Lull  start of equities

THE buying and selling of shares on the trading floor of the Nigerian Stock Exchange (NSE) cumulatively began the year on a rather sluggish note, as the crisis surrounding the removal of subsidy from fuel may have started taking toll on the market.

Aware of the fact that the stock market is a secondary victim of any crisis affecting the economy, most investors, who were earlier eager to approach it in the year, now appear to be staying back to watch as events in the market unfold.

Trading trend in the securities market at the last quarter of last year, was on the positive trajectory, owing to permutation by experts that the market would reverberate in the new year.

However, the volume and numbers of deals expected to soar beginning from Tuesday last week, the first trading day in the year, were put in abeyance as the subsidy removal took the nation by surprise.

The thinking of most investors especially those termed  common investors is that the government, in collaboration with the agencies assigned to oversee activities in petroleum industry, should have created enough awareness so as to cushion the after effect of the removal of subsidy.

A cross section of them who spoke to ‘Investors Guide’ expressed shock that while they were still expecting compensation in the new year due to plausible information that the year would be a good one for investors in the equities market, the government went ahead without adequate plan to deregulate the petroleum industry whose ripple effect would be enormous on the economy.

Market x-ray last week

An x-ray of trading on the Exchange last week showed that most investors rather than hold their shares are now eager to sell them.

The activities in the market revealed that despite the penny value of most stocks, investors are still bent on selling their shares just as many others have preferred not approach the stock market until situation in the market improves.

The present unhealthy state of the market has further resulted in glut of shares as most broking firm houses came to the floor of the Exchange with long list of mandate to sell, but unfortunately only fewer buyers came forward. Liquidity squeeze in the market before now had been a major headache for both operators and regulators who felt they had done all that was needed to bring back fund into the market. The reverse has been the case. The resultant effect is the glut of Shares in the market without buyers.

Giving an insight to the effect of the subsidy removal on the market, the Managing Director, Crane Securities Limited, Mr. Mike Eze said the immediate effect of the subsidy removal on the capital market would be the holding back of funds by shareholders who are confronted with uncertainty about the action to be taken by the Federal Government.

Eze, who said such policy action normally illicited abnormal reactions from people in emerging markets like Nigeria, noted that the capital market was not likely to see any investment during the first two weeks of this month..

Reacting to the removal of fuel subsidy, the President of Progressive Shareholders Association, Mr. Boniface Okezie said it was ill timed and capable of further depleting the prices of shares in the capital market.

Okezie noted that the government should have waited for at least the second half of this year before coming up with what he described as ‘an ill-fated policy’ so as to enable a little bit of stability in the fledging capital market. .

At the close of transaction on Friday the twin market performance indicators, the market capitalisation and the All-Share Index showed investors wealth deepening by a cumulative figure of 0.02 per cent.

The NSE All-Share Index depreciated by 5.33 points or 0.02 per cent to close on Friday at 20,725.30 while the market capitalization of the 186 First -Tier equities dropped to N6.531 trillion. However, the NSE-30 Index appreciated by 8.72 points or 0.9 per cent to close at 932.49.  Transaction last week.

Transaction on the first trading day of the year on the floor of the Nigerian Stock Exchange closed on a bearish note as both market performance indices were further depleted by 0.3 per cent just as some market operators have projected that the removal of fuel subsidy will in a short run slowdown investment in the nation’s capital market.

Particularly, the All-share index dropped by  59.57 basis points or 0.3 per cent to close at 20,671.06 from 20,730.63 it closed with at the last trading day in 2011 while the market capitalisation of equities equally depreciated by N19 billion or 0.3 per cent to close at N6.513 trillion from N6.532 trillion.

Further  review of trading showed that Access Bank  led the percentage gainers’ table with five per cent to close at N5.04 per share while Vitafoam Plc followed with a gain of 4.94 per cent to close at N5.31 per share as NACHO Plc gained 4.86 per cent to close at N5.39 per share.

However, Nestle Plc led the price losers’ table, dropping five per cent  to close at N423.38 per share while Guinness Nigeria Plc followed with a loss of 4.98 per cent  to close at N237.56 per share and GT Assurance Plc with 4.93 per cent to close at N1.35 per share.

Meanwhile, a turnover of 99.6 million shares worth N972.8 million in 2,420 deals was recorded during the day.

