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Stock Market Sheds 1% on Profit Taking

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  • Stock Market Sheds 1% on Profit Taking

Profit taking by some investors ended a two-week positive performance at the stock market last week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell by 0.92 per cent to close at 25,510.01. Similarly, market capitalisation ended lower at N8.827 trillion.

The market had recorded upward performance for two weeks following improved corporate earnings for 2016 declared by some companies. However, profit taking set in last week as investors locked in part of gains earlier recorded by some stocks. Another factor that led to the decline last week was price adjustments for dividend declared by some companies. The market was open for only four days as the federal government declared Friday Public Holiday to commemorate Easter celebration. Despite the fact that some companies still declared improved earnings for 2016 last week, profit taking dominated. Consequently, the market closed in the bear’s territory.

Daily Market performance

Investors embarked on profit taking on the first day of the week following the previous week’s gains. Consequently, the NSE ASI fell by 0.45 per cent to close lower at 25,626.39, pushing the year-to-date ( YTD) loss to 4.6 per cent on Monday. The negative performance was affected by losses in Nigerian Breweries , GTBank Plc and Ecobank Transnational Incorporated (ETI) among others. Despite the bearish close, the activity level was mixed as volume traded rose 77.7 per cent to 191.8 million shares units while value traded fell 35.6 per cent to settle at N584.7 million.

Sector indices were largely bearish with the NSE Oil & Gas Index closing as the only gainer for the day with a marginal appreciation of 0.04 per cent. The indicator was bolstered by gains in Total (+4.1 per cent) which offset the decline in Oando (-4.8 per cent). The NSE Consumer Goods Index shed 1.4 per cent as Dangote Sugar Refinery Plc was adjusted for dividend. Investors sold off on Nigerian Breweries led to a slide of 2.0 per cent. In a similar vein, the NSE Insurance Index went down by 1.1 per cent following sell pressure on AIICO (-3.8 per cent) and Continental Reinsurance Plc (-3.9 per cent) weighed on the sector.

The NSE Banking Index depreciated by 0. 47 per cent due to losses in GTBank (-0.8 per cent) and ETI (-2.8 per cent).

“The decline in performance today was in line with projection as investors expectedly took a breather following two weeks of positive momentum. Whilst we believe upsides to equities are capped by subsisting capital controls which restrict foreign investor participation, our outlook for the market remains positive for April as we expect strong first quarter(Q1) earnings, due for release this month, to further propel market performance,” analysts at Afrinvest said.

The market extended losses for the second day of the week with NSE ASI going down by 0.58 per cent to close at 25,478.06. In terms of market capitalisation, it shed N51.3 billion to close at N8.8 trillion. Depreciation in the shares of Mobil Oil (-9.4 per cent), Dangote Cement (-0.4 per cent) and GTBank (-1.4 per cent), was partly responsible for the negative performance on Tuesday.

Unlike the previous when one sector recorded positive performance, all sectors closed in red. The NSE Oil & Gas Index led the losers’ chart, shedding 2.6 per cent . The NSE Banking Index went down by 0.62 per cent as a result of losses by GTBank (1.4 per cent) and Zenith Bank (1.3 per cent).

The NSE Consumer Goods Index trailed with a 0.31 per cent decline due to further losses in Nigerian Breweries (-0.4 per cent) and Dangote Sugar Refinery Plc (-1.9 per cent). Similarly, the NSE Insurance Index fell by 0.2 per cent on the back of AXA Mansard’s depreciation (-1.9 per cent). The NSE Industrial Goods Index closed 0.1 per cent lower.

The Nigerian equities market returned to positive territory yesterday on bargain hunting, pushing the NSE All-Share Index by 0.07 per cent to close at 25,496.71. Similarly, market capitalisation added N6.5 billion to close at N8.8 trillion, while year-to-date decline stood at 5.1 per cent.

The positive performance was majorly driven by gains in GTBank Plc, Nigerian Breweries Plc and FBN Holdings Plc. But Trans-nationwide Express Plc led the price gainers’ chart with 4.6 per cent, trailed by Fidson Healthcare Plc, which went up by 4.3 per cent.

Transcorp Plc and AIICO Insurance Plc appreciated by 4.1 per cent and 3.7 per cent respectively, just as FBN Holdings Plc, Oando Plc and Flour Mills of Nigeria Plc 3.2 per cent and 3.1 per cent in that order.

Conversely, Unilever Nigeria Plc led the price losers, shedding 5.0 per cent, trailed by Lafarge Africa Plc with 4.9 per cent. Ashaka Cement Plc, Nigerian Aviation Company Plc and Jaiz Bank Plc declined by 4.9 per cent, 4.8 per cent and 4.5 per cent respectively.

