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Equities Market Extends Losses on Negative Sentiments

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8 years ago

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Nigerian Exchange Limited - Investors King
  • Equities Market Extends Losses on Negative Sentiments

The Nigerian equities market extended its weekly depreciation to sixth consecutive week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI), fell by 0.8 per cent to close at 25,333.39 last week.

The market had maintained a steady decline over the past weeks, shedding 3.0 per cent the previous week. Although the weak negative investors sentiments persistent last week, a number of high-capped stocks halted their losses last week, leading to a lower decline of 0.8 per cent. The market capitalisation of the NSE fell by the same margin to close lower at N8.721 trillion. Apart from the NSE ASI, all other indices finished lower during the week with the exception of the NSE Banking and NSE Consumer Goods Indices that appreciated by 0.02 per cent and 0.42 per cent respectively.

Daily Market Performance   Summary

Trading resumed on negative note as  the NSE ASI fell by 0.15 per cent to close at 25,499.00. The depreciation recorded in the share prices of FBN Holdings, Ecobank Transnational Incorporated (ETI), Dangote Sugar, Mobil   Oil and Stanbic IBTC Holdings were responsible for the decline in NSE ASI. Total value of stocks traded on the floors on Monday was N858.54 million, down by 3.34 per cent from N888.17 million the previous day.

Performance across sectors was broadly bearish with only the NSE Industrial Goods Index gaining marginally. The  NSE Insurance Index led sector decliners, falling by  0.6 per cent on account of losses in Continental Reinsurance Plc (-4.8 per cent) and NEM  Insurance (-1.4 per cent). Similarly,  the NSE  Oil & Gas Index closed 0.36 per cent lower as a result of  profit taking in Mobil Oil  (-2.6 per cent) and Total Nigeria Plc(-2.5 per cent). The NSE Banking Index shed 0.6 per cent to close in the red on the back of weak appetite for ETI (-2.0 per cent), Stanbic IBTC (-1.9 per cent) and Zenith Bank (-0.2 per cent). Losses in Dangote Sugar (-4.9 per cent) and International Breweries (-1.5 per cent) depressed the NSE Consumer Goods Index by 0.1 per cent.

The negative sentiments continued to drive the market down on Tuesday, causing the market the NSE ASI to hit a seven-month low. Specifically, the NSE ASI fell by 0.15 per cent to close at 25,461.34, increasing the month-to-date and year-to-date decline to 6.46 per cent and 11.47 per cent respectively.

Tuesday’s decline resulted from heavy sell offs across oil and gas sector. For instance, Forte Oil Plc fell by 9.7 per cent, while Total Nigeria Plc went down by 5.0 per cent. In all, 17 stocks declined compared with 11 stocks that appreciated. Forte Oil Plc led, declining by 9.7 per cent to close at N74.62.

The sell-off in Forte Oil Plc came after the company successfully raised N9 billion bond under its N50 billion bond issuance programme. The   company had said the funds  would  be used to refinance existing short term commercial bank loan obligations and to finance the retail outlet expansion of the company.

The Group Chief Executive Officer, Forte Oil, Mr. Akin Akinfemiwa  had said: “With the raising of this initial capital which has been fully underwritten shows the confidence the investing public has in Forte Oil Plc as an investment of choice. This bond programme being the first in the downstream sector, is testament to Forte’s position within the downstream sector and allows the company to actualise the vision of the Board to continue to provide value to its shareholders regardless of the economic climate.”

The NSE Oil & Gas Index led the decliners with 2.5 per cent, while NSE Consumer Goods Index followed with a marginal decline of 0.02 per cent. On the positive side,  the NSE  Banking Index rebounded 0.05 per cent  on the back of bargain hunting in Access Bank  (+0.5 per cent), Zenith Bank Plc (+0.4 per cent) and Guaranty Trust Bank (+0.3 per cent).

The bear run was halted on Wednesday as the NSE ASI 0.22 per cent to close higher at 25,517.00 on bargain hunting by investors on some of the highly discounted stocks to increase their portfolio. Similarly, market capitalisation added N19.2 billion to close at N8.8 trillion. At the close trading, 19 stocks gained compared to 11 that depreciated.

