Nigerian Stock Market Roundup: A Week of Weak Economic Data

#TheNumbers for the week ended September 2, 2016

 Highlights

• CBN readmits all the banks suspended from the interbank FX market
• NBS releases a flurry of weak macro data (Q2’2016 GDP: -2.06%; July inflation: 17.1%)
• Dangote Cement announced a N600 increase in the ex-factory price of a bag of cement.
• Big trades on the interbank FX market, on the inflow of $270mn in a single transaction by an offshore investor in FGN debt.
• The Naira hits record low of 425 to dollar on parallel market

Commentary

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Broadly, Nigerian stocks traded sideways for the most part of the week. However, we note big gains and losses on Thursday and Friday respectively, owing to movements in DANGCEM. The gains in DANGCEM came in after management announced an increase in the ex-factory price of its 50kg cement. Sector wise, they were mostly flat as well, the big move came in from the Oils on the back of gains in SEPLAT. We note that there wasn’t much talk about the weak macro data, as this had largely been priced in. Put together, the All-Share Index ended with a WoW gain of 111bps to close 27,756.67pts.

The Oils paced the gainers for the week, climbing 412bps. Sustained offshore interest in SEPLAT has seen it record huge gains for the second consecutive week. The Consumers added 113bp, on gains in 7UP, the soft drinks manufacturer is seeing renewed buying interest after hitting a 52-week low of N102.60 in mid-August. The Insurers and Banks were up 89bps and 70bps respectively. In the banks, we note a retracement in the banks that were readmitted into the FX market – the likes of FCMB, SKYE & FBNH being among the top 10 price gainers for the week. We also note sustained offshore demand for GTB shares while ZENITH has been under some selling pressure, thus widening the traditional spread between both lenders.

Turnover for the week was 1.12bn shares valued at N13.82bn broadly in line with the 1.12bn shares valued at N13.84bn that traded in the previous week. Though the week opened with thin volumes (N0.711bn on Monday) owing to technical issues at the NSE and the CSCS, turnover by mid-week hit N4.88bn, as the backlogs were cleared as well as rebalancing from index funds. As in the last couple of weeks, the big crosses were in the likes of GUARANTY (N3.69bn), NB (N2.22bn) and NESTLE (N1.85bn) – the trio accounted for c.32% of total turnover.

The Week Ahead

• Closure of register for N0.25 interim dividend from ACCESS
• Interim dividend payment of N3.00 from TOTAL & N0.25 from GTB

Market Snapshot

Sector Performance: 

Risers & Decliners:

• Top Risers:

7UP (+28.23%; N144.90); WEMABANK (+17.19%; N0.75) & SEPLAT (+15.76%; N318.33)

• Top Decliners:

MAYBAKER (-19.80%; N0.81); UNITYBNK (-10.71%; N0.7) & JBERGER (-9.71%; N43.69)

#TheNumbers for the week ended August 26, 2016

Highlights

• CBN suspends nine banks from the interbank FX market for failing to remit NNPC cash to TSA
• UBA readmitted into the FX market after remitting all outstanding NNPC cash to the TSA within 24hrs of the suspension.
• CBN instructs banks to give 60% of their FX to manufacturing firms
• The CBN settles the $152.48 million of Naira futures contracts it sold in two months ago at an exchange rate of N279/$. The apex bank also executed a fresh 12-month contract at N241/$ which is scheduled to mature on Aug. 16, 2017
• The Naira hits record low of 412 to dollar on parallel market

Commentary

Nigerian stocks ended the week in the red with the main theme being “kamikaze” policy moves by monetary authorities, who were quite busy last week. However, we note that the market saw smallish gains in 3 of the 5 trading sessions; a steep decline on Thursday on the back of weakness in DANGCEM erased all the gains. The market benchmark slid 0.72% WoW to end at 27,450.91pts. At current levels, market capitalization stands at N9.428tn and the ASI has seen a YtD decline -4.16%

Sector wise, the Oils were big winners, adding 674bps on gains in SEPLAT & FO, the recovery in the duo is coming after several weeks of sustained selling pressure. On the other hand, the Industrials were the big losers, shedding 113bps driven by weakness in DANGCEM. While there were more sellers out there for DANGCEM shares, a single cross trade of c.200k shares at much lower levels accounted or the decline in its share price. Elsewhere, the Consumers were up 93bps on gains in INTBREW as well as significant offshore demand for NB shares. The Banks climbed 86bps mostly on the back of gains in GTB which continues to see significant buying interest from offshore investors. Noteworthy was weakness in banks that were suspended from the FX market. The Insurers were only a tad higher, adding 4bps.

The bourse saw a turnover of 1.124bn shares valued at N13.839bn compared with the 1.375bn shares valued at N12.940bn that traded in the previous week. This was driven by block trades in GTB (N4.67 billion) and NB (N2.73 billion) – the duo accounted for c.53% of total market turnover. In both names, we note local institutional selling and foreign institutional buying, in mostly prearranged cross trades. Our sense, local investors were harvesting gains in both names (GTB & NB had gained 99.8% & 59.1% respectively form their 52–week lows) and switching to fixed income given the elevated yield environment.

Half year earnings season more or less wrapped with the release of H1 numbers from UBA. The numbers were broadly in line with most its peers, impairments were higher, impacting Net Interest Income. However, earnings were boosted by higher Fee and Commission Income. It also recorded strong revaluation gains. It announced an interim dividend of N0.20 per share.

The Week Ahead

• Based on its website, the National Bureau Of Statistics is guiding to release a flurry of key macro data on August 31, 2016
• Closure of register for N0. 60 special dividend from GSK & N0.25 interim dividend from GTB
• Dividend payment of N0.35 from REDSTAREX & N0.07 from CUSTODYINS
• We might see increased activity levels driven by month–end rebalancing from index funds

Market Snapshot

Sector Performance:

Risers & Decliners:

• Top Risers:

SEPLAT (+14.58%; N275.00); FO (+10.56%; N177.00) & TRANSCORP (+10.48%; N1.16)

• Top Decliners:

FCMB (-14.96%; N1.08); AGLEVENTIS (-10.10%; N0.89) & ACADEMY (-9.52%; N0.57)

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