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Stock Market Rebounds, Gains 2.5% on Renewed Optimism

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  • Stock Market Rebounds, Gains 2.5% on Renewed Optimism

The stock market shrugged losses of the previous week and closed 2.47 per cent higher last week as the bulls resurged to take control of the market. Trading throughout the week was broadly bullish as the market closed positive on all the trading sessions.

The bulls resurged with investors taking position in value stocks – especially the banking stocks – ahead of the half year earnings season.

There was a renewed optimism among investors. As a result, the Nigerian Stock Exchange (NSE) All-Share Index rose by 2.47 per cent to close at 33,261.66, pushing the month-to-date growth to 0.44 per cent and year-to-date growth to 23.77 per cent.

Apart from the NSE ASI that rose 2.47 per cent, all other major sectoral indices finished higher with the exception of the NSE ASeM index that closed flat.

The NSE Banking Index appreciated by 6.1 per cent to lead the others.

The NSE Industrial Goods Index went up by 2.94 per cent, while the NSE Oil & Gas Index garnered 2.31 per cent. The NSE Insurance Index closed 0.88 per cent higher, while the NSE Consumer Index gained 0.71 per cent.

Daily Market Performance

When trading resumed on Monday, the market remained bullish as bargain hunting activities in the banking stocks assisted to sustain the bull run. Specifically, the Nigerian Stock Exchange (NSE) All-Share Index appreciated by 0.48 per cent to close at 32,614.60, while market capitalisation added N53.6 billion to close at N11.2 trillion.

Investors swooped on banking stocks, taking position ahead of half year corporate results announcement. Out of the 26 price gainers, 12 were banking stocks. United Bank for Africa Plc, Access Bank Plc, Unity Bank Plc appreciated by 4.9 per cent apiece, while Ecobank Transnational Incorporated garnered 3.8 per cent.

Zenith Bank Plc chalked up 3.4 per cent, just as Diamond Bank Plc and FCMB Holdings Plc went up by2.4 per cent each. Fidelity Bank Plc and FBN Holdings Plc gained 2.3 per cent apiece, while Wema Bank Plc, Jaiz Bank Plc and Guaranty Trust Bank Plc appreciated by 1.8 per cent, 1.5 per cent and 0.06 per cent in that order.

However, Flour Mills of Nigeria Plc recorded the highest price gainer for the day, rising by 9.7 per cent. Redstar Express Plc and C & I Leasing Plc followed with 5.0 per cent apiece.

Conversely, 15 stocks depreciated led by Union Bank of Nigeria Plc with 8.8 per cent. University Press Plc and Skye Bank Plc trailed, shedding 5.0 per cent apiece.

A.G Leventis Nigeria Plc and Vitafoam Nigeria Plc went down by 4.8 per cent each, just as AXA Mansard Insurance Plc, Cadbury Nigeria Plc and John Holt Plc declined by 4.7 per cent, 4.0 per cent and 3.5 per cent respectively.

A look at the performance across sectors showed that three appreciated while two declined. The NSE Banking Index led the sectoral performance with 3.0 per cent.

The NSE Oil &Gas Index trailed with a gain of 0.7 per cent due to positive sentiment towards Oando Plc (+4.8 per cent). Similarly, the NSE Industrial Goods Index added 0.3 per cent as a result of price appreciation in Meyer Plc (+4.3 per cent).

On the negative side, the NSE Consumer Goods Index shed 0.7 per cent on the back losses suffered by Nigerian Breweries (-0.6 per cent). The NSE Insurance Index fell by 0.3 per cent following depreciation in the shares of AXA Mansard (-4.8 per cent).

The market continued to rally on Tuesday with the index adding 0.65 per cent to close at 32,827.98. The appreciation recorded in the share prices of GTBank, UBA, Access Bank, Dangote Cement, and Zenith Bank Plc boosted the performance.

Investors staked N2.03 billion on 218.76 million shares. The most actively traded sectors were: Financial Services (171.42 million shares, Conglomerates (10.95 million shares), and Consumer Goods (9.27 million shares), while the three most actively traded stocks were: UBA (35.26 million shares), Niger Insurance (19.99 million shares) and Zenith Bank (18.27 million shares).

