The Nation Newspaper

Tag: equities

  • Foreign investors show increased appetites for Nigerian equities

    Foreign investors show increased appetites for Nigerian equities

    For the first time since the beginning of this year, foreign investors are staking more on Nigerian equities than they are taking out. Latest update on foreign portfolio transactions in the Nigerian equities showed that they have regained the lead as the larger block of investors from the domestic investors with about 29 per cent increase in total transactions by foreign investors.

    The foreign portfolio investment (FPI) report by the Nigerian Stock Exchange (NSE) showed positive net foreign inflow of about N20 billion in June this year, reversing the downtrend that has seen a built-up of deficit foreign transactions over the five previous months.

    The report used two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy. Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE.

    The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers.

    Total foreign inflow rose to N68.78 billion as against decline in outflow to N49.22 billion in June, putting the total foreign transactions to N118 billion. Total domestic transactions stood at N107.51 billion. The proportion of foreign investors’ turnover to Nigerian investors’ turnover thus stood at 52.32 per cent to 47.68 per cent.

    A six-month report for the first half ended June 30, showed that foreign investors accounted for 60.84 per cent of total turnover value in the Nigerian stock market as against 39.16 per cent recorded by Nigerian investors.

    Total foreign transactions stood at N705.15 billion as against N453.91 billion by Nigerian investors. Total transactions during the period thus stood at N1.159 trillion. However, there were more outflows than inflows with net foreign deficit of more than N100 billion. Total foreign outflows stood at N402.63 billion as against foreign inflows of N302.52 billion.

    Earlier reports had indicated general decline in foreign investments as the overall trend continued to show net deficit with outflows more than inflows. While foreign participation declined from 75.25 per cent in April to 45.56 per cent in May, domestic participation more than doubled from 24.75 per cent to 54 .44 per cent.

    The five-month report for the period ended May 31, 2014 detailed month-on-month as well as periodic transactions by both foreign investors and Nigerian investors.

    According to the report, the quantity of total foreign transactions dropped by about N47 billion in May to N91.9 billion, its lowest position in four months. Besides, the inflow- the buy side of the foreign transactions, declined by about N24 billion from this year’s high of N65.1 billion in April to N41.3 billion in May, its lowest position in three months.

    Total transactions trended to its high of N201.61 billion in May, driven largely by significant increase in transactions by Nigerian investors, which rose from N45.64 billion in April to N109.75 billion in May.

    Five-month cumulative analysis however still underlined the dominance of foreign investors, who accounted for about 63 per cent of the turnover on the NSE during the period. Aggregate turnover during the period stood at N933.55 billion, consisting of N587.15 billion from foreign investors and N353.41 billion from Nigerian investors.

    Buy-sell analysis of the foreign transactions showed that foreign investors had taken out more than they invested during the period. Foreign outflows stood at N353.41 billion within the period as against inflows of N233.74 billion.

    In April, foreign investors traded N138.79 billion worth of shares including sales transactions of N73.73 billion and buy transactions of N65.06 billion. Total domestic transactions stood at N45.64 billion. Total transactions during the month stood at N184.43 billion.

    The foreign sale-buy trend in April followed the same trend in recent months, although the momentum of buy transactions appeared to be picking up. In the first quarter, nearly two-thirds of foreign portfolio transactions were on the sell side.

    According to the NSE, total foreign outflows stood at N229.03 billion in the first quarter, representing some 64.2 per cent of total foreign transactions during the period. Total foreign inflows stood at N127.41 billion. Altogether, foreign investors’ deals accounted for N356.50 billion during the three-month period, more than 65.11 per cent of total transactions of N547.51 billion. This indicated that Nigerian investors accounted for N191.01 billion, 34.89 per cent of total transactions, during the period.

    Month-on-month analysis showed that there was increase in the momentum of foreign transactions in March 2014, with increases in both sell and buy orders. However, the downtrend continued to dominate transactions. Total foreign outflow in March 2014 stood at N75.42 billion as against inflow of N55.13 billion, totaling N130.55 billion. Foreign investors accounted for 78.25 per cent of total transactions-foreign and domestic, of N166.84 billion in March 2014.

    The flow of investments in March this year contrasted sharply with the situation in March 2013 when there were more inflows than outflows. Total foreign inflows totaled 53 per cent of total foreign transactions in March 2013. Total foreign transactions stood at N80.14 billion in March 2013, consisting of inflow of N43.13 billion and outflow of N37.01 billion.

    Month-on-month, the outflows in February are about 107 per cent higher compared to January this year and about 183 per cent compared to February 2013. While total transactions at the NSE increased from N181.97 billion in January to N198.70 billion in February , foreign outflows accounted for the increased tempo of activities and the higher proportion of foreign participation to local participation.

