Equities Market Halts Bearish Trend

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Goddy Egene

Temporary relief came to the Nigerian stock market last week following the listing of MTN Nigeria Communications Plc. Trading in the shares of MTN in two days reversed Nigeria’s equities market fortune to the positive territory.  

The high demand for the stock after its listing without commensurate supply led to a jump of 21 per cent in its price from N90 to N108.90.

The gain by the telecoms giant effectively wiped off losses from the prior sessions. Consequently, the Nigerian Stock Exchange (NSE) All-Share Index appreciated by 0.08 per cent to  close at 28,871.93 points.  Market capitalisation added N1.9 trillion to close higher at N12.7 trillion.

But investors on the NSE and stakeholders waiting to purchase the shares of MTN Nigeria Communications Plc through an initial public offering (IPO) may do so at a very high premium whenever the telco decides to float the IPO. This is because of the free float accommodation MTN Nigeria was granted by the capital market regulators to pave the way for its listing, even as MTN exercised its option on preference shares worth N145 billion a day after the listing and went ahead to borrow a further N200 billion from Nigerian banks, to pay off the preference shareholders at the listing price of N90 per share, a source revealed.

However, analysts at Cordros Capital Limited said since the gain recorded was not broad based, they advised investors to still maintain cautious trading.

“Clearly, the gain was not broad-based, at such we reiterate our cautious trading pattern. Meanwhile, we believe that the blend of positive macroeconomic fundamentals and compelling valuations still supports a near term recovery,” they said.

A further review of the trading pattern last week, showed that the market was bearish for three days prior to the listing of MTN.  For instance, the market opened with a decline of 1.26 per cent on Monday on the back of losses in Nestle Nigeria Plc and Guaranty Trust Bank Plc. The market witnessed further decline of 0.22 per cent on Tuesday and 0.48 per cent on Wednesday. However, the bearish run reversed on Thursday and Friday following the listing of MTN on the Nigerian Stock Exchange increasing the ASI by 0.53 per cent and 1.53 per cent respectively.

Across sectors, performance was negative as all indices tracked trended southwards led by the NSE The Banking Index led with a decline of 4.3 per cent.

The Consumer Goods Index trailed, shedding 4.1 per cent, while the NSE Insurance Index shed 3.3 per cent. Similarly, the NSE Industrial Goods and NSE Oil & Gas Index dipped by 2.8 per cent and 2.3 per cent in that order.

Nevertheless, the listing of MTN on the exchange elicited excitement among its board and management.

For instance, the Chairman MTN Nigeria, Pascal Dozie, said: “Today is a major milestone in the evolution of MTN in Nigeria and it is fitting that it takes place 18 years to the day since I made the first call on the MTN network on May 16th 2001. Since our initial investment in 2001, we have worked in partnership with Nigerians to deliver the largest network in Nigeria, with over 60 million people now able to access mobile communications services.

“We employ over 1,600 people and our operations create employment for more than 500,000 Nigerians. Our technology has empowered millions of people and businesses in rural and urban areas. This has driven innovation, expanded market access and enhanced local economic inclusion. I am delighted that we can expand this impact further today, by enabling investors to trade our shares on the NSE.”

Also commenting, the   Chief Executive Officer, Ferdi Moolman, said: “We have evolved from an ambitious start-up at the genesis of a new and emerging industry, to a business that is able to touch lives in every corner of Nigeria. We have established a sustainable platform for growth, from which we are able to meet the growing and dynamic needs of our customers, our communities and our country.

“This platform has been built through a sustained focus on customer-centric delivery, striving to ensure that every subscriber gets as much value for their money as possible. We are grateful to customers for their loyalty, and to our people, our partners and our regulators for the opportunity to continue to contribute to Nigeria’s growth story.

“We are only beginning to tap into the opportunities that connectivity enables and are fully focused on investing to connect every Nigerian, and to make social innovations like mobile electricity and high impact mobile solutions in education, healthcare and agriculture available in communities everywhere.”

Market turnover

Meanwhile, investors traded a total turnover of 1.172 billion shares worth N17.887 billion in 18,380 deals were traded last week compared with a total of 1.477 billion shares valued at N10.876 billion that exchanged hands the previous week in 20,740 deals. 

However, the Financial Services Industry led the activity chart with 680.592 million shares valued at N7.395 billion traded in 11,035 deals, thus contributing 58.09 per cent and 41.34 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 266.636 million shares worth N818.249 million in 1,152 deals. The third place was ICT Industry with a turnover of 82.390 million shares worth N6.085 billion in 346 deals.   

Trading in the top three equities namely, Transnational Corporation of Nigeria Plc, Access Bank Nigeria Plc and Guaranty Trust Bank Plc, accounted for 421.064 million shares worth N4.681 billion in 3,073 deals, contributing 35.94 per cent and 26.17 per cent to the total equity turnover volume and value respectively.

Also, a total of 18,181units of Exchange Traded Products (ETPs) valued at N215,365.64 executed in four  deals compared with a total of 97,154 units valued at N1.318 million transacted  the preceding  week in two deals.

A total of 10,366 units of Federal Government Bonds valued at N9,783 million were traded last  week in nine deals compared with a total of 265 units valued at N281,654.91 transacted two  week in five deals.

Price gainers and losers

A look at the price movement chart showed that 16 equities appreciated in price during the week, lower than 18  in the previous week, while 42 equities depreciated in price, lower than 49  equities of the previous week.

Thomas Wyatt Nigeria Plc led the price gainers with 24 per cent, trailed by  Neimeth International Pharmaceuticals Plc with 22 per cent.  A.G Leventis Nigeria Plc gained 16.6 per cent, while  Transcorp Plc and NPF Microfinance Bank Plc chalked up 8.8 per cent.  Okomu Oil Palm Plc and UAC of Nigeria Plc appreciated by 5.0 per cent.

Other top price gainers included: Veritas Kapital Assurance Plc (5.0 per cent); Mutual Benefits Assurance Plc (4.7 per cent ) and Unilever Nigeria Plc (3.2 per cent).

Conversely,  Regency Assurance Plc led the price losers with 20 per cent, trailed by Forte Oil Plc with 18.8 per cent. Champion Breweries Plc shed 18.2 per cent, just as FCMB Group Plc and Wema Bank Plc  went down by 13.8 per cent apiece. Goldlink Insurance Plc closed 13.04 per cent lower, while NEM Insurance Plc dipped by 12 per cent.

Other top price losers were: University Press Plc (9.7 per cent); Access Bank Plc (9.1 per cent) and Cement Company of Northern Nigeria Plc (9.1 per cent).

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