Despite the negative performance of the Nigerian stocks market in the month of September, Union Diagnostic & Clinical Services, UACN Property Development Company and C&I Leasing closed strong, dominating the table of best performing stocks for the month. The month recorded 29 gainers and 61 losers. Other gainers are First Aluminum, Unity Bank, Neimeth Pharmaceutical Company, Sterling Bank, Vitafoam Nigeria, GlaxoSmithKline Consumer Nigeria and Wapic Insurance. Except for GlaxoSmithKline Consumer Nigeria, all other nine top performing stocks are penny stock. Penny stocks in Nigerian Stock Exchange (NSE) are some equities with relatively lower prices ranging from less than 50 kobo to N10, they are small-capitalised stocks investors can make money on, in terms of share price appreciation.
Data obtained from the NSE indicated that Union Diagnostic led the gainers for the month under review by 30.77 per cent as the stock opened at 26 kobo and closed at 34 kobo, galloping on the strength of market sentiment and better quarterly results. UACN Property followed with a gain of 24.20 per cent to close at N1.95 from N1.57, while C & I Leasing chalked 20.8 per cent from N2.50 and closed the month at N3.02, per share, as the company continues its deep play in the oil servicing sector.
First Aluminum up by 20.59 per cent, Unity Bank gained 17.24 per cent, Neimeth, 10 per cent growth, Sterling Bank appreciated by 9.49 per cent, Vitafoam rose by 8.02 per cent, GlaxoSmithKline gained 6.87 per cent and Wapic Insurance up by 5.56 per cent, among others.
September was one of the worst months in the third quarter, and indeed this year on the Nigerian Stock Exchange (NSE). The All Share Index, which measures the aggregate value of the nation’s stock market declined with a monthly decline of 5.97 per cent and year to date loss of 14.32 per cent as at September 28, 2018. It fell from 34,848.45 at the beginning of the month to 32,766.37 on September 28, 2018.
The dip is largely due to cautious dominated by selling positions, as investors sold-off their positions due to the political tension, dwindling economic activities and capital outflow. The Nigerian stocks market’s indicators have remained on a downtrend for eight consecutive months. Within the month of September, the NSE composite All-Share index touched 15-month lower lows in the face of different attempts to rebound that failed on continued outflow of funds that reduced liquidity. The current economic retrogression is a reflection of Nigeria’s present macro-economic indices that reveal the stagnation of the economy, which has been blamed on the present intense focus on politics at the detriment of the economy.
Speaking to LEADERSHIP, the chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion said that that small capitalised stocks or penny stock with good fundamental have increase in share price as investors showed interest because of their lower prices in the month of September.
Omordion noted that while some investors are buying in anticipation of improvements in their status and future potentials, others might be buying these stocks for the quick return it offers. Chairman of Association of Stockbroking Houses of Nigeria (ASHON), Chief Patrick Ezeagu, explained that performance of listed companies on the Nigerian Stock Exchange were good, but the current downswing was the effect of general lull in the economy and other exogenous factors, prompting both domestic and foreign investors to convert their shares to cash. On the outlook for the market, Omordion said that “the ongoing volatility is likely to persist as bargain hunters take advantage of the low-price regime, in the midst of continued selloffs and political risk, especially as shadow elections by political parties kick off any moment from now.
“Already, investors are looking forward to third quarter earnings reports so as to rebalance their portfolios and watch the political space. Meanwhile, analysing the actual numbers released has given basic insights into company earnings that are likely to drive prices and determine market valuation.” He urged investors to review their positions in line with investment goals, vis-à-vis strength of company numbers and act as events unfold in the global and domestic environment, advising investors to go for equities with intrinsic value,
According to him, we advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst mixed company, economic and market fundamental. Also, analysts at Cordros Capital Limited noted that “we remain conservative in our outlook, as selloffs are likely to persist, amidst the absence of a one-off positive triggers and likely negative sentiments of investors, particularly foreign players, as a result of contagion effect of emerging market selloffs, and political concerns ahead of the 2019 election.”
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