•Shareholders call for strong judicial system

Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), has charged capital market stakeholders to uphold high ethical standards while promoting initiatives that advance the cause of the Nigerian capital market.

Director General, Securities and Exchange Commission (SEC), Mr. Lamido Yuguda, said stakeholders in the capital market must uphold high ethical standards and promote new strategies to strengthen investors’ confidence.

Yuguda spoke at the triennial delegates’ conference of the Independent Shareholders Association of Nigeria (ISAN). The theme of the conference was “Administration of Justice in Nigeria and Our Economy”.

He said it was important to strengthen accountability among market participants in the Nigeria capital market.

He noted that the judiciary has been contributing to the development of the capital market through its role of adjudicating over matters involving stakeholders in the capital market.

 “As SEC continues its important regulatory work of protecting both foreign and domestic investors who invest their funds in the Nigerian capital market, we will continue to partner with and engage the judiciary, and other relevant stakeholders.

“In an increasingly competitive global environment for capital flows, foreign investors consider the strength and independence of a regulator in their investment decisions.

“It is, therefore, a matter of urgent national priority to continue to send the right signals to the investing world that the Nigerian capital market is indeed soundly regulated by a strong and independent SEC, devoid of conflicting interference from any arms of Government,” Yuguda said.

He pointed out that SEC has over the years enjoyed the support of the nation’s courts in the quest to build a vibrant capital market that can contribute to achieving national objectives.

He however noted that there was room for reform in the judiciary especially on issues around investor protection and dispute resolution mechanisms in the Nigerian capital market.

Yuguda, who was special guest at the event, was represented by Director, Lagos Zonal Office of the Commission, Mrs Hafsat Rufai.

He commended ISAN as one of the foremost shareholders’ advocacy groups in the country, which has been promoting activities aimed at developing the nation’s capital market.

 “We are proud to be associated with your core activities which centre on minority shareholder protection, advancement of corporate governance and development of deep and robust capital market,” Yuguda said.

National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Dr. Anthony Omojola explained that the association has been promoting the interest of retail or small shareholders especially in the capital market where shares of publicly quoted companies are listed.

He called on the federal government to strengthen the capacity of the judicial system for economic growth and development.

According to him, the nation’s judicial system needs to be reformed in order to stabilise and stimulate the growth of the economy.

He said that there was the need to push for a better funding of the judiciary, establish measures that will deter corrupt practices capable of hampering economic growth.

He called for improved service condition for judicial officers in order to ensure efficient and transparency in the system.

In his paper titled, ‘The Nigerian Judiciary and The Economy”, A Senior Advocate of Nigeria (SAN), Barrister Chuks Nwachuku, noted that a good judiciary is the foundation of every viable and vibrant economy.

He said the confidence that an investor has in the legal system affects the quantum of investment he or she would be willing to make in the country.

He noted that the issue of delay in the judiciary system would continue to drag Nigeria’s economic growth.

According to him, there can be no lasting solution to the issue of economic growth unless the judiciary understands its role as a catalyst for the growth of the economy through quick determination of commercial disputes and criminal trials.

He pointed out that the judiciary needs to answer hard questions about its contribution to the Gross Domestic Product (GDP) of the country.

On the issue of delay in justice, he said that Nigeria represents a case study on how to deny justice by permanently postponing it.

He lamented that it was unfortunate that different cases that were filed 10 to 12 years are still in court and the appeals are still being considered at the Supreme court.

“In my over three decades of being a litigation lawyer in Nigeria, my summation of the system is that justice is a miracle that happens once in a while,” Nwachuku said.

He said that delay in the courts has led to congestion, with such congestion at the appellate courts having its own negative effects on the lower courts.

He explained that the judiciary is a reference to the entire governmental institutional framework and processes for dispute resolution in the country, noting that a good judiciary is the foundation of every viable and vibrant economy in the free world.

Investors staked about N1.97 trillion on Nigerian equities in the third quarter as stable corporate earnings continue to stimulate investors’ appetite for Nigerian quoted stocks.

Trading data released at the weekend indicated that total transactions for the nine-month period ended Septembe 30, 2022 stood at N1.969 trillion, 47.8 per cent or N637 billion above N1.332 trillion recorded in comparable period of 2021.

