Equities Market Remain  Bearish Despite Positive Corporate Earnings


By Goddy Egene

The Nigeria equities market declined for the fourth consecutive week with the Nigerian Stock Exchange (NSE)  All-Share Index falling by 0.38 per cent to close at 26,348.73. The market similarly recorded a negative performance the previous week when it dipped by 0.32 per cent. 

Despite the announcement of corporate results for the nine months ended September 30, where the banks recorded improved performance, the bear run   persisted. The level the NSE ASI closed was its lowest since May 5, 2017.  On month-on-month, the market has shed 4.6 per cent and 16.2 per cent year-to-date. The market recorded losses in four days while performance across the sectors was equally bearish.   The NSE Insurance Index led with 1.7 per cent fall, followed by the NSE Industrial Goods Index with 1.5 per cent. The NSE Consumer Goods Index went down by 0.6 per cent, while the NSE Banking Index, and NSE Oil & Gas Index shed 0.4 per cent and 0.3 per cent in that order.

Commenting on the market performance, analysts at Cordros Capital Limited said: “In our view, the trend witnessed through the year is likely to persist through the final quarter of the year, although we expect pockets of gains over the final months of the year as fund and portfolio managers realign portfolios prior to the start of 2020. Nonetheless, we note that valuations remain attractive driven by price deterioration throughout the year. Hence, we advise long-term investors to take positions in the market, given currently attractive valuations.”

Earnings Season Kicks Off

The earnings season for the companies to declare their corporate results swung into full gear last week with mixed results.  Banks posted improved performances, while some manufacturing and petroleum products manufacturing firms posted poor results. Some ended with losses while others reduced bottom-lines.

For instance, Zenith Bank Plc, GTBank Plc, Access Bank Plc, United Bank for Africa (UBA) Plc and FBN Holdings Plc that released their results, recorded growth in their profitability. Zenith Bank Plc recorded the highest profit in terms of absolute figures while Access Bank Plc led in terms of percentage growth.

Zenith Bank Plc led with a profit after tax (PAT) of N150.7 billion, compared with N144.2 billion posted in the corresponding period of 2018. GTBank Plc followed with a PAT of N146.9 billion, up from N142.2 billion.  Access Bank Plc recorded a PAT of N90.7 billion, showing an increase of 44 per cent compared with N62.9 billion in 2018

 UBA posted PAT of N81.6 billion, which is 32.2 per cent above the N61.7 billion in the corresponding period of 2018, while FBN Holdings Plc   ended the nine months with N51.74 billion, compared with N44.8 billion in 2018.

“Our retail and corporate banking franchises continued its momentum with customers’ deposits growing by seven to N3.95 trillion from N3.69 trillion recorded as at December 2018, a reflection of increasing share of the industry’s deposits and customers’ confidence in the Zenith brand. These deposit acquisitions have directly contributed to our cost of funds improving from 3.3 per cent in 2018 to 2.95 per cent in 2019,” Zenith explained in the statement.

On his part, the Group Managing Director/CEO, UBA Plc, Kennedy Uzoka, said the resilience of the bank’s business model and its focused growth of earning assets have yielded a 10.8 per cent growth in interest income. 

“In addition to the commendable yield on interest earning assets, we also achieved a 22.1 per cent growth in non-interest income, driven largely by the increased penetration of our superior digital banking offerings, credit expansion, remittances and other lifestyle transactional services. UBA remains committed to its vision of becoming the undisputed leading and dominant financial services institution in Africa. We will continue to innovate and lead in all our business segments, whilst delivering top-notch operational efficiencies and best-in-class customer service. We are beginning to realise early gains from our ongoing Transformation Program and I am indeed excited about the days ahead,” Uzoka stated.

Market turnover

Meanwhile, the market recorded a turnover of 2.051 billion shares worth N16.126 billion in 13,508 deals  compared with  896.610 million shares valued at N16.561 billion that exchanged hands  the previous  week in 12,638 deals. 

 The Financial Services industry led the activity chart with 1.784 billion shares valued at N12.588 billion traded in 8,469 deals. The sector, thus contributed 87 per cent and 78.1 per cent  to the total equity turnover volume and value respectively. The Conglomerates industry followed with 98.429 million shares worth N120.779 million in 444 deals. The third place was Construction/Real Estate industry with a turnover of 57.873 million shares worth N66.019 million in 90 deals.    Trading in the top three equities namely, Omoluabi Mortgage Bank Plc, Zenith Bank Plc and  Transnational Corporation of Nigeria Plc  accounted for 1.388 billion shares worth N9.067 billion in 2,221 deals, contributing 67.7 per cent and 56.2 per cent  to the total equity turnover volume and value respectively. 

In the exchanged traded products segment, investors traded   1,405 units valued at N244,462.05  in  nine  deals compared with a total of 960 units valued at N146,642.75 transacted two weeks  in 11 deals.

In terms of bonds trading, a total of 9,018 units of Federal Government Bonds valued at N9.713 million were traded last week in 13 deals compared with a total of 1,397 units valued at N1.518 million transacted the preceding week in nine  deals. 

 Top price gainers and losers

A look at the price movement chat showed that 18  equities appreciated in price during the week, lower than 19 in the previous week, while 33 equities depreciated in price, higher than 23 equities in the previous week.

Cornerstone Insurance Plc led the price gainers with 18.7 per cent, followed by Consolidated Hallmark Insurance Plc with 12.1 per cent. Trans-Nationwide Express Plc chalked up 9.1 per cent, just as Sterling Bank Plc garnered 7.7 per cent. A.G Leventis Plc went up 7.6 per cent, while UACN Property Development Company Plc appreciated by 7.0 per cent. 

Cutix Plc and Courteville Business Solutions Plc  went up by 6.8 per cent and 5.0 per cent respectively, while Union Diagnostic & Clinical Services Plc and Continental Reinsurance Plc  gained 4.5 per cent and 3.4 per cent  in that order. 

Conversely, Guinness Nigeria Plc led the price losers with 18.7 per cent decline, trailed by NEM Insurance Plc with 13 per cent. Custodian Investment Plc shed 12.1 per cent.  Jaiz Bank Plc went down by 10 per cent, while C & I Leasing Plc and Eterna Plc lost 9.5 per cent respectively. 

Glaxosmithkline Consumers Nigeria Plc and  Ikeja Hotel Plc depreciated by 9.3 per cent apiece, while WAPIC Insurance Plc  and LASACO Assurance Plc  dipped by  8.5 per cent  and 7.1 per cent respectively.