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Nigerian Equities Market Records Third Consecutive Weekly Decline

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Nigerian stock market
  • Nigerian Equities Market Records Third Consecutive Weekly Decline

Respite is yet to come for investors in the Nigerian equities market as the market continued its bear run for the third consecutive week. In fact the market recorded its highest decline since July 22. The benchmark index, the Nigerian Stock Exchange (NSE) All-Share Index (NSE ASI) fell by 3.0 per cent to close at 26,170.88, while market capitalisation shed N279.1 billion to close at N9 trillion.

Market operators said the huge decline in the market was due to price depreciation in the shares of high-capped stocks across consumer goods, cement and banking sectors was responsible for the huge loss.

“Continued downward valuation revisions following the announcement of the widely unimpressive July-September corporate earnings — and exacerbated by the weak prospect of a recovery in the near term — may have contributed to the selloffs in the latter sectors,” analysts at Cordros Capital said.

Looking ahead, they said a sustainable recovery in equities will remain constrained by a subdued macro which has sent the local and foreign institutional investors (accounting for 80 per cent of total monthly trades) on sabbatical.

“The NSE ASI is expected to close positive this week, however, on likely recovery in the shares of some of the high-capped stocks that lost last week,” they added.

Daily Market Performance Summary

A decline in a number of highly capitalised stocks depressed the equity market to open the week on a bearish note on Monday. The Nigerian Stock Exchange All Share Index (NSE ASI) depreciated by 0.35 per cent to close at 26,887.54. Specifically, the depreciation recorded in the share prices of United Bank for Africa, Unilever, Access Bank, Transcorp and GTBank were responsible for the decline recorded on the first day of trading.

Investors traded N115 million shares worth N1.16 billion, down by 4.64 per cent from N1.21 billion the previous trading day. The three most actively traded sectors were: Financial Services (96.09 million shares), Conglomerates (5.27 million shares) and, Oil & Gas (4.36 million shares), while the most actively traded stocks were: UBA (21.49 million shares), GT Bank (17.75 million shares) and Zenith Bank (11.72 million shares).

All sector indices trend Southwards on Monday led by the NSE Banking Index, shedding 1.5 per cent on account of declines in GTBank (-3.2 per cent) and Access Bank (-1.3 per cent). The NSE Insurance Index trailed, losing 1.4 per cent while the NSE Industrial Goods Index declined 0.2 per cent. The NSE Consumer Goods and NSE Oil & Gas indices went down by 0.1 per cent apiece.

The bearish trend in worsened on Tuesday as the NSE ASI dipped 1.9 per cent to close at 26,364.27 points, while market capitalisation shed N180.1 billion to close at N9.1 trillion.

Losses sustained in the shares of Dangote Cement (-4.9 per cent), Lafarge Africa Plc (-4.9 per cent) and GTBank (-2.1 per cent) dragged market performance. However, market activity improved as volume and value traded rose by 64.3 per cent and 38.3 per cent to settle at 189.0 million shares and N1.6 billion respectively. The three most actively traded stocks were: Chams (40.10 million shares), UBA (28.61 million shares) and Transcorp (18.04 million shares).

In terms of sectoral indicators, only the NSE Consumer Index rose by 0.52 per cent, while the remaining closed lower. The NSE Industrial Goods Index slumped 4.5 per cent trailed by NSE Oil & Gas Index with a decline of 1.3 per cent. The Banking Index went down by 1.2 per cent while the NSE Insurance Index lost 0.4 per cent.

The bears remained in control of the market on Wednesday with the NSE ASI falling by 0.72 per cent to close at 26,173.69. Also the total value of stocks went down by 35.2 per cent to N1.04 billion, from N1.60 billion recorded the previous day, while to volume of stocks traded was 146.11 million shares in 3,039 deals.

The stock market rebounded on Thursday helped by gains recorded by banking stocks. The NSE ASI appreciated by 0.18 per cent to close at 26,221.75. Similarly, market capitalisation added N16.5 billion to close at N9.0 trillion.

Guaranty Trust Bank Plc, Zenith Bank Plc, Access Bank Plc and United Bank for Africa Plc appreciated by 4.6 per cent, 3.4 per cent, 2.9 per cent and 2.4 per cent respectively.

