• Stock Market H1 ’17: Investors Gain N2.2tr in Bullish Run

Reflecting uptick in economic activities buoyed by improved foreign exchange inflow courtesy of oil price rebound and increased foreign investment inflow occasioned by new foreign exchange policy of the Central Bank of Nigeria, CBN, investors’ fortunes on the Nigeria Stock Exchange (NSE) soared by whopping N2.2 trillion in the first half of the year (H1’17).

Specifically, the NSE market capitalisation, which represents total value of shares on the Exchange, went up by 23.8 per cent or N2.205 trillion to N11.5 trillion at the close of trading on Friday June 30th, 2017, against N9.246 trillion at the end of December 2016.

Also when compared with the corresponding period in 2016 (H1’16) the improved return on investment for investors represented 12.7 per cent growth from N10.165 trillion at the end of June 2016.

Analysis of the current NSE data shows the impressive H1’17 performance in the following sector indices: NSE All Share Index, which measures the price movement of stocks traded on the Exchange, surged by 23.2 per cent or 6,242.86 points to 33,117.48 points at the close of business on Friday from 26,874.62 points at the beginning of the year; the NSE 30 Banking Index surged by 448.5 per cent to 1,504.44 points from 274 points; NSE Industrial Index appreciated by 21.1 points to close at 1,932.20 points from 1,595.33 points; NSE Consumer Goods Index rose by 11.6 per cent to 795 .40 points from 712.65; NSE Insurance Index rose by 9.2 per cent to 137.86 points from 126.29 points; while NSE Oil and Gas index inched up by 3.4 per cent to 323.16 points from 321.68 points.

Further review of the market for H1’17 shows that the top 10 price gainers are: May & Baker Nigeria Plc, Fidson Healthcare Plc, United Bank for Africa, UBA Plc, Cement Company of Northern Nigeria, CCNN, First Bank Nigeria, FBN Holding Plc, Presco Plc. Others include: Beta Glass, International Breweries Plc, Access Bank Plc, and PZ Cussons Nigeria Plc.

Conversely, the top ten price losers are: Forte Oil Plc, 7up Bottling Company Plc, Meyer Plc, Trans-nationwide Express Plc, Tripple Gee Plc, University Press Plc. Others include: Union Dicon Salt Plc, Guinness Nigeria Plc, John Holt Plc, and AG Leventis Plc.

Analysts’ projections

The impressive growth aligns with projections by market operators and analysts at the beginning of the year. They had projected that 2017 would be better because the economy has recovered to levels last seen in 2015/16.

For example Ayo Teriba, an economist, in his projections for 2017, said: “The brighter outlook will be premised on government holding up some of the monetary and economic policies throughout 2017. But it is reasonable to expect that they would. If they do, Nigeria can expect a resumption of growth, a moderation of inflation, a return of stability to the foreign exchange market, a convergence of exchange rates, and a sustained strengthening of the inter-bank rate.”

Also analysts at ARM Research had stated: “In our H1 17 Nigeria Strategy Report, we projected a nuanced outlook for naira equities against the backdrop of subsisting reticence of foreign and local investors towards naira equities as well as weak fundamentals. Pertinently, US interest rate normalisation, rising political concerns on the global front and FX worries in the domestic market, continue to drive foreign apathy while local support continues to dissipate as rising yields which aside from raising discount rate for equity valuations provided a significantly compelling investment outlet in the fixed income market.

“Over the second quarter of 2017, political uncertainty in Europe, swelling predictions of geo-political crisis, prospects of further rate hike by the US Federal Reserve should continue to drive cautious approach to EM/frontier market investing. Whilst domestic FX markets have seen improved liquidity since March 2017, we expect Foreign Portfolio Investment, FPI participation to be gradual with more allocation in the FI market. Complicating the outlook for equities is the elevated domestic yield environment which works to dilute local investor interest in equities.”

Meanwhile, market operators and financial analysts have expressed optimism of better market performance in their projection for the third quarter of 2017 (Q3’17). They stressed that improvement in the monetary and fiscal policies, among other factors such as global oil prices will determine the sustainability of the bullish run witnessed in the just ended H1’17.

Top five stock price gainers

Details of the stock price movement showed that May & Baker Nigeria Plc, led the cream of price gainers in H1’17, appreciating by 312.8 per cent to close last Friday at N3.88 per share from 94 kobo per share on January 3rd, 2017. It was followed by Fidson Healthcare Plc, which went up by 117.2 per cent to close at N2.28 per share from N1.28 per share. UBA Plc came third on the H1’17 price gainers’ chart, rising by 94.7 per cent to close at N7.50 per share from N4.50 per share, followed by Cement Company of Northern Nigeria, CCNN, which surged by 94 per cent to close at N9.70 per share, while FBNH gained 90.45 per cent to close at N6.38 per share from N3.35 per share.

Top five stock price losers’ movement

On the other hand, Forte Oil led the bunch of losers, dropping by 40.7 per cent to close at N50.7 per share from N84.43 per share; it was followed by 7up Bottling Company Plc, which declined by 33 per cent to close at N86.45 per share from N129.00 per share. Meyer Plc dipped by 19.5 per cent to close at N0.70 per share from N0.87 per share; followed by Trans-Nationwide Express Plc, which nosedived by 17 per cent to N0.83 per share to close at N1.00 per share, while Tripple Gee Plc lost 16.2 per cent to close at N1.14 per share from N1.36 per share.

Market Operators/Analysts reactions

Commenting on the market performance, Managing Director/CEO, APT Securities & Funds Limited, Mallam Kasimu Kurfi, said “Second quarter performance is excellent with a gain of over 30 per cent in the three months; this is really exceptional. It is the longest ever gain that we achieved in a quarter.

For the Q3 performance, it will really depend on the global price of Crude oil, as it currently trade at $46, which is seventh months lowest. The ability of the Central Bank of Nigeria, CBN to continue with Foreign Exchange, FX policy, the performance of the companies for second quarter 2017, the behaviour of foreign investor as regard to our market as well as our institutional investors particularly Pension Fund Administrators, will determine the success of Q3.