Category: Equities

Nigerian equities regained their rally with a net capital gain of N154 billion, closing the gap created by Tuesday’s pullback.

Benchmark indices at the Nigerian Exchange (NGX) indicated average return of 0.55 per cent, equivalent to net capital gain of N154 billion. This raised the average year-to-date return to 0.93 per cent.

The All Share Index (ASI)- the common index that tracks all share prices at the Exchange rose by 283.27 points or 0.55 per cent to close at 51,729.87 points as against its opening index of 51,446.60 points. Aggregate market value of all quoted equities rose simultaneously from its opening value of N28.022 trillion to close at N28.176 trillion.

With more than two advancers for every decliner, the positive overall market situation was driven by widespread buy sentiments, especially within the large-cap stocks such as BUA Cement, PZ Cussons Nigeria, Guaranty Trust Holding Company (GTCO) and Nigerian Exchange Group (NGX Group).

There were 26 gainers to 12 losers. Thomas Wyatt Nigeria recorded the highest gain of 9.48 per cent to close at N1.27 per share. Champion Breweries followed with a gain 9.45 per cent to close at N4.75. FTN Cocoa processors rose by 7.69 per cent to close at 28 kobo. Mutual Benefits Assurance rallied 6.67 per cent to close at 32 kobo while Courteville Business Solutions gained 6.52 per cent to close at 49 kobo.

On the negative side, Chellarams led the losers with  drop of 9.89 per cent to close at N1.64, per share. Royal Exchange followed with a decline of 7.41 per cent to close at N1. Coronation Insurance depreciated by 6.67 per cent  to close at 42 kobo per share. AXA Mansard Insurance dropped by 6.54 per cent to close at N2.00 kobo while RT Briscoe Nigeria declined by 3.57 per cent to close at 27 kobo per share.

The momentum of activities however slowed down with turnover dropping by 16.40 per cent to 281.945 million shares valued at N8.159 billion in 3,679 deals. FBN Holdings (FBNH) was the most active stock with a turnover of 108.925 million shares valued at N1.221 billion. BUA Cement followed with 42.393 million shares worth N4.073 billion. GTCO traded 233.985 million shares valued at N810.044 million. Access Holdings traded 13.471 million shares valued at N122.606 million while Transnational Corporation of Nigeria (Transcorp) recorded 13.418 million shares worth N16.046 million.

Most analysts expected the market to continue on the upswing.

“We expect positive sentiments to continue as investors take position for the year” GTI Securities Limited stated.

Analysts at SCM Capital said they expected the “bullish sentiment to persist as investors continue to review their portfolios ahead of the earnings season”.

Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) has commenced full enforcement of a regulatory framework that mandates mutual funds’ managers to hold clients’ investment assets under independent custody.

Director General, Securities and Exchange Commission (SEC) , Mr Lamido Yuguda said the full enforcement of the custody requirement on all utual funds was part of efforts to enhance inestors’ protection and boost confidence in the market.

He added that after a thorough review of the status of privately managed funds, the commission mandated that Rule 95 should also apply to all discretionary and non-discretionary portfolios and products to ensure the protection of investors’ funds in the fund management space.

According to him, the commission has also successfully carried out a comprehensive on-site inspection exercise on the 95 registered fund managers to ensure that both the public and private funds registered by the commission are being operated in line with the relevant rules and regulations.

Under the rules, clients’ fund for collective investment should be held in safe and secure custody or electronically administered.

“The Nominee Company shall have no authority to demand for board membership of companies or to exercise any voting rights attached to shares registered in the nominee company’s name unless instructed to do so by its clients.

“No person or entity shall operate any product that pools investors’ monies, including discretionary or non-discretionary portfolios/funds except such person or entity is registered as a fund/portfolio manager.

“No fund and portfolio manager shall advertise, market or attract investors to the existence of any product, discretionary or non-discretionary other than registered collective investment schemes.

“Every fund or portfolio manager shall submit quarterly returns and annual reports in respect of all products, discretionary or non-discretionary portfolios/funds, in a form as determined by the Commission,”  according to SEC’s  statement.

Infringement of the rule by  fund managers will attract penalties of not less than N500,000, additional N10,000 daily and risk of suspension among others.

Capital market operators had commended SEC on the directive that clients’ funds for mutual trust should be domiciled with the custodian of the asset for optimal safety.

