The Nation Newspaper

Tag: stocks

  • Banking stocks lead returns at stock market

    Investors in banking stocks earned as much as a double of any other average investor in the Nigerian equities market in the first half of this year.

    A six-month review of sectoral indices for the period ended June 30, 2017 at the weekend showed that banking stocks significantly outperformed the benchmark index and other sectoral indices at the Nigerian Stock Exchange (NSE).

    The NSE Banking Index, which tracks price appreciation in the most active banking sector, indicated average year-to-date return of 45.08 per cent for the first half, almost a double of the average year-to-date return of 23.23 per cent for the overall stock market.

    The NSE Industrial Goods Index, which includes Nigeria’s most capitalised company-Dangote Cement, recorded the second highest return with a six-month return of 21.12 per cent. Expectedly, the NSE 30 Index, which tracks the 30 most capitalised stocks that largely comprise of banking and industrial goods stocks, recorded average return of 25.87 per cent within the period.

    With the exception of investors in the emerging stocks segment of the market, other tracked indices showed modest positive returns within the period. The NSE Insurance Index recorded a return of 9.16 per cent. The NSE Consumer Goods Index posted a gain of 11.61 per cent. The NSE Oil and Gas Index recorded the lowest return of 3.35 per cent on the main board.

    The NSE Lotus Islamic Index, which tracks stocks that comply with Islamic investment guidelines, indicated a return of 11.15 per cent.

    Meanwhile, pensioners appeared to be in for wider dining tables as the NSE Pension Index, which tracks a portfolio of stocks specially screened for pension investment in line with the pension investment guidelines, posted a return of 42.92 per cent.

    However, the NSE ASeM Index, which tracks equities on the Alternative Securities Market (ASeM) for emerging stocks, posted a negative return of 1.27 per cent within the first half of the year.

    Also, investors earned net capital gain of N344 billion during the three-day trading session last week. Aggregate market value of all quoted equities at the NSE rose from the week’s opening value of N11.108 trillion to close the week at N11.452 trillion, representing net capital gain of N344 billion. The benchmark index for the stock market, the All Share Index (ASI) also rallied from its index on board of 32,122.14 points to close the week at 33, 117.48 points.

    Total turnover stood at 1.171 billion shares worth N11.458 billion in 13,763 deals during the three-day trading session compared with a total of 2.311 billion shares valued at N24.577 billion traded in 27,836 deals in the previous five-day trading week.

    The financial services sector led the activity chart with 899.307 million shares valued at N6.779 billion traded in  7,977 deals; thus contributing 76.78 per cent and 59.16 per cent to the total equity turnover volume and value respectively. The conglomerates sector followed with 111.022 million shares worth N189.462 million in 952 deals while the consumer goods sector ranked third with a turnover of 56.912 million shares worth N2.373 billion in 2,055 deals.

    The three most active stocks were United Bank for Africa Plc, Transnational Corporation of Nigeria Plc and Access Bank Plc, which altogether accounted for 499.566 million shares worth N3.717 billion in 2,954 deals, contributing 42.65 per cent and 32.44 per cent to the total equity turnover volume and value.

    Also traded during the week were a total of 869,680 units of Exchange Traded Products (ETPs) valued at N19.150 million in 16 deals compared with a total of 63,927 units valued at N841,330.04 traded in 11 deals in the previous week.

    In the debt segment, a total of 20 units of Federal Government Bonds valued at N16,487 were traded in a deal compared with seven deals struck for 2,212 units valued at N2.098 million in the previous week.

     

  • ‘Many stocks are still trading below their values’

    ‘Many stocks are still trading below their values’

    Leading investment banker, Dr. Umaru Kwairanga, in this interview with Taofik Salako speaks on the opportunities in the stock market and strategies to build healthy investment portfolio. A former chairman of Ashaka Cement, Kwairanga is on the National Council of the Nigerian Stock Exchange (NSE) and a director in several companies, including Lafarge Africa, Central Securities Clearing System Plc (CSCS), Jaiz Bank Plc and FBN Mortgages Limited.

    What is your assessment of the capital market so far this year?

    The capital market has been on a rebound in 2017, especially from the end of the first quarter till now. Recent initiatives taken by the Central Bank of Nigeria to solve the problem of chronic scarcity of forex has boosted the economy and the capital market in particular. The All Share Index has swung into positive territory after months of persistent declines and trading volumes have increased dramatically in the last couple of months. I would say the Nigerian capital market has done quite well in the last couple of months.

