Finance

Stock Market Rebounds on Dividend Expectations

Published

7 years ago

January 30, 2017

Nigerian Exchange Limited - Investors King

Stock Market Rebounds on Dividend Expectations

The Nigerian equities market returned to positive territory last week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) rose by 0.40 per cent compared with a decline of 0.39 percent the previous week.

Despite the release of poor quarterly corporate performance by some companies, investors ignored those results and took position ahead of dividend payment for the year ended December 31, 2016.

Consequently, the NSE ASI and market capitalisation appreciated by 0.40 per cent to close the week at 26,328.22 and N9.059 trillion respectively. Similarly, all other Indices finished higher during the week with the exception of the NSE Premium Index that depreciated by 0.13 per cent. Investors were upbeat last week, with the NSE ASI recording gains in four out of the five sessions.

Daily Market performance

Trading resumed for the week last Monday market yesterday resumed the week on a positive note as the NSE ASI appreciated by 0.03 per cent to close at 26,231.37. Market analysts at Meristem Securities Limited, attributed the positive trading to gains by large capitalised stocks.

“We attribute the day’s performance to the positive sentiments in the market, specifically on some large cap stocks. We expect this trend to continue into the week, as we anticipate more bargain hunting activities on counters trading below their intrinsic values,” they said.

A total of 19 stocks appreciated compared with 15 that declined in value. UACN Property Development Company (UPDC) Plc led the price gainers’ chart, advancing by 4.86 per cent to close at N3.02 per share.

UPDC is planning to raise about N5 billion from the capital market through a rights issue of 1.719 billion ordinary shares of 50 kobo each at N3.00 per share on the basis of one new share for every one share already held.

The second day of the week witnessed a bearish trading with the index shedding 0.05 per cent to be at 26,217.54. Similarly, market capitalisation shed N4.8 billion to close at N9.0 trillion.

Shares tanked as the Central Bank of Nigeria’s Monetary Policy Committee (MPC) retained the Monetary Policy Rate (MPR) at 14 per cent. The MPC, which met on Monday and Tuesday voted unanimously to maintain status quo by retaining the: MPR at 14 per cent; Cash Reserve Ratio at 22.5 per cent and Liquidity Ratio at 30 per cent.

However, market operators said retaining the MPR at 14 per cent will make the fixed income securities remain more attractive to investors than the equities market.

Analysts at Meristem Securities Limited, said: “Given that the MPC maintained the status quo on all policy variables, we expect the weak market mood will continue to dictate the direction of activities in the equities market. However, we advise investors to continually assess the market for opportunities to take positions in fundamentally justified stocks ahead of the full year 2016 earnings season.”

Seven-Up-Bottling Company Plc and Custodian and Allied Plc led the price losers, depreciating by 4.9 per cent each to close at N101.40 and N3.63 respectively. NCR Nigeria Plc and NAHCO also shed 4.9 per cent apiece, just as Sterling Bank Plc and Transcorp Plc went down by 4.8 per cent and 4.7 per cent in that order.

On the positive side, Cement Company of Northern Nigeria Plc led the price gainers with 5.0 per cent to close at N4.62 per share. UAC of Nigeria Plc followed with 4.9 per cent, just as NPF Microfinance Bank Plc appreciated by 4.6 per cent.

In terms of sectoral performance, the NSE Banking Index, which had outperformed other sector indices for the most part of the year, dipped 1.1 per cent as investors booked profit in Zenith Bank Plc (-3.5 per cent) and United Bank for Africa Plc (-1.2 per cent).

The bulls regained control of the market on Wednesday even as investors staked N2.434 billion on 190 million shares in 2,896 deals.

The bulls pushed the NSE ASI to close 0.09 per cent higher at 26, 240.45.

The recovery in the market was attributed to the activities of bargain hunters who swooped on shares, making 21 equities to close higher while 16 declined. NASCON Allied Industries Plc led the price gainers with 4.9 per cent trailed by Neimeth International Pharmaceuticals Plc with 4.6 per cent. Custodian and Allied Plc appreciated by 3.3 per cent, just as Oando Plc chalked up 2.3 per cent.

