Nigerian stocks in record N1.9trn half-year gain

The Nigerian stock market will close the first half of the year on June 30 with a record gain of approximately N1.9 trillion, BusinessDay analysis has shown.

There are just three trading days to wrap-up the first half of 2017. The stock market had opened this year on a negative note, as decline in oil revenues plunged Nigeria into its first recession in 29 years. Foreign investors took flight after the Central Bank of Nigeria (CBN) introduced restrictive foreign exchange policies, in a bid to manage the significant drop in foreign exchange earnings, resulting in a significant fall in share prices.
But the market suddenly turned a negative return in the second–quarter (April) to reach a 23-month high, as local and foreign portfolio managers responded positively to the decision of the Central Bank of Nigeria (CBN) to introduce a foreign exchange window for investors and exporters.
“Nigerian equities have surged by over 30 percent since the introduction of the Investors and Exporters FX window, ahead of major pan-African markets (South Africa: 0.8 percent, Egypt: 8.7percent, Kenya: 15.8 percent and Ghana: 14.9 percent)” said to analysts at Lagos-based United Capital Plc.
Nigerian stock price jump in the first half of 2017 has been mainly led by gains in the banking, cement and oil sectors, as dollar liquidity continued to improve on the currency market. The Nigerian Stock Exchange (NSE) All Share Index (ASI) which opened this year at 26,874.62 points and closed at 32,122.14 points last Friday, indicating year-to-date (Ytd) return of 19.53 percent, while the value of listed Nigerian stocks rose from year-open level of N9.246 trillion to N11.107 trillion, a rise of N1.86 trillion.
While analysts at Vetiva Capital expect recent strong buying sentiment to continue, they emphasised “caution” on select stocks that have risen significantly in the past weeks.
“From the global market low in March 2009, the Nigerian market has risen 40 percent (compared to Kenya’s 194 percent, Egypt’s 273 percent and South Africa’s 180 percent),” according to United Capital analysts.
The research analysts added, “There appears to be scope for further upside in Nigerian equities, despite their remarkable short-term performance.
However, downside risks from lower oil prices and negative surprises in first half 2017 earnings could temper the current market enthusiasm. In effect, while we hold an overweight position in Nigerian stocks, we advise players to tread cautiously”.
Another factor behind the market half year rise, was when Moody’s maintained a stable outlook for Nigeria’s banking sector. Other market analysts also pointed to expected improvement in half-year company results, as the economy cranks back to life.
Ayodeji Ebo, managing director at Afrinvest Securities Limited, noted that, “We are in the mid-year and most stocks have gained significantly since first-quarter (Q1) 2017”.
Following recent slide, he noted that portfolio managers and proprietary traders are moving to cash out, sighting the likelihood of a bearish trend till the end of the month “and recovery is expected by the first week of the new month.”
May & Baker Nigeria Plc is the best performing stock in the first half of 2017 with a record 404.3percent increase to N4.74.
Other stocks that have seen significant upside in their performance include; Access Bank Plc, Airline Services & Logistics Plc, Beta Glass Plc, FBN Holdings Plc, Fidelity Bank Plc, Flourmills Nigeria Plc, Oando Plc, International Breweries Plc, Okomu Oil Palm Plc, Presco Plc, PZ Cussons Nigeria Plc, Skye Bank Plc, and United Bank for Africa Plc.
All these stocks have exceeded 50 percent price gain year-to-date. A look at the year to date performance of some of the listed Nigerian stocks as at June 23 revealed that investors in Access Bank Plc shares, with price at N 8.86 have gained 50.9 percent this year.
Similarly, Air Service & Logistics Plc has rallied by 80.0 percent to N4.50; Beta Glass Plc at N52.17 gained 72.1 percent already; Cement Company of Northern Nigeria Plc recorded increase by 104.2 percent to N10.21; FBN Holdings Plc has risen by 75.8 percent this year to N5.89; while Fidelity Bank Plc share price has risen by 42.9 percent this year to N1.20
BusinessDay checks further show that the share price of Fidson Healthcare Plc at N2.75 has risen by 114.8 percent this year; Flourmills Nigeria Plc at N27.74 has increased by 50.0 percent in 2017; International Breweries Plc also rose by 57.4percent to N29.12.
Okomu Oil Palm Plc has achieved 53.2 percent growth in its share price this year to N61.56; Oando Plc at N7.24 has increased this year by N 54 percent; Presco Plc at N73 has increased by 82.0 percent Ytd; PZ Cussons Nigeria Plc share price at N20.90 grew by 44.1 percent this year.
Also, Skye Bank Plc which grew by 34 percent this year stood Tuesday at 67 kobo; Stanbic IBTC Holdings Plc at N30.60 has increased this year by 104 percent; Transcorp Plc at N1.43 grew by 64.4 percent; while UBA Plc at N8.32 achieved 84.9 percent first half growth.

 

Iheanyi Nwachukwu