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Equities Market Ends Six-day Losing Streak

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Trading floor stock exchange market nse
  • Equities Market Ends Six-day Losing Streak

The Nigerian equities market recorded gains at the close of trading on the floor of the Nigerian Stock Exchange on Thursday, ending six straight days of losses.

The NSE market capitalisation rose to N9.026tn from N9.01tn, while the All-Share Index appreciated to 26,221.75 basis points from 26,173.69 basis points.

A total of 137.638 million shares valued at N990.638m exchanged hands in 3,283 deals.

The equities market closed positive, advancing by 0.18 per cent to settle the year-to-date return at -8.45 per cent.

The volume and value of transactions, however, declined by 5.80 per cent and 4.32 per cent each in comparison to Wednesday’s trading. Sixteen stocks appreciated in value while 20 pared at the end of Thursday’s trading activities.

The highest gaining counters for the day included: Airline Services and Logistics Plc, Guaranty Trust Bank Plc, Vitafoam Nigeria Plc, Fidson Healthcare Plc and Zenith Bank Plc, which appreciated by 4.69 per cent, 4.65 per cent, 4.6 per cent and 4.17 per cent, respectively.

On the other hand, Cadbury Nigeria Plc, Forte Oil Plc, Total Nigeria Plc, Nigerian Aviation Handling Company Plc and Caverton Offshore Support Group Plc lost the most by 9.65 per cent, 8.5 per cent, 8.19 per cent, 4.94 per cent and 4.55 per cent, respectively.

Market performance, as measured by the NSE indices showed that all sectors declined save for the banking index, which advanced by 3.08 per cent; while oil and gas stocks dropped by 3.71 per cent; food and beverages sector depreciated by 0.47 per cent; insurance sector dipped by 0.24 per cent, while the industrial sector fell by 0.003 per cent.

Commenting on the performance of the market, analysts at Meristem Securities Limited, in the firm’s daily analysis, said, “As expected, the market witnessed pockets of bargain-hunting activities on certain large-cap tickers, which in our opinion, led to the marginal gain recorded at the close of trade on Thursday.

“While we do not expect a replica of the current market mood on Friday, it is probable given the current low levels of some fundamentally justified stocks. We however envisage a negative week-on-week return.

Meanwhile, the interbank call rate advanced 350bps to 22.67 per cent amid slightly tighter liquidity. At the foreign exchange interbank market, the naira appreciated N1.40 against the dollar to close at N306.36 at the spot market while the one year forward remained unchanged at N355.

Bearish trading persisted in the Treasury bills market on Thursday amid sell pressure on the short-term bills. Specifically, yield on the 35 day-to-maturity and 105DTM bills advanced to 14.19 per cent and 18.45 per cent, respectively.

Similarly, the bearish streak persisted in the bond space with yields on benchmark bonds rising four basis points on the average. The largest swings were observed on the short-term bonds as yields on the seven per cent FGN October 2019 and 15.54 per cent FGN February 2020 bonds rose seven basis points and nine basis points to 15.03 per cent and 15.27 per cent, respectively.

Commenting on this trend, Vetiva Capital Management’s analysts said, “With bearish sentiment persisting in Thursday’s session, we anticipate a tepid close to the week as tight liquidity constrains buying.”

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.

Finance

Ghana/Kenya: Eurobonds to Decouple as Fiscal Challenges Come to Fore

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Ghana and Kenya, two of the sub-Saharan African sovereigns with the highest amount of outstanding Eurobonds, could see a widening of their risk premiums over 2021, according to a Senior Credit Analyst at Redd Intelligence, Mark Bohlund.

Faced with fiscal challenges, the two African nations are expected to return to the Eurobond market in the first quarter of 2021, but this time with bigger risk premiums as investors are expected to incorporate a higher likelihood of frontier-market issuers being pushed into debt restructuring.

Mark Bohlund said, “Ghana and Kenya are likely to return to the Eurobond market in 1Q21 but see a widening of their risk premiums over 2021 as investors incorporate a higher likelihood of frontier-market issuers being pushed into debt restructuring.”

