Equities Market Sheds N239bn on Continuing Profit-taking

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Goddy Egene

The stock market remained bearish last week as investors continued to take profit, leading to a decline of 2.7 per cent in the Nigerian Stock Exchange (NSE) All-Share Index which closed at 28,067.09 on Friday.

Also, the market capitlisation shed N239 billion to close at N14.6 trillion.  

While investors had a bullish outing in the month of January, the first week of February witnessed a sluggish performance following negative reactions to interim results of companies that showed mixed performances. 

Sectorally, only the NSE Insurance sector appreciated with 0.2 per cent, while others tracked depreciated. The NSE Industrial Index led the laggards, shedding 4.1 per cent, trailed by NSE Oil & Gas Index which   fell by three per cent.  The NSE Consumer Goods Index declined by 2.2 per cent. In the same vein, the NSE Banking Index went down by 1.5 per cent.

Analysts at Cordros Capital, said the negative trend witnessed last week, would likely persist.

“In our view, the trend witnessed is likely to persist, as the dual impacts of the weakening sentiment and mixed earnings performances during earnings season are expected to pressure market returns. Nonetheless, we advise investors to take positions in fundamentally justified stocks,” they stated in a report.

However, some positive news came from the market last week that are capable of changing investors’ sentiments to positive territory.

For instance, the NSE and Securities and Exchange Commission (SEC) intensified efforts in ensuring trading in derivatives in the market by putting together a capacity building workshop for operators.

The workshop, which was focused on the legal and regulatory requirements of derivatives trading for capital market operators, was put together to guide market participants to properly interpret the approved exchange traded derivative rules and recently released SEC’s derivatives and clearing rules, as well as address concerns on the on-boarding process. 

According to Chief Executive Officer of NSE, Mr. Oscar Onyema, “The introduction of exchange- trade derivatives on our bourse is aimed at broadening the options available to support efficient implementation of risk management and investment strategies across diverse asset classes and financial instruments. 

“We are, therefore, delighted to host this event in recognition of the importance of capacity building and investor education to the development of this asset class.

“We are working tirelessly to ensure that our derivatives market remains aligned with International Organisation of Securities Commission (IOSCO) principles by facilitating access to recognised and licensed derivative products, world class market surveillance technology, effective trading rules as well as appropriate risk management and clearing facilities.”

Also speaking, on the rules guiding the derivatives market, Head of Department, Registration, Exchanges, Market Infrastructures and Innovation, SEC, Mr. Emomotimi Agama said: “The NSE and SEC have provided the platform and requisite rules to guide activities in the derivatives market. It is, therefore, the responsibility of capital market operators to work with us to galvanise activities within this market segment. 

“Furthermore, interested dealing members or clearing houses must build strong capacity to deliver on investor education, proper legal frameworks, effective risk management procedures, and advanced reporting standards to engage in Derivatives Trading for the safety & security of investors.”

Also, last week, the Minister of Environment, Dr. Mohammad Abubakar said  the federal government was ready to  undertake a third  tranche of the green bond programme of up to N25 billion to fund environmental projects.

 “The first tranche of the green bond was about N10 billion, the second N15 billion and the third, we are looking at N25 billion. We are moving up in the launch 

“We want to embark on more projects that are climate sensitive that will help in eliminating climate problems.”

He stated that the proceed of the green bond will be used to finance power, aforestation, deforestation water, energy, agriculture among other projects among others.

“We are moving to smart agriculture to produce more foods with minimal impact on the environment. The third tranche  will further demonstrate the government’s commitment to the reduction of greenhouse gas emissions by 20 per cent unconditional and 45 per cent conditional by 2030, as outlined under the Paris Agreement signed on 21 September 2016,” he said.

Market turnover

Investors traded 1.478 billion shares worth N20.295 billion in 23,263 deals last  week in contrast to a total of 1.561 billion shares valued at N26.073 billion that exchanged hands  the previous  week in 21,444 deals.    However, the Financial Services industry  remained the most traded, recording  1.199 billion shares valued at N13.728 billion traded in 15,183 deals,  thus contributing 81.14 per cent and 67.64 per cent  to the total equity turnover volume and value respectively. The Consumer Goods followed with 68.225 million shares worth N2.444 billion in 2,312 deals. The third place was Conglomerates industry, with a turnover of 60.095 million shares worth N242.213 million in 922 deals.      

 Trading in the top three equities:  Zenith Bank Plc, FBN Holdings Plc and  Guaranty Trust Bank Plc, accounted for 621.150 million shares worth N11.275 billion in 6,718 deals. 

Top price gainers and losers

Meanwhile, 15 equities appreciated last week lower than 17 equities in the previous week, while 49 equities depreciated in price, higher than 44 equities in the previous week.

Law Union and Rock Insurance Plc led  the price gainers with 58.5 per cent, trailed by Union Bank of Nigeria Plc with 17.8 per cent, while Honeywell Flour Mills Plc gained 13.4 per cent.

Livestock Feeds Plc, Japaul Oil & Maritime Services Plc garnered 10 per cent and 8.7 per cent respectively. Linkage Assurance Plc and Nigerian Aviation Handling Company Plc chalked up 8.7 per cent and 4.8 per cent respectively. Flour Mills Nigeria Plc appreciated by 3.6 per cent, just as AIICO Insurance Plc added 2.5 per cent.

Conversely, C & I Leasing Plc led the price losers with 26.5 per cent, trailed by Royal Exchange Plc with 16.6 per cent. Cadbury Nigeria Plc shed 16.2 per cent, just as NASCON Allied Industries Plc  lost 13.3 per cent.

Eterna Plc, Conoil Plc, Trans-nationwide Express Plc and NEM Insurance Plc went down by 10 apiece, while NCR (Nigeria) Plc and Forte Oil Plc closed lower by 9.9 per cent each.