Markets

Stock Market Plummets as Optimism Wanes

Published

8 years ago

February 22, 2016

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).

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

IOCs Stick to Dollar Dominance in Crude Oil Transactions with Modular Refineries

Published

3 hours ago

April 25, 2024

Samed Olukoya

International Oil Companies (IOCs) are standing firm on their stance regarding the currency denomination for crude oil transactions with modular refineries.

Despite earlier indications suggesting a potential shift towards naira payments, IOCs have asserted their preference for dollar dominance in these transactions.

The decision, communicated during a meeting involving indigenous modular refineries and crude oil producers, shows the complex dynamics shaping Nigeria’s energy landscape.

While the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had previously hinted at the possibility of allowing indigenous refineries to purchase crude oil in either naira or dollars, IOCs have maintained a firm stance favoring the latter.

Under this framework, modular refineries would be required to pay 80% of the crude oil purchase amount in US dollars, with the remaining 20% to be settled in naira.

This arrangement, although subject to ongoing discussions, signals a significant departure from initial expectations of a more balanced currency allocation.

Representatives from the Crude Oil Refinery Owners Association of Nigeria (CORAN) said the decision was not unilaterally imposed but rather reached through deliberations with relevant stakeholders, including the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

While there were initial hopes of broader flexibility in currency options, the dominant position of IOCs has steered discussions towards a more dollar-centric model.

Despite reservations expressed by some participants, including modular refinery operators, the consensus appears to lean towards accommodating the preferences of major crude oil suppliers.

The development underscores the intricate negotiations and power dynamics shaping Nigeria’s energy sector, with implications for both domestic and international stakeholders.

As discussions continue, attention remains focused on how this decision will impact the operations and financial viability of modular refineries in Nigeria’s evolving oil landscape.

Energy

Nigeria’s Dangote Refinery Overtakes European Giants in Capacity, Bloomberg Reports

Published

4 hours ago

April 25, 2024

Samed Olukoya

The Dangote Refinery has surpassed some of Europe’s largest refineries in terms of capacity, according to a recent report by Bloomberg.

The $20 billion Dangote refinery, located in Lagos, boasts a refining capacity of 650,000 barrels of petroleum products per day, positioning it as a formidable player in the global refining industry.

Bloomberg’s data highlighted that the Dangote refinery’s capacity exceeds that of Shell’s Pernis refinery in the Netherlands by over 246,000 barrels per day. Making Dangote’s facility a significant contender in the refining industry.

The report also underscored the scale of Dangote’s refinery compared to other prominent European refineries.

For instance, the TotalEnergies Antwerp refining facility in Belgium can refine 338,000 barrels per day, while the GOI Energy ISAB refinery in Italy was built with a refining capacity of 360,000 barrels per day.

Describing the Dangote refinery as a ‘game changer,’ Bloomberg emphasized its strategic advantage of leveraging cheaper U.S. oil imports for a substantial portion of its feedstock.

Analysts anticipate that the refinery’s operations will have a transformative impact on Nigeria’s fuel market and the broader region.

The refinery has already commenced shipping products in recent weeks while preparing to ramp up petrol output.

Analysts predict that Dangote’s refinery will influence Atlantic Basin gasoline markets and significantly alter the dynamics of the petroleum trade in West Africa.

Reuters recently reported that the Dangote refinery has the potential to disrupt the decades-long petrol trade from Europe to Africa, worth an estimated $17 billion annually.

With a configured capacity to produce up to 53 million liters of petrol per day, the refinery is poised to meet a significant portion of Nigeria’s fuel demand and reduce the country’s dependence on imported petroleum products.

Aliko Dangote, Africa’s richest man and the visionary behind the refinery, has demonstrated his commitment to revolutionizing Nigeria’s energy landscape. As the Dangote refinery continues to scale up its operations, it is poised to not only bolster Nigeria’s energy security but also emerge as a key player in the global refining industry.

Crude Oil

Brent Crude Hits $88.42, WTI Climbs to $83.36 on Dollar Index Dip

Published

1 day ago

April 24, 2024

Samed Olukoya

Oil prices surged as Brent crude oil appreciated to $88.42 a barrel while U.S. West Texas Intermediate (WTI) crude climbed to $83.36 a barrel.

The uptick in prices comes as the U.S. dollar index dipped to its lowest level in over a week, prompting investors to shift their focus from geopolitical tensions to global economic conditions.

The weakening of the U.S. dollar, a key factor influencing oil prices, provided a boost to dollar-denominated commodities like oil. As the dollar index fell, demand for oil from investors holding other currencies increased, leading to the rise in prices.

Investors also found support in euro zone data indicating a robust expansion in business activity, with April witnessing the fastest pace of growth in nearly a year.

Andrew Lipow, president of Lipow Oil Associates, noted that the market had been under pressure due to sluggish growth in the euro zone, making any signs of improvement supportive for oil prices.

Market participants are increasingly looking beyond geopolitical tensions and focusing on economic indicators and supply-and-demand dynamics.

Despite initial concerns regarding tensions between Israel and Iran and uncertainties surrounding China’s economic performance, the market sentiment remained optimistic, buoyed by expectations of steady oil demand.

Analysts anticipate the release of key economic data later in the week, including U.S. first-quarter gross domestic product (GDP) figures and March’s personal consumption expenditures, which serve as the Federal Reserve’s preferred inflation gauge.

These data points are expected to provide further insights into the health of the economy and potentially impact oil prices.

Also, anticipation builds around the release of U.S. crude oil inventory data by the Energy Information Administration, scheduled for Wednesday.

Preliminary reports suggest an increase in crude oil inventories alongside a decrease in refined product stockpiles, reflecting ongoing dynamics in the oil market.

As oil prices continue their upward trajectory, investors remain vigilant, monitoring economic indicators and geopolitical developments for further cues on the future direction of the market.