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Stock Market Records Highest Daily Loss in Eight Months

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  • Stock Market Records Highest Daily Loss in Eight Months

The nation’s equities market recorded its highest daily loss in eight months at the close of trading on the floor of the Nigerian Stock Exchange on Wednesday.

Sell-offs drove the NSE All Share Index lower by a record 3.5 per cent to close at 32,292.79 basis points.

The market capitalisation of listed equities dropped below N12tn, losing N422.2bn to close at N11.784tn on Wednesday.

The year-to-date loss dipped to 15.6 per cent while activity level strengthened as a total of 246.906 million stocks valued at N6.930bn exchanged hands in 3,912 deals, an increase of 63.9 per cent and 334.0 per cent in volume and value, respectively.

The top traded stocks by volume were Access Bank Plc (46.2 million), FBN Holdings Plc (22.6 million) and Transnational Corporation of Nigeria Plc (19.7 million), while the top traded stocks by value were Dangote Cement Plc (N3.9bn), Nestlé Nigeria Plc (N748m) and Guaranty Trust Bank Plc (N519.2m).

Sector performance was largely bearish as only the oil and gas Index gained.

Gains in Seplat Petroleum Development Company Plc and Forte Oil Plc by 0.6 per cent and 4.4 per cent, respectively, drove the index 0.4 per cent higher.

The industrial index fell by 3.9 per cent following sell pressures in Dangote Cement Plc and Cement Co. of North Nigeria Plc, which declined by 5.8 per cent and 9.9 per cent, respectively.

Similarly, the banking index fell by 2.8 per cent on the back of losses in Stanbic IBTC Holdings Plc and Access Bank Plc, which declined by 8.9 per cent and 8.6 per cent, respectively.

Continued sell-offs in Nigerian Breweries Plc and profit-taking in Nestlé Nigeria Plc pulled the consumer goods index down by 1.6 per cent.

Likewise, the insurance index closed at 1.4 per cent lower on the back of losses in NEM Insurance Plc and AIICO Insurance Plc, with respective declines of 3.2 per cent and 6.7 per cent.

Ten stocks recorded price appreciations while 37 stocks declined.

The top five gainers were Law Union and Rock Insurance Plc, Skye Bank Plc, Jaiz Bank Plc, Wema Bank Plc and Japaul Oil & Maritime Services Plc.

Law Union saw its share price increase by 9.09 per cent to close at N0.60, while Skye Bank appreciated by 8.93 per cent to close at N0.61 per share.

Jaiz Bank appreciated by six per cent to close at N0.53 per share, while Wema Bank and Japaul Oil saw their share prices increase by 5.26 per cent and 4.55 per cent to close at N0.60 and N0.23, respectively.

Universal Insurance led the losers, depreciating by 10 per cent to close at N0.27 per share.

Cement Company of North Nigeria Plc followed, declining by 9.87 per cent, while Fidelity Bank Plc (9.58 per cent), LASACO Assurance Plc (9.09 per cent), Stanbic IBTC Holdings Plc (8.89 per cent) Diamond Bank Plc (8.89 per cent) and 31 others dragged the stock market lower.

Analysts at Afrinvest Securities Limited said the strong bearish sentiments witnessed in Tuesday’s session weighed heavily across trading on Wednesday.

“Following this, we anticipate a possible rebound before the close of the week as investors buy the dip for stocks with attractive entry prices as witnessed in Guaranty Trust Bank Plc. This, however, does not change our near-term bearish outlook on market,” they added.

The Managing Director/Chief Executive Officer, BlackBit Limited, Wale Ajibade, attributed the decline to negative foreign sentiments around investment climate, which he said could be as a result of the approaching elections.

“We are entering election season and there might be reactions from foreign portfolio investors, who are pulling out of their positions. Also, there is pressure on the domestic side where people have more expenses; so, investors are selling more than they are buying. However, the largest contributor to the decline can be attributed to the winding down of portfolio investments by foreign investors,” he added.

The Managing Director, Cowry Asset Management Limited, Johnson Chukwu, said the decline was due to weak and negative market sentiments.

According to him, people watch out for market performance and if the market is moving negatively, they want to sell.

He noted that investors sold more than they bought because they were not encouraged by the market performance of the previous day.

