Stock Investors Net N598bn Capital Gains Amid Profit-taking

Investors in Nigerian equities closed weekend with net capital gains of N598 billion despite the onset of a considerable profit-taking.

Investors sought to monetise substantial capital gains built up over weeks of successive rally but gains by large-cap telecommunication stocks rallied the overall market position to a positive closing.

Benchmark indices at the Nigerian Exchange (NGX) at the weekend indicated average return of 2.09 per cent, equivalent to net capital gains of N598 billion. The rally nudged the average year-to-date return to 26.61 per cent.

The All Share Index (ASI)- the value-based common index that tracks share prices of all quoted equities at the NGX, closed weekend at 54,085.30 points as against its week’s opening index of 52,979.96 points. Aggregate market value of all quoted equities increased correspondingly from its week’s opening value of N28.562 trillion to close at N29.160 trillion.

With more than two decliners for every advancer, the positive overall market position was driven majorly by gains recorded by Airtel Africa, the only large-cap stock within the top 10 gainers. On the back of rekindled foreign investors’ appetite, Airtel Africa’s share price rose by 20.2 per cent to close at N1, 767 per share, the third highest gain for the week and the highest for any large-cap stock.

The underlying sentiment was generally negative with 54 losers to 23 gainers during the week, compared with 37 gainers and 42 losers recorded in the previous week.

Expectedly, sectoral indices closed negative. Telecommunications stocks are not represented by any sectoral index, but they hold substantial influence on the overall market benchmark, the ASI. The NGX Insurance Index recorded above-average loss of 6.27 per cent. The NGX Consumer Goods Index followed with a drop of 3.94 per cent. The NGX Oil and Gas Index dipped by 0.86 per cent.

The NGX Banking Index declined by 0.76 per cent. The NGX Industrial Goods Index slipped by 0.67 per cent. The NGX 30 Index, which tracks 30 largest stocks at the stock market, declined by 2.28 per cent. The NGX Pension Index- which tracks stocks that have been specially screened in line with pension funds investment guidelines, posted a negative return of -2.74 per cent while the NGX Lotus Islamic Index- which tracks ethical stocks that comply with Islamic principles, also recorded negative return of -2.23 per cent.

On the upside, Industrial and Medical Gases Nigeria led with a gain of 20.88 per cent to close at N11 per share. MRS Oil Nigeria followed with a gain of 20.59 per cent to close at N16.40 per share. Conoil rose by 9.95 per cent to close at N34.25 while FTN Cocoa Processors appreciated by 9.37 per cent to close at 35 kobo per share.

On the downside, UAC of Nigeria led the losers with a drop of 27.08 per cent to close at N10.50. Global Spectrum Energy Services followed with a loss of 18.77 per cent to close at N2.77. Royal Exchange dropped by 14.04 per cent to close at 98 kobo. RT Briscoe lost 13.85 per cent to close at 56 kobo while Jaiz Bank dipped by 13.33 per cent to close at 78 kobo per share. Jaiz Bank’s share price was during the week adjusted for dividend payment.

The momentum of activities also slowed down with total turnover of 1.84 billion shares worth N27.29 billion in 27,273 deals last week in contrast to a total of 3.02 billion shares valued at N31.78 billion traded in 29,153 deals two weeks ago.

The financial services sector remained atop activity chart with a turnover of 1.29 billion shares valued at N10.75 billion in 12,379 deals, representing 69.90 per cent and 39.37 per cent of the total equity turnover volume and value respectively. The conglomerates sector followed with 251.105 million shares worth N1.66 billion in 1,371 deals while consumer goods sector placed third with a turnover of 105.60 million shares worth N2.52 billion in 4,263 deals.

Banking stocks dominated the activities chart. The trio of Ecobank Transnational Incorporation, Jaiz Bank and Access Holdings were the most active stocks, accounting for 640.650 million shares worth N4.825 billion in 2,098 deals, representing 34.81 per cent and 17.68 per cent of the total equity turnover volume and value respectively.

“The market keeps going against general sentiment and closed the week positive. The negative market sentiment is waning. A positive close in the next trading session may signal the beginning of a bullish trend. A negative close may signal a possible retracement,” Analysts at Arthur Stevens Asset Management stated at the weekend.

Analysts at Cordros Capital noted that with the recent decision of the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) to hike the Monetary Policy Rate (MPR) by 150 basis points to 13.00 per cent, negative sentiments will dominate market performance in the short term.

“Nonetheless, we think a short-term market correction will present opportunities for investors to make re-entry in stocks with sound fundamentals and attractive dividend yields. Overall, we advise investors to take positions in only fundamentally justified stocks as the fragility of the macroeconomic environment remains a significant headwind for corporate earnings,” Cordros Capital stated.