The report underlined that while foreign investors had also shown improved appetite for Nigerian stocks, the performance of the domestic market was driven by Nigerian investors. Transactions by domestic investors accounted for 83.70 per cent of total transactions at the Nigerian market in third quarter 2022 compared with 78.43 per cent in third quarter 2021.

The report showed improvements in transactions at the institutional and retail ends of the market. Domestic institutional investors closed deals worth N1.648 trillion in third quarter 2022 as against N1.045 trillion traded in corresponding period of 2021.

Total value of transactions by retail investors also improved from N436.53 billion in third quarter 2021 to N556.78 billion in third quarter 2022.

Nine-month pricing trend analysis had shown that Nigerian equities posted average return of 14.77 per cent, equivalent to net capital gain of about N3.3 trillion for the nine-month period.

The nine-month performance was however moderated by losses recorded in the last three months. Investors lost about N1.50 trillion between July and September 2022 alone as escalated global energy and commodity crises triggered massive portfolio realignments across markets.

Benchmark indices at the Nigerian stock market indicated average negative return of -5.39 per cent for the three-month period ended September 2022,  equivalent to net capital depreciation of N1.50 trillion for the three-month period.

The third-quarter performance underlined sustained decline in recent months with investors losing an average of 1.63 per cent or N430 billion in September alone. The market had lost about N28.3 billion in August and suffered its highest loss within the quarter at the onset with a N772 billion loss in July.

The All Share Index (ASI)- the value-based index that tracks all share prices at the Nigerian Exchange (NGX) closed September 2022 at 49,024.16 points as against 51,817.59 points recorded at the beginning of July 2022.

Aggregate market value of all quoted equities dropped from July 2022’s opening value of N27.935 trillion to close September 2022 at N26.451 trillion, a decrease of about N1.50 trillion. The almost perfect correlation between market capitalisation and ASI underlined that the depreciation was mainly due to decline in share prices rather than primary market changes such as reduction in number of shares.

Segmental analysis showed no safe haven for investors during the period. All sectoral indices closed negative, driven by selloffs within the large and mid-cap stocks. The NGX 30 Index- which tracks the 30 largest stocks at the NGX, posted average loss of 7.45 per cent in the third quarter. The NGX Banking Index- the most active index, declined by 4.67 per cent.

Also, the NGX Insurance Index, the most populous index, dropped by 5.46 per cent during the period. The NGX Industrial Goods Index recorded the highest decline of 17.61 per cent within the three-month period. The NGX Oil and Gas Index depreciated by 6.80 per cent in third quarter 2022. The NGX Consumer Goods Index declined by 6.30 per cent. The NGX Pension Index, which tracks stocks in line with the stringent pension funds’ investment guidelines, depreciated by 9.00 per cent while the NGX Lotus Islamic Index- which tracks equities that comply with the more stringent Islamic investment rules, declined by 6.51 per cent in the third quarter.

Analysts attributed the market performance to the worsening domestic and global economic risks characterised by rising inflation and higher interest rates.

Most analysts remained cautious of the outlook in the months ahead citing worsening economic fundamentals and political risks.

Meanwhile, total turnover at the NGX last week stood at 598.817 million shares worth N14.234 billion in 15,859 deals, in contrast with a total of 938.020 million shares valued at N16.701 billion traded in 15,700 deals two weeks ago.

The financial services industry remained atop activity chart with 398.264 million shares valued at N2.219 billion traded in 8,247 deals; thus contributing 66.51 per cent and 15.59 per cent to the total equity turnover volume and value respectively. The conglomerates industry followed with 37.514 million shares worth N49.503 million in 393 deals. The information and communication technology (ICT) industry placed third with a turnover of 30.708 million shares worth N8.383 billion in 1,218 deals.

The three most active stocks were Mutual Benefits Assurance Plc, Sterling Bank Plc and Fidelity Bank Plc, which altogether accounted for 181.347million shares worth N248.920 million in 854 deals, representing 30.28 per cent and 1.75 per cent of the total equity turnover volume and value respectively.

