- Stock Market Gains N156bn on Renewed Investor Sentiment
It was another bullish week for equities investors as the market rode on the continued positive sentiments to gain N156.2 billion. The market, which had previously recorded its highest weekly gain, rallied further last week on persistent investors’ positive reactions to first quarter (Q1) earnings reported by companies. The Nigerian Stock Exchange (NSE) All-Share Index (NSE ASI) rose by 1.85 per cent to close at 26,235.63, while market capitalisation appreciated by same margin to close higher at N9.069 trillion.
Similarly, all other Indices finished higher during the week with the exception the NSE Insurance and NSE Industrial Goods Indices that depreciated by 0.09 per cent and 1.04 per cent respectively while the NSE ASeM Index closed flat.
The NSE Banking Index appreciated by 3.6 per cent, followed by the NSE Consumer Goods and NSE Oil & Gas Indices with 3.0 per cent apiece.
However, on the contrary, the Industrial Goods Index declined 1.1 per cent, just as the NSE Insurance Index recorded 0.1 per cent.
Analysts at Afrinvest said the market performance was driven by “swirls of positive sentiment, which emanated from the impressive Q1 earnings and expectations of a rebound in economic activities following positive PMI readings for April and improved FX liquidity.”
Daily Market performance
The market commenced the week and new month on a positive note on Tuesday as the NSE ASI appreciated by 0.80 per cent to close at 25,965.18. The gain recorded could be attributed to the renewed investor sentiments witnessed in the market from last week, coupled with some impressive Q1:2017 earnings releases which drove the positive reactions. Specifically, sustained interest in market bellwethers such as Zenith Bank, Nestle Nigeria, Guaranty Trust Bank and Seplat contributed to the positive performance.
Performance across sectors was broadly positive as all indices closed in the green save for the NSE Industrial Goods Index which stagnated. The NSE Banking Index appreciated the most, rising by 1.5 per cent due to gain by Zenith Bank (+3.7 per cent) and GTBank (+1.4 per cent) while the NSE Oil & Gas Index went up 1.4 per cent followed gains by Seplat (+3.7 per cent) and Oando (+4.8 per cent). Similarly, the NSE Consumer Goods Index and NSE Insurance indices closed 0.9 per cent and 0.02 per cent higher on the back of rally in Nestle (+2.5%) and WAPIC Insurance (+4.0 per cent) in that order.
At the end of trading, 22 stocks added value compared with 12 decliners. The gainers’ chart was led by Fdison (+9.1 per cent), NPF Microfinance Bank (+9.1 per cent) and FBN Holdings Plc (+5.4%).
Conversely, UACN of Nigeria Plc, Forte Oil Plc and AIICO Insurance shed 5.0 per cent, 4.2 per cent and 3.8 per cent respectively.
The market appreciated further as the bulls consolidated their hold on the market. The NSE ASI appreciated by 0.58 per cent to close at 26,116.79. The appreciation recorded in the share prices of Zenith Bank, Nigerian Breweries, Access Bank, FBN Holdings and UBA were mainly responsible for the gain recorded in the Index.
Market performance was broadly bullish as all sector indices closed in the green. The NSE Banking Index advanced the most, chalking up 1.5 per cent on the back of price appreciation in UBA (+6.3 per cent) and Zenith Bank (+1.6 per cent).
The NSE Oil & Gas Index added 0.6 per cent on account of gains in Oando (+7.9 per cent) and Forte Oil(+2.3 per cent). Likewise, the NSE Consumer Goods Index and Insurance indices trended northwards by adding 0.4 per cent and 0.3 per cent respectively. The NSE Industrial Goods Index closed unchanged.
The stock market recorded gains for the fifth consecutive trading session on Thursday as investors continued to take position in large cap stocks on the exchange. Consequently, the NSE ASI closed 0.20 per cent higher to settle at 26,166.80, reducing the year-to-date decline to 2.6 per cent. Also, the market capitalisation added N18 billion to close at N9.Investors gained N18.0bn as market capitalisation rose to N9.0 5 trillion. The positive close was majorly driven by gains in Nigerian Breweries Plc, Zenith Bank and International Breweries Plc.
A total of 26 stocks advanced while 15 declined. International Breweries Plc led the price gainers with 9.3 per cent trailed by Fidson Healthcare with 9.1 per cent, while NAHCO appreciated by 4.8 per cent.
Conversely, Stanbic IBTC Bank Plc led the price losers with 9.6 per cent, while Unity Bank Plc shed 7.4 per cent. AXA Mansard Insurance Plc went down by 4.5 per cent.
“Considering the positive momentum witnessed since the start of the week, we expect the market to close the week positive; however, we do not rule out the possibility of some “end of the week” profit-taking by investors in the trading session ahead,” analysts at Afrinvest (W.A) said.
The recorded its fourth consecutive gain on Friday adding 0.19 per cent to bring the total growth for the week to 1.85 per cent.
Meanwhile, investors traded 1.154 billion shares worth N10.439 billion in 16,676 deals , compared with 1.333 billion shares valued at N9.671 billion that exchanged hands the previous week in 16,300 deals.
The Financial Services Industry maintained its lead on the activity chart with 813.016 million shares valued at N6.904 billion traded in 10,298 deals; thus contributing 70.45 per cent and 66.13 per cent to the total equity turnover volume and value respectively. The Oil and Gas Industry followed with 106.566 million shares worth N1.063 billion in 1,356 deals. The Services Industry occupied the third position with a turnover of 90.940 million shares worth N188.204 million in 660 deals.
