Stock Market Records Marginal Decline, Set For Bulls' Return – Economic Confidential (press release)

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Nigerian Stock Exchange

Stock Market Records Marginal Decline, Set For Bulls’ Return

It was another negative close for the stock market last week with the Nigerian Stock Exchange (NSE) All-Share Index falling marginally by 0.16 per cent, compared with a decline of 1.13 per cent the previous week. Last week’s decline made it the third consecutive fall the market is recording. However, considering the performance, the return of the bulls is imminent. The market actually fell only on the first day of the week and rose for four days.

But the appreciation recorded could not offset the impact of the loss on the first trading day of the week. As a result, the NSE ASI fell by 0.16 per cent to close lower at 42,570.89, while market capitalisation ended at N15.277 trillion.

Similarly, all other indices finished lower during the week with the exception of the NSE Banking, NSE Insurance NSE CG Indices that rose by 1.52 per cent, 1.24 per cent and 0.27 per cent respectively.

Daily Performance

The equities market started the week on a negative note on Monday as the bears returned after three days of gains. After seven-days of bearish trend, the bulls had returned last Wednesday and remained in control for the rest of the trading days.

However, the losses recorded in the two days outweighed the gains recorded in three days, making the market to close on bearish note last week. But as the trading resumed for the week on Monday, a decline in bellwether stocks depressed the NSE ASI by 1.53 per cent to close at 41,988.18. Similarly, market capitalisation went down by N233.5 billion to be at N15.1 trillion.

Thirty-two stocks depreciated as against 16 stocks that appreciated. Bellwether stocks such as Dangote Cement (-3.3 per cent), Nestle Nigeria Plc (-4.1 per cent), FBN Holdings Plc (-4.8 per cent) and Nigerian Breweries Plc (-1.6 per cent) were among the price losers. Linkage Assurance Plc led the price gainers’ chart with 9.0 per cent, trailed by Livestock Feeds Plc with 5.0 per cent. Fidson Healthcare Plc and AXA Mansard Insurance Plc added 4.9 per cent apiece. Jaiz Bank Plc and May & Baker Nigeria Plc chalked up 4.0 per cent and 3.5 per cent apiece among others.

In terms of sector performance it was mixed as two of five indices trended southwards, two closed in the green and the remaining one was falt.

The NSE Consumer Goods Index led the losers’ chart with 1.6 per cent, followed by the NSE Industrial Goods Index with 1.5 per cent.

The market recovered on Tuesday, inching up by 0.38 per cent to close at 42,148.40. The appreciation recorded in the share prices of Dangote Cement, UBA, Nestle, PZ Cussons, and Cadbury were mainly responsible for the gain recorded in the Index

“Market outlook remained positive with the possibility of a rebound as investors take advantage of low valuations,” market operators said.

On Wednesday banking stocks rebounded as apprehension among investors over the Central Bank of Nigeria (CBN)’s directive to banks on payment of dividends reduced.

The CBN had, at the weekend, issued a new policy, which among others, stipulates that banks or discount houses that do not meet the minimum capital adequacy ratio shall not be allowed to pay dividend.

According to the CBN, banks that have a Composite Risk Rating (CRR) of “high” or a non-performing loan (NPL) ratio of above 10 per cent shall not be allowed to pay dividend; and those that meet the minimum capital adequacy ratio (CAR) but have a CRR of “Above Average” or an NPL ratio of more than five per cent but less than 10 per cent shall have dividend payout ratio of not more than 30 per cent.

The central bank, however, pointed out that there shall be no regulatory restriction on dividend pay-out for banks that meet the minimum capital adequacy ratio, have a CRR of “low” or “moderate” and an NPL ratio of not more than five per cent.

When the news of the policy hit the market some investors dumped their banking shares on Monday and Tuesday. However, fewer investors sold off their banking shares, while more are buying. A development that saw more banking stocks appreciate yesterday.

Eight banks appreciated in value, making the NSE Banking Index to record the highest gain of 1.1 per cent.

The banks that appreciated were: Sterling Bank Plc (3.8 per cent); United Bank for Africa Plc (3.2 per cent); FBN Holdings Plc (2.7 per cent); Access Bank Plc (1.6 per cent); GTBank Plc (1.5 per cent); Diamond Bank Plc (0.81 per cent) and ETI Plc (0.2 per cent).

An investment banking firm, Cordros Capital Limited (CCL) has said the CBN’s policy would not affect dividend payouts in the medium term.

In the report yesterday, the investment banking firm, said based on the directive by CBN and contrary to earlier jitters that trailed the release of the circular, they think the directive more appropriately reveals the apex bank’s commitment to financial stability.

