Equities Market Rebounds on Q3 Earnings Expectations

WEEKLY REPORT

Bargain hunting took over trading at the stock last week as investors’ sentiments turned positive ahead of third quarter earnings season. Having shed 0.14 per cent the previous week, the market rebounded last week to completely reverse the previous week’s loss. Nigerian Stock Exchange (NSE) All-Share Index (ASI) appreciated by 2.49 per cent to close at 36, 320.93, market capitalisation added N285.3 billion to close higher at N12.502 trillion.

Market analysts linked the positive performance to investors’ moves to take position ahead of announcement of Q3 results. Apart from the benchmark gauge that gained, all other Indices finished higher during the week with the exception of NSE Insurance index that depreciated by 1.21% while the NSE ASeM Index closed flat.
According to analysts at Cordros Capital Limited, they expect performance in this week to be driven by investors taking position in fundamentally sound stocks ahead of Q3 earnings releases, and profit taking in large cap counters, following the gains recorded last week.
“Overall, the impact of bargain hunting will more than outweigh the snippets of profit taking,” they said.

Daily Market Performance
Trading opened for the week on a low note on Tuesday as there was no trading on Monday due to public holiday to market Nigeria’s 57th anniversary.
The benchmark index shed 0.38 per cent to close lower at 35,306.09, indicating persistent negative investors’ sentiments that enveloped the market the previous week.
A total of 22 stocks depreciated compared with 18 that appreciated. Unity Bank Plc led the price losers with 5.0 per cent, trailed by PZ Cussons Nigeria Plc and United Capital Plc with 4.9 per cent apiece.

PZ Cussons yesterday reported its first quarter results, where it recorded a loss of N123 million, an improvement on the N1.585 billion in the corresponding period of 2016.
Cadbury Nigeria Plc shed 4.8 per cent, just as Sterling Bank Plc, Glaxosmithkline Consumer Nigeria Plc and Jaiz Bank Plc went down by 4.7 per cent, 4.5 per cent and 4.2 per cent in that order.
On the positive side, C & I Leasing Plc recorded the highest price gain of 9.8 per cent, trailed by Learn Africa Plc with 6.7 per cent. Caverton and N.E.M Insurance Plc appreciated by 4.8 per cent and 4.3 per cent respectively. Union Bank of Nigeria Plc and Guinness Nigeria Plc added 3.9 per cent and 3.6 per cent respectively.
Union Bank is currently in the market raising about N50 billion from existing shareholders. The bank is offering 12.1 billion ordinary shares of 50 kobo at N4.10.
Meanwhile, the NSE Consumer Goods Index fell 0.9 per cent to lead the sectoral decliners due to the fall in the share prices of Nigerian Breweries Plc and PZ. Losses in Forte Oil Plc and Oando Plc dragged the NSE Oil & Gas Index 0.3 per cent.

The market recovered on Wednesday with the index, appreciating by 0.15 per cent to close at 35,358.57. Nine stocks advanced, while 18 depreciated. However, C & I Leasing Plc remained the top price gainer, garnering 9.5 per cent to close at N1.96 per share. The stock had the previous week led the price gainers, chalking up 28.3 per cent. It had last week with a growth of 9.8 per cent before garnering 9.5 per cent on Wednesday.
Market operators attributed the renewed demand for C & I Leasing to company’s prospects. The leasing firm reported a highly impressive results for the six months ended June 30, 2017 with revenue growing by 32.3 per cent, while profit after tax (PAT)soared by 298 per cent.

Meanwhile, NASCON Allied Industries Plc closed as the second highest price gainer with 4.9 per cent, followed by UACN Property Development Company Plc and Vitafoam Nigeria Plc chalked up 4.7 per cent apiece
Conversely, MRS Oil Nigeria Plc led the price losers with 4.9 per cent, trailed by Continental Reinsurance Plc with 4.6 per cent. Learn Africa Plc, Unity Bank Plc and Dangote Sugar Refinery Plc 3.8 per cent, 3.5 per cent and 3.3 per cent trailed in order.
Commenting on the market performance, analysts at Meristem Securities Limited said: “The gain recorded in the equities market can be attributed to investors taking advantage of the relatively low prices of the market heavyweights, which witnessed days of consecutive declines. We expect the current positive sentiments to linger in the coming days.”

