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Equities Market Declines on Portfolio Re-balancing, Profit Taking

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  • Equities Market Declines on Portfolio Re-balancing, Profit Taking

A combination of profit taking, portfolio re-balancing and disappointing corporate results by some companies last week dampened the bullish sentiments that had prevailed in the equities market. The market, which had an unprecedented bullish run in two months, had ended the first half of the year with a growth of 23.2 per cent.

Although some level of profit takings was envisaged as the second half (H2) began last week, investors’ confidence was also affected by some weaker-than-expected results. Besides, major portfolio investors and fund managers were still busy rebalancing their investments for the remaining part of the year.

Consequently, the Nigerian Stock Exchange (NSE) ASI went down by 1.99 per cent to close at 32,459.17, while market capitalisation recorded a higher decline of 2.31 per cent to be at N11.187 trillion.

Similarly, all other indices finished lower during the week with the exception of the NSE Insurance and the NSE Industrial Goods Indices that appreciated by 1.10 per cent and 0.22 per cent while the NSE ASeM Index closed flat.

According to analysts at Cordros Capital, the wave of sell-off in the Banking index in the first three trading sessions of the week – with a cumulative loss of 3.73 per cent was driven by reservations concerning the exposure of a syndicate of 13 banks to Etisalat Nigeria, after it was announced that the telecom giant had reconstituted its board with the apex bank mostly in control.

They added that the improved optimism in Dangote Cement was on the back of a favourable first time rating by Moody’s. – wherein Dangote Cement local currency corporate rating received a one-notch rating above the Nigeria’s sovereign rating.

Daily Market Performance

After a bullish outing in the first half of the year, the second half commenced on a bearish last Monday, which was the first trading day of the new half. The market resumed for the week with a decline of 1.05 per cent. Counters such as UBA, GTBank, Zenith Bank, Dangote Cement and FBN Holdings Plc were mainly responsible for the decline recorded.

The value of trading was equally down as investors staked N1.52 billion, on 162.35 million shares compared to N3.35 billion of the previous trading session.

The most actively traded sectors were: Financial Services (128.84 million shares), Conglomerates (11.84 million shares), and Consumer Goods (10.81 million shares), while the three most actively traded stocks were: Access Bank (20.89 million shares), Fidelity Bank (16.03 million shares) and UBA (14.60 million shares).

An analysis of the sectoral performance showed that the NSE Insurance Index was the only lone gainer for the day. It rose by 0.3 per cent as a result of bargain hunting in AIICO (+3.3 per cent) and AXA Mansard (+0.9 per cent).

The NSE Oil & Gas Index led the losers chart, shedding 1.8 per cent on account of Mobil (-5.0 per cent), Total (-5.0 per cent) and Conoil (-4.9 per cent). The NSE Banking Index trailed, losing 1.1 per cent following declines in GTBank (-1.1 per cent) and Zenith Bank (-1.8 per cent), while the NSE Industrial Goods Index and the NSE Consumer Goods Index closed 0.6 per cent and 0.3 per cent lower respectively.

The equities market remained bearish on Tuesday with the NSE Index declining 1.1 per cent to close at 32,410.20. The downward trend was influenced by price decline in Nigerian Breweries (-1.9 per cent), UBA (-5.8 per cent), GTBank (-1.3 per cent), ETI (-4.9 per cent), Stanbic IBTC (-3.0 per cent), FBN Holdings (-3.4 per cent) and Access Bank (-2.3 per cent).

Unlike on Monday when the NSE Insurance Index was the lone gainer, the NSE Industrial Goods Index was the only gainer on Tuesday. It rose marginally by 0.01 per cent.

The NSE Banking Index depreciated the most, sliding by 2.3 per cent as investors continue to take profit in Tier-1 and Tier-2 lenders. The NSE Consumer Goods Index followed with a decline of 1.2 per cent decline, while the NSE Oil & Gas Index trailed with a 1.1 per cent. The NSE Insurance Index shed 0.11 per cent.

The market extended its loss on Wednesday. The index dipped by 0.33 per cent to close at 32,302.32 following depreciation recorded in the share prices of Guinness, PZ Cussons, Flour Mills, Unilever and Access Bank among others.

