Lacklustre Earnings Weigh Down Market Performance

The Nigerian Equity Market extended losses into the 4th trading session as it opened the week negative against the backdrop of lacklustre earnings declared by quoted companies which further doused investors' sentiment.

Consequently, the benchmark All Share Index (ASI) of Nigerian equities shed 61bps to close at 29,828.95 points, whilst Market Capitalization declined N62.9bn to close at N10.3tn. Market activity however increased as aggregate volume and value of stocks traded advanced 142.7% and 207.4% to 366.9m units and N5.2bn.

Industrial Goods Index Emerges Lone Sector Advancer
All sector indices closed negative today save for the Industrial Goods index which advanced 0.2% due to bargain hunting WAPCO (+0.5%). On the flip side, the Oil & Gas index declined 1.5% on sell-down pressure in OANDO (-9.5%) which trailed the weak FY:2014, Q1:2015 and Q2:2015 earnings results released by the company last week.

The Insurance Index trailed losses with 1.0% as investors' took profit in MANSARD (-4.5%) whilst the Consumer Goods also weakened 0.6% as sentiment weakened further in NIGERIAN BREWERIES (+1.5%) which recorded a 12.2% Y-o-Y decline in PAT in result submitted last week. Similarly, the Banking Index shed 0.3% despite the 1.1% pullback in ZENITH, as investors sold down on STANBIC (-5.0%), GUARANTY (-1.2%), FBN HOLDINGS (-3.0%) and UBA (-2.0%). FBN HOLDINGS reported a 16.9% jump in revenue to N390.0bn and 19.2% decline in PBT to N73.7bn in its 9M'2015 result.

FBN HOLDINGS and UBA were also reportedly sanctioned by the Central Bank of Nigeria to the tune of N2.9bn and N1.9bn respectively for non-remittance of NNPC funds into the consolidated government Treasury Account with the CBN. The heavy loss in STANBIC is attributable to the report from the Financial Reporting Council (FRC) that it had suspended 4 directors of the bank and reported it to EFCC for alleged financial misstatements.

Sentiment Closes Negative on Sell Pressure
Market sentiment measured by market breadth (advancers/decliners ratio) declined to 0.4x as 28 stocks closed in the red relative to 10 that gained. WEMABANK (+5.3%), CONTINSURE (+4.2%) and AFRICA PRUDENTIAL (+1.9%) led gains, whilst OANDO (-9.6%), OKOMUOIL (-8.4%) and PAINTCOM (-5.0%) led losses.

The weak sentiment for equities as well as lacklustre earnings result by quoted companies will in the short term continue to weigh down on equities market performance. We anticipate further reactions on OANDO in the trading sessions ahead as the stock closed on full offer today. Banking stocks (mostly Tier-2) may also record some sell-offs.

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