Nigerian Bourse extends downturn on improved rates in T-bills, closes lower by 0.96% WtD

Transactions on the floor of the Nigerian Stock Exchange last week closed on a Bearish note as the All Share Index and Market Capitalisation depreciated by 0.96% to close the week at 39,799.89 and N20.823 trillion respectively. For two days, precisely on Tuesday and Wednesday, we saw some form of recovery occasioned by impressive full year results and dividend declared by Zenith Bank and UCAP. The market however came down afterwards after the primary auction of Treasury Bills as the rates improved by 150 basis points, from 4% to 5.5%.

According to Aruna Kebira, Chief Dealer of Global View Capital Limited, the 1.5% increase in the T-Bills rate is a lot of money for those invest in billions, most especially the PFAs.

The reason why that percentage in for Treasury Bills is not as high as that of the capital market is because that is the risk free rate. You are sure of your capital 100% plus that 5.5%. That is you will get your capital 100% and get another 5% on top of it. Unlike in the capital market, if you put N100,000, you might get N98,000 back or even 90,000. But for T-Bills, if you put N100,000 you will get N115,000; no story at all.

So people like going there than the capital market. It is when that place is down, that is when they talk about the capital market. So there is serious capital flight from the equity market to the money market.

The government is not consistent with its policy. The rate in the money market is going up. It started from 0.3% and its now 5.5% and it is giving people the hope that it will continue. Though the auction for February has ended. The next auction should be on the 14th of March. But the question is that between now and 14th of March because people have already locked in for the T- Bills of February, except for the secondary market. Between now and next auction, may be something will happen in the equity market such that there will be concentration back in the equity market; may be incoming of more results in the market.

“Going forward, the downturn in the market makes some of the stocks cheaper. Look at Zenith that declared N2.70 dividend, at the share price of N25.45 it has a dividend yield of over 10%. UCAP that paid 70 kobo at the share price of N6.13 has dividend yield of over 10%. The lower the price of the stock, the higher the dividend yield. Capital appreciation may not be easy to come by at this period”.

An aggregate of 1.930 billion units of shares valued at N20.656 billion in 24,687 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 1.541 billion shares valued at N18.235 billion that exchanged hands the previous week in 22,752 deals.

The Financial Services Industry led the activity chart with 1.450 billion shares valued at N15.070 billion traded in 14,236 deals; thus contributing 75.11% and 72.96% to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 154.906 million shares worth N179.673 million in 798 deals. The third place was Consumer Goods Industry, with a turnover of 111.782 million shares worth N2.270 billion in 3,865 deals.

Trading in the top three equities namely Wema Bank Plc, Zenith Bank Plc and First Bank Holding Plc  accounted for 782.167 million shares worth N8.914 billion in 4,624 deals, contributing 40.52% and 43.15% to the total equity turnover volume and value respectively.

All other indices finished lower with the exception of NSE Banking, NSE AFR Bank Value, NSE MERI Growth and NSE Oil/Gas Indices which rose by 0.69%, 1.34%, 0.66% and 0.97% while the NSE ASeM and NSE Growth Indices closed flat.

Nineteen (19) equities appreciated in price during the week, lower than thirty-nine (39) equities in the previous week. Forty-four (44) equities depreciated in price, higher than thirty-three (33) equities in the previous week, while ninety-nine (99) equities remained unchanged, higher than ninety (90) equities recorded in the previous week.

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