Markets

Equities Market Rebounds on Renewed Optimism

Published

7 years ago

March 13, 2017

Equities Market Rebounds on Renewed Optimism

It was a positive week at the stock market last week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) rose by 0.90 per cent to close at 25,238.10. Similarly, market capitalisation appreciated with the same margin to be at N8.734 trillion. The growth compares with a decline of 0.94 per cent recorded the preceding week.

The market had shed value two weeks ago amidst corporate results declared by some companies for the year ended December 31, 2016. Zenith Bank Plc, Transcorp Hotels Plc, Dangote Cement Plc and Nestle Nigeria Plc reported their audited results, announcing various dividends the previous week. Despite the dividends, the market had closed in the bears’ territory.

However, the trend changed last week as more companies announced their results, recommending higher dividends. This development, market analyst said raised investors’ optimism for more positive results. Consequently, the NSE ASI closed 0.90 per cent higher.

Daily Market Performance

The stock market closed last week on a bearish note despite attractive yields declared by some companies in their financial results for the year ended December 31, 2016. Zenith Bank Plc, Transcorp Hotels Plc, and Dangote Cement Plc declared improved results that led to recommendation of dividends by their boards. Although Nestle Nigeria Plc posted a decline in profit for the year, it still recommended a dividend for the shareholders.

However, many investors were not moved by the development and maintained their weak appetite towards the equities market. As a result, the market closed weaker. Out of the five days the market declined in three days and appreciated in two days.

Specifically, the Nigerian Stock Exchange (NSE) All-Share Index pared by 0.94 per cent to close at 25,012.08, while market capitalisation ended at N8.656 trillion.

However, all other Indices finished higher during the week with the exception of the NSE Premium and NSE Industrial Goods Indices that depreciated by 4.47 per cent and 2.33 per cent respectively while the ASEM Index closed flat.

Daily Market performance

The equity market started the week on a negative note with the NSE ASI depreciated by 1.72 per cent to close at 24,581.99, following depreciation recorded in the share prices of Access Bank, Dangote Cement, Unilever, Guinness and FBN Holdings among others.

The year-to-date (YTD) decline worsened to 8.5 per cent on Monday. Performance across sectors was mixed as three indices advanced while two declined. The NSE Consumer Goods Idex appreciated the most, rising by 3.7 per cent as Nestle Nigeria and Nigerian Breweries rising by 10 per cent and 0.9 per cent respectively to bolster the index.

In the same vein, the NSE Oil & Gas Index gained 3.3 per cent on account of appreciation by Forte Oil Plc(+5.1 per cent) while the NSE Insurance Index grew by 0.4 per cent.

On the negative side, the NSE Industrial Goods Index fell by 5.9 per cent as investors off-load Dangote Cement, which shed 7.0 per cent. The stock had depreciated 11.7 since its 2016 financial results were published the previous week. The NSE Banking Index slid 0.3 per cent despite an impressive 2016 full year results submitted on Monday. The equity fell by 3.7 per cent.

The bulls surfaced on Tuesday to take over control of the market lifted by Dangote Cement Plc. The NSE ASI rose by 2.28 per cent. In all, the bullish trend was driven by appreciation in the share price of Transcorp (+7.14 per cent), Guinness (+4.97 per cent) Dangote Cement (+4.92 per cent), Paintcom (+4.84 per cent) and Dangote Flour(+4.11).

The value of equities traded increased by 94.59 per cent to N2.595 billion, while volume of trading also rose by 78.7 per cent to 215 million in 3,689 deals.

The five stocks that drove activities in volume terms included: Access Bank (43.7 million), Zenith Bank (42.6 million), UBA (18.9 million), FBN Holdings (18.2 million), UCAP (13.4 million) and NEM (10.4 million).

After recording a positive performance on Tuesday, the market was depressed on Wednesday by a number of highly capitalised stocks. Consequently, the NSE ASI fell by 0.57 per cent to close at 24,986.02. The decline recorded in the share prices of GTBank, Dangote Cement, Lafarge Africa, FBN Holdings and Zenith Bank were mainly responsible for the loss.

In terms of sectoral performance, the NSE Consumer Goods Index was the only gainer, improving by 3.0 per cent following price appreciation in Nigerian Breweries(+5.0 per cent) and Guinness (+3.9 per cent).

