This Day (Lagos)

Nigeria: No Respite as Equities Remain Downbeat

Investors in the Nigerian equities market again last week waited in vain for a possible rebound as the market maintained a downward trend, on the back of sustained profit taking by some investors.

The bears had the previous week dominated activities on the Nigerian bourse driving equity prices southwards, following speculation that analysts' prediction that the market would rebound on the back of strong second quarter results, might not come to pass.

It continued on that note at the resumption of trading last Monday with major market indicators closing in red. The market opened for four days last week due to the public holiday declared by the Federal Government of Nigeria on Tuesday, May 29, 2012 to mark the Democracy Day. Trading again started on Wednesday on a poor note and continued the weak run till the close of business last Friday.

A review of trading statistics released by the Nigerian Stock Exchange (NSE) showed that the NSE All-Share Index (ASI), which opened the week at 22,232.36, depreciated by 268.49 points or 1.21 per cent to close on Friday at 21,963.87. Also, the equities market capitalisation also depreciated from N7.090 trillion to N7.004 trillion.

Four of the NSE sectoral indices closed downwards. The NSE 30 index depreciated by 14.84 points (or 1.46 per cent), while the NSE Consumer Goods Index depreciated by 17.86 points (or 1.01 per cent).

The NSE Banking-10 Index depreciated by 10.58 points or 3.27 per cent, the NSE Insurance-10 Index depreciated by 0.79 points or 0.62 per cent. However, the NSE Oil/Gas-5 Index appreciated by 0.27 points or 0.14 per cent.

A further look at the NSE numbers showed that investors sold a total of 1.301 billion ordinary shares worth N9.46 billion made in 14,792 deals, in contrast to a total of 1.74 billion shares valued at N15.108 billion exchanged the previous week in 19,754 deals.

However, at the close of trading activities for the week, the Financial Services sector of the equities market was the most active (measured by turnover volume) with 737.805 million shares valued at N5.896 billion traded in 8,553 deals. This was followed by Conglomerates Sector with 269.168 million shares valued at N314.298 million traded in 692 deals.

Also, the banking subsector of the Financial Services sector was the most active during the week (measured by turnover volume) with 642.493 million shares worth N5.832 billion exchanged by investors in 8,258 deals. The volume in the sector was driven by Guaranty Trust Bank Plc, First Bank of Nigeria Plc and UBA Plc.

Also traded during the week were 1,920 units of NewGold Exchange Traded Products (ETFs) valued at N4.665 million exchanged in 6 deals. However, there were no transactions in the Federal Government development stocks, State/Local Government Bonds and Corporate Bonds/Debentures Stocks sectors.

Gainers and Losers

The price movement chart of the NSE displayed a total of 22 equities that appreciated in prices during the week, higher than the 14 of the preceding week.

PZ Cussons Nigeria Plc led on the gainers' table by 5.22 per cent to close at N24.20 per share followed by Glaxo Smithkline Consumer Nigeria Plc by five per cent gain to close at N21.00 per share.

Other price gainers in the top 10 category included: Unilever Nigeria Plc. (N0.70), Presco Plc (N0.65), International Breweries Plc (N0.49), Access Bank Plc (N0.23), Stanbic IBTC Bank Plc (N0.21), Union Bank Nigeria Plc (N0.20), May & Baker Nigeria Plc. (N0.18) and Cement Company of Northern Nigeria Plc (N0.12).

On the other hand, 33 stocks depreciated in prices lower than 35 of the preceding week. Nigerian Breweries Plc led on the price losers' table, dropping by N2.78 per cent to close N105 per share while UAC of Nigeria Plc followed with a loss of N1.69 per cent to close at N33.31 per share.

Other price losers in the top 10 category included: Zenith Bank Plc (N1.35), Lafarge Cement WAPCO Nigeria Plc (N1.14), Flour Mills Nigeria Plc (N1.04), Julius Berger Nigeria Plc (N0.99), Okomu Oil Palm Plc (N0.87), National Salt Company Nigeria Plc (N0.69), NCR (Nigeria) Plc (N0.68) and First City Monument Bank Plc (N0.65).

Trading Delayed

Meanwhile, there was anxiety among brokers at the start of trading last Wednesday as trading commenced late, following some complex technical issues the trading engine encountered.

As result, trading started about 12.30 pm in contrast with the usual commencement time of 10.30 am. Although the NSE did not give details of the problem, it said in a statement that the problem had to do with some hardware on its trading engine.

"The Exchange's technology staff and hardware engineers were deployed as early as 6.30 am and were able to resolve all issues to ensure that market transactions commenced by 12.30pm. As a result of the delay in the commencement of day trading activities, the NSE extended the day trading time to 4.30pm," the statement said.