Sterling Bank Plc led the price gainers with 5.7 per cent, followed by Oando Plc with 5.0 per cent. Flour Mills of Nigeria Plc and PZ Cussons Nigeria Plc advanced 4.9 per cent each. Conversely, Forte Oil Plc led price losers with 6.2 per cent to close at N70.00 per share. Julius Berger Nigeria plc trailed with 5.0 per cent, just as African Prudential Registrars Plc and Total Nigeria Plc rose by 4.3 per cent.

In terms of sectoral performance, all the sectors closed in the green except the NSE Oil and Gas Index that shed weight. The NSE  Banking Index led sector gainers after appreciating 0.75 per cent following investors’ swoop on GTBank Plc(+1.2 per cent) and  United Bank for Africa Plc (+1.2 per cent). The uptrend in Nestle Nigeria Plc (+1.3 per cent), PZ Cussons Nigeria Plc (+4.9 per cent) and Nigerian Breweries Plc (+0.2 per cent) bolstered the  NSE Consumer Goods Index by 0.50 per cent. Also the NSE Insurance Index appreciated 0.2 per cent on account of AIICO Insurance Plc (+3.5 per cent), while the NSE Industrial Goods Index rose 0.1 per cent.

One day after rebounding, the bears returned and reclaimed the control of the market, pushing the NSE ASI down by 0.10 per cent to close at 25,490.70. The depreciation recorded in the share prices of Forte Oil, Stanbic IBTC, Total, Zenith Bank and Nigerian Breweries were responsible for the decline. Similarly, market capitalisation lost N9.1 billion to close at  N8.8 trillion.

Sectorally, the performance was mixed.  The  NSE Oil & Gas Index topped the losers’ chart closing 1.4 per cent lower due to profit taking in Total (-9.0 per cent) and continuous sell-off in Forte Oil (-1.4 per cent) while the  NSE Consumer Goods Index  shed ).13 per cent on the back of weak appetite in Nigerian Breweries Plc (-0.2 per cent) and International Breweries  (-4.1 per cent). On the  positive side, the NSE Banking Index went up by  0.15 per cent  following gains  posted by  GTBank (+0.9 per cent) and Access Bank (+0.2 per cent) which offset losses in Zenith Bank (-1.1 per cent). The NSE Insurance Index rose marginally 0.02 per cent on account of a rally in NEM Insurance (+4.2 per cent).

The market closed lower on Friday as the NSE ASI fell by 0.62 per cent to close at 25,333.39. The depreciation recorded in the share prices of Forte Oil, Stanbic IBTC, Lafarge, Zenith Bank and Dangote Cement accounted for the decline.

Market turnover

Meanwhile, investors traded 639.439 million shares worth N6.455 billion in 11,799 deals were traded last week, compared with 823.547 million shares valued at N5.444 billion that exchanged hands  in 11,634 deals the previous week. The Financial Services Industry remained the most traded with 491.758 million shares valued at N2.211 billion traded in 6,241 deals; thus contributing 76.90 per cent and 34.25 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 64.507 million shares worth N58.500 million in 681 deals. The third place was occupied by the Consumer Goods Industry with a turnover of 54.901 million shares worth N3.307 billion in 2,386 deals.

Gainers and losers

The price movement chart showed that 27 equities appreciated in price during the review week, higher than 10 equities of the previous week. Conversely, 26 equities depreciated in price, lower 48 equities of the previous week. In terms of gainers, Flour Mills of Nigeria Plc led  with 20.3 per cent, trailed by African Prudential Registrars Plc with 14.5 per cent. Fidson Healthcare Plc appreciated by 12.9 per cent, while Unity Bank Plc rose by 9.2 per cent. Champion Breweries Plc, Mobil Oil Nigeria Plc and Diamond Bank Plc garnered 8.4 per cent and 7.1 per cent in that order among others.

Conversely, Forte Oil Plc led the price losers, declining by 24 per cent, trailed by Okomu Oil Palm Plc with 13.8 per cent, while Neimeth International Pharmaceuticals Plc shed 12.7 per cent. Airline Services and Logistics Plc. UACN Property Development Company Plc and Total Nigeria Plc declined by 11.8 per cent, 11.7 per cent ND 10.9 per cent respectively.

