Sustained gains by the two largest companies on the Nigerian Stock Exchange (NSE), Dangote Cement Plc and MTN Nigeria Communications Plc, lifted the equities to a new high last week. After six weeks below the psychology benchmark of 30,000, the NSE All-Share Index (ASI) surged 6.96 per cent to close at 30,881.29 per cent. This was the highest weekly gain since January 2018. Similarly, market capitalisation added N885 billion to close higher at N13.602 trillion.
While Dangote Cement Plc, which has the highest market capitalisation on the bourse, appreciated 13 per cent, newly listed MTN, which has the second highest market capitalisation rose 28.5 per cent, adding N631 billion to the growth.
THISDAY had reported that the Economic and Financial Crimes Commission stormed MTN’s office about 4pm on Friday and quizzed top officials of the telecoms company after demanding vital documents, which they were promptly given. THISDAY also learnt that the EFCC visit and questioning of MTN management staff were not unconnected with the alleged share manipulation in the recent MTN listing on the NSE.
However, the high demand for MTNN shares after its listing the previous week was sustained throughout last week amidst allegations of price manipulation.
Bargain hunting in MTNN and Dangote Cement buoyed the benchmark index, up 1.7 per cent on Monday. The positive trend was sustained on Tuesday and Wednesday as the index rose 2.9 per cent and 3.1 per cent respectively due to sustained price appreciation by MTNN, Dangote Cement and Guaranty Trust Bank Plc.
Also, sustained buying interest in Dangote Cement Plc, Nestle Nigeria and GTBank boosted the market on Thursday. However, the market shed 1.9 per cent on Friday following profit taking in Dangote Cement, Nigerian Breweries Plc and Stanbic IBTC Holdings Plc.
On sectoral performance two out of three tracked sectors appreciated, while three declined. The NSE Industrial Goods Index led with 6.12 per cent, followed by NSE Insurance Index. Conversely, the NSE Consumer Goods Index led with 2.98 per cent, trailed by the NSE Banking Index with 1.82 per cent, while the NSE Oil & Gas Index shed 0.65 per cent.
Commenting on the gain posted by the market, analysts at Cordros Capital Limited said: “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.”
Following the allegations of possible violation of some rules in the listing of MTNN, NSE last explained that due process was followed in the admission of the telco on the Nigerian bourse.
The NSE explained that its Rule book defined free float as the number of shares that an issuer has outstanding and available to be traded on the exchange. It includes all shares held by the investing public, and excludes shares held directly or indirectly by promoters, directors and their close relatives; strategic investors holding five per cent and above of the issued share capital; or government.
NSE noted that its rules for listing on the Premium Board (which is the board in which MTN Nigeria is listed) require a company to have a minimum free float of 20 percent of its issued share capital or that the value of its free float is equal to or above N40 billion on the date the exchange receives the issuer’s application to list.
“MTN Nigeria met with the free float requirement of N40 billion. The free float of MTN at the time of listing was in excess of N90 billion,” NSE had said.
The NSE added that where a company lists following an Initial Public Offering, shares are expected to be available for trading on the day of listing, while in a listing by Introduction, no shares have been offered for subscription by the company prior to listing.
“Thus, without any intervention, it is possible that there will be no shares available for trading on the listing date. Indeed, currently, no rule of the exchange compels shareholders in a listed company to tender their shares for trading.
“Shareholders are at liberty to trade their shares at any time and price suitable to them. Thus, in order to stimulate trading in the shares of companies that list by Introduction, the NSE’s practice is to urge the company to make shares available on the day of listing.
“In the case of MTN Nigeria, the NSE had requested the company as part of the listing process to make shares available and The Exchange expects the company to do that.
The NSE said it believed it had addressed the concerns raised, “we will like to assure our stakeholders and the general public that the exchange will continue to uphold global best practices in its business operations and will sustain engagement with its stakeholders to continually develop regulatory frameworks that ensure our market completely reflects our values of ambition, fairness and inclusion.”
The value of trading surged last week on the bank of MTNN shares. Investors staked N57.895 billion on 1.698 billion shares in 24,328 deals, compared with N17.887 billion invested in 1.172 billion shares valued in 18,380 deals the previous week.
The Financial Services Industry led the activity chart with 1.121 billion shares valued at N8.708 billion traded in 13,380 deals, thus contributing 66.01 per cent and 15.04 per cent to the total equity turnover volume and value respectively. The ICT Industry followed with 324.332 million shares worth N40.717 billion in 3,330 deals. The third place was Consumer Goods Industry with a turnover of 75.831 million shares worth N2.948 billion in 2,957 deals. Trading in the top three equities namely, MTN Nigeria Communications Plc, Sovereign Trust Insurance plc accounted for 726.103 million shares worth N41.622 billion in 4,972 deals, contributing 42.75 per cent and 71.89 per cent to the total equity turnover volume and value respectively.
Also, a total of 7,832 units of Exchange Traded Products (ETPs) valued at N48,890.00 executed in six deals compared with a total of 18,181 units valued at N215,365.64 transacted in four deals the previous week.
A total of 1,389 units of Federal Government Bonds valued at N1.440 million were traded in 14 deals compared with a total of 10,366 units valued at N9.783 million transacted two weeks ago.
Price gainers and losers
A look at the price movement chat showed that 30 equities appreciated in price during the week, higher than 16 in the previous week, while 40 equities depreciated in price, lower than 42 equities of the previous week.
Thomas Wyatt Nigeria Plc led the price gainers with 29 per cent trailed by MTN Nigeria Plc, which appreciated by 28.5 per cent. Dangote Cement Plc and MCNichols Plc garnered 13.6 per cent and 10 per cent respectively.
Fidson Healthcare Plc and Linkage Assurance Plc chalked up 9.7 per cent and 9.0 per cent in that order. University Press Plc and Beta Glass Plc went up 7.7 per cent and 7.6 per cent respectively. Vitafoam Nigeria Plc and NEM Insurance Plc gained 7.5 per cent and 7.2 per cent in that order.
Conversely, Consolidated Hallmark Insurance Plc led the price losers with 20.6 per cent, followed by Sterling Bank Plc with 17.2 per cent. While Academy Press Plc shed 16.6 per cent. Neimeth International Pharmaceuticals Plc went down by 16.3 per cent, just as Livestock Feeds Plc and Flour Mills of Nigeria Plc declined by 12.1 per cent.
Other top price losers included: UAC of Nigeria Plc (11.6 per cent); Chams Plc (11.6 per cent); Access Bank Plc (10.0 per cent) and E-Tranzact International Plc(9.8 per cent).