Daily Market Report –September 10th, 2015

Photo L-R: Jude Ohanehi, Executive Director, Operations, NPF Microfinance Bank Plc;  Oscar Onyema, CEO, The Nigerian Stock Exchange; Deputy Inspector General, Azubuko Joel Udah (rtd), Chairman, NPF Microfinance Bank Plc; and Akinwunmi Lawal, MD/CEO, NPF Microfinance Bank Plc at the Closing Gong Ceremony at the Exchange yesterday.

WEAK –Profit-taking on banks’ stocks drags market performance down.

Sentiment in the Nigerian Bourse remained weak on Thursday as the benchmark equities gauge -- All Share Index (ASI) -- shed 0.2% to close at 29,403.12 points, while YTD loss rose to --15.2%. Market Capitalization also declined N10.3bn to at N10.1tn.
Analysts at Afrinvest Research said, “The decline in the benchmark index was against the backdrop of profit-taking in banking stocks --UBA (-8.7%), FBNH (-7.2%), STANBIC (-5.0%) and ETI (-3.2%) and GUARANTY (-1.2%).” Market activity measured by aggregate volume and value of stocks traded softened 33.4% and 27.8% to close at 306.1m units and N3.1bn.

Banking Index Leads Laggards on Profit-Taking
Profit taking in the Banking index was sustained as the index closed in the red for the second consecutive trading session to lead sector laggards as investors sold-off on STANBIC (-5.0%) and ETI (-3.2%) and GUARANTY (-1.2%) whilst UBA (-8.7%) was marked down for dividend. Conversely, the consumer goods (+1.3%) index rebounded to lead advancers, attributable to the strong gains in NESTLE (+2.2%), GUINNESS (+5.0%), NIGERIAN BREWERIES (+0.7%) and PZ (+4.0%).

The positive sentiment on GUINNESS (+10.2% in the last two trading sessions) is primarily due to the announcement of a planned partial tender offer by the company (at not more than N175 per share) as the majority shareholder, Diageo seeks to increase its stake from 54.3% to 70.0% in Nigeria. The Industrial Goods index trailed, buoyed by the rally in cement producers - DANGCEM (+1.2%) and WAPCO (+1.0%). Similarly, the Insurance and Oil & Gas indices cd 0.7% and 0.1% CONTINSURE (+4.9%) and OANDO (+0.6%).

Market Breadth Closed Negative
Market breadth, measured by advancers vs decliners ratio improve slightly but closed negative at 0.9X (25 loser's' vs 23 gainers') relative to 0.2x yesterday. Top gainers today include HONYFLOUR (+9.1%), DIAMOND (+3.6%) and GUINNESS (+5.0%) whilst UBA CAPITAL (-9.3%), VONO (-9.3%) and UBA (-8.7%) led market laggards.

The market seemed to have bucked the strong rally seen from last week up until Tuesday. This remained linked to the announcement of the gradual phase-off of Nigeria from the JP Morgan Emerging Market Bond Index. Although we note that the earnings of Banks with significant holding of government bond classified as Available for Sale and Trading would be affected by the depreciation in bond prices which has trailed the announcement. We believe that the broad fundamentals of the companies in the bourse remain relatively insulated from the contagion effect of the bonds rout.