Low yield on FG securities drive equities market by N203bn in November


Story by Kayode Tokede

Low yield on federal government securities in continued to drive the equities market, leading to investors gaining N203 billion on the Nigerian Stock Exchange (NSE) in November.

The market capitalisation which ended October at N12.830 trillion rebounded to end activities at N13.033 trillion in November, gaining 1.58 per cent.

Consequently, the All-Share index (ASI) added 642.88 basis points or 2.45 per cent to close at 27,002.15 basis points, defying 4.62 per cent loss in the previous month.

This brings the equities market Year-Till-Date (YTD) performance to negative 14.09 per cent.

The equities market posed a positive posture at the end of November as it witnessed renewed bargain hunting during the month following policy-induced rallies in the market.

In a distanced similar development however, the last weekly trading on the equities securities portended that the market might be on the verge of losing its momentum, except rescued by a new trigger.

The week closed on a marginal gain of as the ASI advanced 0.04 per cent.

All other indices finished lower with the exception of NSE Main Board, NSE-AFR Div Yield, NSE Meri Growth, NSE Consumer Goods, NSE Lotus II and NSE Industrial Goods indices which appreciated by 1.83 per cent, 2.21 per cent, 1.81 per cent, 4.69 per cent, 2.72 per cent and 0.35 per cent respectively, while the NSE ASeM Index closed flat.

According to analysts at Cordros Capital, despite the marginally positive performance of the market during the week, the market seems to once again be losing impetus.

“Consequently, we expect the market to shed points in the coming week, absent a policy-driven catalyst.

“Nonetheless, the case for the market to record some gains over the short to medium term remains compelling, even as the valuation picture becomes less compelling.”

The Monetary Policy Committee (MPC) members of the Central Bank of Nigeria (CBN) noted that the persisting bearish trend in the equities market, had started to abate in November, and was pleased by the increased patronage in the sovereign bonds market.

According to communiqué signed by CBN governor, Mr. Godwin Emefiele at the end of last week meeting, the ASI grew by 2.41 per cent to 26,991.41 basis points on November 22 from 26m355.35 basis points at end-October 2019.

He said, the market capitalization also grew by 1.54 per cent to N13.03 trillion on November 22, 2019 from N12.83 trillion at end-October 2018, due largely to portfolio shift from short-term government securities to the equities market.

However, a total turnover of 1.161 billion shares worth N13.174 billion in 18,142 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 1.416 billion shares valued at N17.249 billion that exchanged hands the previous week in 20,303 deals.

The Financial Services industry, measured by volume, led the activity chart with 801.229 million shares valued at N6.219 billion traded in 10,415 deals; thus contributing 68.98 per cent and 47.20 per cent to the total equity turnover volume and value respectively.

The Conglomerate industry followed with 139.940 million shares worth N585.927 million in 943 deals while the third place was Consumer Goods industry with a turnover of 84.546 million shares worth N3.445 billion in 2,674 deals.

In addition, trading in the top three equities namely, Law Union & Rock Insurance Plc, Zenith Bank Plc and United Bank for Africa Plc, measured by volume, accounted for 369.396 million shares worth N3.086 billion in 3,360 deals, contributing 31.80 per cent and 23.43 per cent to the total equity turnover volume and value respectively

Also, a total of 11,991 units valued at N102,312.34 were traded during the week in 30 deals, compared with a total of 150 units valued at N15,929.60 transacted last week in nine deals.

During trading last week, a total of 313,912 units of Federal Government Bonds valued at N320.719 million were also traded in 23 deals, compared with a total of 42,085 units valued at N47.490 million transacted the previous week in 30 deals.