    In the light of market situation, what is your advice for investors?

    My advice has always been that investors should make investing a regular habit, invest after thorough research and more importantly seek the opinion of a professional stock broker. Keep an eye on your investments and the fundamentals of the companies you invest in. Buy low, sell high. Our stock market has growth potential as many stocks are still trading below their intrinsic values. This is a good time to move in.

    What is the link between macro-economic instability and trading on the Nigerian Stock Exchange, especially the issue of foreign exchange?

    The macro-economic instability in the previous past impacted trading on the NSE negatively. The index and market capitalisation were down by almost five pr cent while the uncertainty lasted and trading volumes halved from previous years. As you know, participation in our capital market has been slightly skewed in favour of foreign portfolio investors for most of the past decade and this category of investors refused to participate in the capital market while the forex issues persisted. I believe the drastic dip in liquidity of the capital market was partly due to the refusal of this category of investors to play in the market while the macro-economic issues were prevalent

     What is your assessment of investor’s confidence in the market?

    Investor confidence is gradually returning as can be seen by the positive numbers in recent weeks. Our prayer is that the government, the Central Bank of Nigeria and other regulators remain consistent in their resolve to tackle the issues that have held our economy and this great country potential down in recent years. That will definitely boost investor’s confidence further and guarantee stability.

    Are there critical issues that the government should address to use the capital market to fund this year’s budget deficit?

    I think the funding of government deficits is an ongoing issue and cannot be tied to the current year’s budget alone. The capital market exists to bridge the gap between investors who have funds to invest and users whether government or the private sector who need funds at any particular time. As long as the Federal Government puts in place policies and mechanisms to ensure prudence and accountability and offers competitive returns, the capital market will remain a viable option for funding its deficits.

    What have been the roles of the Chartered Institute of Stockbrokers (CIS) in building investor’ confidence in the market?

    CIS has been very proactive in ensuring that members of the institute attain and maintain the highest standards in terms of professionalism, knowledge and character. Any investor dealing with a licensed member of the Institute is assured that he or she is dealing with a professional who knows his onions and who will always abide by the highest standards of integrity.  At the same time CIS is also waging a relentless war against quackery in the profession to ensure that investors in the Nigeria’s market are protected at all times.

     As chairman of the national workshop committee of the CIS for this year, what informed the theme, “Transiting from recession to a global power: A working template for Nigeria “?

    We chose the theme because we believe that what has happened in the last year is an aberration. Nigeria with its bountiful human and material resources and untapped opportunities should be on a consistent growth trajectory to taking its rightful place as a global power. Some mistakes were however made over the years especially in the last four decades that have consistently held back our potential. Our belief as an institute is that with the right strategies in place and proper implementation, we can reset this country and fast-track it to its rightful place in the comity of nations. We see the recession as a temporary blip and are confident that with the right template, we can attain our rightful status as a global power.

    What are the benefits of the theme to the economy in general and the capital market in particular?

    The theme will elicit a viable working template that the managers of the economy can leverage on to drive growth in the country. We anticipate that speakers will come up with feasible and workable strategies for important organs of government and the private sector to implement to drive momentum in various sectors. This will benefit the economy, the citizenry and, ultimately, the capital market as the capital market is but a barometer of the economy. When an economy is vibrant and growing, the capital market will mirror this. If otherwise, the market will equally reflect the situation. I must be quick to add that our market is forward looking.

    What is the nexus between the workshop theme and the Economic Recovery and Growth Plan (ERGP) recently launched by the Federal Government ?

    A: The two are complementary in that they both seek to proffer workable and practicable solutions to get the economy out of recession and back on the path of sustainable growth.

    What do you think would make the workshop unique?

    The workshop will be practical and offer implementable strategies on a wide ranging variety of problems holding our economy back. It will, therefore, not be just another talk shop. It shall be a new platform for engaging the government on the need to utilize the capital market for successful implementation of this year’s budget.

     What should the investing public expect from the national workshop?

    Investors should expect positive messages on growth in both the economy and the capital market. They should expect to hear about some of the laudable strategies being crafted to get the economy out of recession and increase corporate returns.

