Finance

Equities Market Defies Profit Taking, Gains N188bn

Published

7 years ago

June 19, 2017

Nigerian Exchange Limited - Investors King

Equities Market Defies Profit Taking, Gains N188bn

The Nigerian equities market remained bullish last week on continuing positive investor sentiments, which lifted the market capitalisation by N188 billion or 1.63 per cent to close higher at N11.692 trillion.

Similarly, the Nigerian Stock Exchange (NSE) All-Share Index appreciated by 1.60 per cent to be at 33,810.56 amidst profit taking activities. Although some investors moved in to lock in profits recorded in the past weeks, the bulls had the upper hand, making the market to close the week higher for the fourth consecutive week. Apart from the index and market capitalisation ending the week positively, the value of stocks traded equally rose to N32.042 billion invested in 2.737 billion.

All other Indices finished higher during the week with the exception of the NSE ASeM, NSE Oil/Gas, NSE Lotus II and NSE Industrial Goods Indices that depreciated by 0.32 per cent, 4.20 per cent, 0.71 per cent, and 0.28 per cent respectively.

Daily Market performance

As expected, the trading resumed at the stock market on Monday with investors taking profit. Consequently, the benchmark index fell by 0.12 per cent to close at 33,235.28, while market capitalisation shed N14.3 billion to close at N11.49 trillion.

The decline was influenced by profit-taking in Nestle, International Breweries Plc and Total Nigeria Plc among others. According to analysts at Meristem Securities Limited, “while we observed that the positive sentiments towards a number of counters were still maintained, we attribute the day’s marginal decline to profit-taking activities on counters that had rallied in recent weeks.”

International Breweries Plc led the price losers, depreciating by 8.6 per cent to close at 29.45 per share. The stock had surged by 33.2 per cent last week on the news of its planned merger with two other breweries. UAC of Nigeria Plc shed 5.8 per cent, while AIICO Insurance Plc went down by 5.3 per cent. Fidelity Bank Plc and University Press Plc depreciated by 4.9 per cent apiece.

Seven-Up Bottling Company Plc, Learn Africa Plc and United Capital Plc closed 4.8 per cent, 4.7 per cent and 4.4 per cent lower respectively. Similarly, Nestle Nigeria Plc, NEM Insurance Plc and Total Nigeria Plc shed 4.1 per cent, 4.0pe cent and 3.9 per cent respectively.

Total Nigeria had in the previous week assured shareholders of its commitment to grow its business in Nigeria in particular and Africa at large. According to the Chairman of Total Nigeria Mr. Stanislas, the company has no intention to withdraw it business from Nigeria or Africa.

The equity market depreciated further on Tuesday as profit taking continued, leading to a decline of 0.28 per cent in the index to close at 33,141.85. The depreciation recorded in the share prices of Nestle, Forte Oil, UBA, FBN Holdings and Dangote Cement was mainly responsible for the loss recorded in the Index

The total value of stocks traded on that day was N5.55 billion, down by 9.26 per cent from N6.11 billion recorded on Monday. The most actively traded sectors were: Financial Services (309.56 million share), Conglomerates (50.57 million shares) and Consumer Goods (21.60 million shares), while the three most actively traded stocks were: Zenith Bank (62.30 million shares), Transcorp (49.20 million shares) and FCMB (41.45 million shares).

However, after two days of slide, the market recorded a rebound and appreciated by 1.38 per cent to close at 33,598.20.

Gains in Nigerian Breweries, GTBank, UBA, FBN Holdings and Zenith Bank boasted the rebound. Investors recouped N157.8 billion as market capitalisation expanded to N11.6 trillion. Also, activity level improved as volume and value traded grew 85.0 per cent and 13.5 per cent to 759.0 million shares units and N6.3 billion respectively.

Performance across sectors was bullish as all indices appreciated. The NSE Banking Index led with 2.9 per cent on the back of gains in GTBank (+5.0 per cent) and Zenith Bank (+5.0 per cent) while appreciation in AXA Mansard (+3.3 per cent) and Continental Reinsurance Plc (+2.7 per cent) drove the NSE Insurance Index 1.5 per cent northwards. Similarly, the NSE Oil & Gas Index appreciated 1.3 per cent as a result of gains in Oando (+8.1 per cent) and Seplat (+1.2 per cent), just as the NSE Consumer Index appreciated by 1.0 per cent boosted by gain in Nigerian Breweries Plc. The NSE Industrial Goods Index rose 0.8 percent following gain by Lafarge Africa.

The market sustained the positive momentum for the second day on Thursday, lifting the index by 0.59 per cent. The positive performance resulted from sustained buying interest in blue-chip banking and consumer goods stocks. Specifically, the day’s performance was driven by gains in Zenith, Nigerian Breweries, GTBank, and Unilever.

However, contrary to the previous trading session, performance across sectors was mixed with three of the five indices closing in the green. The NSE Banking index gained the most, appreciating by 1.8 per cent on the back of gains in GTBank (+1.7 per cent) and Zenith Bank (+4.6 per cent) while price rally in AXA Mansard (+4.8 percent) lifted the NSE Insurance Index by 1.4 per cent.