Goddy Egene and Nosa Alekhuogie

The Nigerian equities market extended its weekly depreciation to sixth consecutive week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI), fell by 0.8 per cent to close at 25,333.39 last week.

The market had maintained a steady decline over the past weeks, shedding 3.0 per cent the previous week. Although the weak negative investors sentiments persistent last week, a number of high-capped stocks halted their losses last week, leading to a lower decline of 0.8 per cent. The market capitalisation of the NSE fell by the same margin to close lower at N8.721 trillion. Apart from the NSE ASI, all other indices finished lower during the week with the exception of the NSE Banking and NSE Consumer Goods Indices that appreciated by 0.02 per cent and 0.42 per cent respectively.

Daily Market Performance   Summary

Trading resumed on negative note as  the NSE ASI fell by 0.15 per cent to close at 25,499.00. The depreciation recorded in the share prices of FBN Holdings, Ecobank Transnational Incorporated (ETI), Dangote Sugar, Mobil   Oil and Stanbic IBTC Holdings were responsible for the decline in NSE ASI. Total value of stocks traded on the floors on Monday was N858.54 million, down by 3.34 per cent from N888.17 million the previous day.

Performance across sectors was broadly bearish with only the NSE Industrial Goods Index gaining marginally. The  NSE Insurance Index led sector decliners, falling by  0.6 per cent on account of losses in Continental Reinsurance Plc (-4.8 per cent) and NEM  Insurance (-1.4 per cent). Similarly,  the NSE  Oil & Gas Index closed 0.36 per cent lower as a result of  profit taking in Mobil Oil  (-2.6 per cent) and Total Nigeria Plc(-2.5 per cent). The NSE Banking Index shed 0.6 per cent to close in the red on the back of weak appetite for ETI (-2.0 per cent), Stanbic IBTC (-1.9 per cent) and Zenith Bank (-0.2 per cent). Losses in Dangote Sugar (-4.9 per cent) and International Breweries (-1.5 per cent) depressed the NSE Consumer Goods Index by 0.1 per cent.

The negative sentiments continued to drive the market down on Tuesday, causing the market the NSE ASI to hit a seven-month low. Specifically, the NSE ASI fell by 0.15 per cent to close at 25,461.34, increasing the month-to-date and year-to-date decline to 6.46 per cent and 11.47 per cent respectively.

Tuesday’s decline resulted from heavy sell offs across oil and gas sector. For instance, Forte Oil Plc fell by 9.7 per cent, while Total Nigeria Plc went down by 5.0 per cent. In all, 17 stocks declined compared with 11 stocks that appreciated. Forte Oil Plc led, declining by 9.7 per cent to close at N74.62.

The sell-off in Forte Oil Plc came after the company successfully raised N9 billion bond under its N50 billion bond issuance programme. The   company had said the funds  would  be used to refinance existing short term commercial bank loan obligations and to finance the retail outlet expansion of the company.

The Group Chief Executive Officer, Forte Oil, Mr. Akin Akinfemiwa  had said: “With the raising of this initial capital which has been fully underwritten shows the confidence the investing public has in Forte Oil Plc as an investment of choice. This bond programme being the first in the downstream sector, is testament to Forte’s position within the downstream sector and allows the company to actualise the vision of the Board to continue to provide value to its shareholders regardless of the economic climate.”

The NSE Oil & Gas Index led the decliners with 2.5 per cent, while NSE Consumer Goods Index followed with a marginal decline of 0.02 per cent. On the positive side,  the NSE  Banking Index rebounded 0.05 per cent  on the back of bargain hunting in Access Bank  (+0.5 per cent), Zenith Bank Plc (+0.4 per cent) and Guaranty Trust Bank (+0.3 per cent).

The bear run was halted on Wednesday as the NSE ASI 0.22 per cent to close higher at 25,517.00 on bargain hunting by investors on some of the highly discounted stocks to increase their portfolio. Similarly, market capitalisation added N19.2 billion to close at N8.8 trillion. At the close trading, 19 stocks gained compared to 11 that depreciated.

