NIGERIA: Bullish Run Lifts Market to Three-month High

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The bullish run in the Nigerian equities market was sustained last week with the All-Share Index hitting a three-month high
 
Having appreciated by 1.10 per cent the previous week, sustained positive sentiments lifted the ASI by 2.1 per cent to close at 39,831.83.  Apart from the 2.1 per cent appreciation in the ASI,  the volume and value of equities traded on the Nigerian bourse also rose significantly.
 
Operators said   the bullish trend was achieved on the back of the declining yields in the fixed income market, a development, they explained, attracted portfolio reallocations by investors  to the equity market.
 
Market Turnover
Investors staked N23.917 billion on 1.869 billion shares  in  in 23,554 deals, up from N20.861 billion invested in 1.675 billion shares in 24,513 deals the previous week.
 
The financial services industry closed the week as the most active in volume terms with 1.486 billion shares valued at N15.519 billion traded in 12,384 deals. Consequently,  the sector contributed 79.53 per cent  and 64.89 per cent  to the total equity turnover volume and value respectively.
 
The conglomerates industry followed with a turnover of 109.647 million shares worth N607.628 million in 1,230 deals. The third place was occupied by the services industry with 81.708 million shares worth N228.740 million in 857 deals. 
 
A further analysis of the trading pattern showed that the top three equities in terms of volume of trading were Wapic Insurance Plc, Zenith  Bank Plc and Guaranty Trust Bank Plc, accounting for 815.138 million shares worth N11.613 billion in 3,151 deals.
 
The three stocks contributing 43.62 per cent and 48.56 per cent to the total equity turnover volume and value respectively.
 
Apart from the equities, 674 units of Exchange Traded Products (ETPs) valued at N127,162.83 were also  executed in 15 deals compared with a total of 10,329 units valued at N3.305 million transacted last week in 18 deals the previous week.
There   were no transactions recorded in debt instruments this week under review.
 
NSE Outperforms Peers
The ASI rose 2.1 per cent close at 39,831.83, while market capitalisation grew by 2.34 per cent to close at N13.152 trillion. All the NSE indices appreciated during the week with the exception of the NSE Industrial Goods and NSE ASeM indices that closed flat. The Oil & Gas Index led with 15.5 per cent attributable to gains in Oando  and Forte Oil  Plc. The  Consumer Index appreciated by 3.5 per cent, while the  Banking and Insurance indices also advanced 1.3 per  cent  and 0.8 per cent in that order.
 
In all, the Nigerian market led the  other African markets in the week under review. While the NSE ASI returned 2.1per cent,  the Johannesburg Securities Exchange delivered 1.6 per cent.  The   Kenya NSE 20 indices fell 1.1 per cent.
 
Gainers and Losers
In terms of price movement, a total of  42  equities appreciated in prices as against 37 that appreciated the previous week. Conversely, 33 equities depreciated in prices  as against 36  equities of the preceding week, while one hundred and twenty-four  others  equities remained unchanged.
 
Forte Oil Plc led the price gainers with N30.59 to close at N186.54 per share. The equity was the previous week included in the Morgan Stanley Capital International (MSCI) Frontier Market 100 Index. Forte Oil was included along with Ecobank Transnational Incorporated (ETI).
 
Market operators had hailed the development,  it is a testament to the fundamentals and strong growth potential of the energy company.  The operators believe the  inclusion will be a driver of imminent inflow of foreign direct investments that will compete strongly with local investment.
 
They therefore urged Nigerian investors to take advantage of this development and increase their stake ahead of the growing appetite from offshore players.  ETI also rose last week, chalking up N1.13 to close at N15.13 per share.
 
However, Nigerian Breweries Plc closed with the second highest price gain of N13.08 to close at N176.13 per share.  Mobil Oil Nigeria Plc  rallied N10.94, while Oando Plc garnered N4.01. Dangote Sugar Refinery Plc  appreciated by N0.64, just as Ikeja Hotel Plc, Custodian and Allied Insurance, NPF Microfinance Bank  and AvonCrowncap Plc gained N0.27, N0.25,and N0.14 respectively.
 
On the contrary,  Beta Glass Plc  led the price losers with N2.68 to close at N16.22, followed by Jos Breweries Plc and First City Monument Bank Plc  with a decline of N0.34 apiece. Airline Services and Logistics Plc shed N0.17, just as Neimeth International Pharmaceutical Plc and May and Baker Plc went down by N0.15 each. CutixPlc lost N0.11, while Deap Capital Management and Trust Plc and Courtville  Investments Plc shed N0.08 and N0.06 respectively.
 
Listing of Caverton
One significant   development in the equities market last week was the listing of Caverton Offshore Support Group Plc (Caverton)  on the Nigerian bourse.
Caverton, which is a leading provider of marine, aviation and logistics services to local and international oil and gas companies in Nigeria, made history last week as  the first offshore support company to be listed on the NSE.
 
A total of 3.35 billion shares of 50 kobo each of Caverton were listed at N9.50, amounting to a market capitalisation of N31.83billion. The Chief Executive Officer of NSE, Mr. Oscar Onyema, said  the exchange was proud of the listing Caverton.
 
“We are proud that Caverton has taken a strategic step to join the prestigious club of quoted companies in Nigeria. We commend them for this bold step. We must also note the giant strides made by Caverton in strengthening its governance structure to prepare  as a listed company. The company has been making profit over the years and has paid dividend consistently since 2009,” Onyema said.
 
The Chairman of Caverton, Mr. Aderemi Makanjuola, said they were  extremely pleased as Caverton enters its next phase of growth as a listed company.
 
“Leveraging our expertise and execution capabilities, we plan to embark immediately on fleet expansion and the development of new service areas in the offshore marine and aviation sectors. The  listing will enable the company have access to more capital to finance more contracts that are underway. Caverton is at a stage where it needs to access more capital because more contracts are coming in.
 
"We also need to train more people and ensure that Nigerian engineers and pilots derive greater benefits from the evolving opportunities and that instead of hiring people from abroad and taking out the money, we can help Nigerians to acquire the necessary capacities and hire them,” Makanjuola said.
 
Market Outlook
Assessing the performance of the market last week and looking ahead, analysts at Meristem Securities Limited, said the positive trend would be sustained this week.
 
“Given the momentum of gains recorded in the week, we are of the view that the positive trend will most likely be sustained in the coming week given the relative low pricing of some counters and the fact that no major domestic regulatory shock or global uncertainty should crystallise in the near term,” they said.
 
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