The Nigerian Stock Exchange (NSE) has continued to perform negatively, as the market maintained its downward trend throughout the week.
Last week the All-Share Index closed at 27,306.81 basis points, down 1.17%. The NSE All-Share Index also declined by 0.47% this week and closed at 26,925.29 basis points. Year to date, the index is down 14.33%.
15 equities appreciated in price during the week, higher than 12 equities that appreciated the previous week. 34 equities depreciated in price this week, as against 43 equities in the previous week, while 119 equities remained unchanged this week, higher than 113 equities recorded in the preceding week.
Here are the top 10 gainers and losers for the week.
B.O.C. Gases Plc
B.O.C. Gases Plc was the best-performing stock this week. The stock opened at N5.57 and closed at N6.12, up N0.55 or 9.9%.
Year to date, the stock is up 45.4%.
Union Diagnostic & Clinical Services
Union Diagnostic & Clinical Services Plc opened at N0.22 and closed at N0.24, up N0.02 or 9.1%.
Year to date, the stock is up 4%.
[READ MORE: Nigerian Stock Market ends the week Negative]
Unity Bank Plc
Unity Bank Plc opened at N0.64 and closed at N0.69, up N0.05 or 7.8%.
Year to date, the stock is up 35.5%.
Livestock Feeds Plc
Livestock Feeds Plc opened at N0.41 and closed at N0.44, up N0.03 or 7.3%.
Year to date, the stock is up 10.2%.
Transnational Corporation of Nigeria Plc
Transnational Corporation of Nigeria Plc opened at N0.87 and closed at N0.91, up N0.04 or 4.6%.
Year to date, the stock is up 31.1%.
Continental Reinsurance Plc
Continental Reinsurance Plc opened at N1.39 and closed at N1.45, up N0.06 or 4.3%.
Year to date, the stock is up 24.1%.
Union Bank Nigeria Plc
Union Bank Nigeria Plc opened at N6.75 and closed at N7.00, up N0.25 or 3.7%.
Year to date, the stock is up 25%.
Cement Company of North Nigeria Plc
Cement Company of North Nigeria Plc opened at N14.00 and closed at N14.50, up N0.50 or 3.6%.
Year to date, the stock is up 25.3%.
MTN Nigeria Communications Plc
MTN Nigeria Communications Plc opened at N131.00 and closed at N135.00, up N4.00 or 3.1%.
Year to date, the stock is up 50%.
Zenith Bank Plc
Zenith Bank Plc rounded up the top 10 gainers for the week. The stock appreciated by 1.5% opening at N16.35 and closing at N16.60, up N0.25.
Year to date, the stock is up 28%.
RAK Unity Pet Company Plc
RAK Unity Pet Company Plc was the worst-performing stock this week, shedding 25%. The stock opened the week at N0.40 and closed N0.30, down N0.10.
Year to date, the stock is down at 0% and is trading at a year low.
UACN Plc opened the week at N5.50 and closed at N4.50, down N1.00 or 18.2%.
Year to date, the stock is down 53.9%.
Ecobank Transnational Incorporated
Ecobank Transnational Incorporated opened the week at N7.25 and closed at N6.00, down N1.25 or 17.2%.
Year to date, the stock is down 57.1%.
Law Union and Rock Insurance Plc
Law Union and Rock Insurance Plc opened the week at N0.39 and closed at N0.33, down N0.06 or 15.4%.
Year to date, the stock is down 45%.
Stanbic IBTC Holdings Plc
Stanbic IBTC Holdings Plc opened the week at N38.10 and closed at N33.00, down N5.10 or 13.4%.
Year to date, the stock is down 31.2%.
Unilever Nigeria Plc
Unilever Nigeria Plc opened the week at N32.00 and closed at N27.90, down N4.10 or 12.8%.
Year to date, the stock is down 24.6%.
CHAMS Plc opened the week at N0.26 and closed at N0.23, down N0.03 or 11.54%.
Year to date, the stock is down 15%.
Red Star Express Plc
Red Star Express opened the week at N4.76 and closed at N4.24, down N0.52 or 10.9%.
Year to date, the stock is down 1%.
Wapic Insurance Plc
Wapic Insurance Plc opened the week at N0.39 and closed at N0.35, down N0.04 or 10.3%.
Year to date, the stock is down 16.7%.
Nascon Allied Industries Plc
Nascon Allied Industries Plc rounded up the top 10 losers for the week. The stock fell by 10%, opening at N14.00 and closing N12.60, down N1.40.
Year to date, the stock is down 30%.