     

  • High-cap stocks halt equities’ rally

    • Cadbury Nigeria gets new MD

    Nigerian equities suffered a relapse yesterday as selloff within the highly capitalised stocks’ group drove the market to a net capital loss of N81 billion. Highly capitalised stocks in the building materials, banking and oil and gas sectors dominated the top losers’ list in a five-hour trading session that saw considerable preference for low-priced equities.

    Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) dropped from N9.146 trillion to close at N9.065 trillion, representing a net capital loss of N81 billion. The All Shares Index (ASI)-the benchmark index at the stock market, declined by 0.88 per cent to close at 26,346.24 points as against its opening index of 26,580.22 points.

    While there were more losers than gainers, the overall negative position was driven largely by losses recorded by large-cap stocks such as Dangote Cement, Guaranty Trust Bank and Zenith Bank. Seven-Up Bottling Company led the 25-stock losers’ list with a loss of N11.15 to close at N111.40. Mobil Oil Nigeria followed with a loss of N2.04 to close at N263.01. Guaranty Trust Bank, the most capitalised banking stock, dropped by N1.04 to close at N23.56. Dangote Cement, the most capitalised quoted company, lost N1 to close at N168. Forte Oil declined by 61 kobo to N79.76. International Breweries dropped by 50 kobo to N18. Zenith Bank declined by 39 kobo to close at N15.10. Access Bank dropped by 21 kobo to N6.30. Cutix lost 18 kobo to close at N1.71 while United Bank for Africa declined by 16 kobo to close at N4.75 per share.

    Investors showed considerable preference for low-priced stocks, otherwise known as penny stocks. Omoluabi Savings and Loans was the most active stock with a turnover of 93.50 million shares worth N83.95 million. Fidelity Bank followed with 39.37 million shares valued at N36.03 million while FCMB Group placed third with a turnover of 37.14 million shares worth N49.5 million. Altogether, a total of 372.85 million shares were traded in 4,068 deals.

    On the upside, Total Nigeria led the 19-stock gainers’ list with a gain of N5 to close at N305. Cadbury Nigeria followed with a gain of 25 kobo to close at N9.28. UACN Property Development Company added 15 kobo to close at N3.15. Nigerian Aviation Handling Company rose by 12 kobo to close at N2.71 while Airlines Services and Logistics added 11 kobo to close at N2.61 per share.

    Meanwhile, Mondelçz International, a global snacks powerhouse, holds 74.99 per cent equity stake in Cadbury Nigeria, has drafted a director of its global biscuits business based in Hanover, United States of America, Mr. Muhammad Amir Shamsi, to take over as the managing director of Cadbury Nigeria with effect from February 1, 2017. He will succeed Mr Roy Namaan, whose resignation takes effect from January 31, 2017.

  • NSE places one-third of stocks on ‘danger’ list

    NSE places one-third of stocks on ‘danger’ list

    More than one-third of quoted companies on the Nigerian Stock Exchange (NSE) have regulatory and compliance issues that investors need to consider, a new assessment report by the Exchange has shown.

    The report, which heralded the implementation of the newly introduced Compliance Status Indicator (CSI) of the NSE obtained at the weekend, indicated that more than 60 companies were tagged with red alerts by the Exchange, drawing the attention of the investing public to compliance and regulatory issues in the stocks.

    There are 180 companies listed on the NSE and more than 60 of them are tagged with the red alerts for various infractions and compliance issues. Many high-profile companies in the banking, oil and gas, consumer goods, insurance, construction and services sectors among others were marked out by the CSI for investors’ scrutiny.

    The Nation had reported exclusively that the NSE will start to tag quoted companies with compliance and regulatory issues with a three-character code that enables investors to identify such companies and make appropriate informed investment decisions.

    Ten codes had been developed by the NSE. The code-Below Listing Standard (BLS) comprises all deficiencies regarding continuing listing standards. Missed Regulatory Filing (MRF) implies that the company missed regulatory filing deadline.

    Delisting Watch-list (DWL) relates to companies that have been served with a delisting notice, but the delisting process has been put on hold because they have received a stay of action from the NSE for a specified period during which they will address the issues that led to the issuance of the delisting notice. If they fail to tackle the issue within the defined period or any extension thereof, the hold on the delisting process will be lifted.

    Also, Delisting in Progress (DIP) defines companies that are in the delisting process, mandatory or voluntary. Usually, the delisting process commences with a notice of intention to delist from the NSE to an issuer, in the case of mandatory delisting, or to the Exchange from an issuer, in the case of voluntary delisting.

