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Equities extend losing streak amid mixed earnings, sentiments

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[FILES] Nigerian Stock Exchange


Nigeria’s equities market extended its decline following mixed earnings reports and continued risk-off sentiments, causing the composite All-Share Index (ASI) and market capitalisation of the bourse to suffer another decline of 0.4 per cent, closing the week at 26,348.73 points and N12.826 trillion.

Similarly, all other indices finished lower with the exception of NSE MERI Growth Index, which appreciated by 0.19 per cent. Besides, of the 26 companies that have made their quarterly results available, 16 recorded decline in their respective bottom-lines. Analysts argued that the unimpressive performance in corporate earnings released so far is an indication that all is not well with the economy.

As investors await the implementation of fiscal and monetary reforms needed to stimulate nation’s economic growth and productivity, the market recorded losses on four consecutive trading sessions last week.For instance, transactions on the Nigerian Stock Exchange (NSE) reopened on a negative note on Monday, as sell pressures in 15 stocks dragged the market capitalisation by N28 billion.

At the close of transactions, the ASI was down by 58.54 absolute points, representing an increase of 0.22 per cent, to close at 26,390.08 points.Similarly, market capitalisation decreased by N28 billion to close at N12.847 trillion.

The downturn rode on losses recorded in large and medium capitalised stocks, among which wereDangote cement, Zenith Bank, NEM Insurance, Access Bank and United Bank for Africa (UBA).Sell pressures persisted on the nation’s bourse as losses extended to the second consecutive session, resulting to a further decline in the ASI by 0.09 per cent.

Specifically, at the close if trading, the ASI fell by 24.25 points or 0.09 per cent to 26,365.83 points. Accordingly, investors lost N12 billion in value as market capitalisation declined to N12.835 trillion.The downturn on Tuesday was impacted by losses recorded in medium and large capitalised stocks, among which were MTN Nigeria, Eterna, Cadbury Nigeria, May and Baker Nigeria and Dangote Cement.

At the end of transactions on Wednesday, investors renewed appetite in some bellwethers stocks lifted market capitalisation by N15 billion.The ASI rose by 32.11 points or 0.12 per cent to 26,397.94 points. Accordingly, investors gained N15 billion in value as market capitalisation went up to N12.850 trillion.

The upturn was impacted by gains recorded in medium and large capitalised stocks, among which were Dangote Cement, United Bank for Africa (UBA), FBN Holdings, UACN Property Development Company and Omoluabi Mortgage Bank.Trading reversed previous gains to close on a downward note on Thursday, occasioned by to sell pressures in 20 stocks , causing the ASI to plunge by 0.2 percent.

The ASI decreased by 40.70 absolute points, representing 0.2 per cent decline to close at 26,357.24 points. Similarly, the market capitalisation lost N19 billion to close at N12.831 trillion.The downtrend was impacted by losses recorded in large and medium capitalised stocks, amongst which are; Guinness Nigeria, GlaxoSmithKline Consumer Nigeria, Lafarge Africa, Custodian Investment and Ikeja Hotel.Market breadth closed negative, with five gainers against 20 losers. Forte Oil recorded the highest price gain of 10 per cent, to close at N17.60, per share.

Consolidated Hallmark Insurance followed with a gain 8.82 per cent to close at 37 kobo, while Sterling Bank appreciated by 2.78 per cent to close at N1.85, per share.

The bear dominance in the midst of earnings reporting season is a clear reflection of mixed reactions to the numbers posted, and indeed, the economy.This is, notwithstanding, the seemingly positive news that Nigeria moved 15 places up to number 131 in the World Bank Ease Of Doing Business report for 2020.
Analysts at Codros Capital limited said: “In our view, the trend witnessed through the year is likely to persist through the final quarter of the year, although we expect pockets of gains over the final months of the year as fund and portfolio managers realign portfolios prior to the start of 2020.
“Nonetheless, we note that valuations remain attractive driven by price deterioration throughout the year. Hence, we advise long-term investors to take positions in the market, given currently attractive valuations.”

The Chief Research Officer of Investdata Consulting Limited, Ambrose Omorodion, said: “Given that earnings and economic news can change trend at any time, keep your gaze on fundamentally sound and dividend-paying stocks for possible capital appreciation as Q3 numbers giving insight into companies’ position and future expectations.”

Further analysis of last week’s trading showed that turnover of 2.051 billion shares worth N16.126 billion in 13,508 deals were recorded by investors in contrast to a total of 896.610 million shares valued at N16.561 billion that was exchanged in 12,638 deals during the preceding week.The financial services industry (measured by volume) led the activity chart with 1.784 billion shares valued at N12.588 billion traded in 8,469 deals; thus contributing 87.00 per cent to the total equity turnover volume and value respectively.

The conglomerates industry followed with 98.429 million shares worth N120.779 million in 444 deals. The third place was construction/real estate industry with a turnover of 57.873 million shares worth N66.019 million in 90 deals. Trading in the top three equities namely, Omoluabi Mortgage Bank Plc, Zenith Bank Plc and Transnational Corporation of Nigeria Plc (measured by volume) accounted for 1.388 billion shares worth N9.067 billion in 2,221 deals, contributing 67.69 per cent to the total equity turnover volume and value respectively.

Also, a total of 1,405 units valued at N244,462.05 were traded this week in 9 deals compared with a total of 960 units valued at N146,642.75 transacted last week in 11 deals. A total of 9,018 units of Federal Government Bonds valued at N9.713 million were traded this week in 13 deals compared with a total of 1,397 units valued at N1.518 million transacted last week in nine deals. Similarly, 18 equities appreciated in price during the week, lower than 19 n the previous week and 33 others depreciated in price, higher than 23 equities in the previous week, while 115 equities remained unchanged, lower than 124 recorded in the preceding week.


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Ambrose OmorodionNSE
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