The Nation Newspaper

Tag: stocks

  • Emerging market stocks rise

    Emerging-market stocks advanced, led by the biggest rally in Turkey’s benchmark index in more than three months, amid speculation political tension in the country may ease. The lira strengthened, while Russia’s ruble declined.

    Bloomberg said Turkish stocks climbed 5.7 per cent, rebounding from a 14 per cent slide the previous two weeks spurred by a corruption probe embroiling Prime Minister Recep Tayyip Erdogan’s government.

    The Ibovespa climbed, paring the worst yearly drop among the world’s 20 biggest stock indexes, as Brazilian President Dilma Rousseff pledged to keep up the fight against inflation. The ruble slipped after suicide bombers killed at least 30 in the southern city of Volgograd.

    The MSCI Emerging Markets Index added 0.4 percent to 1,001.95 as of 10:01 a.m. in New York. The gauge is valued at 10.5 times projected earnings for the next 12 months, a 29 percent discount versus the MSCI World Index, the biggest gap in five years. Investors are betting on a “calmer period” in Turkish politics, according to Emre Balkeser, the head of sales and trading at Garanti Yatirim Menkul Kiymetler AS.

    “With emerging-market equities having had a very weak year, in particular compared to developed-market equities, I would assess the price movement over the last couple of days as picking up cheap paper, and Turkey in particular, buying into bombed-out equity,” Michael Ganske, head of emerging markets at Rogge Global Partners Plc in London, said.

    Nine of the 10 industry groups in the MSCI Emerging Markets Index rose. The measure has lost 5 percent this year, compared with a gain of 24 percent for the MSCI World Index.

    Turkey’s Borsa Istanbul National 100 Index (XU100) rebounded from the lowest level since August 2012, increasing the most among 94 global equity gauges tracked by Bloomberg. Erdogan, facing allegations of corruption within his government, accused a “gang” within the police and judiciary of treason as he addressed supporters in a series of rallies over the weekend. The graft investigation prompted him to replace ministers in his cabinet about three months before local elections on March 30.

    “There were expectations of some bad news over the weekend on the political side,” Arda Kocaman, the head of treasury at Finans Invest in Istanbul, said by phone. “It didn’t happen. So there’s a relief rally or some short covering. It’s just a no-news-is-good-news bounce.”

    Discount retail chain BIM Birlesik Magazalar AS surged 74 percent after Chairman Mustafa Latif Topbas said in an e-mail Dec. 28 that he has never broken the law and that he is ready for the scrutiny of all personal and company ties.

  • 37 stocks record above-average returns in 11 months

    37 stocks record above-average returns in 11 months

    •Costain, John Holt, Deap Capital lead worst-performing stocks

    Less than one-fifth of companies quoted on the Nigerian Stock Exchange (NSE) measured up to average return at the stock market in a market situation that showed wide gap between exciting gains and losses and dormancy.

    Year-to-date analysis of the stock market for the 11-month period ended November 30, 2013 indicated that only 37 companies out of the 200 companies listed on the NSE recorded up to or surpassed the market’s average return of 38.61 per cent.

    Costain West Africa Plc, John Holt Plc and Deap Capital Management Plc lost more than 60 per cent of their market values during the period, leading the several dormant and declining stocks.

    The analysis both underlined the exceedingly positive overall market situation at the Nigerian stock market as well as the hangover of the previous recession that has kept several stocks dormant or inactive around their base prices.

    Conglomerates, fast moving consumer goods companies, petroleum-marketing companies, construction and cement companies and healthcare companies featured prominently among the 37 best-performing stocks. The analysis however showed decline in the momentum of fast-paced companies as forty five companies had measured up to market average three months ago.

    Forte Oil remained the best-performing stock, in terms of capital gains, with 11-month share price increase of 1,374.8 per cent. Champion Breweries placed second with average return of 308.4 per cent. Evans Medical ranked third with a gain of 270.1 per cent. Transnational Corporation of Nigeria (Transcorp) retained year-to-date return of 239.1 per cent while Conoil Plc had increased its market value by 231.4 per cent during the period.

    Other stocks with three-digit percentage growth included Livestock Feeds, 191 per cent; Jos International Breweries 181.7 per cent; MRS Oil and Gas, 129.1 per cent; Cadbury Nigeria, 116.7 per cent, Presco, 115 per cent; Wema Bank, 119.2 per cent and Eterna Oil, which share price rose by 109.6 per cent.

    Several other stocks nearly doubled their market values including Julius Berger Nigeria, 99.1 per cent; Fidson Healthcare, 98.1 per cent and Dangote Sugar Refinery, which rose by 83.3 per cent. Other above-average stocks included UAC of Nigeria, 51.8 per cent; UACN Property Development Company, 52.5 per cent; Honeywell Flour Mills, 43.5 per cent; National Salt Company of Nigeria (Nascon), 59.63 per cent; Nestle Nigeria, 78.5 per cent; Diamond Bank, 41.70 per cent; United Bank for Africa (UBA), 64.7 per cent; AIICO Insurance, 38.7 per cent; Continental Reinsurance, 51.3 per cent; Custodian and Allied Insurance, 39.2 per cent; Wapic Insurance, 70.7 per cent and Stanbic IBTC Holdings Plc, which grew its share price by 77.3 per cent.