    Foreign portfolio outflows stood at N103.53 billion in February as against foreign inflows of N32.75 billion. These indicated that foreign investors accounted for 68.59 per cent of total transactions during the period.  This contrasted sharply with the situation in similar earnings season of February 2013 when foreign investors had more inflows at N39.34 billion as against outflows of N36.63 billion.

    Total foreign outflow had stood at N50.14 billion in January as against inflow of N39.53 billion during the period, bringing total foreign transactions to N89.67 billion.

  • Rising inflation will not hurt equities market, says Rewane

    Rising inflation may not significantly influence the performance of the Nigerian stock market, managing director, Financial Derivatives Company (FDC), Mr Bismarck Rewane has said.

    Many analysts expected the inflation rate to rise in the next computation. Rewane’s FDC has predicted that inflation rate will likely increase marginally again to 8.3 per cent.

    According to FDC, the inflation forecast was based on the regression model of its analysts. If this forecast increase in inflation takes place, it will be the fifth monthly consecutive increase in the price level this year.

    In its latest economic bulletin, FDC said the projection of a further increase in the headline inflation figure would not hurt investors’ confidence in the equities market.

    According to the report, investor confidence in the stock market will remain unchanged because the status quo on monetary policy has not influenced a significant movement in the fixed income market.

    The report pointed out that the current investors’ sentiment and profit-taking transactions are possible incentives to drive the stock market performance in the near term.

    “The stock market in 2014 has only gained 1.65 per cent. In spite of earnings growth decline, the price earnings ratio has declined to 29.56 times from as high as 31 times. This means that there are a few bargains out there. The inflation numbers are unlikely to scare yield hungry investors from bargain hunting,” FDC stated.

    However, the report noted that while the increase in inflation rate might be marginal, the cumulative increase could become a cause for monetary policy concern given that in February 2014, the year on year retail price inflation was 7.7 per cent and will now peak at 8.3 per cent, up by 0.6 per cen.

    According to FDC, even though inflation rate is within the six to nine per cent target range, it will only be 0.7 per cent lower than the ceiling, a trend that should give the Central Bank of Nigeria (CBN)’s Governor a reason to look at the close relationship between M2 growth and the consumer price index (CPI).

    The CBN Governor is also expected to decompose money supply into the high powered component and other aggregates as the rate of inflation is already becoming part of the political agenda in what is likely to be a keenly contested election.

    “The Central Bank is watching the inflation rate closely because of the fact that rising inflation will seriously undermine the key objective of maintaining the value of the naira at current levels. The new CBN Governor has staked his reputation on his mission to bring down interest rates and thus impact employment indirectly. An increase in the inflation rate is likely to make the reduction of interest rates less imperative,” FDC stated.

    Notwithstanding, the report indicated that the exchange rate would remain stable as increased foreign reserves has placed the apex bank in better position to defend the currency.

    ‘’We do not expect any significant impact of the projected increase in inflation rate on the interbank market in August. However, it will make portfolio managers become jittery, since an increase in rates will de-press bond prices and could lead to diminution in value of their portfolios. But irrespective of the inflation numbers, we do not expect increased volatility in the money markets as our projection remains within the target band of the CBN,” the report stated.

  • Experts predict improved performance for equities in Q 2

    Investment pundits and market analysts expect the stock market to outperform its first half in the second half and still deliver an average of double-digit return to investors in the year.

    Nigerian quoted equities had recorded capital gains of N802 billion in the first half of this year, indicating a modest average return of 2.79 per cent over the six-month period.

    Most investment experts said they expected the market to witness improved performance in the second half.

    Group Deputy Managing Director, BGL Plc, Mr. Chibundu Edozie, said the stock market would witness stronger uptick in the second half citing increasing investors’ appetite and expected results of quoted companies.

    According to him, while analysts had expected a stronger performance in the first half of the year given similar performance last year, external variables depressed share prices as the market failed to react positively to impressive year-end results and attractive corporate actions by listed companies.

    He noted that there were expectations that increasing primary market activities would also lead to positive sentiments for the equity market but these expectations did not play out well, mostly due to key risks to global financial markets in 2014, especially the continuous increase in quantitative easing (QE) tapering in the United States (US).

    “The market did not react enough to good year-end results and corporate actions, while primary market activities did not gather steam as expected. However, based on the success of Seplat IPO and listing by Caverton, we are optimistic of improving performance in the second half of the year,” Edozie said.

    He expressed optimisms that the market could still make a double-digit return in the second half to override the lull in the first half noting that the expected release of the first half earnings of quoted companies could trigger bullish rally for several stocks.

