Market Report

PenCom’s multi-fund investment structure yet to impact equities


July 11, 2018 | 5:37 pm
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Nigerian stock market moved further into the negative territory after Wednesday’s trading session on Customs Street-Lagos as sell pressure around equities outweighed buy decisions.

Increasing negatives around stocks are indications that Pension Fund Administrators (PFAs) implementation of multi-fund investment structure (MFS) on Retirement Saving Account (RSA) has not really triggered substantial shift from debt to equities.

Despite concerns over rising political risks, investors expect impressive first-half (H1) scorecards to help reroute equities market northward.

The National Pension Commission (PenCom) recently replaced the “one size fits all” investment structure for PFAs with the Multi-Fund Structure (MFS) regulation which considers for age or risk profile of such contributors.

The multi-fund structure which requires pension contributors to choose one of the four fund types to invest their RSA became effective on July 2, 2018.

Market watchers had expected that Pension Fund Administrators to reduce allocation of assets under management (AUM) to Federal Government securities as a result of declining yields. The FGN bond market was fairly active on Wednesday as yields narrowed for several traded maturities across the curve.

 “It is unlikely that the implementation of the MFS framework will have an immediate impact on the equities market, especially with the 6 months transition period provided for PFAs, to restructure their portfolios in accordance to the framework”, according to United Capital Research analysts in their May 29 note to investors.

Analysts note that within a broader trend in the emerging/frontier economy space, Lagos Bourse joined two other leading stock markets in sub-Saharan Africa (SSA) – Johannesburg Stock Exchange and Nairobi Stock Exchange that find themselves in negative territory year-to-date (Ytd).

“The Ramaphosa bounce in South Africa did not last long: the Jo’burg index has been under water since the start of February. Nigeria has its own elections coming: in our view, investors are not worried while they feel that the polls will be decisive, and not followed by violence and endless judicial challenges”, Gregory Kronsten–led team of analysts at FBNQuest Capital said in their July 11, 2018 note to investors.

The Nigerian equities market closed Wednesday on a negative note, as benchmark Index depreciated further by 0.45percent to 37,253.25 points against 37,421.01 points recorded the preceding trading day.

The value of listed equities which stood at N13.556 trillion at the beginning of trading on Wednesday July 11, 2018 declined to N13.495trillion, indicating value loss of about N61billion. The stock market’s year-to-date (YtD) returns stands at minus 2.59percent. At the close of trading, 15 stocks gained as against 25 losers.

Mobil Oil Nigeria Plc recorded the highest rally after its share price increased from N165 to N180.5, representing an increase of N15.5 or 9.39percent. Forte Oil Plc gained N1.45 or 4.86percent, from N29.85 to N31.3.

Nigerian Breweries Plc gained N1 or 0.91percent, from N110 to N111. Custodian   Investment Plc increased from N5.7 to N6.27, up by 57kobo or 10percent; while UAC of Nigeria Plc rose from N13.2 to N13.55, up by 35kobo or 2.65percent.

Julius Berge Nigeria Plc declined most by N3 or 10percent, from N30 to N27; followed by International Breweries Plc which lost N2.65 or 6.46percent, from N41 to N38.35.

Dangote Cement Plc lost N2 or 0.88percent, from N227 to N225. Lafarge Africa Plc declined from N35.75 to N33.9, down by N1.85 or 5.17percent; while Flour Mills Nigeria Plc lost 25kobo or 0.81percent, from N31 to N30.75.

In 3,526 deals, stock traders exchanged 287,085,880 units valued at N3.745billion.

Access Bank Plc, Zenith Bank Plc, Transnational Corporation of Nigeria Plc, Guaranty Trust Bank Plc, and FBN Holdings Plc were actively traded stocks on the Nigerian bourse.

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July 11, 2018 | 5:37 pm
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