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Stock Market

Nigeria’s oil stocks cap bullish run, as ASI gains 0.02%

Nigerian bourse finished on a near flat note, as Nigerian oil stocks capped Tuesday’s bullish run.

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gtbank, stock market, Bulls dominate Nigerian bourse ASI up 0.74%, Investors gain N77 billion., Crude oil bulls lose steam, as COVID-19 cases hit record high

The Nigerian Stock Exchange closed Tuesday’s trading session on a slightly bullish note. The All Share Index recorded an uptick of 0.02% to close at 25,136.49 basis points as against -0.27% depreciation recorded previously.

Its Year-to-Date (YTD) returns currently stands at -6.35%. The Nigerian Stock Exchange market capitalization stood at N13,1123 trillion.

Market turnover closed positive as volume moved up by +68.08% as against -66.59% downtick recorded in the previous session. ZENITHBANK, GUARANTY, and LASACO were the most active to boost market turnover. GUARANTY and ZENITHBANK topped trading turnover in value terms.

NASCON led the list of active stocks that recorded an impressive volume spike at the end of today’s session.

Market breadth closed positive as UPL led 16 Gainers as against 13 Losers topped by CONOIL – an improved performance when compared with the previous outlook.

GTBank 728 x 90

Top gainers

  • UPL up 9.91% to close at N1.22
  • UCAP up 3.23% to close at N3.2
  • DANGSUGAR up 2.44% to close at N12.6
  • UBA up 2.31% to close at N6.65
  • FLOURMILL up 1.09% to close at N18.5

Top losers

  • CONOIL down 9.76% to close at N15.25
  • ARDOVAdown 9.68% to close at N12.6
  • OANDO down 9.68% to close at N2.24
  • FIDSON down 5.25% to close at N3.79
  • NBdown 2.78% to close at N35

Market Outlook

The Nigerian bourse finished on a near flat note, as Nigerian oil stocks (OANDO , CONOIL, ARDOVA ) capped Tuesday’s bullish run. Nairametrics envisages cautious buying as many institutional investors remain on the sidelines, thereby affecting market liquidity negatively.

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading. Featured Financial Market Analysis for a Fortune Global 500 Company. Member of the Chartered Financial Analyst Society. Follow Olumide on Twitter @tokunboadesina or email [email protected]

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Spotlight Stories

CBN will continue monetary policy aimed at boosting stock market

The CBN has insisted that it will continue with its monetary policy measures towards the stock market in efforts to resuscitate the economy.

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Total credit to the economy rose to N19.54trillion – CBN Governor, CRR debits, P-AADS, #EndSARS: CBN says funds in frozen accounts may be linked to terrorist activities, Covid-19: Court closures impacted revenue generation for courts - Emefiele, P&ID dispute: UK Court orders $200 million guarantee to FG, Leaked letter by Poultry Farmers Association triggered CBN emergency approval to import maize, nImplications of CBN's latest devaluation and FX unification, current account deficit, IMF, COVID-19, CBN OMO ban could give stocks a much-needed boost , CBN’s N132.56 billion T-bills auction records oversubscription by 327% , Nigeria pays $1.09 billion to service external debt in 9 months , Implications of the new CBN stance on treasury bill sale to individuals, Digital technology and blockchain altering conventional banking models - Emefiele  , Increasing food prices might erase chances of CBN cutting interest rate   , Customer complaint against excess/unauthorized charges hits 1, 612 - CBN , CBN moves to reduce cassava derivatives import worth $600 million  , Invest in infrastructural development - CBN Governor admonishes investors , Credit to government declines, as Credit to private sector hits N25.8 trillion, CBN sets N10 billion minimum capital for Mortgage firms, CBN sets N10 billion minimum capital for Mortgage firms , Why you should be worried about the latest drop in external reserves, CBN, Alert: CBN issues N847.4 billion treasury bills for Q1 2020 , PMI: Nigeria’s manufacturing sector gains momentum in November, CBN warns high foreign credits could collapse Nigeria’s economy, predicts high poverty, MPC Member, BVN, Fitch, Foreign excchange (Forex), Overnight rates crash after CBN’s N1.4 trillion deduction, Nigeria’s foreign reserves hit $36.57 billion; Emefiele keeps his word on defending the naira, CBN to support maize farmers, projects 12.5 million metric tons in 18 months, BREAKING: CBN Upscales Greenwich Trust Limited, grants it's operational license for merchant banking, AGSMEIS: CBN expand beneficiaries to 14,638., CBN expands access to mortgage financing