    Other best-performing stocks included GlaxoSmithKline Consumer Nigeria, with 11-month return of 44.1 per cent; CAP, 78.6 per cent; Cement Company of Northern Nigeria, 75.5 per cent; Dangote Cement, 52.2 per cent; IPWA, 52 per cent; Lafarge Cement Wapco Nigeria, 70.9 per cent; Red Star Express, 40 per cent; Academy Press, 57.4 per cent; ABC Transport Plc, 60 per cent while McNichols was the only Alternative Securities Market (Asem) stock on the list with an increase of 79.01 per cent.

    On the other hand, Costain was the worst-performing stock during the period with a negative return of 65 per cent. John Holt trailed with a drop of 62.1 per cent. Deap Capital Management Limited placed third with a loss of 60 per cent. Transnationwide Express dropped by 56.1 per cent while Multi-Trex and Morison Industries lost 47.4 per cent and 42.1 per cent respectively.

    Other stocks which lost more than 20 per cent of their market values included Chellarams, 27.3 per cent; Arbico, 26.9 per cent; Vono Products, 38.9 per cent; NPF Microfinance Bank, 34.8 per cent; Ekocorp, 22.6 per cent; E-Tranzact, 22.4 per cent; Thomas Wyatt Nigeria, 34.1 per cent, RT Briscoe, 21.1 per cent; Capital Hotel, 27.4 per cent while Juli Plc, an Asem stock, which lost 26.6 per cent.

    The year-to-date analysis showed that investors in Nigerian equities earned about N3.48 trillion in capital gains over the past 11 months. Aggregate market capitalisation of all quoted equities closed November 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 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.

    ess than one-fifth of companies quoted on the Nigerian Stock Exchange (NSE) measured up to average return at the stock market in a market situation that showed wide gap between exciting gains and losses and dormancy.

    Year-to-date analysis of the stock market for the 11-month period ended November 30, 2013 indicated that only 37 companies out of the 200 companies listed on the NSE recorded up to or surpassed the market’s average return of 38.61 per cent.

    Costain West Africa Plc, John Holt Plc and Deap Capital Management Plc lost more than 60 per cent of their market values during the period, leading the several dormant and declining stocks.

    The analysis both underlined the exceedingly positive overall market situation at the Nigerian stock market as well as the hangover of the previous recession that has kept several stocks dormant or inactive around their base prices.

    Conglomerates, fast moving consumer goods companies, petroleum-marketing companies, construction and cement companies and healthcare companies featured prominently among the 37 best-performing stocks. The analysis however showed decline in the momentum of fast-paced companies as forty five companies had measured up to market average three months ago.

    Forte Oil remained the best-performing stock, in terms of capital gains, with 11-month share price increase of 1,374.8 per cent. Champion Breweries placed second with average return of 308.4 per cent. Evans Medical ranked third with a gain of 270.1 per cent. Transnational Corporation of Nigeria (Transcorp) retained year-to-date return of 239.1 per cent while Conoil Plc had increased its market value by 231.4 per cent during the period.

    Other stocks with three-digit percentage growth included Livestock Feeds, 191 per cent; Jos International Breweries 181.7 per cent; MRS Oil and Gas, 129.1 per cent; Cadbury Nigeria, 116.7 per cent, Presco, 115 per cent; Wema Bank, 119.2 per cent and Eterna Oil, which share price rose by 109.6 per cent.

    Several other stocks nearly doubled their market values including Julius Berger Nigeria, 99.1 per cent; Fidson Healthcare, 98.1 per cent and Dangote Sugar Refinery, which rose by 83.3 per cent. Other above-average stocks included UAC of Nigeria, 51.8 per cent; UACN Property Development Company, 52.5 per cent; Honeywell Flour Mills, 43.5 per cent; National Salt Company of Nigeria (Nascon), 59.63 per cent; Nestle Nigeria, 78.5 per cent; Diamond Bank, 41.70 per cent; United Bank for Africa (UBA), 64.7 per cent; AIICO Insurance, 38.7 per cent; Continental Reinsurance, 51.3 per cent; Custodian and Allied Insurance, 39.2 per cent; Wapic Insurance, 70.7 per cent and Stanbic IBTC Holdings Plc, which grew its share price by 77.3 per cent.

    Other best-performing stocks included GlaxoSmithKline Consumer Nigeria, with 11-month return of 44.1 per cent; CAP, 78.6 per cent; Cement Company of Northern Nigeria, 75.5 per cent; Dangote Cement, 52.2 per cent; IPWA, 52 per cent; Lafarge Cement Wapco Nigeria, 70.9 per cent; Red Star Express, 40 per cent; Academy Press, 57.4 per cent; ABC Transport Plc, 60 per cent while McNichols was the only Alternative Securities Market (Asem) stock on the list with an increase of 79.01 per cent.