Conversely, Honeywell Four Mills Plc, Livestock Feeds Plc led the price losers with 4.9 per cent apiece. A.G Leventis Plc and UACN Property Development Company Plc shed 4.6 per cent each.

Sectoral performance indicates that only the NSE Banking Index depreciated by 0.08 per cent. The NSE Oil/Gas Index appreciated by 0.49 per cent, while NSE Industrial Goods Index, NSE Insurance Index and NSE Consumer Goods Index grew by 0.41 per cent, 0.14 per cent and 0.04 per cent.

The market sustained its positive performance for the second straight day on Thursday with the NSE ASI going up by 0.2 per cent. Interest showed by bargain hunters in Guaranty Trust Bank, Forte Oil Plc, Zenith Bank Plc, Oando Plc and Stanbic IBTC Holdings bolstered the bullish trading. Apart from the NSE ASI that appreciated by 0.2 per cent, market capitalisation of equities added N17 billion to close at N9.0 trillion.

It was mixed blessings for investors in Stanbic IBTC and Guinness Nigeria. While Stanbic IBTC rose by 1.1 per cent following news of smooth management changes, those in Guinness suffered a depreciation of 5.0 per cent. Guinness reported a N4.6 billion loss after tax for the six months ended December 31, 2016. Commenting on the results, Managing Director/Chief Executive of Guinness Nigeria, Mr. Peter Ndegwa, attributed the poor performance to the challenging economic environment and high finance charges.

Ndegwa said: “We now have both International Premium Spirits (IPS) and locally manufactured mainstream spirits within our portfolio and these contributed to revenue growth for the half year. Our accessible beer brands also continue to grow strongly.”

The equities market sustained the positive tempo on the last trading session for the week as the NSE ASI rising by 0.15 per cent to close at 26,2328,22 compared to an increase of 0.19 per cent recorded the previous day. Similarly, the market capitalisation increased by 0.19 per cent to close at N9.058 trillion. The marginal rise in the index and market cap were prompted by appreciation in the share prices of Total, Nestle, Seven-Up Bottling Company Plc, Zenith Bank and Stanbic IBTC. The value of equities traded also increase by 84.71 per cent to N2.194 billion from N1.187 billion transacted previously. The total volume of equities traded rose by 62.33 per cent to 238 million in 2,725 deals.

Market turnover

In all, investors traded 990.584 million shares worth N18.823 billion in 14,917 deals last week by investors on the floor of the exchange, compared with a total of 1.340 billion shares valued at N8.903 billion that were traded the previous week in 15,733 deals.

The Financial Services Industry led the activity chart with 664.647 million shares valued at N3.896 billion traded in 8,056 deals; thus contributing 67.10 per cent and 20.70 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 133.641 million shares worth N2.602 billion in 2,653 deals. The third place was occupied by Conglomerates Industry with a turnover of 63.189 million shares worth N88.834 million in 635 deals.

Price gainers and losers

Meanwhile, 29 stocks appreciated last week lower than 30 equities of the previous week. Conversely, 30 equities depreciated in price, higher than 27 equities of the previous week. Unity Bank Plc led the price gainers with 15.6 per cent, trailed by Oando Plc with 12.4 per cent. Stanbic IBTC Holdings Plc and Champion Breweries Plc garnered 8.5 and 8.3 per cent respectively. Other top price gainers included: Forte Oil Plc (8.1 per cent); Wema Bank Plc (7.8 per cent); NPF Microfinance Bank Plc (6.6 per cent); Total Nigeria Plc (6.4 per cent); Neimeth International Pharmaceuticals Plc (4.2 per cent) and Seplat Petroleum Development Company Plc (4.1 per cent).

