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Market Views

Why Nigerian stock bears are roaring loud 

Since January’s gains, recent outlook of the Nigerian stock market has not been particularly impressive.



The Nigerian stock market seems to have become a victim of its own success. Its All Share Index in the year 2020 emerged as the best-performing index in the world as it gained +50.03%. 

The Nigerian equities market is reversing some of the January gains which were driven by factors including, continued local participation, positive sentiments around vaccine distribution despite reported increase and new strains of the COVID-19 virus, and the outlook that fixed income yields could remain low for longer.

Combined, this drove the market up by 5.3% in January.

However, the sentiment seems to have reversed given the mixed signal from the fixed income market that yields may begin to rise faster-than-anticipated after the outcome of the last OMO and NTB auctions conducted by the CBN,” said Abiodun Keripe, Managing Director, Afrinvest Research. 

READ: Macro weakness: Justification for cheap Nigerian stocks?

Again, the slow-paced vaccine distribution amidst increased case counts both globally and locally is worrisome. “Consequently, equities are down 4.7% on a month-to-date basis in February,” the Lagos-based investment banker added. 

It became unsurprising that such a position caught the eye of diverse categories of investors who obviously want a piece of the pie. However, these expectations are short-term driven. 

“A high percentage of results released to date have not been particularly impressive,” said Adetayo Teluwo, a scholar at Warwick Business School. 

Investors are conscious of the impact of the current economic climate on multiple sectors and are opting to cut losses across portfolios. As a result, immediate profit-taking has been prioritized over delayed capital appreciation. 

READ: Record sell-offs persists in medium and low capitalized Nigerian stocks

The current bearish trend in the Nigerian stock market was caused by the widespread profit-taking activities which started in the past three weeks. 

“The impressive earnings report by companies like AXA Mansard, TOTAL, and some others despite the impact of Covid19 in the past year drove their respective share prices up and traders are locking in on their gains, thereby causing market sentiments to fall in the red,” said Darlington Morsi Onyemaka, a Forbes Accelerator Cohort ’20 and founder of Quba Exchange.

“Sell-offs would guarantee the right pricing for Investors who are eyeing juicy dividends at higher volumes. 

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“Investors are positioning to buy the same targeted stocks at lower prices ahead of re-entry towards earning dividends,” Adetayo added. 


READ: Collapse in domestic bills and bonds yields forcing local funds into stocks

Investor confidence has been impacted by a few unfavorable regulatory shocks in recent times.  The consistent sell-offs and price dips continue to play in the hands of investors who prefer to shore up on the investor stocks in their portfolio. Silent, aggressive accumulation of insurance stocks using off-the-radar vehicles is a contributory factor as well. 

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Keripe opined that given the wall of liquidity in the market, some investors have been on the sideline, waiting to see some level of correction. 

“It is not beyond foreign Investors to dump stocks in high volumes opening the gates for the hungry bears,” says Adetayo. 

READ: U.S Stocks close lower, as Facebook, Amazon, Google drop 2%

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That being said, Nigerian equities are still relatively underpriced at a 15.3x price-earnings ratio compared with some of its global & BRICS peers, and now presents an entry opportunity for investors that have been waiting for a correction.  

“However, the expectation for corporate earnings performance and dividend outlook remains positive particularly for the companies operating in the resilient sectors of the economy (Telecomms, Banking & Agriculture), we believe this would provide support for the market,” Keripe added. 

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 or email [email protected] He is a Member of the Chartered Financial Analyst Society.

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1 Comment

  1. DELE

    February 20, 2021 at 3:08 pm


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Financial Services

Jim Ovia is set to earn N9.58 billion in dividend for FY 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock.



Jim Ovia: From a clerk to founder of Nigeria's most profitable bank

The founder and Chairman of Zenith Bank Plc, Mr. Jim Ovia is expected to earn a massive sum of N9.575 billion in dividend for the financial year ended December 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock out of the 31,396,493,787 ordinary shares available. This gives him an 11.29% direct interest in the Tier -1 bank.

It’s however important to note that such dividend is subject to a 10% withholding tax in Nigeria.

READ: Is Zenith Bank thriving on the strength of sound financial indices?

Recall that about a day ago, the Board of Directors of the bank in a statement released via the Nigerian Stock Exchange proposed a final dividend of N2.70, amounting to a total payout of N3.00 per share for the financial year 2020 (interim: N0.30).