Performance across sectors was positive as all indices trended northwards. The NSE Banking Index advanced the most, adding 2.0 per cent on the back of sustained interest in GTBank and Zenith Bank. The NSE Industrial Index appreciated by 0.3 per cent, while the NSE Consumer Goods Index gained 0.2 per cent.

The sustained bullish run for three days pushed the market capitalisation of the Nigerian bourse by N180 billion, rising from N11.187 trillion on Monday to N11.367 trillion on Wednesday.

Analysts at Meristem Securities Limited had said “the gain in the market (yesterday) could be attributed to the continued share price appreciation of some banking sector heavyweights, as well as the slight gains recorded on some other large cap counters.”

In all, 29 stocks appreciated on Wednesday, while 15 depreciated. Seven-Up Bottling Company Plc recorded the highest price gain of 8.8 per cent close at 89.23, trailed by Neimeth International Pharmaceuticals with 7.1 per cent. CAP Plc and Linkage Assurance chalked up 5.0 per cent apiece, while Ecobank Transnational Incorporated garnered 4.9 per cent.

N.E.M Insurance Plc and Avon Crowncaps Plc added 4.8 per cent and 4.6 per cent respectively. Learn Africa Plc, May & Baker Nigeria Plc and Eterna Oil Plc went up by 3.6 per cent, 3.1 per cent, and 2.6 per cent in that order.

On the bears’ side, University Press Plc led the price losers with 9.6 per cent to close at N2.92 per share. Champion Breweries Plc trailed with 7.5 per cent, while United Capital Plc shed 7.2 per cent. Conoil Plc and Capital Hotel Plc declined by 5.0 per cent and 4.8 per cent respectively.

The market followed the bullish pattern on Thursday and Friday, 0.8 per cent and 0.04 per cent respectively to end the week positively.

Market Turnover

In terms of market turnover, investors staked N13.993 billion on 1.272 billion shares in 19,385 deals last week, up from N12.295 billion invested in 1.061 billion shares in 18,847 deals the previous week.

However, the Financial Services Industry remained the most active leading the activity chart with 1.086 billion shares valued at N9.743 billion traded in 11,229 deals, thus contributing 85.33 per cent and 69.63 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 44.786 million shares worth N1.536 billion in 2,853 deals. The third place was occupied by Conglomerates Industry with a turnover of 38.104 million shares worth N75.759 million in 727 deals.

Trading in the top three equities, United Bank for Africa Plc, FBN Holdings Plc and Zenith International Bank Plc, accounted for 505.388 million shares worth N5.454 billion in 4,009 deals, contributing 39.73 per cent and 38.98 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 25,540 units of Exchange Traded Products (ETPs) valued at N2.646 million executed in 10 deals compared with a total of five units valued at N484.85 transacted the previous week in one deal.

Similarly, a total of 2,977 units of Federal Government Bonds valued at N2.946 million were traded last week in 11 deals, compared with a total of 358 units valued at N344,610.97 transacted the previous week in seven deals.

Price Gainers and Losers

Meanwhile, 48 equities appreciated in price during the week, higher than the 16 equities of the previous week, while 27 equities depreciated in price, lower than 51 equities of the previous week.

Neimeth International Pharmaceuticals Plc led the price gainers with 24.6 per cent, followed by Unity Bank Plc which chalked up 19.6 per cent. Forte Oil Plc appreciated by 15.3 per cent, just as Avon Crowncaps & Containers Plc gained 14.5 per cent. N.E.M Insurance Plc, Ecobank Transnational Incorporated rose 14.1 per cent and 14.0 per cent respectively.

Other top price gainers were: Mobil Oil of Nigeria Plc (9.9 per cent); Flour Mills of Nigeria Plc (9.7 per cent); Seven-Up Bottling Company of Nigeria Plc (8.8 per cent); and Access Bank Plc (8.4 per cent).

On the flipside, Conoil Plc led the price losers, shedding 17.4 per cent, trailed by University Press Plc 14.1 per cent. Champion Breweries Plc, Union Bank Plc and Jaiz Bank Plc went down by 12.2 per cent, 9.9 per cent and 9.0 per cent in that order.