Sterling Bank Plc led the price gainers with 5.7 per cent, followed by Oando Plc with 5.0 per cent. Flour Mills of Nigeria Plc and PZ Cussons Nigeria Plc advanced 4.9 per cent each. Conversely, Forte Oil Plc led price losers with 6.2 per cent to close at N70.00 per share. Julius Berger Nigeria plc trailed with 5.0 per cent, just as African Prudential Registrars Plc and Total Nigeria Plc rose by 4.3 per cent.

In terms of sectoral performance, all the sectors closed in the green except the NSE Oil and Gas Index that shed weight. The NSE  Banking Index led sector gainers after appreciating 0.75 per cent following investors’ swoop on GTBank Plc(+1.2 per cent) and  United Bank for Africa Plc (+1.2 per cent). The uptrend in Nestle Nigeria Plc (+1.3 per cent), PZ Cussons Nigeria Plc (+4.9 per cent) and Nigerian Breweries Plc (+0.2 per cent) bolstered the  NSE Consumer Goods Index by 0.50 per cent. Also the NSE Insurance Index appreciated 0.2 per cent on account of AIICO Insurance Plc (+3.5 per cent), while the NSE Industrial Goods Index rose 0.1 per cent.

One day after rebounding, the bears returned and reclaimed the control of the market, pushing the NSE ASI down by 0.10 per cent to close at 25,490.70. The depreciation recorded in the share prices of Forte Oil, Stanbic IBTC, Total, Zenith Bank and Nigerian Breweries were responsible for the decline. Similarly, market capitalisation lost N9.1 billion to close at  N8.8 trillion.

Sectorally, the performance was mixed.  The  NSE Oil & Gas Index topped the losers’ chart closing 1.4 per cent lower due to profit taking in Total (-9.0 per cent) and continuous sell-off in Forte Oil (-1.4 per cent) while the  NSE Consumer Goods Index  shed ).13 per cent on the back of weak appetite in Nigerian Breweries Plc (-0.2 per cent) and International Breweries  (-4.1 per cent). On the  positive side, the NSE Banking Index went up by  0.15 per cent  following gains  posted by  GTBank (+0.9 per cent) and Access Bank (+0.2 per cent) which offset losses in Zenith Bank (-1.1 per cent). The NSE Insurance Index rose marginally 0.02 per cent on account of a rally in NEM Insurance (+4.2 per cent).

The market closed lower on Friday as the NSE ASI fell by 0.62 per cent to close at 25,333.39. The depreciation recorded in the share prices of Forte Oil, Stanbic IBTC, Lafarge, Zenith Bank and Dangote Cement accounted for the decline.

Market turnover

Meanwhile, investors traded 639.439 million shares worth N6.455 billion in 11,799 deals were traded last week, compared with 823.547 million shares valued at N5.444 billion that exchanged hands  in 11,634 deals the previous week. The Financial Services Industry remained the most traded with 491.758 million shares valued at N2.211 billion traded in 6,241 deals; thus contributing 76.90 per cent and 34.25 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 64.507 million shares worth N58.500 million in 681 deals. The third place was occupied by the Consumer Goods Industry with a turnover of 54.901 million shares worth N3.307 billion in 2,386 deals.

Gainers and losers

The price movement chart showed that 27 equities appreciated in price during the review week, higher than 10 equities of the previous week. Conversely, 26 equities depreciated in price, lower 48 equities of the previous week. In terms of gainers, Flour Mills of Nigeria Plc led  with 20.3 per cent, trailed by African Prudential Registrars Plc with 14.5 per cent. Fidson Healthcare Plc appreciated by 12.9 per cent, while Unity Bank Plc rose by 9.2 per cent. Champion Breweries Plc, Mobil Oil Nigeria Plc and Diamond Bank Plc garnered 8.4 per cent and 7.1 per cent in that order among others.

Conversely, Forte Oil Plc led the price losers, declining by 24 per cent, trailed by Okomu Oil Palm Plc with 13.8 per cent, while Neimeth International Pharmaceuticals Plc shed 12.7 per cent. Airline Services and Logistics Plc. UACN Property Development Company Plc and Total Nigeria Plc declined by 11.8 per cent, 11.7 per cent ND 10.9 per cent respectively.