Also, similarly, the NSE Consumer Goods Index appreciated 1.1 per cent following gains in Nigerian Breweries (+2.3 per cent). Conversely, the NSE Oil & Gas Index and the NSE Industrial Goods Index fell 1.1per cent apiece as investors booked profit in Mobil Oil, Seplat and Lafarge Africa.

The market ended the last day of the week with a marginal growth as the index grew by 0.04 per cent propelled by gains in Nigerian Breweries Plc, Nestle Nigeria Plc, Presco, Ecobank Transnational Incorporated and Zenith Bank Plc.

Market turnover

Meanwhile, investors exchanged 2.737 billion shares worth N32.042 billion in 32,217 deals last week, compared with 3.100 billion shares valued at N29.180 billion that exchanged hands the previous week. The Financial Services Industry remained the most traded, accounting for 2.189 billion shares valued at N21.792 billion traded in 18,832 deals, thus contributing 79.98 per cent and 68.01 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 287.945 million shares worth N621.772 million in 2,031deals. The third place was occupied by Consumer Goods Industry with a turnover of 114.832 million shares worth N5.370 billion in 5,040 deals.

Trading in the top three equities namely, Access Bank Plc, Zenith Bank Plc and Transnational Corporation of Nigeria Plc accounted for 918.046 million shares worth N10.324 billion in 5,809 deals, contributing 33.53 per cent and 32.22 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 16,300 units of Exchange Traded Products (ETPs) valued at N973,376.00 executed in three deals compared with a total of 40.317 million units valued at N178.841 million transacted in the preceding week in 12 deals.

Similarly, a total of 12,193 units of Federal Government Bonds valued at N12.440 million were traded last week in 14 deals, compared with a total of 10,860 units valued at N10.196 million transacted the previous week in 10 deals.

Price Gainers and Losers

A look at the price movement chart showed 38 stocks appreciated, while 42 others depreciated. May & Baker Nigeria Plc led the bulls, surging 60.5 per cent. Skye Bank Plc trailed with a gain of 41.5 per cent, while Cement Company of Northern Nigeria Plc chalked up 33.6 per cent.

Transcorp Plc garnered 22.3 per cent, just as Ashaka Cement Plc, Unilever Nigeria Plc and Okomu Oil Palm Plc appreciated by 21.2 per cent, 20.9 per cent and 15.7 per cent respectively. Presco Plc, Unity Bank Plc and Fidson Healthcare Plc added 15.7 per cent, 15.4 per cent and 15.3 per cent in that order.

On the downside, International Breweries Plc led the price losers with 19.1 per cent, followed by Forte Oil Plc with 13.5 per cent. Learn Africa Plc and Champion Breweries Plc shed 12.6 per cent and 8.5 per cent respectively. Custodian and Allied Plc went down by 8.4 per cent, just as Diamond Bank Plc and Mobil Oil Nigeria Plc depreciated by 7.6 per cent respectively.

Other top price losers were: Cutix Plc (7.4 per cent); Dangote Sugar Refinery Plc (7.1 per cent0 and N.E.M Insurance Plc (7.0 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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Finance

Presidential Committee to Exempt 95% of Informal Sector from Taxes

Published

4 days ago

May 14, 2024

Samed Olukoya

The Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC) has unveiled plans to exempt a significant portion of the informal sector from taxation.

Chaired by Taiwo Oyedele, the committee aims to alleviate the burden of multiple taxation on small businesses and low-income individuals while fostering economic growth.

The announcement came following the close-out retreat of the PFPTRC in Abuja, where Oyedele addressed reporters over the weekend.

He said the committee is committed to easing the tax burden, particularly for those operating within the informal sector that constitutes a substantial portion of Nigeria’s economy.

Under the proposed reforms, approximately 95% of the informal sector would be granted tax exemptions, sparing them from obligations such as income tax and value-added tax (VAT).

Oyedele stressed the importance of supporting individuals in the informal sector and recognizing their efforts to earn a legitimate living and their contribution to economic development.

The decision was informed by extensive deliberations and data analysis with the committee advocating for a fairer and more equitable tax system.

Oyedele highlighted that individuals earning up to N25 million annually would be exempted from various taxes, aligning with the committee’s commitment to relieving financial pressure on small businesses and low-income earners.

Moreover, the committee emphasized the need for tax reforms to address the prevailing issue of multiple taxation, which disproportionately affects small businesses and the vulnerable population.

By exempting the majority of the informal sector from taxation, the committee aims to stimulate economic growth and promote entrepreneurship.

The proposal for tax reforms is expected to be submitted to the National Assembly by the third quarter of this year, following consultations with the private sector and internal approvals.

The reforms encompass a broad range of measures, including executive orders, regulations, and constitutional amendments, aimed at creating a more conducive environment for business and investment.

In addition to tax exemptions, the committee plans to introduce executive orders and regulations to streamline tax processes and enhance compliance. This includes a new withholding tax regulation exempting small businesses from certain tax obligations, pending ministerial approval.