    On the other hand, Costain was the worst-performing stock during the period with a negative return of 65 per cent. John Holt trailed with a drop of 62.1 per cent. Deap Capital Management Limited placed third with a loss of 60 per cent. Transnationwide Express dropped by 56.1 per cent while Multi-Trex and Morison Industries lost 47.4 per cent and 42.1 per cent respectively.

    Other stocks which lost more than 20 per cent of their market values included Chellarams, 27.3 per cent; Arbico, 26.9 per cent; Vono Products, 38.9 per cent; NPF Microfinance Bank, 34.8 per cent; Ekocorp, 22.6 per cent; E-Tranzact, 22.4 per cent; Thomas Wyatt Nigeria, 34.1 per cent, RT Briscoe, 21.1 per cent; Capital Hotel, 27.4 per cent while Juli Plc, an Asem stock, which lost 26.6 per cent.

    The year-to-date analysis showed that investors in Nigerian equities earned about N3.48 trillion in capital gains over the past 11 months. Aggregate market capitalisation of all quoted equities closed November 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 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.

     

  • Investors swoop on Unity Bank, penny stocks

    •Power business boosts Transcorp’s prospects

    Investors appeared to be factoring immediate to short-term prospects of emerging low-priced stocks into their valuations as significant increase in open buy orders for low-priced stocks highlighted the renewed recovery at the stock market.

    Against the background of foreign investors’ interests in Unity Bank Plc, investors appeared to be scrambling for the shares of the banking sector’s lowest-priced stock. Unity Bank recorded the second highest capital appreciation at the stock market last week with a gain of 32 per cent to close at 66 kobo.

    Market analysts said the strong rally by Unity Bank might not be unconnected with the reports of expressions of interests in the bank by some foreign investors. Three major investors, Lagos-based Verod Capital Management, Development Partners International (DPI), a United Kingdom-based firm; and Bank of Africa, an intercontinental banking and investment conglomerate were said to be prospecting investments in Unity Bank.

    DPI, which was established in London in 2007, was reported to have indicated willingness to make a commitment of up to $200 million in Unity Bank plc. DPI currently manages a $400 million private investment fund and is in the process of raising a further $500 million in investment funds.

    With an investment portfolio cutting across several sectors pan-Africa, there is high level optimism among finance analysts that DPI’s entry into Nigeria’s banking industry through Unity Bank will redefine the retail market segment and hike the stakes in terms of competition.

    One of DPI’s most recent equity investments was the 67 per cent equity stake in Mansard Insurance, now Nigeria’s third largest insurance companies.

    Verod Capital Management has also indicated interest in investing as much as $160 million in Unity Bank. Verod, which is focused on acquiring majority or minority equity stakes in businesses with strong market position, free cash flow potential and substantial value creation through growth and operational improvement, was said to have considered Unity Bank as a good investment choice.

    Market analysts said investors saw strong potential in Unity Bank, which had opened the week at its nominal price of 50 kobo per share.

    Analysts said although there were concerns about liquidity for low-priced stocks, otherwise known as penny stocks, investors were enticed by the substantial capital gains that could follow the realisation of some of the emerging deals on low-priced stocks.

    The impending take-over of the Ugheli Power Plant by Transnational Corporation of Nigeria (Transcorp) Plc also boosted investors’ valuations of the conglomerate. Transcorp was the most active stock during the week, a bullish rally that saw its share price rising by 11.11 per cent to N1.50.

    Thomas Wyatt topped the gainers’ list, in percentage terms, with a gain of 33.33 per cent to close at 96 kobo. Airline Services Logistics rose by 15.22 per cent to N3.86. Transnationwide Express, which has outlined a business development plan, rose by 15.04 per cent to N1.30. International Energy Insurance’s share price appreciated by 14.29 per cent to 72.

    UAC of Nigeria rode on the back of sale of 49 per cent equity stake in its fast food restaurant business-UAC Restaurants Limited, to a South African firm-Famous Brands Limited to record the highest gain by a large-cap stock during the week. UACN’s share price improved by 11.54 per cent to N60.80.

    Late price rallies moderated streak of losses that dominated the week, leaving the market with a modest week-on-week return of 0.25 per cent. The All Share Index (ASI), the common index that tracks all equities on the NSE, closed at 36,188.72 points as against its week’s opening index of 36,098.07. Aggregate market capitalisation of all equities increased from its value on board of N11.494 trillion to close the week at N11.527 trillion. The NSE 30 Index inched up by 0.31 per cent, underlining the gains by some highly capitalised stocks.

    Total turnover stood at 1.51 billion shares worth N12.06 billion in 24,983 deals. The financial services sector contributed 1.11 billion shares valued at N6.65 billion in 13,369 deals; representing about 73 per cent of total turnover volume for the week. The conglomerates sector, which was largely driven by Transcorp, placed second on the activity chart with a turnover of 224.98 million shares worth N810.38 million in 1,300 deals.

