Equities Market Sheds N158bn, Records Sixth Consecutive Weekly Decline

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Goddy Egene

The downtrend at the stock market continued last week, leading to a sixth consecutive negative close. 

The Nigerian Stock Exchange All-Share Index (NSE ASI) fell by 1.17 per cent to 27,630.46, as investors ignored the earning season and continued taking profit. The   market capitalisation shed N157.7 billion to close at 13.3 trillion.  Year-to-date, the market has declined by 13.1 per cent. Although the market performance is seen as a negative development, it has depressed prices of stocks to a comfortable entry level.

The market had opened on Monday on a positive note as gains in Dangote Sugar Refinery Plc, Cement Company of Northern Nigeria Plc and MTN Nigeria Communications Plc lifted the NSE ASI by 0.10 per cent. 

However, the market turned negative on Tuesday, as it shed 0.5 per cent. The bearish trend was sustained on Wednesday with a decline of 0.4 per cent.  There was a little respite on Thursday as the market inched up marginally by 0.05 per cent. But the bears returned on Friday, dragging the index by 0.40 per cent, leading to a fall of 1.17 per cent for the week.

In terms of sectoral performance, the NSE Banking Index led the losers with  6.1 per cent  on the back of sell pressures in Unity Bank Plc (-13.5 per cent ), FBN Holdings Plc(-11.6 per cent) and Zenith Bank Plc (-10.7 per cent).

Banking stocks remained under pressure despite the improved results already released by some of the banks. Unity Bank Plc, which shed 13.5 per cent last week, had reported a 96 per cent jump in profit for the half year to June 30, 2019. Also, FBN Holdings Plc that went down 11.6 per cent, ended the H1 2019 with improved profitability and decline in non-performance loans(NPL). 

The Group Managing Director of FBN Holdings Plc, Mr. UK Eke recently said the company was committed to delivery sustainable long-term performance following continuous improvement in the NPL.

 FBN Holdings NPL ratio has dropped to 14.5 per cent  from 25.3 per cent  as of March 2019 and 25.9 per cent  at the end of 2018 financial year. 

“Despite the difficult operating environment, we remain resolute in delivering on our guidance across key metrics including our commitment towards a single digit NPL ratio by the end of year, as evidenced by the reduction in NPLs from the last quarter. Essentially, Atlantic Energy – our largest NPL, was written off, translating to a decline in the NPL ratio from 25.9 per cent in December 2018 to 14.5 per cent as at June 2019, a step that brings us closer to our FY 2019 target and creates more headroom for quality asset growth. 

“This is paving the way for sustained improvement in asset quality and a further reduction in impairment charges that will allow us to take advantage of enhanced earnings opportunities when they arise. “Furthermore, we have remained focused on deepening our transaction-led income and are uniquely positioning for stronger revenue growth and value creation,” Eke said. 

Also speaking, the Chief Executive Officer, First Bank and Subsidiaries, Dr. Adesola Adeduntan, said: “In line with our commitment to address the legacy asset quality challenges, exposure to Atlantic Energy was written off in the quarter. 

“This is a material progress in our legacy NPL resolutions and clearly reflects our resolve towards achieving a single digit NPL ratio by year end. In addition, this step creates significant headroom for increased business opportunities and enhanced earnings especially in the oil & gas sector of the economy.”  

The NSE Insurance Index shed 3.9 per cent, while the NSE Oil & Gas Index and NSE Consumer Goods Index went down by 1.6 per cent and 0.6 per cent in that order.

Market turnover

Investors traded 1.081 billion shares worth N12.014 billion in 16,246 deals last week, as against 759.266 million shares valued at N14.038 billion that exchanged hands in 16,209 deals last week.  However, the Financial Services industry remained the most traded, recording led  900.334 million shares valued at N9.076 billion traded in 8,693 deals, thus contributing 83.3 per cent and 75.54 per cent to the total equity turnover volume and value respectively. 

The Conglomerates Industry followed with 51.224 million shares worth N64.388 million in 897 deals, while the third place was occupied by Consumer Goods Industry with a turnover of 40.906 million shares worth N946.210 million in 3,090 deals.    

Trading in the top three equities namely: Sterling Bank Plc, Guaranty Trust Bank Plc and Access Bank Plc (measured by volume) accounted for 511.856 million shares worth N6.133 billion in 2,074 deals, contributing   47.36 per cent  and 51.05 per cent to the total equity turnover volume and value respectively.

Also, total of 36,011 units valued at N495,359.07 were traded last week in 13 deals compared with a total of 87,142 units valued at N1.180 million transacted the previous week in 18 deals.

Similarly, a total of 18,100 units of Federal Government Bonds valued at N20.049 million were traded last week in  eight  deals compared with a total of 433,774 units valued at N445.318 million transacted two weeks ago week in 16 deals.

Top price gainers and losers

Meanwhile, only 12 equities appreciated in price during the week, lower than 32 equities in the previous week, while 43 equities depreciated in price, higher than 27 equities in the previous week.

Cement Company of Northern Nigeria Plc led the price gainers with 13.3 per cent, trailed by Dangote Flour Mills Plc with 11.3 per cent. B.O.C Gases Plc chalked up 9.8 per cent, just as NCR (Nigeria) Plc garnered 9.4 per cent. 

AXA Mansard Insurance Plc and Custodian Investment Plc  appreciated by 9.1 per cent, just as Sterling Bank Plc and LASACO Assurance Plc 6.6 per cent and 5.8 per cent in that order. Lafarge Africa Plc and MTN Nigeria Communication Plc 4.1 per cent and 3.1 per cent respectively.

Conversely,  Continental Reinsurance Plc led the price losers with 19.2 per cent, trailed by Law Union & Rock Insurance Plc with 17.0 per cent. Unity Bank Plc and Forte Oil Plc went down by 13.5 per cent and 12.6 per cent in that order.

Academy Press Plc depreciated by 12.5 per cent, just as FBN Holdings Plc shed 11.6 per cent. May & Baker Nigeria Plc and Zenith Bank Plc 10.8 per cent  and 10.6 per cent.  Nigerian Aviation Handling Company Plc and Guinness Nigeria Plc declined by 10 per cent apiece.