    “Barring any further external shock, we expect the market to close the year with NSE’s index at 46,924.59 points, a return of about 14 per cent for 2014,” Edozie said.

    Managing Director, GTI Securities, Mr. Tunde Oyekunle, also said the second half would witness major comeback for several stocks, especially in the financial services sector.

    According to him, there are indications that second quarter earnings of several companies would be better, prompting investors to take positions in these stocks.

    “Generally, we expect a slight improvement in the performance of listed stocks across different sectors. Banking stocks will see slight improvements mainly due to the effect of raising the cash reserve ratio (CRR) of public funds to 75 per cent. While the oil and gas, food & beverages, building materials stocks may have obvious growth in earnings; insurance stocks may post mixed results since some of them are yet to come out of their previous loss positions. We expect conglomerates like Transcorp and UACN to record significant growth in earnings,” Oyekunle said.

    Managing director, Morgan Capital Group, Mr. Ayoleke Adu said there could be some flight to safety to some established companies as the general election approaches.

    “We expect a flight to safety from investors in second half of 2014 particularly to companies with strong dividend histories which perform well in their half-year 2014 reports. The general election will be the major economic event to affect the market in second half 2014. We expect low market activities for the major part of the period with intermittent rallies as third quarter and full year 2014 numbers are released. As investors rebalance their portfolios, caution would prevail in the Nigerian capital market as the unpredictable outcome of the general elections will see investors adopt a wait and see approach to investing in Nigeria until there is clarity regarding the presidency,” Adu said.

    Riding on the back of sustained gains in May and June, the stock market had erased the losses in the previous four months and left the investors with some N802 billion in capital gains.

    The main value-based indices at the Nigerian Stock Exchange (NSE) showed modest performance. Aggregate market value of all quoted equities closed the first half at a high of N14.028 trillion as against its 2014 opening value of N13.226 trillion. The All Share Index (ASI), the benchmark index that tracks prices of all quoted equities and serves as Nigeria’s country index, rose from the year’s opening index of 41,329.19 points to close first half at 42,482.48 points, representing average return of 2.79 per cent.

    Quoted equities had wriggled all through the first four months with negative month-on-month return. The stock market recorded a negative return of -0.68 per cent in April, building on the bearish trend that had characterized the stock market in the first quarter. In January, February and March, the market consistently recorded losses of 1.8 per cent, 2.5 per cent and 2.0 per cent respectively.

    The negative return in April further depressed the overall market performance, increasing the four-month average loss to 6.88 per cent.

     

  • Equities open second half with N279b gain

    Equities open second half with N279b gain

    The stock market set out for the second half with a promising bullish rally as investors sought to take early positions ahead of expected second quarter earnings. With more demand than supply, investors earned about N279 billion in new capital gains, implying a week-on-week 2.0 per cent.

    The bullish start to the second half nudged the average year-to-date return to 4.12 per cent with investors in oil and gas and industrial goods stocks well ahead of the market’s average.

    New earnings reports for the first half are expected to trickle in this month and build up substantially in the next month. Post-listing rules at the Nigerian Stock Exchange (NSE) require quoted companies to submit their earnings reports, not later than three months after the expiration of the period. Most quoted companies including all banks, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31.

    The first-half reports for the period ended June 30, 2014 are expected to be submitted over the next three months. Unity Bank blazed the trails last week with the early submission of its six-month report for the period ended June 30, 2014.

    Pricing trend showed widespread bullish sentiments with the composite index and sectoral indices closing on the upside. The All Share Index (ASI), which tracks prices of all quoted equities and doubles as Nigeria’s country index, reached a new highpoint of 43,031.81 points at the weekend as against its week’s opening index of 42,187.62 points. Aggregate market value of all quoted equities also crossed from the N13 trillion mark to N14 trillion mark rising from the week’s value-on-board of N13.930 trillion to close at N14.209 trillion.

    All other indices showed similar uptrend. The NSE 30 Index, which tracks 30 most capitalised stocks on the NSE, rose by 1.38 per cent. The NSE Banking Index rallied 1.24 per cent while its counterpart index for insurance was better at 1.94 per cent. The NSE Industrial Goods Index rose by 1.92 per cent. The NSE Consumer Goods Index inched up by 0.22 per cent. The NSE Oil and Gas Index was muted with average gain of 0.46 per cent while the NSE Lotus Islamic Index, which tracks selected Shariah-compliant stocks, recorded a week-on-week gain of 0.38 per cent.

