The much anticipated listing of MTN Nigeria Plc on the Nigerian Stock Exchange (NSE) has finally come, triggering shareholders of market bellwethers to sell some holdings thereby creating cheaper entry points for retail investors.
Some equity investors who had hoped to become one of the owners of the telecoms company are still yearning as existing shareholders of MTN Nigeria are largely unwilling to offer their holdings since the firm listed on the NSE by a way of introduction.
For instance, MTN Nigeria attracted a total bid of 200 million units on the first trading day, implying investors’ aggressiveness and excitement towards Nigeria’s biggest telecommunication company by market share.
If the biddings were successful, it would have translated to a whooping N200 billion worth of traded value at N99 per share. However, only 5 million shares were on offer, representing 2.5 percent success rate.
While the stock hit the NSE daily price ceiling of 10 percent in its first two trading sessions last week, investors are yet to back out of the telecoms giant.
“The listing of MTN won’t necessarily slow down the bearish trend of the market,” said Paul Uzum, a Lagos-based stockbroker on the NSE. “Instead investors, in the bid to balance their portfolio, would sell off some of their existing holdings to purchase the shares of MTN.”
Sequel to the above stance, 3 out of 5 most capitalised companies on the NSE underperformed their previous week performance, signalling the anticipated move of investors.
This is on the back that investors were not likely to introduce fresh capital into the purchase of MTN’s shares so giving room for cherry picking providing easy profit in a market which has lost about 8.14 percent since the beginning of the year.
While Dangote Cement in the previous week recorded a decline by 1 percent in its share price, as at the close of trading on Friday, its stock underperformed as price dipped 2 percent week on week.
The same trend was seen in Nestle’s share which stood as the worst performer w/w. The share price of Nigeria’s biggest consumer goods firm by market capitalization as at the previous week remained flat w/w. However, the stock plunged 6 percent as at the end of the day’s trading on Friday.
Nigeria Breweries wasn’t left behind as investors sold off positions which saw the brewer shed 4 percent off its market value w/w as at Friday as against 2 percent decline in the previous week.
Further analysis of the five biggest companies on the NSE before the emergence of MTN Nigeria shows the stocks have lost a significant market value, bringing them close to their weakest market prices in a year. This is despite their impressive outings in the first quarter of 2019.
Nigeria’s most capitalised firm, Dangote Cement, neither gained nor lost on Friday at N176, this brings the share price of the cement giant to 3.53 percent close to its 52-week low of N170.
Similarly, Guaranty Trust Bank sustained its decline on Friday by 1.29 percent, bringing it to its lowest level of N30.60 in the last one year, while Zenith Bank’s share price which stood at N19.60 was 0.26 percent close to its 52-week low of N19.55.
Nigerian Breweries remained unchanged at N62.50 on Friday, but that put the stock to 9.84 percent near its 52-week low of N56.90, while Nestle stood at N1,430, representing 5.93 percent above its one-year low of N1,350.
Analysts say the bullish trend witnessed in the shares of MTN would likely persist this week, a development that may likely dampen the performance of some existing companies in spite of their strong fundamentals.
As a result, taking positions at this time in stocks with strong fundamentals may return value to forward looking investors as analysts forecast current market sentiment may weigh on MTN upon market’s realization of what should be the wireless carrier’s intrinsic value.
