By Akin Omo Akin Lagos
The Nigerian stock market closed last week on a positive position which resulted in the increase of overall market performance.
The All Share Index gained by 25.81 points or 0.09 per cent to 27, 861.03 points, while market capitalization improved by N134 billion to settle at N8.855 trillion
Stock market analysts noted, “Given that the macro worries that have kept investors away from the market still exist, we attribute the gains of last week to investors cherry-picking fairly priced, dividend paying stocks, ahead of year end and the announcement of OPEC’s output freeze deal, with Nigeria among countries exempted.
All sector indices, except Insurance, closed the week in green. The Oil & Gas index topped with 9.97 per cent, following gains by Mobil and Oando. The Banking and Consumer Goods indices appreciated by 4.2 per cent and 0.7 per cent respectively. Conversely, the Insurance index went down by two per cent on the back of losses recorded by Mansard Insurance and Continental Reinsurance.
Stocks Activities Movement For The Week
The local bourse opened the week bearish but trended northwards by mid-week and sustained uptrend till Friday with a gain of 1.88 per cent, which more than offset earlier of the week losses.
Market breadth remained negative, although in continuous improvement, with 27 gainers versus 30 losers compared to 25 gainers versus 26 losers previous week. Total volume traded increased by 287 per cent week-on-week to 2.48 billion shares, valued at N9.99 billion, and traded in 12,059 deals, compared to 640.4 million shares, valued at N6.46 billion and traded in 11,801 deals the previous week.
For the week, Mobil led gainers chart by 55.11 per cent to close at N324.13 per share. Portland Paints followed by 31.16 per cent gain to close at N1.81, while Wema Bank appreciated by 9.62 per cent to close at 57 kobo per share.
On the other hand, Neimeth led the losers by 12 per cent to close at 66 kobo per share. Unity Bank shed 10.17 per cent to close at 53 kobo, while Honeywell Flour went down by 10.09 per cent to close at 98 kobo per share.
Outlook For This Week
Stock market analysts expected the current sentiment of last week to extend into the this week.
Analysts from Cordros Capital said, “While acknowledging the still subdued macro environment, we believe the broadly attractive stocks prices following the selloffs experienced last month, offers opportunities for investors to take position in high-yielding stocks, as the year unwinds.”
Analysts from United Capital noted that “We expect the current sentiment to extend into the coming week as optimism from recent OPEC deal continues to stoke demand in the interim.”
While analysts from Afrinvest pointed out that “In line with our forecast, uptrend observed in the market this week was largely linked to activities of bargain hunters after the market had sustained six consecutive weeks of downtrend. Overall, we advise investors to stay invested only in market bellwethers.”
Oil & Gas Stocks Shed N183bn In 11 Months
Shareholders of Oil and Gas companies quoted on the Nigerian Stock Exchange (NSE) recorded a loss of about N183.43 billion between January and November, 2016 following panic sales that had persisted in the equities market.
Available statistics show that transactions on the floor of the NSE continued to swing downwards, as the market recorded a year-to-date loss of 10.13 per cent.
Further investigation by LEADERSHIP showed that the oil and gas sub-sector recorded a loss of N183.43 billion from a capitalization of N760.255 billion it opened for the year to close at N576.827 billion as at December 2, 2016.
Also, the oil and gas index declined by 19.29 per cent from 356.56 points to 287.77 points under the period reviewed.
Investors in the oil and gas companies sector who had reacted positively to the federal government’s removal of subsidy and increase in petroleum price from N86.50 to N145 per litre have retreated, as the nation slipped into recession.
The sub-sector has continued to witness persistent sell pressure, as the price of crude dropped following the upset in financial sector and on concerns that measure the country’s central bank put in place to stem capital outflows would hinder their ability to sell holdings in the country.
The drop in the NSE oil and gas index is a reflection of the fall in the prices of petroleum equities. The equities are Beco Petroleum Product, Conoil, Eterna, Forte Oil, Mobil, MRS Oil, Total, Oando and Seplat Petroleum Development Company.
Analysing the sector for the period showed that despite the decline, some companies performed well, Mobil gained 102.6 per cent, Eterna Oil went up by 45.9 per cent, while Seplat and Total appreciated by 68.97 per cent and 76.6 per cent respectively.
On the other side, Forte Oil in 11 months declined by 80.2 per cent, Oando went down by 26.1 per cent while MRS declined by 8.4 per cent.
The managing director of Highcap. Securities Limited, Mr. David Adnori said that oil companies listed on the NSE are facing challenges of low global price of crude oil which has made investors to either sell off their stocks or adopt a wait and see attitude.
He noted that the down turn is affecting oil companies and producing countries across the globe.
Going forward, stock market analysts noted that the recent developments in the oil market where OPEC members reached an agreement to cut production by 1.2mb/d has already triggered a rally in oil prices to $54.1 per barrel, which portray a good development to the oil and gas stock.