When trading resumed on Thursday, the market extended its gains to the second day as bargain hunting in value stocks by investors continued. Thirty-one stocks added value compared with 14 others that shed value. Market analysts said the positive sentiments are being propelled by investors’ moves to position themselves ahead of the third quarter earnings season. Companies are expected to begin to announce their results for the Q3 ended September 30, 2017. The renewed demand for by investors, ahead of the Q3 earnings season further lifted the index by 1.17 per cent to close at 35,773.98. Similarly, the market capitalisation added N142.9 billion to close at N12.3 trillion. Also, volume of trading rose by 82.4 per cent as investors exchanged N317.4 million shares worth N2.9 billion.

The price gainers comprised many bellwether stocks. But Linkage Assurance Plc led the price gainers with 8.7 per cent, trailed by Presco Plc with 5.0 per cent, while Dangote Flour Nigeria Plc followed with 4.7 per cent. NPF Microfinance Bank Plc garnered 4.5 per cent, just as Caverton chalked up 4.3 per cent.
Other top price gainers included: Lafarge Africa Plc (4.0 per cent); Unity Bank Plc (3.6 per cent);DangoteCement Plc(2.3 per cent); Vitafoam Nigeria Plc(2.2 per cent); United Bank for Africa Plc (2.2 per cent) and Skye Bank Plc (1.9 per cent).
Conversely, Cadbury Nigeria Plc led the price loses with 5.0 per cent, trailed by MRS Oil Nigeria Plc and Continental Reinsurance Plc with 4.9 per cent respectively. Mobil Oil Nigeria Plc shed 4.8 per cent, just as Law Union & Rock Insurance Plc went down by 4.3 per cent. FCMB Bank Group Plc and Transcorp Plc depreciated by 3.7 per cent and 3.6 per cent in that order.

In terms of sectoral performance, the NSE Industrial Goods Index led gainers, with up 2.8 per cent as a result of appreciations in Dangote Cement (+2.4 per cent) and Lafarge Africa(+4.0 per cent). The NSE Banking Index followed with a growth of 0.8 per cent, while , upticks in Nigerian Breweries Plc (+1.2 per cent) lifted the NSE Consumers Goods Index by 0.5 per cent. Conversely, the NSE Insurance Index and NSE Oil & Gas Index appreciated by 0.4 per cent apiece.
The bulls consolidated their control of the market, lifted the index by 1.53 per cent, bringing the week-on-week gain to 2.49 per cent and year-to-date growth to 35.15 per cent.

Market Turnover
Meanwhile, investors traded 1.493 billion shares worth N15.107 billion in 14,549 deals, as against 1.326 billion shares valued at N14.086 billion that exchanged hands in 14,703 deals the previous week.
The Financial Services Industry remained the most active with 1.288 billion shares valued at N10.121 billion traded in 8,334 deals, thus contributing 86.30 per cent and 66.99 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 89.259 million shares worth N3.154 billion in 2,760 deals. The third place was occupied by Conglomerates Industry with a turnover of 49.361 million shares worth N113.737 million in 491 deals.
Also traded during the week were a total of 2,000 units of Exchange Traded Products (ETPs) value at N34,000.00 executed in one deal compared with a total of 274 units valued at N636,147.90 transacted in 18 deals two weeks ago.
Similarly, a total of 2,360 units of Federal Government Bonds valued at N2.029 million were traded in seven deals, compared with a total of 7,424 units valued at N6.689 million transacted in 18 weeks the previous week.

Price Gainers and Losers
In terms of price movement, 38 equities appreciated higher than 32 of theprevious week, while 26 equities depreciated in price, lower than 32 equities of the preceding week. C & I Leasing maintained the number one spot on the gainers table, advancing by 19.6 per cent.
Caverton trailed by 18.2 per cent, while Presco Plc appreciated by 15.2 per cent. Lafarge Africa Plc garnered 13.0 per cent, just as NAHCO Plc and United Bank for Africa Plc chalked up 10.0 per cent and 9.2 per cent respectively. Other top price gainers were: Linkage Assurance Plc (8.7 per cent); NPF MFB(7.2 per cent); Vitafoam Nigeria Plc (7.1 per cent) and Zenith Bank Plc (6.8 per cent).

Conversely, MRS Oil Nigeria Plc led the price losers’ chart with 14.1 per cent, trailed by Continental Reinsurance Plc with 12 per cent. PZ Cussons Nigeria Plc shed 9.4 per cent, while Unity Bank Plc and Cadbury Nigeria Plc went down by 8.3 per cent and 6.0 per cent respectively.

Other top losers were: Jaiz Bank Plc (5.7 per cent); CutixPlc(4.8 per cent); Sterling Bank Plc (4.7 per cent); Glaxosmithkline Consumer Nigeria Plc (4.5 per cent) and Law Union Rock Insurance Plc (4.3 per cent).