The ASI closed weekend at 43,912.64 points as against the week’s opening index of 44,396.73 points, indicating a drop of 1.09 per cent. . Aggregate market value of all quoted equities also closed weekend down at N23.918 trillion compared with the week’s opening value of N24.182 trillion. The bearish trend depressed the average year-to-date return to 2.80 per cent at the weekend.

Three companies are raising about N40 billion in new capital from the general investing public as companies increasingly resort to non-equity financing options.

Offer documents obtained at the weekend showed that three companies in the financial services sector are raising a total of N39.5 billion through the issuance of commercial papers and non-interest bonds.

The three companies currently in the primary market raising capital include FSDH Merchant Bank, TAJBank and VFD Group Plc.

Market analysts said the increasingly sizeable flow of debt issuances and the combination of interest and non-interest instruments showed the diversification and depth of the Nigerian capital market.

Analysts noted that additional capitalisation of financial services companies could also indirectly lead to extended financial supports to other businesses. 

FSDH Merchant Bank is raising about N24.5 billion through the issuance of the Series 8, Series 9, and Series 10 of its commercial papers (CP). It had earlier registered a N40 billion CP issuance programme.

The wholesale bank is offering three tranches of 90-day, 152-day and 180-day CPs to raise a total of N24.5 billion. FSDH Merchant Bank is offering 15.00 per cent implied yield and 14.4650 per cent discount rate for 90-day CPs. It is also offering 16.00 per cent implied yield and 15.0005 per cent discount rate for 152-day CPs while subscribers to 180-day CPs will receive implied yield of 17.00 per cent and discount yield of 15.6850 per cent.

FSDH Merchant Bank will use the net proceeds of the issuance to fund short-term working capital and other general corporate requirements.

TAJBank, a national non-interest bank, under the first tranche of its Sukuk issuance programme, is raising up to N10 billion through its special purpose vehicle- Taj Sukuk Issuance Programme SPV Plc.

The company is offering series 1 Mudarabah Sukuk at N1,000 per Sukuk certificate with a projected profit of 15 per cent per annum.

The net proceeds of the Sukuk will be used by TAJBank as additional Tier-1 Capital under the capital regulation and will be used by the bank to support its Tier-1 capital for the purpose of maintaining its capital adequacy and for its general corporate business activities.

VFD Group- a proprietary investment holding group, is raising N5 Billion under its Series 1 commercial paper. The net proceeds of the offer will be used to support the company’s short-term working capital and funding requirements.

VFD Group’s new capital will strengthen VFD Group’s investments in key sectors of the economy. VFD Group seeks out viable opportunities that cater to the investment needs of retail and institutional investors across all tiers for direct market gain. The firm leverages sound investment expertise and deep knowledge of market fundamentals into securing investments that yield optimum returns to its shareholders.

The core of VFD Group’s business strategy is unlocking opportunities for value creation in the Nigerian and African informal sector while creating innovative and accessible products and solutions within the formal sector.

The firm’s portfolio spans financial services, asset management, real estate, and fintech and include companies such as Abbey Mortgage Bank, Tempo Electric, Piggy Vest and VFD Microfinance Bank.

Nigerian equities closed weekend with a net capital depreciation of N1.73 trillion as a massive selloff in the stock market’s most capitalised stock-Airtel Africa Plc; overshadowed the overall market situation.

Benchmark indices for Nigerian equities showed average return of -6.67 per cent for the Nigerian market, contrary to the generally positive overall market trend in the global equities markets.

The decline depressed the positive average year-to-date return at the Nigerian market to 3.93 per cent, fuelling fears that the market may be in line for its first negative full-year return in three years.

Airtel Africa, which listed by way of introduction at the Nigerian Exchange (NGX) , came under intense sell pressure during the week, dragging along the entire market as investors scurried to adjust their portfolio positions.

Airtel Africa’s share price declined by 27.10 per cent to close weekend at N1,312.20 per share, the highest loss during the week.

Market analysts attributed the selloff to ordinary trading dynamics but noted that the impact of the active trading on the telecommunication group’s shares on the entire market highlighted the dominance of few stocks at the Exchange.