The NSE Industrial Goods Index was the biggest decliner, falling 3.5 per cent as sell offs in Lafarge Africa Plc (-5.0 per cent) and Dangote Cement Plc (-2.8 per cent) constituted a drag on the index. Similarly, the NSE Oil & Gas Index shed 2.5 per cent following sell pressure on Seplat (-5.0 per cent) and Forte (-5.0 per cent) just as the NSE Banking Index lost 0.1 per cent.

Again, the bulls returned on Thursday to take control of the market, making the NSE ASI to close 0.74 per cent higher. There were 16 gainers and nine losers on Thursday. Nestle Nigeria and Dangote Cement Plc led the gainers with 5.0 apeice to close at N725.55 and N159.75.

Medview Airlines Plc followed with 4.9 per cent, while NEM Insurance Plc appreciated by (4.82 per cent. Honeywell Flour Mills chalked up 4.3 per cent.

On the negative side, Nigerian Breweries Plc led the price losers with 5.00 per cent to close at N130.36. Also, Guaranty Trust Bank, which released its 2016 the previous day, fell by 4.8 per cent.

GTBank had on Wednesday reported gross earnings of N414.62 billion for the year ended December 31, 2016, showing an increase of 37 per cent from N301.85 billion in 2015. Profit before tax stood at N165.14billion, representing a growth of 37 per cent over N120.69billion recorded in 2015, while profit after tax rose from N99.436 billion in 2015 to N132 billion.

The bank grew its loan book grew by 16 per cent from N1.373trillion in 2015 to N1.590 trillion in 2016, just as total deposits grew by 29 per cent to N2.111trillion from N1.637trillion in 2015.

Based on the results, the bank has proposed final dividend of 175 kobo, bringing the total dividend to 200 kobo per share. The bank has already paid an interim dividend of 25 kobo.

Performance across sectors was mixed with indices appreciated while three declined. The NSE Industrial Goods Index advanced the most, growing by 2.4 per cent boosted by Dangote Cement(+5.0 per cent). Similarly, the NSE Insurance Index appreciated 0.2 per cent. Conversely, the NSE Consumer Goods Index led sector decliners, shedding 2.0 per cent on account of profit taking in Nigerian Breweries ( -5.0 per cent). Also, the NSE Banking and Oil & Gas Indices went down by 1.3 per cent and 0.3 per cent respectively.

The bulls extended their hold on the market for the second day to close on a positive note. Specifically, the NSE ASI appreciated by 0.27 per cent to close at 25,238.01. Gains by Unilever, Forte Oil, Dangote Cement, Nestle, and Zenith Bank propelled the growth recorded for the last day of the week.

The total value of stocks traded on Friday was N2.31 billion, up by 5.81 per cent from N2.19 billion recorded the previous day. The total volume of stocks traded was 245.38 million 3,260 deals. The three actively traded sectors were: Financial Services (229.72 million), Consumer Goods (5.58 million), and Conglomerates (4.26 million), while three most actively traded stocks were: Zenith Bank (87.18mn), Diamond Bank (38.58mn) and FBN Holdings (30.10mn).

Market Turnover

In all, investors traded 1.024 billion shares worth N12.464 billion in 16,400 deals last week, compared with 1.387 billion shares valued at N13.726 billion that exchanged hands the previous week in 5,422 deals.

As usual, the Financial Services Industry remained the most activity leading with 850.758 million shares valued at N7.083 billion traded in 10,358 deals. The Consumer Goods Industry followed with 78.421 million shares worth N3.9 billion in 2,545 deals, while the third place was occupied by Conglomerates Industry with a turnover of 46.196 million shares worth N70.668 million in 536 deals.

Also traded during the week were a total of 1,020 units of Exchange Traded Products (ETPs) valued at N51,316.00 executed in four deals.

A total of 6,686 units of Federal Government Bonds valued at N5.583 million were traded this week in 7 deals, compared with a total of 375 units valued at N447,055.02 transacted the previous week in five deals.

Price Gainers and Losers

Meanwhile, 24 equities appreciated last week, while 31 depreciated. Nestle Nigeria led the price gainers chalking up 16.9 per cent, trailed by Unilever Nigeria Plc with 11.4 per cent. N.E.M Insurance Plc appreciated by 9.6 per cent, just as Honeywell Flour Mills Plc ended 5.0 per cent higher.