Market operators lauded the commission for the rule, describing it as a necessary step to check abuse of clients’ funds and ensure accountability for both parties.

Market operators said protection of investors’ funds begins from averting commingling as the funds and investments will be held by a custodian and not by the fund manager.

They noted that the capital market thrives  in investor trust and such clear separation of clients’ assets from that of the fund  managers enthrones transparency.

A custodial service refers to when a corporate entity or individual, known as custodian, holds a property or asset on behalf of a client. Specifically, a custodian is a financial institution that holds clients’ securities for safekeeping in order to minimize the risk of theft or loss. Securities such as share certificates, bonds, stocks and treasury bills are some of the assets a custodian holds for clients. Custody services are available to a wide portfolio of clients, including unit trust schemes, pension funds, corporate clients, high networth individuals, financial institutions, foreign, local and individual investors, insurance funds, fund managers, brokers, and dealers.

Nigerian equities reopened yesterday with a strong bullish sentiment as investors jostled to take positions in value stocks.

Benchmark indices at the Nigerian Exchange (NGX) indicated average gain of 0.92 per cent, equivalent to net capital gain of N257 billion. The rally nudged the average year-to-date return to 0.9 per cent.

The All Share Index (ASI)-the value-based common index that tracks all share prices at the Exchange, rose by 470.74 points or 0.92 per cent to close at 51,693.08 points as against its opening index of 51,222.34 points.

Aggregate market value of all quoted companies at the NGX rose from its opening value of N27.899 trillion to close at N28.156 trillion.

The positive market position was driven largely by gains recorded by mid and large-cap stocks such as Airtel Africa, Nigerian Breweries, FBN Holdings and Vitafoam Nigeria.

There were 18 gainers to 16 losers. Thomas Wyatt Nigeria recorded the highest gain of 9.28 per cent to close at N1.06 per share. Associated Bus Company followed with a gain 8.0 per cent to close at 27 kobo. Royal Exchange rose by 5.88 per cent to close at N1.08. Airtel Africa rallied by 5.16 per cent to close at N1,630 while consolidated Hallmark Insurance rose by 5.0 per cent to close at 63 kobo per share.

On the negative side, Union Bank of Nigeria (UBN) led the losers with a drop of 8.63 per cent to close at N6.35 per share. Wema Bank followed with a loss of 8.21 per cent to close at N3.58. AIICO Insurance declined by 6.25 per cent  to close at 60 kobo per share. Caverton Offshore Support Group dropped by 4.95 per cent to close at 96 kobo while Stanbic IBTC Holdings  dipped by 4.33 per cent to close at N32 per share.

The momentum of activities also improved with total turnover rising by 17.10 per cent to 229.219 million shares valued at N2.91 billion in 3,900 deals. Sterling Bank was the most active stock with a turnover of 85.178 million shares valued at N119.255 million. United Bank for Africa (UBA) followed with 21.623 million shares worth N173.308 million. FBN Holdings (FBNH) recorded 20.091 million shares valued at N222.860 million. Access Holdings recorded 10.325 million shares valued at N95.528 million while Zenith Bank traded 8.292 million shares worth N202.481 million.

Analysts at Afrinvest Securities noted that investor sentiment, as measured by market breadth, improved and this could continue in the next trading session.

 “In the next trading session, we expect bargain hunting activities to sustain the positive performance,” Afrinvest stated.

Analysts at United Capital however said they the bears could resume activities across counters, as investors book profits from the previous extended rally. 

Analysts noted that Central Bank of Nigeria’s recent Cash Reserve Ratio (CRR) debits in the money market will likely discourage investors from sustaining investment in equities in the short-term as they hope for improvement in money market yields.

“However, we see any downturn as a short-term buying opportunity as we expect investors’ risk-on sentiments will linger through first quarter 2023, favouring the equities market, as the prevailing downward pressure interest rates will persist through the quarter,” United Capital stated.

Not less than 96 per cent of capital market operators complied with regulatory filing on prudential returns in 2022, Securities and Exchange Commission (SEC) has stated.

Director General, Securities and Exchange Commission (SEC), Mr. Lamido Yuguda, said the apex capital market regulator has continued to employ its compliance tool to ensure that only fit and proper capital market operators practice in the market.

He noted that there had been an improved level of compliance with filing of prudential returns from 81 per cent in 2021 to 96 per cent in 2022.