    The trio of Transcorp, Wapic Insurance Plc and Diamond Bank Plc accounted for 563.97 million shares worth N1.47 billion in 1,303 deals, contributing 37 per cent of market’s volume.

     

  • NSIA chief frets over costly stocks

    Chief Executive Officer, Nigerian Sovereign Investment Authority (NSIA), Mr Uche Orji said he was worried about rising stock prices as he prepares to hand over the next tranche of the fund’s $1 billion of holdings to external fund managers.

    The Authority is seeking returns of 400 basis points above U.S. CPI in its $325 million future generations fund, one of three such pools created to manage the $1 billion, and plans to be fully invested by the middle of next year. It will weigh investments in about eight asset classes from private equity to developed and emerging-market stocks even as some securities gained on signs the global economic recovery is taking hold.

    Orji told Bloomberg he’s working with Cambridge Associates LLC on filtering possible managers for the future fund after tapping former employers Goldman Sachs and UBS AG (UBSN), along with Credit Suisse Group AG (CSGN), to help manage a separate $200 million fixed income fund. That accounts for about 20 percent of the fund’s total portfolio and will start reporting performance next month.

    Borrowing costs are soaring from record lows reached in January as speculation deepens that the Fed will curtail its so-called quantitative easing as soon as this month, signaling an end to cheap money that propped up asset prices.

    “A lot of asset classes are richly valued frankly. There’s still a lot I’m not comfortable with in developed market equities. I’m not going to try and be a hero and catch a falling knife with people’s money,” Orji said.

    The wealth fund was signed into law in May 2011 by President Goodluck Jonathan and started last October to invest savings made from the difference between budgeted oil prices and actual market prices. A third pool is mandated to invest $325 million in infrastructure, with a further $150 million that can be allocated to any of the three investment groups, Orji said.

    The infrastructure fund will invest in Nigeria and be internally managed because of a lack of local managers and is considering about 15 projects, said Orji. It’s targeting returns of 500 basis points above U.S. inflation and will probably announce “a couple” of investments by year’s end, he said.

    The Dow Jones Industrial Average index has gained each year since 2009 and with Europe’s economy showing signs of recovery equity values may be set to rise further amid the possible paring of stimulus by the US Federal Reserve, said Orji. Fed policy makers were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start cutting bond purchases later this year if the economy improves, minutes of their July meeting showed.

    “Nobody knows what tapering is,” Orji said in London. “I don’t think anybody has seen this level of quantitative easing in history so we don’t even know how the market is going to act.”

    Jonathan’s government is in talks with Nigeria’s state governors on future transfers and savings after the latter protested allocations to the wealth fund, Finance Minister Ngozi Okonjo-Iweala said July 2. The Nigerian federal government plans to step up contributions toward year’s-end and is targeting $5 billion for the wealth fund in the “medium-term,” she said.

    Such an increase would put it on a par with Angola, Africa’s second largest oil producer, which announced a $5 billion sovereign wealth fund in October. That’s headed by Chairman Jose Filomeno dos Santos, the son of Angolan president Jose Eduardo dos Santos.

    Growing the fund beyond the initial $1 billion “will not be easy and straightforward frankly, especially if you think that a country of 160 million people have competing needs for spending and you’re here fighting your corner,” said Orji.

     

     

    Nigeria saves oil revenue above the benchmark budgeted price in the excess crude account, which held $5 billion Okonjo-Iweala said in May, down from $9.2 billion in January. It relies on crude exports for about 95 percent of its foreign-currency earnings and about 80 percent of government revenue.

    “The dispute with governors over the scale and the mandate of the SWF has been ongoing since Jonathan’s election and is unlikely to reach a resolution soon,” said Alan Cameron, a Nigeria-focused economist at FCMB Group Plc in London. The start of campaigning for elections in 2015 “will only make these disagreements more difficult to resolve,” he said.

    The Nigerian Stock Exchange All-Share Ind has advanced 30 percent this year. The measure declined 0.1 percent at the 2:30 p.m. close of trading in Lagos, the commercial capital.

    Orji, who said he has personal relationships with other sovereign wealth funds from his time as an investment banker in Europe and the U.S., hopes to attract other sovereign wealth funds, such as those in the Middle East, to coinvest in Nigeria.

    “We see ourselves as a conduit,” said Orji. “This is Nigeria, we deliver good returns, the pleasure is all theirs.”

     

  • Industrial stocks lead equities with 56% returns

    Companies that engage in manufacturing of industrial goods such as cement and paints have generated the highest returns for investors, according to the latest return analysis from the Nigerian Stock Exchange (NSE).

    Investors in industrial goods stocks have earned twice the returns in the banking, oil and gas, insurance and consumer goods sectors and they are leading the market’s average return by some 25 percentage points.

    The NSE Industrial Goods Index opens today with a year-to-date return of 55.85 per cent, the highest return among the several groups being tracked by the NSE. The NSE Industrial Goods Index is the benchmark for four subgroups including building materials, electronic and electrical products, packaging and containers and tools and machinery.

