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Yuletide: Stock Market Sell-off Worsens

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Oscar Onyema
  • Yuletide: Stock Market Sell-off Worsens

Investors in the nation’s stock market have continued to sell off their holdings as Yuletide approaches.

The sell-off in the market strengthened last week as reflected by the dip in the index, which declined from 30,718.72 basis points on Tuesday to its lowest point during the week at 30,568.05 bps on Thursday.

The performance of the market last week was dragged by the sell-offs in heavily weighted stocks in the consumer goods and oil and gas sectors as they both closed negatively, declining by 2.79 per cent and 0.84 per cent, respectively.

The banking, insurance and the industrial goods sector indices were the only indices that registered upward movements during the week.

During the week, the bearish performance in the equities market dragged the All Share Index lower by 0.9 per cent to settle the year-to-date return at -19.80 per cent.

There were 33 gainers and 37 losers, which pegged the market breadth at 0.89x.

A total turnover of 1.169 billion shares worth N14.762bn in 14,554 deals was traded during the week by investors on the floor of the Exchange in contrast to a total of 1.107 billion shares valued at N11.192bn that exchanged hands in the previous week in 14,430 deals.

The financial services industry (measured by volume) led the activity chart with 983.374 million shares valued at N9.358bn traded in 8,484 deals, thus contributing 84.15 per cent and 63.39 per cent to the total equity turnover volume and value, respectively.

The banking sector, however, recorded an overall negative performance as it declined by 0.86 per cent, dragging its year-to-date return to -11.52 per cent.

However, the sector breadth at 1.60x was in favour of the bulls, as eight gainers outpaced five losers.

Union Bank of Nigeria Plc outperformed the sector with a share price increase of 14.02 per cent to close at N6.10.

Profit-taking prevailed in the banking sector as sell-offs dominated four of the top seven weighted counters in the sector. Consequently, the losses outweighed the gains recorded on eight counters.

Analysts at Meristem Securities Limited predicted a marginal gain in the sector this week as slight upticks were recorded across the sector’s heavyweight.

The healthcare industry followed with 44.802 million shares worth N183.753m in 253 deals.

The healthcare sector declined by 1.15 per cent to peg the year-to-date return at -21.40 per cent.

Neimeth International Pharmaceuticals Plc was the top gainer, with a share price increase of 3.45 per cent to close at 60 kobo.

Sell-offs in Fidson Healthcare Plc led to a negative close of the sector as the company emerged the top loser with a price decline of 6.12 per cent to close at N4.60.

The third place was occupied by the consumer goods industry with a turnover of 42.758 million shares worth N3.553bn in 2,227 deals.

At the close of the week, the consumer goods sector was awash with negative sentiment as it declined by 2.79 per cent, dragging its year-to-date loss to -26.33 per cent.

The consumer goods sector failed to sustain its bullish trend from the previous week, as selling pressures prevailed on large-cap stocks in the sector.

Cadbury Nigeria Plc was the best-performing stock with a share price gain of 5.82 per cent to close at N10.

On the losers’ end, Nestlé Nigeria Plc recorded the highest loss during the week with a 6.39 per cent decline.

The industrial goods sector advanced by 0.81 per cent, pegging its year-to-date return at -37.81 per cent. The sector breadth settled at 1.33x, as four gainers outpaced three losers.

Cap Plc emerged the highest gainer with an 18.25 per cent gain to close at N37.25 per share.

On the other hand, Cutix Plc led the losers’ chart, shedding 9.64 per cent to close at N1.78 per share.

At the close of the week, the notable gains on counters like Cap Plc and Berger Paints Plc drove the sector to a positive close.

The insurance index gained 0.20 per cent to settle the sector’s year to date loss at -11.90 per cent as four gainers and seven losers pegged the sector breadth at 0.57x.

The insurance sector outperformed other sectors this week, following modest gains on stocks like Continental Reinsurance Plc and Law Union and Rock Insurance Plc.

Veritas Kapital Assurance Plc closed at the top of the gainers’ list with a price increase of 19.05 per cent.

However, Cornerstone Insurance Plc led other laggards, following a decline of 9.09 per cent in its share price.

The oil and gas sector was characterised by bearish sentiment as it dipped by 0.82 per cent at the close of the week. This settled the year-to-date return at -15.59 per cent as the sector breadth closed at 0.75x.

Forte Oil Plc outperformed other stocks in the sector, after gaining 33.89 per cent to close at N24.10.

On the other hand, 11 Plc, Conoil Plc, Oando Plc and Seplat Petroleum Development Company Plc featured on the losers’ chart, closing at N156.60, N20.25, N4.95 and N594 per share, respectively.

Analysts at Meristem said the negative outing at the close of last week could be attributed to selling pressure on some of the sector’s heavily weighted counters, such as Seplat and 11 Plc.

Trading in the top three equities, namely Zenith Bank Plc, FBN Holdings Plc, and United Bank for Africa Plc (measured by volume) accounted for 438.938 million shares worth N5.691bn in 2,962 deals, contributing 37.56 per cent and 38.55 per cent to the total equity turnover volume and value, respectively.

The top five gainers last week were Forte Oil, John Holt Plc, Veritas Kapital, Cap Plc and Union Bank, which saw their prices gain 33.89 per cent, 20 per cent, 19.05 per cent, 18.25 per cent and 14.02 per cent, respectively.

The top five losers were 11 Plc, Conoil, Cutix Plc, Livestock Feeds Plc and Chams Plc, whose share prices declined by 10.41 per cent, 10 per cent, 9.64 per cent, 9.62 per cent and 9.09 per cent, respectively.

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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