Stocks gain N316bn as corporate earnings entice investors

In the trading week ended March 6, 2015, Nigerian stock market rose by 3.14 percent or N316 billion in value terms.

Stock buyers at the Nigerian Stock Exchange (NSE) raised their bet in the last trading day of the review week after mid-week loss that resulted from profit-taking activities.

As the duo of GTBank plc and Zenith Bank released their impressive full-year 2014 earnings, which surpassed analysts’ consensus forecasts, more investors saw reasons to increase their equities holdings – thereby positively impacting the value of stocks at the bourse last Friday.

“Zenith delivered an ROAE of 19 percent for 2014. We would expect consensus estimates for 2015 to move up slightly. On the back of the results, we would expect the market to react positively, with the caveat that concerns about the impact of the fallout from the decline in oil prices are likely to linger a bit. Zenith shares have outperformed the index this year,” said financial analysts at Lagos-based FBN Capital Limited.

On GTBank earnings, these analysts said: “Given that the positive surprise in the results was driven by non-interest income (and in particular FX trading), we do not expect much of the surprise to be carried forward as far as consensus forecasts are concerned. More importantly, these results do not yet reflect the fallout from the worst of the marked decline in oil prices. We believe that GTBank will fare better than most banks and should be viewed as a core holding for investors through the challenging times ahead.”

Despite choppy trade witnessed last week at the nation’s bourse, the NSE All Share Index (ASI) closed high at 31,049.37 points from 30,103.81 points at the beginning of trade last week. The NSE ASI added 945.56points last week. The value of listed equities also rose to N10.360 trillion from N10.044 trillion.

Ahead of this performance, market analysts at another Lagos-based investment firm, United Capital plc expected the profit-taking recorded last Thursday to persist in following day’s session, though at a weaker momentum, and advised investor to trade with cautious.

Mobil Oil Nigeria plc led the 37 stocks that gained Friday against 15 losers. Mobil Oil rose by N5.2, from N155.8 to N161; Total Nigeria plc garnered N4.5, from N140 to N144.5; GTBank plc rose from N22.03, to N24.28, after adding N2.25. Zenith Bank plc rose from N19 to N20.94, adding N1.94, while Conoil plc rallied from N32.2 to N33.81, after adding N1.61.

Nigeria’s foreign exchange reserves fell 9.04 percent to $30.87 billion by March 4, from $33.94 billion a month earlier, data from the central bank showed on Friday.

The Central Bank of Nigeria (CBN) has used the reserves to support the ailing naira currency in Africa’s top crude exporter, which has been hammered by falling global oil prices and uncertainty over the delayed presidential elections due later this month.

Brent crude rose above $61 a barrel on Friday, supported by geo-political tensions in Libya and Iraq, while traders kept a close eye on Iran nuclear talks that could eventually bring more supply to world markets.

Seplat Petroleum Development Company plc led the losers table after its share price dropped by N20, from N450 to N430; followed by Presco plc, which declined from N32.38 to N30.77, down by N1.61. Chemical and Allied Products plc lost N1.58, from N39.78 to N38.2; Flour Mills of Nigeria plc dipped by N1.07, from N34.92 to N33.85; while Berger Paints plc declined from N9 to N8.55, down by N0.45.

CBN plans to issue new Treasury Bills (T-Bills) worth N995.5 billion ($5bn) as from next week Thursday, March 19, the central bank said on its debt issuance calendar on Friday.

The T-Bills will have tenors of between 3-month and 1-year maturities, the bank said. The bank will issue a total of N202.25 billion of the 3-month maturities during the period, and a total of N236.81 billion worth of the 6-month tenor. A total of N556.46 billion worth of the 1-year paper will be sold during the period, the bank said. A total of N945.5 billion worth of Treasury bills issued earlier will be due for repayment during the same period.

 

Iheanyi Nwachukwu