    However, it is dominated by building material stocks, especially cement and paints manufacturing companies.

    The NSE Industrial Goods Index consisted of 10 lead stocks out of the 26 companies listed in the sector. The representative stocks were selected based on their market capitalisation and liquidity. The benchmarked stocks included Ashaka Cement, Lafarge Wapco Cement Nigeria, Dangote Cement, CAP, Cement Company of Northern Nigeria, Berger Paints, Cutix, DN Meyer and Portland Paints & Products Nigeria.

    With some 28 per cent of total market capitalisation, industrial goods stocks contribute substantially to the market turnover. The All Share Index (ASI), the common value-based index that tracks all equities on the NSE, opens with a year-to-date return of 31.44 per cent. Drawing from the bullishness of several industrial goods stocks, most of which are ethical stocks, the NSE-Lotus Islamic Index opens with second highest return of 44.02 per cent. The NSE 30 Index, which tracks the 30 most capitalised stocks, has returned 31.79 per cent so far this year.

    The market generally showed robust returns, with inflation-adjusted returns in double digits. The NSE Consumer Goods Index shows average return of 27.54 points 27.54 points. Banking index shows year-to-date return of 24.46 per cent while insurance index and oil and gas index open today at 23.13 per cent and 22.43 per cent respectively. The benchmark index for the newly reactivated Alternative Securities Market (ASeM) indicates a year-to-date return of 2.58 per cent.

    The year-to-date position of the market was boosted by strong bullish rally recorded last week. The ASI appreciated by 2.49 per cent last week to open today at 36,907.81 points. It had opened the week at 36,010.28 points.

    Aggregate market capita-lisation of all listed equities increased by 2.47 per cent or N285 billion to close at N11.798 trillion as against its week opening’s value of N11.513 trillion. Industrial stocks index outperformed other indices with a weekly gain of 7.93 per cent. The NSE 30 Index appreciated by 2.50 per cent.

    The NSE Consumer Goods, NSE Banking, NSE Oil and Gas, NSE-Lotus II and NSE-ASeM Index recorded gains of 2.75 per cent, 1.48 per cent, 1.0 per cent, 4.18 per cent and 3.33 per cent respectively. However, NSE Insurance Index depreciated last week by 2.05 per cent.

    Total turnover stood at 2.29 billion shares worth of N24.03 billion in 29,048 deals. The financial services sector topped the activity chart with a turnover of 1.76 billion shares valued at N14.80 billion in 16,292 deals. The banking sub-sector was the most active with a turnover of 1.276 billion shares valued at N12.072 billion in 11,622 deals.

    Meanwhile, Crusader (Nigeria) Plc was delisted last week following the conclusion of the merger with Custodian and Allied Insurance Plc. A total of 781.02 million ordinary shares resulting from the merger exercise between Custodian and Allied Insurance Plc and Crusader (Nigeria) Plc were added to the outstanding shares of Custodian and Allied Insurance simultaneously.

     

  • Industrial firms emerge best-performing stocks

    Companies engaged in production of industrial goods have posted the highest average returns at the stock market so far this year, according to the opening returns of sectoral groups this week.

    This comes on the heels of efforts by the Nigerian Stock Exchange (NSE) to woo about 100 industrial goods companies to the Exchange and recent creation of the sectoral index- NSE Industrial Goods Index.

    Analysis of week’s opening market data made available by the NSE showed that average return by the industrial stocks was nearly twice of the overall market’s average and more than four percentage points above return by the closest category of stocks.

    The industrial goods group consists of companies under the building materials, electronic and electrical products, packaging and containers and tools and machinery subsectors.

    There are 27 companies under the industrial goods sector, which accounted for some 28 per cent of total market capitalisation at the NSE. However, the impact of the sector is determined largely by large-cap stocks such as Dangote Cement, Lafarge Wapco Cement Nigeria, Ashaka Cement and CAP Plc.

    Besides the four large-cap stocks, other selected stocks that formed the sectoral index were Cement Company of Northern Nigeria, Berger Paints, Cutix, DN Meyer and Portland Paints and Products Nigeria Plc.

    Returns analysis showed that the NSE Industrial Goods Index opened this week with the highest average year-to-date return of 33.54 per cent, nearly twice the return by the All Share Index (ASI), the benchmark index that gauges the performance of all equities on the NSE. ASI posted average return of 17.50 per cent.

    The NSE Oil and Gas Index indicated the second highest return of 29.32 per cent, riding on the back of impressive gains by Oando and Forte Oil. The insurance sector returned 26.74 per cent. The duo of NSE Banking Index and NSE Consumer Goods Index recorded below average return of 11.72 per cent and 15.45 per cent. The reluctant pricing trend of the banking sector partly influenced the performance of the NSE 30 Index, which returned 17.87 per cent. The NSE 30 Index tracks the 30 most capitalised stocks on the NSE and it’s dominated by banking stocks.

    Management of the NSE has said it was focusing on unlocking the potential of the industrial goods sector with a target to list some 100 more industrial companies.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, said the NSE was working on attracting more industrial companies to the NSE.