However, value of trading rose as investors exchanged 311.38 million shares valued at N2.97 billion, up from N1.70 billion invested the previous day.

The most actively traded sectors were: Financial Services (250.52 million shares), Conglomerates (31.29 million shares), and Consumer Goods (11.85 million shares), while the three most actively traded stocks were: Niger Insurance (62.90 million shares), FBN Holdings (30.45 million shares) and Transcorp (30.23 million shares).

The market rebounded on Thursday with the index appreciating by 0.16 per cent to close at 32,354.78 . The influencers were: Dangote Cement, Seplat, Access Bank, FBNH and Zenith Bank among others. Investors traded 168.51 million shares worth N3.63 billion with Financial Services leading after recording 105.61 million shares. The Conglomerates sector followed with 22.47 million shares), and Consumer Goods (10.53 million shares).

The three most actively traded stocks were: GTBank (36.32 million shares), Transcorp (21.31 million shares) and FBN Holdings (16.09 million shares).

The market remained bullish on Friday as the index rose by 0.32 per cent to close higher at 32, 459.17 on gains by Dangote Cement, Seplat, Access Bank, FBN Holding, and Zenith Bank among others.

The total value of stocks traded was N2.47 billion, down by 31.79 per cent from N3.63bn recorded the previous day. The total volume of stocks traded was 212.38mn in 3,217 deals. The three most actively traded stocks were: Zenith Bank (73.31 million shares), Transcorp (18.38 million shares) and Sterling Bank (15.26 million shares), while the most actively traded sectors were: Financial Services (162.29 million shares), Conglomerates (18.61 million shares), and Consumer Goods (16.52million shares).

Market Turnover

In all, investors traded 1.061 billion shares worth N12.295 billion in 18,847 deals, compared with 1.171 billion shares valued at N11.458 billion that exchanged hands the previous week in 13,763 deals.

The Financial Services Industry remained that most active with 802.195 million shares valued at N7.331 billion traded in 11,334 deals, thus contributing 75.62 per cent and 59.63 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 109.378 million shares worth N174.604 million in 1,024 deals. The third place was occupied by Consumer Goods Industry with a turnover of 62.992 million shares worth N2.405 billion in 3,021deals.

Trading in the top three stocks, Zenith International Bank Plc, Transnational Corporation of Nigeria Plc and FBN Holdings Plc, accounted for 317.099 million shares worth N3.223 billion in 3,823 deals.

Also traded during the week were a total of five units of Exchange Traded Products (ETPs) valued at N484.85 executed in one deal compared with a total of 869,680 units valued at N19.150 million transacted the previous week in 16 deals.

Similarly, a total of 358 units of Federal Government Bonds valued at N344,610.97 were traded last week in seven deals, compared with a total of seven units valued at N16,486.85 transacted two weeks in one deal.

Price Gainers and Losers

Meanwhile, only 16 stocks appreciated last week compared with 40 of the previous week, while 51 equities depreciated as against 28 of the preceding week.

Cutix Plc led the price gainers, chalking up 10.0 per cent, trailed by Continental Reinsurance Plc which appreciated by 9.2 per cent. Honeywell Flour Mills Plc garnered 7.9 per cent, just as CAP Plc and Oando Plc appreciated by 6.2 per cent and 5.2 per cent respectively.

Abbey Building Mortgage Bank Plc and AXA Mansard Plc gained 4.0 per cent and 3.6 per cent in that order, just as Redstar Express Plc closed 3.5 per cent higher. The remaining two price gainers that made up the top 10 were: African Prudential Plc and First Aluminium Plc (3.4 per cent each).

Conversely, May & Baker Nigeria Plc led the price losers, shedding 25.7 per cent, trailed by Neimeth International Pharmaceuticals Plc with 24.4 per cent.

Conoil Plc and Flour Mills went down by 18.5 per cent and 15.6 per cent respectively, just as Julius Berger Nigeria Plc and Guinness Nigeria Plc shed 14.2 per cent and 13.2 per cent in that order.

Other top price losers included: ETI (11.3 per cent); Cadbury Nigeria Plc (10.7 per cent); Linkage Assurance Plc (9.3 per cent) and Unity Bank Plc (8.9 per cent).

