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NSE Index Declines Further as Highly Capitalised Stocks Depress Market

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Nigerian Stock
  • NSE Index Declines Further as Highly Capitalised Stocks Depress Market

The Nigerian equities market maintained a negative close yesterday driven by highly capitalised Dangote Cement Plc and Nigerian Breweries Plc.

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) declined by 0.66 per cent to close at 27,044.36. But for the losses by Dangote Cement, the market would have closed in the positive territory. Specifically, excluding Dangote Cement, the ASI would have ended 0.17 per cent higher.

However, the decline of 1.47 per cent decline in Dangote Cement drove the market to close lower. Also, Nigerian Breweries Plc fell by 1.48 per cent. Similarly, market capitalisation shed N61.4 billion to be at N9.3 trillion. Other highly capitalised stocks that depreciated included: Ecobank Transnational Incorporated, Guaranty Trust Bank Plc and Nestle Nigeria Plc.

In all 21 stocks depreciated compared to 18 that appreciated. Ashaka Cement Plc led the losers’ table with 9.7 per cent, followed by NASCON Allied Industries Plc and University Press Plc went down by 4.8 per cent apiece.

On the positive side, Honeywell Flour Mills Plc led the price gainers with 7.8 per cent to close at N1.23 per share. May & Baker Nigeria Plc trailed with 4.7 per cent, while Learn Africa Plc chalked up 3.9 per cent. Nigerian Aviation Handling Company Plc and Diamond Bank Plc appreciated by 3.8 per cent and 3.7 per cent respectively.

Trading activity level was mixed as volume t fell 44.5 per cent to 112.5 million shares while value traded rose 87.4 per cent to N2.4 billion. The most actively traded sectors were: Financial services (60.21 million share), Healthcare (24.27 million shares) and, Consumer Goods (12.03 million shares), while three most actively traded stocks were: May and Baker (23.42 million shares), Sterling Bank (8.79 million shares) and Transcorp (8.31 million shares).

In terms of sectoral performance, the NSE Banking and NSE Insurance indices gained 0.1 per cent and 0.5 per cent respectively. The banking index was bolstered by gains in Zenith Bank (+2.0 per cent), United Bank for Africa Plc (+0.9 per cent), while the insurance index rose as result of was buy sentiments that lifted Mansard Insurance (+2.6%). Conversely, the NSE Industrial Goods Index slid 0.8 per cent to lead decliners mainly on account of sell pressure on Dangote Cement (-1.5 per cent). The NSE Consumer Goods Index trailed closely dipping by 0.6 per cent.

 

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.

Markets

OPEC Agrees to Increase Oil Supply by 500,000 Barrels Per Day Ahead of Surge in Demand

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Nigeria's economic Productivity

OPEC and allies finally agreed to ease their 7.7 million barrels per day production cut by 500,000 barrels per day starting from January 2021.

This will now bring the oil cartel’s total production cuts to 7.2 million barrels per day starting from next year.

Oil prices rose after the news as the market believed the approval of Pfizer COVID-19 in the United Kingdom will kick start a series of approvals and helped restore confidence, increase business activities and demand for the commodity across the globe.

After the outcome of the meeting was made public on Thursday, Brent Crude Oil against which Nigerian oil is priced gained 1.35 percent on Friday after gaining 1.4 percent on Thursday to $49.37 per barrel at 11.35 am Nigerian time on Friday.

The US West Texas Intermediate gained 1.29 percent to $46.23 barrel on Friday.

500,000 bpd from January is not the nightmare scenario that the market feared, but it is not what was really expected weeks ago,” said Rystad Energy senior oil markets analyst Paola Rodriguez Masiu. “Markets are now reacting positively and prices are recording a small increase as 500,000 of extra supply is not deadly for balances,” she added.

Investors King increased business sentiment in the energy sector to boost investment, increase activity in the sector and most important improve crude oil demand enough to accommodate the 500,000 barrels per day extra that would be hitting the global market starting from January.

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Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd

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Oil

The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

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Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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