The optimism that shaped the Nigerian capital market at the beginning of the year waned towards the end of the first quarter of 2021. This is evident in the returns posted by most of the market indices. At present, there are eighteen main and sub sectoral indexes that gauge the market pulses on any trading day, with the main indicator being the All Share Index(ASI) of the Nigerian Stock Exchange(NSE) . All but the Oil and Gas Index showed declining trend at the end of Q1 2021.
Market returns by ASI, January to March 2021, declined from 5.3 percent in January to -1.2 percent in February and further to -3.0 percent in March 2021. ASI attained its year high of 42,412.66 points on January 29, 2021, with the corresponding year low of 38, 561.84 points on March 15, 2021. Between the two points, ASI lost 3,850.82 points or fell by 9.09 percent during the reference period.
The Main Board index fell from 6.4 percent in January to -0.2 percent in February and to -0.9 percent in March 2021. The NSE Premium Index followed the same pattern, as it declined from 4.1 percent in January, to -2.3 percent in February, and to -6.6 percent in March 2021. The year high of the Premium Index was 3,613.80 points on January 29, 2021, and the corresponding year low was 3,233.35 points on March 12, 2021.
On what caused the downward trend in the capital market in the first quarter of 2020, an analyst who did not want his name in print attributed it to improvement in yields in the fixed income market.
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“The downward movement in the capital market indices was caused by asset allocation among pension fund operators and asset management firms. The yield environment improved during the period. Since their target was to get the best returns for their investors, most of them moved their investments from the capital market to the money market in the first quarter of 2021”, he said.
The NSE Premium Index has the market heavyweights in terms of stock listings. The stocks are Access Bank, Dangote Cement, First Bank Holdings, Seplat and the United Bank for Africa (UBA). Others are WAPCO, Zenith Bank and MTN Nigeria. With combined N9.097 trillion as market capitalisation, the eight stocks listed under the NSE Premium Index accounted for 45 percent of the NSE market capitalisation as at March 31, 2021.
Their financials were impressive in the year that just ended. Access Bank announced a 12.7 percent increase in profit after tax (PAT) at the end of December 2020 from N96.52 billion in 2019 to N106.73 billion in December 2020. Total comprehensive income for the year ended December 2020 was N169.92 billion up from N96.52 billion in 2019. The bank has declared 55 kobo per share as the final dividend for FY2020.
Dangote Cement has declared N16 per share as the final dividend for 2020. That announcement followed an impressive year where the company saw improvement across the top and bottom lines. Group revenue for the year rose by 16 percent from N891.7 billion in 2019 to N1.03 trillion in 2020. Profit after tax was up by 35 percent to N352.6 billion up from N261.4 billion in 2019.
The profit after tax of First Bank Holdings increased by 21.8 percent from N89.73 billion as of December 2020 compared with N73.66 billion as of December 2019. Also, Africa’s global bank, the United Bank of Africa (UBA) paid its shareholders 35k per share as the final dividend for the year ended December 31, 2020. The bank made N113.76 billion as profit after tax in 2020 as against N89.09 billion in 2019.
Lafarge (WAPCO) declared N1 per share as the final dividend for FY2020. The company made N30.84 billion as profit after tax from continuing operations in 2020 compared with N15.5 billion in 2019.
Zenith Bank announced N2.70 per share as the final dividend from N230.56 billion profit after tax it made in 2020 which was 10.4 percent higher than N208.84 billion the bank realised in 2019. The final dividend brought the total dividend paid by Zenith in 2020 financial year to N3 per share.
MTN Nigeria’s profit after tax rose by 0.9 percent from N203.3 billion in 2019 to N205.2 billion in December 2020. The company’s total equity rose to N178.4 billion in December 2020 and that was 22.3 percent higher than N145.9 billion in December 2019. The company was bullish in the first quarter of 2021 with the acquisition of additional 10MHz spectrum in the 800MHz band from the Intercellular Nigeria Limited.
“Through this acquisition, we will be better positioned to support the deepening of broadband penetration in the country. The added resources will also greatly impact our customers’ experience providing even better internet connectivity. It is our goal to keep finding ways to grant everyone access to a modern connected life”, Karl Toriola, CEO, MTN Nigeria, said.
On a month on month analysis, the worst performing index in January was the NSE Growth Index which posted -3.3 percent. On the other hand, the best performing indexes were the NSE Oil and Gas Index that returned 12.4 percent; NSE AFR DIV Yield Index the closed the month at 14.4 percent, while the NSE Insurance Index was outstanding as it returned 29.8 percent.
In February 2021, the NSE Industrial Index was the worst performing index on the NSE with -7.5 percent returns. On the other hand, the NSE Oil and Gas Index was the best performing index as it returned 17.3 percent. As against seventeen indices that made positive returns in January 2021, only six indices posted positive returns in February 2021. These were the NSE Meri Value Index, 0.6 percent; NSE AFR Div Yield Index, 2.6 percent; NSE Growth Index, 5.7 percent; NSE Insurance Index, 6.6 percent and the NSE Oil and Gas Index, 17.3 percent.
In March 2021, the NSE Industrial Index was the worst performing index. It returned -7.9 percent in March 2021. The best performing index was the NSE Oil & Gas Index which posted 17.5 percent returns.
The NSE Industrial Index has stocks which are Berger Paints, Betaglass, CAP, Cutix, Meyer, Portland Paints, Dangote Cement, Notore and WAPCO. The outlook for the second quarter is mixed.