The All Share Index (ASI)- the overall value-based index that tracks share prices of all quoted equities, slumped to 44,396.73 points at the weekend as against its week’s opening index of 47,569.04 points.

Aggregate market value of all quoted equities also dropped correspondingly from the week’s opening value of N25.910 trillion to close weekend at N24.182 trillion, a decrease of N1.728 trillion.

Pricing trend analysis however showed an underlying positive sentiment with more gainers than losers and mixed performance across the sectors. There were 33 advancers to 29 decliners last week compared with 25 gainers and 24 losers recorded in the previous week.

The NGX Industrial Goods Index led the positive sectors with average return of 3.22 per cent. The NGX Banking Index followed with average gain of 1.15 per cent. The NGX Pension Index- which tracks stocks that comply with pension funds investment guidelines, posted average gain of 0.58 per cent.

However, the NGX 30 Index- which tracks the 30 largest stocks at the market, depreciated by 5.68 per cent, highlighting the bearishness within the blue chips. The NGX Insurance Index dropped by 3.72 per cent.The NGX Consumer Goods Index slipped by 0.88 per cent. The NGX Oil and Gas Index dipped by 1.45 per cent while the NGX Lotus Islamic Index- which tracks stocks that comply with Islamic investment rules, declined by 6.21 per cent.

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Other top losers included NEM Insurance Plc and Beta Glass Plc, which dropped by 9.98 per cent each to close at N4.42 and N41.50 per share respectively. Royal Exchange declined by 9.78 per cent to close at 83 kobo. MRS Oil and Gas lost 9.76 per cent to close at N12.95 while Aluminium Extrusion Ind declined by 9.72 per cent to close at N6.50 per share.

On the positive side, Academy Press led the gainers with a gain of 11.45 per cent to close at N1.46. Fidelity Bank followed with a gain of 10.14 per cent to close at N3.80. United Capital rose by 10.13 per cent to close at N12.50. BUA Cement rose by 9.73 per cent to N62 per share. PZ Cussons Nigeria added 9.52 per cent to close at N9.20 while University Press chalked up 9.33 per cent to close at N1.64 per share.

The momentum of activities also improved considerably with total turnover of 938.020 million shares worth N16.701 billion in 15,700 deals compared with a total of 491.815 million shares valued at N11.922 billion traded in 14,350 deals in previous week.

The financial services sector remained atop activity chart with 501.278 million shares valued at N5.080 billion traded in 8,279 deals; thus contributing 53.44 per cent and 30.42 per cent to the total equity turnover volume and value respectively. The information and communication technology (ICT) sector followed with 316.347 million shares worth N8.729 billion in 1,249 deals while the oil and gas sector placed third with a turnover of 28.244 million shares worth N983.561 million in 846 deals.

The trio of CWG Plc, Guaranty Trust Holding Company Plc and Fidelity Bank Plc were the most active stocks, altogether accounting for 490.324million shares worth N2.905 billion in 2,860 deals, representing 52.27 per cent and 17.39 per cent of the total equity turnover volume and value respectively.

“In the coming week, we anticipate the bearish sentiment would linger as investors position in the fixed income space given the spurring yield environment, especially after the bond auction on Monday,” Afrinvest Securities stated at the weekend.

Telecommunication companies in Nigeria and other Sub-Saharan Africa (SSA) have potential to sustain impressive growths and deliver higher returns as the region moves faster towards digitization.

In its maiden report on the telecommunication sector in SSA titled “Powering the digital economy”, Vetiva stated that there were huge opportunities in the telecommunications space in the region, especially in the area of internet services.

The report released at the weekend outlined that the SSA region has seen burgeoning demand for data services which has contributed to growth in recent period.

Vetiva noted that the low broad-band penetration in the region represents huge opportunity for continuing strong growth in the mid-to-long term.

Telecommunications Analyst at Vetiva, Victoria Ejugwu explained that the telecommunication industry still holds huge opportunity for growth given relatively low internet coverage rate noting that SSA was growing at a faster rate than the rest of the world, both in economic terms and in population rate.

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According to her, the region’s young and growing population that can be characterized as digital natives, possesses a huge market for telcos in terms of demand for connectivity. Also, increasing network coverage will further help to unlock revenue for telecom operators.