He described the improvement as a welcome development given the commission’s quest to pursue a capital market that is based on the principles of increased transparency, efficiency and global competitiveness.

He pointed out that 2022 was another eventful year in which the commission continued its implementation of sound initiatives that are expected to bring about the much desired market development that would not only deepen the market but also ensure the continued protection of investors. 

“The commission released Guidelines on the Implementation of Sections 60-63 of the Investments and Securities Act 2007.The Nigerian Capital Market Institute (NCMI) organized training for chief executive officers, chief financial officers and other officers of public companies to facilitate their compliance. The commission also provided filing options for audited (annual) and fourth quarter financial statements.

“The commission has conducted the risk based supervision (RBS) examination on 20 capital market subsidiaries of five financial holding companies aimed at supporting the entire financial system stability,” Yuguda said.

He outlined that the Nigerian capital market witnessed significant momentum, with the main securities exchange, Nigerian Exchange (NGX), recording a N6.1 trillion increase in the equities capitalization, from N21.82 trillion on December 31, 2021 to N27.96 trillion as at December 30, 2022 representing a 28 per cent increase, outshining most of the global securities markets.

He noted that the NGX All-Share Index also recorded a 19.98 per cent year-on-year growth from 42,716.44 points on December 31, 2021 to 51,251.06 as at December 30, 2022. 

 ”On the Debt side of the capital market, the S & P FMDQ Sovereign Bond Index closed at 592.84 points on December 14, 2022 indicating a 4.8 per cent increase from 565.67 points in December, 2021.   

“The market witnessed this despite relatively weak corporate earnings, investor apathy and slow economic growth. However, we expect to see enhanced growth in 2023 driven by initiatives that target improvement in the business environment, increased liquidity, and possible increase in sovereign bond issuances to finance the budget deficit,” Yuguda said.

Ellah Lakes Plc and International Institute for Tropical Agriculture (IITA) has reached a seed production and technical support agreement aimed at exploring opportunities in the N60 billion Nigerian soybean market.

Ellah Lakes, through its subsidiary, Adani Staple Crop Processing Zone Food Company, and IITA agreed on a seed multiplication programme which, in the first phase, involving the production of high yielding soybean seed varieties on five hectares of land located in IITA Ibadan, Oyo State and subsequently, on 500 hectares of land located in Adani, Enugu State.

In a regulatory filing at the Nigerian Exchange (NGX) yesterday, Ellah Lakes noted that IITA, through the partnership, brought its expertise in the production and supply of high-quality breeder and foundation seedlings to private sector seed producers.

According to the company, the partnership agreement between both companies will facilitate the production of premium quality soybean seedlings for cultivation at Adani SCPZ in Enugu State with IITA providing all the technical support  required to produce the seedlings for the company.

The company noted that the improved variety of breeder seeds is expected to yield 2.5 metric tons of quality soybean per hectare, 150 per cent higher than the Nigerian national average of 1.0 metric tons per hectare and at par with output in  South American countries such as Brazil and Argentina.

“Soybean is an important source of plant-based protein that contains dietary fiber, vitamins and minerals. Soybean consists of 20 per cent oil, making it an important crop for producing edible oil. A by-product from the oil production, soymeal, is used as a high-protein animal feed in the poultry and aquaculture industries.

“The demand for soybean in Nigeria is estimated to be in excess of 1.2 million metric tons per annum, which is a market value of over N360 billion, approximately $780 million. Additionally, soybean from Nigeria has huge export potential because Nigerian soyabean is non-genetically modified, it has a wider range of applications including as input into infant cereals and textured vegetable protein – which is often used as meat analogue or meat extender,” the company stated.

Chief Executive Officer, Ellah Lakes, Mr. Chuka Mordi said with its partnership with IITA, Adani SCPZ will be able to significantly boost productivity at its 3,700-hectare farm in Adani, Enugu State, and will be on track to achieving a target output of 7,500 metric tons of soybean per annum upon full cultivation of the property.

 “This is a symbolic and significant milestone on our company’s strategic path to build staple crop processing zones across the country. Adani remains our flagship site and under the supervision of the IITA, we expect to accelerate progress in Enugu State, during the course of 2023,” Mordi said.

He noted that the agreement also marked an important milestone on the company’s strategic path to build staple crop processing zones across the country, with Adani being the flagship site.

