Nigerian Equity Markets | 31 Dec 2015: Equities Close 2015 with Fireworks …NSEASI Appreciates 3.1%

Lagos, Nigeria, Capital Markets in Africa — The Nigerian equities market All Share Index (ASI) ended the year on a positive note appreciating 3.1% today to settle at 28,642.3pts. Amid intense political tension, tumbling oil prices and macroeconomic pressures in the domestic and global space, the local market benchmark index depreciated 17.4% in 2015 relative to -16.2% in 2014. Market capitalization improved N297.3bn at the end of today’s trade settling at N9.9tn but down by N1.6tn compared to N11.5tn at the end of 2014.  Today’s trade remained driven by a last-minute rally in NIGERIAN BREWERIES (+9.7%), ETI (+5.0%) and DANGCEM (+3.1%). Market activity stayed mixed as total volume traded contracted by 82.1% to 252.2mn units while aggregate value traded expanded 98.0% to N3.9bn.

Sector performance broadly mirrored that of the broader index as all indices closed higher today. The Consumer Goods index appreciated the most at 4.9% at the end of the trading session but depreciated 17.4% for the year. The Industrial Goods index rose 3.7%, also emerging the only gainer for the year with 1.3% Y-o-Y return. We believe this may be linked to the 20.1% Y-o-Y appreciation recorded by WAPCO due to capacity expansion via acquisitions and stronger volume sales in Nigeria which pushed up the company’s valuation and improved investor’s sentiment in the ticker. The Oil & Gas index was up 2.9% today but depreciated 6.2% Y-o-Y in line with the observed pressures in space — lower oil prices and delayed subsidy payments. In the Financial services space, the Banking Sector index rose 1.8% today but tumbled 23.6% for the year- the worst across sectors — as a combination weak macroeconomic pressure and stiff policy regulations weighed on profitability and assets quality which dampened investor’s sentiments. The Insurance index also gained 0.5% today but dipped 4.7% Y-o-Y.

Market sentiment measured by market breadth jumped to 6.6x as 33 stocks advanced while 5 declined. Price winners for the day were NAHCO (+10.2%), TRANSEXPR (+9.7%) and NIGERIAN BREWERIES (+9.7%), while CADBURY (-5.0%), CUTIX (-2.9%) and SKYEBANK (-2.5%) led the list of price losers. We believe the rally observed in the last two trading days of the year remained associated with the end of the year portfolio adjustment by fund managers. With the expectation for massive capital spending and expansive budget in 2016, we anticipate a better performance for Nigerian equities in 2016 however key risk in the horizon remains exchange rate uncertainties and a bearish oil price outlook.

Source: Afrinvest (West Africa) Limited Research Team