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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.

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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Markets

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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