Nigeria’s oldest surviving indigenous bank, Wema Bank Plc, seeks to consolidate its competitive advantages in digital banking with its seamless leadership transition anchored on continuing digital innovation and optimisation.

Market pundits said another decade of consolidated growth and development anchored on digital optimisation and innovation beckons in Wema Bank as Moruf Oseni assumed the reins of leadership after a legacy-defining leadership of Ademola Adebise, who retired after 12 years of acclaimed leadership.

Analysts noted that it was a deliberate succession plan that Adebise, a fintech guru and computer expert who built competitiveness for Wema Bank through digital banking innovation and process re-engineering, was succeeded by Oseni, another astute computer engineer and erudite banker with proven prowess in corporate banking, treasury management and   digital optimisation and innovation.

Analysts said the retirement and appointments announced by the bank were illustrative of the decision to sustain and build on the achievements of the bank in recent years.

Analysts believed that the growth and upward trajectory momentum of Wema Bank will continue to accelerate and move in leaps and bounds under Oseni who has exercised oversight and supervision on all the business and technical divisions of the bank and made them market leaders.

Wema Bank had last weekend announced the retirement of Adebise with effect from March 31 2023 and the appointment of Oseni, current deputy managing director, as the new managing director. Also, Mr. Wole Akinleye, currently executive director in charge of corporate banking and south west banking, was appointed as deputy managing director while Tunde Mabawonku, chief finance officer and divisional head of finance and corporate services was also appointed as executive director.

Adebise who joined Wema Bank in 2009 from Accenture Nigeria as an Executive Director, and later became Managing Director in 2018, was Executive Director in charge of South Bank, Deputy Managing Director-supervising Corporate Banking, Treasury, and Support Functions at Wema Bank between 2009 and 2017.

In July 2018, Adebise became the acting Managing Director, following the retirement of Mr Segun Oloketuyi ,his predecessor. On approval by the Central Bank of Nigeria, he became the substantive Managing Director.

Adebise was reputed to have led Wema Bank to its most outstanding and sterling financial epoch, producing a streak of unrivalled financial performance in the history of the bank in the last four years.

He expanded the bank’s footprints to other locations in Nigeria, and improved the performance of the bank and spearheaded the first dividend payment in 14 years. Since then, he has ensured consistent dividend payment over the last four years.

Shareholders have expressed satisfaction with the bank. His share reconstruction programme of the bank has led to accelerated share price growth and capital appreciation for the shareholders thereby building wealth for them.

The bank has grown its total assets by 155 per cent, from N470 billion to over N1.2 trillion. Deposits also grew by 214 per cent from N350 billion to N1.1 trillion.

Adebise initiated the partnership with Bank of Africa to support its customers across the African continent which has increased the bank’s market share and customer base. All these led to an additional growth of two million customer accounts in Nigeria and a market share of three per cent of industry volumes. The bank is now the leading collection bank for state and government agencies due to its effective and efficient platform. The bank’s rating by agencies was upgraded to BBB investment grade.

Perhaps Adebise’s best legacy at Wema Bank was the ALAT platform, the first fully digital bank in Nigeria which allows customers to open and operate their accounts without visiting the bank’s branches. Customers can apply for loan, forex and make multiple payments through ALAT thereby making banking convenient, safe and fast for the customers.

The bank significantly changed the digital landscape through the ALAT platform. The innovative platform also came top in the KPMG Digital Scorecard for leading retail banks in Nigeria and this was based on in-depth insights into the state of user experience on retail banks’ digital channels. Furthermore, the bank launched the first SME Business School for capacity building and empowerment of SMEs – this has benefitted over 20,000 small businesses.

The bank also became one of the founding members of the United Nations Environmental plan for financial institutions (UNEP-FI) and continues to provide digital solutions for societal impact.

Adebise also embarked on fresh capital raising through a rights issue through which N40 billion fresh capital was raised. This has strengthened the resilience and solidity of the oldest indigenous bank in the country.

He changed the demographics of the work force, attracting and hiring young professionals to join the bank, a development that has brought improvement s in business processes, outputs and efficiency.

Among the numerous awards Wema Bank won under his leadership include the “Best digital bank (Fintech award)”, and “Best Bank in customer service by KPMG”. The bank’s efficiency rating also went many notches up, as was adjudged as one of the best three banks in the first half of 2022.