    Awaiting Regulatory Approval (AWR) implies that the companies that are awaiting the approval or no objection of their primary or another government regulator before releasing their audited financial statements.

  • Banking stocks sustain rally over clarity on EFCC probes

    For the second consecutive trading session, banking stocks bucked the negative overall market position at the Nigerian Stock Exchange (NSE) to close on the positive as many banks affirmed compliance with operational rules and dissociated themselves from slush political dealings.

    Amidst the sustained decline in the overall market position at the NSE in the past two trading sessions, the NSE Banking Index-which tracks the banking sector, sustained modest uptrend on the back of gains by many banks. The NSE Banking Index rose yesterday by 0.58 per cent, almost on the same level with the day-on-day gain of 0.6 per cent recorded on Tuesday.

    The All Share Index (ASI)-the value-based index that tracks prices of all quoted equities and serves as benchmark index for the Nigerian stock market, conversely dropped by 0.06 per cent yesterday, extending the downtrend that saw a decline of 0.70 per cent on Tuesday.

    The sustained rally in the banking sector came on the heels of clarifications by Sterling Bank and Access Bank that last week’s investigative visits by the Economic and Financial Crimes Commission (EFCC) were not in connection with any slush political dealings but were on normal banking transactions involving non-political clients.

    Sterling Bank’s share price remained steady on Wednesday after it rallied by 4.91 per cent on Tuesday, the eighth highest percentage gain within the five-hour trading session. Sterling Bank had filed a regulatory statement at the Exchange clarifying the recent issue involving the bank and EFCC.

    In the statement, Sterling Bank affirmed that it did not hold account for “the public officer from the previous administration to which this matter (EFCC visit to the bank) has been linked either officially or otherwise”.

    Some reports had linked last week investigative visit by the EFCC to the bank to the slush political dealings involving former Minister of Petroleum Resources, Mrs Diezani Allison-Madueke, generally known as Diezanigate. EFCC has also been investigating diversion of arms funds, otherwise known as Dasukigate, named after the former National Security Adviser, Col. Sambo Dasuki (rtd).

    Sterling Bank explained that while the reason for the visit by the EFCC was not immediately clear, it has now been confirmed that the investigation is related to the banking relationship of a non-bank financial institution that is a client of Sterling Bank Plc.

    “We affirm for the public records that the bank does not hold the account of the public officer from the previous administration to which this matter has been linked either officially or otherwise; the non-bank financial institution (asset management company) in question purchased a number of loans on a recourse basis from Sterling Bank Plc on commercially acceptable terms and this is the link of the concern raised by the EFCC to Sterling Bank Plc,” Sterling Bank stated.

    Sterling Bank assured the investing public that it has commissioned a review of the compliance procedures of its non–bank financial institution clients with the aim of strengthening this area of its operations while in the interim, the bank will not accept any new non-bank financial institution relationships.

    In a related statement, Access Bank also clarified that the EFCC visited the bank as part of ongoing investigation into a specific transaction involving a customer of the bank in the normal course of business.

    Access Bank noted that while the visit came without any form of notification or invitation, it fully cooperated with the officials of the EFCC.

    “We have observed the wide ranging speculations in the media connecting the visits of the Commission to various personalities. We would like to state emphatically for the benefit of our stakeholders that the bank has absolutely no link, interaction or relationship whatsoever with any of the personalities stated in the media reports,” Access Bank stated.

    The overall market position again closed negative yesterday. The ASI declined from 25,646.56 points to close at 25,630.52 points. Aggregate market capitalisation of all quoted equities also dropped marginally from N8.822 trillion to close at N8.820 trillion.

    However, the underlying sentiments at the stock market were largely positive with 31 gainers to 20 losers. The negative overall market position was driven largely by losses recorded by highly capitalised stocks such as Dangote Cement, Dangote Sugar Refinery, Flour Mills of Nigeria, Lafarge Africa and Ecobank Transnational Incorporated.

  • Equities rebound as investors go for undervalued stocks

    Where were more than two advancers for every decliner yesterday at the Nigerian Stock Exchange (NSE) as a renewed demand for quoted equities spurred a major rebound. After successive declines in the previous two trading sessions, bargain-hunters returned to the stock market on Thursday, holding out higher prices for most transactions.