    Year-to-date analysis showed that investors in the oil and gas sector remained ahead of the market with six-month-and-a-week return of 33.85 per cent. The NSE Industrial Goods Index indicated year-to-date return of 6.97 per cent while the NSE 30 Index trailed with 1.99 per cent. Investors in financial services stocks remained in the red with -2.34 per cent and -2.53 per cent for banking and insurance subsectors respectively.

    Across Africa, equities trended upward on new buying momentum. South Africa’s FTSE JSE indicated a weekly return of 2.7 per cent while the Kenyan NSE 20 rose by 1.0 per cent. Global indices also showed similar upbeat. The United Kingdom’s FTSE rose by 1.8 per cent while the United States’ benchmark, the Standard & Poors (S & P) 500 also rose by 1.2 per cent. The India BSE Sens recorded a week-on-week gain of 3.4 per cent to push its year-to-date return to 22.6 per cent. France CAC 40 rose by 1.1 per cent while Germany’ XETRA DAX and Japan’s Nikkei returned 2.1 per cent and 2.3 per cent respectively.

    At the NSE, total turnover stood at 2.27 billion shares worth N28.62 billion in 26,730 deals last week as against a total of 2.89 billion shares valued at N30.03 billion traded in 30,650 deals in previous week. The financial services sector led the activity chart with 1.74 billion shares valued at N15.51 billion in 11,381 deals, contributing 76.7 per cent and 54.2 per cent to the total equity turnover volume and value respectively. Conglomerates sector followed with a turnover of 193.61 million shares worth N1.22 billion in 2,610 deals while the oil and gas sector placed third with 153.88 million shares worth N3.85 billion in 5,808 deals.

    The trio of FBN Holdings Plc, Continental Reinsurance Plc and Transnational Corporation of Nigeria Plc were the most active stocks with a total of 907.74 million shares worth N7.82 billion in 4,632 deals, representing 39.96 per cent and 27.33 per cent of aggregate turnover volume and value respectively.

    Trading remained muted in other non-equity securities. A total of 223,359 units of Exchange Traded Products (ETPs) valued at N4.45 million were traded in 19 deals while a total of 730 units of FGN bonds valued at N863, 405were traded in a transaction.

  • ‘Equities’ outlook cautious, lukewarm in Q2’

    Major investment firms and analysts believe Nigerian capital market will be characterised by restrained bargain-hunting amidst evident lull in investors’ appetite in the second quarter as the market oscillates between external pressures and domestic regulatory transition.
    Leading market pundits and analysts said they expected the market to be somehow tepid in the remaining months of the first half, although there could be some modest resurgence. With a negative first quarter return of -6.25 per cent, most opinions seemed to tilt towards a negative close for the market in the second quarter.
    Investment experts at BGL Plc, GTI Capital, FSDH Securities, Financial Derivatives Company (FDC) and CBO Capital said they did not expect an overtly bullish market in the second quarter, although there were several bargain stocks that could enliven the market.
    Group deputy managing director, BGL Plc, Mr. Chibundu Edozie said the capital market would remain cautious and undecided, although it may not witness a major decline.
    According to him, the outlook for the market is unclear as the market has so far failed to respond to a number of impressive corporate financial announcements of listed companies.
    “The cautious mode of the market is likely to be sustained through the first half of the year until the new CBN Governor resumes in June and monetary policy direction becomes clearer especially in relation to exchange rates. We however do not foresee a further precipitous decline given that the market currently presents significant bargain opportunities to investors,” Edozie said.
    He noted that the bearish run in the equities market was due largely to foreign investors selling down in response to the global investment risk reappraisal in the wake of US active tapering of its quantitative easing and hence rising interest rates abroad.
    Edozie pointed out the influence of foreign portfolios in Nigerian market noting that among peers and emerging markets, the Nigerian stock market was the second worst performer in the first quarter; behind Russia which declined by 8.8 per cent during the period.
    Managing director, GTI Securities Limited, Mr. Tunde Oyekunle, said the rebasing of the GDP and the emergence of Nigeria as the largest economy in Africa will boost the nation’s economic outlook and fuel economic activities, which may impact performance of quoted stocks positively.
    According to him, more impressive results and dividend payouts by some quoted companies are expected to boost market performance in the second quarter. This would be marginally supported by expected growth in first quarter unaudited results.
    He noted that the momentum around SEPLAT, the first indigenous upstream oil company to be listed, could create a spark in the second quarter, drawing investors’ attention to other potentials.
    “We are optimist that the passage of the 2014 Budget and other reforms will enhance market performance in the next quarter, though at a slower rate since the foreign reserve is still on the decline while foreign portfolio investors remain wary of new risks,” Oyekunle said.
    Analysts at FSDH Securities advised investors to diversify their equities portfolios to take on additional sectors in the upstream oil and gas subsector while maintaining long positions in banking stocks
    Analysts at GTI Securities outlined the key sectors that may herald market performance in the remaining months of the year to include power, construction, oil and gas and banking sectors.
    Analysts noted that the positive reforms in the mortgage industry which has seen the creation of the Nigerian Mortgage Refinancing Company to create liquidity by providing access to cheap funds will drive a lot of building activities and boost the construction and building material sector.
    “The huge dependence of the economy on the oil and gas sector makes a compelling case for it. Despite all the unresolved issues in the sector, the economic relevance of the product makes the sector one to watch out for in the rest of 2014,” analysts stated.
    They noted that contrary to market insinuations, the recent results of a good number of banks have shown that they were not much affected by the increased public sector cash reserve requirement (CRR).
    “We are much enthusiastic on the banks with strong fundamentals and rich dividend history,” analysts stated.
    Analysts at FDC pointed out that as the stock market is currently in the bear territory, value investors will target perceived undervalued stock to hunt for good bargains during the second quarter.
    “In the interim, the market would depend on positive earnings release as local investors look for bargains on cheaper prices. Earnings will provide a guide; domestic retail investors are important to the outlook,” analysts at CBO Capital stated.
    The performance of the Nigerian equities market was largely bearish during the first quarter of the year. In January, February and March, the market consistently recorded losses of 1.8 per cent, 2.5 per cent and 2.0 per cent respectively. This was in sharp contrast to the corresponding period of 2013 when the market returned about 17.7 per cent in the first three months. In terms of activities, the average daily volume of transactions of 380 million units for the first quarter of 2014 was also lower than 512 million units in the corresponding period of 2013.
    The All Share Index (ASI), the benchmark index at the Nigerian Stock Exchange (NSE), closed the quarter with a drop of 6.25 per cent to close at 38,748 points while market capitalization dropped by 5.89 per cent to close at N12.45 Trillion. Total market volume for the quarter also fell by 26 per cent at 22.83 billion while total market value rose marginally by 6.3 per cent to close at N269.4 billion.

