Equities Market Sheds 2% on Negative Investor Sentiment

The positive performance recorded by the Nigerian stock market the previous week could not be sustained last week as investors’ confidence weakened following poor results by some companies. The market had rebounded the previous week as investors were optimistic companies would soon begin to declare dividends for the 2016 financial year. As a result, the Nigerian Stock Exchange (NSE) All-Share Index (NSE ASI) had appreciated by 0.40 per cent.

However, the market returned to the red zone last week with the NSE ASI declining by 2.0 per cent to close at 25,802.54, while market capitalisation ended at N8.892 trillion. Many investors got high disappointed that Forte Oil Plc, which was the first firm to declare 2016 full year results, posted a decline of 50 per cent in profit after tax and neither recommended a dividend nor bonus issue. Similarly, leading soft drink bottling firm, Seven-Up Bottling Company Plc recorded a loss of N2.9 billion for the nine months to December 31, 2016. The market was bearish for four days and recorded an appreciation only one day. At the end of week, the index shed 2.0 per cent. Similarly, all other Indices finished lower during the week with the exception of the NSE Premium Index and NSE Industrial Goods Indices that appreciated by 0.15 per cent and 4.37 per cent respectively, while the NSE ASem Index closed flat. The NSE Oil & Gas Index led the losers with a decline of 5.0 per cent.

Daily Market performance The market opened for the week on a bearish note as investors’ sentiments remained weak. The Nigerian Stock Exchange (NSE) All-Share Index fell by 0.42 per cent to close at 26,217.18. Market capitalisation shed same margin to close lower at N9.02 trillion.

The depreciation recorded in the share prices of Oando, GTBank, Zenith Bank, Dangote Cement and Access Bank were mainly responsible for the loss recorded on Monday.

Investors traded 143.52 million shares worth N2.19 billion in 2,139 deals. The first five stocks that drove volume included AIICO (56.8 million), Transcorp (16.0 million), UBA (7.75 million), FBN Holdings (7.64 million) and Fidelity Bank (7.4 million). Analysts at SCM Capital Limited said they expected the market to exhibit another depressed mood the following day.

“We expect market to exhibit another depressed mood at tomorrow`s session due to weak volume. However, the current valuation presents an attractive entry opportunities for risk tolerant investors to position ahead of the earnings season,” they had said.

In line with the negative outlook, the equity market slumped further on Tuesday with the NSE ASI, depreciating by 0.69 per cent to close at 26,036.24. Losses by Nestle, GTBank, Guinness, Nigerian Breweries and Access Bank accounted for the decline. Consequently, the market closed the first month of 2017 with a decline of 3.12 per cent.

The total value of stocks traded on Tuesday N2.76 billion up by 265.5 per cent from N755.89 million of the previous day, while total volume of stocks traded was 205.77 million in 2,914 deals.

The market prolonged the bearish mood on Wednesday with the NSE ASI declining below the 26,000 psychological mark. Specifically, the index closed lower at 25,903.55.

Investors’ sentiments remained dampened by weak corporate earnings by some companies. Market operators said investors were being cautious as they await more corporate results for 2016 full year and quarterly performance. Already, Guinness Nigeria Plc, a leading brewing firm had announced a loss of over N4.6 billion for the half year to December 31, 2016. Similarly, Seven-Up Bottling Company Plc, declared a loss of N4.8 billion for the nine months ended December 31, 2016.

Forte Oil Plc, which announced its full year results ended December 2016, posted a drop of 50 per cent in profit after tax and did not declare a dividend for the year.

“These results are serious concerns for shareholders who are not enthusiastic about increasing demand for stocks for now until positive results begin to come in to the market,” a stock dealer said.

In all, only nine stocks appreciated while 25 stocks depreciated on Wednesday led by Forte Oil with 5.0 per cent to close at N67.66 per share. Guinness Nigeria Plc and Unilever Nigeria Plc trailed with a decline of 4.9 per cent apiece.

Forte had posted a revenue of N148.6 billion in 2016, up by 19.3 per cent from N124.6 billion in 2015. However, profit before tax fell by 24 per cent to N5.3 billion, from N7.0 billion, while profit after tax declined by 50 per cent to N2.9 billion, compared with N5.8 billion recorded in 2015.

The market gained for the first time on Thursday as the index appreciated by 0.13 to close at 25,936.24 as bargain hunting in banking stocks drove the index northwards. Gains recorded by UBA, GTBank, Guinness, Access Bank and Zenith Bank bolstered trading to close in green.

Performance across sector was broadly bullish as all indices closed in the green save for the NSE Oil & Gas Index which declined 1.6 per cent as losses in Forte Oil Plc (-9.7 per cent) and Seplat (-0.03 per cent) more than offset gains in Oando (+4.8 per cent), while the NSE Industrial Goods Index closed flat. The NSE Banking Index gained the most, rising by 0.9 per cent on account of buying interest in UBA (+2.9 per cent) and Zenith (+1.4 per cent). Similarly, the NSE Insurance and NSE Consumer Goods indices closed 0.6 per cent and 0.02 per cent.

Market turnover Meanwhile, market turnover stood at total turnover of 1.153 billion shares worth N8.032 billion in 12,783 deals, compared with a total of 990.584 million shares valued at N18.823 billion that exchanged hands the previous week in 14,917 deals.

But the Financial Services Industry maintained the number position on the activity chart with 841.221 million shares valued at N3.065 billion traded in 7,102 deals; thus contributing 72.93 per cent and 38.16 per cent to the total equity turnover volume and value respectively. The Services Industry followed with 91.826 million shares worth N139.497 million in 265 deals. The third place was occupied by Industrial Goods Industry with a turnover of 67.010 million shares worth N247.141 million in 510 deals.

Trading in the top three equities namely – Continental Reinsurance Plc, FBN Holdings Plc and Med-View Airline Plc accounted for 381.262 million shares worth N788.588 million in 1,008 deals, contributing 33.05 per cent and 9.82 per cent to the total equity turnover volume and value respectively.

Price gainers and losers The price movement chart showed that 23 equities appreciated in price last week, lower than 29 equities of the previous week. Conversely, 37 equities depreciated in price, compared with 30 equities of the previous week, while one 115 equities remained unchanged lower than 116 equities recorded in the preceding week.

Caverton led the price gainers with 15.9 per cent, trailed by Lafarge Africa Plc with a gain of 9.8 per cent. Unity Bank Plc appreciated by 8.1 per cent, just as Mobil Oil Nigeria Plc and Seven-Up Bottling Company Plc garnered 4.3 per cent and 3.8 per cent in that order.

Other top price gainers included: United Capital Plc (3.2 per cent); May & Baker Nigeria Plc (3.0 per cent); Sterling Bank Plc (2.7 per cent) and Guinness Nigeria Plc (2.4 per cent).

Conversely, Forte Oil Plc led the price losers with 15.1 per cent, followed by Neimeth International Pharmaceuticals Plc with 15.0 per cent. UACN Property Development Company Plc went down by 13.8 per cent, while Total Nigeria Plc and Diamond Bank Plc dipped by 10.3 per cent and 10.1 per cent in that order.

Nestle Nigeria Plc, Wema Bank Plc and Continental Reinsurance Plc shed 9.3 per cent and 9.0 per cent respectively. Custodian and Allied Plc and UAC of Nigeria closed the week 7.5 per cent and 7.3 per cent lower in that order.