The Nigerian stock market closed the first quarter of 2021 in red as the All-Share Index fell to a loss of 3.04% during the quarter.
YTD stocks are also down 3.04% despite a slew of impressive results and robust dividend payments, especially following a financial year marred by the Covid-19 Pandemic.
The month of March has been disastrous for stocks having posted losses during the month every year since 2018 making it joint highest with February and the worst months for stocks in the last 5 years.
Up until last week when it eked out a gain, Stocks had skidded on 7 weeks losing spree sending nearly all indexes in the red.
Why March was bad?
Nigerian stocks suffered major losses in a tumultuous month due to several factors some of which include rising yields in government securities, reallocation of portfolios by investors, profit-taking, and the deteriorating situation in the economy.
Rising Yields: The higher the interest rate on government securities the lower the demand for stocks and vice n versa. Interest rates on bonds, treasury bills, and other risk-free securities rose during the quarter as the central bank grappled with widening negative real interest rates. With inflation surging past 17% in February, the real interest rates (after adjusting for inflation) on government securities fell to minus zero threatening the ability of the government to borrow in the future. Investors also believed this could be a challenge for the CBN’s ability to attract foreign investor dollars.
Portfolio Reallocation: Major Portfolio Managers such as Pension Fund Administrators and Mutual Funds also rebalanced their portfolios in the first quarter of the year in response to growing risks in the economy and the stock market. As of last week, the Pension fund Index was down 2.22% as pension funds cycled funds out of the stock market in anticipation of weaker earnings, higher interest rates, and a weakening economy.
Profit Taking: Retail and Institutional Investors also embarked on profit-taking especially after stocks closed in 2020 as one of the best performing in the world. With valuations soaring in the latter half of 2020, investors seized the opportunity to sell down on their positions that have accumulated significant gains during the year. This also affected stocks.
Marked Downs: Another possible reason for a weak first quarter was the spate of dividends declared during the quarter and their qualification dates. A survey of dividends published showed that about 10 companies slated their marked down dates (when the dividend is approved for payment) in March 2021. This means the share prices of the stocks will be reduced by the value of dividends paid.
The rest of this content is for our Premium Newsletter Subscribers SSN. Subscribe here to receive this newsletter every week via your email.
Nigerian stocks that outperformed Bitcoin, Ethereum and Cardano in April
According to data tracked on the NSE, the shares of Japaul Gold and Ventures Plc, Meyer Plc and University Press Plc delivered better returns than Bitcoin, Cardano, Ethereum.
The recent crypto-mania has presented investors who are nervous about the stock market with key opportunities to capitalize on, through alternative investments in cryptocurrencies.
The attendant effect of this led to the move which saw the total market capitalization of Bitcoin, Ethereum, Litecoin, XRP and other crypto assets surge above the $400 billion mark in Q4 2020 to more than $2 trillion in recent times – the total market capitalization of all cryptocurrencies are valued at about $1.74 trillion as of the time of drafting this report.
Despite the gains Bitcoin, Ethereum and Cardano delivered to their holders, the market performance of these digital assets since the beginning of April has been comparatively unimpressive. Of the three cryptocurrencies, only Ethereum maintains month to date gains in excess of 15%, while the month to date losses in others stand in excess of 12%.
The performance of these digital assets so far in April
Data tracked on Binance, a cryptocurrency exchange that provides a platform for trading various cryptocurrencies revealed that Ethereum’s month to date gains in the month of April is put at about 15% while the month-to-date loss of Bitcoin and Cardano is put at about 16% and 12% respectively.
Stocks on NSE delivered decent returns in the month of April, outperforming some cryptos. Some stocks on the Nigerian Stock Exchange have delivered impressive returns for their holders in the month of April, despite the recent lacklustre state of key shares listed on the exchange.
According to data tracked on the Nigerian Stock Exchange, the shares of the following companies have delivered better returns than Bitcoin, Cardano, Ethereum and some other cryptocurrencies so far in this month.
Japaul Gold and Ventures Plc
(JAPAULGOLD), MtD gains: 46.83%
The rebranded and restructured mining company with a key focus on gold and other solid minerals exploration is the best-performing stock on NSE this month with a month to date gain of about 46.83%.
