As Investors Reap N330bn by Profit-taking in 4 Days, NSE ALSI Sheds 0.49%

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 Bamidele Famoofo

Profit-taking activities of domestic and foreign investors in the Nigerian equities market, which made them to smile home with about N330billion as at last Thursday has reduced market capitalisation to about N15.55trillion.

The NSE recorded a four-day straight loss as its All Share Index (ALSI) sheds 0.49 per cent and month-to-date and year-to-date returns fell to -2.29 per cent and 13.29 per cent, respectively.

According to stock market analysts, sell-offs  and profit-taking were recorded in almost all the sectors, but specifically in consumer good and 2nd tier banking stocks on Thursday.

Data made available by StanbicIBTC Stockbrokers Limited on Thursday showed that The NSE Consumer Goods Index declined by 198 basis points or 1.98 per cent largely on Nestle stock whose shares declined by 5.0 per cent. Nigerian Breweries, a foremost brewer and the most capitalised in its sector, recorded 3.24 per cent price depreciation on Thursday.

In spite of the appreciable loss recorded in the consumer goods sector in the review week, there are some exceptions in blue chip stocks like beverage manufacturer, Cadbury Plc, which recorded a price gain of 4.38 per cent, while fast-growing International Breweries Plc, also grew its shares by 2.61 percent.

The NSE Banking Index was another major contributor to the fall of the NSE ALSI in the week with a 1.1 per cent drop in its sector index. “We saw more profit-taking activities across the tier 2 banking names”, said analysts with StanbicIBTC Stockbrokers.

For instance, a big uptake was seen in Sterling Bank Plc, one of the tier-two banks on Thursday as investors crossed around 1.7billion units of its shares, lifting the price from  N2.13 per share to N 2.23, representing 4.69 per cent gain in price level on Thursday.

“We saw a big cross of around 1.7billion units in Sterling bank today and that alone accounted for 51 percent of the total value traded on the day”, analysts hinted.

Accordingly, Sterling Bank led the volume and value charts on Thursday with 1.75billion and N3.83billion, respectively.

Activities on the shares of Skye Bank, a tier-two bank was to the detriment of the sellers, who offloaded at a huge discount. The bank lost 8.93 per cent in share price on Thursday as price dropped from N1.12 per share to N1.02 per share, to lead the laggards’ squad.

Notwithstanding the profit-taking activities in the Nigerian bourse, performance outlook remains positive as financial experts see the market sustaining the gains it recorded in 2017.

Afrinvest, in its markets outlook for 2018, said the Nigerian bourse will deliver a return of at least 32.7 percent in 2018, which he described as a bull case. On a base case (moderate), a return of 19.8 per cent is expected while in the least scenario, 7.7 percent return is visible.

Managing Director of Afrinvest Securities Limited, Mr. Ayodele Ebo,  noted that, the “Nigerian market traded at a premium to frontier market peers in the last bull market (2013) but currently trades at a discount.”

However, Afrinvest pointed out that, the 2018 performance projection for the NSE is largely dependent on three key factors, namely earnings fundamentals of corporate, stability in the FX market and other macro indicators as well as portfolio flow dynamics.

Analysts at SCM Capital believe earnings would be sustained given recent events and favourable economic indicators in the biggest economy in Africa.

Head Research, SCM Capital, Mr. Sewa Wusu, in his review of the market performance, attributed the recent rally in the equities market in Nigeria to market sentiments. His words: “The present profit taking in the market is expected as the rally in the first few weeks in January was huge and it is normal for investors to offload at a point to take profit.”

Wusu said both the tier-one and tier-two banks are being speculated on by investors as they prepare to announce their financial year ended 2017 earnings. “Investors look forward to getting dividend from these banks towards the end of the first quarter in 2018,” he disclosed.

In a recent market review, Cordros Asset Management Limited said the possibility of continued profit taking remains high, but added that, “Our theme on the market remains positive, on the back of favourable macro economic conditions.”

The Nigerian Stock Exchange, which ranked second best performing stock market in Africa and 11th best in the world in 2017, offered investors a 42 per cent return on investment in 2017.