Investors upbeat as equities rally N316b gains

Investors showed improved appetite for Nigerian equities in the immediate past week as attractive valuations, reduced political risk and improved macroeconomic direction spurred a broad-based bargain-hunting for quoted shares.

Benchmark indices for the Nigerian equities market showed average gain of 2.33 per cent at the weekend, equivalent to net capital gains of N307.7 billion for the week. However, the listing of additional shares by Stanbic IBTC Holdings lifted the total increase in market value of quoted equities to N316 billion at the weekend.

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The sustained rally coincided with the Wednesday September 11, 2019’s decision of the Presidential Election Petition Tribunal affirming the election of President Muhammadu Buhari. Total market value of quoted equities rebounded with net gain of N52 billion on Wednesday, rose further by N141 billion on Thursday and capped the rally with a net gain of N172 billion on Friday.

Many analysts had said investors might have interpreted the decision of the presidential election tribunal as a sign of stability that gives clearer direction of the macroeconomic direction, notwithstanding the discontent in the opposition camp and possible appeal to the Supreme Court.

The rally, the highest in recent weeks, moderated the negative average year-to-date return to -11.62 per cent. On a quarterly basis, average return so far for the third quarter improved, though still negative, to -7.30 per cent. Meanwhile, the benchmark turned positive for August with a month-to-date return of 0.92 per cent.

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The All Share Index (ASI)-the common value-based index that tracks share prices at the Nigerian Stock Exchange (NSE), rose from its week’s opening index of 27,146.57 points to close weekend at 27,779.00 points. Aggregate market value of all quoted equities also rallied from its opening value of N13.207 trillion for the week to close weekend at N13.523 trillion.

With 39 advancers to 19 decliners, most sectoral indices also closed positive underlining the broad bargain-hunting that drove the overall market performance. The NSE 30 Index, which tracks the 30 most capitalised stocks at the Nigerian Stock Exchange (NSE), rose by 2.72 per cent. The NSE Banking Index appreciated by 5.06 per cent. The NSE Consumer Goods Index rallied average gain of 0.57 per cent while the NSE Oil and Gas Index rose by 7.19 per cent. However, the NSE Industrial Goods Index declined by 0.41 per cent while the NSE Insurance Index dropped by 2.13 per cent.

UACN Property Development Company, which is being unbundled by its parent company, UAC of Nigeria, led the rally with a double of its share price by 51.52 per cent to close weekend at N1.50 per share. FBN Holdings followed with a gain of 24.1 per cent to close at N5.40. Seplat Petroleum Development Company placed third with a gain of 15.67 per cent to close at N460. Forte Oil appreciated by 14.1 per cent to close at N16.55. Ecobank Transnational Incorporated rallied by 11.9 per cent to close at N8 while Cornerstone Insurance rose by 11.1 per cent to close at 30 kobo per share.

On the negative side, Thomas Wyatt Nigeria recorded the highest loss of 9.52 per cent to close at 38 kobo. Continental Reinsurance followed with a drop of 7.98 per cent to close at N1.50. Oando dropped by 7.3 per cent to close at N3.80. Livestock Feeds declined by 7.1 per cent to close at 39 kobo while Cutix depreciated by 6.67 per cent to N1.40 per share.

The momentum of activities also improved considerably. Total turnover stood at 1.15 billion shares worth N14.08 billion in 17,980 deals compared with a total of 1.10 billion shares valued at N17.08 billion traded in 15,431 deals in the previous week.

The financial services sector, traditionally the most active, remained atop activities chart with 840.704 million shares valued at N10.765 billion in 11,331 deals, representing 73.30 per cent and 76.45 per cent of the total equity turnover volume and value respectively. The conglomerates sector followed with 111.231 million shares worth N243.124 million in 963 deals while the information and communication technology (ICT) sector occupied a distant third with a turnover of 95.087 million shares worth N605.135 million in 404 deals.

Banking stocks dominated activities’ chart with the trio of Guaranty Trust Bank, Access Bank and FBN Holdings accounting for 484.003 million shares worth N8.306 billion in 4,265 deals, representing 42.20 per cent and 58.99 per cent of the total equity turnover volume and value respectively.

Besides equities, a total of  6,540 units of Exchange Traded Products valued at N23,650 were also traded in five deals last week compared with a total of 3,692 units valued at N1.974 million traded in 10 deals two weeks ago.

On the sovereign bond market, a total of 274 units of Federal Government bonds valued at N280,932 were traded in seven deals compared with a total of 47,690 units valued at N51.008 million traded in 15 deals penultimate week.

Beyond Nigeria, investors’ sentiment for quoted equities appeared to improve globally last week with most global markets closing positive. In the United States of America, the Dow Jones Industrial Average (DJIA), S & P 500 Index and NASDAQ Index appreciated by 1.4 per cent, 1.2 per cent and 1.1 per cent respectively. In United Kingdom, the UK FTSE ASI appreciated by 1.1 per cent. France’s CAC 40 Index rose by 1.0 per cent. Germany’s XETRA DAX Index rallied by 2.2 per cent. Hong Kong’s Hang Seng Index advanced by 2.5 per cent. Japan’s Nikkei 225 Index rose by 3.7 per cent. China’s Shanghai Composite Index appreciated by 1.1 per cent. Russia’s RTS Index rose by 1.6 per cent. India’s BSE Sens Index also rose by 1.1 per cent while Brazil’s Ibovespa Index posted average gain of 1.5 per cent.

Major African markets also showed positive sentiment. South Africa’s FTSE/JSE Index posted a week-on-week gain of 2.8 per cent. Egypt’s EGX 30 Index indicated average gain of 1.2 per cent while Kenya’s NSE 20 Index appreciated by 0.9 per cent. However, Ghana’s GSE Composite Index dipped by 0.2 per cent.

Analysts meanwhile remained cautious about the outlook for the Nigerian equities market, although improved macroeconomic direction is expected to impact the market positively.

“Our view continues to favour cautious trading owing to the fact the gains recorded this week were not broad-based. Nonetheless, we note that valuations remain attractive while price deterioration has resulted in expected dividend yields on some stocks rising significantly to levels on par with yields on Treasury bills. Hence, we advise that long-term investors consider appropriately timed investments,” Cordros Securities stated.

Most analysts believed the delivery of the presidential election judgement would spur government activities in the period ahead and provide additional impetus for market performance.

Managing Director, APT Securities & Funds Limited, Mallam Kasimu Garba Kurfi, said the decision of the presidential election tribunal would provide a clearer direction for the market.

“We are expecting positive response, especially in view of the early presentation of the underlying assets for the 2020 national budget,” Kurfi said.

Chief Executive Officer, Sofunix Investment and Com

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