Investors bearish as Nigeria bourse maintains losing streak

By Charles Abuede

• Selling pressures intensify across market bellwethers
• Banking index slumps 4.14% on investors’ bearish stance
• Naira recovery continues, T-bills tepid, bond negative

Investors maintained their bearish stance on Thursday, as selling pressures increased across bellwethers in the market.

The Nigerian bourse extended its losing streak for the fourth day in a row, as investors intensified their profit-booking motives. Thus, the sell-offs on heavily weighted counters such as Zenith Bank (-6.2%), WAPCO (-10.0%) and FBN Holding (-10.0%) drove the market into negative territory. Accordingly, the All-Share Index fell 127 basis points to settle at 34,577.26 points, following a decline in market capitalisation by N232.1 billion to N18.1trillion, while the year to date return moderated to 28.8 per cent.

However, market activity level strengthened as volume and value traded rose 95.7 per cent and 94.1 per cent to 553.9 million units and N6.6 billion, respectively. The most traded stocks by volume were Guaranty Trust Bank – GTB – (87 million units); Zenith Bank (65 million units); and Transnational Corporation (52.5 million units), while GTB (N2.8 billion), Zenith Bank (N1.5 billion) and MTNN (N405 million) led by value.

Bearish sector performance

The market performance across sectors was bearish as all indices closed southward. The banking and insurance indices lost, down 4.1 per cent and 3.7 per cent respectively, on account of sell-offs in Zenith Bank (-6.2%), FBN Holdings (-10.0%), AXA Mansard (-6.1%) and AIICO Insurance (-5.4%). Similarly, the consumer and industrial goods indices trailed, shedding 1.1 per cent and 0.7 per cent respectively, following losses in Dangote Sugar (-6.9%), Guinness Plc (-9.8%), WAPCO (-10.0%) and CUTIX (-6.8%). Additionally, sell pressures in OANDO (-6.4%), ARDOVA (-1.1%) and MTN (-0.8%) dragged the oil & gas and AFR-ICT indices down by 0.7 per cent and 0.4 per cent, respectively.

Investor sentiment wanes

Investor sentiment as measured by market breadth (advance/decline ratio) declined to 0.2x from the 0.6x recorded in the previous session as six stocks gained against the 40 that declined. Okomu Oil (+10.0%), Mutual Benefit (+9.1%) and FTN Cocoa (+8.1%) led the gainers, while WAPCO (-10.0%), FBN Holding (-10.0%) and UPL (-10.0%) led the decliners.

The NSE 30

The NSE 30 Index decreased by 1.37 per cent to close at 1,437.90 points as against 1,457.82 points on the previous day. Market turnover closed with a traded volume of 334.80 million units. Okomu Oil and Unilever were the only gainers, while FBN Holding and Lafarge Africa were the key losers.

Foreign Exchange

Continuing its recovery, the naira appreciated by N2 to trade at N476 against the greenback on the street FX market. Meanwhile, at the I&E FX market, naira appreciated further by 0.02 per cent as the dollar was quoted at N394.60 as against the last close of N394.67. Most participants maintained bids at between N381 and N408.18 per dollar.

Treasury Bills

The T-bills market closed tepid coming on the heels of Central Bank of Nigeria’s N102.97 billion Primary Market Auction (PMA) on Wednesday. Precisely, the average yield in the secondary market closed unchanged at 0.5 per cent. In furtherance to the circular released on the CBN’s Special Bills, the bank issued an 81-day instrument valued at N4 trillion, with a stop rate of 0.5 per cent.

Also, at the Wednesday PMA, stop rates cleared lower at 0.01 per cent from 0.02 per cent for the 91-day, while there was an uptrend in the 182-day (0.60% from 0.09%) and 364-day (3.2% from 0.15%) instruments. Notably, bids at the auction were pronounced on the 91-day (10.9x) compared to 1.6x, and 1.1x on the 182-day and 364-day. A total of N48.13 billion, N12.13 billion, and N42.71 billion was allotted across the 91-day, 182-day, and 364-day.

However, the OMO market bucked its bearish trend to keep the average yield at 0.5 per cent. Across the curve, trades settled flat halting sell-offs that had dominated the first half of the week

Bond Market

On the other hand, the FGN bonds secondary market closed on a negative note on Thursday, as the average bond yield across the curve cleared higher by three basis points to close at 1.99 per cent from 1.96 per cent on the previous day. Average yields across short tenor and the long tenor of the curve widened by two basis points and 16 basis points, respectively, while the average yield across medium tenor of the curve remained unchanged. The 27-APR-2023 maturity bond was the best performer with a decline in yield of one basis point, while the 26-APR-2049 maturity bond was the worst the performer with an increase in yield of 32 basis points.

Meanwhile, the DMO released FGN bond offer circular for December 2020, indicating plans to supply only N60 billion through re-opening of 15-year (N30 billion) and 25-year (N30 billion) tenors. The DMO has reduced the supply by 25 per cent as compared to the previous auction supply (N80 billion). The bond auction is scheduled on December 16 with the settlement on December 18, 2020.