She pointed out that telcos were making diversification efforts into the mobile money space, and this should further cement growth prospects.

She noted that the region possesses one of the largest unbanked populations, and that telcos were positioned to close the financial inclusion gap and drive the region to compete with the global market.

“Telcos’ reach to customers cannot be overemphasized and there is a overarching role for them to play for the region to achieve success in financial inclusion,” Ejugwu said.

Vetiva however highlighted that downside risk to growth remains weak macro-economic factors, which have dwindling effect on purchasing power, which might ultimately dampen demand for telco services.

According to Vetiva, the changing regulatory landscape across SSA could also be a challenge for telecom operators, as the operations of telcos can be materially affected by sudden adverse policies implemented by the region’s regulators.

“In Nigeria, we saw the negative effect the Nigerian Communications Commission (NCC)’s SIM registration embargo had on mobile subscriber base in the first half of 2021. Also, more recently, the Communications Authority of Kenya gave a directive to mobile network operators to block SIM cards that were yet to be registered. However, despite these regulatory drawbacks, the telecom sector has proved to be resilient, and has maintained a growth trend which surpasses the region’s economic growth,” the report stated.

Nigeria’s premier non-interest bank, Jaiz Bank Plc, had a seamless management transition at the weekend with the assumption of duty by Dr. Sirajo Salisu as the new managing director of the bank.

Sirajo took over from Mr. Hassan Usman whose tenure ended after retirement on October 15, 2022.

Sirajo, a former executive director at the bank, assured all stakeholders of his commitment to building on the achievements recorded by Usman, the longest-serving managing director of the 10-year old bank.

“As we look ahead into the next phase of our bank, we will continually show our best, and meet the challenges of our world so that we can build a future in which we thrive together,” Sirajo said.

Until his appointment, the new managing director had  held several senior executive positions in the bank including regional manager for southern operations, chief risk officer and executive director, business development for the northern region. He was credited with providing key strategic direction that led to the growth of the bank’s business in the northern region.

Prior to joining Jaiz Bank in 2016, Sirajo had served as the managing director of Arab Gambian Islamic Bank (AGIB) for six years.

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Sirajo is a 1991 BSc. Economics graduate from Bayero University Kano. He has an M.Sc. in Monetary Economics from the University of Port Harcourt and Ph.D. in Agricultural Economics from Abubakar Tafawa Balewa University, Bauchi. He also obtained another Master’s Degree in Islamic Banking and Finance from Bayero University, Kano. He is a Fellow of the Institute of Credit Administration (FICA) and Honorary Senior Member of the Chartered Institute of Bankers of Nigeria (CIBN).

The board of the bank expressed optimism that Sirajo would positively impact the performance of the bank.

Meanwhile, Jaiz Bank has provided free medical checks to its customers and staff as part of activities to mark customers’ service week.

The bank had joined organisations all over the world to celebrate customers’ service week, which is celebrated every first week in October.

Assuring customers of better services and innovations, the management of the bank said that as the bank celebrated its 10th year in existence, it was important to underscore the roles of customers in the journey of the bank.

The bank stated that it decided to provide free medical check to its stakeholders as part of its corporate social responsibility (CSR).

“You have been our inspiration in doing our very best and exceeding your expectations is our constant goal while focusing on innovations to achieve our mission of making life better through ethical finance,” the bank stated.

• Stocks reverse losses with N119b gain

• Guaranty Trust leads activities

• Geregu Power loses N27.25b

Investors have staged a major comeback to Nigerian equities after recent price depreciation enhanced fair value and potential returns for several stocks.

All major benchmark indices at the stock market closed weekend positive with widespread positive sentiment across most sectors of the market.

Average return for the Nigerian equities at the weekend stood at 0.46 per cent, equivalent to net capital gains of N119 billion within the four trading sessions of the week.

The Nigerian market outperformed global indices for emerging and frontier markets and ranked within the positive group in a week characterised by mixed performance across the global markets.

With more advancers than decliners, the average year-to-date return rode on the back of the rally to 11.36 per cent, sustaining expectation that the Nigerian market may be on course to its third positive consecutive annual return.