Also traded during the week were a total of 20 units of Exchange Traded Products (ETPs) valued at N110,000.00 executed in one deal compared with a total of 533 units valued at N32,204.30 transacted in the preceding week in 15 deals.
Similarly, a total of 1,582 units of Federal Government Bonds valued at N1.608 million were traded this week in 10 deals, compared with a total of 4,705 units valued at N3.934 million transacted two weeks ago in four deals.
Price Gainers and Losers
The price movement chart showed 43 advancers higher than the 38 equities of the previous week, while 16 equities depreciated in price, lower than 25 equities of the previous week.
Fidson Healthcare Plc led the price gainers’ chart with 43.6 per cent. Oando Plc trailed with 24 per cent, while Livestock Feeds Plc appreciated by 16.2 per cent.
Nigerian Aviation Handling Company Plc, chalked up 15.2 per cent, just as Newrest ASL Nigeria Plc and FBN Holdings Plc garnered 14.2 apiece. Other top price gainers were: May & Baker Nigeria Plc (14.1 per cent); Transcorp Plc (11.3 per cent); International Breweries Plc (10.4 per cent) and Cutix Plc (9.5 per cent).
Conversely, Unity Bank Plc led the price losers with 13.7 per cent, trailed by Champion Breweries Plc with 8.9 per cent decline. Stanbic IBTC Holdings Plc went down by 6.6 per cent, just as NASCON Allied Industries Plc and AXA Mansard Insurance Plc shed 5.7 per cent each.
Medview Airline Plc and Jaiz Bank Plc declined by 4.6 per cent and 4.3 per cent respectively. Others were: Honeywell Flour Mills Plc (4.2 per cent); Sterling Bank Plc (4.1 per cent); and Total Nigeria Plc (3.04).
Oil Prices Recover Slightly Amidst Demand Concerns in U.S. and China
Oil Prices Continue Slide as Market Skepticism Grows Over OPEC+ Cuts
Global oil markets witnessed a continued decline on Wednesday as investors assessed the impact of extended OPEC+ cuts against a backdrop of diminishing demand prospects in China.
Brent crude oil, the international benchmark for Nigerian crude oil, declined by 63 cents to $76.57 a barrel while U.S. WTI crude oil lost 58 cents to $71.74 a barrel.
Last week, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed to maintain voluntary output cuts of approximately 2.2 million barrels per day through the first quarter of 2024.
Despite this effort to tighten supply, market sentiment remains unresponsive.
“The decision to further reduce output from January failed to stimulate the market, and the recent, seemingly coordinated, assurances from Saudi Arabia and Russia to extend the constraints beyond 1Q 2024 or even deepen the cuts if needed have also fallen to deaf ears,” noted PVM analyst Tamas Varga.
Adding to the unease, Saudi Arabia’s decision to cut its official selling price (OSP) for flagship Arab Light to Asia in January for the first time in seven months raises concerns about the struggling demand for oil.
Amid the market turmoil, concerns over China’s economic health cast a shadow, potentially limiting fuel demand in the world’s second-largest oil consumer.
Moody’s recent decision to lower China’s A1 rating outlook from stable to negative further contributes to the apprehension.
Analysts will closely watch China’s preliminary trade data, including crude oil import figures, set to be released on Thursday.
The outcome will provide insights into the trajectory of China’s refinery runs, with expectations leaning towards a decline in November.
Russian President Vladimir Putin’s diplomatic visit to the United Arab Emirates and Saudi Arabia has added an extra layer of complexity to the oil market dynamics.
Discussions centered around the cooperation between Russia, the UAE, and OPEC+ in major oil and gas projects, highlighting the intricate geopolitical factors influencing oil prices.
U.S. Crude Production Hits Another Record, Posing Challenges for OPEC
U.S. crude oil production reached a new record in September, surging by 224,000 barrels per day to 13.24 million barrels per day.
The U.S. Energy Information Administration reported a consecutive monthly increase, adding 342,000 barrels per day over the previous three months, marking an annualized growth rate of 11%.
The surge in domestic production has led to a buildup of crude inventories and a softening of prices, challenging OPEC⁺ efforts to stabilize the market.
Despite a decrease in the number of active drilling rigs over the past year, U.S. production continues to rise.
This growth is attributed to enhanced drilling efficiency, with producers focusing on promising sites and drilling longer horizontal well sections to maximize contact with oil-bearing rock.
While OPEC⁺ production cuts have stabilized prices at relatively high levels, U.S. producers are benefiting from this stability.
The current strategy seems to embrace non-OPEC non-shale (NONS) producers, similar to how North Sea producers did in the 1980s.
Saudi Arabia, along with its OPEC⁺ partners, is resuming its role as a swing producer, balancing the market by adjusting its output.
Despite OPEC’s inability to formally collaborate with U.S. shale producers due to antitrust laws, efforts are made to include other NONS producers like Brazil in the coordination system.
This outreach aligns with the historical pattern of embracing rival producers to maintain control over a significant share of global production.
In contrast, U.S. gas production hit a seasonal record high in September, reaching 3,126 billion cubic feet.
However, unlike crude, there are signs that gas production growth is slowing due to very low prices and the absence of a swing producer.
Gas production increased by only 1.8% in September 2023 compared to the same month the previous year.
While the gas market is in the process of rebalancing, excess inventories may persist, keeping prices low.
The impact of a strengthening El Niño in the central and eastern Pacific Ocean could further influence temperatures and reduce nationwide heating demand, impacting gas prices in the coming months.
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