[READ FURTHER: List of Dividends announced so far in 2019 (August 2019)]
NSE Industrial Index sheds 183.17 index points in February, highest since November 2018
The NSE Industrial index shed a total of 183.17 index points in February, the highest decline since November 2018.
The Nigerian Stock Exchange Industrial Index at the close of trading activities for the second month of 2021, closed on a bearish note, with the index depreciating by 8.8%, to close at 1898.2 index points for the month.
A preview of the performance of the index revealed that it shed a total of 183.17 index points – the highest since November 2018 (-190.58 index points).
This steep decline in the index was occasioned by the sell-off by wary investors in the shares of companies in the industrial sector, with the shares of Lafarge (WAPCO), BUA, and Dangote Cement being one of the shares impacted on the exchange.
The sell-off however was triggered by profit-taking activities across the market spectrum.
However, other factors that contributed to this sell-off may include rising yields in the money market spooked by CBN’s move to increase yields for OMO bills, as well as expectations of further devaluation of Naira.
What you should know
- The NSE Industrial Index was designed to provide an investable benchmark to capture the performance of the Industrial Sector. It comprises the most capitalized and liquid companies in the industrial sector and is based on the market capitalization methodology.
- The index monitors the performance of ten industrial companies on the Nigerian Stock Exchange which includes Dangote, BUA, and Lafarge Cement.
- The overall performance of the companies was bearish in February as the index closed on a negative note with eight losers.
- WAPCO (-23%) led the loser’s chart for the month, followed by Berger (-9.94%) and Betaglas (-9.75%).
- WAPCO down by 23.00% to close at N23.10
- BERGER down by 9.94% to close at N7.25
- BETAGLAS down by 9.75% to close at N50.00
- BUACEMENT down by 8.86% to close at N72
- PORTPAINT down by 7.14% to close at N3.25
- DANGCEM down by 6.78% to close at N220
Sell frenzy wipes out N1.1 trillion from market capitalization of Nigerian stocks
Nigerian Stocks end February with N1.1 trillion loss in market value, first loss since September 2020.
The Nigerian Stock Exchange ended February with a 6.16% loss ending 7 months winning streak that started in July 2020.
Year-to-date, the Nigerian stock exchange also swung to a loss of -1.17% after closing the month of January with a 5.32% gain. Out of the 166 stocks tracked by Nairametrics 53 stocks posted losses while 35 stocks gained, the rest were flat.
In total, investors lost a whopping N1.1 trillion during the month wiping off all the gains made in January. The last time stocks lost over a trillion naira was in March 2020 when stocks plummeted by about N2.5 trillion due to the global pandemic that had just broken. Before February, stocks have lost N1 trillion and above only 4 times in the last 5 years.
The selloffs also ensued despite the National Bureau of Statistics report that Nigeria had exited a recession beating consensus analyst expectation of a U -shaped recovery.
Why the sell-off?
The sell pressure on Nigerian stocks in the month of February is attributed to a change in key economic drivers that have underpinned the success of stocks in recent months.
- Overvalued stocks – As stocks hit an all-time high of N22 trillion in market capitalization, investors found it harder to find value in equities. Nigeria boasts of less than 200 stocks on its flagship bourse out of which about 60 have enough liquidity to absorb more capital. For most investors, the key driver for investing in stocks was the dividend yield. However, as market value spiked, the prospects for higher dividend yields fell making investments in equities less attractive.
- Profit-taking – As investors assigned overvalued status to Nigerian stocks, many saw this as an opportunity for profit-taking. For example, the NSE 30 Index swung from a positive return of 4.93% in January to a loss of 7.41% in February. Pension funds also sold off stocks with their index falling to a loss of 7.68% after closing January with a 7.49% pop. The insurance sector which led the gainers’ chart earlier on in the year went from a gain of 29.77% to a loss of 17.82%
- Earnings season – The anticipation of how investors might also react to 2020 FY results also played a role in the selloffs that occurred in February. Investors expected a fall in profits for most listed companies. To avoid being in a value trap they sell off and hope to return once the outlook becomes clearer.
- Rise in interest rates – Lower interest rates have been the major driver of an upsurge in the market value of stocks since last year. The central bank sent clear signals during the months that it was in the mood to increase yields of its OMO and Treasury Bills thus competing directly with dividend yields (which we touched on above). The higher the yield on risk-free investments the less attractive investing in stocks become.
- Gloomy economic outlook – Lastly, insecurity, social unrest and an ailing economy are also weighing down on investors. Investors are also worried about the economic growth of the country and the ability of the government to continue to operate in a bankrupt state. Nigeria has seen its fiscal deficits explode in recent years. Some of the deficits are funded by an estimated N10 trillion in CBN’s Ways and Means lending.
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