NSE ROUND UP: Equities in tight trades as companies scurry to submit earnings

Nigerian equities traded on a tight balance of bargain-hunting and profit-taking during the immediate past week as third quarter earnings of most active quoted companies showed steady corporate outlook. With 33 advancers to 32 decliners each, key benchmark indices at the stock market showed almost a flat market, though the overall market position tilted a bit towards negative with week-on-week decline of 0.34 per cent.

The flow of third quarter earnings release increased substantially during the week ahead of the Tuesday October 31, 2017 deadline for all relevant companies to submit their nine-month results. The nine-month results have however failed to significantly alter the tit-for-tat nature of the market in recent trading sessions.

Market analysts said investors had priced third quarter earnings into share prices already and many investors were looking to take profit and rebalance their portfolios, rather than aggressive positioning that could have stir a major rally.

The All Share Index (ASI)-Nigeria’s sovereign equities index, which tracks share prices at the Nigerian Stock Exchange (NSE), slipped to 36,462.26 points at the weekend as against its week’s opening index of 36,587.31 points. With this, the average year-to-date return for Nigerian equities closed the week at 35.68 per cent.

Aggregate market value of all quoted equities however closed at N12..619 trillion as against its week’s opening value of N12.594 trillion. The increase in market value was due to the listing of rights issued by Guinness Nigeria Plc. Sequel to the full subscription to right issue of five for 11 shares, a total of 684.49 million shares were added to Guinness Nigeria Plc.

All sectoral indices closed on the negative with the exception of the NSE Banking Index, which posted a week-on-week gain of 0.84 per cent. The NSE 30 Index, which tracks the 30 most capitalised stocks, dropped by 0.46 per cent. The NSE Insurance Index slumped by 3.08 per cent. The NSE Consumer Goods Index declined by 0.73 per cent. The NSE Oil and Gas Index dropped by 1.34 per cent while the NSE Industrial Goods Index recorded the highest drop of 3.28 per cent.

There were 33 advancers and 32 decliners last week compared with 23 advancers and 34 decliners recorded in the previous week. Nascon Allied Industries recorded the highest gain, in percentage terms, of 20.76 per cent to close at N15.94. Dangote Flour Mills rose by 19.59 per cent to close at N8.24. Fidelity Bank appreciated by 15.28 per cent to close at N1.66. UAC of Nigeria rose by 12.04 per cent to close at N18.05 while Fidson Healthcare appreciated by 8.86 per cent to close at N3.81 per share.

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On the downside, Cutix led the decliners with a drop of 22.3 pe rcent to close at N2.02. Forte Oil followed with a loss of 14.2 per cent to close at N38.29. AXA Mansard Insurance lost 10.2 per cent to close at N2.02. Jaiz Bank dropped by 9.09 per cent to close at 60 kobo. University Press dropped by 7.66 per cent to N2.05 while Lafarge Africa depreciated by 7.14 per cent to close at N52 per share.

Total turnover stood at 1.394 billion shares worth N16.403 billion in 19,195 deals compared with a total of 872.892 million shares valued at N14.016 billion traded in 19,047 deals two weeks ago. The financial services sector led the activity chart with 1.116 billion shares valued at N10.153 billion traded in 9,942 deals; thus contributing 80.05 per cent and 61.90 per cent to the total equity turnover volume and value respectively. The consumer goods sector followed with 95.005 million shares worth N3.251 billion in 4,443 deals. The third place was occupied by conglomerates sector with a turnover of 90.194 million shares worth N645.159 million in 1,136 deals.

Banking stocks were the most active with the three most active stocks- United Bank for Africa Plc, Access Bank Plc and FBN Holdings Plc accounting for 515.058 million shares worth N4.458 billion in 3,088 deals, contributing 36.95 per cent and 27.17 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 104,544 units of Exchange Traded Products (ETPs) valued at N11.506 million in seven deals compared with a total of 34,573 units valued at N2.091 million traded in 14 deals two weeks ago.

In the sovereign debt market, a total of 559 units of Federal Government bonds valued at N485,803 were traded in five deals, compared with a total of 7,279 units valued at N7.139 billion traded in 12 deals penultimate week.

The MSCI at the weekend announced its decision to retain the MSCI Nigeria Indexes in the MSCI Frontier Markets Indexes. The market will be removed from the review list for potential reclassification to Standalone status.

MSCI will also no longer apply the special treatment for the MSCI Nigeria Indexes announced on April 29, 2016. More specifically, and as part of the upcoming November 2017 Semi-Annual Index Review , MSCI will implement all index review changes, including changes in the Number of Shares (NOS) and Foreign Inclusion Factors (FIF) that have been postponed since April 29, 2016. These changes will be made for securities classified in Nigeria in the MSCI Nigeria Indexes and in indexes which Nigeria is a component of. These include the MSCI Factor, Thematic, ESG and other relevant derived indexes. MSCI will also resume the regular implementation of corporate events effective immediately.

Index review changes for the MSCI Nigeria Indexes will be announced together with the November 2017 Semi-Annual Index Review announcement on November 13, 2017.

The MSCI Nigeria Indexes were added to the review list for potential reclassification to Standalone status in September 2016 due to issues in the foreign exchange market leading to impairment in the ability of institutional investors to repatriate capital. On April 21, 2017, the Central Bank of Nigeria (CBN) announced the establishment of the Investors’ and Exporters’ Foreign Exchange Window which aims to improve liquidity in the foreign exchange (FX) market. Market participants have indicated that since the establishment of this Window, funds can be repatriated at close to the official rate. Concerns on the spreads and delays which investors have earlier experienced have also eased.

Many analysts said they expected the Nigerian equities to close this quarter positive, despite recurring profit-taking that may moderate the market rally.

“In addition, Nigeria’s financial market remains a sweet and attractive spot for both foreign and local investors. Although performance in the past year had been hampered by foreign exchange challenges, the improvements that have been witnessed since the introduction of better foreign exchange management policies suggest that the market still has potential to attain new heights,” Afrinvest Securities stated in a macroeconomic review of the Nigerian market.

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