Markets

Nigerian Equities Market Records Third Consecutive Weekly Decline

Published

7 years ago

November 14, 2016

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.

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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

19 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

20 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

2 days 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.