Banking Stocks’ Gains Lift Equities Market 

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Goddy Egene

The stock market recorded its first weekly gain after five consecutive weeks of losses.  The market which, had declined by 0.21 per cent the previous week, recovered to close on positive note last week.

Specifically, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) rose 0.08 per cent to close at 26,314.49, while market capitalisation added N10.3 billion to be at N12.8 trillion. 

The market had started the week on a positive note on Monday when the NSE ASI rose by 0.41 per cent, due to price appreciation in Guaranty Trust Bank Plc, Stanbic IBTC Holdings Plc and United Bank for Africa Plc. But losses in Nestle Nigeria and MTN Nigeria Communications Plc pulled the market into the bears’ territory on Tuesday. The negative performance was sustained on Wednesday and Thursday as the market fell by 0.58 per cent and 0.14 per cent respectively.

However, rally by GTBank, Access Bank Plc among others on Friday led a growth of 0.48 per cent, making the index to close the week with 0.08 per cent growth. 

The NSE Banking Index posted the highest growth of 8.5 per cent driven by buy interest in Tier 1 Banks. The NSE Industrial Goods Index trailed with 2.0 per cent, while the NSE Insurance Index appreciated by 0.4 per cent. 

Conversely, the NSE   Consumer Goods Index declined by 5.6 per cent, , while the NSE Oil & Gas Index shed 0.2  per cent.

Commenting on the market performance, analysts at Afrinvest West Africa said they did not expect the positive trend to  be sustained in subsequent weeks due to weak investor sentiment towards equities.

“However, the Central Bank of Nigeria (CBN) recently restricted individuals, local corporates and non-banking financial institutions from participating in both the primary and secondary markets for Open Market Operations (OMOs). Following this directive, we expect investors’ focus to shift towards equities due to current low prices and attractive dividend yields,” they said.

 Also speaking, analysts at Cordros Capital Limited, said the market was a reflection of investors’ views about the expectations for the economy given the still uninspiring macro story. 

“Nonetheless, we expect the market might benefit over the short-term from recent policy directions as investors seek alpha-yielding opportunities in the face of lower yields in the fixed income market,” they said.

Market turnover

Meanwhile, investors traded 2.063 billion shares worth N18.431 billion traded in 16,778 deals last week, up from 1.511 billion shares valued at N16.193 billion that exchanged in 15,544 deals.    The Financial Services industry remained the most active, leading with 1.833 billion shares valued at N12.367 billion traded in 11,116 deals.  The sector, thus contributed 88.82 per cent and 67.1 per cent to the total equity turnover volume and value respectively. 

The Industrial Goods industry followed with 102.535 million shares worth N2.236 billion in 1,148 deals, while third place was occupied by Consumer Goods industry with a turnover of 46.061 million shares worth N1.676 billion in 1,965 deals.   

Trading in the top three equities namely: Jaiz Bank Plc, Access Bank Plc and Zenith Bank Plc accounted for 1.118 billion shares worth N8.018 billion in 4,492 deals, contributing 54.18 per cent and 43.5 per cent to the total equity turnover volume and value respectively. 

Jaiz Bank Plc last week said it would pay a dividend for the current financial year. If this happens, it will be the first time the shareholders would be receiving dividend since the stock was listed on the NSE. 

The Managing Director of Jaiz Bank Plc, Hassan Usman said decision to pay dividend was informed by the improving fortunes of the non-interest bank as indicated in the nine months results ended September 30, 2019.

The bank posted total income of N7.670 billion in 2019, up by 49.2 per cent from N5.141 billion in the corresponding period of 2018. Profit before tax jumped by 510 per cent to N1.471 billion, compared with N241 million in 2018, while profit after tax grew fast by 643 per cent from N161 million to N1.205 billion in 2019.  Deposits from customers rose from N33.24 billion to N57.1 billion, while total assets grew from N99.86 billion to N151.94 billion.

 Usman said the results further demonstrated that the bank has the capacity to grow sustainably in line with its strategic vision of becoming the leading non-interest bank in Sub-Saharan Africa by 2022.

He said the bank was determined to be in every state of the economy, rendering financial services that address human needs irrespective of their faith and religion.

Giving more insight on the operations of the bank, he said Jaiz Bank does not represent any particular religion.

Usman said: “We are the face of a new concept in banking. One important information we will continue to emphasize is that this product is not a religious product. It is open and available to all, irrespective of their faith or religion. 

“It is a mode of financing that tries to address human needs directly by providing goods and services on a payment basis different from conventional banking that we know. Literarily, that is what non-interest or Islamic banking is doing anywhere in the world. It is about providing financing to people who cannot afford to buy directly with their own resources at a time. So, rather than give money, we provide the services and goods people are looking for to meet their consumption needs or businesses. We have seen from our operations so far that all manner of persons come to us and we do business with them. This, I believe, is what we have been doing.” 

Top price gainers and losers

The price movement chart showed that 30 equities appreciated in price during the week, higher than the 27 equities in the previous week, while 28 depreciated in price, higher than 18 equities in the previous week.

Law Union and Rock Insurance Plc led the price gainers with 30.9 per cent, trailed by Jaiz Bank with 18.3 per cent. Access Bank Plc chalked up 17.9 per cent, just as FCMB Group Plc gained 16.2 per cent. 

United Bank for Africa Plc garnered 13.7 per cent, while GTBank Plc and Cement Company of Northern Nigeria Plc appreciated by 13.5 per cent and 10.1 per cent in that order.

Champion Breweries Plc, FBN Holdings Plc and Cornerstone Insurance Plc appreciated by 10 per cent, 9.4 per cent and 8.8 per cent respectively.

Conversely, Unilever Nigeria Plc led the price losers with 26.6 per cent, trailed by International Breweries Plc with 25.4 per cent, just as Fidson Healthcare Plc and Presco Plc shed 12.5 per cent and 9.9 per cent in that order.   Capital Hotel Plc, MRS Oil Nigeria Plc and Ikeja Hotel depreciated by 9.8 per cent, 9.7 per cent and 9.3 per cent respectively.

Other top price losers included: UACN Property Development Company Plc (9.3 per cent); UPDC Real Estate Investment Trust (9.1 per cent)and MCnichols Plc (8.7 per cent).