The All Share Index- the value-based common index that tracks all share prices at the Nigerian Exchange (NGX) closed weekend at 47,569.04 points as against the week’s opening index of 47,351.43 points. Aggregate market value of all quoted equities also trended upward simultaneously from the week’s opening value of N25.791 trillion to close weekend at N25.910 trillion.

The concurrence of the ASI and market capitalisation implies that the increase in market value was driven mainly by share price appreciation, rather than primary market activities such as listing of new shares or revaluation and splitting of existing shares.

Most sectoral indices also closed positive, underlining the widespread bargain-hunting that drove share pricing during the week. The NGX 30 Index- which tracks the 30 largest stocks at the Exchange, recorded above average growth of 0.65 per cent. The NGX Industrial Goods Index recorded the highest gain of 3.17 per cent. The influential NGX Banking Index rose by 1.93 per cent. The NGX Insurance Index- which tracks the most populous sector at the market, posted average return of 1.72 per cent for the week. However, the NGX Oil and Gas Index depreciated by 2.13 per cent while the NGX Consumer Goods Index dropped by 0.74 per cent.

Meanwhile, the NGX Pension Index- which tracks portfolios that meet the investment guidelines for pension funds, rose by 0.38 per cent while the NGX Lotus Islamic Index- which tracks stocks that comply with Islamic investment rules, recorded above-average return of 0.90 per cent.

Total turnover stood at 491.815 million shares worth N11.922 billion in 14,350 deals last week compared with a total of 586.939 million shares valued at N8.837 billion traded in 17,183 deals two weeks ago.

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The financial services sector led the activity chart with 346.661million shares valued at N3.757 billion traded in 7,427 deals; thus contributing 70.49 per cent and 31.51 per cent to the total equity turnover volume and value respectively. The information and communication technology (ICT) industry followed with 40.475 million shares worth N3.982 billion in 1,060 deals while the conglomerates sector placed third with a turnover of 20.313 million shares worth N28.929 million in 356 deals.

Investors showed the strongest appetite for shares of Guaranty Trust Holding Company Plc, Mutual Benefits Assurance Plc and FBN Holdings Plc. The three most active stocks accounted for 211.080 million shares worth N2.478 billion in 2,834 deals, contributing 42.92 per cent and 20.78 per cent to the total equity turnover volume and value respectively.

Also, a total of 1,192 units of exchange traded products (ETPs) valued at N2.087 million were traded last week in 28 deals compared with a total of 1,667 units valued at N264,986 traded in 19 deals two weeks ago.

At the secondary debt market, a total of 13,882 bond units valued at N13.879 million were in 12 deals compared with a total of 4,649 bond units valued at N4.768 million swapped in 16 deals two weeks ago.

There were 25 gainers to 24 losers last week compared with 11 gainers and 46 losers recoded in the previous week. May & Baker Nigeria led the gainers, in percentage terms, with a gain of 13.82 per cent to close at N4.20 per share. Ikeja Hotel followed with a gain of 9.73 per cent to close at N1.24. Neimeth International Pharmaceuticals rose by 9.52 per cent to close at N1.38. Coronation Insurance appreciated by 9.37 per cent to close at 35 kobo. Honeywell Flour Mills added 8.84 per cent to close at N2.34. BUA Cement rose by 8.65 per cent to close at N56.50 per share. Africa Prudential chalked up 8.0 per cent to close at N5.40. Sovereign Trust Insurance rose by 7.69 per cent to close at 28 kobo. Guaranty Trust Holding Company rose by 5.29 per cent to close at N17.90 while Access Holdings appreciated by 5.26 per cent to close at N8 per share.

On the negative side, U A C of Nigeria led the decliners with a drop of 12.20 per cent to close at N9 per share. FTN Cocoa Processors dropped by 10 per cent to close at 27 kobo per share. Global Spectrum Energy Services declined by 9.82 per cent to close at N2.48. Academy Press depreciated by 9.66 per cent to close at N1.31. Geregu Power, which had rallied after a momentous listing by introduction, melted with a loss of 9.02 per cent to close at N110 per share. R T Briscoe lost 8.82 per cent to close at 31 kobo. University Press declined by 8.54 per cent to close at N1.50 while Cutix depreciated by 8.82 per cent to close at N2 per share.

