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Stock Market

UBA, WAPCO, NEM drop amid profit-taking 

Market sentiment, as measured by the market breadth, closed negative as 33 stocks lost, relative to 21 gainers.

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market's, Bears clawing down on the naira, hits N425 to $1

Nigerian stocks ended the week on a bearish note as the All Share Index declined further by -0.24% today to close at 41,001.99 from 41,099.15 index points.

  • Year-to-date and market capitalization similarly fell by -0.24% to settle at 1.82%, and N21.44 trillion respectively.
  • A total volume of 591.4 million units of shares, valued at N5.07 billion exchanged hands in 5,767 deals. TRANSCORP (-1.72%) was the most traded shares by volume at 169.2 million units, while ZENITHBANK topped by value at N681 million.
  • Market sentiment, as measured by the market breadth, closed negative as 33 stocks lost, relative to 21 gainers. LIVESTOCK (-10.00%) led the laggards today, while NCR (+9.86%) topped the gainers’ list.
  • With losses recorded in all sectors, except for the consumer goods sector which advanced by +0.06%, the NSE banking, oil & gas, industrials, and insurance sectors fell by 0.17%, 0.29%, 0.50%, and 7.93%, respectively.

READ: Bargain hunters propel Nigerian stocks up, investors gain N50 billion

Top gainers

  1. NCR up 9.86% to close at N3.12
  2. CUTIX up 9.71% to close at N2.26
  3. CHAMPION up 9.55% to close at N1.95
  4. REDSTAREX up 3.03% to close at N3.4
  5. FLOURMILL up 1.27% to close at N32

READ: Race to recapitalization catapult Insurance stocks to best performing asset class in Nigeria

Top losers

  1. LIVESTOCK down 10.00% to close at N2.52
  2. MRS down 9.68% to close at N11.2
  3. NEM down 9.67% to close at N2.43
  4. WAPCO down 6.98% to close at N26
  5. UBA down 2.79% to close at N8.7

READ: Unilever Overseas Holdings acquires N352 million worth of shares of Nigerian subsidiary

Outlook

Nigerian stocks ended the last trading session on a bearish note amid profit-taking across the market spectrum.

  • Downtrend was driven by price depreciation in large and medium capitalized stocks amongst which are; MRS Oil Nigeria, WAPCO, Lafarge, NEM, and UBA.
  • That said, Nairametrics envisages cautious buying on the account that certain market indicators reveal investors are taking some of their gains across the market spectrum

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina. He is a Member of the Chartered Financial Analyst Society.

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Stock Market

Nestle Nigeria’s parent company to earn N32 billion in dividend from subsidiary

Nestlé S.A, the parent company of Nestlé Nigeria looks set to earn a mega dividend.

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The parent company of Nestlé Nigeria Plc, Nestlé S.A, is set to earn a whopping sum of N32 billion in dividend for the financial year ended December 2020.

The multinational food and drink processing conglomerate corporation, headquartered in Switzerland is the single majority shareholder of Nestlé Nigeria Plc, with 527,080,970 units of the total issued shares of its subsidiary.

This puts the ownership stake of the Swiss multinational at 66.5%, ahead of Stanbic IBTC Nominees Limited with 6.28% ownership stake.

Recall that the Board of Directors of Nestlé Nigeria in a statement released via the Nigerian Stock Exchange proposed a final dividend of N35.5 per share. This puts the total dividend payout of the company at N60.5 per share for the financial year 2020 (interim: N25.0).

When converted to dollars, the dividend amounts to about $78 million based on an exchange rate of N410/$1.

This proposal reflects the resilience of Nestlé despite the disruption occasioned by the pandemic. As the FMCG company was able to maintain its tradition of dividend payment to shareholders in 2020, despite taking a major shock in its profit during the year (-14%).

  • Nestlé delivered a consistent result in terms of revenue, amidst the ongoing COVID-19 pandemic which disrupted supply chains globally.
  • The revenue of the FMCG company increased by 1% in 2020 (N287 billion), compared to FY’19 figures (N284 billion).
  • However, the increase in the prices of materials, foreign exchange restrictions, and a spike in finance costs placed pressure on the company’s profitability in 2020.
  • At the back of these pressures, Nestlé’s PAT declined by 14% in 2020 (N39.2 billion) compared to FY’19 figures (N45.7 billion).

What you should know

Nestlé S.A is one of the largest food companies in the world in terms of revenue. The Switzerland-based consumer goods behemoth is the parent company of Nestlé Nigeria PLC – a leading food and beverage company in Africa.

Nestlé has grown its operation in Nigeria, as well as its presence in the Central and West Africa region over the years.
Its factory in Nigeria has grown from one – with the establishment of the Agbara Manufacturing Complex which commenced operation in 1981 – to three in recent times, following the inauguration of the Flowergate factory, a factory initially dedicated to the production of MAGGI products, and the set-up of the Abaji factory complex in 2016.

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Stock Market

Rising bond yields hit U.S stock markets

The fear of higher U.S. bond yields undermined riskier assets like U.S stocks and other global equities.

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U.S stocks

Resurgent worries about rising U.S. bond yields hit U.S stocks heavily at its most recent trading session. global investors are currently waiting anxiously on what the most powerful monetary policymaker, Jerome Powell will say on the risk of a rapid rise in long-term borrowing costs.

The fear of higher U.S. bond yields undermined riskier assets like U.S stocks and other global equities.

Stock traders are treading cautiously on a macro that revealed the Benchmark 10-year U.S. Treasuries surged to 1.477% as investors anticipate U.S. inflation could pick up as economic recovery gathers momentum driven by government stimulus and further progress in the rollout of COVID-19 vaccines.

READ: What’s going to happen to Nigeria’s stock market in May?

Stock bears took a grip on the world’s biggest and most liquid equity markets as Healthcare, Technology, and Consumer Services sectors drifted lower

  • At the close in New York Stock Exchange, the Dow Jones Industrial Average plunged by 0.39%, while the S&P 500 index lost about 1.31%, and the NASDAQ Composite index dipped by 2.70%
  • Stocks that recorded significant losses outnumbered advancing ones on the New York Stock Exchange by 1717 to 1512 and 67 ended unchanged; on the Nasdaq Stock Exchange, 2152 fell and 1175 advanced, while 57 ended unchanged.

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the rationality behind the recent sell-offs observed in U.S equity markets

READ: Why Nigerian stock bears are roaring loud 

Innes said, “The sell-off in global fixed income markets is revving up again, spilling over to unseat equities and other relatively heavily positioned risk-sensitive assets.

“Chicago Federal Reserve Bank, President Evans today did not push back on the rise in yields. He said he does not see a risk of inflation rising too quickly and does not think the Fed will need to change the duration of QE purchases.

“To my mind, the only thing left that might influence the Fed’s decision-making process would be whether financial conditions were to tighten or markets were deemed dysfunctional.”

What to expect: That being said, some stock market experts however share the opinion that it seems too early to raise the alarm as financial conditions seem loose, Fed intervention’s hurdle is high and will be higher always when activity and inflation data come in very strong through Q2.

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