Financial services sector led the market transaction volume with 72.9 million units valued at N373.7 million exchanged in 1,423 deals.

The banking sub-sector of the financial services sector was the most active during the day (measured by turnover volume) with 57.6 million shares worth N364.5 million exchanged by investors in 1,330 deals.

Volume in the banking sub-sector was largely driven by activity in the shares of GTB Bank and First Bank.

Also, insurance sub-sector of the financial services sector, boosted by activity in the shares of Unity Capital Assurance Plc, followed with a turnover of 14.7 million shares valued at N8.9 million in 89 deals..

Trading in the shares of some companies especially in the beverage breweries sub-sector on  Wednesday lifted the volume of shares traded as 639 million shares worth N1.9 billion changed hands in 2,654 deals, higher than 99 million units valued at N973 million exchanged in 2,420 deals on Tuesday. Particularly, at the close of transactions in the day, the beverages breweries sub-sector dominated in volume terms of 514 million shares worth N1.1billion in 219 deals followed by the banking subsector which traded 94 million units worth N539million in 1,440 deals.

A further review showed that the oil & gas sub-sector ranked third with 6.6million shares worth N6.5million in 361deals. Transactions in the shares of Champion Breweries boosted activities in the beverage breweries sub-sector with 513 million shares valued at N949million.

The banking sub-sector was driven by activities in the shares of United Bank for Africa which traded 29 million shares worth N75 million in 14 deals. However, the All-share index slided further by 35.99 basis points or 0.1per cent from 20,671.06 recorded on Tuesday to 20,635.07 while market capitalisation fell by N11billion from N6.513 trillion to N6.502 trillion.

On the price movement chart, 20 companies depreciated in price led by Eternaoil with five percent to close at N2.85per share followed by Sterling bank with 4.95 percent to close at N0.96 per share. Ikeja Hotel lost 4.94 per cent to close at N1.54 per share while UACN and Custodian & Allied shed 4.70 per cent to close at N30.00 and N2.23 per share respectively. Flourmill shed 3.82 per cent to close at N63.00 per share while First Bank lost 2.98 per cent to close at N8.80 per share. Skye Bank, Wapic and Unitybank lost 2.98, 1.92 and 1.79 per cent to close at N3.80, N0.57 and N0.55 per share respectively. On the other hand, 18 companies recorded price appreciation as FO topped the gainers’ chart with five per cent to close at N12.18 per share while Okomuoil followed with 4.98 per cent to close at N24.25 per share. However, respite came the way of discerning investors Thursday after days of bearish run occasioned by the removal of fuel subsidy as activities on the floor of the Nigerian Stock Exchange closed marginally in the green.  Specifically, at the close of transactions in the day, the All-share index rose slightly by 21.93 basis points or 0.1per cent from 20,635.07 recorded on Wednesday to 20,657 while the market capitalisation equally inched up by N7billion from N6.502 trillion to N6.509 trillion.

The financial services sector dominated in volume terms with 128.7million shares worth N616.7billion in 1,536 deals.

The sector was driven by the banking sub sector of the financial services sector with the activities in the shares of Diamond Bank and Ecobank to record a turnover of 116.5 valued at N609.8 million in 1210 transactions.

The insurance subsector, driven by the activities in the shares of Sovereign Trust followed with a turnover of 12.2 million shares valued at N6.8 million in 324 deals. A total turnover of 154.5 million shares worth N1.1 billion in 2,593 was recorded at the day’s trading. Honeywell Flour Mills led other gainers in percentage term of  five per cent to close at N2.54 while Custodian Insurance and Dangote Flour followed with a gain of 4.9 per cent each to close at N2.34 and  N5.75 respectively.

On the other hand, 19 companies recorded price depreciation as Ashaka Cement topped the losers’ chart with five per cent to close at N11.03 per share while Access Bank and Eterna Oil followed with 4.9 per cent each to close at N5.03 and N2.71 per share respectively. Transaction on Friday further made investors to heave a sigh of relief as gains in major blue chip resulted in the climb in the market indicators by 0.32 per cent. The market capitalisation rose by N21 billion to close the week at N6.530 trillion while the All-Share Index chalked 68.3 basis point to close 20,725.30.