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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Finance

Moniepoint Strengthens Efforts to Broaden Financial Access Through Collaborative Initiatives

Published

1 day ago

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July 25, 2024

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Africa’s fastest growing financial institution according to the Financial Times, Moniepoint Inc has underscored the importance of a collaborative and holistic stakeholder approach in advancing the future of financial and economic inclusion in Nigeria.

In a recent high-level policy dialogue between the Nigerian government and private sector stakeholders held in Washington DC, Moniepoint Inc’s Group CEO and Co-Founder, Tosin Eniolorunda emphasized the importance of public-private collaborations in addressing trust issues that have slowed down the adoption of innovative fintech solutions for economic and financial inclusion.

“Moniepoint has long championed the importance of financial inclusion and financial happiness. Building trust with the public and government, improving business and consumer access to the financial system are critical issues that are aligned to our philosophy. As testament to our commitment, we recently launched a landmark report investigating Nigeria’s informal economy, highlighting opportunities to widen financial inclusion to historically underserved communities. The outputs from this strategic gathering will go a long way in bolstering Nigeria’s economy even as closer linkages are formed from public-private collaboration which will be a huge boost to the overall development and competitiveness of the larger financial services industry,“ Eniolorunda said.

The event, which brought together government officials, regulators, law enforcement agencies, and fintech industry leaders at George Washington University, aimed to leverage innovative approaches to drive a sustainable and inclusive financial system in Nigeria.

Vice President Kashim Shettima, addressing the gathering via video conference, highlighted the urgent need for financial innovation to drive Nigeria’s economic and financial inclusion agenda. This aligns with President Bola Ahmed Tinubu’s administration’s commitment to bringing over 30 million unbanked Nigerians into the formal financial sector as part of the Renewed Hope Agenda.

“We must develop a sustainable collaboration approach that will facilitate the adoption of inclusive payment to achieve our objective of economic and financial inclusion,” Vice President Shettima stated.

The dialogue focused on addressing critical challenges in Nigeria’s fintech ecosystem, including regulatory oversight, security concerns, and trust issues that have hindered the widespread adoption of innovative financial solutions. Participants explored strategies to enhance interagency collaboration and strengthen the overall effectiveness of the financial services sector.

Philip Ikeazor, Deputy Governor of the Central Bank of Nigeria responsible for Financial System Stability, emphasized the need for ongoing collaboration among all stakeholders to meet the goals of the Aso Accord on Economic and Financial Inclusion.

Kashifu Inuwa Abdullahi, Director General of the National Information Technology Development Agency (NITDA), advocated for “a digital-first approach and the fusion of digital literacy with financial literacy to address trust issues affecting the inclusive payment ecosystem.”

Dr. Nurudeen Zauro, Technical Advisor to the President on Economic and Financial Inclusion, explained that the gathering aims to evolve into a mechanism providing relevant information to the Office of the Vice President, facilitating effective decision-making for economic and financial inclusion.

The event resulted in various recommendations covering rules, infrastructure, and coordination, with a focus on implementable actions and clear accountabilities. As discussions continue, Moniepoint remains dedicated to leveraging its expertise and technology to support the government’s financial inclusion goals and create a more financially inclusive society for all Nigerians.

Other notable speakers included Inspector General of Police Mr. Kayode Egbetokun, Executive Director of the Center for Curriculum Development and Learning (CCDL) at George Washington University Professor Pape Cisse, Assistant Vice President at Merrill Lynch Wealth Management Mr. Reginald Emordi, Regional Director for Africa at the Center for International Private Enterprise (CIPE) Mr. Lars Benson, and United States Congresswoman representing Florida’s 20th congressional district, The Honorable Sheila Cherfilus-McCormick, Prof Olayinka David-West from the Lagos Business School among others.

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Banking Sector

CBN Rate Hikes Raise Borrowing Costs for Banks Seeking FX

Published

2 days ago

on

July 24, 2024

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Retail banking

The Central Bank of Nigeria (CBN) has implemented a significant adjustment to its borrowing rates.

