Nigeria: Stock Market Dips in July As Investors React to Weak Results

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As it was with the weather in the month of July, investors in the Nigerian equities market witnessed massive rain of losses weakening the gains made in the previous month.

This was due to negative sentiments fuelled by weaker-than-expected second quarter 2014 results across sectors as well as profit-taking from previous gains.

It was a three-day trading week as the Federal Government of Nigeria declared Monday and Tuesday 2014 a public holidays to mark the end of the holy month of Ramadan and Eid-el Fitr celebrations.

Trading resumed after the holiday last week recording two days of losses and a day of gain. Already dampened investors’ confidence was worsened when last Friday as financial results from the two major flour milling companies on the Nigerian Stock Exchange (NSE) were below expectations.

Flour Mills Nigeria Plc recoded a decline in profit for the year ended March 31, 2014 while Dangote Flour Plc sunk into deeper losses. The company reported a net loss of N4.3billion for the half year ended June 30, 2014.

The negative sentiments led to the NSE All-Share Index (ASI) and market capitalisation depreciating by 0.83 per cent to close last Friday at 41,934.40 and N13.847 trillion respectively.

Similarly, all the NSE sector indices depreciated during the week with the exception of the NSE Consumer Goods Index, NSE Oil and Gas Index and NSE Industrial Goods Index that appreciated during the week by 0.14 per cent, 3.93 per cent and 0.41 per cent respectively. But the NSE ASeM index closed flat.

The equities market had the previous week recorded five straight days of losses following weak sentiment fuelled by analysts’ prediction of a flattish to single digit growth for some banks.

However, some traders told THISDAY last week that the days ahead will be positive as the profit-taking activities would reduce and more investors scramble for undervalued stocks with strong full year results.

“We expect that positive momentum will commence towards the first half of next week profit-taking will reduce and investors might seek to capitalise on undervalued stocks particularly the banking stocks,” said a trader.

Summary of daily performance The market started on a positive note on Wednesday as the ASI appreciated by 0.20 per cent to close at 42,368.99 points, compared with the depreciation of 0.57 per cent recorded the previous Friday.

Consequently, the Year-to-Date (YTD) gain of the Index reached 2.52 per cent. The appreciation in the Index could be attributed to the gains recorded in the share prices of some highly capitalised stocks such as: Oando Plc, Dangote Cement Plc, Stanbic IBTC Plc, Zenith Bank Plc, and Lafarge WAPCO Plc amongst others.

Similarly, the market capitalisation appreciated by 0.20 per cent to close at N13.99 trillion, compared with the depreciation of 0.57 per cent recorded last Friday to close at N13.96 trillion. The total value of the stocks traded on the day on the floors of the NSE was N6.73 billion, down by 74.72 per cent from N26.62 million traded the previous Friday.

However, at the close of trading the next day, bearish sentiments in the market saw the index reverse the gains posted in the previous session. The intraday chart revealed that trading opened northwards but was heavily weighed down by Dangote Cement Plc which shaved off 214.22 points from the index.

At the close of trades, the All Share Index declined by 271.50 points or 0.64 per cent to close at 42,097.49 points while the corresponding market capitalisation was down by N89.65 billion to settle at N13.9 trillion. The mood in the market was also reflected in activity level as volume traded declined significantly by 50.3 per cent to 354 million.

However, value of transactions mildly improved by 2.7 per cent to N6.91 billion. Market sentiments waned as shown by decreased activity level and the continuous downturn in the market. Consequently, market breath index closed negative on account of 34 decliners relative to 25 gainers on the Bourse.

The oil & gas sector led the day’s performance chart recording a 1.17 per cent upsurge backed by renewed investors’ interest in Forete Oil Plc. Insurance and Consumer goods trackers also improved 0.30 per cent and 0.19 per cent accordingly.

However, the banking sub-sector closed in the red with a 0.79 per cent drop. The banking index was heavily depressed by price declines in tier one banks-FBN Holdings Plc, Zenith Bank Plc, and Guaranty Trust Bank Plc. The Industrial sector also closed negative with a 0.68 per cent drop on account of the drag in Dangote Cement Plc.

On Friday, which was the first day of the new month, the equities market started the month southwards, declining 0.39 per cent at the close of business. The recent decline of the benchmark index has been on the back of negative sentiments.

At the close of business last Friday, marginal gains by Forte Oil Plc and Flour Mills Nigeria Plc were offset by significant declines in the share prices of Guaranty Trust Bank Plc, Nestle Nigeria Plc and UBA Plc, which jointly shed 160.80 off the index.

At close of trades, the ASI stood at 41,934.43 points with a corresponding market capitalisation of N13.85 trillion. Overall market turnover weakened relative to the previous day’s levels as market activity thinned due to prominent negative sentiments. In all, 276.5 million units of shares valued at N5.94 billion were exchanged in 4,997 deals, with major sell-offs in Guaranty Trust Bank Plc accounting for 27.18 per cent of traded value.

 Market turnover A further analysis of trading results showed that investors traded 1.345 billion shares worth N19.580 billion in 17,075 deals on the floor of the Exchange in contrast to 1.778 billion shares valued at N38.103 billion that exchanged hands the previous week in 24,186 deals.
As usual the financial services industry led the activity chart in volume terms with 1.019 billion shares valued at N9.004 billion traded in 7,704 deals. The sector thus contributed 75.78 per cent and 45.98 per cent to the total equity turnover volume and value respectively.

The conglomerates industry followed with a turnover of 105.811 million shares worth 696.406 million in 1,262 deals. The third place was occupied by the Oil and Gas Industry with 88.513 million shares worth N2.692 billion in 3,157 deals.

Trading in the top three equities namely, Access Bank Plc, Wema Bank Plc and Transnational Corporation Of Nigeria Plc (measured by volume) accounted for 539.349 million shares worth N3.514 billion in 1,654 deals, contributing 40.10 per cent and 17.95 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 27,660 units of Exchange Traded Products (ETPs) valued at N613,729.40 executed in 13 deals compared with a total of 516,299 units valued at N10.120 million transacted the previous week in 17 deals.

Similarly, 77,480 units of FGN bonds valued at N90.277 million were traded this week in 8 deals compared with a total of 300 units of FGN bonds valued at N349, 812.46 transacted the previous week in 3 deals.

Gainers and losers Meanwhile, 27 equities that appreciated in prices during the week higher than 26 equities of the preceding week. 47 equities depreciated in prices lower than 54 equities of the preceding week, while 126 equities remained unchanged higher than 120 recorded in the preceding week.

The top 10 gainers for the week included: Forte Oil Plc (N12.90), Seven-Up Bottling Company Plc (N6.97), Flour Mills Nigeria Plc (N3.69), Ashaka Cement Plc (N2.73), StanbicIBTC Plc (N1.91), Oando Plc (N1.53), University Press (28 kobo) Evans Medical Plc (20 kobo), AG Leventis Plc (13 kobo), and Cutix Plc (nine kobo).

Conversely, the top 10 losers included: GlaxoSmithkline Consumer Nigeria Plc (3.98), GTB Plc (N2.20), FBN Holdings Plc (82 kobo), Red Star Express Plc (60 kobo), Skye Bank Plc (19 kobo), Fidson Plc (18 kobo), Diamond Bank Plc (35 kobo), UBA Plc (41 kobo). NEM Insurance Plc (six kobo), and Courtville Plc (three kobo).


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