To forestall similar technical hitches from recurring, the NSE is in the process of replacing its trading platform.

The Exchange had in April signed the multinational financial services powerhouse, NASDAQ OMX System for the upgrading of its current trading platform to the cutting-edge NASDAQ X-Stream which is a high-performance, robust and scalable, multi-asset, multi-market matching trading engine.

The Chief Executive Officer of NSE, Mr. Oscar Onyema, had explained that the new trading, which is expected to become operational in the second quarter of 2013, would provide the Exchange with the fastest trading engine in Africa.

"Investors, through their stockbrokers, will have real-time access to market prices, their portfolios and be enabled to execute market orders in near real-time from anywhere and on a wide range of devices including smartphones," he said.

NASD Trading Rules

In another development, indications emerged last week that the NASD Limited, which was had been granted an Approval-in-Principle (AIP) by the Securities and Exchange Commission (SEC) to operate Over-the-Counter (OTC) market in Nigeria, is finalising its trading rules and is targeting the last quarter of this year to commence operations.

NASD Limited was formed in 1998 to promote and operate an OTC market open to all interested registered securities dealers in Nigeria. It has been working towards putting in place an organised OTC market in place. SEC gave its approval last year.

It had planned to commence operations late last year but that was not possible as it was sourcing for funds and how to get a trading platform among other issues.

However, Chairman of Technical Committee of NASD Limited, Mr. Victor Ogienwonyi, told THISDAY the trading rules were being finalised and operations would likely begin in the last quarter of the year after getting the final approval of SEC.

According to him, since getting the AIP of SEC, the promoters of the project had been working round the clock to ensure a smooth take-off of operations.

He added that N500 million had been raised by the company from 51 operators while vendors for the trading platform had been streamlined to three from the 11 that applied to supply the platform. He disclosed that a permanent office had been secured for the company on Marina, Lagos, while key staff members had been recruited.

"We are finalising our trading rules and hope to take off fully by last quarter of this year after getting approval from SEC. We intend to have an all-asset trading platform that will trade from simple money market instruments like commercial paper through equities to bonds, including simple derivatives like foreign exchange options and futures.

"Our intention is to trade all non listed Public Liabilities companies (PLCs) in a very transparent manner; thereby expanding the market for securities and complementing the Nigerian Stock Exchange (NSE)", he added.

Before now, Chairman of NASD Limited, Mr. Tola Mobolurin, had said that the NASD would provide capital raising windows to all qualified public sector and corporate entities especially small-to-medium sized companies seeking to raise capital and for investors seeking to trade existing securities on a transparent platform.

"It would also provide a liquidity window for investors and fund managers who invested in public unquoted companies and expand opportunities for Pension Fund Administrators who are required to invest only in publicly traded securities," he said.

Ecobank Gets $250m Investment

Effort to get investors back to the market received a boost during the week under review when Ecobank Transnational Incorporated (ETI) signed an agreement with the Public Investment Corporation (PIC), South Africa, which is investing $250 million in its common equity, on behalf of Government Employment Pension Fund (GEPF).

ETI is the parent company of Ecobank Group, a pan-African banking group with presence in 32 countries.

The agreement was signed last week on the sideline of the just concluded annual meetings of the African Development Bank (AfDB).

Group Chief Executive of ETI, Mr. Arnold Ekpe, signed for Ecobank while Chairman of PIC and Deputy Finance Minister for South Africa, Mr. Nhlanhla Musa Nene, and Chief Executive Officer of PIC, Mr. Elias Masilela, signed on behalf of PIC.

According to PIC, the investment will represent its first major direct investment in Africa outside South Africa and is in line with GEPF's investment strategy, which has identified Africa as the next frontier for investment growth. The deal is expected to strengthen Ecobank's tier one capital and further enhance its ability to grow its business across the African continent.

In line with the terms of the agreement, the $250 million share purchase will be effected by the issuance of 3,125,000 shares in Ecobank, representing 19.58 per cent of the total outstanding number of shares. The significant investment will enable PIC to take a seat on the board of Ecobank.

Commenting, Ekpe said: "With GEPF as a shareholder, Ecobank will now have a slate of highly reputable local and international shareholders and our equity capital raining programme is coming to an end. Our unparalleled presence across sub-Saharan Africa and our knowledge of local markets will also facilitate the GEPF's investment plan for Africa."

In his own remarks, Masilela said they were excited about the proposed investment they would make in Ecobank.

"We strongly believe that this is a significant step that will complement the Africa strategy of our major client, GEPF, which seeks to take advantage of private equity opportunities on the continent," he said.

"With this one investment, we will be immediately optimising our footprint on the rest of the continent, an action that would otherwise require multiple investments and huge effort as well as resource allocation," he added.

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