On the contrary, Honeywell Flour Mills Plc led the bears, shedding 11.3 per cent, trailed by MRS Oil Nigeria Plc with 9.7 per cent. Sterling Bank Plc went down by 8.7 per cent, while Caverton Offshore Support Group Plc declined by 8.0 per cent. Livestock Feeds Plc and Transnational Corporation of Nigeria Plc went down by 6.9 per cent apiece just as A.G. Leventis Nigeria Plc, Custodian and Allied Plc, Nigerian Aviation Handling Company Plc and Trans Nationwide Express Plc lost 5.7 per cent, 5.2 per cent and 5.0 per cent in that order.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Banking Sector

Unity Bank Marks Global Money Week, Engages Students on Financial Literacy

Published

2 days ago

April 30, 2024

Samed Olukoya

Unity Bank Plc has engaged students from all the geopolitical zones of the federation as it facilitated financial literacy training in 15 schools as part of activities to mark the 2024 Global Money Week.

The Financial Literacy Training was held as a strategy for driving financial inclusion of the Central Bank of Nigeria and Bankers Committee. Unity Bank’s Managing Director/Chief Executive Officer, Mrs. Tomi Somefun participated in the programme by facilitating training on financial literacy at NYSC Demonstration Secondary School, Calabar, Cross River State recently.

Mrs Somefun, who was represented by Unity Bank’s Chief Compliance Officer, Mrs. Patricia Ahunanya, provided the students with invaluable insights on the path to wealth creation, including imbibing savings habits, investing, and adopting money management skills early.

Her interaction with the students was aimed at instilling financial discipline and financial management skills for the attainment of financial independence and security while promoting a savings and investment culture. During the session, Mrs. Somefun acknowledged outstanding students and presented them with awards.

The Global Money Week (GMW) is an annual campaign dedicated to raising global awareness about the importance of promoting financial literacy among young people from an early age. The initiative focuses on equipping them with the knowledge, skills, attitudes, and behaviours essential for making informed financial decisions, leading to financial well-being. Each year, a minimum of 40,000 organizations participate in this endeavour, collectively impacting over 60 million children globally.

In Nigeria, the Central Bank of Nigeria, CBN, Banker’s Committee in collaboration with Junior Achievement Nigeria, coordinates the activities for Global Money Week, which sees the participation of financial institutions with nationwide coverage.

Banking Sector

CBN Halts Opay, Palmpay, Others Onboarding Amid Forex Scandal

Published

2 days ago

April 30, 2024

Samed Olukoya

The Central Bank of Nigeria’s (CBN) has directed four leading fintech companies, OPay, Palmpay, Kuda Bank, and Moniepoint to halt the onboarding of new customers pending further investigation.

This directive, issued by the apex bank, comes in the wake of allegations linking these fintech giants to illicit foreign exchange transactions.

The move has sent ripples across Nigeria’s burgeoning fintech landscape, raising questions about regulatory oversight and the evolving dynamics of financial technology in the country.

Representatives from two of the affected companies confirmed the CBN’s order, shedding light on the gravity of the situation.

While acknowledging the allegations, they highlighted potential misdirection, emphasizing that the majority of implicated accounts are affiliated with commercial banks rather than fintech platforms.

“I can confirm that 90% of the accounts implicated in the illicit forex transactions are with commercial banks, and only 10% are with fintechs. Why then has the CBN not extended this directive to the commercial banks? We face a widespread issue here, and targeting fintechs seems like an unfair focus on the more vulnerable targets,” one source explained.

This revelation underscores a broader concern regarding regulatory asymmetry within Nigeria’s financial ecosystem.

Despite fintechs demonstrating robust Know Your Customer (KYC) practices, they find themselves under intense scrutiny while traditional banks seemingly evade similar directives.

The controversy deepened with recent revelations from the Economic and Financial Crimes Commission (EFCC), which secured a court order to freeze over 1,100 bank accounts allegedly involved in illegal foreign exchange transactions.

Justice Emeka Nwite’s decision, issued on an ex-parte motion, underscores the urgency to address financial malfeasance within the country.

However, scrutiny seems disproportionately directed towards fintechs, leaving industry insiders perplexed.

“In terms of KYC, the fintechs are doing better than the banks, but all eyes seem to be on the fintechs whenever the issue of KYC occurs,” a source revealed.