Banking Sector

CBN Governor Vows to Tackle High Inflation, Signals Prolonged High Interest Rates

Published

4 days ago

May 14, 2024

Samed Olukoya

Central Bank of Nigeria - Investors King

The Governor of the Central Bank of Nigeria (CBN), Dr. Olayemi Cardoso, has pledged to employ decisive measures, including maintaining high interest rates for as long as necessary.

This announcement comes amidst growing concerns over the country’s soaring inflation rates, which have posed significant economic challenges in recent times.

Speaking in an interview with the Financial Times, Cardoso emphasized the unwavering commitment of the Monetary Policy Committee (MPC) to take whatever steps are essential to rein in inflation.

He underscored the urgency of the situation, stating that there is “every indication” that the MPC is prepared to implement stringent measures to curb the upward trajectory of inflation.

“They will continue to do what has to be done to ensure that inflation comes down,” Cardoso affirmed, highlighting the determination of the CBN to confront the inflationary pressures gripping the economy.

The CBN’s proactive stance on inflation was evident from the outset of the year, with the MPC taking bold steps to tighten monetary policy.

The committee notably raised the benchmark lending rate by 400 basis points during its February meeting, further increasing it to 24.75% in March.

Looking ahead, the next MPC meeting, scheduled for May 20-21, will likely serve as a platform for further deliberations on monetary policy adjustments in response to evolving economic conditions.

Financial analysts have projected continued tightening measures by the MPC in light of stubbornly high inflation rates. Meristem Securities, for instance, anticipates a further uptick in headline inflation for April, underscoring the persistent inflationary pressures facing the economy.

Despite the necessity of maintaining high interest rates to address inflationary concerns, Cardoso acknowledged the potential drawbacks of such measures.

He expressed hope that the prolonged high rates would not dampen investment and production activities in the economy, recognizing the need for a delicate balance in monetary policy decisions.

“Hiking interest rates obviously has had a dampening effect on the foreign exchange market, so that has begun to moderate,” Cardoso remarked, highlighting the multifaceted impacts of monetary policy adjustments.

Addressing recent fluctuations in the value of the naira, Cardoso reassured investors of the central bank’s commitment to market stability.

He emphasized the importance of returning to orthodox monetary policies, signaling a departure from previous unconventional approaches to monetary management.

As the CBN governor charts a course towards stabilizing the economy and combating inflation, his steadfast resolve underscores the gravity of the challenges facing Nigeria’s monetary authorities.

In the face of daunting inflationary pressures, the commitment to decisive action offers a glimmer of hope for achieving stability and sustainable economic growth in the country.

Banking Sector

NDIC Managing Director Reveals: Only 25% of Customers’ Deposits Insured

Published

4 days ago

May 14, 2024

Samed Olukoya

The Managing Director and Chief Executive Officer of the Nigeria Deposit Insurance Corporation (NDIC), Bello Hassan, has revealed that a mere 25% of customers’ deposits are insured by the corporation.

This revelation has sparked concerns about the vulnerability of depositors’ funds and raised questions about the adequacy of regulatory safeguards in Nigeria’s banking sector.

Speaking on the sidelines of the 2024 Sensitisation Seminar for justices of the court of appeal in Lagos, themed ‘Building Strong Depositors Confidence in Banks and Other Financial Institutions through Adjudication,’ Hassan shed light on the limited coverage of deposit insurance for bank customers.

Hassan addressed recent concerns surrounding the hike in deposit insurance coverage and emphasized the need for periodic reviews to ensure adequacy and credibility.

He explained that the decision to increase deposit insurance limits was based on various factors, including the average deposit size, inflation impact, GDP per capita, and exchange rate fluctuations.

Despite the coverage extending to approximately 98% of depositors, Hassan underscored the critical gap between the number of depositors covered and the value of deposits insured.

He stressed that while nearly all depositors are accounted for, only a quarter of the total value of deposits is protected, leaving a significant portion of funds vulnerable to risk.

“The coverage is just 25% of the total value of the deposits,” Hassan affirmed, highlighting the disparity between the number of depositors covered and the actual value of deposits within the banking system.

Moreover, Hassan addressed concerns about moral hazard, emphasizing that the presence of uninsured deposits would incentivize banks to exercise market discipline and mitigate risks associated with reckless behavior.

“The quantum of deposits not covered will enable banks to exercise market discipline and eliminate the issue of moral hazards,” Hassan stated, suggesting that the lack of full coverage serves as a safeguard against irresponsible banking practices.

However, Hassan’s revelations have prompted calls for greater regulatory oversight and transparency within Nigeria’s financial institutions. Critics argue that the current level of deposit insurance falls short of providing adequate protection for depositors, especially in the event of bank failures or financial crises.

The disclosure comes amid ongoing efforts by regulatory authorities to bolster depositor confidence and strengthen the resilience of the banking sector. With concerns mounting over the stability of Nigeria’s financial system, stakeholders are urging for proactive measures to address vulnerabilities and enhance consumer protection.