Equities Investors Count Gains as All-Share Index Rises 4.4%

Equities investors had a good outing last week as the stock market recorded growth despite the challenges brought by the COVID-19 pandemic. Contrary to the negative performance recorded the previous week, the stock market recorded a positive performance as indicators closed higher.

Precisely, the Nigerian Stock Exchange (NSE) All-Share Index appreciated by 4.45 per cent to close at 24,045.40, while market capitalisation higher at N12.531 trillion.

Also volume and value of shares traded improved to 1.662 billion shares worth N18.205 billion in 28,791 deals, from N1.012 billion shares valued at N9.892 billion traded in 17,023 deals the previous week.

Given the low valuation in the market, many investors have been embarking on bargain hunting so as to increase their portfolios ahead of expected market recovery.

Having gained in the month of April after a decline in the first quarter of the year, the market sustained the bullish run for eight straight days before the bears resurfaced last Friday. The market garnered about N804 billion in the eight-day bullish run.

Market analysts had attributed the positive performance to low prices of stocks and reaction of investors to some of the improved first quarter results announced by some companies.

For instance, Senior Equity Research Analyst at Cordros Capital, Mustaha Wahab, said: “For us in Cordros, we believe the ultra-selloffs witnessed in March were an overreaction and that the market is now in a stronger condition than at the beginning of this COVID-19 episode. In other words, the panic element has eased significantly in our opinion.

“There have been a few developments over the recent past weeks, which I believe provide respite for investors. For one, Nigeria received the International Monetary Fund (IMF)’s approval for $3.4 billion (N1.2 trillion) loan request. The approval came earlier than expected and is the IMF’s largest COVID-19 emergency financing provided to-date. While the loan will do little to address the significantly stressed balance of payment condition, it sure will provide some notable support to the 2020 budget in a year where government spending is necessary,” Wahab said.

He noted that the positive results posted by some companies in the Q1 of 2020, also impacted the growth posted in April

“On the corporates side, we have seen some fairly impressive first quarter results thus far. The cumulative banks’ earnings that have been published to-date show earnings growth of eight per cent, with core income lines and asset quality fairly strong. For consumer goods companies, we like the fact that Nigerian Breweries Plc maintained revenue at last year’s level, even though profit was weaker (owing to high operating expenses). As expected, MTN Nigeria Communications Plc delivered strong numbers, driven by strong growth across revenue lines,” he said.

According to Mr. Oluropo Dada of Network Capital Limited, the digital channels deployed by the NSE to support remote trading which was overwhelmingly embraced by the traders, has contributed to the positive market performance being witnessed in the market.

“Everything worked seamlessly to the advantage of the market. The Q1 results of those big banks that provides over 65 per cent of the trading activities in the sector were released to the market and those results compared favourably with the historical records, meaning that those banks are still creating values. Also, dividend declared for 2019 financial years were paid by major banks during the month, thereby providing liquidity to the shareholders and by extension to the market,” he said.

Market turnover

Meanwhile, a breakdown of the market turnover showed that the Financial Services industry led the activity chart with 1.385 billion shares valued at N11.813 billion traded in 17,117 deals. The sector contributed 83.35 per cent and 64.89 per cent to the total equity turnover volume and value respectively. The Services industry followed with 53.551 million shares worth N128.065 million in 1,003 deals, while the Consumer Goods industry, occupied the third position with a turnover of 53.444 million shares worth N2.780 billion in 3,607 deals.

Trading in the top three equities namely, FBN Holdings Plc, Guaranty Trust Bank and Zenith Bank Plc accounted for 774.294 million shares worth N9.796 billion in 7,516 deals, contributing 46.59 per cent and 53.81 per cent to the total equity turnover volume and value respectively.

Top price gainers and losers

The price movement chart showed that 39 equities appreciated in price during the week, higher than 28 equities in the previous week, while 22 equities depreciated in price, lower than 20 equities in the previous week.

Ardova Plc led the price gainers’ with 32.4 per cent. The Chief Executive Officer of the company, Mr. Olumide Adeosun, recently said the petrol products marketing firm had designed a programme to minimise the impact of the COVID-19 pandemic on its operations and assured stakeholders that it would be ready to face the challenges that emerge at the end of the crisis.

“Our foresight in setting up business continuity frameworks for unprecedented circumstances such as this, means we are presently experiencing near-zero impediments to our operational efficiency. Ardova Plc remains committed to supplying the energy needs of our customers during this period, and our stations remain open to provide them with fuels, lubricants and cooking gas. We fully support the federal government’s efforts to remove petrol subsidy for the downstream, as it will allow subsidy money to be re-allocated to areas that truly benefit the broader population and have more impact on our development as a nation,” Adeosun said.

Meanwhile, WAPIC Insurance Plc closed as the second-highest price gainer, chalking up 26.9 per cent. Nigerian Breweries Plc added 25 per cent, while Consolidated Hallmark Insurance Plc and Prestige Assurance Plc appreciated by 20 per cent each.

UACN Property Development Company Plc garnered 19.48 per cent, just as Ecobank Transnational Incorporated went up 12.3 per cent. Royal Exchange Plc and Cutix Plc added 10 per cent and 9.9 per cent respectively.

Conversely, Linkage Assurance Plc led the price losers with 16.9 per cent, trailed by C & I Leasing Plc with a decline of 10 per cent. MCNichols Plc shed 8.7 per cent, just as NEM Insurance Plc and Lafarge Africa Plc went down by 8.1 per cent and 6.7 per cent in that order.

Other top price losers included: NPF Microfinance Bank Plc (5.6 per cent); Wema Bank Plc (5.08 per cent); Courteville Business Solutions Plc (4.7 per cent); May & Baker Nigeria Plc (4.4 per cent); and Chams Plc(4.3 per cent).