Other top price gainers included: Continental Reinsurance Plc (4.9 per cent); Paints and Coatings Manufacturers Plc(4.8 per cent); Newrest ASL (4.6 per cent);

Transcorp Plc (4.3 per cent); Champion Breweries Plc (4.2 per cent) and Julius Berger Nigeria Plc (4.1 per cent).

Conversely, African Prudential Registrars Plc led the price losers with 15.5 per cent. United Capital Plc trailed with 15.1 per cent. Nigerian Aviation Handling Company Plc and Seven-Up Bottling Company Plc shed 12 per cent and 9.4 per cent in that order.

Livestock Feeds Plc went down by 9.4 per cent, just as Eterna Plc and Unity Bank Plc depreciated by 9.4 per cent and 8.2 per cent respectively. Other price losers were Transcorp Hotels Plc (8.0 per cent); Ashaka Cement Plc (7.9 per cent) and Lafarge Africa Plc (6.9 per cent).

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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

Oil Prices Dip on Sluggish Demand Signs and Fed’s Interest Rate Outlook

Published

1 day ago

May 13, 2024

Samed Olukoya

Oil prices on Monday dipped as the U.S. Federal Reserve officials’ comments showed a cautious approach to interest rate adjustments.

The dip in prices reflects concerns over the outlook for global economic growth and its implications for energy consumption in the world’s largest economy.

Brent crude oil, against which Nigerian oil is priced, slipped by 7 cents or 0.1% to $82.72 per barrel while U.S. West Texas Intermediate crude oil stood at $78.21 per barrel, a 5 cents decline.

Auckland-based independent analyst Tina Teng highlighted that the oil market’s focus has shifted from geopolitical tensions in the Middle East to the broader world economic outlook.

Concerns arose as China’s producer price index (PPI) contracted in April, signaling continued sluggishness in business demand.

Similarly, recent U.S. economic data suggested a slowdown, further dampening market sentiment.

The discussions among Federal Reserve officials regarding the adequacy of current interest rates to stimulate inflation back to the desired 2% level added to market jitters.

While earlier in the week, concerns over supply disruptions stemming from the Israel-Gaza conflict had provided some support to oil prices, the attention has now turned to macroeconomic indicators.

Analysts anticipate that the U.S. central bank will maintain its policy rate at the current level for an extended period, bolstering the dollar.

A stronger dollar typically makes dollar-denominated oil more expensive for investors holding other currencies, thus contributing to downward pressure on oil prices.

Furthermore, signs of weak demand added to the bearish sentiment in the oil market. ANZ analysts noted that U.S. gasoline and distillate inventories increased in the week preceding the start of the U.S. driving season, indicating subdued demand for fuel.

Refiners globally are grappling with declining profits for diesel, driven by increased supplies and lackluster economic activity.

Despite the prevailing challenges, expectations persist that the Organization of the Petroleum Exporting Countries (OPEC) and their allies, collectively known as OPEC+, may extend supply cuts into the second half of the year.

Iraq, the second-largest OPEC producer, expressed commitment to voluntary oil production cuts and emphasized cooperation with member countries to stabilize global oil markets.

However, Iraq’s suggestion that it had fulfilled its voluntary reductions and reluctance to agree to additional cuts proposed by OPEC+ members stirred speculation and uncertainty in the market.

ING analysts pointed out that Iraq’s ability to implement further cuts might be limited, given its previous shortfall in adhering to voluntary reductions.

Meanwhile, in the United States, the oil rig count declined to its lowest level since November, signaling a potential slowdown in domestic oil production.

As oil markets continue to grapple with a complex web of factors influencing supply and demand dynamics, investors and industry stakeholders remain vigilant, closely monitoring developments and adjusting their strategies accordingly in an ever-evolving landscape.

Crude Oil

Brent Crude Hovers Above $84 as Demand Rises in U.S. and China

Published

4 days ago

May 10, 2024

Samed Olukoya

Brent crude oil continued its upward trajectory above $84 a barrel as demand in the United States and China, the two largest consumers of crude globally increased.

This surge in demand coupled with geopolitical tensions in the Middle East has bolstered oil markets, maintaining Brent crude’s resilience above $84 a barrel.

The latest data revealed a surge in demand, particularly in the U.S. where falling crude inventories coincided with higher refinery runs.

This trend indicates growing consumption patterns and a positive outlook for oil demand in the world’s largest economy.

In China, oil imports for April exceeded last year’s figures, driven by signs of improving trade activity, as exports and imports returned to growth after a previous contraction.

