Market Sheds N304bn in One Week on Continuing Bearish Trading

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Goddy Egene

The stock recorded a decline of 2.3 per cent last week as the bears returned, depressing prices of bellwethers. After recovering from a three-week bearish run the previous week, market operators had expected that the positive trend would be sustained.

But the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell to 2.3 per cent to 29,270.95, while market capitalisation shed N303.7 billion to close at N12.902 trillion. The year-to-date decline of market has thus worsened to 6.9 per cent. Apart from the ASI that fell, activity level also declined as average volume and value traded declined by 42.1 per cent and 64.7 per cent to 298.4 million shares and N1.8 billion respectively as buying interest continued to wane.

Trading had started on Monday with a 1.2 per cent on the back of losses in Guaranty Trust Bank Plc, Dangote Cement Plc and Nigerian Breweries Plc.

 The negative trend persisted for the remaining four days with the NSE ASI depreciating by 0.7 per cent, 0.1 per cent, 0.3 per cent and 0.1 per cent respectively.

In terms of sectoral performance, the NSE Banking Index led the laggards with 5.4 per cent, followed by the NSE Consumer Goods Index. The NSE Industrial Goods Index went down 2.3 per cent. The NSE Oil & Gas Index shed 0.7 per cent, just as the NSE Insurance Index declined 1.0 per cent.

Investors’ appetite for stocks was dampened last week as the NSE announced the suspension of trading the shares of 11 companies for failing to file their accounts as required by the listing rules of the exchange. 

The NSE had explained that the affected companies were suspended pursuant to Rule  3.1, Rules for filing of accounts and treatment of default filing,  which provides that “If an issuer fails to file the relevant accounts by the expiration of the cure period, the exchange will: send to the issuer a “second filing deficiency notification” within two  business days after the end of the cure period;  Suspend trading in the Issuer’s securities; and (c) notify the Securities and Exchange Commission (SEC) and the market within 24 hours of the suspension.”

Based on the above, the NSE suspended trading in the shares of 11 companies. They are: FTN Cocoa Processors Plc, Goldlink Insurance Plc, Guinea Insurance Plc; Conoil Plc; Lasaco Assurance Plc; Niger Insurance Plc; R.T.Briscoe (Nigeria) Plc; Resort Savings & Loans Plc; Royal Exchange Plc; Standard Alliance Insurance Plc and Universal Insurance Plc

The exchange had explained that  the suspension   of the companies would only be lifted upon the submission of the relevant accounts and provided the exchange is satisfied that the accounts comply with all its applicable rules.

 

Market turnover

Meanwhile, a total turnover of 1.025 billion shares worth N9.911 billion in 19,375 deals were traded last week by investors in contrast to a total of 1.771 billion shares valued at N28.036 billion that exchanged hands two weeks ago in 18,660 deals.  

 But the Financial Services industry led the activity chart with 660.844 million shares valued at N5.735 billion traded in 11,296 deals, thus contributing 64.49 per cent and 57.8 per cent to the total equity turnover volume and value respectively. The Healthcare Industry followed with 95.150 million shares worth N61.699 million in 174 deals. The third place was Industrial Goods Industry with a turnover of 89.419 million shares worth N1.416 billion in 1,723 deals.    Trading in the top three equities namely, United Bank For Africa Plc, Zenith Bank Plc and FBN Holdings Plc accounted for 297.889 million shares worth N3.095 billion in 3,998 deals.

A total of 12,375 units valued at N6.223 million were traded in eight deals compared with a total of 505,460 units valued at N39.278 million that was transacted the previous week in 27 deals. Also, a total of 1.007 million units of Federal Government Bonds valued at N1.024 billion were traded last week in 14 deals compared with a total of 47,212 units valued at N49.976 million transacted two weeks ago in 34 deals.

Price gainers and losers

The price movement chart displayed 21 equities appreciated in price during the week, lower than 36 in the previous week, while 44 equities depreciated in price, higher than 32 equities in the previous week. Academy Press Plc led the price gainers with 48.1 per cent, trailed by Consolidated Hallmark Insurance Plc with 26  per cent. Cement Company of Northern Nigeria Plc garnered 15.5 per cent, while Lafarge Africa Plc closed 14.1 per cent higher.

Market operators had said CCNN had huge potential to deliver sustainable growth and increase  shareholders’ wealth going forward high growth prospects having jumped by 213 per cent in profit for the three months ended March 31, 2019 on the back of its merger with Kalambaina Cement Company Limited.

Lafarge Africa Plc appreciated by 14.2 per cent as investors renew demand for the stock following expectations that its fortunes would turnaround soon. The cement firm reduced its loss in 2018 and ended the first quarter of 2019 with a profit.

Specifically, Lafarge Africa Plc  posted a profit after tax of N3.14 billion in Q1, compared with  a loss of N2 billion recorded in the corresponding period of 2018. 

Commenting on the performance, Chief Executive Officer of Lafarge Africa Plc, Michel Puchercos,  the company’s momentum is very positive and would be sustained in 2019.

“Our Strategy 2022 , ‘Building for Growth’ in Nigeria is delivering the expected results with strong increase in operating earnings before interest  taxation depreciation and amortisation(EBITDA)  and profit. Our momentum is very positive and is expected to be sustained in 2019. South Africa continued the turnaround plan with significant improvement in Q1 2019 compared to prior year.Our strategic decision to divest South Africa with a sale to another affiliate of the LafargeHolcim Group, will strengthen our balance sheet,”   he said. 

 Puchercos explained that  the  Rights Issue (early this year) together with the divestment of its South African operations will deleverage Lafarge Africa by N246 billion, enabling to fully repay United States dollars  Shareholder Loan and short-term naira overdraft.

Also, Cutix Plc was among the price gainers, gaining 10  per cent, while  Conoil Plc, B.O.C Gases Plc  chalked up 9.9 per cent each. Flour Mills of  Nigeria Plc, Cadbury  Nigeria Plc and Sterling Bank Plc gained 7.1 per cent, 4.7 per cent and 4.5 per cent in that order.

Conversely, Smart Products Nigeria Plc led the price losers with 34.1 per cent trailed by Mutual Benefits Assurance Plc with 13.0 per cent. Guaranty Trust Bank Plc  shed 11.8 per cent. Presco Plc and  Redstar Express Plc depreciated by 10 per cent apiece, just as Fidson Healthcare Plc and Livestock Feeds Plc lost 9.9 per cent and 9.4 per cent in that order.

Other top price gainers included: Julius Berger Nigeria Plc (8.9 per cent); Sovereign Trust Insurance Plc (8.7 per cent) and Eterna Plc (7.5 per cent).