Investors traded only 735.702 million shares worth N7.132 billion in 7,138 deals last week as the market was opened for only three days due to the fact that Wednesday and Thursday were observed as public holidays to celebrate Christmas.
As a result, the volume and value of trading were 46 per cent and 54 per cent lower than the 1.381 billion shares valued at N15.504 billion respectively that exchanged hands in 14,528 deals the previous week.
The bearish trend extended last week as the Nigerian Stock Exchange (NSE) All-Share Index declined by 0.41 per cent to close at 26,416.48, while market capitalisation ended at N12.753 trillion.
Analysts had said the level of activity and volatility would be sustained over the final days of the year, with some pockets of gains expected, as fund and portfolio managers realign portfolios prior to the start of 2020.
The market is heading for its second consecutive year of decline, having declined by 17.8 per cent in 2018. Market analysts predicted that the NSE ASI would shed about 16 per cent this year.
Looking at the performance in the outgoing year, analysts at Vetiva Capital Market Limited said the market experienced a slow start in the year, mostly due pre-election uncertainty.
“Further to this, a general risk-off sentiment towards Emerging and Frontier Markets further hampered investment activity not only in Nigeria, but across Sub-Saharan Africa and the Middle East.
“In Nigeria, despite the merger of Access Bank and Diamond Bank at the end of first quarter (Q1) driving some interest in the banking sector, the resultant activity did not filter into the broader equity space over time, as the market closed Q1’19 in the red. Overall, the most positive period for the year followed the listing of MTNN, which drove the market into positive territory in May,” they said.
They explained that the second half of the year saw further tepid activity in equities, despite an influx of domestic liquidity spurred by the Central Bank of Nigeria (CBN)’s restriction of open market operation (OMO) auctions to just banks and Internationals. According to them, pension funds managers (PFAs) and investors seeking alternative investment channels flocked to the equity capital market, but only to bellwether stocks in robust sectors.
Analysts expect this trend to largely continue in 2020, however, driven by regulation, they expect capital restructuring in the insurance sector to induce more equity raising in 2020.
“Looking forward, foreign investor participation in Emerging and Frontier markets is likely to increase (even across equities), although the bulk of inflows will generally be to the Fixed Income space, amid dovish policy stances from developed economies and weaker global prospects. However, Nigeria is unlikely to be the main destination for investors, as comparable frontier markets currently present more attractive prospects.
Finally, due to the restriction on OMO activity, analysts foresee further inflows into the equity market from PFAs. However, given the PFAs cautious approach to equity investments in previous years, expectations are not overly optimistic. Although, the mooted reconstitution of the Pension Commission (PENCOM) board, could be a driver for investment growth, should the board reintroduce a minimum exposure to equities,” they added.
Also commenting, a stockbroker and Managing Director of Garba Kurfi of APT Securities and Funds Limited said the market did not badly especially in view of the successful listing of MTN and Airtel especially Airtel which was in computation of either listing in NSE or JSE but we have succeeded.
However, he said the market is likely to close in negative with about 16 per cent repeating last year’s given a total of over 30 per cent for the two consecutive years 2018 & 2019 just a repeat of 2015 & 2016.
“We are hopeful 2020 will repeat 2017 when NSE ASI gained over 42 per cent. The coming year is likely to repeat because of the following: our stocks are trading below the fair value compared with other frontier markets.
Our earnings ratio of about six times compared eight to 10 times in the frontier markets; the current Loan to deposit ratio (LDR) crashed the interest in the money market from 15 per cent to about seven per cent encourage high networth individuals to capital market; the crash of TBs rate from 15 per cent to about six per cent also move investments from money market into capital market.The signing of budget for 2020 in 2019 give the hope of capital execution ( CAPEX) which will have multiplier effect on the economy. All these give the hope of better performance in 2020,” Kurfi said.
Similarly, a shareholder activist, Mr. Moses Igbrude, who is member of Independent Shareholders Association of Nigeria(ISAN) rated it mixed grill. According to him, some companies paid good dividends especially the banks even with the challenging economic environment.
“Even with this performance the stocks prices were generally poor and extremely under value throughout this 2019. Many companies has delisted from the exchange because of environmental factors and government policies. Federal government policy instability, insecurity, port congestion multiple taxation, infrastructural deficiency, high cost of funds all contributed to poor performance.
I am appealing to the FG to take the capital market serious because it is the barometer to measure the economy of any nation by providing necessary support through good policies that can impact the economy, policies that will enhance infrastructural development, improve power stability, eliminating ports congestion by opening up other ports in other parts of country.
Harmonise all taxes for easy payment. A situation where tax consultants will slam five to seven years of over N100 billion tax on a company in order for the company management to negotiate is not idea in modern society. Government and companies should be partnership in progress,” he said.
Igrbude also said the government should address the liquidate problem in the economy by providing tax incentives as well as finding strategy to reduce the high cost borrowing.
“FG policies should focus on how to stimulate local production and encourage exports and Export Expansion Grant(EEG) scheme should be sincerely implemented,” he said.
Meanwhile, the Financial Services industry remained the most the active, trading 610.677 million shares valued at N4.710 billion traded in 4,319 deals, thus contributing 83.01 per cent and 66.04 per cent to the total equity turnover volume and value respectively. The Consumer Goods industry followed with 43.359 million shares worth N1.097 billion in 1,062 deals, while the third place was Conglomerates industry with a turnover of 37.576 million shares worth N63.537 million in 269 deals.
Trading in the top three equities namely, Law Union and Rock Insurance Plc, Access Bank Plc and United Bank for Africa Plc accounted for 320.699 million shares worth N1.587 billion in 1,063 deals, contributing 43.5 per cent and 22.2 per cent to the total equity turnover volume and value respectively.
Top price gainers and losers
In terms of price movement, 31 equities appreciated in price during the week, lower than 33 equities in the previous week, while 17 depreciated in price, lower than 25 equities in the previous week.
Nigerian Aviation Handling Company Plc appreciated by 13.2 per cent, trailed by NEM Insurance Plc, Nestle Nigeria Plc and A.G. Leventis Nigeria Plc chalked up 10 apiece. UACN Property Development Company Plc garnered 9.5 per cent.
University Press Plc, Unilever Nigeria Plc, Courtville Business Solutions Plc and Linkage Assurance Plc added 9.4 per cent, 8.9 per cent, 8.3 per cent and 8.1 per cent in that order.
Conversely, May & Baker Nigeria Plc led the price losers with 9.8 per cent, trailed by Cornerstone Insurance Plc with 9.5 per cent. Transcorp Hotels Plc shed 9.2 per cent, just as Law Union and Rock Insurance Plc went down by 9.2 per cent. Wema Bank Plc and Dangote Sugar Refinery Plc lost 8.5 per cent and 7.3 per cent in that order.
Other top price losers included: MTN Nigeria Plc (6.6 per cent); Guinness Nigeria Plc (6.2 per cent); FCMB Group Plc (5.2 per cent) and FBN Holdings Plc (3.8 per cent).