Market Report

Equities record N1.01trn value loss within nine months

by Iheanyi Nwachukwu

November 17, 2016 | 12:55 am
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Nigerian equities recorded over N1trillion value loss within nine months period to September 30, 2016 as shown in the recent ‘Fact Sheet’ of Nigerian Stock Exchange (NSE).

As weak sentiment drove sell-offs across sectors at the local bourse, the listed equities earlier valued at N11.591trillion as at nine months to September 2015 depleted to N10.576trillion in the same period of 2016, INVESTOR checks showed.

The average daily volume traded across all products at the Nigerian Stock Exchange in Q3 2016 was 303.48 million units, representing a 20.81percent decline from 383.22 million units in Q3 2015. The average daily value traded at N2.48 billion ($8.14 million), fell 31.04 percent from N3.60billion in the same period in 2015.

At the NSE, companies are either listed on the Premium Board, Main Board, or the Alternative Securities Market (ASeM). Sustained depreciation of the Naira due to FX scarcity, coupled with challenges in the power sector helped to fuel bearish market sentiments across these three segments in Q3’2016.

With total transactions to the end of September running 41percent lower than the comparable year-earlier period, an NSE latest report on portfolio participation in equity trading showed monthly turnover of N95billion for September, compared with N130billion for the year-earlier period.  In Q3’16, the number of listed equities on the NSE Main Board decreased by eight, from 176 in Q3’2015 to 168 in Q3’2016; with corresponding value loss of about N888billion from N6.911trillion to N6.023trillion.

Though, the number of companies listed on the Premium Board remains the same –Dangote Cement, Zenith Bank Plc and, FBN Holdings, their values depleted by N108billion in just one year, according to our check.

Investors in Alternative Securities Market (ASeM) listed companies recorded value loss of N196million, from Q3’15 level of N8.639billion to N8.443billion; though the number of companies listed in ASeM depleted by 2, from 11 to 9.

Africa’s biggest economy stock market returns are in negative of circa 5 percent; though it managed to outperform its counterparts like Nairobi Stock Exchange (NSE), but lagged that of Johannesburg Stock Exchange (JSE).

The equity turnover velocity in Q3 2016 was 6.21%, down 1.43 percentage points from 7.65% in the previous year.  At the end of the quarter, the average price equity (PE) ratio of the Exchange’s listed equities stood at 30.87, compared to 16.41 in the previous year. The dividend yield for the 52-week period ended September 30, 2016 was 6.07%, compared to 6.11% for the previous year.

“Our chart shows that Lagos hit its low point of -21.6% ytd very early in the year (19 January) and has recovered on sentiment. Positive news on the fiscal side and the resilient performance of top tier bank names have been balanced by what we charitably term the work in progress of the new foreign-exchange policy launched on 20 June”, said Gregory Kronsten-led team of research analysts at FBNQuest in their recent note “NSE underpinned by sentiment and hope”.

“It may be surprising that there was a net foreign inflow of N5billion in September. There has been some offshore buying of flagship names such as DangCem and GT Bank but, we understand, from funds “blocked” due to delayed repatriation after earlier trades or from dividend payments. Our view is that a fully functioning FX regime will only come about gradually and in a piecemeal fashion because we cannot identify one solution large enough and politically acceptable to provide the necessary trigger,” the analysts further said.

Iheanyi Nwachukwu

by Iheanyi Nwachukwu

November 17, 2016 | 12:55 am
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