The market capitalisation, which represents the total value of investors’ assets was up by N1.485 trillion to N13.206 trillion on June 28, 2019 from N11.721 trillion at the beginning of the year.
The NSE All-Share Index dropped by 4.66 per cent in the H1, following 2019 election, policy implementation slowdown and sell-offs by foreign investors.
Stocks on the gainers list are Chams with a gain of 45 per cent, MTN Nigeria rose by 43.3 per cent, Caverton Offshore Support Group up by 33.9 per cent, while union Bank of Nigeria (UBN) appreciated by 22.3 per cent.
Others are sterling Bank, Courteville Business Solutions, Japaul Oil & Maritime Services and Trans Nationwide Express gained by 15.8 per cent, 15 per cent, 14.3 per cent and 12.3 per cent, respectively.
Meanwhile, CI Leasing and Dangote Flour Mills have emerged the best performing stock, in percentage terms, on the Nigerian Stock Exchange (NSE) for the first half of the trading year ended June 28, 2019.
Despite the overall market performance decline, CI Leasing and Dangote Flour recorded triple digit growth of 214.6 per cent and 155.5 per cent, respectively for the period under review.
Chief operating officer, InvestData Limited, Mr. Ambrose Omordion, attributed the CI Leasing stock’s price appreciation to the decision of Abraaj, managers of Aureos Africa Fund, to convert $10 million loan in C & I Leasing to equity is a show of confidence in the company.
He explained that “The Aureos Africa Fund had advanced the $10 million unsecured, redeemable, convertible loans stock to C & I Leasing. The loan matured at the end of 2018. However, instead of asking for the repayment of the loan stock, Abraaj converted to equity in the C & I Leasing.”
Speaking on the decision of converting the loan to equity, the managing director/CEO of C & I Leasing, Mr. Andrew Otike-Odibi said, “This development is positive for our business as it improves the capital structure of the company and helps position it favorably for additional capital raise from the market in first quarter of 2019.”
Market analysts said the foreign investors must have seen the positive trend the company has recorded in the recent times and bright future prospects, making the share price to top the gainers table in H1.
For Dangote Flour, Omordion said that the performance was as a result of the acquisition propose by Olam International in getting full ownership of Dangote Flour, saying that the deal is part of the company’s stated strategy of strengthening its portfolio by investing in proven businesses that have consistently performed and gained market leading position.
Analysts at United Capital Plc in its outlook for market in H2 said that though election uncertainties were out of the way and monetary policy in the global economy is increasingly looking dovish, investors continued to snub Nigerian equities despite attractive valuation, opting for short-dated money market bills.
They stated that activities on the local stock market stayed bearish as investors were clearly unimpressed by the outcome of the election. Year-To-Date (YTD) return weakened from a gain of 3.6 per cent before the election to a loss of 7.2 per cent as at end of April, which marked the end of all electioneering processes, including the announcement of all gubernatorial polls. As at the end of H1, 2019, YTD return settled at a negative of 4.2 per cent.”
Also, analysts at Cowry Assets Management Limited said that towards the end of the second quarter, the euphoria which surrounded the listing by introduction of 20.4 billion shares of MTN Nigeria on the local bourse engendered another positive equity market performance in May, but the performance was short-lived given the general negative investors’ mood.
Hence, the performance of the domestic bourse dwindled in H1 2019 as the year to date loss of the NSE All Share Index (ASI) stood at 4.66% as against the gain of 0.09 per cent recorded in H1 2018.
They noted that “As equities market failed to respond to major stimuli, such as relatively peaceful post-election conduct of the political class and transition of power, inaugural speech of the President as well as the listing of MTN Nigeria’s shares, investors’ hope of a likely strong market rebound is now left on the altars of the timely release of the President’s ministerial list, the optimism that the appointed ministers would reel out market-friendly fiscal policies as well as the final judgement of the Presidential election tribunal.
“Nevertheless, we feel that the equities market has been over-beaten by investors. Hence, an upward movement of the general market gauge looks inevitable in H2 2019.”
They noted that many companies’ share prices are way undervalued and their dividend yields have become incredibly high, adding that this portends good entry-price opportunity for investors to make a “finger-licking” gains in the near term.
Cowry Asset said “We may see the falling equity prices tending towards a possible replay of the bearish market in 2016/2017, when the local bourse came under severe bearish attack and profit-making businesses traded below their equity values.
“Only those investors who exercised enough patience partook in the bullish market run which eventually surfaced in 2017 when the stock market returned a whopping gain of 42.30 per cent to investors.
“For us, we will pitch our tent with companies that have sustainably settled their expenses profitability, consistently paid dividend, trading below their equity values and have good cash position.”
They explained further that in the event of further decline in share prices, we feel companies with the above-mentioned attributes, will still deliver good income to investors at year end, adding that “We expect corporate earnings season to play a role in further lifting the domestic share prices as dividend payouts would translate to higher dividend yields amid lower share prices.
“Hence, we advise a medium-term equities market investment strategy, at least a holding period of nine months.’’
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