Presco Plc declined by 4.9 per cent, just as Capital Hotel Plc, A.G Leventis Nigeria Plc and B.O.C Gases Plc closed 4.8 per cent lower apiece.

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

Unity Bank Posts N2.09 Billion Profit Despite N4 Billion Revaluation Loss in 2020

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Unity Bank Plc, one of Nigeria’s leading financial institutions, grew profit after tax to N2.09 billion in the financial year ended December 31, 2020.

The lender profit before tax stood at N2.22 billion in the year under review while assets rose by astonishing 67.90 percent from N293.05 billion in 2019 to N492.02 billion in 2020.

In the audited financial statements released on Monday, Unity Bank grew its gross loan portfolio by 92.9 percent from N106.9 billion recorded in December 2019 to N206.2 billion in December 2020.

The almost 100 percent jumped in credit provision highlighted the bank’s strategy at deepening support for farmers, improving food security and enhancing new job creation for thousands of youths and entrepreneurs.

During the bank’s earnings call on Monday, Mr. Kolawole Ebenezer, the Executive Director and Chief Financial Officer, Unity Bank Plc, explained that the bank has been able to cut down on its Non-performing loan to near-zero percent by adopting a strategy that allows the lender to focus on farmers and at the same time implement strategy that mitigates security challenges.

Unity Bank grew its net operating income by 9.71 percent to N25.46 billion in 2020, up from N23.21 billion in the corresponding period of 2019. Similarly, net interest income rose by 7.60 percent to N17.75 billion in 2020 from N16.49 billion in 2019 while earnings per share stood at 17.85 kobo.

In spite of COVID-19 disruption, Unity Bank grew customers’ deposit portfolio by 38.4 percent to N356.62 billion, up from N257.69 billion filed in 2019. This indicates market acceptance of the bank’s product offerings and series of technological integration launched during the year under review to ease banking challenges, especially as the world struggles with the COVID-19 pandemic.

Bismarck J. Rewane, the Managing Director and Chief Executive Officer of Financial Derivatives Company Limited, who spoke during the earnings call on Monday, said Unity Bank is operating like a tier I bank despite its obvious limitations and highlighted the broad-based growth the bank has recorded in recent years.

The economic think tank further explained that if the bank’s N4 billion revaluation loss is added to profit after tax declared, the bank would have declared N6 billion. This does not include the adjustments made by the Central Bank of Nigeria to the interest rate charged on agric loans that eroded interest income on loans by over 30 percent.

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Finance

Nasdaq Set To Launch Options Trading For Coinbase Global

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Less than a week after the largest crypto exchange in the U.S. Coinbase was listed, Nasdaq is set to start trading options for Coinbase Global.

According to Reuters, a representative for Coinbase stated that the COIN.O options will start trading on Nasdaq on Tuesday, April 20.

The launch of equity options will offer a new way for investors to bet on the fortunes of Coinbase. Equity options represent the right, but not the obligation, to buy or sell a stock at a certain price, known as the strike price, on or before an expiration date.

The news follows Coinbase’s direct listing, which saw the firm’s stock fluctuate between a valuation of $429.54 and $310 on its first day of trading.

It was reported that the Chief Executive Officer of Coinbase, Brian Armstrong sold less than 2% of his holdings which worth about $292 million in shares on COIN’s first day of trading. According to filings made with the U.S. Securities and Exchange Commission, Armstrong sold 749,999 shares in three batches at prices ranging from $381 to $410.40 per share for total proceeds of $291.8 million.

It was also reported that insiders dumped nearly $5 billion in COIN stock shortly after it was listed. Filings on the Coinbase Investor Relations website showed a total of 12,965,079 shares were sold by insiders, worth over $4.6 billion at COIN’s $344 share price at close on Friday.

Yahoo Finance reported the stock has slumped 22.5% from a high of $429.54 on April 14 to a current after-hours trading price of $332.75 where it appears to have settled after Monday’s trading session.

