Nigerian Stock Exchange sustained its bullish momentum last week as investors traded a total turnover of 1.816 billion shares valued at N25.791 billion in 31,665 deals.
This was below the 11.400 billion shares worth N35.892 billion transacted in 39,265 deals in the previous week. However, the Exchange managed to sustain its global lead as sentiment remained high despite the economic recession and a series of other uncertainties.
In terms of volume traded, the financial services industry led with 1.274 billion shares estimated at N14.710 billion that exchanged hands in 18,392 deals. Therefore, contributing 70.15 percent and 57.04 percent to the total equity turnover volume and value, respectively.
The conglomerates industry followed with 217.170 million shares valued at N231.809 million and exchanged in 1,226 deals. In third place was the consumer goods industry with a turnover of 113.760 million shares valued at N2.598 billion in 4,568 deals.
Zenith Bank Plc, Transnational Corporation of Nigeria Plc and Access Bank Plc led the most traded stocks in terms of volume. Together, the three accounted for 649.529 million shares valued at N8.104 billion in 6,395 deals and contributed 35.76 percent and 31.42 percent to the total equity turnover volume and value, respectively.
The market capitalisation of listed equities expanded by 2.19 percent to settle at N18.228 trillion while the NSE All-Share Index also gained 2.19 percent or 748.69 index points to 34,885.51 index points, up from 34,136.82 index points recorded in the previous week.
The bourse year to date return rose to 29.97 percent, the highest performer among Bloomberg tracked 93 global stocks. NSE Premium index led with 47.85 percent year-to-date gain while the NSE AFR Div Yield Index trailed with 47.82 percent gain. See the list of top gainers and losers for the week below.
Market Cap of UK’s Three Largest Banks Slumped by $75B in a Year
Market Cap of UK’s Three Largest Banks Slumped by $75B in a Year
The COVID-19 pandemic has hit the European banking system hard, with many of the largest banks coping much worse with the crisis than their US peers. While the US financial giants managed to boost their investment banking and trading revenues and better position themselves in times of economic uncertainty, major European banks all reported huge losses in 2020, causing their market cap to plunge deep below 2019 levels.
According to data presented by BuyShares, the combined market capitalization of HSBC Holdings, Lloyds Banking Group and Barclays, as the three largest UK banks, hit $184bn last week, almost a $75 drop year-over-year.
Europe’s Largest Bank HSBC Lost $46.4B in Market Capitalization
Europe’s largest bank by assets, HSBC, has suffered significant losses amid the COVID-19 crisis. The Group’s earnings report revealed revenues for the nine months of 2020 amounted to $38.7bn, a 9% drop in a year, primarily due to the progressive impact of interest rate reductions across its global businesses. Reported profit after tax plunged by 62% to $5.2bn between January and September 2020.
In December 2019, the market capitalization of the London-headquartered financial giant stood at $160.1bn, revealed Yahoo Finance data. During the next three months, this figure dropped to $114bn.
The noticeable decreasing trend continued in the following months, with the market capitalization falling to $78.9bn in September, a 50% plunge since the beginning of 2020. Statistics indicate the combined value of HSBC’s stocks stood at $113.8bn last week, a $46.4bn drop in a year.
Lloyds Banking Group Witnessed the Biggest Market Cap Plunge
The Yahoo Finance data revealed that Lloyds Banking Group, as the second-largest bank in the United Kingdom, witnessed the most significant drop in the market capitalization amid the COVID-19 crisis, with the figure falling from $57.4bn in December 2019 to $34.8bn last week, almost a 40% plunge in a year.
After putting aside £2.4bn for bad debts, Britain’s biggest high street lender reported a loss of £676 million in the second quarter of 2020. The negative trend continued in the third quarter of 2020, with the net profit plunging by 19% YoY to £3.4bn. The Group’s earnings report revealed that the net profit in the nine months of 2020 amounted to £10.8bn, 17% less than the same period in 2019.
Barclays lost almost $5.5bn in market capitalization amid the COVID-19 crisis. In December 2019, the combined value of stocks of the UK’s third-largest bank by assets stood at $40.8bn. Statistics show this figure dropped by 13%, landing at $35.3bn last week.
Stock Market Bubble Fears Overblown, Micro-bubbles Are the Issues
Concerns over a large stock market bubble are currently overblown – it’s the micro-bubbles that could pose more imminent risks to investors, warns the CEO of one of the world’s largest independent financial advisory and fintech organisations.
The warning from Nigel Green, chief executive and founder of deVere Group, comes as global shares reached almost record highs on Monday.
MSCI’s All Country World index, which tracks stocks across 49 countries, was up 0.2% on the day.
Mr Green says: “As stocks hit historic highs, there are fears that the boom we’re currently experiencing could end in a bust, similar to the dot-com era.
“For the time being, we believe that concerns over a large stock market bubble are overblown. To understand the reasoning, we need to look at why markets are valued so high at the moment.
“Essentially, it is down to the unprecedented levels of monetary and fiscal support, the ultra-low bond yields, the historically low interest rates, that earnings are up, and that both institutional and retail investors have large reserves of excess cash.
“This is a rare combination and, on the back of all this, it can be expected to take years for markets to cool significantly.”
He continues: “What is perhaps more concerning are micro-bubbles of a small group of stocks that consistently rush to new highs and reject all balanced valuations.
“Hyper growth stocks, which often lure in Do-It Yourself investors with their headline-grabbing current performance, at the moment appear to have no ceiling.
“However, highly profitable incumbents in their sectors could soon bring the ‘story stocks’ back down to earth, with their valuations headed for a meaningful correction.”
Another major risk of micro-bubble stocks, says the deVere boss, is that they overshadow the potential of new stocks and sectors, with investors subsequently missing key low entry point opportunities.
“There are also new businesses emerging which people, including myself, see as the future. Not all of these will succeed, of course, whilst some will rocket,” he notes.
Therefore, investors should work alongside a good fund manager to seek out those stocks most likely to generate and build their wealth over the long-term.
Nigel Green concludes: “In today’s landscape, it is not the macro-bubble of which investors should be wary.
“Any potential bursting of bubbles is likely to be within specific stocks, so unlikely to rock the global financial markets as has happened previously – but individual investors could still be caught off-guard.
“Micro-bubble spotting, and diversification across asset class, sector, region and even currency, should become a priority for investors right now.”
Vitafoam Expands Net Asset per share by 54.3 Percent in 2020
Despite COVID-19 and challenging business environment, Vitafoam Nigeria Plc grew net asset per share by 54.3 percent from N4.70 achieved in 2019 to N7.25 in 2020.
The company attributed the strong performance to improved innovation and expansion.
Vitafoam reported a 5.2 percent surge in total sales during the period, 8.1 percent decline in cost of sales and 11.4 percent reduction in finance.
Profit After Tax increased by 72 percent to N4.11 billion from N2.39 billion while basic earnings per share increased to N3.05 from N1.82.
Speaking on the company’s performance, Mr Taiwo Adeniyi, Group Managing Director and Chief Executive, said: “Innovation is the drive. As a matter of corporate policy, we do continuous improvement on our products.
“We sell high margin products. We are highly connected with our customers. We know their different needs and as such our products always gain acceptance in the market. Our foams and other products meet specific needs.
“Last year, we launched Buy Rights when our research revealed that different weights require different types of foams. We do not just sell to customers, we offer health counselling to advise on the specific foam for individual customers. This has greatly endeared us to our customers.
“Our investment in the subsidiaries as a growth strategy is beginning to pay off. All of them have turned profitable. We are not insulated from the tough operating environment as all the indices that should drive growth in the manufacturing sector are weak.”
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