stock exchange: NSE RoundUp! Equities rally N182bn gain as return hits 37.1%

Nigerian equities ranked within the top rank of global stock market rally in the immediate past week as

improved optimism on the global economic outlook and third quarter earnings season spurred the bulls to sustained charge.

With most quoted companies at the Nigerian Stock Exchange (NSE) expected to submit their third quarter earnings within the next few weeks, a positive report on the global economic outlook and Nigerian economy by the World Bank Group appeared to quicken investors’ appetite for equities.

All benchmark value indices at the Nigerian stock market trended upward as investors increased open market orders in continuing positioning for the nine-month results. The main overall indices indicated an average week-on-week gain of 1.45 per cent, equivalent to net capital gain of N182 billion.

The sustained rally pushed the average year-to-date return for the Nigerian equities to 37.11 per cent at the weekend, implying that investors have earned more than one-third of the value of their portfolios in capital appreciation so far this year.

With nearly two advancers for every decliner, all sectoral indices also closed positive, reflecting the widespread positive sentiment that marked pricing during the week.

The All Share Index (ASI)-the value-based common index that tracks share prices at the Nigerian Stock Exchange (NSE) recorded a week-on-week gain of 1.45 per cent to close the week at 36,848.17 points as against its week’s opening index of 36,320.93 points. Aggregate market value of all quoted equities also increased from the week’s opening value of N12.502 trillion to close the week at N12.684 trillion. The concurrence between the ASI and total market value usually implies that any such change is due to changes in share prices, rather than new listing or delisting.

The rally at the Nigerian stock market broadly reflected the positive global stock market as investors looked to increased returns with improving global economic outlook. The United Kingdom FTSE Index rose by 0.2 per cent. In United States of America, the S & P 500 Index inched up by 0.1 per cent while the NASDAQ closed flat. Japan’s Nikkei 225 Index rallied by 2.2 per cent. Germany’s XETRA DAX Index rose by 0.2 per cent. Hong Kong’s HANG SENG Index appreciated by 0.1 per cent. Russia’s RTS Index posted a gain of 2.6 per cent. India’s BSE Index returned 1.8 per cent. China’s SHANGHAI COMPOSITE Index rose by 1.3 per cent while Egypt’s EGX 30 Index appreciated by 0.3 per cent.

However, France’s CAC 40 declined by 0.3 per cent. Kenya’s NSE 20 Index dropped by 1.4 per cent while Ghana’s GSE CompositeIndex slipped by 0.1 per cent.

Further analysis of the pricing trend at the Nigerian stock market showed that all sectoral indices closed positive, boosting their year-to-date returns. The NSE Banking Index recorded a wee-on-week return of 1.41 per cent last week to push the average year-to-date return for the sector to 67.89 per cent. The NSE 30 Index-which tracks the 30 most capitalised companies, rose by 1.25 per cent last week to increase its year-to-date return to 41.25 per cent. The NSE Industrial Goods Index rallied by 0.66 per cent last week to close with a year-to-date return of 32.9 per cent.

The NSE Consumer Goods Index rose marginally by 0.05 per cent to close with year-to-date return of 31.24 per cent.. The NSE Insurance Index recorded the highest gain of 7.90 per cent last week to build up average year-to-date return for the sector to 17.93 per cent. However, with previous steep declines in share prices of many oil majors including Forte Oil and 11 Plc, formerly Mobil Oil Nigeria Plc, the NSE remained with negative year-to-date return of -6.90 per cent, in spite of above average gain of 1.82 per cent last week.

There were 41 advancers to 23 decliners last week as against 38 advancers and 26 decliners recorded in the previous week. AXA Mansard Insurance recorded the highest gain-in percentage terms, of 25.5 per cent to close at N2.51. Cement Company of Northern Nigeria followed with a gain of 20.1 per cent to close at N9.68. Linkage Assurance rose by 17.3 per cent to close at 88 kobo. Red Star Express increased by 14.95 per cent to close at N5.46 while Transnational Corporation of Nigeria chalked up 14.3 per cent to close at N1.52 per share.

On the negative side, University Press led the decliners with a lossof 13.6 per cent to close at N2.22. AG Leventis Nigeria followed with a drop of 11.3 per cent to close at 55 kobo. Law Union and Rock Insurance declined by 8.99 per cent to close at 81 kobo. C & I Leasing dipped by 8.7 per cent to close at N1.78 while Unity Bank dropped by 5.45 per cent to close at 52 kobo per share.

Total turnover stood at 1.56 billion shares worth N13.50 billion in 18,409 deals last week compared with a total of 1.49 billion shares valued at N15.11 billion traded in 14,549 deals in the previous week. The financial services sector-the traditionally most active sector, dominated activities chart with a turnover of 1.37 billion shares valued at N6.51 billion in 10,880 deals; representing 87.76 per cent and 48.19 per cent of the total equity turnover volume and value respectively. The consumer goods sector staged a distant second with a turnover of 70.5 million shares worth N5.64 billion in 3,398 deals while the conglomerates sector placed third with 58.78 million shares worth N141.93 million in 706 deals.

The three most active stocks were Diamond Bank Plc, Zenith International Bank Plc and Transnational Corporation of Nigeria Plc, which altogether accounted for 985.76 million shares worth N2.84 billion in 3,401 deals, representing 63.39 per cent and 21.04 per cent of the total equity turnover volume and value respectively.

Also traded during the week were a total of 60 units of Exchange Traded Products (ETPs) valued at N2,266 in six deals compared with a total of 2,000 units valued at N34,000 traded in a deal in the previous week.

In the sovereign debt segment, a total of 1,041 units of Federal Government bonds valued at N1.040 million were traded in 10 deals compared with a total of 2,360 units valued at N2.029 million traded in seven deals two weeks ago.

Market pundits were almost unanimous on the positive outlook for the equities in the near term as third quarter earnings trickle in.

“As third quarter earnings scorecards of banks and industrial goods companies begin to trickle in from next week, we expect performance to be driven by investors’ assessments of earnings quality. However, as we remain optimistic on third quarter earnings, we expect market performance to stay positive in the near term,” Afrinvest Securities-a Lagos-based dealer at the NSE, stated in a weekend advisory note.

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