Value of Trading Declines 41% on Nigerian Bourse in 2016

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  • Value of Trading Declines 41% on Nigerian Bourse in 2016

Investors staked N557.75 billion on 78.90 billion shares in 2016, showing a decline of 41.33 per cent compared with N950.66 billion invested in 92.83 billion shares in 2015.

The market closed the year with a decline of 6.17 per cent, the third straight negative performance as a result of weakened investors’ appetite given several headwinds that pervaded the different sectors of economy in the year.

Assessing the performance of the market in 2016, analysts at Meristem Securities Limited said participation in the market was weak, as the volume traded and market turnover for the year pared by 15 per cent (78.90 billion units in 2016 versus 92.83 billion units in 2015) and 41.33 per cent (N557.75 billion in 2016 versus N950.66 billion in 2015) respectively.

According to MSL, 30 counters featured on the gainers’ chart, while, 77 stocks declined in the year. Dangote Flour (276.11 per cent), United Capital Plc( (108.40 per cent), Total (103.39 per cent), Seplat (87.19 per cent) and Mobil Oil (74.38 per cent) recorded the highest returns in the year.

Conversely, Forte Oil (-74.42 per cent), Skye Bank (-68.35 per cent), Caverton (-63.56 per cent), Diamond Bank (-61.74 per cent) and Sterling Bank (-58.47 per cent) were the top underperformers for the year.

The analysts explained that activities in the market were tempered during the year, as evidenced by the decline in volume traded and market turnover.

“We attribute this dull mood to weakened investors’ appetite given several headwinds that pervaded the different sectors of economy in the year. The weak investor sentiment was also compounded by the attractive interest rate environment in the year amid the rising inflationary pressure, which made fixed income investments a safe haven for investors,” they said.

Looking ahead, MSL said they expect a spillover of these sentiments into the first half of 2017.

“We expect a spillover of these sentiments into the first half of 2017, on the back of sustained gloomy state of the economy, as FX pressure continues to plague companies. We, however, do not rule out the possibility of a positive return in 2017, as we expect the higher crude production and price stability, coupled with effective execution of 2017 budget, to bode well for the Nigerian economy in the coming year,” they said.

In their sectoral review, MSL said the agriculture sector led the outperformers. According to the firm, the Meri-Agri Index returned 26.45 per cent to outperform other sectors in the market for the second year consecutively.

“The sector’s positive performance was steered by the usual suspects- Okomu Oil Palm Plc (+32.57 per cent) and Presco Plc (+21.52 per cent), while Livestock Feeds Plc (36.84 per cent) depreciated in value for the year. Other counters (Ellah Lakes Plc and FTN Cocoa) traded flat throughout the year,” they said.

MSL explained that the agric sector which contributes about 29 per cent to the country’s gross domestic product (GDP) was amongst the few to record positive output growth (+4.54 per cent ) as at Q3:2016.

“We attribute this to heightened government focus, coupled with the favourable policies which were implemented in the course of the year. Also, as evident from the earnings releases of the companies, the devaluation of the Naira which is stifling activities of palm oil importers, resulted in a topline boost for Okomu Oil and Presco,” they said.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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