Equities Market Remains Bearish as Investors Embrace Risk-free Instruments

The Nigerian equities ended last week on negative note, recording two consecutive weekly decline as investors traded cautiously and focusing more on risk free securities. The market had declined by 2.0 per cent the previous week on persistent negative investor sentiments engendered by weak corporate earnings. The same factor and the current uncertainties underpinning the economy, made the market to remain in the bear zone last week. Specifically, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell by 1.79 per cent to close at 25,340.02, while market capitalisation shed N122.7 billion to close at N8.77 trillion.

Analysts at Cordros Capital said sentiments were expectedly low as investors continued to play safe in risk free assets.

“Although there have been snippets of activities in selected sectors (banking, consumer goods and cement), the impact is less visible on the overall market given investor preference for only a few companies within the aforementioned sectors. The largest loss of the week was recorded in the Monday (-0.83 per cent) session, while the gains recorded on Wednesday (+0.05 per cent) and Friday (+0.07 per cent) were very negligible,” they said.

Daily Market performance When trading resumed on Monday the bears maintained their strong grip on the stock market, causing the NSE ASI to fall by 0.83 per cent to close at 25,587.09. Similarly, market capitalisation shed N69.6 billion to close lower at N8.8 trillion. The negative performance yesterday has worsened the year-to-date decline to 4.7 per cent.

At the close of trading only eight stocks appreciated while 25 shed value. In all, the weakness on the day was predominantly driven by PZ Cussons (-4.95 per cent), United Bank for Africa (-4.00 per cent), Transcorp (-2.63 per cent), Total (-2.24 per cent), Access Bank (-2.2 per cent), Dangote Cement (-1.7 per cent), Zenith Bank (-1.4 per cent), Oando (-1.0 per cent), Guinness (-0.4 per cent), and Forte Oil (-0.4 per cent).

However, UACN Property Development Company (UPDC) Plc led the price losers’ chart, depreciating by 9.2 per cent to close at N2.25 per share. At the current price, some market operators said the bid by the company to raise additional funds through a rights issue is under threat. According to them, the price is below the N3.00 issue price proposed by the company. UPDC has applied to raise N5billion through a right issue of 1.719 billion ordinary share of 50 kobo each at N3.00 per share.

Meanwhile, United Capital Plc led the price gainers with 4.7 per cent to close at N3.72, trailed by Livestock Feeds Plc with 4.0 per cent, while AIICO Insurance Plc added 1.7 per cent.

Although the bearish trend was sustained on Tuesday, the volume of trading rose by 35.9 per cent despite amid the rampaging bears, which drove the year-to-date (YTD) decline to 5.3 per cent at that day. Investors traded 207.18 million shares worth N1.58 billion in 2,791 deals, up from 152.391 million shares valued at N903.531 million executed in 2,706 deals the previous day.

However, the bearish trend persisted with the Nigerian Stock Exchange (NSE) All-Share Index sliding by 0.55 per cent to close at 25,446.66 as the bourse remained under pressure of heavy selloff in consumer goods sector. Similarly, market capitalisation went down by the same margin of 0.55 per cent to close at N8.769.80 trillion.

A closer look at the performance indicated that the decline resulted from depreciation in the share prices of bellwethers such as Nigerian Breweries Plc, Forte Oil Plc, Nestle Nigeria and Guinness Nigeria Plc.

Analysts at SCM Capital Research said: “We expect the current bearish mood to prevail, given the lack of catalyst to spur activities to the upside. The scenario may, however, reverse if some positive results are released.”

In all, 22 stocks depreciated led by Forte Oil Plc with 6.4 per cent, trailed by Nestle, which shed 5.0 per cent. PZ Cussons Nigeria Plc, International Breweries Plc and NASCON Allied Industries Plc lost 4.9 per cent apiece, while UACN Property Development Company Plc and FBN Holdings Plc shed 4.8 per cent each among others.

On the positive side, 14 stocks appreciated with Beta Glass Plc and Caverton gaining 5.0 per cent each to lead the price gainers. Presco Plc and Pharma Deko Plc and AXA Mansard Insurance Plc garnered 4.8 per cent each.

