WEEKLY REPORT
Bearish sentiments dominated the Nigerian equities market last week contrary to expectations that the announcement of nine months earnings by companies would help to sustain the growth recorded the previous week.
The market had appreciated by 1.45 per cent the previous week following continuing bullish sentiments that firms would post improved nine months results.
Although companies began to announce their results last week showing some level of growth, bearish sentiments dominated the market indicating that investors are yet to react positively to numbers being released by the listed firms.
Consequently, the Nigerian Stock Exchange (NSE) All-Share Index NSE ASI and market capitalisation fell by 0.71 per cent to close the week at 36,587.31and N12.594 trillion respectively. Similarly, all other Indices finished lower during the week with the exception of the NSE Banking and NSE Pension Indices that appreciated by 0.03 per cent and 0.02 per cent.
During the week, Zenith Bank, UBA, Dangote Cement, Cement Company of Nigeria and Wema Bank released their nine months results which showed both top and bottom line growth in the period. But conversely, Guaranty Trust Bank and Forte Oil recorded a decline in top-line but growth in bottom-line.
According to the analysts at Meristem Securities Limited, the banking sector remained the key driver of market activities making substantial contributions to the market volume and turnover. “We attribute this to sustained bullish investor sentiments towards the sector and the expectations of impressive nine months 2017 results. On the flip side, the sell pressures on the market’s most capitalised stocks dragged the bourse to a negative close. In the coming week, we expect bullish sentiments to prevail in the market as companies continue to release their financial scorecards,†they said.
Daily Market Performance
Still in the bullish mood, the market resumed for the week on a positive note on Monday as the NSE ASI appreciated by 0.33 per cent to close at 36,970.81.Gains recorded in the share prices of Zenith Bank, Ecobank Transnational Incorporated(ETI), Dangote Cement, Stanbic IBTC Holdings, and Dangote Sugar were the main catalysts. In terms of turnover on the first day of the week, investors traded 214.95 million shares worth N2.74 billion in 4,262 deals.
The three most actively sectors were: Financial Services (156.20 million shares), Conglomerates (31.43 million shares), and Consumer Goods (10.80 million shares), while the most actively traded stocks included: (30.99 million shares), UBA (25.46 million shares) and GT Bank (23.30 million shares).
Most sector indices closed positively with the NSE Banking Index recording 1.0 per cent following gains recorded by Zenith Bank Plc and ETI among others.
Similarly, the NSE Insurance Index recorded a modest gain of 0.2 per cent due to uptick in AXA Mansard and AIICO Insurance. The NSE Oil & Gas Index closed flat, while the NSE Consumer Goods Index fell as a result of loss by Nigerian Breweries Plc that shed 1.1 per cent.
However, the growth recorded on Monday could not be sustained on Tuesday as the market faltered. The index fell by 0.81 per cent to close lower at 36,669.61. The depreciation in the share prices of Dangote Cement, Nigerian Breweries, UBA, Access Bank, and GT Bank caused the lower close. At the end of the trading on Tuesday, all NSE indices recorded declines with the NSE Industrial Goods Index, NSE Banking Index, NSE Insurance Index and NSE Oil & Gas Index shedding 0.91 per cent, 0.41 per cent, 0.36 per cent and 0.51 per cent in that order.
“We attribute the performance to profit taking activities on counters which have previously recorded gains. The market performance was further dragged by the 1.78 per cent loss on Dangote Cement Plc,†analysts at Meristem Securities Limited said.
Despite the release of nine months results by some companies that showed improved performance, the market continued on the downward trend on Wednesday as the index fell by 0.08 per cent to close at 36,641.52.
Banking stocks dragged down the performance on the back of pull-backs in Tier-1 – Access Bank (-2.2 per cent), UBA (-1.5 per cent) and Zenith Bank (-0.5 per cent). Activity level softened as volume and value traded fell 6.0 per cent and 0.4 per cent to settle at 198.6 million units and N2.9 billion respectively.
Similar to previous trading session, sector indices’ performance was largely bearish with three sectors declining while two unchanged.
The market recovered marginally on Thursday with a growth of 0.01 per cent to close at 36,645.65 points. The recovery came as a result of gains recorded by Stanbic IBTC, Dangote Sugar, Union Bank, Sterling Bank, and Nestle.
Again, sectoral performance was mixed as three of the five indices closed negatively while only one ended on the positive territory, while another closed flat. Zenith Bank Plc released its results on Thursday, recording improvement in performance indicators.
The bank recorded gross earnings of N531.3 billion, showing a growth of 39.7 per cent above the N380.4 billion posted in the corresponding period of 2016. Net interest income rose marginally by 6.2 per cent from N189.8 billion to N201.5 billion, while non-interest income surged by 123 per cent to N169.5 billion, from N94.7 billion.
Zenith Bank grew its profit before tax (PBT) by 30.8 per cent from N116.6 billion to N152.5 billion, while profit after tax (PAT) grew faster by 36 per cent to N129.2 billion, compared with N95.4 billion in 2016.
Contrary to expectations that the market would recovery further, it depreciated by 0.16 per cent on the last day of the week to close at 36,587.31.
Market Turnover
Meanwhile, the market recorded a turnover of 872.892 million shares worth N14.016 billion in 19,047 deals compared with 1.555 billion shares valued at N13.504 billion that exchanged hands the previous week in 18,409 deals.
The Financial Services Industry led the activity chart with 692.380 million shares valued at N8.940 billion traded in 11,464 deals, thus contributing 79.32 per cent and 63.78 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 63.658 million shares worth N123.149 million in 896 deals. The third place was occupied by Consumer Goods Industry with a turnover of 61.676 million shares worth N3.034 billion in 3,469 deals.
Trading in the top three equities, GTBank, Zenith Bank Plc and UBAnited Bank for Africa Plc (measured by volume) account accounted for 270.638 million shares worth N7.213 billion in 3,902 deals.
Price Gainers and Losers
The price movement chart showed 23 advancers lower than 41 of the previous week, while 34 equities depreciated in price, higher than 23 equities of the previous week.
International Breweries Plc led the price gainers with 21.7 per cent, trailed by Glaxosmithkline Consumer Nigeria Plc with 14.3 per cent, while Cutix Plc appreciated by 8.7 per cent. Union Bank of Nigeria Plc chalked up 5.5 per cent, just as Stanbic IBTC Holdings Plc rose by 5.4 per cent. Cement Company of Northern Nigeria Plc garnered 5.1 per cent just as Custodian and Allied Plc closed the week stronger by 5.0 per cent. Other top price gainers included: Fidson Healthcare Plc, B.O.C Gases Plc (4.7 per cent) and African Prudential Plc(3.0 per cent.
Conversely, Redstar Express Plc led the price losers with 13 per cent, trailed by AXA Mansard Insurance Plc that shed 10.3 per cent. Law Union and Rock Insurance Plc closed 8.6 per cent lower. Champion Breweries Plc and Forte Oil Plc shed 6.9 per cent. Other top price losers were: Continental Reinsurance Plc (6.2 per cent); May & Baker Nigeria Plc (5.7 per cent); Honeywell Flour Mills Plc (5.4 per cent); Livestock Feeds Plc (5.4 per cent) 11 Plc (4.9 per cent).