The new Managing Director, Oseni, comes on board with ample executive management experience and proven leadership and managerial attributes. He joined Wema Bank in June 2012 as an Executive Director, and has over 25 years of experience with more than 16 years at senior and executive management levels.

He was an executive director for six years and deputy managing director for the last four years and has demonstrated capacity to lead the bank. As deputy managing director, Oseni was responsible for the digital optimisation directorate which includes digital, retail, treasury, operations, and the technology divisions. Oseni was also the executive compliance officer of the bank. He supervised the launch of ALAT – Nigeria’s 1st digital Bank that has received local and global awards and multiple accolades. Before joining Wema Bank, he was the CEO of MG Ineso Limited, a principal investment and financial advisory firm.

Prior to MG Ineso, Oseni was a Vice President at Renaissance Capital, and an Associate at Salomon Brothers/Citigroup Global Markets in London. Oseni holds an MBA from the Institut European d’Administration des Affaires (INSEAD) in France, a Master’s in Finance (MiF) from the London Business School and a B.Sc. in Computer Engineering from Obafemi Awolowo University (OAU), Ile-Ife, Nigeria. He is also an alumnus of both the Advanced Management Programme (AMP) of the Harvard Business School and King’s College, Lagos.

Shareholders have endorsed the leadership succession at Wema Bank with the active retail shareholders expressing optimism that the appointment of Oseni will lead to improved performance in the years ahead.

Chairman, Ibadan Zone Shareholders Association (IBZA), Mr. Eric Akinduro said the succession was indicative of good corporate governance at the bank as the seamless transition will enable the bank to build on its growth momentum.

After rallying net capital gains of N4.45 trillion in 2022 and sustaining the upbeat in first two trading sessions in 2023, Nigerian equities yesterday suffered their first loss in 14 days with a net loss of N429 billion.

Profit-taking transactions on large-cap stocks overshadowed the overall market situation, although the general pricing trend remained largely positive.

With 20 advancers t0 16 decliners, losses suffered by Airtel Africa, United Bank for Africa (UBA), Nigerian Exchange Group and FBN Holdings overwhelmed the overall market position, leaving investors with net loss of N429 billion.

Benchmark index indicated average price depreciation of 1.43 per cent yesterday, reversing the average year-to-date return to negative at -0.75 per cent.  

The All Share Index (ASI)- the value-based common index that tracks all share prices at the Nigerian Exchange (NGX), dropped by 789.04 points or 1.53 per cent to close at 50,868.52 points as against its opening index of 51,657.56 points.

Aggregate market value of all quoted companies declined from its opening value of N28.136 trillion to close at N27.707 trillion.

Prestige Assurance led the losers with a drop of 8.70 per cent to close at 42 kobo per share. Airtel Africa, NGX’s most capitalised stock, followed with a decline of 8.26 per cent to close at N1,500. University Press lost 7.37 per cent to close at N1.76 per share. NPF Microfinance Bank lost 7.10 per cent to close at N1.57. Royal Exchange dropped by 6.36 per cent to close at N1.03 per share.

On the positive side, John Holt recorded the highest gain of 10 per cent to close at 88 kobo per share. Honeywell Flour Mills followed with a gain of 9.95 per cent to close at N2.43. Computer Warehouse Group (CWG) added 9.78 per cent to close at N1.01. UAC of Nigeria (UACN) rose by 4.88 per cent to close at N10.75 while Nigerian Breweries rallied 4.21 per cent to close at N47 per share.

The momentum of activities also slowed down considerably with turnover volume dropping by 47.80 per cent to 138.716 million shares valued at N1.828 billion in 3,673 deals. Sterling Bank was the most active stock with 29.154 million shares valued at N41.014 million. Guaranty Trust Holding Company (GTCO) followed with 19.946 million shares worth N477.768 million. Access Holdings traded 11.348 million shares valued at N99.855 million. FBN Holdings recorded 10.994 million shares valued at N120.967 million while Zenith Bank traded 6.246 million shares worth N152.138 million.

Most market analysts expected the market to swing more to positive side in first quarter 2023, as quoted companies prepare to submit their earnings reports for the 2022 business year.

Analysts at United Capital said they expected robust market activity and bullish sentiments to continue briefly.

“The usual January momentum is likely to dominate in the near term, particularly as the yield environment appears to be shifting downwards,” United Capital stated.