Stocks Decline N78.5 Billion as Market Opens with Sell-offs

Stocks Decline N78.5 Billion as Market Opens with Sell-offs

Stocks decline N78.5 billion on first trading session as equities market opens with sell-offs. The local bourse declined 39 basis points due to sell-offs in GUARANTY (-3.3%), BUACEMENT (-1.1%), and GUINNESS (-8.1%).

Consequently, the All-Share index settled at 38,766.6 points, year to date loss worsened to -3.7% as market capitalisation decreased to ₦20.3 trillion.

Trading activity declined as volume and value traded plunged 6.2% and 7.4% respectively to 224.6 million units and ₦2.1 billion.

The most traded stocks by volume were UACN (34.0 million units), ACCESS (26.3 million units), and FBNH (18.9 million units) while ZENITH (₦364.3 million), GUARANTY (₦338.6 million), and UACN (₦337.6 million) led by value.

Afrinvest said performance across sectors that under its coverage was bearish as 5 out of 6 indicators closed negative while the AFR-ICT closed flat.

The Banking index led the laggards, down 1.7% due to sell-offs in STERLNBA (-8.7%), GUARANTY (-3.3%) and ZENITH (-0.9%).

On the same note, the Industrial Goods and Insurance indices declined by 0.5% apiece on the back of sell-offs in BUACEMENT (-1.1%), WAPCO (-0.7%), AIICO (-3.2%) and CUSTODIA (-1.4%).

Similarly, the Consumer Goods and Oil & Gas indices fell by 0.4% and 0.1% respectively saw some price depreciation in GUINNESS (-8.1%), INTBREW (-8.7%), and OANDO (-3.1%).

Investor sentiment, as measured by market breadth weakened to 0.7x from the 0.8x recorded previously as 14 stocks gained against 21 decliners.

ETERNA (+9.9%), LINKASSURE (+9.7%) and ROYALEX (+9.1%) were the top gainers while MRS (-9.9%), ALEX (-9.9%) and CHIPLC (-9.4%) were the top decliners.

“We expect the equities market to rebound as the week proceeds”, Afrinvest said.

On last week’s pricelist, Linkage Assurance Plc (+41.18% week on week to N0.72), Royal Exchange Plc (+37.50% wow to N0.33), and Guinness Nig. Plc (+19.67% wow to N35.90) were the best-performing stocks.

Meanwhile, DAAR Communication Plc (-16.00% wow to N0.21), Regency Alliance Plc (-12.12% wow to N0.29), and FTN Cocoa Plc (-8.70% wow to N0.42) were the week’s laggards.

Market activity was broadly bullish last week, as average volume traded rose by 18.06% wow to 361.22mn units, while value traded rose by 11.67% wow to N4.760bn.

On a sector basis, the performance was bearish as 3 of 5 of our coverage indices closed in the red terrain.

The NSE Banking, NSE oil and gas, and NSE industrial goods indices closed negative, all of which moderated by 126bps wow, 30bps wow, and 209bps wow, respectively. The foregoing completely offset the gains across NSE Insurance (+2.82% wow) and NSE consumer goods (+1.93% wow).

 At the end of the first quarter, Nigeria’s equities stand firmly among the few countries with negative returns (see table below).

“For us, we still see significant legroom for further equity assets losses, especially as the absence of pricing flexibility by the CBN continues to keep foreign investors apprehensive towards naira risk instruments.

“Nonetheless, we guide that fundamentals remain strong”, Chapel Hill Denham said in a market report.

The firm noted that Nigeria’s valuation remains attractive relative to peer countries both on forward P/E and dividend yield perspective. For us, this development could trigger an upward repricing of equity instruments in the medium term.

“On our recommendations, in the Banking sector, we like Access Bank, Fidelity Bank, Zenith Bank, Guaranty Trust Bank, Stanbic IBTC Holding, United Bank for Africa, and FBNH.

“In the consumer goods sector, we like Dangote Sugar Refinery, Flour Mills, Nigerian Breweries, Intbrew, Guinness, UAC of Nigeria, Unilever, and FCWamco.

“We also have buy ratings on Lafarge in the cement sector, Custodian & Allied in the insurance sector, and Airtel Africa in the telecommunication sector”, Chapel Hill Denham said.

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Stocks Decline N78.5 Billion as Market Opens with Sell-offs