    According to him, the creation of the industrial goods index was in recognition of the impact of the sector on the NSE and in another way to showcase its potential.

    He said the industrial index would lead to development of other derivatives such as Exchange Traded Funds (ETFs) based on the industrial goods stocks.

    Onyema however decried the problems of poor infrastructure, influx of substandard goods, unfavourable import tariff regime, inconsistent government policies and proliferation of smuggled goods, which operators said were hampering their performances.

  • Banking stocks may outperform other equities, say analysts

    Banking stocks may outperform other equities, say analysts

    • Shift in MPR unlikely in Q2

    Banking stocks have been tipped to outperform other equities quoted at the Nigerian Stock Exchange (NSE), analysts at Cordros Capital have forecast.

    In a 2013 forecast released at the weekend, the firm also said emerging markets equities look attractive when compared with those of developed markets. The Cordos Capital forecast said a long-term view of emerging markets remains positive, especially with a growing middle class, pent-up consumer demand and young populations. The market, they said, is unmatched in their prospective return on investment.

    “We maintain our bullish stance on Nigerian equities, a view which has played out very well in 2012 amid an ongoing surge in the All Share Index. We believe that banks will continue to lead the way, with the consumer and construction industries poised for greater mark,” it said.

    The equities market made a sluggish start to 2012 following the bearish trend fuelled by profit warnings issued by United Bank for Africa, Diamond Bank and First City Monument Bank (FCMB) due to material write-downs on their non-performing loans. However, the equities market performed well in 2012 with a total return of 35 per cent.

    Market performance, they said, was impacted by the sustained investors confidence, economic growth trend, stable naira, impressive corporate earnings, robust investment horizon, attractive valuation of equities, increased activity of foreign portfolio managers, regulatory interventions, and recovery in the banking sector.

    Besides, they said the big shifts in monetary policy is unlikely in the first half of 2013, adding that in response to the global economic crisis, the Central Bank of Nigeria (CBN) pursued measures in 2009 and 2010 to promote growth and financial stability.

    However, in 2011 and 2012, the CBN tightened monetary policy to mop-up excess liquidity in the banking system and ward off inflationary pressures.The market pressures were stemming from high fiscal spending, the implementation of a new minimum wage and the injection of funds into the bank system through the purchase of non-performing loans through bonds issued by the Asset Management Corporation of Nigeria (AMCON).

    According to the firm, the Monetary Policy Rate (MPR), which was 6.25 per cent in September 2010, increased six times in 2011, to reach 12 per cent in December, 2011. The rate remained unchanged at 12 per cent in 2012. Similarly, the Cash Reserve Ratio (CRR) was increased steadily from one per cent in March to eight per cent in December 2011.

    It said a combination of renewed optimism over the state of the global economy, apparent easing of tension in Eurozone crisis, and aversion of the United States’ “fiscal cliff” suggests that interest ratecuts may be held back until the latter part of 2013.

    ”Our expectation is further premised on the fact that inflation remains elevated. However, we believe once inflation falls to within target, monetary policy loosening could come to the fore, leading to a 100 basis points cut to 11 per cent. They also projected that increased interest in the equities market would be sustained towards end of first quarter as investors continue to position for the full year results ahead,” it added.

    The analysts also said there is possibility that full deregulation of downstream oil sector and signing into law the Petroleum industry Bill will impact the oil and gas sector, leading to capital raising.

     

  • Wema Bank, three others now market making stocks

    THE Nigerian Stock Exchange (NSE) yesterday announced the addition of four new stocks to its market making programme. They are Flour Mill, Unilever, Royal Exchange, and Wema Bank Plc. This brings to 43 the total number of market making stocks at the Exchange.

    According to the NSE, the inclusion of the stocks from Consumer Goods and Financial Services sectors became effective today.

    The addition of the new stocks was in line with the planned phased approach for introducing stocks to the programme from the baskets allocated to the Market Makers on the Exchange.

    Meanwhile, transactions on the floor of the NSE closed with a further appreciation on the twin market indicators. The All-Share-Index and market capitalisation improved by 77 basis points each.

    Specifically, gains recorded by market heavy weights strengthened the indicators’ returns today. Nestle, FBNH, Nigeria Breweries, GTBank and Guinness added values to their previous closes to push indicators to two-day consecutive uptrend.

    Lead indicator, NSE-ASI added 243.99 points to hit 31,815.45 points while the capitalisation went up by N78 billion to close at N10.179 trillion. These represent a growth of 0.77 per cent respectively.

    Nestle continued the streak of appreciation hitting highest price ever at N840.10. It added N49.85, representing 6.31 per cent growth as a market making stock.

    The market equally benefited from value appreciation posted by some mid-capitalised stocks such as Diamond Bank, Julius Berger, Flour Mills, PZ Cussons, UBA and Dangote Sugar.

    However, the volume of shares traded stood at 424.661 million worth N3.850 billion across 6,505 deals. This was lower than 507 million units worth N3.1 billion exchanged in 6,666 deals on Tuesday.

