Nigeria Equity Watch | 13 Aug 2015: Nigeria Equities Extend Bearish Run on Banking Stocks Rout … ASI dips 114bps

Lagos, Nigeria (Capital Markets in Africa) — The Nigerian Equity Market extended losses to the third day as the All Share Index (ASI) dipped 114bps to close at 30,752.63, paring MTD performance +1.9% whilst driving YTD losses rose to -11.3%. The extended bearish run in the market was against the backdrop of sell-down pressure on Banking, Industrial and Consumer Goods bellwether counters: GUARANTY (-4.0%), ZENITH (-2.9%), FBNH (-4.9%), UBA (-8.3%), DANGCEM (-0.6%), and NIGERIAN BREWERIES (-1.2%).  Market activity was however mixed as aggregate volume declined 29.6% to 305.8m while value traded rose 136.4% to N4.0bn.

All sector indices closed weaker today, with the Banking index recording the worst performance with a 2.9% loss. The loss was on account of the rout on the most capitalized Banking stocks – GUARANTY (-4.0%), ZENITH (-2.9%), FBNH (-4.9%) UBA (-8.3%) and ACCESS (-3.9%). Investors remain pessimistic on Banks earnings as macroeconomic risk weigh on the sector’s performance. Zenith Bank’s earnings result released after market close however showed an impressive 24.2% and 12.1% in Gross earnings and PAT to N229.1bn and N53.2bn respectively. The Oil & Gas index trailed performance as it shed 1.9% on sell-offs in SEPLAT (-4.4%), FORTE OIL (-1.9%) and OANDO (-1.6%) as continued decline on oil prices continue to spook Oil & Gas stocks performances. The Insurance index followed as it weakened 0.6% due to price depreciation in CUSTODINS (-2.4%) and MANSARD (-1.4%); while the Consumer Goods index declined 0.5% due to further sell-offs in brewers: NIGERIAN BREWERIES (-1.2%) and GUINNESS (-4.7%). The Industrial Goods index also declined 0.2%.

Market sentiment, measured by advancer/decliner ratio expectedly weakened today as sell pressure gained momentum. The indicator settled at 0.3x (10 gainers versus 35 losers), which may indicate further bearish trading in the session ahead. Top advancing stocks for the day include EVANSMED (+9.0%), PORTPAINT (+4.8%), WEMABANK (+4.7%), whilst SKYEBANK (-5.8%), STANBIC (-5.0%) and NPF MICROFINANCE (-5.0%) led laggards. Given the sustained downward pressure on global prices of crude, we continue to expect further bearish performance in the Nigerian equity markets. Hence, we reiterate our advice to investors to maintain a medium to long term perspectives, although we expect Banking stocks to rally tomorrow following the impressive ZENITH result.

Source: Afrinvest (West Africa) Limited Research Team