Equities Fall Further on Profit-taking, Weak Q1 Results

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Goddy Egene

Trading at the stock market remained bearish last week as a combination of profit-taking in bellwethers and negative reactions to financial results released by companies for the first quarter ended March 31, 2019, dominated sentiments of investors.

Consequently, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell by 1.78 per cent to close lower at 29,212.00, while market capitalisation shed N197 billion to be at N10.979 trillion. The year-to-date decline of the NSE ASI worsened to 7.1 per cent as last Friday.

Just like the previous week, the market traded for four days and the bears and bulls controlled two days each. But the bears had the upper hand, leading to a decline of 1.78 per cent at the end of the week.

Trading had started on Monday on a negative note with the NSE ASI falling 0.73 per cent following losses by Guaranty Trust Bank Plc, Stanbic IBTC Holdings Plc and Dangote Cement Plc. The negative trend was sustained on Tuesday with a higher decline of 1.23 per cent due to sell-off in Dangote Cement Plc, Nestle Nigeria Plc, Stanbic IBTC among others.

But the market rebounded on Thursday and Friday, appreciating by 0.04 per cent and 0.14 per cent in that order. However, the gains in the two days were not enough to offset the losses of Monday and Tuesday.

By the close of the week, three of the five major sectors declined led by the NSE Industrial Goods Index that fell 3.0 per cent. The NSE Banking Index trailed with 1.3 per cent, just as the NSE Consumer Goods Index went down by 0.3 per cent.

On the positive side, the NSE Insurance Index rose 1.3 per cent, followed by NSE Oil and Gas Index that appreciated by 0.02 per cent.

Commenting on the market, analysts at Afrinvest (West Africa) Limited said: We view the market as lacking drivers for a sustained bullish run and so expect the market to continue to trade sideways, with profit-taking and bargain-hunting activities dominating an equal amount of trading session over the short term.”

In their analysis, analysts at Meristem Securities Limited said the negative performance last week was partly due, to the string of negative first quarter results, which cut across the different sectors of the market.”

According to Meristem, the poor earnings performances were further pointers to weak consumer spending in the economy, even as many of the companies face different operating challenges.

“It is therefore cheery news that the National Assembly passed the 2019 Budget, which includes provisions for the implementation of the new minimum wage. This should strengthen consumer spending, which has been faltering since the exit from recession. On the downside, however, it portends upside inflation risks, with the possibility of constraining the Monetary Policy Committee’s easing posture,” they said.

Meanwhile, an analysis of the other markets in Africa, showed that Nigeria was the second highest loser following Ghana that recorded a decline of 2.4 per cent.   Kenya’s NSE 20 went down by 0.6 per cent, while Mauritius’ SEMDEX shed 0.4 per cent. Morocco’s Casablanca MASI closed with a marginal decline and ending its four week’s bullish run.  The Egypt EGX30 emerged as the lone gainer last week, rising by 0.3 per cent.

Among the BRICS markets, three of the tracked indices trended southwards. The two markets that closed in the positive territory are South Africa and Russia.  The South Africa FTSE/JSE All Share rose 0.5 per cent after President Cyril Ramaphosa said government won’t cut jobs at state power utility Eskom. Similarly, Russia’s RTS marginally inched higher by 0.1 per cent.

Conversely, China’s Shanghai Composite and India’s BSE Sens shed 0.3 per cent following the expiry of Iranian Oil Sanction Waivers on May 2nd, 2019. Also, the Brazil Ibovespa closed the week 0.3 per cent lower.

In Asia and the Middle East, performance was mixed with the bears dominating. The Saudi Arabia’s Tadawul ASI led decliners with 0.7 per cent followed by Thailand’s SET Index and Qatar’s DSM 20 which dipped 0.3 per cent each.

On the positive side, United Arab Emirates ADX General Index led gainers up 2.8 per cent trailed by Turkey’s BIST 100 that added  0.3 per cent.

Following the United States(US) Federal Reserve Bank’s stance on interest rate, performance across the developed market was mixed. In the US markets, the S&P 500 and NASDAQ fell 0.3 per cent each. The UK FTSE All Share index dipped 0.5 per cent, while the France’s CAC 40 declined 0.5 per cent.

 On the other hand, the Hong Kong Hang Seng led gainers, rising 1.6 per cent.  Germany XETRA DAX followed with gain of 0.5 per cent, while Japan’s Nikkei 225 was flat.

Market turnover

Meanwhile, investors traded 1.470 billion shares worth N15.498 billion in 18,092 deals last week compared with 1.432 billion shares valued at N15.089 billion that exchanged hands in 15,342 deals the previous week.   The Financial Services Industry remained the most active, leading the activity chart with 610.138 million shares valued at N5.828 billion traded in 8,012 deals; thus contributing 41.5 per cent and 37.61 per cent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 227.766 million shares worth N777.211 million in 1,558 deals, while the third place was Consumer Goods Industry with a turnover of 154.760 million shares worth N4.496 billion in 3,622 deals.    Trading in the top three equities namely, Transnational Corporation of Nigeria Plc, Cement Company of Northern Nigeria Plc and Japaul Oil & Maritime Services Plc accounted for 403.650 million shares worth N2.103 billion in 1,124 deals, contributing 27.46 per cent and 13.57 per cent to the total equity turnover volume and value respectively.

A total of 1.190 million units of Exchange Traded Products (ETPs) valued at N10.967 executed in 12 deals compared with a total of 4,800 units valued at N45, 578.70 transacted the previous week in nine deals.

A total of 14,589 units of Federal Government Bonds valued at N15.164 million were traded last week in 12 deals as against a total of 41,150 units valued at N43.977 million transacted the previous week.

Price gainers and losers

 The price movement chart showed that 32 stocks appreciated higher than 30 stocks the previous week, while 44 equities depreciated in price, higher than 40 equities of the previous week.

Japaul Maritime and Oil Services Plc led the price gainers with 39.2 per cent, trailed by Julius Berger Nigeria Plc with 19.6 per cent, while Forte Oil Plc and Jaiz Bank Plc garnered 19.6 per cent and 12.5 per cent respectively. UACN Property Development Company Plc and Transcorp Plc chalked up 12 per cent and 11.6 per cent in that order.

Other top price gainers included: Caverton Offshore Support Services Plc (11.5 per cent); Courteville Business Solutions Plc, Veritas Kapital Assurance Plc (10 per cent apiece); and Dangote Flour Mills Plc (9.9 per cent).

On the contrary, Goldlink Insurance Plc led the price losers with 18.1 per cent, trailed by First Aluminium Nigeria Plc with 12.5 per cent, while Royal Exchange Plc and Total Nigeria Plc went down by 11.5 per cent and 10.9 per cent respectively.

Other top price losers were: Afromedia Plc (10 per cent); MCnichols Plc; Academy Press Plc (9.1 per cent apiece); NPF MFB Plc (9.0 per cent); Cutix Plc (8.7 per cent) and Oando Plc (8.4 per cent).