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Stock Market Plummets as Optimism Wanes

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After rallying for five day the previous week following investors drive to build position ahead of probable positive earnings release by listed companies, the Nigerian equities market closed in the red last week as optimism waned, forcing anxious investors to book profit.

The equities market had closed positive the previous week with a 5.05 per cent gain after a five-day rally which strengthened benchmark indicator by 1,187.92 points. Both the NSE-ASI and market capitalisation closed higher ending the week at 24,689.69pt and N8.491trillion respectively. Market sentiment was positive with renewed active bargain tendency displayed toward large and medium cap stock in anticipation of positive earnings release and likelihood of dividend announcement.

However, the  market was volatile in most of the trading days last week  as supply  outstripped demand while most investors maintained cautious approach.

At the close of trades,   the Nigerian Stock Exchange  All-Share Index (ASI)  and market capitalisation depreciated by 1.04 per cent to close the week at 24,432.51 and N8.403 trillion respectively.

Similarly, all other Indices finished lower during the week, with the exception of the NSE Main Board Index, NSE Banking Index, NSE Consumer Goods Index and NSE Oil and Gas and  that appreciated by 0.95 per cent, 0.04 per cent, 0.21 per cent and 3.30 per cent respectively, while the NSE ASeM index closed flat.

Meanwhile, analysts at InvestmentOne Limited have said  that the market will remain volatile and enjoined investors to tread cautiously and take position in quality name ahead of earning season.

“With the market breadth index closing negative, we expect market to be volatile in the coming session. Hence, we reiterate our earlier stance for position-building in quality name for a medium to long term horizon,” they stated.

Daily Performance Analysis

Trading on the Exchange had commenced on a positive note last Monday gaining 0.56 per cent corresponding to a N47 billion increase in market capitalisation to N8.54 trillion. The session looked likely to close in the red but a late rally saw the index rise from 24,381.47, during intraday, to close at 24,827.50.

There were 13 stocks that appreciated on the day against 25 losers. The session was driven by a late rally in Dangote Cement Plc  (3.75 per cent) in addition to Seplat Plc (3.65 per cent) and Guaranty Trust Bank Plc (0.73 per cent). These performances offset the declines in Nestle Nigeria Plc (3.60 per cent), Zenith Bank Plc (4.92 per cent) and FBN Holdings Plc (4.07 per cent). Consequently, the Industrial and Oil and Gas sectors rose by 2.00 per cent and 0.62 per cent respectively, while the Consumer Goods and the Banking sectors shed 1.37 per cent and 0.97 per cent respectively.

The market depreciated Tuesday after trending upwards for six days. The NSE ASI decreased by 1.26 per cent to close at 24,514.91. The depreciation recorded in the share prices of Dangote Cement Plc, Nigerian Breweries Plc, Nestle Nigeria Plc, Zenith Bank Plc and Guaranty Trust Bank Plc, were mainly responsible for the loss recorded in the index. Similarly, the market capitalisation depreciated by 1.26 per cent to close at N8.43 trillion, compared with the appreciation of 0.56 per cent recorded the prior day to close at N8.54 trillion.

The  market declined  further on Wednesday  with the NSE ASI  decreasing  by 1.87 per cent to close at 24,056.12. Similarly, the market capitalisation depreciated by 1.87 per cent to close at N8.27 trillion. The depreciation recorded in the share prices of Dangote Cement Plc, Guinness Nigeria Plc, Nestle Nigeria Plc, Unilever Nigeria Plc and Guaranty Trust Bank Plc caused  the loss recorded in the index.
However, despite  the low market activity witnessed on Thursday, the NSE ASI rebounded  appreciating  by 0.85 per cent to close at 24,261.69.

The appreciation resulted from rise recorded in the share prices of Nigerian Breweries Plc, Guinness Nigeria Plc, Guaranty Trust Bank Plc, FBN Holdings Plc and Seplat Plc. Similarly, the market capitalisation appreciated by 0.85 per cent to close at N8.34 trillion, compared with the depreciation of 1.87 per cent recorded the previous day to close at N8.27 trillion. The total value of stocks traded on the floors of the NSE on the day was N959.77 million, down by 50.84 per cent from N1.95 billion traded the previous day.