The move, which follows the CBN’s recent decision to adjust the asymmetric corridor around the Monetary Policy Rate (MPR), has led to an increase in the cost of borrowing for banks seeking foreign exchange (FX).

This decision comes amid heightened concerns over the Naira’s performance and inflation rates.

According to Bismarck Rewane, Managing Director/CEO of Financial Derivatives Company Limited, the adjustment means that banks now face borrowing costs of nearly 32% from the CBN, a sharp increase from the previous rate of approximately 26%.

This change in borrowing costs is intended to deter banks from relying on the CBN for FX purchases, thereby reducing pressure on the Naira.

Data reveals that in the first five days of July 2024, banks borrowed an unprecedented N5.38 trillion from the CBN, marking a record high.

The increased borrowing costs are expected to reduce this practice, thereby alleviating some of the strain on the Naira.

Despite these efforts, the Naira has continued to struggle. On Tuesday, the Naira depreciated by 3.13% against the US dollar, with the exchange rate falling to N1,548.76.

This decline is attributed to reduced dollar supply and ongoing uncertainty surrounding Nigeria’s foreign reserves.

The black market saw an even sharper drop, with the Naira falling to 1,687 per dollar, reflecting broader concerns about currency stability.

Rewane highlighted that the recent rate hikes are part of a broader strategy by the CBN to manage inflation and stabilize the Naira.

“The increase in borrowing costs is a necessary step to address the carry trade practices where banks use cheap funds from the CBN to buy FX and sell it at higher rates,” he explained.

The CBN’s decision to raise borrowing costs comes amid a backdrop of persistent inflation and rising interest rates.

Over the past three years, the CBN has raised interest rates 12 times, with recent adjustments aimed at managing liquidity and curbing inflation.

As of June 2024, Nigeria’s headline Consumer Price Index (CPI) reached 34.19%, up from 33.95% in May.

The central bank’s policy changes are expected to have mixed effects.

Analysts at FBNQuest anticipate that banks will continue to benefit from the high-interest rate environment, potentially leading to a shift of assets from equities to fixed-income securities as investors seek higher yields.

The CBN remains committed to navigating Nigeria through these challenging economic conditions.

By adjusting borrowing costs and implementing tighter monetary policies, the central bank aims to strike a balance between managing inflation, stabilizing the Naira, and supporting overall economic growth.

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Finance

Senate Passes Bill for 70% Windfall Levy on Banks’ Forex Gains

Published

2 days ago

on

July 24, 2024

By

Naira Exchange Rates - Investors King

The Nigerian Senate has approved an amendment to the Finance Act of 2023, increasing the windfall levy on banks’ foreign exchange gains from 50% to 70%.

The bill was passed during a plenary session on Tuesday after a thorough review by the Finance Committee.

The Senate’s decision aims to address the significant profits banks have accrued due to recent foreign exchange policy shifts.

This windfall is viewed as a product of government intervention rather than the banks’ strategic efforts, prompting the call for redistribution.

The additional revenue from this levy is expected to contribute to financing the N6.2 trillion Appropriation Amendment Bill.

This funding will support various government projects and initiatives, ensuring that the windfall benefits are reinvested into the economy.

The Senate also approved amendments to the payment timeline, setting the levy to take effect from the start of the new foreign exchange regime through 2025, avoiding retrospective application from January 2024.

Also, the Upper Chamber removed the proposed jail term for principal officers of defaulting banks.

Instead, banks that fail to remit the levy will incur a penalty of 10% per annum on the withheld amount, alongside interest at the prevailing Central Bank of Nigeria (CBN) Minimum Rediscount Rate.

This legislative move aligns with President Tinubu’s broader fiscal strategy, which aims to optimize national revenue through independent sources.

The amendment underscores the Senate’s commitment to leveraging bank profits for national development, especially amid economic challenges.

While some industry stakeholders express concerns about the impact on banking operations, others see this as a necessary step towards equitable wealth distribution and economic stability.

The bill’s passage is anticipated to have significant implications for both the financial sector and the broader economy.

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