With Ghana’s outstanding Eurobonds presently estimated at US$10.3 billion and Kenya’s outstanding Eurobonds put at US$6.1 billion, spreads on Ghana’s Eurobonds will increase over those of Kenya in 2021.

It is likely that spreads on Ghana’s eurobonds over those of Kenya will increase over 2021 as concerns rise over its weak fiscal position and high reliance on commercial overseas financing,” Bohlund stated.

Commenting on the countries’ fiscal positions, Bohlund said both countries are likely to post double-digit fiscal deficits this year, as contracting economies add to already faltering government revenue.

“With interest costs absorbing close to 50% of government revenue, Ghana will struggle to find sufficient cost- savings in other areas to reduce the fiscal deficit substantially in 2021.”

“In contrast to Kenya, Ghana has already cut back its capital expenditure to a bare minimum. The Bank of Ghana stepped up its purchases of government bonds sharply in September and we expect this to continue during 2021.

“In Kenya, part of the solution should be to encourage county governments to raise more revenue, but this will be challenging to implement before the August 2022 elections.

“Having shied away from bi- and multilateral creditors in favor of commercial borrowing, Ghana is likely to struggle to secure sufficient external financing in 2021. This makes increased central bank financing likely and poses downside risks to the cedi.

“Neither Ghana nor Kenya is likely to seek DSSI participation in 1H21 even if they deem that international bond issuance will not be possible.

“We have changed our view and now expect both Ghana and Kenya to issue Eurobonds in 1H21.

“Kenya is likely to continue to draw on funding from the IMF, the World Bank and other multilateral creditors, as well as bilateral financial support from China as the Standard Gauge Railway, continues to bleed funds.”

Bohlund added that the spreads between Ghana and Kenya Eurobonds are likely to widen further as a higher risk of a debt restructuring is priced into Ghanaian assets.

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Insider Dealing: Paul Miyonmide Gbededo Adds Another 612,326 Shares of Flour Mills to His Stake

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Paul Miyonmide Gbededo, the Group Managing Director, Flour Mills of Nigeria Plc bought an additional 612,326 shares of the company.

The management stated this in a disclosure statement sent to the Nigerian Stock Exchange on Monday.

The managing director purchased the shares at N27.75 per share on November 20, 2020 at the Nigerian Stock Exchange in Lagos, Nigeria. Meaning, Gbededo has invested another N16,992,046.5 into the company.

This was in addition to the 3,284,867 shares valued at N91,642,269 and 4,200,852 shares worth N117.62 million purchased by Gbededo earlier in the month of November. Bringing his recent purchases to 8,098,045 million shares worth N226,254,315.5. See the details of the latest transaction below.

 

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FCMB Reports 16.4 Percent Increase in Profit After Tax in Q3 2020

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FCMB

FCMB Group Plc, one of the leading financial institutions in Nigeria, reported a 16.4 percent increase in profit after tax for the third quarter of the year.

In the unaudited financial statements released through the Nigerian Stock Exchange (NSE), the lender’s profit before tax grew by 10.2 percent year-on-year to N4.8 billion while profit after tax increased by 16.4 percent to N4.2 billion.

FCBMB Group Plc expanded gross earnings by 4.8 percent to N48.3 billion during the period under review. Similarly, the bank’s net interest income rose by 30.03 percent year-on-year to N22.7 billion.

The strong performance continued across the board as net fee and commission income increased by 0.29 percent to N5.2 billion. Net trading income rose by 39.4 percent year-on-year to N1.82 billion.

Personnel expenses dropped by 7.9 percent to N6.9 billion during the quarter while general and administrative expenses declined by 7.52 percent year-on-year to N7.6 billion. Largely due to the COVID-19 lockdown.

Loans and advances to customers rose by 10.8 percent to N793.14 billion between December 2019 and September 2020. Total desposits from customers during the same period grew by 26.7 percent to N1.2 trillion.

The bank’s total assets increased by 22.12 percent to N2.04 trillion.

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