In terms of sectoral performance, the NSE Insurance and Industrial Goods indices appreciated while others declined. The insurance sector gauge apprecied by 0.8 per cent following gains recorded by AXA Mansard, while 0.6 per cent appreciation posted by Dangote Cement lifted the Industrial Goods indicator.

On the flip side the NSE Consumer Goods index led sector losers, down 2.5 per cent on account of decline in Nestle (-5.0 per cent) and Nigerian Breweries (-2.0 per cent) while the NSE Oil & Gas and NSE Banking indices went down by 0.6 per cent and 0.3 per cent respectively.

Respite came on Wednesday when the bulls returned lifting the NSE ASI by 0.05 per cent to close at 25,460.45.

The positive performance was bolstered by buy interests in Dangote Cement (+0.7 per cent), GTBank (+1.4 per cent), UBA(+0.8 per cent) and Access Bank (+0.8 per cent) .

Performance across sectors was mixed as three sectors gained while two declined. Although Dangote Cement propelled the broader index, the NSE Industrial Goods Index was surprisingly dragged by Lafarge Africa Plc (-5.9 per cent) while the loss in Nigerian Breweries Plc (-0.7 per cent) weighed on Consumer Goods Index (-0.3 per cent). The NSE Banking index appreciated 0.7 per cent as a result of gains in GTBank (+1.4 per cent). Likewise, the NSE Insurance Index improved by 0.2 per cent as a result of gains in AIICO (+3.5 per cent).

However, the bulls could not sustain their hold as the equities market switched to the bearish side on persistent weak sentiments. The NSE ASI fell by 0.54 per cent to close at 25,322.30.

The Market Capitalisation also declined by 0.13 per cent to close at N8.763 trillion. The negative mood in the index and market cap was caused by the depreciation in the share prices of Nestle (-3.34 per cent), Seven-UP Bottling Company Plc (-5.00 per cent), Forte Oil (-4.99 per cent), Nigerian Breweries (-0.98 per cent) and PZ (-9.73 per cent).

But the market turned green on Friday, which was the last day of the week with the NSE ASI appreciating marginally by 0.07 per cent to close at 25,340.02. The appreciation recorded in the share prices of Access Bank, GT Bank, Transcorp, Oando and Zenith Bank were mainly responsible for the marginal gain recorded in the NSE ASI.

Market turnover Investors traded 1.052 billion shares worth N8.031 billion in 13,586 deals last week compared to a total of 1.153 billion shares valued at N8.032 billion that exchanged hands the previous week in 12,783 deals.

The Financial Services Industry led the activity chart with 905.319 million shares valued at N3.399 billion traded in 7,501 deals; thus contributing 86.03 per cent and 42.32 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 43.996 million shares worth N70.390 million in 581 deals. The third place was occupied by Consumer Goods Industry with a turnover of 30.487 million shares worth N1.767 billion in 2,565 deals.

Price gainers and losers Meanwhile, 19 equities appreciated in price during the week, lower than 23 equities of the previous week. Conversely, 38 equities depreciated in price, higher than the 37 equities of the previous week.

Caverton Offshore Support Group Plc led the price gainers with 12.5 per cent, trailed by Beta Glass Company Plc with 10.2 per cent. Neimeth International Pharmaceuticals Plc and AXA Mansard Plc rose by 6.4 per cent and 5.2 per cent respectively, just as Transcorp Plc and Pharma Deko Plc garnered 5.2 per cent and 4.8 per cent in that order.

On the negative side, UPDC led the price losers with 23.7 per cent trailed by PZ Cussons Nigeria Plc with 18.5 per cent, while Forte Oil Plc and FBN Holdings Plc appreciated by 11.6 per cent and 10.5 per cent respectively. Nestle Nigeria Plc, Learn Africa Plc, Cutix Plc and Fidelity Bank Plc shed 8.2 per cent, 8.1 per cent and 6.7 per cent in that order among others.