Nigerian Equity Markets | 16 Nov 2016: Equities Extend Bearish Streak to 5th Session …NSE ASI down 0.2%

LAGOS (Capital Markets in Africa) –  The bearish sentiment in the Nigerian bourse continued as sustained sell-offs in bellwether equities dragged the index down 0.8% to berth at 25,653.14 points (a 25-week low) whilst YTD loss worsened to -10.4%. Bearish sentiment towards NESTLE (-1.8%), GUARANTY (-1.8%), and FORTE (-7.4%) impacted market performance as investors lost N70.2bn in value, bringing market capitalization down to N8.8tn. However, activity level remained mixed as volume traded dipped 23.2% to 145.7m units while value traded rose 49.2% to settle at N1.4bn with a total number of deals closing at 2,421.
 
Industrial Index Emerges Lone Gainer
Contrary to the previous trading session, performance across sectors was largely bearish as all indices closed in the red save for the Industrial Goods index which rose 8bps on the back of gains in WAPCO (+0.2%). The Oil & Gas index (-1.8%), pressured by sell-offs in FORTE (-7.4%) and OANDO (-4.9%), emerged the top sector loser. Likewise, the Banking index shed 1.2% on the back of weak appetite for Tier-1 lenders – ZENITH (-1.4%) and GUARANTY (-1.8%) while the Consumer Goods index lost 0.9% on account of losses in NESTLE (-1.8%) and 7UP (-9.7%). Similarly, the Insurance index depreciated 0.3% at the close of trade.
 
Lackluster Breadth Highlights Weak Sentiment
Investor sentiment waned significantly as market breadth (advancers/decliners ratio) declined to 0.1x – 6 advancers versus 33 decliners – from 0.5x yesterday. The best performers were FIDSON (+4.9%), INTBREW (+4.7%) and UBN (+3.4%) while 7UP (-9.7%), TRANSCOHOT (-9.7%) and PAINTCOM (-9.5%) were the worst performers. Performance of the equities market has been uninspiring in the past one month, with the broader index down 7.9% within the period. This could be explained by investors’ pessimism regarding macroeconomic fundamentals (particularly FX market illiquidity), high discount rate and bearish forward earnings expectation. However, given the current downtrend, some stocks have fallen to attractive positions for bargain hunters and we see domestic investors taking advantage of these opportunities in sessions ahead.

Equities Extend Bearish Streak to 5th Session …NSE ASI down 0.2%
LAGOS (Capital Markets in Africa) – The Equities market recorded a loss for the 5^th consecutive session at the end of trading today as the All Share Index (ASI) pared 0.2% to settle at 25,599.79 points, bringing YTD loss to 10.6%. Sell pressure on NIGERIAN BREWERIES (-0.6%), FORTE (-5.0%), TOTAL (-4.8%) and GUARANTY (-0.7%) dragged market performance as investors lost N18.4bn bringing market capitalization to N8.7tn. Activity stayed mixed as volume traded rose 10.9% to 161.6m while value traded declined 12.2% to N1.2bn respectively.

Mixed Sentiment across Sectors
Sector performance was mixed as 2 indices gained while 3 declined. The Insurance and Banking indices rose 0.5% and 0.2% on the back of gains in CONTINSURE (+3.0%), AIICO (+3.5%), ETI (+3.0%) and ACCESS (+1.9%). On the contrary, the Oil & Gas index led sector decliners, down 1.6% on account of losses in FORTE (-5.0%) and TOTAL (-4.8%) while the Consumer Goods index lost 0.3% as a result of price depreciation in NIGERIAN BREWERIES (-0.6%). Similarly, the Industrial Goods index weakened (-0.2%) against the backdrop of losses in CAP (-5.0%) and ASHAKA (-2.7%). Earlier today, ASHAKA released a notice to the Exchange, announcing a resolution passed by the Board of Directors for voluntary delisting of the Company from the floor of the NSE due to low floatation (15.0% versus NSE rule requirement of 20.0%). Current minority shareholders were given the option of exiting the Company (within 90 days) via exchange of 202 shares of Ashaka for 57 shares of WAPCO plus a cash consideration of N2 per ASHAKA share.

Investor Sentiment Improves but Remains in the Negative Region
Investor sentiment improved as market breadth (advancers/decliners ratio) advanced to 0.6x – 14 advancers versus 25 decliners – from 0.1x yesterday. The best performers were NASCON (+4.9%), HONYFLOUR (+4.8%) and MAYBAKER (+4.5%) and while FORTE (-5.0%), GLAXOSMITH (-5.0%) and CAP (-5.0%) and were the worst performers. Market performance today showed improved sentiment from yesterday’s low, albeit still in the negative region. With the index closing in the red on all sessions this week – due to intense selling pressure – we expect appetite for equities to remain weak whilst investors continue to evaluate macroeconomic developments.