The Nigerian stock market has recorded a turnover of N47.7 billion on 8.12 billion shares in 61,515 deals for the month of January 2017.
This is in contrast to a total of 4.6 billion shares valued at N31.8 billion exchanged in 50,531 deals recorded during the same period in 2016.
According to data by the Nigerian Stock Exchange (NSE), the financial services sector was the most active in volume terms, having traded 6.2 billion shares, amounting to N12.5 billion in 26,155 deals.
The consumer goods sector was second with traded volume of 295.3 million shares valued at N11.2 million in 10,222 deals, while the conglomerates were third with 261.9 million shares worth N366.1 million in 2,328 deals.
Stock investors’ net worth on the exchange, however, depreciated by N274 billion in January 2017, as the market witnessed a mix of bargain hunting and profit taking activities.
The NSE All-Share Index (NSE ASI), which opened the month at 26,874.62 points closed at 26,036.24 points on January 31, 2017. This shows a decrease of 3.12 per cent or 838.38 points during the month, even as the drop in the NSE ASI reflected the price decline suffered by many stocks.
The market value or capitalisation as at January 31, 2017 closed at N8.973 trillion, down by N274 billion from N9.247 trillion recorded at the beginning of the month.
On sector performance for the period under review, NSE Banking index led with positive returns of 3.59 per cent, which was followed by the Pension and ASeM index by 1.14 per cent and 1.12 per cent gain, respectively, while the insurance index recorded a growth of 0.51 per cent.
On the other side, the Consumer Goods index depreciated by 5.98 per cent; the NSE Lotus II followed with a monthly loss of 5.14 per cent, while companies in the industrial index tracks suffered a monthly negative return of 2.74 per cent.
Meanwhile, market breadth for the month was negative, with 24 gainers versus 43 losers. The best performers for the week were Unity Bank by 41.82 per cent gain, United Capital up by 28.21 per cent and FCMB appreciated by 20.99 per cent. Eterna Oil appreciated by 16.77 per cent, while Stanbic IBTC rose by 15.33 per cent.
On the other side, NEM Insurance depreciated by 22.86 per cent, Guinness shed 22.76 per cent and Caverton dipped by 16.67 per cent were the worst performers. Neimeth also declined by 16.67 per cent, while Cutix went down by 16.40 per cent.
In January, there were two new listings by way of introduction, one on the Exchange Traded Funds platform and the other on the main board of the equity market. The 5.97 million units of SIAML Pension ETF admitted to the Daily Official List at a par value of N100 per unit on January 24, 2017, as the first Exchange Traded Fund (ETF) to replicate the NSE Pension 40 Index.
On the main board, the Nigerian Stock Exchange (NSE) on January 31, 2017, listed by introduction 9.75 billion ordinary shares of Med-View Airline at N1.50 per share increasing the number of listed shares to 176 and further deepening the Nigerian capital market through an additional N14.65 billion to the market capitalisation.
Analysts noted that profit takers besieged the market in January for funds to meet pressing needs associated with the season, besides the dwindling confidence at a time macro-economic indicators were crimson red, resulting from the uncertainly surrounding fiscal policies, with government seemingly not doing enough to offering the needed reassurance. Add this to the lack of a clear direction by the same government which has always been a major source of worry to investors.
According to them, this weak confidence in the whole system has kept the market in this up and down movement, following which it closed lower, although one must not fail to add that this was better than the comparable period of 2016.
They also noted that the recent quarterly earnings released in the last few days of the month revealed that the harsh business environment continues to impact negatively on all the sectors, particularly manufacturing and real sectors operators.
While a few stockbrokers said that the Monetary Policy Committee’s (MPC) decision to leave the MPR at 14 per cent and also leave CRR at 22.5 per cent and liquidity ratio at 30 per cent will continue to affect the market growth as activities on NSE still remain foreign investor dominated as long as these FPIs remain on the sideline due to uncertainties around the currency, the market will continue to decline.
The chief executive officer, HighCap Securities Limited, Mr. David Adonri, said the decline experienced in January was as a result of sales pressure mounted by both foreign and local investors, pointing out that the tight monetary policy of the CBN affected the growth of the equities market and the productive real sector.
He, however, said the market would experience improved activity in February because of the activities of market makers in ensuring market stability and higher dividends.
Also, the chief operating officer of InvestData Limited, Mr. Ambrose Omordion, said the market would rebound in February with expectations of impressive results for 2016 financial year.
In its outlook, analysts at United Capital said that they are cautiously positive in their outlook for Nigerian equities in 2017, given that domestic and external macro headwinds are expected to subside in the medium term.
“We have based our forecast of equity market returns solely on domestic macroeconomic conditions, anchored on the trajectory of oil prices. We believe monetary tightening is nearing its peak and we look to see a more accommodative policy stance at some point in 2017 as inflation retraces”, they noted.
They, however, added that there are key downsides risks that could keep yields elevated in 2017, such as lack of progress in oil production, shocks to oil prices, domestic fuel and electricity price increase, as well as a larger-than-anticipated increase in government borrowing.
“Beyond the exogenous factors, an overhaul of the FX market structure in a manner that addresses transparency and liquidity, traction in oil and gas reforms, improvement in power supply are the key triggers for a sustainable rebound in 2017”, they further stated.