Stock Market Sheds 2.9% Despite  Improved Corporate Earning

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WEEKLY REPORT

Contrary to expectations that impressive full year financial results of companies will further boost the performance of the equities market last week, investors  ignored results released by Zenith Bank Plc, Guaranty Trust Bank Plc  and Stanbic IBTC Holdings  Plc and increased their sell pressure.

Consequently, the  two-week  bullish  run came to a halt as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) plunged 2.9 per cent to close  at 41,935.93, while market capitalisation shed N506billion  to be at N15.002 trillion. Similarly, all other indices finished lower during the week with the exception of the NSE Insurance.

Ironically, the NSE Banking Index was among the sectors that contributed to the decline despite impressive results and improved dividend recommendation by Zenith Bank and GTBank. The local bourse traded southwards on all days expect  Tuesday when it closed the day flattish.

Daily Performance

Specifically, the market began last week on negative note as the Nigerian Stock Exchange All Share Index (NSE ASI) depreciated by 0.26 per cent  to close at 43,056.51.  Decline in the share prices of FBN Holdings Plc, Access Bank , Flour Mills, GTBank, and United Bank for Africa (UBA)  were mainly responsible for the negative close.

The three most actively traded stocks were FBN Holdings (425.60 million shares), Zenith Bank (78.96 million shares) and Japaul Oil and Maritime Services (64.76 million shares).

 According to operators, the market performance was mostly negative across sectors. Activity level declined and market breath closed negative. Market activity is expected to improve in coming sessions with release of other 2017 corporate earnings.

In terms of sectoral performance two  closed in the red, while two  trended northwards while one  closed flat. The Insurance Index was the biggest gainer, up 0.8 per cent. Similarly, the NSE Oil & Gas Index inched 0.3 per cent. Conversely, sell pressure in UBA   and Union Bank of Nigeria dragged the NSE Banking Index 0.9 per cent southwards. The NSE Consumer Goods Index  shed 0.09  per cent, while  the NSE Industrial Goods index remained flat.

 However, the market appreciated marginally on Tuesday as the NSE ASI appreciated by 0.04 per cent to close at 43,073.42.  But there were more price losers. Specifically,  39 stocks depreciated while 26 others appreciated But  the share price of Japaul Oil and Maritime Services Plc  suffered the first major decline after a bull run that lasted for days. Japaul had in the previous week  appreciated by 53 per cent following renewed demand by investors who were reacting to news that it had   entered into a binding commitment with Milost Global Inc., an American private equity firm to inject $350 million into its operations.

Japual had disclosed to market operators, shareholders and other stakeholders that the  $350 million capital injection by the United States based firm was  in line with the mandate received from the company’s shareholders at the annual general meeting  held on Thursday the 30th day of June, 2016.

 According to Japual, the facility is in form of $250 million equity injection and $100 million Convertible Notes and it is  expected to bail help to bail out the company from the present financial situation.

Based on this information, many investors renewed their demand for the stock, which led to a jump of over 50 per cent to close at  97 kobo per share.

However, profit taking by some investors on Tuesday reversed the gaining streak  and made it to close   as the highest price loser. It shed 8.3 per cent to be at 88 kobo per share.

Renewed sell Pressure depressed the market on Wednesday with NSE ASI, falling 0.54 per cent to close   at  42,839.52. The depreciation recorded in the share prices of Transcorp, Cadbury Nigeria, Zenith Bank, UBA, and Nestle led to the decline.

“Market performance was mostly bearish driven by sustained sell pressure predominantly in the banking sector stocks, despite the release of results of GTBank and Stanbic IBTC Holdings Plc,” operators said.

Accordingly, market capitalisation declined N83.7 billion  to close at N15.3 trillion. Activity level was mixed as volume traded fell 8.6 per cent  to 372.7 million  units while value traded trended 11.9 per cent  northwards to N6.8 billion.

Also, sector performance was mixed three  of the five  major indices closed southwards with the banking index leading the laggards, down 1.5 per cent due to losses in Zenith Bank  Plc and  Access Bank  Plc.

The NSE Consumer Index trailed, losing 0.8 per cent  on the account of price depreciation in Nestle  (-1.4 per cent), and Dangote Sugar  (-4.9 per cent) while the NSE  Oil & Gas Index shed  0.3 per cent as losses in Total Nigeria  (-1.2 per cent) dragged the index lower. On the positive side,   the NSE Insurance Index  and NSE  Industrial Goods Index were the only gainers, rising  0.10 per cent apiece.

The market depreciated further on Thursday   as decline by bellwether  stocks dragged the NSE ASI to close at 42,185.38.

Commenting on the performance, analysts at FSDH Merchant Bank said:  “The sustained sell pressure particularly in banking sector stocks resulted in a number of stocks on offer at the lower limit. Market outlook remains positive with the possibility of a rebound as investors take advantage of low valuations.”

Also commenting, analysts at Meristem Securities Limited said: “The market mood has been predominantly bearish this week, save for the positive close on Tuesday, which was driven by the gain on Dangote Cement Plc. There were notable selloffs on banking stocks as the release of positive results by some of the Tier-1 banks failed to sway investor sentiment towards the sector. We envisage some bargain hunting on some of these counters, given their relatively low prices.”

Market Turnover

Meanwhile, investors traded 2.444 billion shares worth N36.665 billion in 26,712 deals as against 3.079 billion shares valued at N39.990 billion that exchanged hands in 23,086 deals the previous week. The Financial Services Industry led the activity chart with 2.044 billion shares valued at N26.330 billion traded in 16,788 deals, thus contributing 83.61 per cent and 71.81 per cent  to the total equity turnover volume and value respectively.

The Consumer Goods Industry followed with 168.973 million shares worth N8.111 billion in 4,927 deals. The third place was occupied by Oil and Gas Industry with a turnover of 94.742 million shares worth N825.871 million in 1,641 deals.

Trading in the top three equities namely – FBN Holdings Plc, Zenith  Bank Plc and

Fidelity Bank Plc accounted for 1.084 billion shares worth N17.852 billion in 7,074 deals, contributing 44.34 per cent and 48.69 per cent to the total equity turnover volume and value respectively.

 

Price Gainers and Losers

An analysis of the price movement chart showed that  only 25 equities appreciated in price during the week, lower than 45 of the previous week, 60 equities depreciated in price, higher  than 40 equities of the previous week.

Associated Bus Company Plc led the price gainers with 14.29 per cent, trailed by John Holt Plc with 12.5 per cent, while N.E.M Insurance Plc appreciated by 11.5 per cent. Cutix Plc chalked up 9.8 per cent, just as NPF Microfinance Bank Plc garnered 9.1 per cent.

Other top price gainers included: Fidson Healthcare Plc (7.1 per cent); Learn Africa Plc (5.7 per cent); First Aluminium Nigeria Plc(3.9 per cent); AXA Mansard Insurance Plc (3.8 per cent) and Morison Industries Plc (3.7 per cent).

Conversely, Japaul Oil & Marine Services Plc recorded the highest price loss of 30.9 per cent, trailed by Fidelity Bank Plc with 22.48 per cent.  Unity Bank Plc went down by 21.5 per cent, while African Prudential Plc shed 20.2 per cent.

Other top price losers were: Regency Alliance Insurance Company Plc (20. Per cent); LASACO Assurance Plc (18.1 per cent); Wema Bank Plc (18.0 per cent); Thomas Wyatt Nigeria Plc (16 per cent), United Capital Plc (15.8 per cent);NASCON Allied Industries Plc(15.4 per cent).