Polls uncertainty pushes investments earning down by 42.4% in one month

…As investors trade 6.24bn shares worth N59. 28bn in January

…Diamond Bank, GTBank, other financial services operators record N22.6bn

Motolani Oseni

Due to uncertainties surrounding the forthcoming elections in the country, the volume of shares traded on the Nigerian Stock Exchange (NSE) dropped by 42.38 per cent, posting 6.24 billion shares worth N59. 28 billion in 80,888 in January, against 10.83 billion shares worth N 70. 71 billion traded in 59,132 deals by investors in December 2018. Latest data obtained from the NSE, however, showed that the financial services sector remained the most active in volume terms, accounting for 3.43 billion shares valued at N22.62 billion in 28,671 deals. For instance, Diamond Bank emerged the most sought equity during the period in volume terms, with an exchange of 1.31 billion shares worth N2.72 billion in 3,918 deals, followed by Guaranty Trust Bank (GTBank) on the second spot with 469.59 million shares worth N15.24 billion in 5,775 deals, while conglomerates trailed with a turnover of 6.63 billion shares valued at N16.54 billion exchanged in 10, 541 deals. Transcorp listed under the conglomerates came third with a total of 288.76 million shares worth N334.33 million transacted in 2,476 deals, while UACN traded 21.09 million shares valued at N184.93 million achieved in 934 deals. It was followed by Nigerian Breweries which accounted for 40.84 million shares worth N3.07 billion traded in 1,814 deals, while Honeywell sold 27.98 million shares valued at N33. 80 million in 723 deals. Commenting on this development, the Chief Operating Officer, InvestData Ltd., Mr. Ambrose Omordion, attributed the drop in the activities of the stock market during the review period to cautious trading ahead of next week’s election. Omordion said investors had developed a ‘wait and see attitude’ to ascertain the outcome of the election. Speaking on the dominance of Diamond Bank in the month’s activity chart, he said that the proposed merger with Access Bank boosted the demand for the bank’s shares. According to him, the proposed merger entails that Access Bank acquires the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger. “Based on the agreement reached by the boards of the two financial institutions, Diamond Bank shareholders will receive a consideration of N3.13 per share, comprising N1 per share in cash,” Omordion said. He said the scheme of the merger released by the management showed that the transaction would include the allotment of two new Access Bank ordinary shares for every seven Diamond Bank ordinary shares held as at the implementation date. An analysis of the price movement table during the period indicated that Royal Exchange Assurance emerged the best performing stock in percentage terms, growing by 31.82 per cent to close at 29k per share. Julius Berger came second with 29.55 per cent, while Sterling Bank followed with a growth of 25.79 per cent. Other top gainers’ are Cement Company of Northern Nigeria, Union Diagnostic, Redstar Express, ABC Transport, and Caverton, among others. Conversely, Mcnichols emerged the worst performing stock in percentage terms with a loss of 29.79 per cent to close at 33k per share. Other top losers in percentage terms are Flourmills, GSK, Berger Paint, Consolidated Hallmark Insurance, Newest ASL, Etranzact and Seplat, among others. Omordion said that the month’s biggest gainers were penny stocks and medium capitalised stocks, which were grossly impacted by low price attraction and sentiments. He said low and medium capitalised stocks topped the decliners table due to profit taking and sell pressure triggered by unimpressive third-quarter results and political tension in the country. Meanwhile, the equities market performed positively at the close of trade on Wednesday due to sustained bargain hunting in bellwethers such as Nestle (+2.8%), Guaranty Trust Bank (+1.8%) and Zenith Bank (+0.2%). As a result, the All Share Index (ASI) advanced 0.16 per cent to 30,821.80, market capitalization increased by N18.0 billion to N11.5 trillion while year-to-date loss marginally improved to -1.9 percent. Activity level also improved as volume and value traded rose 88.3% and 65.0% to 358.3m units and N4.8bn respectively. The top traded stocks by volume were FBN Holdings (88.6m), Zenith Bank (55.7m) and Japaul Oil (36.2m) while Zenith Bank (N1.3bn), Guaranty Trust Bank (N724.5m) and FBN Holdings (N660.0m) were the top traded by value. The consumer goods index led sector gainers, up 1.2% following bargain hunting in Nestle (+2.8%) and Dangote Flour (+5.0%). The banking index trailed, rising 0.6 percent due to price appreciation in Guaranty Trust Bank (+1.8%) and Zenith Bank (+0.2%). Similarly, the insurance index maintained an uptrend, inching 0.5 percent higher, on the back of gains in AIICO Insurance (+6.1%) and Cornerstone Insurance (+5.0%). On the flipside, the industrial goods and oil & gas indices shed 0.6 percent and 0.1 percent respectively following sell pressures in Dangote Cement (-0.8%) and Oando (-1.0%). Investor sentiment as measured by market breadth (advance/decline ratio) weakened to 1.1x from 1.8x recorded Tuesday as 19 stocks appreciated against 17 laggards. Learn Africa (+9.5%), Regal Insurance (+9.1%) and MCNICHOLS (+7.7%) were the best-performing stocks while Custodian Allied (-8.8%), Guinea Insurance (-8.7%) and Livestock Feeds (-5.7%) led laggards. Following the positive performance of the market since the start of the week, analysts anticipate profit taking in counters that have enjoyed buying interest till the close of the week.