  • Equities gain N3.48tr, 38.61% in 11 months

    •Equities retain 3.45% in November

    Investors in equities have earned about N3.48 trillion in capital gains over the past 11 months as the stock market survived a last-week downtrend to consolidate its bullish rally in November.

    Average return dropped by 0.83 per cent, while earlier gains left the market with a gain of 3.45 per cent last month.

    Aggregate market capitalisation of all quoted equities closed last month at N12.449 trillion as against this year’s opening value of N8.974 trillion, indicating an increase of N3.475 trillion or 38.72 per cent.

    The main index at the Nigerian Stock Exchange (NSE), the All Share Index (ASI)-a common value-based index that tracks all quoted equities, indicated 11-month year-to-date return of 38.61 per cent. ASI closed November at 38,920.85 points as against its index-on-board of 28,078.81 points for the year.

    With N3.48 trillion and average year-to-date return of 38.61 per cent, equities appeared in good stead for another record successive performance. In value terms, 11-month capital gain of N3.48 trillion has already surpassed total gains of N2.44 trillion recorded for the entire 2012. Also, real benchmark return of 38.61 per cent is already some three percentage points above average full-year return of 35.45 per cent recorded in 2012.

    The stock market had closed the first half of 2013 with average return of about 28.8 per cent, equivalent to N2.45 trillion in capital gains. Aggregate market value of all equities on the NSE had closed the first half at N11.426 trillion while the ASI had closed the first half at 36,164.31 points.

    Meanwhile, turnover at the NSE stood at 2.17 billion shares worth N24.44 billion in 26,443 deals last week. The financial services sector topped the activity chart with 1.20 billion shares valued at N9.13 billion in 12,226 deals; representing 55.48 per cent of total turnover for the week. Conglomerates sector followed with a turnover of 505.33 million shares worth N2.48 billion in 2,628 deals; accounting for 23.31 per cent of total turnover. Oil and gas sector placed third with a turnover of 196.41 million shares worth N2.372 billion in 3,762 deals.

    Investors concentrated on low-priced stocks, otherwise known as penny stocks. The trio of Transnational Corporation of Nigeria Plc, Unity Bank Plc and Wapic Insurance Plc- each a penny stock in its category, accounted for 888.95 million shares worth N2.53 billion in 3,119 deals. This represented 41 per cent of aggregate turnover for the week.

  • Oil and gas stocks lead equities with 69.62% return

    •Costain reassures stakeholders over receivership scare
    •FirstBank confirms acquisition of West African bank

    Oil and gas stocks outflanked the industrial goods stocks to emerge as the sub-sector with the highest average year-to-date return at the stock market in a week that saw four oil and gas stocks among the 10 highest advancers.