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.

Banking Sector

CBN to Extend Credit Risk Management System to OFIs

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In an effort to curb growing bad debt, the Central Bank of Nigeria has said it will extend its Credit Risk Management System to Other Financial Institutions (OFIs) operating in Nigeria to protect them from bad debtors.

According to the apex bank, this is important following the successful implementation of the credit risk system in other lending institutions operating in Nigeria.

The bank disclosed this in a circular titled ‘Credit Risk Management System: Commencement of enrolment of all Development Finance Institutions, Microfinance Banks, Primary Mortgage Banks and Finance Companies’ and signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, on Monday.

In part, the circular read, “As part of efforts to promote a safe and sound financial system in Nigeria, the CBN introduced the CRMS to improve credit risk management in commercial, merchant and non-interest banks as well as to prevent predatory borrowers from undermining the banking system.

“With the successful implementation of the CRMS in deposit money banks, it has become expedient to commence the enrolment of Other Financial Institutions on the CTMS platform.

“Accordingly, all DFIs, MfBs, PMBs and FCs are required to report all credit facilities (principal and interest) to the CRMs and to update same on monthly basis.

“OFIs shall note the Bank Verification Numbers and Tax Identification Numbers are the only basis for regulatory renditions”.

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Banking Sector

BoI Grows Assets by 78.8% to N1.86 Trillion

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The Bank of Industry Group concluded the 2020 financial year with a 78.8 per cent growth of assets from N1.04tn to N1.86tn between 2019 and 2020.

A statement by the bank on Monday said the increase was driven to a large extent by the successful debt syndication of €1bn and $1bn that were concluded in March and December 2020 respectively.

BoI stated that the group’s financial statement demonstrated resilience and strength, noting that the period had significant challenges in the operating environment on account of the impact of COVID-19 pandemic on the economy.

“It also indicates synergy with the various interventions developed by the Federal Government, the Central Bank as well as other strategic partners towards ameliorating the impact of the pandemic on Nigerian enterprises,” the statement said.

The group’s total equity increased by 14.8 per cent from N293.08bn in the previous year to N336.48bn in 2020.

It added that as a reflection of the adverse impact of the challenging operating environment on growth of new facilities, loans and advances grew marginally in 2020 by 1.3 per cent to N749.84bn from the 2019 position.

The bank explained that this was largely due to the economic slowdown in the year as well as the various interventions and support initiated by the bank for its customers.

“The bank reviewed and restructured all its managed projects under the CBN intervention programme with interest rate reduction from nine to five per cent per annum for a period of one year and moratorium extension of three months (with a possible extension up to 12 months),” it said.

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Banking Sector

TAJBank Deploys NQR Solution To Ease Customer Transactions

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TAJBank, Nigeria’s non-interest bank, has announced the deployment of the NQR Payment solution, an indigenous Quick Response Code (QRC) by the Nigeria Interbank Settlement Scheme (NIBSS), for merchants and customers as the newest addition to its innovative e-business channels.

The NQR Payment solution is a secure QR-code-based payments and collections platform developed for merchants and customers to receive and make payments for goods and services in a quick, easy, contactless and secure manner.

A statement signed by the Founder/Chief Operating Officer of the bank, Mr. Hamid Joda, indicated that the ingenious solution would further drive TAJBank’s culture of innovation and create a seamless payment experience for its rapidly growing individual and corporate customers in their banking transactions.

“We are excited to have this payment channel introduced into the nation’s financial system as an addition to other innovative solutions we have deployed over the past few months.

This is a proof that, as we have said in our communications signature line, TAJBank’s interest is always in our customers”, Joda enthused.

In his remarks, the non-interest lender’s Chief Marketing Officer/Co-Founder, Mr. Sherif Idi, also maintained that the deployment of the NQR payment solution would revolutionize the e-payment experience and open new frontiers for small, medium and large scale businesses who are major stakeholders of the bank.

Since it commenced operations in the non-interest banking segment of the financial services industry, TAJBank is noted for its impeccable track record of growth and innovation, rendering exceptional quality services to customers.

The lender’s NQR solution is open to all customers of the bank, both merchants and individuals, across all its branches and digital channels globally.

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