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Markets

These stocks made investors money last week

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Aigboje AIG-Imoukhuede, Access Bank unveils logo, Access Bank and Diamond Bank merger

The Nigerian Stock Exchange All Share Index closed down as investors cashed out some of their profits. The following stocks topped the gainers chart last week and here is what we think about the week going forward.

  1. Wapic Insurance

Wapic Insurance was the biggest gainer in last week’s trading session, adding 6 kobo or 10.91%. The stock could havea bearish performance this week, as the NSE’s N0.01 floor kicks in. Penny stocks like Wapic could have significant volatility. Year to date, the stock has gained 22%.

  1. Dangote Sugar refinery

Dangote Sugar Refinery had a fantastic 2017, in terms of results and price appreciation. 2018 seems to be a continuation of that pattern. The stock gained 9.80% last week, and is up 9.80% year to date. Even though it is currently trading at a price to book ratio of 3, investors could remain bullish towards the stock in anticipation of a bumper dividend. The company for the first time in its history paid an interim dividend of 50 kobo per share last year.

  1. NASCON Allied Industries

NASCON also seems to have continued its 2017 run, as it gained 9.63% in last week’s trading session. Year to date, the stock is up 12.59%. There could be further upside this week, even as the stock is currently trading at a price to book ratio of 3.

 

  1. Trans Nationwide Express

A surprising addition to the list of top gainers last week was Trans Nationwide Express. The courier and logistics company gained 8% in last week’s trading session. Year to date, the stock has appreciated by just 3.85%, suggesting room for further upside.  The stock largely lagged last year due to a dilutive effect of a rights issue which it embarked on.Further appreciation this week may be unlikely, as the NSE implements the N0.01 rule.

  1. PZ Cussons Plc

Fast Moving Consumer Goods (FMCG) giant PZ joined the top gainers last week with a 6.89% gain. 2017 was a difficult year for most FCMGs due to FX liquidity issues, but this seems to have passed. The stock has appreciated by just 14.08% year to date, leaving room for further upside.

  1. Nigerian Breweries

Nigerian Breweries gained 6.72% in last week’s trading session. Opening at N142.19 and then closing at N151.75. The stock has gained just 12.49% year to date, leaving room for further price appreciation.

  1. UACN Property Development Company Limited

UPDC, as the stock iscommonly known, gained 6.67% last week, opening at N3.00 and closing at N3.20. Year to date, the stock has appreciated by just 14.70%. The stock performed poorly in 2017 due to poor results and 2018 may just be the year it bounces back as it applies proceeds of a rights issue.

  1. Dangote Flour Mills

Dangote Flour Mills appreciated by 6.55%or N0.98 in last week’s trading session. The stock opened at N14.97 and closed at N15.95. The company had an impressive 2017 in terms of results and share price performance like its sister companies in the Dangote Group. Year to date, the stock has appreciated by 31%, but may still rally a bit more, due to speculation about a planned dividend payment.

 

  1. Cutix Plc

Cutix Plc gained 5.78% in last week’s trading session. Year to date, the stock is up by 19.40%. There may be room for further price appreciation as investors turn their focus to penny stocks.

 

  1. Learn Africa

Learn Africa rounds up the gainers’ list for last week with a 5.43% gain. The stock opened at N0.92 and closed at N0.97. Possibility of further upside this week may be limited as the N0.01 floor takes effect.

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Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

Stock Market

Banking Index slumps to 375.35 Index points, as Sterling and Wema shares lose over 10%

The NSE Banking Index in the first week of March declined by 1.94% to close at 375.35 index points.

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Global stocks sell-off persists as resurgence of COVID-19 frighten investors 

The Nigerian Stock Exchange Banking Index at the close of trading activities in the first week of March, declined by 1.94% to close at 375.35 index points.

This is according to data from the Nigerian Stock Exchange, seen by Nairametrics.

The slump was due to the underperformance of most banking stocks during the week, notably, Sterling and Wema Bank which recorded the worst decline of 14.04% and 12.70% respectively, for the period under review.

This loss placed the aforementioned banks in the top 10 decliners for the week. It is also pertinent to note that only Unity Bank (among the listed banking stocks) emerged in NSE top 10 gainers for the week, with a share price appreciation of 8.96%.

