Financial services and oil and gas stocks were the few exceptions to the widespread decline that pervaded the Nigerian stock market last week as investors weighed the third-quarter earnings of quoted companies.
The benchmark index for the Nigerian stock market, the All Share Index (ASI), indicated a week-on-week negative return of -1.10 per cent, equivalent to a loss of N114 billion. The ASI-a value-based common index that tracks prices of all quoted equities at the Nigerian Stock Exchange (NSE), closed below its psychological base of 30,000 points at 29,834.21 points compared with its week’s opening index of 30,165.22 points.
Aggregate market value of all quoted equities also dropped from its week’s opening value of N10.367 trillion to close at N10.253 trillion, representing a loss of N114 billion or 1.10 per cent. With 39 decliners to 29 advancers, the negative market position was driven by widespread losses as well as losses recorded by highly capitalised stocks. A total of 122 equities closed flat, highlighting the lack of activities in several stocks, most of which have stagnated at nominal prices for more than 12 months.
The negative return last week further built up the negative average year-to-date return at the stock market to -13.92 per cent. The National Bureau of Statistics (NBS) during the week announced increase in inflation rate to 9.4 per cent in September, the eighth increase in the past nine months, leaving investors in a no-win position. Inflation-adjusted return thus closed the week at -23.32 per cent.
Turnover fell below recent weekly average as investors maintained a tight trading position. Total turnover stood at 949.68 million shares worth N10.28 billion in 14,833 deals last week as against a total of 1.39 billion shares valued at N12.17 billion traded in 14,821 deals two weeks ago. Financial services sector remained the most active with a turnover of 577.298 million shares valued at N4.87 billion in 8,006 deals, representing 60.79 per cent and 47.41 per cent of the total equity turnover volume and value respectively.
The trio of Capital Oil Plc, United Bank for Africa Plc and Guaranty Trust Bank Plc were the three most active stocks with a joint turnover of 370.170 million shares worth N2.386 billion in 2,042 deals, representing 38.98 per cent and 23.21 per cent of the total equity turnover volume and value respectively.
Banking, insurance and oil and gas stocks were the contrarian stocks last week as good earnings report by the United Bank for Africa (UBA) highlighted possible strong recovery in the financial services sector. The NSE Oil and Gas Index recorded the highest gain of 3.75 per cent, riding on the back of strong gain by Forte Oil, which tempered third-quarter earnings failed to halt rising demand. The NSE Insurance Index rose by 2.81 per cent while the NSE Banking Index returned modest gain of 0.67 per cent during the week.
All other group indices followed the negative overall market position. The NSE Premium Index, which tracks the trio of Dangote Cement, FBN Holdings and Zenith Bank International, recorded the highest loss of 2.09 per cent. The NSE 30 Index, which tracks the 30 most capitalised companies on the NSE, declined by 0.90 per cent. Both the NSE Premium Index and NSE 30 Index substantially influenced the negative close of the market, with the two indices mirroring more than three-quarters of the total market capitalisation. The NSE Main-Board Index dropped by 0.57 per cent. The NSE Consumer Goods Index declined by 1.73 per cent. The NSE Industrial Goods Index lost 1.45 per cent. The NSE Pension Index, which tracks a group of 40 stocks adjudged suitable for pension investments, dropped by 0.45 per cent while the NSE Lotus Islamic Index, which tracks stocks that comply with Islamic investment guidelines, returned -0.42 per cent last week.
Transcorp Hotels, which reported negative third quarter earnings, led the losers, dropping by 9.58 per cent to close at N6.42. Access Bank trailed with a drop of 9.23 per cent to close at N4.72. Learn Africa declined by 8.70 per cent to 84 kobo. Unity Bank dropped by 7.41 per cent to close at N1.50 while Honeywell Flour Mills lost 7.27 per cent to close at N2.55 per share.
On the upside, Okomu Oil Palm recorded the highest gain, in percentage terms, of 24.32 per cent to close at N35.63. Nascon Allied Industries followed with a gain of 10.90 per cent to close at N7.73. AXAMansard Insurance rallied 10.74 per cent to close at N2.68. Forte Oil rose by 9.81 per cent to close at N280 while Zenith Bank International grew by 7.42 per cent to close at N17.51.
On the non-common equity market, a total of 3,740 units of Exchange Traded Products (ETPs) valued at N2.035 million were traded in 19 deals compared with a total of 3,180 units valued at N1.150 million traded in 18 deals two weeks ago. Also, a deal was struck for 1,000 units of Federal Government Bonds valued at N1.165 million last week as against two deals struck for a total of 29,472 units valued at N30.711 million in the previous week.
Analysts at FSDH Securities said they expected the market to gain some traction from third quarter earnings. Several companies are expected to undertake final review and board approval of their third-quarter earnings this week. Approved earnings reports must be released immediately to the NSE for onward dissemination to the investing public, according to extant listing rules at the Exchange.