Equities market growth stays soft amidst dull corporate earnings release

Investors interest in Nigeria’s equities market will remain bearish this week, analysts says, as the release of dull corporate earnings for the first half of the year have been unable to trigger growth actions.

For instance, half year scorecard for Transnational Corporation of Nigeria (Transcorp) released last Thursday prompted a sell down in the stock during Friday’s trading session.

Half year results of the conglomerates showed decline in growth and profitability as it recorded a 30.18 percent revenue drop with the only increase recorded in net finance cost, which pushed after-tax profit down by 58 percent.

The equities market thus sustained yet another downtrend in the week ended 19th July 2019.

The NSE All Share Index (ASI) suffered losses on 4 of 5 trading sessions last week. Consequently, the benchmark index slid 2.3 percent last week to settle at 27,919.50 points while year to date loss declined to -11.2 percent.

Investors lost N315.5bn in value as market capitalisation decreased to N13.6 trillion. However, activity level was mixed as average volume advanced 9.8 percent to 273.9m units while average value traded fell 3.2 percent to N2.8bn.

The top traded stocks by volume were FBN Holdings with 122.9m units, Guaranty Trust Bank with 105.8m units and UBA with 78.3m units.

Topping traded stocks by value were Guaranty Trust Bank with N3.1bn, Dangote Cement with N1.0bn and Zenith Bank with N992.7m.

A review of the week’s activities showed that it started on a negative note and was sustained on the first four trading sessions as the benchmark index closed lower at -0.8 percent, -0.5 percent, -0.6 percent and -0.6 percent on Monday, Tuesday, Wednesday and Thursday respectively. Sentiment improved slightly on Friday following gains in MTN Nigeria (+0.8%).

Sectoral performance was equally weak as all sector indices declined in the week under review. Leading the laggards was the oil & gas index, down 5.7 percent on the back of sell-offs in Seplat (-9.4%), Eterna (-8.2%) and Total (-7.2%).

The banking and insurance indices followed suit, shedding 4.3 percent and 3.8 percent respectively due to losses in Union Bank of Nigeria (-12.7%), Eco Transnational Incorporated (-9.5%), Law Union and Rocks (-11.3%) and NEM Insurance (-8.4%).

In the same vein, price depreciation in Cement Company of Northern Nigeria (-17.2%), CAP (-10.0%), CHAMS (-3.6%) and MTN Nigeria (-1.3%) dragged the industrial Goods and AFRI-ICT indices 2.2 percent and 0.7 percent lower respectively.

Finally, the consumer goods index marginally declined 1bp as investors exited position in Flour Mills of Nigeria (-11.1%) and International Breweries (-10.0%).

Market breadth for the week which measures investor sentiment weakened to 0.3x from 0.4x the previous week. This was as a result of 15 stocks advancing against 49 decliners.

The best performing stocks this week were Lasaco Insurance (+13.8%), Cornerstone Insurance (+10.0%) andABBEYBDS (+10.0%) while CCNN (-17.2%), Courteville Business Solutions (-16.7%) and Union Bank of Nigeria (-12.7%) declined the most.