Weak Sentiments Depress Stock Market Further

Goddy Egene Abiodun

Eromosele

Investors’ hope of a possible rally was dashed last week as the Nigerian equities market closed the week in the red, declining by 0.92 per cent.

Some stakeholders and investors had hoped that the huge rally witnessed in the last two days of the previous week would continue in the week under review. They had also expected that corporate earnings being declared by companies would lead to more demand for stocks by investors.

However, the market witnessed five days of consistent losses. Consequently, the twin market gauge, the Nigerian Stock Exchange ( NSE) All- Share Index ( ASI) and market capitalisation depreciated by 0.92 per cent to close last Friday at 34,388.21 and N11.678 trillion. Similarly, three out of the five Indices finished lower during the week. Only the NSE Banking, NSE Insurance and NSE Industrial Goods indices that rose by 2.02 per cent, 0.57 per cent and 1.42 per cent respectively.

According to analysts at Afrinvest ( West Africa), after the breath- taking rally in the Nigerian financial market post2015 presidential polls, markets recently bucked the trend, defying analysts’ expectation of a strong rebound post elections.

“From a year- to- date ( YTD) high of 3.1 per cent ( 35,728.12) post presidential election, the NSE ASI closed last week on a YTD negative return of 0.83 per cent ( 34,388.12),” they said.

The analysts said the development in the markets was a reflection of the mixed corporate earnings performance of quoted companies and the conflicting macroeconomic signals, which leave investors at guessing regarding market direction and appropriate investment decisions.

“Headwind factors of rising consumer prices, fiscal austerity and consequent weaker consumer spending powers, as well as uncertain fiscal direction of political transition have veiled the improving dynamics in the polity and commodity prices. Global oil prices have improved markedly in the last four weeks, closing at YTD high (Brent Crude: US$67.8pb, WTI: US$60.9pd) on May 6. Despite the normalisation path of the US Fed monetary policy, the European Central Bank ( ECB) and several Central bankers across Europe and Asia have picked up the slack with ultralow interest rate and unconventional monetary policy. Hence, the global monetary landscape remains broadly accommodating while the domestic monetary landscape has also recorded some gains with the Naira remaining stable while external reserves haemorrhage is being gradually contained,” they said.

They explained that the modulation the markets await is a successful transition to a new government come May 29thand more importantly, a stable fiscal environment which is consequent on the policy pronouncements of the incoming government. “Whilst the risk factors ( headwinds) are evident, recent positive signals ( tailwinds) as noted above posit a short to medium term attractive valuations for securities,” they added. Summary of Daily Performance

A daily analysis of the trading pattern showed that the equities market had last Monday resumed on a negative note as the benchmark index went down by 0.17 per cent, largely on back of profit taking in Dangote Cement Plc and negative sentiments towards Unity Bank Plc. Improved interest in banking names; FBN Holdings Plc, ETI Plc, UBN Plc and Zenith Bank Plc was unable to ensure a positive close. At the close of the session, the ASI settled at 34,649.28 with a corresponding market capitalisation of N11.77 trillion.

The market declined further on Tuesday as the benchmark index shed 0.14 per cent to close at 34,600.33. This was largely due to waning interest in Nestle Nigeria Plc, Unity Bank Plc and FBN Holdings Plc, which depressed Tuesday’s overall market performance. Market capitalization as well declined by N16.62 billion to N11.75 trillion at the close of trades.

The market again closed on a negative note on Wednesday as the ASI depreciated by 0.50 per cent to close at 34,427.12. The depreciation in the Index could be attributed to the losses recorded in the share prices of PZ Cussons Plc,

APEL ASSET LIMITED

CSL STOCKBROKERS LIMITED

STANBIC IBTC STOCKBROKERS LIMITED

A.R.M SECURITIES LIMITED

RENCAP SECURITIES (NIG) LIMITED

CHAPEL HILL DENHAM SECURITIES LTD

EFCP LIMITED

FBN SECURITIES LIMITED

AFRICAN ALLIANCE STOCKBROKERS LTD

BGL SECURITIES LIMITED STANBIC IBTC STOCKBROKERS LIMITED CSL STOCKBROKERS LIMITED

BGL SECURITIES LIMITED

RENCAP SECURITIES (NIG) LIMITED

READINGS INVESTMENTS LIMITED

CHAPEL HILL DENHAM SECURITIES LTD

FBN SECURITIES LIMITED

EFCP LIMITED

CARDINALSTONE SECURITIES LIMITED

MORGAN CAPITAL SECURITIES LIMITED Forte Oil Plc, Flour Mills Nigeria Plc, Oando Plc and Nigerian

14.37

9.6

9.3

8.4

7.6

6.08

5.63

4.72

2.29

2.28 11.53 9.48

8.57

8.37

4.32

3.84

3.23

2.62

2.54

2.14 Breweries Plc, amongst others. Similarly, the Market capitalisation depreciated by 0.50 per cent to close at N11.69 trillion, compared with the depreciation of 0.14 per cent recorded the previous day to close at N11.75 trillion.

The market remained in negative territory on Thursday with the benchmark index declining by 0.08 per cent to close at 34,400.48. Unity Bank Plc and Nestle Nigeria Plc, which shed 108.16 points and 90.41 points accounted for the mild decline. Market capitalisation in the same manner closed N9.02 billion lower at N11.68 trillion

The bears maintained their hold on the market till the last trading session in the week as the ASI decline last Friday by 0.04 per cent as investors maintained a cautious stance. Although the index traded positive for most of the session, negative sentiments towards Forte Oil Plc weighed on the overall market performance. At the close of the session, the benchmark index closed lower at 34,388.12 points with a corresponding market capitalisation of N11.68 trillion ( down by N4.19 billion). Market Turnover

Meanwhile, a total of 1.584 billion shares worth N20.151 billion in 23,279 deals were traded last week by investors on the floor of the exchange in contrast to a total of 1.169 billion shares valued at N11.961 billion that exchanged hands the previous week in 17,769 deals.

The Financial Services Industry led the activity chart in volume terms with 1.088 billion shares valued at N8.991 billion traded in 13,220 deals, thus contributing 68.66 per cent and 44.62 per cent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with a turnover of 227.840 million shares worth N920.617 million in 1,082 deals. The third place was occupied by the Consumer Goods Industry with 121.859 million shares worth N7.703 billion in 4,123 deals. Gainers and Losers

A look at the the price movement chart of the NSE showed that a total of 32 equities appreciated in price during the week, higher than 31 equities of the preceding week. Forty-five equities depreciated in price, higher than 41 equities of the preceding week, while 116 remained unchanged lower than 120 equities of the preceding week. CAP Plc led the price gainers with N7.34, followed by Ecobank Transnational Incorporated with N3.79. Other top gainers included: Vitafoam Nigeria Plc (N1.57), Red Star Express Plc ( 92 kobo), Honeywell Flour Mills Plc (68 kobo), Caverton Plc (45 kobo),University Press (65 kobo), May & Baker Plc (16 kobo) and International Energy Insurance Plc ( 6 kobo).

Conversely, the top 10 losers included: Forte Oil Plc ( N14.64), Unity Bank Plc (N1.27), CNN Plc ( N1.09), FBN Holdings Plc ( 70 kobo), Learn Africa Plc (16 kobo), Sterling Bank Plc (14 kobo), ABC Transport Plc( six kobo), Academy Press ( 10 kobo), Royal Exchange Assurance Plc and Costain Plc ( five kobo apiece).