Many analysts however expected the market to swing between profit-taking and bargain-hunting in the weeks ahead as high yield in the fixed-income market counteracts third quarter earnings season.

“We project a muted performance in the local bourse next week barring any positive catalyst,” Afrinvest Securities stated.

Analysts at Cordros Securities said investors might be reluctant to leave their gains in the market, thus raising expectation of intermittent profit-taking in the period ahead.

“However, we expect this (profit-taking) to be tempered by bargain-hunting activities from early birds ahead of the third quarter 2022 earnings season. Notwithstanding, we advise investors to take positions in only fundamentally sound stocks as the fragility of the macro environment remains a significant headwind for corporate earnings,” Cordros Securities stated.

Investors at the Nigerian equities market closed weekend with a net loss of N901.98 billion as increased selloffs forced most stocks to close at lower prices.

Benchmark indices for Nigerian equities closed weekend with average decline of 3.41 per cent, equivalent to net capital depreciation of N901.98 billion. The bearishness depressed the average year-to-date return to 10.85 per cent.

With more than four decliners for every advancer, the general market sentiment was negative and there were almost no safe havens for investors.

The All Share Index (ASI)- the value-based common index that tracks all share prices at the Nigerian Exchange (NGX), dropped from its week’s opening index of 49,024.16 points to close weekend at 47,351.43 points. Aggregate market value of all quoted equities also declined from its opening value of N26.451 trillion to close lower at N25.791 trillion. The decline in market capitalization was moderated by the listing of the N250 billion Geregu Power during the week.

All sectoral indices closed in the red with the influential banking sector index leading with a drop of 3.37 per cent. The NGX Insurance Index dropped by 1.16 per cent. The NGX Oil and Gas Index dipped by 1.02 per cent. The NGX Consumer Goods Index slipped by 0.56 per cent while the NGX Industrial Goods Index lost 0.33 per cent. The NGX 30 Index- which tracks the 30 largest stocks at the Exchange had declined by 3.45 per cent, underlining the losses suffered by large-cap stocks. The NGX Pension Index, which tracks stocks specially screened in line with pension investment guidelines, dropped by 2.31 per cent while the NGX Lotus Islamic Index- which tracks portfolios that comply with Islamic investment rules, declined by 3.20 per cent.

There were 11 gainers to 46 losers last week as against 25 gainers and 33 losers recorded in the previous week.  Nascon Allied Industries led the losers with a drop of 13.64 per cent to close at N9.50. Cornerstone Insurance dropped by 10.71 per cent to close at 50 kobo. Neimeth International Pharmaceuticals, May and Baker Nigeria and Airtel Africa lost 10 per cent to close at N1.26, N3.69 and N1,800 respectively. Presco dropped by 9.99 per cent to close at N128.35 while Okomu Oil Palm declined by 9.98 per cent to close at N169.50 per share.

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Total turnover dropped to 586.939 million shares worth N8.837 billion in 17,183 deals during the four-day trading week as against a total of 1.005 billion shares valued at N10.406 billion traded in 17,844 deals two weeks ago.

The financial services industry led the activity chart with 393.814 million shares valued at N4.660 billion in 9,168 deals; thus contributing 67.1 per cent and 52.73 per cent to the total equity turnover volume and value respectively. The information and communication technology (ICT) industry staged a distant second with 48.178 million shares worth N1.203 billion in 1,294 deals while the third place was occupied by conglomerates industry, with a turnover of 40.135 million shares worth N44.406 million in 513 deals.

Banking stocks dominated the top activities chart with the trio of Guaranty Trust Holding Company Plc, Sterling Bank Plc and Zenith Bank Plc accounting for 239.637 million shares worth N3.546 billion in 4,375 deals, contributing 40.83 per cent and 40.13 per cent to the total equity turnover volume and value respectively.

“Looking ahead, we see room for a near-term rebound for the Nigerian equities market after four consecutive months of decline. However, we believe the probability of a strong rebound is limited as investors continue to remain attracted to high-yielding money market instruments. In addition, election activities in Nigeria have kicked in, creating further palpitations for investors. As a result, we retain our view that investors should continue to underweight domestic equities in their portfolios,” FSDH Securities stated in an investment advisory note.