ANZ Research analysts highlighted the ongoing strength in demand from China, suggesting that this could keep commodity markets well supported in the near term.

The positive momentum in demand from these key economies has provided a significant boost to oil prices in recent trading sessions.

However, amidst these bullish indicators, geopolitical tensions in the Middle East have added further support to oil markets. Reports of a Ukrainian drone attack setting fire to an oil refinery in Russia’s Kaluga region have heightened concerns about supply disruptions and escalated tensions in the region.

Also, ongoing conflict in the Gaza Strip has fueled apprehensions of broader unrest, particularly given Iran’s support for Palestinian group Hamas.

Citi analysts emphasized the geopolitical risks facing the oil market, pointing to Israel’s actions in Rafah and growing tensions along its northern border. They cautioned that such risks could persist throughout the second quarter of 2024.

Despite the current bullish sentiment, analysts anticipate a moderation in oil prices as global demand growth appears to be moderating with Brent crude expected to average $86 a barrel in the second quarter and $74 in the third quarter.

The combination of robust demand from key economies like the U.S. and China, coupled with geopolitical tensions in the Middle East, continues to influence oil markets with Brent crude hovering above $84 a barrel.

As investors closely monitor developments in both demand dynamics and geopolitical events, the outlook for oil prices remains subject to ongoing market volatility and uncertainty.

Crude Oil

Brent Plunges Below $83 Amidst Rising US Stockpiles and Middle East Uncertainty

Published

6 days ago

May 8, 2024

Samed Olukoya

The global oil declined today as Brent crude prices plummeted below $83 per barrel, its lowest level since mid-March.

This steep decline comes amidst a confluence of factors, including a worrisome surge in US oil inventories and escalating geopolitical tensions in the Middle East.

On the commodity exchanges, Brent crude, the international benchmark for oil prices, experienced a sharp decline, dipping below the psychologically crucial threshold of $83 per barrel.

West Texas Intermediate (WTI) crude oil, the US benchmark, also saw a notable decrease to $77 per barrel.

The downward spiral in oil prices has been attributed to a plethora of factors rattling the market’s stability.

One of the primary drivers behind the recent slump in oil prices is the mounting stockpiles of crude oil in the United States.

According to industry estimates, crude inventories at Cushing, Oklahoma, the delivery point for WTI futures contracts, surged by over 1 million barrels last week.

Also, reports indicate a significant buildup in nationwide holdings of gasoline and distillates, further exacerbating concerns about oversupply in the market.

Meanwhile, geopolitical tensions in the Middle East continue to add a layer of uncertainty to the oil market dynamics.

The Israeli military’s incursion into the Gazan city of Rafah has intensified concerns about the potential escalation of conflicts in the region.

Despite efforts to broker a truce between Israel and Hamas, designated as a terrorist organization by both the US and the European Union, a lasting peace agreement remains elusive, fostering an environment of instability that reverberates across global energy markets.

Analysts and investors alike are closely monitoring these developments, with many expressing apprehension about the implications for oil prices in the near term.

The recent downturn in oil prices reflects a broader trend of market pessimism, with indicators such as timespreads and processing margins signaling a weakening outlook for the commodity.

The narrowing of Brent and WTI’s prompt spreads to multi-month lows suggests that market conditions are becoming increasingly less favorable for oil producers.

Furthermore, the strengthening of the US dollar is compounding the challenges facing the oil market, as a stronger dollar renders commodities more expensive for investors using other currencies.

The dollar’s upward trajectory, coupled with oil’s breach below its 100-day moving average, has intensified selling pressure on crude futures, exacerbating the latest bout of price weakness.

In the face of these headwinds, some market observers remain cautiously optimistic, citing ongoing supply-side risks as a potential source of support for oil prices.

Factors such as the upcoming June meeting of the Organization of the Petroleum Exporting Countries (OPEC+) and the prospect of renewed curbs on Iranian and Venezuelan oil production could potentially mitigate downward pressure on prices in the coming months.

However, uncertainties surrounding the trajectory of global oil demand, geopolitical developments, and the efficacy of OPEC+ supply policies continue to cast a shadow of uncertainty over the oil market outlook.

As traders await official data on crude inventories and monitor geopolitical developments in the Middle East, the coming days are likely to be marked by heightened volatility and uncertainty in the oil markets.