Stock Market Slips into Negative Territory as Bears Consolidate Hold

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Goddy Egene

The Nigerian equities market continued with the bearish trend following weak investors’ sentiment and negative reaction to unimpressive corporate earnings. As a result, the Nigerian Stock Exchange (NSE) All-Share Index fell by 0.62 per cent to close at 26,808.24, pushing the year-to-date(YTD) performance into negative territory. Specifically, the NSE ASI has recorded YTD decline of 0.13 per cent.

However, activity level rose as volume and value traded increased by 1.4 per cent and 63.7 per cent to 231.5 million shares and N4.5 billion respectively.

The most active stocks by volume were Zenith Bank Plc (45.6 million shares), Nigerian Breweries Plc (39.5 million shares) and Guaranty Trust Bank ( 35.6 million shares) while Nigerian Breweries Plc (N1.8 billion), Zenith Bank N868.1 million led by value.

Sectoral performance showed that three indicators declined led by the NSE Banking Index with 1.4 per cent. It was trailed by the NSE Consumer Goods Index that shed 0.9 per cent, while NSE Oil & Gas Index went down by 0.6 per cent. On the positive side, the NSE Insurance Index appreciated by 0.9 per cent.

In terms of price movement, 19 stocks dipped while 13 stocks appreciated. Flour Mills of Nigeria Plc led the price losers with 8.7 per cent, trailed by Consolidated Hallmark Insurance Plc with 6.9 per cent. NPF Microfinance Bank Plc went down by 6.25 per cent just as Stanbic IBTC Holdings Plc shed 6.23 per cent. Oando Plc lost 5.6 per cent.

Market operators said investors’ sentiments have remained weak since the release of full year results of some leading companies that showed lower bottom-lines.

According to them, the lower profitability of those bellwethers is making many investors become apprehensive of a not-too-impressive earning season.

For instance, Nigerian Breweries Plc recently recorded a revenue of N323 billion, showing a marginal decline compared to N324.4 billion in 2018. Cost of sales fell from N197.5 billion to N191.8 billion, while operating expenses rose from N90.8 billion to N97.1 billion in 2019.

Net financing cost grew by 57.4 per cent from N7.5 billion to N11.9 billion. Profit before tax fell by 20.6 per cent to N23.4 billion, compared with N29.4 billion in 2018. A reduction in tax rate made the profit after tax to decline slower by 17.1 per cent from N19.4 billion to N16.4 billion. However, the board recommended a final dividend of N1.51 kobo per share for the shareholders.