“Next week, we anticipate extended bearish momentum as investors continue to rotate into high-yielding fixed-income assets,” Afrinvest Securities stated.

Analysts at Cordros Capital said they expected the weak sentiments that dominated the market to persist in the week ahead as investors continue to scale down exposure to equities amidst expectations of a continued uptick in fixed-income yields.

“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings,” Cordros Capital stated.

Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) is considering a new regulatory framework that will further enhance the scope and operations of non-interest finance in the capital market.

Director General, Securities and Exchange Commission (SEC), Mr. Lamido Yuguda said the new framework will address challenges and unleash the potential of non-interest capital market.

He said the non-interest capital market has enormous potential capable of growing the capital market capitalisation by 25 per cent over the next three years.

Yuguda spoke during a meeting with the executives of Non Interest Financial Institutions Association of Nigeria (NIFIAN) in Abuja.

He said the Capital Market Master Plan has a target that by the end of the plan period, 25 per cent of market capitalisation in the capital market should come from the non interest sector.

“We are talking of trillions; that means that right now we are not really scratching the surface. Both the market and the commission need to do more. We are working on ensuring that we have a framework that looks at issues relating to non interest capital market and ensure we tackle them.

“There is a lot of opportunities in the market right now for non-interest products. The biggest players right now are the pension fund. Pencom is interested that whatever product is there has some basic risk management features in them but I think there is a lot that we can do.

“You talk about the Sukuk market and the move towards complexities, I would say that even the simple Sukuk, we have not had enough of it. When we came in 2020, it was only the sovereign Sukuk and the sub national sukuk from Osun state. We have tried to attract interest to the product by doing a lot of seminars and re-joined IFSB fully. We also tried to encourage private issuers, as well as show the potentials of the sukuk to other players in the market. This is a simple product but a very powerful one,” Yuguda said.

He said Nigeria needs to adopt the normal Sukuk form where money is raised through sukuk, assets are built and then cash flows are generated from the assets which then flows back to the sukuk holders.

“That’s the traditional way and that’s what happened in countries like Malaysia. Maylaysia has a lot of hotels and resorts and the key financing tool that they have used is the sukuk. They understand the power of this sukuk instrument. It’s a collateralised form of lending, the asset is built and it belongs to the people who have contributed money.

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“You can see the cash flows coming back. These hotels are increasing in output in the economy in which it is located, people are working earning more incomes, the investors are happy because they are receiving the cash flows and the country is getting more prosperous as people from other parts of the world are going there to have a good life,” Yuguda said.

He emphasised the need for all stakeholders to create more awareness, as there is a lot of ignorance, misconceptions among others about sukuk and they all need to be addressed.

“A lot of countries have made tremendous progress which I think we can learn from. Once people see it and it is really working we will get a lot of people interested in the sector.

“The commission is ready to commit resources, both human and material to ensure that the market grows to the level we want. We are interested in the growth of the market as that will have a positive effect on the economy of the country,” Yuguda said.

He noted that the commission had just exposed the rules for shariah advisors in its drive to grow this segment of the market.

According to him, Shariah governance is crucial considering that compliance with Shariah rules and principles is important in non-interest capital market operations.

“The market is developing fast and there is need for proper regulation of those that will drive the process. The provision of the rules is in line with local and international best practices. The regulatory organization in the Nigerian Financial System such as CBN, NAICOM had issued such guidelines to provide clear and good Shariah governance in their respective sectors.

“Making the Shariah Advisory service a registrable function in the market will assist in effective implementation of the proposed consolidation of the Shariah governance rules and will also be an additional source of revenue to the Commission,” Yuguda said.

In his remarks, President, Non Interest Financial Institutions Association of Nigeria (NIFIAN), Mr. Hassan Usman urged the commission to provide a framework for non interest finance in a bid to avoid misuse of the platform by operators.

He said Nigerians need more awareness on non interest capital market, assuring that the association is interested in programmes that will increase enlightenment of the product and boost its contributions to market capitalisation.