On April 20, Coinbase Pro announced that will add support for new trading pairs for Basic Attention Token (BAT), Cardano (ADA), Decentraland (MANA), and USDC from April 20. The four assets will be paired with three fiat currencies (USD, EUR, GBP), BTC, and ETH, with limited trading functionality to be made available while market liquidity is assessed at launch.

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Banking Sector

Unity Bank Grows Asset by 67.90% to N492.02 Billion, As Gross Earnings Hit N42.71 Billion in FY 2020

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Unity Bank Plc grew its assets base to N492.02billion representing a significant increase of 67.90% from the N293.05 billion of total assets value recorded in 2019. This is even as the agric-focused lender declared gross earnings of N42.71 billion within the period under review.

A review of the Bank’s audited results for full-year ended 31 December 2020, released to the Nigerian Stock Exchange, showed that the Bank improved its bottom line marginally as Profit After Tax, PAT stood at N2.09 billion. Profit Before Tax, PBT closed at N2.22 billion, in a year that was defined by the unmitigated impact of global pandemic characterized by disruptions in business activities and the general downturn that resulted in revenue/returns dip in major leading sectors globally.

The lender substantially grew its customers’ deposit portfolio to N356.62 billion, up from N257.69 billion in the corresponding period of 2019, representing a 38.4% growth. This affirms positive market uptake of the Bank’s product offerings, as well as the lender’s growing customer base to its recent aggressive push with agile customer-centric products, which has played a role in deepening financial services penetration, especially to a wider world, an underserved spectrum of the retail market.

Other major highlight of the audited financial statement relates to growth in its net operating income which rose to N25.46 billion from N23.21 billion in the corresponding period of 2019, representing a 9.71% increase. This is even as the net interest income recorded a significant jump, as it rose by 7.60% to N17.75 billion from N16.49 billion in the corresponding period of 2019. Earnings per Share closed at 17.85 Kobo.

The Bank’s gross loans portfolio increased by 92.9% to N206.2 billion in December 2020 from N106.9 billion in December 2019. The Bank’s lending strategy was specially tailored to support the nation’s food agenda. This had the added advantage of improving food security across the country, providing employment to thousands of youths and entrepreneurs, contributing to the conservation of FX stocks and mitigating security challenges by ensuring adequate empowerment of citizens and deepening skills acquisition across the value chain.

Commenting on the result, Unity Bank’s Managing Director/Chief Executive Officer, Mrs. Tomi Somefun stated that the results showed the resilience of the Bank during unprecedented times of uncertainties and our ability to innovate and focus on key balance sheet items that will enable us to maintain the growth trajectory.

She further opined that: “Consequently, for the year under review, the opportunities to significantly create more quality assets for the business, thought to have a sustainable impact, informed part of choices made and we have seen some encouraging market uptake in this regard, apart from the benefits to the enterprise bottom-line that have also started trickling in. Other key performance indicators especially on the liability side of the business were equally not left out. The Bank deployed new product features and augmentation supported by omni-channel, USSD promotions and other channels to enhance services delivery efficiency, drive income generation capacities and enhance steady balance sheet growth for the year”.

Looking ahead, Somefun stated: “we will latch on targeted strategies to deploy significant investment in technology in order to ride the waves of the COVID-19 pandemic. On the back of this, the Bank focuses on achieving major efficiency gains, deepening its retail footprints and penetrating identified cluster market segments, as bulwarks to tapping into various youth markets platforms, in addition to the mass market would get a further boost”.

While laying an outlook for the future, the Unity Bank’s Chief further stated: “The Bank is also looking to consolidate on the gains from its core business areas and niche in the agribusiness sector. The Bank has solidly financed over one million farmers over the past three years. These farmers cut across several primary crop production such as rice, maize, cotton, wheat, sorghum, etc coupled with their rich value chains, and we hope to continue to expand on this as we play our part in driving the country’s quest for self-sufficiency in food production.”

Analysts are of the view that has made an appreciable impact in the agribusiness and its value chains consistently, the market is excited that the current year performance and different initiatives of the Bank show that the agribusiness is bankable not only as a differential positioning but also for sustainable business performance and profitability.

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