“What happened is that people were apprehensive and they panicked because the market did not perform very well yesterday (Tuesday),” he added.

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

COVID-19: CBN Extends Loan Repayment by Another One Year

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Central Bank Extends One-Year Moratorium by 12 Months

The Central Bank of Nigeria (CBN) has extended the repayment of its discounted interest rate on intervention facility by another one-year following the expiration of the first 12 months moratorium approved on March 1, 2020.

The apex bank stated in a circular titled ‘Re: Regulatory forbearance for the restructuring of credit facilities of other financial institutions impacted by COVID-19’ and released on Wednesday to all financial institutions.

In the circular signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, CBN, the apex bank said the role-over of the moratorium on the facilities would be considered on a case by case basis.

The circular read, “The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from nine per cent to five per cent per annum for one year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy.

“Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

“Following the expiration of the above timelines, the CBN hereby approves as follows:

“The extension by another 12 months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities.

“The role-over of the moratorium on the above facilities shall be considered on a case by case basis.”

It would be recalled that the apex bank reduced the interest rate on its intervention facility from nine percent to five percent and approved a 12-month moratorium in March 2020 to ease the negative impact of COVID-19 on businesses.

To further deepen economic recovery and stimulate growth, the apex bank has extended the one year-moratorium until February 28, 2022.

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Finance

MTN Nigeria Generates N1.35 Trillion in Revenue in 2020

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MTN Nigeria Grows Revenue by 15.1 Percent from N1.169 Trillion in 2019 to N1.35 Trillion in 2020

Despite the COVID-19 pandemic and challenging business environment, MTN Nigeria realised N1.346 trillion in revenue in the financial year ended December 31, 2020.

The leading telecommunications giant grew revenue by 15.1 percent from N1.169 trillion posted in the same period of 2019.

Operating profit surprisingly jumped by 8.5 percent from N393.225 billion in 2019 to N426.713 billion in 2020.

This, the telecom giant attributed to the surge in finance costs due to increased borrowings from N413 billion in 2019 to N521 billion in 2020.

MTN Nigeria further stated that the increase in finance costs was the reason for the decline in growth of profit before tax to 2.6 percent.

MTN Nigeria grew profit before tax by 2.6 percent to N298.874 billion, up from N291.277 billion filed in the corresponding period of 2019.

The company posted N205.214 billion profit for the year, a 0.9 percent increase from N203.283 billion recorded in the 2019 financial year.

Share capital remained unchanged at N407 million. While Total equity increased by 22.3 percent from N145.857 billion in 2019 to N178.386 billion in 2020.

MTN Nigeria’s market price per share increased by 61.8 percent from N105 to N169.90.

While market capitalisation as at year-end also expanded by 61.8 percent to N3.458 trillion, up from N2.137 trillion.

The number of shares issued and fully paid as at year-end stood at 20.354 million.

MTN Nigeria margins were affected by Naira devaluations and capital expenditure due to the new 4G network coverage roll-out.

Margins were adversely affected by the effect of naira devaluation and expenses associated with new sites’ roll-out to boost 4G network coverage in FY’20.

“On the former, we note that MTNN expanded the scope of its service agreement with IHS Holding Limited and changed the reference rate for converting USD tower expenses to NAFEX (vs CBN’s official rate previously). Thus, over the full-year period, the company’s operating margin contracted by 1.9 ppts YoY to 31.7%,” CardinalStone stated in its latest report.

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Finance

Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

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Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

Nestle Nigeria, a leading food and beverage company, has declared a final dividend of N35.50k per 50 kobo ordinary share for the year ended December 31, 2020.

The beverage company said N24.50k of the amount declared was from the after-tax profit of 2020 and N5 and N6 were from the after-tax retained earnings of the years ended December 2019 and 2018, respectively.

Nestle Nigeria stated that the amount declared is subject to appropriate withholding tax and approval at the Annual General Meeting of shareholders.

It also noted that payment will be made only to shareholders whose names appear in the Register of Members as at the close of business on 21 May 2021.

Dividends will be paid electronically to shareholders whose names appear on the Register of Members as at 21 May 2021, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts.

Shareholders who are yet to complete the e-dividend registration are advised to download the Registrar’s E-Dividend Mandate Activation Form, which is also available on their website: www.gtlregistrars.com, complete and submit to the Registrar or their respective Banks.

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