Investors Trade N12.126bn Shares amid Bearish Sentiments

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Goddy Egene

Investors staked N12.126 billion on 912.175 million shares in 17,083 deals at the stock market last week, showing a decline of 40.2 per cent compared with N20.295 billion invested in 1.478 billion shares in 23,263 deals the previous week.

The lower market turnover resulted from weak sentiments that continued to dominate the domestic stock market.

The bearish trend led to the Nigerian Stock Exchange (NSE) All-Share Index, shedding 1.1 per cent to close at 27,755.87, while market capitalisation shed N162.1 billion to close at N14.456 trillion.

This was the third consecutive week that NSE ASI would decline, bringing the year-to-date decline to 3.4 per cent.

Analysis by sectors for the week showed that the NSE Consumer Goods Index recorded the highest decline, falling by 6.5 per cent, trailed by NSE Insurance Index with 2.2 per cent.

The NSE Oil & Gas Index shed 0.7 per cent, just as the NSE Banking Index went down by 0.7 per cent. The sole gainer for the week was the NSE Industrial Goods Index that appreciated by 0.78 per cent.

Commenting on the market performance, analysts at Cordros Capital said the bearish trend would likely continue, noting that weakening market sentiment and the absence of positive catalysts are expected to pressure market returns.

“Nonetheless, we advise investors to take positions in fundamentally justified stocks,” they said.

Although the market has been bearish since February, some market operators remained optimistic that the market will end 2020 on positive note. 

According to the Managing Director/Chief Executive Officer of APT Securities and Funds Limited, Mallam Garba Kurfi, the market would close 2020 on positive note after declining in 2018 and 2019.

“The NSE ASI is likely going to close 2020 positively and record close in double-digit growth.  Both technical and fundamental analyses move to the positive direction.  However, the market may experience volatility because of the changes in the reporting financial reports as adopted by the exchange without adequate awareness of the brokers.

“Also, I foresee banks unlikely to make more profits like they did in 2019 because they are pressured by the Central Bank of Nigeria (CBN) directive to meet up 65 per cent loan to deposit ratio (LDR),” Kurfi added.

But he noted that the review of Cash Reverse Ratio (CRR) from 22.50 per cent to 27.50 per cent,  by CBN would redirect funds into the stock market, explaining that  the restriction placed by apex bank  on Open Market Operation and Treasury Bills participation, if sustained, would also  impact positively on the stock market,” he said.

Kurfi, who is a former Council Member of the Nigerian Stock Exchange (NSE) and currently Board Member of the Investment   and Securities Tribunal (IST) noted that the demutualisation of the NSE, would  lead to a more virile stock market, activate idle capital and boost  economic activities.

“The demutualisation of the  NSE  would make  the exchange to function better like its peers  such as the  Johannesburg Securities Exchange (JSE), Nairobi Securities Exchange (NSE) that had already undergone the process.

“It is a good thing and all of us are going to be happy at the end of the day because it is going to unlock more capital for the market.  For instance, if I place shares as collateral, I can trade and make money, we are pleased this is coming after so much delay,” he said.

Looking ahead, Kurfi said companies that benefit from Value-added tax (VAT) exemption such as water, sanitary products, will likely  declare better profits.

He added that building material companies such as cement  firms, are likely to double their turnover and bottom-line because of early implementation of the budget and focus on infrastructural development.

Market turnover

Meanwhile, the  Financial Services industry led the activity chart with 624.219 million shares valued at N7.129 billion traded in 9,640 deals, thus contributing 68.4 per cent and 58.7 per cent to the total equity turnover volume and value respectively. The Conglomerates followed with 93.204 million shares worth N452.093 million in 861 deals. The third place was occupied by Oil and Gas industry, with a turnover of 59.267 million shares worth N124.638 million in 1,254 deals.     

 Trading in the top three equities namely, Zenith Bank Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc accounted for 304.089 million shares worth N5.788 billion in 4,290 deals, contributing 33.3 per cent  and 47.7 per cent to the total equity turnover volume and value respectively.

Exchange Traded Products recorded   a total of 1,540 units valued at N137,421.20 were traded  in five deals, compared with a total of 3,840 units valued at N12.029 million transacted  the previous week in  eight  deals.

The bond market accounted for 23,923 units of Federal Government Bonds valued at N28.986 million were traded this week in 22 deals, as against  55,246 units valued at N63.094 million transacted two weeks in  15 deals.

Top price gainers and losers

A look at the price movement chart showed that 19 equities appreciated in price last week, higher than 15 equities in the previous week, while 35 equities depreciated in price, lower than 49 equities in the previous week.

Livestock Feeds Plc led the price with 16.6 per cent, trailed by United Capital Plc with 15.2 per cent. Trans-Nationwide Express Plc chalked up 11.1 per cent. Learn Africa Plc with 9.7 per cent,  while Prestige Assurance Plc garnered 9.2 per cent.

UAC of Nigeria Plc gained 6.5 per cent, just as Courtville Business Solutions Plc went up by 4.7 per cent. University Press Plc and Africa Prudential Plc chalked up 4.1 per cent and 4.0 per cent respectively.

Conversely, Linkage Assurance Plc led the price losers with 25.8 per cent,  trailed by Skyway Aviation Handling Company Plc with 23.2 per cent. Guinness Nigeria Plc and Vitafoam Nigeria Plc shed 16.5 per cent and 12.1 per cent in that order. Nestle Nigeria Plc and Neimeth International Pharmaceuticals Plc dipped by 10 per cent each.

MRS Oil Nigeria Plc went down by 9.8 per cent, while Chams Plc lost 9.6 per cent. Japaul Oil & Maritime Services Plc shed 9.0 per cent, just International Breweries Plc fell by 8.8 per cent respectively.