“That said, it is our view that the CBN’s latest directive is unlikely to, in the medium term at least, affect the dividend payouts we expect from the banks covered in this report. We should mention that many of the banks’ dividend payment ratios (DPRs), in recent years, have barely reached the peak of the CBN’s requirements on DPR,” they said.

The bullish sentiments in the equities market was sustained for the third day on Thursday as the index 0.28 per cent to close at 42,258.78. Similarly, market capitalisation added N36.1 billion to close N15.17 trillion.

Sustained buying interest in banking stocks, especially in United Bank for Africa Plc, FBN Holdings Plc, Zenith Bank Plc and Access Bank Plc bolstered the performance. The growth of yesterday lifted the year-to-date return to 10.5 per cent.

A total of 24 stocks appreciated while 17 stocks depreciated yesterday. Although gains by banking stocks led to the positive close, Japaul Oil and Maritime Plc led the price gainers’ with 5.4 per cent, trailed by WAPIC Insurance Plc with 4.9 per cent. Total Nigeria Plc with 4.7 per cent, while Livestock Feeds Plc garnered 4.5 per cent.

Other top price gainers included: AIICO Insurance Plc (4.2 per cent); Transcorp Plc (3.8 per cent); UBA, FBN Holdings Plc (3.1 per cent apiece); University Press Plc (2.3 per cent); Jaiz Bank Plc (2.0 per cent); African Prudential Plc (2.0 per cent).

Conversely, UNIC led the price losers’ chart with 6.6 per cent, trailed by Courtville Plc with 5.5 per cent. A.G Leventis Plc shed 5.0 per cent. Caverton Offshore Support Group Plc went down by 4.9 per cent, while Dunlop Nigeria Plc closed 4.3 per cent loser. Fidson Healthcare Plc lost 3.1 per cent, just as Skye Bank Plc and Wema Bank Plc shed 2.8 per cent apiece.

Performance across sectors was largely positive as all indices, save for the NSE Consumer Goods Index shed 0.3 per cent. The NSE Banking Index and NSE Oil & Gas Index led with 0.7 per cent apiece. The NSE Insurance Index and NSE Industrial Goods Index garnered 0.3 per cent and 0.2 per cent respectively.

Market Turnover

Meanwhile, a total turnover of 2.018 billion shares worth N21.740 billion in 25,496 deals were traded last week, compared with 2.940 billion shares valued at N27.924 billion that exchanged hands the previous week in 28,567 deals.

The Financial Services Industry led the activity chart with 1.520 billion shares valued at N12.648 billion traded in 16,225 deals, thus contributing 75.3 per cent and 58.2 per cent to the total equity turnover volume and value respectively.

The Consumer Goods Industry followed with 130.660 million shares worth N6.912 billion in 4,168 deals, while the third place was occupied by Oil and Gas

Industry with a turnover of 130.163million shares worth N251.941 million in 1,420 deals.

Trading in the top three equities namely – FBN Holdings Plc, Fidelity Bank Plc and Skye Bank Plc accounted for 567.824 million shares worth N3.456 billion in 4,891 deals, contributing 28.14 per cent and 15.9 per cent to the total equity turnover volume and value respectively.

Price Gainers and Losers

In all 54 equities depreciated in price, higher than 48 equities of the previous week, while 23 others appreciated lower than the 30 gainers of the previous week.

Conoil Plc led the price losers with 18.3 per cent, trailed by Courtville Business Solutions Plc. UNIC Diversified Holdings Plc went down by 15.6 per cent, just as Unity Bank Plc and DN Tyre & Rubber Plc lost 12.8 per cent and 12 per cent respectively.

Other top price losers include: Wema Bank Plc (11.7 per cent); FCMB Group Plc (11.2 per cent); Caverton Offshore Support Group Plc (9.4 per cent); Vitafoam Nigeria Plc (8.5 per cent) and A.G Leventis Nigeria Plc (8.3 per cent).

On the positive side, Livestock Feeds Plc led the price gainers with 19.0 per cent followed by Japaul Oil & Maritime Services Plc that appreciated by 16.6 per cent.

CAP Plc garnered 7.8 per cent, just as AIICO Insurance Plc and United Bank for Africa Plc chalked up 7.1 per cent and 6.5 per cent in that order. Other top price gainers included: Fidson Healthcare Plc (6.4 per cent); First Aluminium Nigeria Plc (5.4 per cent); University Press Plc (5.2 per cent) Cadbury Nigeria Plc (4.9 per cent) and Linkage Assurance Plc (4.5 per cent).

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