This regulatory imbalance raises critical questions about the evolving role of fintech in Nigeria’s financial landscape.

Despite their innovative solutions and customer-centric approach, fintechs face a regulatory framework that appears skewed against them, favoring traditional institutions.

As Nigeria strives to maintain financial integrity and stability, stakeholders must address these regulatory discrepancies to ensure a level playing field for all participants.

The outcome of this saga will not only shape the future of fintech regulation but also define Nigeria’s approach to combating financial crime in an increasingly digitized economy.

Banking Sector

Zenith Bank Shareholders Approve Holdco Structure

Published

3 days ago

April 29, 2024

Samed Olukoya

Shareholders of Zenith Bank Plc unanimously approved the restructuring of the Bank to a holding company during a court-ordered Extraordinary General Meeting (EGM) held virtually from Zenith Heights, Zenith Bank Plc, Victoria Island, Lagos, on Friday, April 26, 2024.

In accordance with the Scheme of Arrangement dated March 28 2024, pursuant to Section 715 of the Companies and Allied Matters Act (CAMA), 2020 between the Bank and the holders of the fully paid ordinary shares of 50 Kobo each in the Bank, the shareholders voted to transfer 31,396,493,787 ordinary shares of 50 Kobo each held in the issued and paid-up share capital of Zenith Bank Plc to Zenith Bank Holding Company Plc (the HoldCo) in exchange for the allotment of 31,396,493,787 ordinary shares of 50 Kobo each in the share capital of the HoldCo in the same proportion to their shareholding in the Bank.

Similarly, the shareholders approved that each Existing GDR Holder receive, as consideration for each existing GDR held, one new HoldCo GDR.

The shareholders also approved that all of the shares held by the nominees of the Bank in Zenpay Limited, a direct subsidiary of the HoldCo, together with all rights and liabilities attached to such shares, be transferred to the HoldCo.

The Board of Directors were also authorised to delist the shares of the Bank and the Existing GDRs from the official list of the Nigerian Exchange and the London Stock Exchange respectively as well as re-register the Bank as a private limited company under CAMA Act 2020.

In his remarks during the EGM, the Founder and Chairman of Zenith Bank Plc, Jim Ovia, CFR, thanked the shareholders for their unwavering commitment, which has been instrumental in the Bank’s outstanding performance over the years.

He expressed his delight at witnessing the transition of the Bank to a holding company, which is anticipated to position it advantageously for exploring emerging opportunities in the Fintech space while bolstering its digital and retail banking initiatives.

Also speaking during the EGM, Dr. Ebenezer Onyeagwu, the Group Managing Director/Chief Executive, lauded the Founder and Chairman, Jim Ovia, CFR, for his pivotal role in creating an institution that has consistently been a trailblazer in the nation’s financial services industry.

Dr. Onyeagwu expressed his optimism about the Bank’s growth trajectory in the coming years as it transitions into a holding company structure.

According to him, “The HoldCo structure presents an opportunity for us to unlock value for shareholders in terms of opportunity in other sectors beyond banking. The first part is Fintech, where we have already received the approval and the license from the Central Bank of Nigeria (CBN), which we are launching soon.

“It is going to be focusing on an area that we know has not been touched on by anyone. So it is more like us finding an open wide space where we can begin to operate, and with a HoldCo, what that means is that we have an opportunity to diversify our investment.

“We can begin to look at other business verticals that were restrained by the kind of authorisation we have. So, it presents a big opportunity for us to have a wider lens and scope in terms of what we can do. It will also position us to think of opportunities beyond Africa. We will be looking at key business verticals that have the potential to enable us to create value for shareholders.”

On the recapitalisation plan of the Bank, Dr. Onyeagwu stated that the Bank is on course to receive the needed shareholder’s approval in the forthcoming Annual General Meeting (AGM) slated for May 8, 2024, which will kickstart its capital raising effort in line with the CBN directive.

He expressed confidence in the Bank’s ability to raise the stipulated capital, stating that amongst its peers in the industry, Zenith was expected to raise the least amount due to its already robust capital base.