Equities market gains N438bn, as Naira appreciates by 0.28%

The equities market segment of the Nigerian Stock Exchange (NSE) gained the total sum of N438 billion in just one week, as the nation’s currency, Naira, at the unofficial foreign exchange market appreciated by 0.28 per cent to close the week at N362 against the US dollar. The closing weekly statistics showed that the equities market capitalisation, opened trading on January 14 at N11.124 trillion, gained N438 billion or 3.94 per cent to close trading on January 18 at N11.562 trillion. Specifically, the All-Share Index (ASI) gained 1174.47 basis points, representing a growth of 3.94 per cent to close at 31,005.17 basis points from 29,830.70 basis points it opened for trading last week. All other indices finished higher with the exception of the NSE Banking Index that depreciated by 1.04 per cent while the NSE ASeM index closed flat. According to NSE weekly market report, the total volume of transactions traded appreciated to 1.270 billion shares, worth N13.463 billion, and traded in 16,476 deals in contrast to a total of 1.265 billion shares valued at N14.074 billion, and traded in 19,278 deals in the previous week. The Exchange revealed that 38 equities appreciated in price during the week, higher than 22 in the previous week. 29 equities depreciated in price, lower than 44 of the previous week, while 102 equities remained unchanged lower than 103 equities recorded in the preceding week. NEM Insurance Plc topped the gainers’ chart with 43.35 per cent to close at N2.48 per share. Sovereign Trust Insurance Plc followed with 30.00 per cent to close at N0.26 while Royal Exchange Plc. gained 28.57per cent to close at N0.27 per share. Cement Co. of North. Nig. Plc grew by 25.50 per cent to close at N25.10, while Custodian Investment Plc appreciated by 21.70 per cent to close at N6.45 per share. On the other hand, Resort Savings & Loans Plc led the losers’ chart, dropping by 29.73 per cent to close at N0.26 per share. Beta Glass Plc. followed with a loss of 17.91 per cent to close at N55.00, while Linkage Assurance Plc was down by 13.85 per cent to close at N0.56 per share. Other losers are Berger Paints Plc shed 9.88 per cent to close at N7.75, while E-Tranzact International Plc declined by 9.87 per cent to close at N3.56 per share. Further breakdown of the trading showed that “The Financial Services Industry (measured by volume) led the activity chart with 1.131 billion shares valued at N10.573 billion traded in 10,352 deals; thus contributing 89.06 per cent and 78.54 per cent to the total equity turnover volume and value respectively. “The Consumer Goods Industry followed with 37.744 million shares worth N1.628 billion in 2,054 deals. The third place was Conglomerates Industry with a turnover of 37.699 million shares worth N102.918 million in 566 deals. “Trading in the Top Three Equities namely, Diamond Bank Plc, Guaranty Trust Bank Plc and Zenith Bank Plc (measured by volume) accounted for 696.955 million shares worth N8.509 billion in 3,753 deals, contributing 54.86 per cent and 63.20 per cent to the total equity turnover volume and value respectively.” Also traded during the week were a total of 55 units of Exchange Traded Products (ETPs) valued at N5,610.00 executed in 2 deals compared with a total of 15,288 units valued at N236,445.40 that was transacted last week in 4 deals. A total of 3,573 units of Federal Government Bonds valued at N3.764 million were traded this week in 24 deals compared with a total of 17,996 units valued at N18.426 million transacted last week in 10 deals. Analysts at Cordros Capital said: “The absence of a positive catalyst and political concerns ahead of the 2019 election guide our conservative outlook for equities in the short-to-medium term. “However, stable macroeconomic fundamentals remain supportive of recovery in the long term.” In a related development, Sovereign Trust Insurance Plc has proposed to raise N2.085 billion in new equity funds through a rights issue. A statement on the Nigerian Stock Exchange (NSE) confirmed that Sovereign Trust has submitted an application, seeking the bourse approval and listing of the rights issue. Under the rights issue, Sovereign Trust will issue 4.17 billion ordinary shares of 50 kobo each at offer price of 50 per share. As rights, the new shares to be issued have been pre-allotted on the basis of one new share for every two ordinary shares held. In the statement, “The company, through its stockbroker, Dynamic Portfolio Limited, submitted an application to the Nigerian Stock Exchange for the approval and listing of a rights issue of 4,170,411,648 ordinary shares of N0.50 each at N0.50 per share, on the basis of 1 new share for every 2 ordinary shares held. “The qualification date for the rights issue was Tuesday, 15 January 2019.” Meanwhile, the Central Bank of Nigeria weekly intervention (CBN), has continued to stabilise the naira across various forex segments. For instance, the naira appreciated by 0.59 per cent to N362.79 at the Investors &Exporters (I&E) foreign exchange window with the influx of hot money into both fixed income and equities markets for much of the week. A total foreign exchange turnover at the I&E window surged by 83.0 per cent w/w to $1.73 billion. Furthermore, increased autonomous flows also bolstered foreign exchange reserves in the period as the CBN recorded foreign reserve accretion of $42.57 million w/w to $43.08 billion. “With FX reserves comfortably sitting atop $43 billion, we believe CBN has more than enough firepower to leave currency stable for much of the year. However, the still elevated maturity profile, combined with some speculative tendencies will drive mild depreciation as the progress,” analysts at Cordros capital explained. However, the overnight lending rate moderated by 633 basis points w/w to 16.17per cent, against prior week’s close of 22.50per cent. Rates remained elevated throughout the week, amidst the CBN’s N574.59 billion Open Market Operation (OM) interventions. However, inflows of matured OMO bills, N73.45 billion treasury bills, and N106.03 billion bond coupon payments boosted liquidity towards the end of the week, resulting in a rate decline. “The treasury bills market last week were bullish driven by the increase in system liquidity, and increased demand from foreign investors,” analysts at Cordros capital stated. Consequently, yields fell 40 basis points to close the week at 14.91per cent on average. In addition, activities in the bond market were also bullish as market players sought to re-invest coupon payments. As a result, average yield moderated by six basis point w/w to close at 15.19 per cent. “Yield moderated at the mid (-10 bps) and long (-16 bps) segment, following demand for the MAR-2027 (-34 bps) and MAR-2036 (-25 bps) bonds. On the flip side, yields widened at the short (+7 bps) end of the curve following a selloff of the FEB-2020 (+19 bps) bond. “Demand is likely to persist over the next week as market players seek to reinvest inflows from incoming coupon payments (N67.82 billion).
However, theme for the bond market continues to favour modestly higher yields in the medium term, anchored on (1) domestic monetary policy direction, (2) sustained uptick in inflation rate, (3) capital flight amid higher yields in safe-haven assets, and (4) political uncertainty stemming from the upcoming general elections,” analysts at Cordros capital added. Motolani Oseni