Nigeria equities go bearish on selloffs in DangCem, AXA Mansard, UBA

By Charles Abuede

The Nigerian equities market went bearish at the close of trading on Thursday losing 0.12 per cent to close at 41,099.15 points, something some market analysts believe to be indicative of a temporary correction from the bullish trend experienced following the release of inflation figures that printed 15.75 per cent in December 2020. Perceptibly, however, is that majority of the advancers were growth stocks, while the decliners were mainly value stocks.

Similarly, sell-offs in Dangote Cement (-0.2%), AXA Mansard (-9.8%), and UBA (-1.7%) pinned down the index as the year to date return moderated to 2.1 per cent, while market capitalisation declined by N25.4 billion to settle at N21.53 trillion, from N21.49 trillion the previous day.

Furthermore, market activity level improved as volume and value traded rose 72.6 per cent and 38.7 per cent to 1.1 billion units and N6.4 billion respectively. The most traded stocks by volume were Transnational Corporation (428.3 million units), GTBank (62.1 million units), and Sovereign Insurance (61.4 million units), while GTBank (N2.0 billion), Zenith Bank (N708.1 million), and Wapco Plc (Lafarge) (N620.5 million) topped by value.

On the other hand, market performance across sectors was largely bearish as 4 of 6 indices closed southward. The industrial goods and oil & gas indices rose 0.3 per cent and 0.2 per cent respectively due to price appreciation in Wapco Plc (+5.5%) and Ardova Plc (+3.5%). Conversely, the insurance index led the laggards, down 6.7 per cent due to sell-offs in AXA Mansard (-9.8%), Aiico Insurance (-9.4%) and Wapic Insurance (Coronation) (-9.7%).

Similarly, the consumer goods and banking indices lost 0.3 per cent and 0.2 per cent respectively due to selling pressures in Flour Mill (-2.8%), Dangote Sugar (-1.0%), UBA (-1.7%) and UBN (-2.7%). Price depreciation in MTN Nigeria (-0.1%) and CHAMS Plc (-10.0%) drove the AFR-ICT index 0.1 per cent lower.

Meanwhile, market investor sentiment as measured by market breadth (advance/decline ratio) weakened to 0.3x from the 3.7x recorded previously as 14 stocks advanced against 49 decliners. Northern Nigerian Flour Mills (+10.0%), Multiverse (+10.0%) and Champion Breweries (+9.9%) were the best-performing tickers, while CHAMS Plc (-10.0%), Prestige Assurance (-10.0%) and TOURIST (-9.8%) were the main losers.

NSE 30

The NSE 30 Index decreased by 0.25 per cent to close at 1,687.87 points as against 1,692.06 points on the previous day. Market turnover closed with a traded volume of 219.60 million units. Lafarge Africa and Sterling were the key gainers, while Flour Mills and UBN were the key losers.

Foreign Exchange Trading

In the foreign exchange market on Thursday, the naira stayed flat at N475 to the dollar for the fourth straight session this week in the street FX market, while at the I&E FX market, the domestic currency appreciated by 0.04 per cent as the dollar was quoted at N394 per dollar as against the last close of N394.17. Most market participants maintained bids between N390 and N415.76 per dollar.

T-Bills Trading

In the treasury bills market, buying sentiments returned to the space, despite the flattish stance across the intermediate and long segments of the market, such that the bargain hunting at the long end of the market supported a 2 basis points drop in yields to average 0.5 per cent. However, system liquidity tapered down by 9.5 per cent from the previous day to N530.46 billion.

Also, in line with the expectations of market analysts, the OMO market traded bearishly albeit on a soft note. Against this backdrop, the market yield rose by one basis point to 0.8 per cent, reflecting selloffs on the short end of the market.

Bond Trading

Furthermore, profit-booking intensified sharply in the bond market, driven by bearish sentiment that dominated the long end of the market, which offset demand for instruments at the mid-segment. Overall, the average yield pointed higher by 17 basis points to 7.0 per cent. Across the curve, yields on the long end of the market gained +77 basis points compared to a 29 basis points decline at the belly of the curve. In contrast, trades settled flat on the short end of the market.

Meanwhile, the bearish swing of the market trailed the FGN Bond auction on Wednesday, where the DMO allotted N49.40 billion, N57.93 billion, and N15.03 billion across the FGN MAR 2027, FGN MAR 2035, and FGN JUL 2045 instruments at 7.9800 per cent, 8.7400 per cent and 8.9500 per cent.

The DMO also made non-competitive allotments of N21.50 billion (FGN MAR 2027), N25.50 billion (FGN MAR 2035), N1 billion (FGN JUL 2045) to complement the competitive allotment of N122.36 billion out of the N150.00 billion it placed on offer.