specifically, the NSE ASI closed at 25,537.54, while market capitalisation stood at N8.791trillion last Friday.

Decline in the shares of high-capped stocks across consumer goods, cement, oil & gas and banking sectors was responsible for the huge loss suffered last week.  The market has remained under pressure as domestic investors continued to seek safety in high yielding government treasuries while foreign institutional investor participation remains constrained by currency challenges and the weak macro indicators.

Analysts at Cordros Capital Limited said: “Having lost 8.6 per cent in five weeks, we expect some cherry-picking across the market, considering where stocks prices currently trade. That said, we reiterate that a sustainable recovery in equities will remain constrained by a subdued macro which has sent the local and foreign institutional investors (accounting for 80 per cent of total monthly trades) on sabbatical.”

Daily Market Performance   Summary

The bears sustained their strong grip on the stock market on Monday when trading resumed for the week. As a result, the  NSE ASI fell by 0.70 per cent to close at 25,986.81, while market capitalisation dipped below N9 trillion to N8.945 trillion. Year-to-date, the market has declined by 9.2 per cent on the continuing bearish trend in the past weeks.

Apart from the NSE ASI that fell, trading activities declined by 92 per cent and 57.6  in value and volume terms respectively. The total value of stocks traded was N1.12 billion, down by 57.64 per cent from N2.63 billion   recorded the previous trading day. Twenty-two stocks declined in value yesterday led by Forte Oil Plc. The oil stocks fell by 9.7 per cent to close at N10.18 per share. Honeywell Flour Mills Plc trailed with a depreciation of 5.0 per cent to be at 1.14 per share. Cadbury Nigeria Plc and NASCON Allied Industries Plc went down by 4.9 per cent in that order.

Oando Plc shed 4.8 per cent, just as   CAP Plc and Champion Breweries Plc  fell by 4.6 per cent apiece. Vitafoam Nigeria Plc and PZ Cussons Nigeria Plc lost 4.4 per cent and 4.3 per cent respectively.

On the other hand, May & Baker Nigeria Plc led the price gainers with 4.7 per cent to close N0.89 per share. WAPIC Insurance Plc appreciated by 4.0 per cent, just as Livestock Feeds Plc and Mansard Insurance Plc gained 2.5 per cent and 1.6 per cent respectively.

Market analysts at Meristem Securities Limited, said: “We attribute the day’s negative outing to continued investors’ apprehension towards the equities market, given the weak economic fundamentals. We expect the mix of profit taking and bargain hunting activities to determine the direction of market sentiments going forward.”

The   market maintained its downward trend on Tuesday with the NSE ASI depreciating by 0.50 per cent  to close at 25,857.06. The depreciation recorded in the share prices of Lafarge Africa, Zenith Bank, Oando, Transcorp and Dangote Cement was responsible for the loss posted on that day.

The total value of stocks traded on Tuesday was N905 million, by 18.9 per cent  from N1.12 billion  the previous day. The total volume of stocks traded was 189.72 million shares exchanged in 2,417 deals. The most actively traded sectors were: Financial Services (160.35 million shares), Oil & Gas (12.59 million shares) and Consumer Goods (9.09 million shares), while the three most actively traded stocks were: Standard Alliance Insurance (95 million shares), United Capital (11.33 million shares) and FBN Holdings (11.22 million shares).

The bears remained in control for the third day running, driving the NSE ASI further down by 0.79 per cent to close lower at 25,653.14. Similarly, market capitalisation closed lower at N8.83 trillion.

Bearish sentiment towards Nestle Nigeria Plc (-1.8 per cent), Guaranty Trust Bank Plc (-1.8 per cent), and Forte Oil Plc (-7.4 per cent) impacted market performance. However, activity level remained mixed as volume traded dipped 23.2 per cent to 145.7 million units while value traded rose 49.2 per cent to settle at N1.4 billion with total number of deals closing at 2,421.

