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Nigeria’s equities market halted its five-week bearish run this week as the All Share Index (ASI) gained a mild 0.08 per cent Week-on-Week (W-o-W) to settle at 26,314.49 points due to price appreciation in the shares of Law Union, Access Bank and FCMB.
At the close of trading on Friday, the market’s Year-to-Date (YtD) loss eased to -16.3 per cent while market capitalisation rose by N10 billion to close the week’s trading at N12.809 trillion.
The market started the week on a positive note as the benchmark index leaped by 0.41 per cent on Monday due to price appreciation in GT Bank, Stanbic and UBA while losses in Nestle, MTNN dragged the index by 0.10 per cent on Tuesday.
The bearish sentiment continued on Wednesday (0.58 per cent) and Thursday (0.14 per cent) as sell-offs in Dangote Cement, MTNN, Unilever and Zenith Bank dragged the ASI lower.
However, Friday’s session saw investors returning to the market as sentiments in banking stocks buoyed positive performance on the floor of the Nigerian Stock Exchange (NSE) as the ASI notched up 0.48 per cent.
Sector performance was mixed as three of six indices gained W-o-W. Price appreciation in Access Bank (+17.9 per cent), FCMB (+16.3 per cent), CCNN (+10.1 per cent) and WAPCO (+5.0 per cent) pushed the Banking and Industrial Goods indices up 8.5 and 2.0 per cent respectively.
Similarly, the Insurance index gained 0.4 per cent on the back of gains in Law Union (+31.0 per cent).
Conversely, the Consumer Goods and AFR-ICT indices declined 5.9 and 1.6 per cent respectively due to losses in Unilever (-26.6 per cent), International Breweries (-18.7 per cent) and MTNN (-2.8 per cent).
The Oil & Gas index shed 0.2 per cent following price weakness in MRS Oil (-9.7 per cent).
Investor sentiment weakened as market breadth (advance/decline ratio) declined as 28 stocks gained against 27 that lost. Law Union (+31.0 per cent), Access Bank (+17.9 per cent) and FCMB (+16.3 per cent) led the gainers while Unilever (-26.6 per cent), International Breweries (-18.7 per cent) and Fidson (-12.5 per cent) led the losers.
The top traded stocks by volume were Access Bank (228.8 million units), Zenith Bank (175.4 million units) and UBA (174.4 million units) while Zenith Bank (N3.0 billion), Access Bank (N1.9 billion) and MTNN (N1.9 billion) led by value.
Analysts who spoke to Sunday Sun noted that they see equities garnering momentum towards the end of 2019 while advising traders to seek attractive prices, as well as advice on stocks to buy with their stockbrokers.
A stockbroker who craved for anonymity said: “The economy is not moving at the moment, but there is every possibility that the market will pick up before the year ends. But these investors have to be cautious with stock buying and sit with their stockbrokers on the type of stocks to buy and then sell.”
Analysts at Afrinvest in their weekly note, said: “We do not expect that the bullish performance would be sustained in subsequent weeks due to weak investor sentiment towards equities.
However, the CBN recently restricted individuals, local corporates and non-banking financial institutions from participating in both the primary and secondary markets for Open Market Operations (OMOs). Following this directive, we expect investors’ focus to shift towards equities due to current low prices and attractive dividend yields.”
Meanwhile the boards of Cement Co of Northern Nigeria (CCNN) and Obu Cement announced the proposed merger of both entities to form one enlarged company, with Obu Cement becoming the surviving entity.
Beyond ceding all its assets and liabilities to Obu Cement, CCNN will be delisted from the Exchange, while Obu Cement will be listed on an indicative date of January 8, 2020.
This is according to the scheme of the merger. From a 12.6 per cent ownership of CCNN, minority shareholders will now hold an 11.0 per cent stake in the enlarged Obu Cement, while BUA Cement Company Limited and Abdulsamad Rabiu will hold 33.9 and 55.1 per cent stakes, respectively.
According to Cordros Capital: “We understand that the 13.14 billion-unit shares of CCNN are expected to be merged into the enlarged entity in a one-for-one ratio.
However, Obu Cement shares of 40.00 million will be reconstructed, and an aggregate 20.72 billion units will be allotted in the ratio of 518 reconstructed Obu shares for every one Obu share held. Overall, the enlarged company will now have a total of 33.86 billion shares outstanding”.