This proposal reflects the past year’s robust performance and appears to signal that Zenith bank remains well-positioned to perform in the current financial year. However, there was a lower payout ratio at 40.9% compared to FY’19 (42.1%).

  • Key earnings drivers to the financial year performance under review were a 90 basis points drop in the cost of funds to 2.1%, which propelled net interest income (+12.2% YoY) and a 3.8x jump in revaluation gains to N43.4 billion.
  • These offset pressures from operating costs (the cost to income ratio rose 1.2ppts to 50.0%) and impairment charges (cost of risk rose 40basis points to 1.5%)

READ: Jim Ovia: From a clerk to founder of Nigeria’s most profitable bank

Described as the ‘Godfather of banking in Nigeria’ by Forbes Africa, Jim Ovia is quite popular for his business dexterity and leadership skills, especially in the banking sector.

His early interest in technology was the reason Zenith Bank became the first Nigerian company to have a functional website in 1995 and was able to smoothly migrate its operations from analog times to a digital era.

From a single branch in a residential building, Zenith Bank now has hundreds of branches all over Nigeria and several subsidiaries in other countries. The bank became a Public Limited Company in 2001 and was listed on the Nigeria Stock Exchange (NSE), and later on the London Stock Exchange (LSE).

On the 27th of April 2007, Zenith Bank Plc became the first Nigerian bank in 25 years to be licensed by the UK Financial Services Authority (FSA), giving rise to Zenith Bank UK Limited.

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Market Views

Zenith Bank’s stellar earnings pause bearish trend at Nigerian bourse

Zenith Bank had earlier released its audited financial year 2020 results showing impressive growth on the back of a stellar Q4 outing.



Zenith Bank GMD Ebenezer Onyeagwu, Central Bank of Nigeria, CBN's loan-to-deposit ratio policy, Nigerian Stock Exchange NSE stocks, Banks in Nigeria, Deposit Money Banks in Nigeria, Zenith Bank collaborates with fintechs, but insists it is not scared to compete with them, Zenith Bank sets withdrawal limit for customers, as dollar sells for N400, NIGERIA| ZENITH BANK: Revaluation gains support marginal profit growth

The Nigerian bourse ended the second trading session slightly positive amid impressive gains from Zenith Bank. The All Share Index improved by 0.03% to 40,164.86 index points. Year-to-date return and market capitalization settled at -0.26% and N21.01 trillion respectively.

A total volume of 337.9 million units of shares, valued at N3.84billion exchanged hands in 4,164 deals.

The most traded stocks by volume were FBNH (64.58 million units), ZENITHBANK (52.67 million units), TRANSCORP (41.98 million units) and while ZENITHBANK (N1.34 billion), FBNH (N471.80 million) and UBA (N128.22 million) topped the value chart.

AIICO (+7.14%) led the gainer’s chart today, while SUNUASSUR (-9.88%) was the top loser. However, the market breadth index was negative with 16 gainers against 24 losers.

Top gainers

  1. AIICO up 7.14% to close at N1.2
  2. LIVESTOCK up 7.14% to close at N2.25
  3. FLOURMILL up 6.16% to close at N31
  4. ZENITHBANK up 4.84% to close at N26
  5. CUTIX up 4.65% to close at N2.25

Top losers

  1. SUNUASSUR down 9.88% to close at N0.73
  2. LASACO down 9.87% to close at N1.37
  3. AFRIPRUD down 9.85% to close at N5.95
  4. ABCTRANS down 8.57% to close at N0.32
  5. UPL down 8.53% to close at N1.18


Nigerian stocks ended Tuesday’s trading session on a slightly positive note amid stellar performance for Nigeria’s top tier-1 bank.

  • Zenith bank, some hours ago had earlier released its audited financial year 2020 results showing impressive growth on the back of a stellar Q4 outing.
  • In FY’20, the tier1 bank recorded a 10.4% YoY jump in profit after tax to N230.6 billion (vs N211.6 billion expected).

That being said, the Nigerian Stock Exchange consumer goods and insurance indices fell by 1.61% and 0.92% respectively. On the flip side, the NSE banking index closed as the lone gainer, up by 1.68%, while the industrial and energy indexes remained unchanged.

Nairametrics recommends you seek the advice of a stockbroker amid price volatility presently prevailing at medium and low capitalized stocks.

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