    From banking to consumer goods sectors, investors showed improved appetite for quoted equities. Aggregate market value of all quoted equities rode on the back of the increased demand to close at N9.354 trillion, N69 billion above its opening value of N9.285 trillion.

    The All Share Index (ASI), the benchmark index at the NSE, rose by 0.75 per cent to close at 27,205.95 points compared with its opening index of 27,004.50 points. The NSE Banking Index rose by 2.3 per cent while the NSE Consumer Goods Index appreciated by 2.0 per cent. The upturn reduced the negative average year-to-date return to -21.50 per cent.

    There were 25 gainers against 11 losers in a five-hour trading sessions that saw substantial interests in low-priced large-cap stocks as well as low-cap penny stocks. Nigerian Breweries, Nigeria’s second most capitalised stock, led the advancers with a gain of N4.30 to close at N116.31. Guinness Nigeria, the second most capitalised brewer, followed with a gain of N1.60 to close at N124.60. Presco added N1.30 to close at N32.30. Zenith Bank rose by N1.25 to close at N15.25. PZ Cussons Nigeria gathered 96 kobo to close at N27.46. Cadbury Nigeria rose by 93 kobo to close at N19.61 while Seven-Up Bottling Company added 90 kobo to close at N182.

    Total turnover stood at 179.05 million shares valued at N1.46 billion in 2,747 deals. The three most active stocks, in terms of volume, were Law and Union Rock Insurance, 32.85 million shares, United Bank for Africa, 30.87 million shares and FBN Holdings, which recorded a turnover of 16.10 million shares. The most active sectors were financial services, 147.51 million shares; conglomerates, 15.17 million shares and consumer goods sector, which recorded a turnover of 5.0 million shares.

    Analysts at Cowry Asset Management attributed the upturn to renewed bargain-hunting.

    “The rebound today was in line with our expectation of bargain hunting after many value counters fell to year lows yesterday. In our view, the fact that some stocks with low prices are still not generating enough buy-attractions suggests that aggregate market buy-appetite remains weak and the current positive sentiment might be short-lived. We continue to advise caution on the part of retail investors with a short holding period,” analysts at Afrinvest Securities stated.

    Dangote Cement recorded the highest loss of N2.19 to close at N160. Fidson Healthcare and AXA Mansard Insurance dropped by 13 kobo each to close at N2.56 and N2.61 respectively.

  • Nigerian stocks reach their lowest levels, says FBN Capital

    Nigerian quoted equities have reached their lowest levels and may therefore show more recovery than depression in the period ahead, according to FBN Capital Limited.

    In a review of the Nigerian equities market, FBN Capital, the investment banking subsidiary of FBN Holdings, said while the Nigerian equities market might still come under global risks, the market appeared to have fully factored in domestic macroeconomic economic risks and prices have bottomed-out.

    “In January, we forecast a -1.0 per cent loss for the index (All Share Index of the Nigerian Stock Exchange) over the full year. On the basis of solely domestic factors, we think that the market has reached the bottom,” FBN Capital stated.

    The stock market opened on Monday with a negative average year-to-date return of -9.28 per cent, trailing the Kenyan stock market, which had recorded average year-to-date return of -13.6 per cent. In contrast, the South African stock market, Africa’s most liquid and largest market, had gained 5.4 per cent over the same period.

    Under the influence of the political transition, the stock market has been erratic over the past seven months, gaining 20 per cent between March 20 and April 13 on an election-driven surge and then started a sustained streak of depreciation, losing 11.9 per cent in the subsequent period.

    FBN Capital attributed the downtrend at the Nigerian Stock Exchange to “poor listed company results and an investors’ sense of drift since the handover to the new administration on May 29”.

    The investment report noted the various concerns over the delay in forming executive cabinet by President Muhammadu Buhari but analysts at FBN Capital appeared to side with the contrary position that views the concerns as misplaced, noting that while numerous commentators have been highly critical, they tended to overlook the reality that civil servants “run” countries and not ministers.

    The report, however, noted that the stock market might still come under pressure from a sustained fall in the oil price, which would intensify pressures on the public finances, the balance of payments and the naira exchange rate.

    “We also highlight a general risk to frontier and emerging markets from expected United States monetary tightening this year,” FBN Capital added.