The Central Bank of Nigeria has revealed that it will continue with its monetary policy measures aimed at boosting the stock market, even as the country faces higher inflation and remains in recession.

This was made known by the CBN Governor, Godwin Emefiele, in his remarks at the end of the monetary policy committee meeting held last week. He believes a bullish stock market is a leading indicator of a medium-term macroeconomic recovery of the economy.

READ: CRR Compliance: Banks suffer another N226 billion in CRR debits

According to Mr. Emefiele,

“On the Financial Markets, the Committee considered the improved performance in the equities market as a leading indicator of medium-term macroeconomic recovery. Thus, it urged the Bank to maintain its policies on exchange rate and financial system stability to attract more investment into the Nigerian equities market.”

GTBank 728 x 90

Nigerian stocks are one of the best performing asset classes and stock markets in the country. Stocks are currently up 29% YTD, reversing all the post-Covid-19 losses incurred at the height of the lockdown in March and April.

Why this matters: The CBN’s decision to continue with its policy of lowering interest rates is a major boost for the stock market, and an indication that the rally currently being enjoyed by investors will remain sustained.

READ: CBN, NDIC to set up bridge bank for struggling financial institutions

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  • A preferred next line of action will be to encourage robust capital market activities such as IPOs and other forms of public offers.
  • With limited investment outlets, more and more inflow from institutional investors could create new demand for capital formation.
  • However, the pressure on the exchange rate could force a change in policy, increasing interest rates to attract foreign investor dollars in Eurobonds and other foreign offerings.

READ: Forex inflow in I&E window declines by $2.8 billion as FPIs drop by 97%

How we got here

The positive performance for stocks is largely driven by central bank policies that have reduced interest rates for other competing asset classes, such as treasury bills and corporate bonds. Treasury bills yields have fallen below 1% in recent weeks, with true yields falling into negative territory earlier in November.

For most parts of the last two years, Nigerian stocks remained unattractive despite offering dividend yields in the double digits. Yet, investors will rather go for risk-free treasury bills and FGN Bonds.

READ: A summer of higher food prices, limited room for monetary policy

Since the last massive stock market crash in 2009, local investors have relied on activities of foreign portfolio investors in deciding what stocks to buy and when to even invest in the stock market.

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However, with Covid-19 triggering billions of dollars in foreign portfolio outflows exited stock markets, frontier markets like Nigeria suffered massive losses until the central bank policy of low-interest rate environment opened opportunities.

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The central policy that gave birth to lower interest rates began in May 2019, when it increased the cash reserve requirement of local banks and forced a loan to deposit ratio of 65%.

This forced banks to either lend more to the private sector or avoid being debited via the cash reserve requirement provisions of the bank. Banks felt lesser impetus to stimulate customer deposits, thus increasing the amount of naira in the economy looking for where it will be invested.

As Nairametrics earlier reported, in the third quarter of 2019, the apex bank announced it would stop local nonbanking investors from purchasing its lucrative OMO bills, releasing over a trillion into the economy. As OMO bills matured into 2020, trillions more unlocked in the economy with very few options available for investments.

It is likely that the stock market will close positively by year-end, reversing most of the losses incurred in the last 18 months. The CBN’s latest decision to continue with its policy is an indication that the drive to look inward in the quest to resuscitate the economy is being pushed on all fronts.