    The stock market retained a week-on-week gain of 0.28 per cent last week after a weekend trading session characterised by emerging profit-taking shaved off 0.67 per cent from the market value. The main value-based common index at the Nigerian Stock Exchange (NSE), the All Share Index (ASI), closed the week with a gain of 0.28 per cent at 37,870.87 points compared with the week’s index on board of 37,765.82 points.

    Aggregate market value of all quoted equities similarly inched up from its opening value of N12.067 trillion to N12.100 trillion. But the week was overtly bullish for downstream oil and gas stocks, with the NSE Oil and Gas Index closing with average week-on-week gain of 14.16 per cent. The NSE Consumer Goods Index also rode on the back of gains by Nestle Nigeria and Cadbury Nigeria to close with a gain of 1.82 per cent. The NSE Insurance Index rallied 2.68 per cent while the NSE 30 Index, which tracks 30 most capitalised stocks, mirrored the weekend losses by highly capitalised stocks with a weekly gain of 0.17 per cent. However, the NSE Industrial Goods Index lost 0.98 per cent while NSE Banking Index dropped by 0.34 per cent during the week.

    The bullish performance last week pushed the oil and gas stocks ahead as the best-return sub-sector so far this year, ahead of the long-standing industrial goods sub-sector. Year-to-date analysis showed NSE Oil and Gas Index with a year-to-date return of 69.62 per cent, some eight percentage points above 61.52 per cent recorded by the NSE Industrial Goods Index. Other sectoral indices fell below average return at the stock market.

    While the ASI indicated average year-to-date return of 34.87 per cent, the NSE Consumer Goods Index posted a return of 32.82 per cent. The NSE 30 Index trailed with a return of 32.78 per cent. Financial services stocks were at the lower end of the returns. The NSE Insurance Index opens today with average year-to-date return of 18.46 per cent while the NSE Banking Index opens with 17.42 per cent.

    Total turnover last week stood at 1.83 billion shares worth N22.96 billion in 23,840 deals. The financial services industry remained the most active with a turnover of 1.34 billion shares valued at N12.80 billion traded in 12,795 deals, representing 72.93 per cent of total turnover volume.

    However, Transnational Corporation of Nigeria (Transcorp) of the conglomerate sub-sector was the most active stock. The trio of Transcorp, Wapic Insurance Plc and Zenith Bank Plc accounted for 737.81 million shares worth N5.01 billion in 3,369 deals, some 40.22 per cent of total turnover.

    Meanwhile, the board of directors of Costain (West Africa) Plc has said the management of the construction company remained in control of the operations of the company after it scaled through a receivership scare over indebtedness to First Bank of Nigeria (FBN) Limited.

    First Bank had obtained an order of court for the appointment of a receiver manager for Costain over a trade debt.

    In a regulatory filing at the NSE, directors of Costain stated that the company has since made payment to partially liquidate the debt and both parties have entered into agreements for the complete liquidation of the debt.

    The filing indicated that the receiver manager never acted on behalf of Costain pursuant to the court order and with the terms of settlement being reached; Costain does not envisage the implementation of the order of receivership.

     

     

     

  • Equities open on cautious sentiments

    Equities open on cautious sentiments

    Investors should not expect an exceedingly bullish market in the period ahead, though stocks could pose strong capital gains in the topsy-turvy expected to characterise the market trend till year-end.

    As the stock market opens today, most pundits will adopt cautionary approach than the overtly bullish disposition many expect the market to close around its current year-to-date return.

    The All Share Index (ASI), the common value-based index that tracks all equities on the Nigerian Stock Exchange (NSE) and doubles as benchmark return index for the NSE and Nigeria, opens today with average year-to-date return of 35.47 per cent after it lost 1.0 per cent in consecutive declines that pervaded the three trading days last week.

    Many analysts have reechoed the tepid market outlook as equities struggle with profit-taking transactions and belt-tightening monetary policy changes.

    Analysts at Financial Derivatives Company (FDC), headed by Bismarck Rewane, said investors should not carry the optimism of the previous months’ performance to the coming months as the market might have exhausted the steam for such excited return.

    “Macroeconomic events will shape investor behaviour. Declining inflation, a stable naira and interest rates at current levels bear favourable tidings for the market. However, we believe it is unlikely that the market repeats the strong bull run of H2’12. The gains of the year appear to have been made. There will be bright spots here and there but the market will stroll at a tepid pace,” FDC stated in its latest review made available at the weekend.

    Analysts at FDC noted the delicate mixture of surprises and disappointments that have greeted recent earnings reports by quoted companies, which have failed to prompt strong positive rally and activities.