 Performance across sectors was largely bearish as all indices closed in the red save for the NSE Industrial Goods Index which rose 0.08 per cent  on the back of gains in Lafarge Africa Plc (+0.2 per cent). The NSE Oil & Gas Index  fell by 1.8 per cent  pressured by sell-offs in Forte Oil Plc(-7.4 per cent) and Oando Plc (-4.9 per cent), emerged the top sector loser. Similarly, the NSE Banking Index went down by  1.2 per cent following  weak appetite for   GTBank Plc and  Zenith Bank  which  fell by 1.4 per cent and   1.8 per cent respectively. Also, the NSE Consumer Goods Index lost 0.9 per cent on account of losses in Nestle  (-1.8 per cent) and  Seven-Up Bottling Company Plc  (-9.7 per cent), while  the NSE  Insurance Index depreciated 0.3 per cent.

According to analysts at Afrinvest West Africa, performance of the equities market has been uninspiring in the past one month, with the broader index down 7.9 per cent within the period.

“This could be explained by investors’ pessimism regarding macroeconomic fundamentals (particularly foreign exchange market illiquidity), high discount rate and bearish forward earnings expectation. However, given the current downtrend, some stocks have fallen to attractive positions for bargain hunters and we see domestic investors taking advantage of these opportunities in sessions ahead,” they said.

Despite the expectations that domestic investors would take advantage of the attractive prices of stocks, the market extend bearish streak to fourth with the NSE  ASI down 0.21 per cent to close at 25,599.79. The market capitalisation shed N18.4 billion to close at N8.7 trillion.

The negative performance resulted from sell pressure on Nigerian Breweries (-0.6 per cent), Forte Oil (-5.0 per cent), Total (-4.8 per cent) and GTBank (-0.7 per cent).

Sector performance was mixed as two indices gained while three declined. The  NSE Insurance  Index rose by 0.5 per cent on  gains by Continental Reinsurance (+3.0 per cent),  and AIICO Insurance (+3.5 per cent). Similarly, the NSE Banking appreciated by 0.2 per cent on the back of gains in Ecobank Transnational Incorporated (+3.0 per cent) and Access Bank (+1.9 per cent).

Conversely,  the  NSE Oil & Gas Index led sector decliners, shedding 1.6 per cent on account of losses in Forte Oil(-5.0 per cent) and Total (-4.8 per cent) while the NSE Consumer Goods Index lost 0.3 per cent.  The NSE Industrial Goods Index went down by 0.2 per cent as  CAP Plc and Ashaka Cement Plc shed 5.0 per cent and 2.7 per cent in that order.

Market turnover

Reflecting on the low patronage in the market  823.547 million shares worth N5.444 billion in 11,634 deals were traded  last week, down from 2.847 billion shares valued at N7.420 billion that exchanged hands  the previous week. The Financial Services Industry remained the most traded  with 616.999 million shares valued at N2.667 billion traded in 6,142 deals; thus contributing 74.92 per cent and 49 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 47.741 million shares worth N43.735 million in 510 deals. The third place was occupied by the Consumer Goods Industry with a turnover of 42.674 million shares worth N1.735 billion in 2,112 deals.

 

 

Gainers and losers

Meanwhile, only 10equities appreciated in price last week 18 equities of the previous week, while 48 equities depreciated in price, higher than 36 equities of the previous week. May & Baker Nigeria Plc led the price gainers with 12.9 per cent, trailed by Access Bank Plc with 3.7 per cent. Dangote Sugar Refinery Plc rose by 3.6 per cent, while Union Bank of Nigeria Plc garnered 3.3 per cent. Continental Reinsurance Plc, AXA Mansard Index Plc and Mobil Oil Nigeria Plc appreciated by 2.9 per cent 2.7 per cent and 2.6 per cent in that order. Ecobank Transnational Incorporated Plc, National Aviation Handling Company Plc and UAC of Nigeria Plc grew by 2.0 per cent, 1.7 per cent and 0.51 per cent respectively.

On the contrary, Forte Oil Plc led the price losers with 20.8 per cent, trailed by Transcorp Plc with 18.6 per cent. Flour Mills of Nigeria Plc and Paints and Coatings Manufacturers Plc shed 14.3 per cent and 13.1 per cent in that order.