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Companies

Flour Mills GMD purchased additional shares worth N209.29 million in 3 days

Paul Miyonmide Gbedebo acquired 7,486,719 additional shares of Flour Mills, worth ₦209.3 million in 3 days.

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Flour Mill's profit after tax increases by 16.44% in H1 2019  

The Group Managing Director of Flour Mills Nigeria Plc (FMN), Paul Miyonmide Gbededo, purchased a total of 7,486,719 additional shares of the company, worth ₦209.29 million.

According to the notifications issued between 17th and 19th of November by the company’s Secretary, Mr Joseph Umolu, the GMD purchased the ordinary shares of Flour Mills Nigeria in this order:

  • On 17th November, 1,949,839 additional shares worth N54.59 million, at a price of N28.00 per share.
  • On 18th November, 4,200,852 additional shares worth N117.62 million, at a price of N28.00 per share.
  • On 19th November, 1,336,028 additional shares worth N37.07 million, at a price of N27.75 per share.

(READ MORE: Nestlé S.A buys shares of its Nigerian subsidiary worth ₦463.46 million in a week)

This brings the total number of shares of Flour Mills Nigeria Plc purchased by the GMD to 7,486,719. The total consideration for these shares is put at N209.29 million.

What you should know

GTBank 728 x 90

In line with the information contained in the financial statements of the company, as of 30th September 2020, Mr. Gbedebo had a direct shareholding of 2,720,109 shares.

Hence, with the 7,486,719 additional units acquired, his total shareholding now stands at 10,206,828 shares, which is worth N285.79 million at the current share price of N28.00.

What this means

Deal book 300 x 250
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The purchase of the shares of Flour Mills Nigeria Plc further cements Mr. Paul Gbedebo’s position as one of its majority shareholders.

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Stock Market

Nestlé S.A purchased 666,596 additional shares of Nestlé Nigeria Plc in 17 days

Nestlé S.A. has acquired 666,596 additional shares of its Nigerian subsidiary, worth ₦933 million in 17 days.

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Why Nestle Nigeria’s return remains strong - EFG Hermes, Nestle Nigeria Plc appoints new Director, Nestle Plc: FY 2019 Revenue beats estimate; but profit underperforms, GTB, Zenith Bank, & Nestle emerge as Renaissance Capital’s top stock picks, Nestlé’s parent company acquires additional shares worth ₦300 million

Nestlé S.A has purchased a total of 666,596 additional shares of its Nigerian subsidiary, Nestlé Nigeria Plc, in a deal worth N933.95 million.

According to the four different notifications issued between 11th to 27th of November by the Company’s Secretary, Mr. Bode Ayeku, and seen by Nairametrics, Nestlé S.A purchased the ordinary shares of Nestlé Nigeria Plc in this order:

  • On 10th November, 214,924 additional shares worth N300.89 million, at a price of N1,400.00 per share.
  • On the 17th and 18th November, 331,045 additional shares worth N463.46 million, at a price of N1,400.00 per share.
  • On 20th November, 102,690 additional shares worth N143.77 million, at a price of N1,400.00 per share.
  • On 25th and 27th November, 17,937 additional shares worth N24.82 million, at a price of N1,384.00 per share.

This brings the total shares of Nestlé Nigeria Plc purchased by Nestlé S.A to 666,596, and the total consideration for these shares is put at N932.95 million.

What this means

The purchase of the shares of Nestlé Nigeria further cements the position of Nestlé S.A’s as the majority shareholder of the company.

In line with the information contained in the financial statements of the company as of 30th September 2020, the company had exactly 792,656,252 shares outstanding, with Nestlé S.A being the majority shareholder (525,537,201 units) – 66.30% of the total shares of the company outstanding.

GTBank 728 x 90

Hence, with the 666,596 additional units purchased, Nestlé S.A’s ownership percentage of Nestlé Nigeria is now put at 66.38%.

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