Nigerian stocks remain depressed on rate watch, not-so-good growth figures

Nigerian stocks closed lower Monday with benchmark index losing 0.12 percent as investors grapple with uncertainty over rate decisions by the monetary policy committee meeting of the Central Bank of Nigeria due Tuesday.

Investors are also seen to have reacted to growth figures released early Monday, which indicated that the economy slowed quarter-on-quarter to 1.95 percent in Q1 2018 from 2.11 percent as at end December 2017.

According to analysts, the growth figures by the National Bureau of Statistics (NBS) may have largely influenced market performance since the not-so-good figures were majorly driven by oil as against non-oil contribution. Moreover, the decision on rates has been projected by many analysts including those at Afrinvest to remain the same for at least the second quarter of 2018.

The equities market had remain depressed in the past weeks as year-to-date (YTD) return continued its fall from over 16 percent to less than 6 percent.

Specifically, market performance on the day was largely dragged by banking stocks following sell-offs in Tier-1 banking stocks – GUARANTY (-1.1%) and ACCESS (-1.8%) as well as FBNH (-2.7%).

Consequently, the NSE All Share Index shed 12bps to close at 40,425.07 points while YTD return declined to 5.7 percent.

Market capitalization shed N17.2 billion to settle at N14.6 trillion. Similarly, activity level weakened as volume and value traded dipped 22.6 percent and 54.6 percent to 271.2 million units and N2.3 billion respectively.

The top traded stocks by volume were AFRINSURE (90.0m), FIDELITY (21.9m) and DIAMOND (20.5m) while GUARANTY (N664.9m), ZENITH (N282.8m) and NESTLE (267.0m) were the top traded stocks by value.

Sector performance was largely bullish as three of five indices under watch trended northwards. The oil & gas index advanced the most, appreciating 0.5 percent on account of buying interest in FORTE (+4.9%). Following closely were the industrial goods and consumer goods indices, inching 0.3 percent and 0.1 percent higher as a result of gains in WAPCO (+0.6%), NIGERIAN BREWERIES (+0.4%), UNILEVER (+1.0) and DANGSUGAR (+0.8%).

On the other hand, the insurance index topped losers chart, down 0.9 percent, due to profit taking in NEM (-4.9%) and AIICO (-8.8%) while the banking index fell 0.2 percent on the back of sell pressures in GUARANTY (-1.1%) and ACCESS (-1.8%).

Investor sentiment as measured by market breadth (advance/decline ratio) improved to 1.2x from 0.7x recorded the prior trading session as 26 stocks advanced compared to 22 stocks that declined.

The day’s top performing stocks were UNITY (+8.5%), HMARKINS (+7.4%) and LASACO (+5.1%) while NEM (-4.9%), CUSTODIAN (-4.8%) and STERLING (-4.7%) were the worst performing stocks.

Despite the day’s negative performance, analysts still anticipate a rebound in the near term.

“We expect investors to react positively to the Q1:2018 GDP released earlier today as well as existing cheap valuations in the market,” said analysts at Afrinvest Research

United Capital researchers are also of the opinion that investors will begin a hunt for bargains in the near term.

“In terms of liquidity profile, N267.0 billion maturing bills are expected to hit the system this week. Also, we expect market activities to be largely determined by decisions made at the MPC meeting as speculations of policy easing mounts,” they said.