Nigerian equities started the third quarter on a low note as a pronounced profit-taking trend compounded concerns over corporate earnings for first half to trigger strident portfolio realignments.
At the end of the first week in the third quarter, equities stood with a net capital loss of N265 billion. Average week-on-week decline at the Nigerian stock market stood at 1.99 per cent with more than three decliners for every advancer.
The slowdown at the Nigerian equities market also reflected the largely negative start for most African equities while the global equities markets showed mixed performance. However, the average year-to-date return at the Nigerian equities market remained high at 20.78 per cent, riding on the back of a N2.6 trillion rally in the second quarter.
The benchmark index for the Nigerian equities market, the All Share Index (ASI) of the Nigerian Stock Exchange (NSE), depreciated by 1.99 per cent from the week’s opening index of 33,117.48 points to close the week at 32,459.17 points. Aggregate market value of all quoted equities at the NSE also declined by 2.31 per cent or N265 billion to close the week at N11.187 trillion as against the week’s opening index of N11.452 trillion. The difference between the ASI and market value was due to the yet-to-be-fully adjusted impact of the delisting of Ashaka Cement during the week.
There were 16 gainers against 51 losers during the week compared with 40 gainers and 28 losers recorded in the previous week. Most sectoral indices also closed the week in the negative, underlining the widespread losses across the sectors. The NSE 30 Index, which tracks 30 most capitalised stocks at the Exchange, declined by 2.55 per cent. The NSE Banking Index dipped by 2.22 per cent.
The NSE Consumer Goods Index recorded the highest decline of 4.03 per cent. The NSE Oil and Gas Index dropped by 1.75 per cent while the NSE Pension Index, which tracks pension investment-compliant stocks, depreciated by 3.82 per cent. On the upside, the NSE Insurance Index appreciated by 1.10 per cent while the NSE Industrial Goods Index recorded a marginal return of 0.22 per cent.
Expectedly, stocks that had led the rally in the second quarter also led the profit-taking trend that started the third quarter. May & Baker Nigeria, which recorded the highest gain during the third quarter, led the decliners with a drop of 25.8 per cent to close at N2.88. Neimeth International Pharmaceuticals followed with a drop of 24.4 per cent to close at 65 kobo. Conoil dropped by 18.5 per cent to close at N36.31. Flour Mills of Nigeria lost 15.6 per cent to close at N22.78 while Julius Berger Nigeria depreciated by 14.25 per cent to close at N32.14 per share.
On the contrary, low-priced non-bank stocks led the advancers. Cutix Plc led the gainers with a gain of 10 per cent to close at N2.20. Continental Reinsurance followed with a gain of 9.24 per cent to close at N1.30. Honeywell Flour Mills rose by 7.95 per cent to close at N1.90. CAP added 6.25 per cent to close at N34 while Oando rose by 5.21 per cent to close at N7.68 per share.
Total turnover stood at 1.061 billion shares worth N12.295 billion in 18,847 deals as against a total of 1.171 billion shares valued atN11.458 billion traded in 13,763 deals in the previous week.
The financial services industry led the activity chart with 802.195 million shares valued at N7.331 billion traded in 11,334 deals; thus contributing 75.62 per cent and 59.63 per cent to the total equity turnover volume and value respectively. The conglomerates industry followed with 109.378 million shares worth N174.604 million in 1,024 deals while the third place was occupied by consumer goods industry with a turnover of 62.992 million shares worth N2.405 billion in 3,021deals.
The most active stocks were Zenith International Bank Plc, Transnational Corporation of Nigeria Plc and FBN Holdings Plc, which accounted for 317.099 million shares worth N3.223 billion in 3,823 deals, contributing 29.89 per cent and 26.21 per cent to the total equity turnover volume and value respectively.
There was also a deal for five units of Exchange Traded Products (ETPs) valued at N485 during the week compared with a total of 869,680 units valued at N19.150 million traded in 16 deals in the previous week.
In the sovereign debt segment, a total of 358 units of Federal Government Bonds valued at N344,611 were traded in seven deals compared with a deal for seven units valued at N16,487 struck in the segment two weeks ago.
The global equities market however started the third quarter on a mixed note with declines in United States of America, Japan and other markets counterbalanced by appreciations in United Kingdom, France, Germany and other markets.
African equities were largely negative. Egypt’s EGX Index dropped by 0.2 per cent while Kenya’s Nairobi Stock Exchange (NSE) Index declined by 0.7 per cent. Ghana’s Composite Index however showed a gain of 1.6 per cent.
In the other global markets, United States of America’s twin indices-S&P 500 Index and NASDAQ Index closed low. The NASDAQ declined by 0.6 per cent while S & P 500 Index was flat. Japan’s NIKKEI Index dropped by 0.2 per cent. Hong Kong’s HANG SENG Index dipped by 1.2 per cent while Russia’s RTS Index depreciated by 0.8 per cent. On the positive side, United Kingdom’s UK FTSE Index appreciated by 0.2 per cent. France’s CAC 40 Index and Brazil’s IBOVESPA Index inched up by 0.3 per cent each. China’s Shanghai Composite Index rose by 0.6 per cent while Germany’s XETRA DAX Index rose by 0.2 per cent.
As Nigerian quoted companies prepare to present their first half results to the market, most analysts agreed that corporate returns will largely determine the pricing direction in the trading sessions ahead.
“Investors will be looking at half-year 2017 earnings results due to be released in July to August for clues on how solid companies’ fundamentals are but we expect some early-bird investors to start taking positions ahead of the releases. Hence, we expect the bourse to recoup losses in trading sessions next week, barring negative earnings surprises,” Afrinvest Securities-a Lagos-based dealer at the NSE, stated in a preview.