Sectoral performance showed that three sectors advanced, while two declined. The NSE Banking Index rose by 0.8 per cent following gains recorded by GTBank Plc (+1.7 per cent) and Zenith Bank Plc (+0.4 per cent).

The NSE Insurance Index appreciated by 0.5 per cent due to price appreciation in AIICO Insurance Plc (+3.8 per cent) and Continental Reinsurance Plc (+2.5 per cent), just as the NSE Consumer Goods Index gained 0.3 per cent bolstered by gains recorded by Nigerian Breweries Plc (+1.2 per cent) and Flour Mills of Nigeria Plc (+2.8 per cent).

Contrarily, the NSE Industrial Goods Index dipped 2.3 per cent as investors booked profit in Lafarge Africa (-5.0 per cent). Similarly, the NSE Oil & Gas Index shed 0.6 per cent on the back of price losses in Seplat (-2.0 per cent) and Mobil (-0.6 per cent).

The market sustained the positive performance for the second day, although marginally as the NSE ASI rose by 0.05 per cent to close at 25,510.01. The gains recorded in last two days of the week were not enough to wipe out the losses recorded the two days. Consequently, the market closed the week 0.92 per cent.

Market turnover

Meanwhile, investors traded 1.191 billion shares worth N6.037 billion in 11,820 compared with 786.176 million shares valued at N5.828 billion that exchanged hands the previous week in 14,343 deals. The Financial Services Industry led the activity chart with 1.014 billion shares valued at N3.070 billion traded in 6,700 deals. The Consumer Goods Industry followed with 51.888 million shares worth N1.581 billion in 2,025 deals. The third place was occupied by Conglomerates Industry with a turnover of 47.517 million shares worth N66.904 million in 542 deals.

Trading in the top three equities namely – Fidelity Bank Plc, FCMB Group Plc and Standard Trust Assurance Plc- accounted for 679.949 million shares worth N639.862 million in 1,622 deals, contributing 57.06 per cent and 10.60 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 16 units of Exchange Traded Products (ETPs) valued at N1,088.00 executed in one deal compared with a total of 1,510 units valued at N4,113.20 transacted the previous week in three deals.

A total of 4,800 units of Federal Government Bonds valued at N4.892million were traded this week in 10 deals, compared with a total of 11,064 units valued at N10.256million transacted the preceding week in 21 deals.

Price Gainers and Losers

The price movement chart showed 13 gainers lower than the 36 gainers equities of the previous week. Conversely, 37 equities depreciated in price, higher than 22 equities of the previous week.

Fidelity Bank Plc led the price gainers with 21.4 per cent, trailed by C & I Leasing Plc with 14.2 per cent. Transcorp Plc chalked up 5.3 per cent, just as Fidson Healthcare Plc appreciated by 5.2 per cent. International Breweries Plc, NPF Microfinance Bank Plc and Total Nigeria Plc went up 4.9 per cent, 4.8 per cent and 4.1 per cent in that order.

Other top price gainers were: UACN Property Development Company Plc (3.4 per cent); Caverton (3.3 per cent) and FBN Holdings Plc (2.8 per cent).

On the flipside, Dangote Sugary Refinery Plc led the price losers with 14.2 per cent. FCMB Group Plc shed 12.2 per cent, while Mobil Oil Nigeria Plc went down by 10 per cent.

Jaiz Bank Plc depreciated by 8.7 per cent, just as Dangote Flour Mills Plc and Oando Plc closed the week 7.4 per cent and 7.2 per cent lower respectively. Oando Plc, Unilever Nigeria Plc, Union Dicon Salt plc and Ashaka Cement Plc declined by 5.2 per cent, 5.0 per cent, 4.9 per cent and 4.9 per cent in that order.

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.

Crude Oil

Oil Posts 2% Gain for the Week Despite India Virus Surge

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Crude Oil - Investors King

Oil prices steadied on Friday and were set for a weekly gain against the backdrop of optimism over a global economic recovery, though the COVID-19 crisis in India capped prices.

Brent crude futures settled 0.28% higher at $68.28 per barrel and U.S. West Texas Intermediate (WTI) crude advanced 0.29% to $64.90 per barrel.

Both Brent and WTI are on track for second consecutive weekly gains as easing restrictions on movement in the United States and Europe, recovering factory operations and coronavirus vaccinations pave the way for a revival in fuel demand.

In China, data showed export growth accelerated unexpectedly in April while a private survey pointed to strong expansion in service sector activity.

However, crude imports by the world’s biggest buyer fell 0.2% in April from a year earlier to 40.36 million tonnes, or 9.82 million barrels per day (bpd), the lowest since December.

