Less than a quarter of quoted companies on the Nigerian Stock Exchange (NSE) performed above average market returns with low-priced stocks, otherwise known as penny stocks, dominating the highest returns table.
Eight-month year-to-date analysis of the stock market showed a major reversal last month as equities lost N510 billion to almost reverse previous gain of N581 billion in July. The reversal in August shaved average year-to-date capital gains at the Nigerian equities market from about N3.03 trillion by the end of July to N2.52 trillion by the end of August. Indexed, average returns at the market shrank to 29.10 per cent for the eight-month period as against 35.03 per cent recorded by the seventh month.
In simple value terms, the eight-month capital gain of N2.52 trillion still surpassed total gains of N2.44 trillion recorded for the entire 2012, although substantially lower than N3.03 trillion recorded by July 2013. However, the average indexed return of 29.10 per cent fell below return of 35.03 per cent recorded by July. Average full-year return had stood at 35.45 per cent in 2012.
Most equities were almost flat while several other stocks witnessed depreciation, underlying the hangover of the recent recession, which has continued to haunt several stocks, especially in the insurance and information and communication sectors.
Investors warmed up to low-priced brewers as preference for equities with relatively low prices appeared to be growing on the back of substantial returns by the penny stocks.
As against July when 42 stocks performed above average, eight-month year-to-date returns by 45 stocks were higher than the average benchmark return of 29.10 per cent. However, most top-fliers also witnessed considerable declines in their returns compared with the closing positions in July.
Jos International Breweries, Transnational Corporation of Nigeria (Transcorp), International Energy Insurance, Prestige Assurance, Total Nigeria, Ecobank Transnational Incorporated (ETI) and GlaxoSmithKline Consumer Nigeria (GSK) made the new list of above-average stocks, four other stocks including International Breweries, Diamond Bank, NEM Insurance and Ashaka Cement dropped from the top gainers’ list. The most dramatic advances were in the breweries sector, where low-priced brewers became the toasts of investors. Champion Breweries, which had closed July with a year-to-date of 220.7 per cent, consolidated its returns to 310.36 per cent while Jos International Breweries, which fell short of the 35.03 per cent average in July, recorded year-to-date return of 91.50 per cent by end of August.
While few stocks moved their positions on the returns table and returns were lower in several instances, the structure of the top stocks remained largely unchanged. Forte Oil remained atop with eight-month return of 402.85 per cent. Evans Medical followed with a return of 342.53 per cent. Livestock Feeds placed fourth with a return of 197.22 per cent. Presco posted a return of 119.94 per cent. International Energy Insurance (IEI), which had completed the restructuring of its shares by reducing number of outstanding shares and re-pricing the remaining ones, recorded an increase of 116 per cent. However, IEI’s return may still largely be subjective and due mainly to revaluation of the stock as it has not been actively traded after the restructuring. Julius Berger Nigeria retained year-to-date return of 115.61 per cent. In spite of substantial decline in recent period, investors in Wema Bank still have 100 per cent return on the opening values of their investments this year.
Other above-average stocks included Transcorp, 33.33 per cent; UAC of Nigeria, 30.95 per cent; UACN Property Development Company, 37.12 per cent; Seven-Up Bottling Company, 71.43 per cent; Dangote Sugar Refinery, 81.67 per cent; Honeywell Flour Mills, 52.15 per cent; Northern Nigeria Flour Mills, 55.01 per cent; National Salt Company of Nigeria, 36.88 per cent; Cadbury Nigeria, 82.24 per cent; Nestle Nigeria, 33.57 per cent; PZ Cussons Nigeria, 35 per cent; ETI, 29.67 per cent; Sterling Bank, 47.4 per cent; United Bank for Africa, 60.75 per cent; Union Bank of Nigeria, 40.14 per cent; Aiico Insurance, 51.61 per cent; Continental Reinsurance, 60.53 per cent; Prestige Assurance, 29.41 per cent, Wapic Insurance, 41.38 per cent while Stanbic IBTC Holdings recorded a return of 47.55 per cent.
Others were Fidson Healthcare, 90.57 per cent; GSK, 29.71 per cent; May and Baker Nigeria, 47.74 per cent; Courteville, 36 per cent; CAP, 55.89 per cent; Cement Company of Northern Nigeria, 69.06 per cent; Dangote Cement, 48.32 per cent; IPWA, 52 per cent; Lafarge Cement Wapco Nigeria, 58.89; Conoil, 45.37 per cent; Eterna, 53.77 per cent; MRS Oil & Gas, 52.10 per cent; Total Nigeria, 30.26 per cent; Red Star Express, 56.67 per cent, ABC Transport, 54.0 per cent while McNichols, with a return of 85.19 per cent, was the only second-tier stock on the above-average list.
But while the downside remained muted, some 13 stocks recorded significant losses. Vono Products Plc showed the highest year-to-date loss of 66.32 per cent. It was followed by Trans Nationwide Express, which recorded negative return of -64.03 per cent. John Holt trailed with 62.94 per cent while Costain (West Africa) placed fourth with -56.02 per cent.
Other top losers included Chellarams, -22.77 per cent; NPF Microfinance Bank, -33.05 per cent; Deap Capital Management, -46.04 per cent; Morison Industries, -42.07 per cent; Pharma Deko, -28.85 per cent; Thomas Wyatt, -38.64 per cent; Capital Hotel, -27.43 per cent; Learn Africa, -21.88 per cent and Juli Plc, which opened this week with eight-month loss of 26.62 per cent.
Equities’year-to-date performance was moderated by the bearishness that dominated August as poor earnings by banks dampened investors’ appetites. Aggregate market value of all equities closed August at N11.497 trillion from its month’s opening value of N12.007 trillion, indicating a month-on-month drop of 4.25 per cent. The All Share Index (ASI), which doubles as benchmark index for all equities on the NSE and country index for Nigeria, slipped by 4.39 per cent from 37,914.33 points to 36,248.53 points, representing a drop of 4.39 per cent or about 1,666 points.
Nigerian equities had consolidated their bullish rally in July as market capitalisation added N581 billion to throttle back to N12 trillion. Aggregate year-to-date return 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.
Aggregate market value of all equities closed July at N12.007 trillion as against its opening value of N11.426 trillion for the month. The ASI also rose from month’s opening index of 36,164.31 points to close at 37,914.33 points.
The stock market had closed the first half 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 as against its value-on-board of N8.974 trillion that started the year, representing an increase of 27.3 per cent. The ASI had risen from last year’s opening index of 28,078.81 points to close the first half at 36,164.31 points.
The first-half performance was moderated by the downtrend in the latter half of June, which saw the month closing as the most bearish month with a loss of N649 billion. Equities had shown brighter performance in the first five months with whooping capital gains of N3.10 trillion. Aggregate market capitalisation of all equities had closed May at N12.075 trillion while the ASI had indicated a five-month average return of 34.6 per cent.