    Analysts noted the increase in foreign portfolio investments. The NSE’s monthly notes on investor participation had shown foreign inflows at N285 billion in first half of the year and outflows at N304 billion. However, the month of June saw the largest net inflow of the period at about N16 billion.

    The report, however, hinted of possible further devaluation of Naira noting that the offshore community expects a third devaluation in one year, and FBN Capital also expects another adjustment by the end of the year.

    Nigerian equities had gained more than a double of the best return in the select global stock market last week as strong four-day consecutive rally neutralised last-day relapse and left the market with its highest week-on-week performance in recent weeks.

    After losing N1.13 trillion in July, the Nigerian stock market opened August with considerable rally. Day-on-day gain between Monday and Thursday moderated the built-up negative average year-to-date return. However, the market relapsed on the last trading day on Friday as investors turned round to profit-taking.

    The All Share Index (ASI), the common value-based index that tracks prices of all quoted equities on the Nigerian Stock Exchange (NSE), closed last week with a week-on-week gain of 4.18 per cent. It closed weekend at 31,441.71 points as against the week’s opening index of 30,180.27 points. Also, aggregate market value of all quoted companies rose to N10.776 trillion; representing an increase of N432 billion on its week’s opening value of N10.344 trillion. The gain last week moderated the negative average year-to-date return to -9.28 per cent.

    A review of some major advanced and emerging global markets showed that Nigerian equities outperformed other markets with considerable margin. The United States’ Standards & Poor’s 500 ( S & P 500) and the NASDAQ declined by 1.6 per cent and 1.1 per cent respectively. In Europe, the United Kingdom’s FTSE recorded a modest week-on-week gain of 0.5 per cent.  France CAC and German DAX outperformed other advanced markets with weekly gain of 2.2 per cent and 2.0 per cent.

    In Asia, the Shanghai Composite Index rose by 2.2 per cent as against modest decline of 0.3 per cent by Hong Kong Hang Seng. The Japanese Nikkei appreciated by 0.7 per cent.

    In the emerging markets under the BRICS group (Brazil, Russia, India, China and South Africa), Russia’s RTS indicated a negative return of -2.4 per cent while the Brazilian IBOVESPA also declined by 2.7 per cent. On the positive side, the South African FTSE and the India BSE Sens returned 0.6 per cent and 0.4 per cent respectively. Most African markets recorded positive performance, albeit lower than Nigeria’s. The Egypt EGX (Egypt General Index) rose by 0.1 per cent while Kenya’s Nairobi Stock Exchange (NSE) Index inched up by 0.2 per cent. However, Ghana Stock Exchange (GSE) Index declined by 1.0 per cent.

    Low-priced stocks, otherwise known as penny stocks, were the toasts of investors last week. Penny stocks dominated the top-gainers’ list with Evans Medical leading the pack with a gain of 38.9 per cent to close at 75 kobo. Transnational Corporation of Nigeria (Transcorp) recorded the second highest percentage gain of 29.1 per cent to close at N2.66. PZ Cussons Nigeria recorded exceptional gain of 25.26 per cent to close at N34.51, the largest gain by any high-priced stock. May & Baker Nigeria also rose by 14.5 per cent to close at N1.50 while Continental Reinsurance appreciated by 12.05 per cent to close at 93 kobo.

    Total turnover increased to 2.38 billion shares worth N18.99 billion in 19,769 deals last week as against a total of 1.37 billion shares valued at N17.95 billion traded in 17,391 deals in the previous week. Financial services sector remained the dominant sector with a turnover of 1.996 billion shares valued at N13.195 billion in 11,232 deals; representing 83.79 per cent and 69.49 per cent of the total equity turnover volume and value.

     

     

    Conglomerates sector occupied a distant second position on the activity chart with a turnover of 106.53 million shares worth N425.53 million in 1,150 deals. The third place was occupied by natural resources sector, which recorded turnover of 100.021 million shares worth N50.103 million in 16 deals.

    The trio of Continental Reinsurance Plc; Zenith International Bank Plc, and Axamansard Insurance Plc were the most active stsocks, accounting for a total of 1.03 billion shares worth N5.21 billion in 2,339 deals, about 43.4 per cent and 27.4 per cent of the total equity turnover volume and value respectively

     

  • Investors scramble for penny stocks as equities gain N432b

    Investors scramble for penny stocks as equities gain N432b

    Low-priced stocks, otherwise known as penny stocks, were the toasts of investors last week at the Nigerian stock market as four-day successive rally lifted the market with N432 billion capital gains.

