Darasimi Adebisi
On the heels of foreign investors exit, double-digit inflation rate and investors renewed interest in money market instruments, value of Nigerian Exchange Limited (NGX) top 10 highly capitalised stocks dropped by N474.95billion in nine months, THISDAY findings has revealed.
The top 10 highly capitalised stocks on the NGX are Dangote Cement Plc, MTN Nigeria Plc, Airtel Africa Plc, BUA Cement Plc, Nestle Nigeria Plc, and GTCO Plc.
Others are; Zenith Bank Plc, Stanbic IBTC Holdings Plc, NB Plc, Lafarge Africa Plc.
Based on sector representation, Industrial Goods and Financial Services sectors both have three representations each while the ICT and Consumer Goods Sectors accounted for two each.
The decline in these companies value is based on drop in their stock prices between December 31, 2020 and September 30, 2021.
The mixed performance by these high- capitalised companies contributed to the decline in market capitalisation by N107.99billion in nine months of 2021, THISDAY had reported.
As of September 30, 2021, the top 10 companies by market capitalisation accounted for about N17.3trillion of the total market capitalisation of N20.96trillion.
This represents 82.4 per cent contribution to the NSE market capitalisation.
According to Vice President, Highcap securities Limited, Mr. David Adnori, the weight of highly capitalized stocks listed on the NGX do contribute immensely to the performance of the NSE ASI on daily basis.
According to him: “More importantly, this weighty contribution to the performance is more reflective in the market breadth position recorded in any trading day activities. Despite a negative market breadth, a positive movement in the share price of any of the highly capitalized stocks could lift the NSEASI to close in the positive territory and sometimes, reverse is the case.”
With highest foreign investors participation on NGX, Dangote Cement, MTN Nigeria and Lafarge Africa recorded increase in value traded by investors in nine months, while others recorded decline to undermined investors sentiment trading on these companies in the period under review.
Total value investors stake on Dangote Cement in the nine months of 2021 was N598.12billion when its market capitalisation moved from N4.17trillion it opened in 2020 to N4.77trillion as at September 30, 2021.
MTN Nigeria also appreciated by N101.77billion when its market capitalisation moved from N3.46trillion to N3.56trillion as at September close of trading activities on NGX.
In addition, Lafarge Africa that opened the year at N21.05 per share closed on last Thursday at N22.90 to move its total stake by investors to N29.8billion in market capitalisation.
Adnori explained that investors reacted on these three companies half year ended June 30, 2021 impressive performance, stressing that their fundamentals in the period attracted most especially foreign investors.
A check revealed that Dangote cement recorded 52 per cent increase in profit to N191.63billion in H1 2021 from N125.14billion recorded in H1 2020, while MTN Nigeria grew profit by 49,5per cent to N141.83billion in H1 2021.
The telecommunication giant also declared interim dividend per share of N4.55 kobo.
Vice President, Highcap securities Limited explained that Dangote Cement stock price appreciated because of the company’s shares buy-back.
The Africa’s largest cement producer in July announced that the Securities and Exchange Commission (SEC) had approved the renewal of its share buy-back programme until January 21 2022.
He noted that significant H1 2021 results by MTN Nigeria and Lafarge enhance investors’ positive sentiment trading on their stocks on NGX.
THISDAY gathered that Airtel Africa and BUA Cement of the 10 companies recorded the highest decline in value traded by investors in the period under review, while Zenith Bank recorded the lowest.
The drop in GTCO, Zenith bank, Stanbic IBTC Holdings contributed to drop in NGX banking index by 5.6 per cent when its NGX All-Share Index opened the year at 370.85 basis points to close last Thursday at 393.02 basis points.
For instance, the drop in GTCO stock price by to N28.05 as at September 30, 2021 from N32.35 it opened this year led to market capitalisation dropping to M825.5billion from N952.01billion it opened in the year.
In the same vein, Stanbic IBTC Holdings market cap dropped by N65.43billion to N505.85billion as at September 30, 2021 from N570.76billion it closed 2020, Zenith Bank with about per cent drop in stock price to N24.8 show its market capitalisation dropping to N736.25billion from N778.6billion the stock market opened for trading in 2020.
On decline in banks Index, Adnori explained that drop in stocks of GTCO or Zenith bank definitely impacted on the banking Index.
According to him: “Anything that affects GTCO or Zenith will drag the banking index downward because these are the two main leaders in the banking industry. Their H1 2021 audited results was not impressive despite paying shareholders interim dividend. The two banks struggled to improve on profit and it demand surge dump in their prices which affected the overall banking index.”
Meanwhile, Airtel Africa market capitalisation has dropped by N514.12billion when its stock market dropped to N66 as at September 30, 2021 from N77.35 it opened this year. The company’s market capitalisation moved from N3.2trillion to N2.69trillion as at September 30, 2021.
BUA Cement also dropped by N384billion from N2.62trillion to N2.24trillion as at September 30, 2021, while Nestle Nigeria dropped by N19.82billion to N1.17trillion from N1.19trillion it opened 2021.
The multinational company’s stock price in nine months dropped by nearly two per cent to N1,480.00 from N1,505.00 it opened this year for trading activities.
In addition, the market capitalisation of Nigerian Breweries also dropped by N51.98billion to N398.85billion from N447.83billion it closed 2020.
Commenting also, analyst at PAC Holdings, Mr. Wole Adeyeye said: “Most stocks actually experienced decline during the period – Zenith Bank and GTCO are among those stocks. The reason for this is that most foreign investors dropped these stocks due to persistent depreciation of Naira, insecurity and lack of confidence in the country.
“However, the rebound we witnessed in equities market in the third quarter of 2021 may extend to the fourth quarter of the year as we expect domestic investors to increase the equity portion of their portfolio due to slight reduction in yields in fixed income market.
“In addition, the higher crude oil price is expected to have positive impact on Naira in FX market. This may likely attract foreign investors into the country. However, the insecurity in the country remains a major issue.”
The Managing Director, APT Securities and Funds Ltd., Malam Garba Kurfi, attributed the decline in GTCO and Zenith bank to investors’ marking down of both banks interim dividend for half year.
According to him: “The decline is a major concern!. If you look at it, when all of them declared interim dividend, they refused appreciate. I can assure investors’ that by the time the companies release their third quarter results, they will bounce back. Although, I cannot see GTCO bouncing back because H1 2021 performance was not impressive and I do not see impressive third quarter results. However, for the likes of Zenith Bank, among others are going to post impressive third quarter results and reflect on banking index going forward.”