The market closed positive for the second consecutive day last Friday. It rose 0.70 per cent or 170.82 points to 24,432.51 points. This represented a N58 billion increase in market capitalization to N8.40 trillion. The  positive outcome was driven by gains in Nestle Nigeria Plc (7.69 per cent), Nigerian Breweries Plc (0.69 per cent), Seplat Plc (5.00 per cent) and  some banking stocks: Guaranty Trust Bank Plc, (1.02 per cent) and Zenith Bank Plc (0.97 per cent) offsetting the loss in FBN Holdings Plc (3.56 per cent), ETI Plc (0.95 per cent) and Diamond Bank Plc (6.63 per cent).

In addition, there were improvements in investor sentiment as Nestle Nigeria Plc led the 22 stocks that gained compared to Portland Paints Plc (9.43 per cent), which was the biggest loser of the 16 stocks that declined. Industrial was the only sector to end the day in the red, shedding 0.02 per cent while Consumer Goods climbed 2.36 per cent. The Oil and Gas and Banking sectors finished the session up 1.09 per cent and 0.32 per cent respectively. Market activity was mixed last Friday with total volume increasing by 45 per cent while total value dropped 4 per cent as 172 million units of shares worth N925 million were exchanged.

Market Turnover

Meanwhile,  investors traded  1.202 billion shares worth N9.641 billion in 13,712 deals were traded last week in contrast to a total of 1.407 billion shares valued at N17.277 billion that exchanged hands the previous week in 14,914 deals.

The Financial Services Industry led the activity chart with 1.005 billion shares valued at N6.471 billion traded in 8,313 deals; thus contributing 83.66 per cent and 67.12 per cent to the total equity turnover volume and value respectively.

The Consumer Goods Industry followed with 54.333 million shares worth N2.114 billion in 2,365 deals. The third place was occupied by the Conglomerates Industry with a turnover of 45.977 million shares worth N184.205 million in 518 deals.

Trading in the top three equities namely – Zenith International Bank Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc, accounted for 500.360 million shares worth N5.449 billion in 4,011 deals, contributing 41.63 per cent and 56.52 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 93,518 units of Exchange Traded Products (ETPs) valued at N1.158 million executed in 48 deals, compared with a total of 115,641 units valued at N1.285 million transacted the previous week in 28 deals.

A total of 150,000 units of Federal Government Bonds valued at N169.326 million were traded in 2 deals compared to a total of 39,340 units of both State (1) and Federal Government Bonds (2) valued at N44.246 million transacted the previous week in 3 deals.

Gainers and Losers

In terms of   price movement, a total of 22 equities appreciated in price during the week, lower than 26 equities of the previous week. Thirty-seven equities depreciated in price, higher than 30 equities of the previous week, while 131 equities remained unchanged, lower than 134 equities recorded in the previous week.

The top 10 gainers were: Seplat Plc (N50.37), Glaxo Smithkline Plc (N3.28), Ecobank Transnational Plc (85 kobo),  NAHCO Plc (49 kobo), May & Baker Plc (14  kobo), NPF Micro Finance Bank Plc ( nine kobo) Tiger Branded Consumer Plc (six kobo), UAC Nigeria (97 kobo), Airline Services and Logistics (10 kobo) and  Cutix (seven kobo).

On the other hand, the top 10 losers included: NNFM Plc (70 kobo),  Portland Paint Plc (38 kobo), Oando Plc (30 kobo), Caverton Plc (17 kobo), Diamond Bank (13 kobo) Honeywell Flour Plc (12 kobo), Learn Africa Plc ( nine  kobo), Unity Bank Plc, Continental Reinsurance Plc (eight kobo apiece ), and Neimeth Plc (six kobo).

ThisDay

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site

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Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site

Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.

Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.

A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.

One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.

However, Saudi authorities are yet to confirm or respond to the story.

 

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Crude Oil

Brent Crude Oil Approaches $70 Per Barrel on Friday

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Crude oil

Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension

Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.

Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.

Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.

While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.

According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.

“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”

Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.

The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.

I do believe we’re headed for a much healthier supply and demand environment” she said.

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Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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