Nairametrics had earlier reported that investors in the elite banks in Nigeria (FUGAZ) lost a total of N34.68 billion in a single trading session on Thursday, 4th of March 2021, due to downward pressure on their respective share prices caused by sell-offs.

On the other hand, the Financial Services Industry led the activity chart by volume with 1.63 billion shares valued at N10.73 billion traded in 13,269 deals; thus contributing 78.06% and 36.06% to the total equity turnover volume and value respectively.

What you should know:

  • The NSE Banking Index had earlier appreciated by 0.69% to close at 382.76 index points, last week.
  • On a general note, the NSE All-Share Index and Market Capitalization depreciated by 1.18% to close the week at 39,331.61 and N20.578 trillion respectively.
  • Trading in the top three equities namely Wema Bank Plc, Axamansard Insurance Plc, and Zenith Bank Plc (measured by volume) accounted for 903.561 million shares worth N5.564 billion in 4,017 deals.
  • A total turnover of 2.092 billion shares worth N29.744 billion in 24,238 deals were traded this week by investors on the floor of the Exchange.

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Stock Market

How instability in the FX market trigger foreign investors apathy in Nigeria’s equities market

Chukwu has explained how foreign exchange crises have negatively impacted foreign investors’ sentiment in Nigeria’s equities market.

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The Chief Executive Officer of Cowry Asset Management, Mr Johnson Chukwu, has explained how a combination foreign exchange crises have negatively impacted foreign investors’ sentiment in Nigeria’s equities market.

The analysis was in response to the recent Nigerian Stock Exchange’s Domestic and Foreign Portfolio Investment Report for January 2021, which showed that domestic participation in the equities market outperformed foreign transactions, as the latter could only account for 20% of the total market activities.

The report further indicated a downward trend in the share of foreign participation in the equities market, from about 51% in 2018 to 20% as at January 2021.

Reacting to the development, Mr Chukwu in an interview with Arise TV blamed the combination of FX liquidity crisis and instability of the Nigerian foreign exchange market as underlying causes for the downward trajectory.

He said: ‘’If you look at the trend in the past three years, you will observe that foreign portfolio investment into Nigerian equities market has been declining. In 2018, it was 51% of the entire market, so they actually trumped local investors. By 2019, it declined to 49%, implying that the local investors had trumped them. However in 2020, they only accounted for 34% of the entire market, it further came down to 20% by January 2020. Of course, we know those factors that are driving away foreign portfolio investment in the country, and until those factors are addressed, we are likely to see the trend continue.”

On how FX instability and illiquidity contributed to the decline, Mr Chukwu remarked that: “The main factor that drive foreign inflow into the economy is the liquidity in the FX market. Foreign investors want to be able to convert back to their foreign currencies when they want to exit. If there is no liquidity in the FX market, foreign portfolio investors stay away from the market. As you know, the Nigeria FX market witnessed locking of foreign portfolio investors who sold their investments and wanted to exit, but they could not access FX to exit. So because those people couldn’t exit, new investors couldn’t come in. You can’t really go into a market when people are trapped.

“Another factor that could influence them is the stability or predictability of the exchange rate. But the most important factor is the liquidity in the FX market. If you look at the year, these foreign portfolio investments were impressive, oil price was quite strong, for example in 2018, they brought in about N1.2 trillion accounting for 51% of the market activities.”

On the flip side, Mr Chukwu explained why local investors’ participation has been growing. He attributed the increase to the collapse of interest rates and the impressive returns posted by the NSE last year.

‘’The basic thing that happened was that because local interest rates collapsed last year and they remain very low even in January, , local investors particularly institutional investors are underweighting their portfolios in fixed income and overweighting them in equities. When interest rates are very low, investors will switch to the instruments that will give them high yield and in this instance, variable income assets like equities and that was what happened last year and is still happening now,’’ he said.

What you should know

  • Nairametrics reported that despite a bullish run of the NSE in 2020, total investments in the Nigerian stock market as at January 2021 dipped by 13.7% M-o-M.
  • Total foreign transactions as at the aforementioned period stood at N47.52 billion, while domestic transactions stood at N184.94 billion.

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