    On the price movement tables, a total of 111 equities were traded while 40 appreciated. The remaining 25 recorded price reduction. Julius Berger topped the gainers’ chart with an increase of N6.00 or 9.92 per cent to close at N66.50 per share while Nestle followed with a gain of N49.85 or 6.31 per cent to close at N840.10 per share. PZ Cussons gained N1.90 to close at N34.00 per share.

    Others on the top 10 were Port Paint, Flourmills, Eterna Oil & Gas, Fort Oil, Livestock, Vitafoam and AG Leventis added N0.20, N4.05, N0.22, N0.75, N0.11, N0.20 and N0.07.

    International Breweries led others on the losers’ chart with a drop of N2.80 to close at N25.20 per share followed by Prestige Assurance with a drop of N0.06 to close at N0.60 per share.

    Others were Unity Bank, UACN, UAC-Property, Berger Paint, CAP, Honeywell Flourmills, JohnHolt and Nigerian Aviation Handling Company.

    On the activity chart, the banking sub-sector maintained its dominance in volume terms with 211million shares worth N1.7 billion followed by the insurance sub-sector with 99 million units valued at N61 million.

    The food products subsector trailed with 27million units worth N169 million.

    Trading in the shares of Unity Bank buoyed activities in the banking sub-sector with 42 million shares worth N30 million while the insurance sub-sector was enhanced by activities in the shares of Niger insurance with 62 million units worth N31 million.

     

  • Stocks that made the market

    The Nigerian stock market posted average full-year return of 35.4 per cent, equivalent to capital gains of N2.44 trillion in 2012. Notwithstanding the widespread gains and exceedingly positive overall market situation, only 29 stocks recorded above-average returns. ‘Equities Watch’ had pinpointed 11 of the best-performing stocks. Taofik Salako reviews the initial investment guides and highpoints of the stocks that made the market

    The Nigerian stock market rounded off 2012 atop the global returns’ table.

    With average full-year return of 35.45 per cent, equities outperformed market pundits’ estimates and overwhelmed returns by other securities. The All Share Index (ASI), the common value-based index that tracks changes in prices of all quoted companies, closed 2012 at 28,078.81 points as against its opening index of 20,730.63 points for the year. Aggregate market capitalisation of all quoted equities also rose from its opening value of N6.533 trillion to close the year at N8.974 trillion, indicating capital gains of N2.441 trillion. Besides its primary importance as the benchmark index for the Nigerian Stock Exchange (NSE), the ASI doubles as the country index for Nigeria and rightly indicates the competitiveness of Nigerian equity returns.

    Globally, Nigerian equity return ranked seventh on global return scale as average capital gain on equities in Nigeria significantly exceeded returns in all advanced markets of Europe and America. Full-year percentage changes in global stock indices tracked by the Wall Street Journal (WSJ) indicated that Venezuela posted the highest return of 302.8 per cent. Egypt recorded the highest return of 50.8 per cent in Africa. Nigeria followed Egypt on the returns table, far ahead of South Africa, which posted 22.7 per cent. The significance of Nigerian return is in the context of the global returns, especially in key world financial centres, which look toward emerging markets to bolster portfolio performances in matured markets. The Dow Jones Global Index indicated global average equity return of 13.7 per cent for 2012 while another global index-The Global Dow, posted a return of 10.7 per cent. Average return in United Kingdom stood at 22.5 per cent while France, Germany, Japan, Russia and China posted average return of 15.2 per cent, 29.1 per cent, 22.9 per cent, 10.5 per cent and 10.9 per cent respectively.

    Equities provided the best returns among Nigerian securities. With inflation rate at 12.3 per cent and the Monetary Policy Rate, the benchmark interest rate set by the Central Bank of Nigeria (CBN),at 12 per cent, equities were the only investments with real adjusted return in 2012 considering the cost of fund and time value of capital. Fixed-income rates were substantially below equities’ returns and in most cases, negative in real terms. Three-month tenor deposit rate of banks stood at 8.94 per cent, 91-day Nigerian Treasury Bill (NTB) carried return of 11.7 per cent while average monthly prime lending rate stood at 16.51 per cent.

    But notwithstanding the relatively high return indicated by the overall market position, the bullish rally in 2012 was highly concentrated on about one-ninth of quoted stocks. More importantly, the bulls followed Equities Watch’s trails during the year. Most of the stocks picked out for upside potential dominated the top gainers’ list while stocks and sectors marked for doubtful and negative outlook ended on the downside. Cadbury Nigeria Plc, which was first spotted with a year-to-date return of 26.3 per cent and further reinforced in a second piece when it posted 46.8 per cent, rallied through the year to close with a full-year return of 154.4 per cent. Nestle Nigeria was trading at a high of N486.70 when it was cited as a market leader and rallied to close the year at N700, posting a return of 57.1 per cent. Equities Watch had noted when Nestle Nigeria was at a peak of N577.50, that “stability of earnings and returns and sense of corporate security may still take Nestle Nigeria to a new level.” “Besides, in a market still characterized by uncertainties and questions about corporate governance, Nestle Nigeria’s overall image of stability and consistency will continue to be major attraction. The compact nature of the outstanding shares of the company and the preponderance of buy-and-hold retail investors that see the stock as their nest eggs will also continue to mediate the share price fluctuation, making it resistant to downtrend. Most investors holding the free float shares don’t easily sell off. As a consistent dividend-paying stock, Nestle Nigeria provides cushion against the downturn at the secondary market. With recent huge investments in new factory and innovations, the company appears to have operational supports to drive fundamentals and by extension, market consideration,” the September 2012 report had noted.