GTBank Plc, Zenith Bank Plc, Access Bank Plc, UBA and Union Bank of Nigeria Plc are among banks that posted improved results for the nine months ended September 30, 2016.

For instance, GTBank reported a jump of 59 per cent in profit after tax (PAT) to N119.9 billion, following a major boost from foreign exchange (fx) revaluation gains.

The bank reported gross earnings of N329.284 billion, up by 43.5 per cent compared with N229.4 billion in the corresponding period of 2015.

The NSE Banking Index was the only gainer on Thursday, rising by 3.1 per cent on the back of price appreciation by the banking stocks.

The NSE Oil & Gas Index went down (-3.7 per cent), dragged by Forte Oil Plc (-8.5 per cent), Total (-8.2 per cent), Mobil Oil (-2.6 per cent) and Oando(-1.4 per cent). Likewise, the NSE Consumer Goods Index shed 0.5 per cent on the back of sell offs in Nigerian Breweries Plc (-1.1 per cent), Seven-Up Bottling Company Plc (-5.0 per cent) and Cadbury Nigeria (-9.7 per cent). The NSE Insurance Index closed 0.2 per cent lower, while the NSE Industrial Goods Index closed flat.

The gains recorded on Thursday were reversed on Friday as the bulls could not sustain their hold on the market. As a result, the NSE ASI went down by 0.19 per cent to close the week at 26,170.88. The depreciation recorded in the share prices of Lafarge Africa, FBN Holdings, Stanbic IBTC, Transcorp and GTBank were responsible for the loss recorded in the NSE ASI.

The total value of stocks traded rose by 165.8 per cent to N2.63 billion on Friday, from N990.95 million shares the previous day. The three most actively traded stocks were: Standard Alliance Insurance (2.11 billion shares), Zenith Bank (22.39 million shares) and Sterling Bank (18.58 million shares).

Market turnover

The unprecedented jump in volume of shares on Friday lifted the overall weekly turnover to 2.847 billion shares worth N7.420 billion in 16,065 deals, up from the 873.838 million shares valued at N8.024 billion that exchanged hands the previous week.

The Financial Services Industry led the activity chart with 2.632 billion shares valued at N4.935 billion traded in 10,882 deals, thus contributing 92.48 per cent and 66.51 per cent to the total equity turnover volume and value respectively. The ICT Industry followed with 105.401 million shares worth N52.702 million in 11 deals. The third place was occupied by the Conglomerates Industry with a turnover of 36.495 million shares worth N44.162 million in 446 deals.

Also a total of 73,694 units of Federal Government Bonds valued at N80.177 million were traded in nine deals compared to a total of 13,020 units of Federal Government Bonds valued at N12.953 million transacted the previous week in 14 deals.

Similarly, a total of 5,080 units of Exchange Traded Products (ETPs) valued at N62, 550.75 executed in 17 deals, compared with a total of 56,688 units valued at N817,310.72 transacted last week in 31 deals

Gainers and losers

Meanwhile, 18 equities appreciated in price last week, lower than 24 equities of the previous week. Conversely, 36 equities depreciated in price, compared with 37 equities of the previous week.

Airline Services and Logistics Plc led the price gainers with 19.6 per cent, trailed by Wema Bank Plc with 10.5 per cent, while Livestock Feeds Plc and Eterna Plc went up by 9.5 per cent apiece. Guinness Nigeria Plc and Red Star Express Plc garnered 7.1 per cent each, while Pharma-Deko Plc, Ikeja Hotel Plc and International Breweries Plc appreciated by 4.8 per cent, 4.7 per cent and 4.6 per cent in that order.

Conversely, Cement Company of Northern Nigeria Plc led the price losers, shedding 14.3 per cent, trailed by National Aviation Handling Company Plc and Cadbury Nigeria Plc with a loss of 14.1 per cent each. Forte Oil Plc, Lafarge Africa Plc and Champion Breweries Plc declined by 12.7 per cent, 12.5 per cent and 10.2 per cent respectively.

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

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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Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020

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Revenue of OPEC Members to Drop to 18 Year Low in 2020

The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.

EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.

If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.

The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.

It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.

It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”

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