    Economist and investment advisor, Sterling Capital Markets Limited, Sewa Wusu, said there were many variables that could adversely affect the stock market in the period ahead, leading to portfolio rebalancing in favour of the fixed-income market.

    According to him, the increase in cash reserve ratio for public sector funds to 50 per cent by the Central Bank of Nigeria (CBN), will likely lead to increase in deposit and interest rates, which would enhance the attractiveness of money market instruments.

    He noted that high-interest rate in the midst of a tepid stock market will limit the inflow of funds to the capital market.

    In a preview of the second half, analysts at Investment One Financial Services Limited had described the outlook for the stock market in the second half as “neutral”, a reference to subdued performance.

    According to analysts, the equities market could benefit from above-forecasts earnings reports in the second and third quarters as well as stable macroeconomic fundamentals and attractive valuation of the Nigerian stock market relative to developing and emerging market peers.

    Analysts noted that renewed foreign investors’ appetite for the Nigerian market on the back of prolonged monetary easing in the United States could boost market performance.

    They, however, said the market performance could be undermined by weak inflow of external funds on improving economic fundamentals in the USA as well as poor corporate earnings that fail to meet market-wide expectations and end of year sell-off.

    Equities had consolidated their bullish rally in July as improved first-half earnings drove the market to a seven-month average return of 35.03 per cent. Equities closed the seventh month on a high note, trotting back to N12 trillion after adding N581 billion capital gains in July.

    Aggregate year-to-date return thus improved from six-month value of N2.45 trillion to N3.03 trillion by the end of July. After the downtrend in June, the market was particularly spectacular in July with a month-on-month average return of 5.08 per cent.

    Meanwhile, total turnover at the NSE last week stood at 1.1 billion shares worth of N9.10 billion in 17, 076 deals. Financial services stocks accounted for 856.03 million shares valued at N6.01 billion in 9,872 deals; representing 78 per cent of aggregate turnover for the week.

    The financial services sector rode on the back of strong demand for United Bank for Africa (UBA) and Sterling Bank, which boosted the contribution of the dominant banking subsector.

     

     

     

     

     

     

     

  • Equities rake in N405b capital gain on new earnings

    •Vitafoam to raise new capital from shareholders

    Increased flow of new earnings reports that largely showed improvements in fundamentals of quoted companies spurred investors to take early positions in equities and readjust portfolios in the light of the new earnings reports. The scrambles for equities sustained a day-by-day bullish rally throughout last week, leaving investors with capital gain of N405 billion.

    Several companies including United Bank for Africa (UBA), Flour Mills of Nigeria, GlaxoSmithKline Consumer Nigeria, Diamond Bank, Union Bank of Nigeria, Presco, Total Nigeria, Ashaka Cement, Lafarge Cement Wapco Nigeria, Stanbic IBTC Holdings, FCMB Group, Julius Berger Nigeria, Cadbury Nigeria and Ecobank Transnational Incorporated (ETI) released new earnings reports, which altogether stimulated the market momentum.

    Riding on the increased enthusiasm, equities recorded a week-on-week average return of 3.44 per cent last week, which pushed market’s average year-to-date return to 36.84 per cent. The All Share Index (ASI), the benchmark value index for the equities’ market, closed the week at 38,424.34 points as against its opening index of 37,145.65 points for the week.

    Aggregate market value of all equities on the Nigerian Stock Exchange (NSE) rose from value-on-board of N11.764 trillion to close at N12.169 trillion, an increase of N405 billion. All tracked indices at the NSE were on the upside, underlining the widespread bullish rally during the week.

    The NSE 30 Index, which tracks the 30 most capitalised stocks on the NSE, appreciated by 3.64 per cent. Also, the NSE Consumer Goods Index, NSE Banking Index, NSE Insurance Index, NSE Oil and Gas Index, NSE-Lotus Islamic Index and NSE Industrial Goods Index rose by 3.89 per cent, 4.60 per cent, 0.42 per cent, 0.75 per cent, 3.54 per cent and 5.09 per cent respectively.

    Total turnover stood at 1.36 billion shares worth of N16.17 billion in 28,322 deals. The financial services sector was the most active sector with a turnover of 990.48 million shares valued at N7.92 billion in 15,243 deals, representing about 72.6 per cent of total turnover for the week. Banking stocks accounted for 638.02 million shares valued at N6.09 billion in 10,059 deals.

    Meanwhile, Vitafoam Nigeria Plc plans to raise new equity funds from existing shareholders to strengthen the company’s balance sheet and deleverage its highly geared financing structure.

