Stock Market Sheds 1.4% as Profit-taking Halts Recovery

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By Goddy Egene

Profit-taking in bellwethers such as Dangote Cement Plc, Nestle Nigeria Plc and some banking stocks halted the equities market’s further recovery last week.

The market had jumped 7.19 per cent the previous week, recovering about N801.3 billion in value due to bargain hunting by investors.

However, the trend changed last week as investors locked in profits recorded during the short bull-run. As a result, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell 1.4 per cent to close lower at 22,921.38, while market capitalisation shed N167.9 billion to close at N11.778 trillion.

Although there were positive performances on two trading sessions, decline for three days led to the negative close. Investors’ sentiments were still being influenced by the impact of the coronavirus in Nigeria that has continued to spread.

Globally, COVID-19 continued to spread, with the total number of cases reaching about 2.7 million at the weekend, up from the 1.9 million recorded the previous week while the death toll rose to 191,167 from 130,885 persons. Unfortunately, optimism about a potential vaccine was dashed as Gilead’s ‘Remdesivir’ failed the first clinical trial.

According to Afrinvest, the United States remains the hardest hit with active cases and death toll totaling 888,709 and 50,243 respectively.

“Similarly, an additional 4.4 million people filed unemployment claims, taking total Coronavirus-induced job losses to 26.5 million (16 per cent unemployment rate). The US Senate has approved a Coronavirus Relief Bill of $484 billion to provide new funding for distressed small businesses, with readiness to deploy more relief packages. In the coming week, we expect concerns on the spread of the virus to shape investor sentiments in the markets,” Afrinvest said.

Considering the effect of COVID-19 on Africa, the markets were generally bearish as five of the six tracked closed negatively. While Nigeria declined by 1.4 per cent. Mauritius’ SEMDEX dipped by 6.5 per cent. Egypt’s EGX 30 went down by 3.2 per cent. Similarly, Morocco’s Casablanca MASI and Kenya’s NSE 20 indices trended south, losing 0.5 per cent and 0.3 per cent in that order. Only the Ghana GSE Composite index gained, garnering 2.2 per cent.

Performance across the BRICS markets was mixed as three of five indices lost. South Africa’s FTSE/JSE All-Share and Russia’s RTS gained, up 0.6 per cent and 0.3 per cent respectively. On the flip side, Brazil’s Ibovespa led the losers, down 6.0 per cent due to political crisis in the country. Similarly, China’s Shanghai Composite and India’s BSE Sens indices also ebbed lower by 1.1 per cent and 0.8 per cent respectively.

The Asian and Middle East markets recorded a mixed performance with two of five indices closed in the red. Qatar’s DSM 20 and Saudi Arabia’s Tadawul ASI went down by 1.2 per cent and 0.4 per cent respectively. But Turkey’s BIST 100 gained the most, rising 2.6 per cent as investors reacted positively to the 1.0 per cent cut in interest rates. UAE’s ADX General and Thailand’s SET indices trailed, advancing 2.4 per cent and 1.6 per cent in that order.

Also, performance in the developed markets was negative with all indices track recording losses. In the US, the S&P 500 and NASDAQ declined 2.3 per cent and 1.8 per cent respectively. The United Kingdom’s s FTSE All Share fell 0.1 per cent just as Germany’s XETRA DAX and France’s CAC 40 indices fell 2.2 per cent and 1.9 per cent in that order. In the same vein, Japan’s Nikkei 225 and Hong Kong Hang Seng Indices lost 3.2 per cent and 2.3 per cent week-on-week respectively.

Market turnover

Investors traded a total of 1.195 billion shares worth N13.979 billion in 20,591 deals last week compared with 1.495 billion shares valued at N12.894 billion that exchanged hands in 20,982 deals the previous week. However, the Financial Services industry remained the most active, recording 965.571 million shares valued at N7.811 billion traded in 11,710 deals. The sector, thus contributed 80.79 per cent and 55.88 per cent to the total equity turnover volume and value respectively. The Industrial Goods industry followed with 54.803 million shares worth N1.509 billion in 2,043 deals, while the third place was occupied by the Conglomerates industry, with a turnover of 54.114 million shares worth N111.406 million in 460 deals.

Trading in the top three equities namely, FBN Holdings Plc, Guaranty Trust Bank Plc and Zenith Bank Plc accounted for 581.950 million shares worth N6.363 billion in 7,185 deals, contributing 48.69 per cent and 45.52 per cent to the total equity turnover volume and value respectively.

Top price gainers and losers

Meanwhile, the price movement chart showed that 25 equities appreciated in price during the week, lower than 37 equities in the previous week, while 33 equities depreciated in price, higher than 21 equities in the previous week.

Cadbury Nigeria Plc, which recorded a growth of 26 per cent in its results for the first quarter ended March 31, 2020, led the price gainers with 18.25 per cent.

Despite a decline of 7.8 per cent in revenue, the company ended the Q1 with higher bottomline. Analysts at Greenwich Trust Limited had noted that Cadbury posted a stronger export sale that rose by 27.93 per cent despite the border closure, while domestic sales plunged by 11.93 per cent, as competition heightened in a more difficult operating environment.

Although cost of sales eased by 9.32 per cent, gross profit fell marginally by 3.6 per cent to settle at N2.29 billion as against the N2.38 billion recorded in the corresponding period of 2019.

Cadbury’s other income spiked by jumped majorly due gains to the disposal of property, plants and equipment, while operating profit also rose by 23.53 due to, due to the reduction in selling and distribution expenses as well as administrative expenses by 9.07 per cent and 24.36 per cent respectively.
Profit after tax (PAT) grew by 26.04 per cent from N507 million to N639 million in 2020, while earnings per share (EPS) moved from 27 kobo to 34 kobo per share.

Wema Bank Plc closed as the second highest price gainer with 10.7 per cent, followed by NEM Insurance Plc with 10 per cent. University Press Plc chalked up 9.3 per cent, just as Omoluabi Mortgage Bank Plc and NPF Microfinance Bank Plc gained 9.0 per cent and 8.7 per cent in that order.

Learn Africa Plc and NASCON Allied Industries Plc appreciated by 8.4 per cent and 7.4 per cent respectively, while United Capital Plc ebbed 6.6 per cent higher.

Conversely, Skyway Aviation Handling Company Plc led the price losers with 26 per cent, trailed by UAC of Nigeria Plc which shed 17.3 per cent. Guinness Nigeria Plc and Champion Breweries Plc went down by 15.6 per cent each, just as Oando Plc lost 12.2 per cent.

Fidelity Bank Plc and CAP Plc shed 10.7 per cent, while C & I Leasing Plc and Cornerstone Insurance Plc decline by 8.9 per cent and 8.4 per cent respectively.