Nigerian equities were almost on a tit-tat trading pattern as investors weighed dividend expectations against accrued capital gains and the overall outlook ahead of the change of government.
With nearly one decliner for every advancer, benchmark indices for the Nigerian equities market at the weekend indicated marginal average decline of 0.04 per cent, equivalent to net capital depreciation of N13 billion.
Trading pattern at the Nigerian Exchange (NGX) indicated a mix of profit-taking and bargain-hunting, with investors realigning their portfolios on the heels of the increase in Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN).
The apex bank had last week’s Tuesday announced increase in MPR by 50 basis points to 18 per cent.
Market analysts expected the increase to impact on dividend expectations in the new business year.
Managing Director, Arthur Steven Asset Management, Mr. Olatunde Amolegbe, said the increase in MPR could lead to higher finance costs for firms, which might cause profit squeeze.
According to him, with an expectation of a drop in the profit, investors would most likely ease up on the equities market with the expectation that yields will adjust upwards.
“However, if inflation is still not arrested, investors would most likely come back to the equities market as the only known hedge against inflation. In the fixed income market, we expect bearish trading to continue in the short term since the effective inflation adjusted return is still negative despite this increase in MPR,” Amolegbe said.
The All Share Index (ASI)- the value-based common index that tracks all share prices at the Exchange, dropped from its week’s opening index of 54,915.61 points to close weekend at 54,892.53 points. Aggregate market value of all quoted equities also declined from its opening value of N29.916 trillion to close weekend at N29.903 trillion.
The negative overall market position was driven by losses suffered by large and mid-cap stocks, especially within the industrial goods and consumer goods sectors.
The NGX 30 Index- which tracks the 30 largest quoted companies, dipped by 0.16 per cent during the week. The NGX Consumer Goods Index recorded the highest depreciation of 0.74 per cent. The NGX Insurance Index dropped by 0.53 per cent. The NGX Industrial Goods Index dipped by 0.49 per cent while the NGX Oil and Gas Index closed flat.
Meanwhile, the NGX Banking Index rose by 0.93 per cent. The NGX Pension Index- which tracks stocks that meet the guidelines for investment of pension funds appreciated by 0.16 per cent while the NGX Lotus Islamic Index- which tracks stocks that meet Islamic investment rules, also closed positive with average return of 0.23 per cent for the week.
There were 28 gainers to 27 losers during the week compared with 19 gainers and 47 decliners recorded in the previous week.
NCR Nigeria recorded the highest loss, in percentage terms, with a drop of 18.69 per cent to close at N2.35. Ikeja Hotels trailed with a loss of 18.25 per cent to close at N1.03. International Breweries lost 6.45 per cent to close at N4.35. Cadbury Nigeria dropped by 5.83 per cent to close at N11.30 while Multiverse Mining and Exploration declined by 5.80 per cent to close at N3.25 per share.
On the positive side, Sunu Assurances Nigeriarose by 9.09 per cent to close at 48 kobo. LASACO Assurance followed with a gain of 7.14 per cent to close at N1.05. NPF Microfinance Bank rose by 6.94 per cent to close at N1.85. Geregu Power added 6.25 per cent to close at N323 while Transcorp Hotels rallied 6.15 per cent to close at N6.90 per share.
Total turnover stood at 1.689 billion shares worth N11.066 billion in 14,019 deals as against 853.745 million shares valued at N11.841 billion traded in 18,543 deals two weeks ago.
The healthcare sector led the activity chart with 1.086 billion shares valued at N1.627 billion traded in 267 deals; thus contributing 64.32 per cent and 14.70 per cent to the total equity turnover volume and value respectively. The financial services sector followed with 379.556 million shares worth N4.547 billion in 6,711 deals while the conglomerates sector placed third with a turnover of 89.526 million shares worth N131.231 million in 534 deals.
The three most active stocks were Neimeth International Pharmaceuticals Plc, Transnational Corporation Plc and United Bank for Africa Plc, which altogether accounted for 1.248 billion shares worth N2.347 billion in 1,102 deals, contributing 73.89 per cent and 21.21 per cent to the total equity turnover volume and value respectively.
Analysts at Afrinvest Securities said they expected investors to cherry-pick on fundamentally sound tickers with history of attractive dividend payout ratios.
Analysts at Cordros Securities said they expected “cautious trading” that dominated last week to persist in the week ahead, as investors will likely be swayed by corporate actions as more companies release results.
“Nonetheless, we advise investors to seek trading opportunities in only fundamentally justified stocks as the weak macro story remains a significant headwind that could result in persistently weak sentiments,” Cordros Securities stated.