    Regulatory filing made available at the weekend by the Nigerian Stock Exchange (NSE) showed that the board of directors of the foam-manufacturing company has decided to seek for new equity funds from existing shareholders.

    According to the board’s resolution, the rights issue will be pre-allotted on the basis of one new share for every one share held as at the prequalification date.

    Directors of Vitafoam have already scheduled an extra-ordinary general meeting for September 4, 2013 to seek mandatory approval of shareholders of the company for the new issue.

    Vitafoam opens today at N4.40, N1.14 below its high of N5.54 per share. Rights issue is traditionally offered at lower-than-market price.

    The board of the company also appointed Meristem Registrars Limited as the new registrar to the company following the acquisition of its erstwhile registrar – UAC Registrars Limited – by Africa Prudential Registrars Limited.

     

  • Equities lose N888b in three days

    Nigerian equities lost N888 billion in the last three trading days of last week as the global capital market rocketed from concerns about likely adverse impact of fiscal cuts by the United States of America (USA) and further relapse in sticky economies of Europe and America.

    Aggregate market capitalisation of all quoted equities on the Nigerian Stock Exchange (NSE), which had peaked at N12.855 trillion last Tuesday, dropped successively to close weekend at N11.967 trillion, indicating a loss of N888 billion within the last three days.

    The main index at the NSE, the All Share Index (ASI), also nosed down from its recent high of 40,012.66 points on Tuesday to close the week at 37,249.93 points.

    The market’s decline was largely orchestrated by profit-taking transactions on highly capitalised stocks, especially the hitherto extremely bullish fast moving consumer goods and industrial stocks.

    The downturn came on the heels of global downshift in world’s equities’ market amidst worries about the outlooks for advanced economies. The International Monetary Fund (IMF) cut its outlook for USA’s economic growth in 2014 from 3.0 per cent published in April to 2.7 per cent, citing what it described as “excessively rapid and ill-designed” fiscal cuts. The IMF warned that fiscal reductions in the areas of education, science and infrastructure could reduce potential growth.

    Nigerian equity market has a strong linkage with the international financial markets. Latest update shows that foreign investors accounted for 64.48 per cent of total transaction value at the NSE in April, the last available data, a substantial increase on 52.78 per cent they recorded in March when they displaced domestic investors as the most influential investment block.

    Altogether, the Nigerian equity market recorded weekly average return of -5.85 per cent last week as the losses within the last three trading days upset earlier gains. Aggregate market value of equities, which opened the week at N12.640 trillion, closed at N11.967 trillion while the ASI dropped from its week’s index on board of 39,564.79 points to close at 37,249.93 points.

    All other indices at the NSE reflected the pervasive downtrend. The NSE 30 Index, which tracks the 30 most capitalised companies, dropped by 5.86 per cent. The NSE Consumer Goods Index slipped by 7.05 per cent. The NSE Banking Index dropped by 7.23 per cent. Insurance index indicated average loss of 2.87 per cent. The NSE Oil and Gas Index declined by 5.82 per cent while the NSE Industrial Goods Index dropped by 6.59 per cent.

    Total turnover stood at 3.73 billion shares worth of N75.874 billion in 39,060 deals. Financial services sector accounted for a turnover of 1.70 billion shares valued at N14.7 billion traded in 19,826 deals. The trio of Transnational Corporation of Nigeria Plc, IHS Plc and Dangote Cement Plc accounted for 1.35 billion shares worth N48.72 billion in 1,692 deals, representing 36.19 per cent of aggregate turnover.

    Meanwhile, shareholders of Total Nigeria Plc have been assured of a better package in 2013 despite the challenges surrounding the sector.

    Speaking at the 35th annual general meeting (AGM) of the company on Friday in Lagos, chairman, Total Nigeria Plc, Mr Momar Nguer assured shareholders that the company is well positioned to overcome the challenges of the business environment.

    “We expect 2013 will be a year that will provide us with the opportunities for growth and investment and within which we shall consolidate on our past achievements, take advantage of the projected growth the Nigerian economy will offer and deliver value to our shareholder and other stakeholders. “We also envisaged that the year will not be without its own challenges but your company is well positioned to overcome the challenges of the business environment as she has the human capital and experience to do so,” Nguer said.

    Total Nigeria Plc posted a turnover of N217.84 billion in its 2012 operations, against N173.95 recorded in 2011 while profit after tax also increased from N3.81 billion in 2011 to N4.67 billion during the year under review. Based on the improved performance, the company directors are proposing a dividend of N2.72 billion, translating to 800 kobo per share to be distributed as final dividend for 2012 financial year. The company had earlier distributed N1.02 billion or 300 kobo per share as interim dividend.