Market Report

Market loses steam as investors keep wary watch on equities

by Iheanyi Nwachukwu

October 27, 2016 | 12:59 am
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Triggers for a sustainable rally remain scarce at the Nigerian bourse even as third-quarter (Q3) earnings scorecards which trickled-in remain broadly mixed in performances.

Continued wane in investor sentiment has forced the market to lose steam as evidenced in a quiet start to proceedings this week, with a further dip in sight.

The NSE ASI and Market Capitalisation which opened last week at 27,861.03points and N9.570trillion respectively declined to 27,594.16points and N9.478trillion.

Nigerian stock investors lost N92billion last week while the year-to-date (ytd) return stood at -3.65%. All other Indices finished lower during the review week with the exception of the NSE Industrial Goods Index that appreciated by 0.52%, while the NSE ASeM Index closed flat.

Stock investors will still maintain cautious stance in coming trading sessions despite flurry of Q3 2016 earnings releases. Already, most analysts see further concerns regarding domestic economic recovery dominating overall market sentiment. Before now, investors priced-in FX related risk on naira assets. 

Companies that have released their third quarter results include: Omoluabi Savings and Loans Plc, Cornerstone Insurance Plc, Presco Plc, Multiverse Mining And Exploration Plc,  Paints And Coatings Manufactures Plc, Nascon Allied Industries Plc, Chemical And Allied Products Plc, NEM Insurance Plc, Unity Bank Plc, Zenith Bank Plc, Wema Bank Plc, Cadbury Nigeria Plc, Transcorp Hotels Plc,  Secure Electronic Technology Plc, Guaranty Trust Bank Plc, Trans-Nationwide Express Plc, NCR (Nigeria) Plc, Abbey Building Society Plc, Unity Kapital Assurance Plc, Austin Laz & Company Plc , Forte Oil Plc, UBA Plc, and Resort Savings & Loans Plc,  among others.

“Whilst we observe that Friday’s market turnover returned to the low levels typical of the past week, we note that investors remained quite active on GUARANTY (accounted for 30% of market trade) following impressive 9M’16 earnings. We think this market pattern will persist in the week ahead as investors react to earnings release”, Vetiva Capital analysts said in recent breakfast report.

Amid this, the analysts expect investor appeal for banking stocks to improve as Zenith Bank earnings which beat market expectations was expected to serve as a pointer to what to expect from other big banks.

Meanwhile, earlier this week, Ecobank Transnational Incorporated (ETI) notified preference shareholders that in line with the terms on conversion of preference shares recommended to Oceanic shareholders by the Oceanic Board as were stated in the Scheme of Arrangement documents and approved by Oceanic shareholders, that “The holders of the Preference shares shall have right, exercisable at any time between the third anniversary of the Issue Date and the fifth anniversary thereof, to convert their Preference Shares into Ordinary Shares in the Company. Each Preference Share, upon conversion, shall convert into 0.76923 Ordinary Share”, according to a notice at the Nigerian Stock Exchange. The shareholders may convert their preference shares up to Monday October 31, 2016; after the said date, they will not be able to convert their Preference shares anymore. 

Iheanyi Nwachukwu

by Iheanyi Nwachukwu

October 27, 2016 | 12:59 am
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