    After losing N1.13 trillion in July, the stock market opened August with considerable rally. Day-on-day gain between Monday and Thursday moderated the built-up negative average year-to-date return. However, the market relapsed on the last trading day on Friday as investors turned round to profit-taking.

    Penny stocks dominated the top-gainers’ list with Evans Medical leading the pack with a gain of 38.9 per cent to close at 75 kobo. Transnational Corporation of Nigeria (Transcorp) recorded the second highest percentage gain of 29.1 per cent to close at N2.66. PZ Cussons Nigeria recorded exceptional gain of 25.26 per cent to close at N34.51, the largest gain by any high-priced stock. May & Baker Nigeria also rose by 14.5 per cent to close at N1.50 while Continental Reinsurance appreciated by 12.05 per cent to close at 93 kobo.

    In spite of the last-day relapse, all value benchmarks at the Nigerian Stock Exchange (NSE) closed on the upside. The All Share Index (ASI), the composite index that tracks prices of all quoted equities, closed weekend at 31,441.71 points as against the week’s opening index of 30,180.27 points, representing a gain of 4.18 per cent.

    Aggregate market value of all quoted companies also followed the same uptrend to close at N10.776 trillion; representing an increase of N432 billion on its week’s opening value of N10.344 trillion. The gain last week moderated the negative average year-to-date return to -9.28 per cent. There were 37 gainers against 29 losers during the week while 124 stocks were flat.

    Total turnover increased to 2.38 billion shares worth N18.99 billion in 19,769 deals last week as against a total of 1.37 billion shares valued at N17.95 billion traded in 17,391 deals in the previous week. Financial services sector remained the dominant sector with a turnover of 1.996 billion shares valued at N13.195 billion in 11,232 deals; representing 83.79 per cent and 69.49 per cent of the total equity turnover volume and value respectively. Conglomerates sector occupied a distant second position on the activity chart with a turnover of 106.53 million shares worth N425.53 million in 1,150 deals. The third place was occupied by natural resources sector, which recorded turnover of 100.021 million shares worth N50.103 million in 16 deals.

    The trio of Continental Reinsurance Plc; Zenith International Bank Plc, and Axamansard Insurance Plc were the most active stsocks, accounting for a total of 1.03 billion shares worth N5.21 billion in 2,339 deals, about 43.4 per cent and 27.4 per cent of the total equity turnover volume and value respectively.

    Also traded during the week were a total of 6,639 units of Exchange Traded Products (ETPs) valued at N999,551, which were traded in 22 deals. In the previous week, a total of 26,580 units of ETPs valued at N1.719 million were traded in 24 deals. Investors also bought 14,473 units of Federal Government Bonds valued at N15.576 million through six deals.

     

  • New pricing rule: Weak stocks can drop to one kobo

    New pricing rule: Weak stocks can drop to one kobo

    •50 stocks may drop below par value

    At least a quarter of quoted companies may drop to as low as one kobo as the Nigerian capital market regulators approved a new pricing rule that will remove the stopgap that had supported several stocks at their nominal value of 50 kobo.

    The Nigerian Stock Exchange (NSE) yesterday stated that the Securities and Exchange Commission (SEC) has approved the Exchange’s proposal to change the base price for any stock at the stock market from the current par-value based system to a general minimum price level of one kobo.

    According to the amendment to the pricing rule, notwithstanding the par value of a company, the price of every share listed on the Exchange shall be determined by the market, except that no share shall trade below a price floor of one Kobo per unit.

    Par value is the nominal value of a share as stated in the Memorandum of Association of an issuer while the price floor means the amount below which the price of one unit of a share shall not be permitted to trade, and the minimum amount which must be paid for a share in the event of a drop in the unit price of that share.

    The Nation’s check indicated that more than 50 companies, especially in the non-bank financial services subsectors, may be affected by the new pricing rule, which favours market forces to determine share price, irrespective of the nominal value of the company.

    Nearly all the 50 companies have been stagnant at their nominal value for more than a year and are currently on supply, a market euphemism for shares glut and sell pressure. They had been supported at the nominal value by the previous par-value system.

