NSE underperforms Sub-Sahara Africa peers year to date- FBNQuest

FBNQuest, an investment banking firm, has said that the Nigerian Stock Exchange (NSE) is the weakest performer from beginning of the year to date of the three stock market the firm track in the Sub-Saharan of Africa.

NSE market capitalisation has been hovering below N12 trillion since the beginning of the year as the All shares index sometimes last week fell below 31,000 basis points while the bear runs over the market with few times bulls rescue.

According to FBNQuest; “Lagos is the weakest performer year to date of the three stock markets we track in sub-Saharan Africa (SSA), having descended into negative territory in the past two weeks.

The investment banking firm observed that Nairobi (NSE20) is in retreat. Jo’burg (all-share), being the most developed and liquid of the three markets, appears to have benefited the most from the signals that the normalization of US monetary policy has slowed, if not stalled.

Daily turnover year to date on the two more ‘frontier’ exchanges has disappointed, averaging US$9.4 million in Lagos and US$6.9 million in Nairobi.

Data from the Nigerian Stock Exchange put the foreign investor share of turnover in February at 53% but show that their trading over the month amounted to a net outflow of N11 billion. The post-election rally was negligible, unlike in March 2015.

“Many equity investors may have hoped for an Atiku victory on the grounds that his campaign stressed his private-sector credentials and insisted that he would somehow “get things done”. In stark contrast, fixed-income players responded very positively with a surge in buying, as we have previously noted”, FBNQuest stated.

 “The question then becomes what would act as a trigger for sizeable new flows into the Lagos market, and thereby counter the removal of the minimum equity holding  for PFAs as well as a generally uninspiring set of Q1 2019 results (other than two or three banks)”. FBNQuest asked

The firm however responded that the first would be an oil price at a higher and sustainable level. This is indicated by the well-known linkages between the price and the non-oil economy, which was demonstrated by the healthy gross domestic product (GDP) growth posted in 2010-14.

Second, evidence that the banks are achieving the loan book growth of around 10% for the year, which has been their guidance, would be helpful. Further, we add surprises on the upside in the FGN’s reform agenda and sizeable new listings -such as MTN Nigeria.