In the United States, the world’s largest oil consumer, jobless claims have dropped, signalling the labour market recovery has entered a new phase as the economy recovers.

The recovery in oil demand, however, has been uneven as surging COVID-19 cases in India reduce fuel consumption in the world’s third-largest oil importer and consumer.

“Brent came within a whisker of breaking past $70 a barrel this week but failed at the final hurdle as demand uncertainty dragged on prices,” said Stephen Brennock at oil brokerage PVM.

The resurgence of COVID-19 in countries such as India, Japan and Thailand is hindering gasoline demand recovery, energy consultancy FGE said in a client note, though some of the lost demand has been offset by countries such as China, where recent Labour Day holiday travel surpassed 2019 levels.

“Gasoline demand in the U.S. and parts of Europe is faring relatively well,” FGE said.

“Further out, we could see demand pick up as lockdowns are eased and pent-up demand is released during the summer driving season.”

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Commodities

Lagos Commodities and Futures Exchange to Commence Gold Trading

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gold bars

With the admission of Dukia Gold’s diversified financial instruments backed by gold as the underlying asset, Lagos Commodities and Futures Exchange is set to commence gold trading.

According to Dukia Gold, the instruments will be in form of exchange-traded notes, commercial papers and other gold-backed securities, adding that it will enable the company to deepen the commodities market in Nigeria, increase capacity, generate foreign exchange for the Nigerian government to better diversify foreign reserves and create jobs across the metal production value chain.

Tunde Fagbemi, the Chairman, Dukia Gold, disclosed this while addressing journalists at Pre-Listing Media Interactive Session in Lagos on Thursday.

He said, “We are proud to be the first gold company whose products would be listed on the Lagos Futures and Commodities Exchange. The listing shall enable us facilitate our infrastructure development, expand capacity and create fungible products.

“This has potential to shore up Nigeria’s foreign reserve and create an alternative window for preservation of pension funds. A gold-backed security is a hedge against inflation and convenient preservation of capital.”

“As a global player, we comply with the practices and procedures of London Bullion Market Association and many other international bodies. Our refinery will also have multiplier effects on the development of rural areas anywhere it is located,” he added.

Mr Olusegun Akanji, the Divisional Head, Strategy and Business Solutions, Heritage Bank, said the lender had created a buying centre for verification of quality and quantity of gold and reference price to ensure price discovery in line with the global standard.

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Crude Oil

Oil Nears $70 as Easing Western Lockdowns Boost Summer Demand Outlook

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Crude oil

Oil prices rose for a third day on Wednesday as easing of lockdowns in the United States and parts of Europe heralded a boost in fuel demand in summer season and offset concerns about the rise of COVID-19 infections in India and Japan.

Brent crude rose 93 cents, or 1.4%, to $69.81 a barrel at 1008 GMT. U.S. West Texas Intermediate (WTI) crude rose 85 cents, or 1.3%, to $66.54 a barrel.

Both contracts hit the highest level since mid-March in intra-day trade.

“A return to $70 oil is edging closer to becoming reality,” said Stephen Brennock of oil broker PVM.

“The jump in oil prices came amid expectations of strong demand as western economies reopen. Indeed, anticipation of a pick-up in fuel and energy usage in the United States and Europe over the summer months is running high,” he said.

Crude prices were also supported by a large fall in U.S. inventories.

The American Petroleum Institute (API) industry group reported crude stockpiles fell by 7.7 million barrels in the week ended April 30, according to two market sources. That was more than triple the drawdown expected by analysts polled by Reuters. Gasoline stockpiles fell by 5.3 million barrels.

Traders are awaiting data from the U.S. Energy Information Administration due at 10:30 a.m. EDT (1430 GMT) on Wednesday to see if official data shows such a large fall.

“If confirmed by the EIA, that would mark the largest weekly fall in the official data since late January,” Commonwealth Bank analyst Vivek Dhar said in a note.

The rise in oil prices to nearly two-month highs has been supported by COVID-19 vaccine rollouts in the United States and Europe.

Euro zone business activity accelerated last month as the bloc’s dominant services industry shrugged off renewed lockdowns and returned to growth.

“The partial lifting of mobility restrictions, the expectation that tourism will return in the near future, and the lure of the psychologically important $70 mark are all likely to have contributed to the price rise,” Commerzbank analyst Eugen Weinberg said.

This has offset a drop in fuel demand in India, the world’s third-largest oil consumer, which is battling a surge in COVID-19 infections.

“However, if we were to eventually see a national lockdown imposed, this would likely hit sentiment,” ING Economics analysts said of the situation in India.

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