The Nigerian equities market closed on a negative note in the month of February as investors’ investment declined by N346 billion on market correction and profit taking.
There were mixed performances in Nigeria’s capital market, with equity prices oscillating on the floor of the Nigerian Stock Exchange (NSE) during the period to close lower.
This followed the wind of correction and profit taking that blew across the market in February.
The correction wave was also not out of place or totally unexpected after the superlative rise in the price of most stocks, which hit 52-week highs, changing the direction of the market in January, a month that is traditionally known as a period when investors sell down to resolve personal commitments such as school fees, house rents, among others.
Activities on the NSE showed that the NSE All Share Index, which begins the year month-on-month with a growth of 16.37 per cent, went down by 2.28 per cent to close on February 28, 2018 at 43,330.54 index points.
Similarly, market capitalisation declined by N346 billion to close the month of February at N15.549 trillion.
Further breakdown showed that market breadth for the month was negative and weak, as 67 equities depreciated in price higher than 25 equities that appreciated.
The month’s biggest decliners were Consolidated Hallmark Insurance, which was heavily impacted by the NSE’s new pricing rule and weak numbers. It dropped 48 per cent of its opening price for the month.
Subsector peer, Unic Insurance, which came next lost 47.83 per cent, and Courtville Business Solution followed with a decline of 46 per cent, while Multverse shed 37.5 per cent.
The advancers were led by Linkage Assurance with a gain of 24.64 per cent, Unity Bank followed with a gain of 17.11 per cent, NEM Insurance appreciated by 16.02 per cent, BetaGlass gained 15.64 per cent and Unilever rose by 51.20 per cent.
Also, the month’s traded volume was down by 43.27 per cent to 11.94 billion shares from 21.1 billion in January, while value traded also declined by 44.04 per cent to N106.03 billion as against N189.46 recorded in January.
Meanwhile, the Nigeria’s economy recovery is gaining momentum owing to the country’s non-oil sector, majorly industries, as Manufacturing PMI in the month of February stood at 56.3 index points, indicating expansion in the manufacturing sector for the eleventh consecutive month.
The National Assembly finally passed the Petroleum Industry Governance Bill (PIGB) in January, the first part of an oil industry bill that has taken nearly two decades to become a law.
The bill, if assented to by the president, is expected to increase transparency and improve oversight in the energy sector.
Also, increasing foreign exchange inflows through the Central Bank of Nigeria (CBN) in carrying out more interventions in the economy has been helpful.
The CBN has been intervening in the foreign exchange market since April 2017 when it opened a window for Investors and Exporters as well as small and medium enterprises (SMEs).
Equally, external reserves hit $41.47 billion in the month of February, a three year high, which represents a year-to-date increase of 6.58 per cent. This positive trend continues to be supported by strong oil and euro-bond proceeds.
Speaking on stocks market performance in February, the chief operating officer, InvestData Limited, Mr. Ambrose Omordion, said market oscillated during the month as a result of profit taking and disappointment in some results.
Omordion stated that the source of funds brought to the market might cause fluctuations since local and foreign institutional investors trade in the market.
Speaking also, the managing director of Highcap Securities Limited said that the stocks market became over-heated when it experienced massive appreciation in January, which took up the entire length and breathe of the market.
He noted that most stocks were carried along in the rally in the month of January, saying what the market experienced in the month of February was correction.
He also said that crude oil price affected the capital market and the recent decline experienced in the price affected the stocks market, adding that the release of update on the Circular on Internal Capital Generation and Dividend Pay-out Ratio of Nigerian Banks by the Central Bank of Nigeria (CBN) triggered off negative sentiment in the market.
According to Omordion, Market outlook for the month of March will be dicey, being a pre-election year in a market dominated by foreign and institutional investors.
He said that investors should expect volatility and repositioning to continue, while profit taking will reduce on the strength of expected payout and earnings surprises.
He also asked investors not to panic but go for equities with intrinsic value, especially during this season when dividend payment is ongoing.
“We advise investors to allow numbers guide their decisions while repositioning for the year trading activities, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals,” he said.
Analysts at APT Securities and Funds Limited said, “We expect NSE-ASI outing in March to be quite bullish, at least to counter the loss so far in February and to sustain gains on the back of yearend earnings release as macroeconomic indicators suggest positive outlook.
“Furthermore, NSE’s new pricing rule to drop market price nominal value below 50 kobo is a welcome one as it will enhance price movement of illiquid stocks, this should further drive stability in the equities market.”
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