Despite the fact that the stock is currently trading slightly below its open price of N0.62 per share for the year, it has risen from a YTD low of N0.41 to the current N0.60 per share price in recent times. Thus returning a gain of 46.8% for its holders.
Meyer Plc (MEYER)
MtD gains: 29.16%
The shares of the key player in the paint and decorative industry increased from N0.41 per share at the open of trade this month, to N0.53 per share as of the open of market this morning, to print a month to date gain of 29.16%.
The stock of the paint manufacturer is presently trading about 6% higher than its open price of N0.50 per share for the month of April.
University Press Plc (UPL)
MtD gains: 19.77%
The shares of one of Nigeria’s foremost publishers of educational and general reading materials, University Press Plc have increased from N1.07 per share at the close of trade on the 31st of March, to N1.28 per share at the open of trade on the Nigerian Stock Exchange today.
The recent surge in the shares of the company was triggered by buying interest on the floor of the exchange and this renewed interest in the shares of the publisher has seen its shares return an impressive 19.77% month to date gains to investors since the start of this month.
What you should know
- The Nigerian Stock Exchange All-share Index “NGX ASI” is on course to deliver its first weekly gains after weeks of consistent depreciation in the market index and capitalization.
- This decent performance can be linked to the renewed buying interest in the shares of some key companies with impressive fundamentals as Q1 2021 financial results start to trickle in.
Biden’s capital gains tax disturbs Wall street
The Dow Jones Industrial Average fell 321.41 points to 33,815.90, or 0.92%.
Following news that President Joe Biden is planning to propose far higher capital gains taxes for the wealthy, Wall Street sank sharply on Thursday. The Dow Jones Industrial Average fell 321.41 points to 33,815.90, or 0.92%. The blue-chip index fell 420 points at its lowest point for the day. The S&P 500 lost 0.94 percent of its earlier gains to close at 4,134.98, while the Nasdaq Composite fell 0.94 percent to 13,818.41.
Bloomberg News announced Thursday afternoon that Biden is considering raising the capital gains tax rate for rich Americans to as much as 43.4 percent. The measure would increase the capital gains tax threshold on people with $1 million or more to 39.6 percent, up from the existing rate of 20%.
- The Stoxx Europe 600 Index advanced 0.7% while the MSCI All-Country World Index declined 0.2%.
- Capital gains plan does not exempt crypto as Bitcoin fell for the sixth time in seven days, widening losses. If investors keep the cryptocurrency for longer than a year, they will be subject to capital gains tax.
- Growth stocks led the intraday downturn on Thursday, with shares of Tesla and Amazon sliding 3.3 percent and 1.6 percent, respectively, as a result of higher capital gains taxes. The iShares S&P 500 Growth ETF fell 1%, outperforming its value counterpart.
- Equifax up 15.06% to close at $221.64.
- Tractor Supply up 4.43% to close at $188.14.
- AT&T up 4.15% to close at $31.36
- Arconic up 3.67% to close at $27.43
- Danaher up 3.43% to close at $252.79
- Huntington Bancshares -6.71% to close at $14.46
- Dow down -6.01% to close at $60.92
- LyondellBasell Industries down -5.66% to close at $102.00
- Micron down -5.34% to close at $84.71.
- Nucor down -5.08.% to close at $76.11
- Long-term buyers will see a significant cost spike as a result of this tax increase. If investors believe the plan has a chance of becoming law next year, they may be expected to sell this year.
- Some analysts believe that it may be difficult to pass the bill into law in the senate.
Nairametrics advises cautious buying in this era of growing uncertainties.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- FCMB approves FY 2020 dividend pay-out of N2.97 billion to shareholders.
- Africa Prudential Plc posts profit after tax of N381.35 million in Q1 2021.
- Sovereign Trust Insurance Plc notifies stakeholders of 26th Annual General Meeting.
- Dangote Cement Plc to hold AGM on May 26th
- Linkage Assurance Plc proposes N500million as final dividend for 2020, and a bonus issue on its existing shares.