    Presco was trading with a year-to-date return of 26.6 per cent in March when Equities Watch concluded that dividend expectation for the 2011 business year would provide further impetus for capital appreciation. “Most investment pundits believe Presco, and other well-positioned agricultural stocks, could leverage on government’s focus on agriculture and domestic capacity building to improve returns. Already, incentives aimed at encouraging farmers included low-interest intervention funds and reduced tax and tariffs. These incentives fit into Presco’s long-term growth plan, a synchronization that encourages investors’ optimism about future returns,” another June report stated. Presco rallied to close the year with a gain of 96.1 per cent.

    At the onset of First Bank of Nigeria’s comeback bid in May, when the bank was with a year-to-date return of 18.1 per cent, Equities Watch had noted that improved fundamentals would impact further on the market consideration. By August when First Bank’s year-to-date return was 46.6 per cent, Equities Watch had noted that “with this year’s high just barely above the intrinsic book value, the bank appears still substantially undervalued” and that “from earnings to dividend and historic pricing outlooks, most counts tilt in favour of the bank.” First Bank closed the year with 76.6 per cent capital gain.

    In March through to July, Equities Watch had cited United Bank for Africa (UBA) Plc as a promising stock. “With its restructuring into pan-African financial services holding group, operations in 19 African countries and major global financial centres, qualitative balance sheet and expansive deposit base, UBA is a stock to watch,” the March report had pointed out. By July when interim reports had formed consistent growth pattern, it was noted that “there is strong tendency for the emerging fundamentals to set new ceiling for the share price”. UBA closed within the top-four banks with a full-year return of 76.1 per cent.

    Access Bank came under focus in May when its year-to-date return was 41 per cent. “With strong fundamentals, many analysts expect Access Bank to further unlock many growth opportunities from its recent business combination exercise while sustaining its intrinsic aggressive internal growth strategy. It’s this outlook that is driving the equally aggressive positioning by farsighted investors in the equities of the bank,” it was noted. Access Bank closed with full-year return of 88.5 per cent.

    In September, when Sterling Bank was trading with a year-to-date return of 52.5 per cent, Equities Watch had noted that while Sterling Bank opened then at its highest price so far, the share price still represented significant discounts to the recent historic highs. “With continuous improvements in earnings over the period, the share price appears to be more sentimental than fundamental, and it may be opportunity for discerning investors,” it was pointed out. Sterling Bank closed 2012 with a full-year return of 71.3 per cent.

    Other stocks spotted by Equities Watch including Transnational Corporation of Nigeria, UAC of Nigeria and GlaxoSmithKline Consumer Nigeria closed with substantial gains. DN Meyer had closed with a moderated return of 44.9 per cent, in line with the cautious note on the fundamental supports for the then jumpy market price. With one in every two stocks on the top 20 gainers list on the upside watch list of Equities Watch, the equity intelligence report provided reliable guide for investors in 2012. And that is the promise for this year, and always.

     

     

     

     

  • Americans miss $200b on stocks

    Americans have missed out on almost $200 billion of stock gains as they drained money from the market in the past four years, haunted by the financial crisis.

    Assets in equity mutual, exchange-traded and closed-end funds increased about 85 per cent to $5.6 trillion since the bull market began in March 2009, trailing the Standard & Poor’s 500 Index’s 94 per cent advance, according to data compiled by Bloomberg and Morningstar Inc.

    The proportion of retirement funds in stocks fell about 0.5 percentage point, compared with an average rise of 8.2 percentage points in rallies since 1990.

    Assets in equity mutual, exchange-traded and closed-end funds increased about 85 per cent to $5.6 trillion since the bull market began in March 2009, trailing the Standard & Poor’s 500 Index’s 94 per cent advance.

    The retreat showed that even the biggest gain since 1998 failed to heal investor confidence after the financial collapse that wiped out $11 trillion in U.S. equity value was followed by record price swings in equities, a market breakdown that briefly erased $862 billion in share value and the slowest recovery from a recession since World War II.

    Individuals are withdrawing money as political leaders struggle to avert budget cuts that threaten to throw the economy into a new slump.

    “Our biggest liability in the stock market has been the total destruction to confidence,” James Paulsen, the Chief Investment Strategist at Minneapolis-based Wells Capital Management, which oversees about $325 billion, said in a telephone interview. “There’s just so much evidence of this recovery broadening.”