    “Definitely, it is going to affect the market capitalisation because you will have many stocks that will fall below par value. There may be negative market sentiments for such stocks and investors may not really like the idea of their stocks falling as low as one kobo. But looking at it from the global perspective, I think it is good for the market as market forces will now determine the price base for stocks,” Mr. Omololu Ajediran, fund manager, Sterling Capital Markets Limited, said.

    Most insurance companies, which have so far stagnated at 50 kobo, may be affected by the new rule These include African Alliance Insurance, Cornerstone Insurance, Equity Assurance, Great Nigeria Insurance, Guinea Insurance, Consoldiated Hallmark Insurance, Investment and Allied Assurance, International Energy Insurance, Lasaco Assurance, Law Union & Rock Insurance, Linkage Assurance, Prestige Assurance, Regency Alliance Insurance, Sovereign Trust Insurance, Standard Trust Assurance, Standard Alliance Insurance, Unic Insurance, Unity Kapital Assurance and Universal Insurance Company.

    Other companies that may initially be affected by the new rule include UTC Nigeria, Mutual Benefits Assurance, Niger Insurance, Omatek Ventures, Japaul Oil Maritime & Services, Tantalizers, Daar Communication, Secure Electronic Technology, Afromedia, Beco Petroleum, Multiverse, Nigerian Wire and Cable, IPWA, First Aluminium Nigeria, Mass telecommunication Innovation, Chams, Union Diagnostic & Clinical Services, Resort Savings and Loans, Aso Savings and Loans Plc, Multi-Trex Integrated Foods, DN Tyres & Rubber, FTN Cocoa Processors, Rak Unity, Capital Oil, Anino and Afrik Pharmaceuticals.

  • Emerging-market stocks fall on regulatory crackdown

    Citic Securities Co. and Haitong Securities Co., China’s two biggest listed brokerages, dropped by the 10 percent daily limit in Shanghai after they were suspended from lending money to new clients. A gauge of technology companies headed for the highest close since November after India’s Wipro Ltd. reported better-than-estimated earnings. The ruble rose after Standard & Poor’s delayed a decision on whether to cut Russia’s sovereign rating to junk. The Ibovespa snapped a two-day rally.

    The MSCI Emerging Markets Index declined 0.3 percent to 954.25 at 10:57 a.m. in New York, its second day of losses. The gauge is down 0.2 percent since the start of the year as a plunge in Brent crude outweighed a bigger-than-forecast increase in Chinese exports. Crude, which slumped almost 50 percent last year, dropped from a one-week high in London and New York today as Iraqi production rose to a record.

    Chinese regulators moved to cool down the stock market by tightening norms for trading with borrowed money. Their action came after outstanding margin loans in the country almost tripled since June and bank lending to companies for investing in financial markets surged to the highest on record.

    “A tighter grip on margin lending is having a big impact on the market,” Maarten-Jan Bakkum, an emerging-market strategist at ING Groep NV in The Hague, said by e-mail. “It shows once again how much the Chinese market has been driven by liquidity and technicals. Risk remains high there. The rest of the emerging world is not really affected by this.”

    The Shanghai Composite Index, which had rallied 67 percent in the 12 months through last week, plunged 7.7 percent today. That was the biggest retreat since June 2008 and pushed the 30-day volatility on the measure to the highest level in five years. The Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong tumbled 5 percent, the most since November 2011. The yuan weakened 0.2 percent versus the dollar.

    Citic, Haitong and Guotai Junan Securities Co. were suspended from lending money and stocks to new clients for three months, the China Securities Regulatory Commission said on Jan. 16. The regulator punished nine other brokerages for offenses including allowing unqualified investors to open margin-trading accounts. The China Banking Regulatory Commission banned banks from lending to companies for trading.

     

     

     

    A gauge of information-technology companies, the best-performing industry group this year on the emerging-markets index, rose 0.9 percent. Wipro advanced the most since July 2013. India’s S&P BSE Sensex Index climbed to a six-week high.

    Brazil’s Ibovespa index lost 0.8 percent as consumer stocks slid. Analysts reduced their outlook for Brazil’s economic growth in 2015 to 0.38 percent from 0.40 percent, according to the median forecast in a central bank survey published Monday.

    Nigeria’s benchmark index rallied 2.5 percent, its biggest gain since Christmas. Thai shares advanced 1.2 percent, led by a 9.7 percent rally in Bank of Ayudhya Pcl.